§ 15. Lieut.-Commander KENWORTHYasked the Chancellor of the Exchequer what loans have been raised abroad since the present Government assumed office; and what were the conditions imposed?
§ 16 and 17. Mr. PETHICK-LAWRENCEasked the Chancellor of the Exchequer (1) what is the amount and what is the estimated cost to the Exchequer during 12 months of the New York credit;
(2) what are the amounts and the estimated cost to the Exchequer during the 12 months of the French bank credit and French issue of British Treasury franc bills, respectively?
§ 18 and 19. Mr. WISEasked the Chancellor of the Exchequer (1) what is the net rate per cent. received by the French banks in respect of the new credits to the Treasury; whether this rate was fixed by reference to the prevailing rate paid in Paris for short-term credits; and, if so, what was this rate understood to be;
(2) what is the total cost per cent. to the Treasury of the credits recently arranged in Paris and New York, respectively, including loss of revenue owing to remission of taxation; what commissions or other payments are being made to bankers or others in this country and in France and the United States of America in connection with these transactions; and for what services?
§ Major ELLIOTThe following are the detailed terms of the British Treasury credits in the United States of America and in France. Both credits run for a period of 12 months and are for maximum amounts equivalent to £40,000,000 in each case. The United States of America credit is a banking credit up to an aggregate amount of $200,000,000 at any time outstanding. The Treasury are entitled to draw on this credit by depositing dollar bills for 30 days, 60 days or 90 days, and to renew such bills within the 12 months' period. The rate of discount will be 1 per cent. above the official discount rate of the Federal Reserve Bank of New York, with a mini- 281 mum of 4½ per cent. and a maximum of 6 per cent., unless the Federal Reserve Bank discount rate exceeds 6 per cent., in which case the rate of discount will be the Federal Reserve Bank discount rate. At present, therefore, the rate of discount is 4½ per cent. The Treasury pays commissions of 1¼ per cent. on the total sum of $200 millions. Nothing is payable by the Treasury in respect of United States taxation.
The credit in France is in two parts: in the first place a credit entitling the Treasury to draw on a group of French banks on current account up to an amount of 2,500 million francs outstanding at any time, interest at 4½ per cent., being payable on any amounts actually drawn for the period during which they are outstanding, and in the second place a public issue of one-year 4¼ per cent. British Treasury Bills payable in francs for a total amount of a further 2,500 million francs. I am glad to be able to inform the House that this issue has already been fully subscribed. Commission at the rate of 1¼ per cent. is payable both on the Treasury Bills issued to the public and on the amount of the credit, namely, 2,500 million francs. Nothing is payable by the Treasury in respect of French taxation on the bank credit. On the public issue, the Treasury is responsible for the expenses of issue, including certain duties in France, amounting at the most to 0.8 per cent. on the amount of the public issue.
The annual cost to the Exchequer of both the United States and the French credits depends of course, on the extent to which the bank credits are in fact utilised, and cannot, therefore, be estimated beforehand. The rate of interest and the commission fixed in the case of the French bank credit represents the terms necessary in order to obtain a, credit of this magnitude with success. I am not aware of any similar short term credits on the Paris market, so that I am not in a position to make a direct comparison of the kind suggested by the hon. Member for the Eastern Division of Leicester (Mr. Wise). Credits of this character are not liable to British taxation unless held by or on behalf of persons who are liable as being resident or domiciled in this country. No commission of any kind is payable to bankers in this country. In reply to the hon. 282 and gallant Member for the Central Division of Hull (Lieut.-Commander Kenworthy), these credits are the only loans raised abroad by the present Government.
§ Lieut.-Commander KENWORTHYI am much obliged to the hon. and gallant Gentleman, but he has not answerd the last part of my question as to what were the conditions imposed. Cannot we have an answer to that? I did not ask for the terms of the loans. That has all been in the newspapers. I asked for the conditions imposed—the sort of taxes and the reductions to be made in the standard of living. That is what I want to know.
§ Major ELLIOTThe hon. and gallant Gentleman will find all the conditions in the statement.
§ Lieut.-Commander KENWORTHYI gave statutory notice. May I ask for the information that is asked for in the question. Can we have the conditions?
§ Mr. WISEIs the hon. and gallant Gentleman aware that the present rate for three months' bank bills in New York is 1 per cent. per annum, and will he explain why this Government finds it necessary to pay four times as much?
§ Major ELLIOTIt is impossible to add anything to the answer I have given.
§ Mr. WISEAre we to conclude that the credit of the Government is so low that it has to pay four times the market rate?
§ Mr. GEORGE HARDIEWas any condition made as to the spending of the money and as to certain cuts being made in certain directions?
§ Major ELLIOTNo, certainly not.