HC Deb 08 June 1937 vol 324 cc1579-82
47 Mr. Boothby

asked the Chancellor of the Exchequer (1) whether the question of monetary policy in relation to gold is being considered by the Imperial Conference; whether the possibility of bringing the United States of America and the Union of Soviet Socialist Republics into consultation regarding this question has also been considered; and whether, in order to bring about a revival of confidence and trade, he will make a statement of policy at the earliest possible moment;

(2) whether the recent offerings of gold in the London market have been due to increased production and sales on the part of the Union of Soviet Socialist Republics or to dishoarding on the part of private holders who are anxious about the widening of the discount in relation to the American shipping parity; and whether, with a view to restoring confidence, he can give the House an assurance that the Treasury will continue to co-operate with the authorities in Washington in the purchase of gold at a price corresponding approximately to the American shipping parity;

(3) whether he is satisfied with the working of the Tripartite Currency Agreement; whether any modification or extension of the agreement is at present contemplated; and whether, in view of the fact that the recovery of the last four years has been accompanied by increasing stability of the gold price, he can give the House an assurance that His Majesty's Government will continue to do everything that lies in their power to prevent a fall in the currency value of gold and, so far as possible, to avoid fluctuations in the future?

51. Mr. Price

asked the Chancellor of the Exchequer whether, in view of the danger to price stability of large amounts of gold now being offered on the market by gold-producing countries and gold hoarders, he will consider concerted action with the Dominions, the United States, and France with a view to stabilising the price of gold as far as possible?

Sir J. Simon

I am glad of the opportunity to make a statement with a view to removing some of the misconceptions which have been prevalent. British monetary policy remains as laid down in my predecessor's statement to the World Economic Conference of 1933, the declaration by the Delegates of the British Commonwealth to the same Conference and in the Tripartite Declarations of September last. No change in this policy is contemplated or has come before the Imperial Conference. This policy does not involve an obligation on us to buy gold at a fixed price, but it does involve the purchase or sale of gold for the purpose of checking undue fluctuations in exchange rates. We have never hesitated, and will not hesitate, to buy or sell gold for this purpose. As was stated yesterday by my hon. Friend the Financial Secretary, the arrangements made under the Tripartite Declaration which require close contact between the respective Treasuries have been working to the full satisfaction of the Governments concerned; no modification or extension of these arrangements is at present under consideration. The points of detail in the questions under reply are constantly under review. I am informed that the bulk of the recent offerings of gold in the London market have been due to dishoarding.

Mr. Boothby

May I ask my right hon. Friend, first, whether the fact that the recent purchases of gold by the Exchange Equalisation Fund were at a considerable discount from the American shipping parity does not primâ facie indicate that there has not hitherto been that wholehearted and effective co-operation between the authorities here and in Washington that we could have wished, and will he give an assurance that in future there will be full and effective co-operation between our authorities and the authorities in Washington for the purchase of surplus gold; and whether, pending a final international solution of the problem, the Government will do everything in their power to maintain the sterling value of gold and maintain commodity prices in the British Empire?

Sir J. Simon

As regards the second part of the supplementary question, namely, whether the Government will do all they can to maintain market prices, the answer to that follows, I think, quite clearly from the reply which I have already given. As regards the hon. Gentleman's more technical point about the widening discount on the London market, that is, as he knows, a highly technical question. I do not consider that the circumstances indicate any want of co-operation, and I am inclined to think, and I am advised, that this highly technical question has had attributed to it an importance which it does not merit.

Mr. Dalton

Have I correctly understood the Chancellor as saying that there is no intention of returning to the Gold Standard and establishing a fixed relationship between sterling and gold?

Sir J. Simon

My statement was that we intended to continue in the course which we have followed, and that there is no ground for supposing that we were contemplating a change. As to questions in the ultimate future, they will have to be considered when they arise.

Colonel Wedgwood

Do we understand from the reply that we are to go on indefinitely buying gold which we do not want in order to keep up the price of that which we have got?

Sir J. Simon

I should like to make it plain to the right hon. and gallant Gentleman and to the House, if one is asked to make a new declaration of policy, that I see no occasion for a new declaration of policy, and, indeed, there is nothing new to declare.

Mr. Davidson

If the right hon. Gentleman thinks that there should be a departure from the policy of the Government on this question, does he propose first to ascertain the feeling of the City?

Mr. Macquisten

In view of the increased supply of gold, is it not time that we restored the use of gold coinage? Have not the people infinitely more respect for coins than for scraps of paper?

53. Mr. Liddall

asked the Chancellor of the Exchequer whether, in his endeavour to prevent international trade being unsettled by the growing amount of fresh raw gold, he will give early warning of any contemplated change of policy by parties to the Tripartite Agreement and thereby minimise the risk of repetition of the losses suffered by British manufacturers and exporters when the French franc was recently devalued suddenly and contrary to earlier declarations?

Sir J. Simon

As indicated in my reply to the hon. Member for East Aberdeen (Mr. Boothby), no change of policy is under consideration.

Mr. Liddall

Will the right hon. Gentleman bear in mind that British commerce suffered great loss because the franc was devalued a few days after the French Government had stated that it would not be devalued?

Mr. Thorne

Who regulates the selling price of gold?