HC Deb 12 February 1929 vol 225 cc221-3

asked the Chancellor of the Exchequer whether, prior to the raising of the Bank rate on Thursday last, any representation was made to the Treasury by the Bank in accordance with Section 8 of the Currency and Bank Notes Act, 1928, asking for authority to increase the amount of the fiduciary issue above 260 million pounds?

The CHANCELLOR of the EXCHEQUER (Mr. Churchill)

No, Sir. An increase in the fiduciary issue would only have had the effect of stimulating the transfer of funds from this country to New York for speculative purposes.


Is the right hon. Gentleman satisfied with the latest outcome of his financial policy, or has he in mind any remedy which he proposes to take to prevent the industry of this country from being at the mercy of speculators in America or in any other foreign country?


I can imagine no remedy which would be more ill-judged than interference on political grounds with the working of our banking system.


Is it not a fact that the rise in the Bank rate is due to our prematurely going back to the gold standard?

Lieut.-Commander KENWORTHY

Am I to understand that the right hon. Gentleman had no knowledge of the proposal to raise the Bank rate, and that the Treasury were in no way consulted?


I certainly had knowledge beforehand.


Does not the right hon. Gentleman recollect that the chief criticism raised from hon. Members opposite against the policy of a sound currency, was that we should be snowed under a great mountain of gold?


May I have an answer to my question? I asked the right hon. Gentleman whether it is not a fact, generally recognised, that the rise in the Bank rate is due to our having gone back, prematurely, to the gold standard?


No, Sir. I do not think that is at all the correct way to put it. Many things followed, good, bad and indifferent, from the decision that was then taken, and which the House approved, but it is not right to say that any movement of the Bank rate is due to that decision. Of course, if we were not on the gold standard, we might not have had a rise in the Bank rate on this particular occasion but, on the other hand, the financial position of the City of London and the country might stand very differently from what it does now.