HC Deb 12 November 1940 vol 365 c1581
54. Mr. Craven-Ellis

asked the Chancellor of the Exchequer from what source the banks are obtaining the means to make advances to the Treasury known as bank deposits; and is it intended to liquidate these borrowings from the sale of National Savings Certificates or bonds?

Sir K. Wood

The banks are able to lend to the Government by way of Treasury deposit receipts as a result of the increased liquid funds in their hands arising from the increase in their customers' deposits. As regards the second part of the Question, the proceeds of sales of Government securities to the public are not earmarked to particular purposes but, along with the proceeds of taxation, are available to meet all Government expenditure, including the repayment of short-term debt.

Mr. Craven-Ellis

Have not these credits been brought into existence by the action of the banks, and is it not advisable at this time that the Government should be responsible for the creation of credit for war purposes?

Mr. De la Bère

Are these credits not costless credits? They cost the banks nothing.

Sir K. Wood

I have already answered various questions which my hon. Friend has put.

Mr. Shinwell

Does not the right hon. Gentleman realise that we must adopt a new conception of finance if we are to win the war?

Sir K. Wood

I have no doubt that my hon. Friend would agree to adopt the suggestions that have been made by his hon. Friends.