§ 38. Mr. Croninasked the Chancellor of the Exchequer if he will reconsider the decision to claim a waiver of the annual instalment of interest on the loan from the Government of the United States of America, payable on 31st December, 1956, in view of the effect that its announcement has had on foreign confidence in sterling and also the necessity for its debate in Congress.
§ Mr. Walker-SmithNo, Sir. I see no reason why an application for a waiver of the annual interest on the United States loans of December, 1945, made in accordance with the intention of the Loan Agreement, should have on adverse effect on foreign confidence in sterling. Indeed, I am sure that the undertaking by the United States Administration to put the matter to Congress with a favourable recommendation has had a helpful effect.
§ Mr. CroninIs the hon. and learned Gentleman aware that the forward premiums have moved steadily against sterling ever since his right hon. Friend made that announcement?
§ Mr. Walker-SmithThe official rate for sterling has held pretty steady in the last week since the statement was made.
§ Mr. PeytonWill my hon. and learned Friend agree that one of the chief reasons at the moment for lack of confidence abroad in sterling is the fear, which is of course, unfounded, that we might have the party opposite in power?
§ Mr. JayCan the hon. and learned Gentleman say what the legal position would be if the United States Congress do not accept this request before 31st December? Should we be formally in default or not?
§ Mr. Walker-SmithNo, Sir. My right hon. Friend made it clear that we are proposing to pay the amount of interest due, on the assumption that there is no 219 waiver, into a special account to stress the fact that in no circumstances will this country default on its obligations.
§ Mr. Walker-SmithMy right hon. Friend made it clear that the question of the machinery for the payment into a special account would be gone into in consultation with the United States Government.