HC Deb 26 September 1939 vol 351 cc1204-5
49. Colonel Wedgwood

asked the Chancellor of the Exchequer whether he is aware that the stop on the American exchange at $4.03 now amounts to a 7½per cent, tax on all exports to, and a bonus of the same on all imports from America; and whether, in view of the importance of developing our export trade he will now remove this stop on the exchange.

Sir J. Simon

The rate of exchange which governs commercial transactions and other authorised business between this country and the United States is the official rate published daily in the Press. The right hon. Gentleman's question presumably refers to the fact that a limited number of transactions have taken place in other countries at a different rate. I do not think that the difference between the two rates, which has varied considerably but is now a matter of 1 per cent., can properly be regarded as a tax on exports and a bonus on imports. The right hon. Gentleman has no doubt appreciated the fact that a further depreciation of the £ sterling would inevitably tend to involve an increase in the cost of imported materials from foreign countries and a consequent increase in the cost of living.

Colonel Wedgwood

May I ask the right hon. Gentleman two questions (1) whether he can give the House now the rate of exchange that obtains in the free market between the dollar and the pound; and (2) whether he appreciates that this fixing of the exchange involves a very high rate of export duty on all exports from this country just at a time when we want to encourage exports to the utmost of our ability?

Sir J. Simon

I think the right hon. Gentleman in his supplementary question is really putting the argument contained in his original question.

Colonel Wedgwood

Is it true?

Sir J. Simon

I have pointed out that the difference as far as I know at present is one per cent.

Mr. Bellenger

In connection with the fixing of the dollar sterling exchange can the right hon. Gentleman say whether the tripartite agreement is still operating?

Sir J. Simon

I think I am right in saying that no party to the agreement has suggested that it is not operating.