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Treasury Bills

Volume 345: debated on Thursday 30 March 1939

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68 and 69.

asked the Chancellor of the Exchequer (1) whether, in view of the fact that the supply of Treasury bills normally depends on the balance between Government income and expenditure and on the balance between the new issues and maturities of other Government obligations, and that a proportion of these Treasury bills are held by the Issue Department of the Bank of England and by Government Departments, will he arrange for a certain quantity of these to be released in exchange for longer-dated securities in order to satisfy the needs of the market, and thereby, of British industry;

(2) whether, in view of the fact that the January returns of the London clearing banks show a reduction of £105,000,000 in liquid assets, that is cash, money at call, and bills discounted, as compared with the same month of 1937, and that these banks cannot extend credit without a proportionate increase in their liquid assets which depend largely on the supply of Treasury bills in the money market, and of the recent shrinkage in the volume of these and the prospect of a further shrinkage, he will take steps to increase the supply of Treasury bills available to the market?

I cannot undertake to deal with all the points raised by my hon. Friend in these questions within the limits of a Parliamentary answer. The amount of Treasury bills in circulation is of course very great. Any comparative shortness of supply in recent months is due partly to seasonal causes and partly to the substantial reduction in our gold holding last year. In view of the large borrowing programme ahead of us in the next 12 months, I see no immediate prospect of further shrinkage, but on the contrary should expect the total to be increased.