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Currency And Bank Notes Act, 1914

Volume 112: debated on Monday 17 February 1919

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asked the Chancellor of the Exchequer whether he proposes to ask Parliament to amend the Currency and Bank Notes Act, 1914, so as to better provide for the security and convertibility of the notes issued under the Act; and, if not, whether he proposes to take any other steps for securing such objects?

The question is engaging my attention, but I do not think any immediate action on the basis suggested by my hon. Friend is either possible or desirable. A valuable interim Report on the position has been made by the Reconstruction Committee on Currency and the Foreign Exchanges, of which Lord Cunliffe is chairman, and their recommendations will be carefully considered. The Committee, however, clearly recognise that until demobilisation has been completed it is not practicable to bring their recommendations into operation. The note issue being at present fully covered either by gold or short-date British Government obligations, no question of improving the security can arise. The convertibility, on the other hand, must of course ultimately depend on the strength of the gold reserve, which in its turn depends on our power to attract gold to this country by means of a favourable trade balance. This can only be brought about by the restoration of our export trade, to the importance of which I need hardly say the Government are fully alive.