HC Deb 15 December 1936 vol 318 cc2274-5
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?

Mr. CHAMBERLAIN

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.

Sir A. M. SAMUEL

Is it not necessary, under the Act of 1928 to lay a Minute on the Table?

Mr. CHAMBERLAIN

No, Sir, not in respect of a reduction in the issue, but it would be necessary in the case of an increase.

Mr. THORNE

Not being a financier, may I ask the right hon. Gentleman what object he has in view?

Mr. CHAMBERLAIN

I can hardly give that in answer to a question.

Mr. THORNE

Does that mean that I had better find out myself what object the right hon. Gentleman has in view?

Mr. CHAMBERLAIN

I will tell the hon. Gentleman if he will see me afterwards.

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. BELLENGER

Would the right hon. Gentleman agree that this is a measure of deflation?

Mr. CHAMBERLAIN

No, Sir, I have explained that it is not.

Mr. SHINWELL

May we have an assurance that this process will not have an adverse effect upon trade?

Mr. CHAMBERLAIN

I think I can give a definite assurance.

Mr. LEES-SMITH

Is this limited in length of time by the Gold Standard Act?

Mr. CHAMBERLAIN

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.