§ 54. Sir Patrick Hannonasked the Chancellor of the Exchequer the present day value of the 3,150,000,000 dollars remain- 1766 ing of the dollar credit in terms of U.S. prices prevailing in December, 1945, and at the present time.
§ Mr. DaltonAs the answer contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.
§ Sir P. HannonWill the Chancellor tell the House how long he thinks this loan will sustain itself in carrying on our transactions with the United States? When will it peter out?
§ Mr. DaltonNot for quite a long time. The answer which I am proposing to circulate indicates that in answer to the hon. Gentleman's Question. We have to decide which American index of prices we select, and my answer gives particulars of various alternative prices. I conclude by saying that it would be misleading to assume that the present prices give any guide to average prices over the whole term of the credit. It must not be taken for granted that American prices will hold their present level over the next three or four years, or even that the average will be much higher than December, 1945
§ Following is the answer:
§ This Question can only be answered by reference to index numbers, and it is a matter of opinion which index is the most suitable to use. Taking December, 1945, as 100, American retail prices had, up till October, 1946, increased by 14 per cent., while the American export price index had increased by 13 per cent. to September, 1946.
§ On the other hand, the United States Bureau, of Labour Statistics Wholesale Price Index has moved as follows:
| December, 1945 | … | 100 |
| March, 1946 | … | 102 |
| June, 1946 | … | 105 |
| September, 1946 | … | 116 |
| End-November, 1946 | … | 130 |
§ On this basis the present day value of the 3,150 million dollars remaining of the dollar credit would be approximately 23 per cent. less than at December, 1945, i.e., it would be approximately 2,430 million dollars But it would be misleading to assume that the present prices give any guide to average prices over the whole term of the credit. It must not be taken for granted that American prices will hold their present level over the next three or four years, or even that the average will be much higher than December, 1945.
1767§ 55. Colonel Crosthwaite-Eyreasked the Chancellor of the Exchequer whether it is the intention of His Majesty's Government to differentiate in accounting between dollar receipts received from current transactions and from the U.S. loan, respectively, in accordance with the provision of Article 6 of the Loan Agreement.
§ Mr. DaltonNo, Sir. This question would only arise if our drawings from the American credit exceeded current requirements.
§ Colonel Crosthwaite-EyreDoes that answer mean that, under Article 6, His Majesty's Government are not bound to finance current transactions from current dollar credits, and that they can use the American loan for that purpose?
§ Mr. DaltonNo, Sir, Article 6 is part of the agreement. The question which the hon. and gallant Gentleman put to me would only arise if the drawings that we are currently making from the credit exceeded our own requirements, and that is not so at present. Therefore, there is nothing to subdivide between the two heads.