§ In the midst of this widespread economic blizzard, more severe than our generation has ever known, I feel justified in seeking, as the lesser of two evils, relief by means of non-recurrent revenues and temporary expedients, somewhat similar to those to which my predecessor resorted so freely in more prosperous times, and which I admit in those circumstances I condemned, and should condemn again in normal conditions. Unfortunately, the depredations of my predecessor have left few hen roosts to rob. There are, however, two resources which I can legitimately and without hardship call to my assistance as expedients in this time of unparalleled stringency. As a result of the advertisement given to the fact, most hon. Members are aware that there exists what is known as the Exchange Account, which represents a sum of £33,000,000 advanced from Votes of Credit during the War and utilised by the Treasury in purchasing foreign exchange to finance payment of our obligations abroad. This is not an account to which expenditure is finally charged but is in the nature of a revolving fund. It has enabled us to buy foreign exchange under favourable conditions in advance of the date upon which we have payments to make. If conditions were unfavourable or foreign currency dear, the possession of a reserve has enabled us to keep out of the market and abstain from buying until conditions improved. The advantages are so obvious that no defence of the Account is needed, and down to a recent date no possibility existed of reducing the amount below £33,000,000. The new circumstances which have modified the situation arise from the Hague agreement and the establishment of the Bank of International Settlement. Previously we received payment of reparations and of instalments of the French and Italian War debts in sterling, but we have now been able to arrange that these sums shall be placed to our credit in the Bank for International Settlement in dollars, which we can utilise in making 1405 payments on our own foreign debt. These arrangements have been working for nearly a year quite satisfactorily.
§ It does not follow that the Exchange Account can be dispensed with altogether. The dates on which we receive dollars abroad do not match exactly the dates on which we require them for use, and it would be, moreover, imprudent to rely exclusively upon one source of supply. But there is no doubt that the size of the account is excessive for present or future needs and that without injury to the public interest it can be reduced by £20,000,000. I am thus in a position to increase the miscellaneous receipts for this year by that amount.
§ I have spoken of the Exchange Account hitherto as if it were a fixed sum of £33,000,000, that being the amount which the revolving fund has received from the Exchequer and not repaid. The pegging of the Exchange during the War was necessarily an operation involving expense, and for a long time the assets of the account were below its nominal figure. The position has now been reversed and its assets now exceed its nominal figure by more that £3,000,000. This reserve being in existing conditions no longer required, I have allowed for this receipt in my estimate already given of the miscellaneous revenue for the current year. The further amount to be found is thus reduced to £17,366,000.