HC Deb 25 June 1968 vol 767 cc216-7
6. Mr. Sheldon

asked the Chancellor of the Exchequer if he will make a statement on the present operation of the two-tier gold system.

28. Mr. Bruce-Gardyne

asked the Chancellor of the Exchequer if, in view of current strains in the two-tier gold price system he will reconsider the Government's decision to oppose a change in the official price of 35 dollars per ounce for gold.

Mr. Roy Jenkins

The two-tier gold system has been working satisfactorily. I see no reason why it should not last a considerable time.

Mr. Sheldon

But since it is almost certain that there has been some leaking of gold between these two tiers, can my right hon. Friend make an estimate, however approximate, of how much it might be?

Mr. Jenkins

No. I would not necessarily accept my hon. Friend's assumption. I certainly could not make an estimate.

Mr. Bruce-Gardyne

Has the Chancellor noticed that Dr. Emminger has said that one of the effects of raising the price of gold will be to enable all countries to pursue more expansionary economic policies? Does the right hon. Gentleman agree with that forecast, and does he regard it as an advantage or disadvantage in raising the price of gold?

Mr. Jenkins

I have not noted this statement of Dr. Emminger, although in general I note statements from him and other central bankers with close attention and great interest. Raising the price of gold would be one way of increasing liquidity, but, in our view, it would be an irrational and lopsided and, possibly, disrupting way.

Mr. Barnett

While hoping that the two-tier system will give us adequate breathing space, may I ask my right hon. Friend whether he feels that there is an adequate amount of liquidity, bearing in mind the reducing deficit in the United States and the long time it will be before the S.D.R.s come into force? Does my right hon. Friend feel that some further action might be needed fairly soon to increase liquidity?

Mr. Jenkins

This problem requires constant attention. The progress which we have made and which we hope to continue to make with the S.D.R. scheme will be a substantial move in this direction, although I do not close my mind to other methods.

Mr. Gresham Cooke

In view of the pressures on the two-tier system, should we not be well advised to ask the Americans to raise the price of gold from 35 dollars?

Mr. Jenkins

No. The assumption three months ago would have been that the gap between the two prices would be substantially in excess of that which exists at present.