§ Sir A. M. SAMUEL
(by Private Notice) asked the Chancellor of the Exchequer whether he is in a position to make any statement concerning the Fiduciary Issue?
Yes, Sir. As a temporary measure it has been decided to increase the amount of gold held in the Issue Department of the Bank of England by £65,000,000. Such a step by itself would, of course, mean a very sharp expansion of the credit base for which there is no justification at the present time. I have, therefore, at the request of the Bank, directed the reduction of the Fiduciary Issue by £60,000,000 under the powers conferred by the Currency and Bank Notes Act, 1928, thus limiting the expansion to small dimensions. I would add that there is no greater permanence in these arrangements than may seem desirable since the fiduciary issue may be increased or diminished at any time in the future in accordance with the provisions of the Act named.
No, Sir, not in respect of a reduction in the issue, but it would be necessary in the case of an increase.
§ Mr. THORNE
Does that mean that I had better find out myself what object the right hon. Gentleman has in view?
§ Mr. MACQUISTEN
If the right hon. Gentleman were to allow things to follow the normal course and an expansion of credit to take place, would that not greatly stimulate trade and industry, and give a great deal of employment to the people?
§ Mr. SHINWELL
May we have an assurance that this process will not have an adverse effect upon trade?
It is not limited in time. There was no specific time mentioned by me in answer to the question, but I explained that it is a temporary measure, and if conditions change there is sufficient flexibility in the arrangement to enable us to alter it.