§ Sir N. Grattan-Doyleasked the Chancellor of the Exchequer whether he will have a test made as to whether the rise by speculation in the staple commodity index number since May, 1936, owing to the Government's cheap money policy is, in May, 1937, still appreciably increasing employment without now causing a reduction in the purchasing power of the pound and an appreciable increase in taxation to meet the cost of rearmament?
§ Mr. ChamberlainI have under constant observation the effects of the cheap money policy both on prices and on employment. Since that policy was initiated in the middle of 1932 the cost of living has risen by 6 per cent. and the numbers unemployed have fallen from 2,900,000 to 1,450,000. The cost of living index and the wholesale price index are both lower 1263W than in 1929. I cannot accept my hon. Friend's assumption that cheap money causes speculation. In so far as the rise in commodity prices has been assisted by speculation, I should regard the process as incidental to general economic activity and prosperity. The charges for the temporary borrowing of money are, I am informed, a negligible factor in the speculator's calculations.