§ 17. Mr. Ridley
asked the Chancellor of the Exchequer what was the reason for the increase in the money supply at an annual rate of 9.6 per cent. during the second period of 1968.
§ Mr. Roy Jenkins
A great many factors can be attributed as leading to a change in money supply. In any one quarter some of these factors may reflect purely seasonal or temporary influences, as indeed was the case in the second quarter. In the September quarter, after seasonal adjustment, the increase was no more than ½per cent. Taking the second and third quarters of 1968 together, the money supply was rising at an annual rate of about 6 per cent., after allowing for seasonal adjustment.
§ Mr. Ridley
Would not the Chancellor agree that the injection of large sums of public money by buying up gilt-edge stocks very often occurs just at the wrong time, as last week, and that the continually increasing money supply is counter-cyclical? Will he look into the serious increases in demand which have resulted from this sort of policy and which were responsible for last week's measures?
§ Mr. Jenkins
I will consider carefully what the hon. Gentleman has to say on this point, which has some force. The employment of money supply over the past two quarters has been no more than in line with the increase in gross national product.
§ Mr. Iain Macleod
Will the right hon. Gentleman tell us, for information, what definition he is taking of money supply for the purpose of this Answer? Is it cash in circulation plus bank deposits?
§ Mr. Jenkins
Definitions are always dangerous things to give without the exact words in front of one, but I think that it is cash and notes plus banking deposits, either in the United Kingdom of foreign banks, held by United Kingdom residents.