HC Deb 17 September 1931 vol 256 cc1038-9W
Mr. G. OLIVER

asked the Chancellor of the Exchequer in what way, if any, the Exchequer will recoup itself from the Bank of England in respect of the foreign credit taken up by the British Government and made available by it to the bank?

Mr. WISE

asked the Chancellor of the Exchequer whether the Bank of England or the Treasury is defraying the cost of the £50,000,000 credit obtained in July for use by the Bank of England in supporting the exchange; whether the recent credits of £80,000,000 are to be used by the Bank of England for similar purposes; and what are the reasons for the costs of this operation being borne by the taxpayer instead of by the Bank of England?

Mr. P. SNOWDEN

As I informed the hon. Member for Ilkeston (Mr. G. Oliver) on 15th September, the recent credits are not for the purpose of maintaining the credit of the Bank of England, but are for the purpose of maintaining the credit of the country. The foreign currency obtained is Bold to the Bank of England and the sterling sums credited to the British Government are used to reduce the amount of our floating debt at home. The previous credit of £50,000,000 was a Bank of England credit, and any profit is taken or any cost is borne by the Issue Department of the Bank of England. As by Statute all the net profits of the Issue Department belong to the State, it makes no practical difference whether that particular credit was a Bank of England credit or a Treasury credit.

Mr. WISE

asked the Chancellor of the Exchequer for what services the commission of 1¼ per cent., amounting in all to nearly £500,000, is being paid to certain New York bankers in connection, with the credits recently obtained by the Treasury for possible use by the Bank of England in supporting the exchange; whether, under the agreement, this amount would have to be paid even though no credits at all were in fact used; and what are the names of the firms to whom these sums are being paid?

Mr. SNOWDEN

The commission of ¼ per cent. represents the consideration for the option granted to His Majesty's Government to draw amounts up to $200,000,000 at any time during the period of one year. This commission is payable whether or not the credits are used. It would not be in the public interest to disclose the names of the participants.