Major BARNESasked the Chancellor of the Exchequer whether the Report of the Committee on Currency and Exchange of the Brussels International Financial Conference contains a Clause to the effect that banks should be freed from political pressure; whether His Majesty's Government 1974W subscribes to that Clause; whether the existence of a huge floating debt constitutes a form of political pressure; and, if so, what measures the Government has in view for carrying into effect the recommendation made in the Clause in question?
Mr. CHAMBERLAINThe recommendation referred to was as follows
Banks, and especially Banks of Issue, should be freed from political pressure, and should be conducted solely on the lines of prudent finance.His Majesty's Government are in complete agreement with this recommendation. There is no reason why the existence of a large floating debt should involve the exercise of political pressure on a bank of issue, so long as a Government meets its maturing obligations without creating additional inflation, as has been done in this country since the beginning of 1920, during which period there has been an appreciable reduction in legal tender circulation. In reply to the last part of the question, I would refer the hon. and gallant Member to the next recommendation of the same Committee, namely, that
the creation of additional credit should cease, and Governments and municipalities-should not only not increase their floating debts, but should begin to repay or fund them by degrees.This is the policy of His Majesty's Government.