Cabinet Committee
46.
asked the Prime Minister whether he is now in a position to state the name of the Member of the War Cabinet who is now to preside over the committee dealing with agriculture?
My right hon. Friend the Lord Privy Seal will preside over the committee in question.
Does my right hon. Friend realise that up to now we have not had a clearly denned policy in regard to food production; and will it be the task of the Lord Privy Seal to visualise something rather more than the indiscriminate ploughing-up programme, so that we may have the maximum output?
I cannot accept my hon. Friend's view.
Grassland Ploughing
97.
asked the Minister of Agriculture what acreage of grassland was scheduled to be ploughed up in the counties of Northumberland and Durham, respectively, under the £2 an acre scheme; and how many acres have been ploughed to date?
I would refer the hon. Member to a reply I gave to a similar Question by the hon. Member for Cheltenham (Mr. Lipson) on 4th April. I do not think that it would be in the interests of the food production campaign to publish the information asked for at this stage, but I can say that good progress is being made in both counties.
Has the quota been approximately reached?
Very good progress is being made.
Exchange Control
49.
asked the Chancellor of the Exchequer whether he is aware that the fall of sterling is creating a very unfavourable impression in neutral countries; and what steps does he propose to take to reinforce exchange restrictions and to block foreign balances?
50 and 51.
asked the Chancellor of the Exchequer (1) whether he is aware that there is a free market on the London Stock Exchange for the sale by aliens of sterling securities, and that during recent weeks large quantities of such securities have been sold there by American owners who have converted the sterling payments received into dollars on the unofficial exchange in New York; thereby causing a heavy fall in the sterling exchange; and what steps he is taking to prevent such action;
(2)whether he is aware that portions of the sterling payments made by the Treasury to British owners of dollar securities have been utilised by the recipients in purchasing large quantities of international sterling securities, such as British-American tobacco shares, gold mining and oil shares from American owners who have converted the sterling payments into dollars; and what steps is he taking to prevent the purpose of requisitioning dollar securities being thereby nullified?52.
asked the Chancellor of the Exchequer whether he will now place an absolute embargo upon the withdrawal of funds from this country by aliens living abroad?
55.
asked the Chancellor of the Exchequer whether he will take steps to bring about a recovery in the value of free sterling in America, in view of the fact that the free franc and the Canadian dollar have fallen in sympathy with free sterling?
63.
asked the Chancellor of the Exchequer whether he has any statement to make in regard to the present low position of sterling on the New York exchange, and as to what effect this will have on Anglo-American trade relations?
64.
asked the Chancellor of the Exchequer whether he has any estimate of the total amounts held by foreign residents in the form of sterling balances; and whether he pro poses to take any steps to block the disposal of these in order that he may prevent further depreciation of sterling in the unofficial market?
68 and 69.
asked the Chancellor of the Exchequer (1) whether he has any estimates as to the proportion that the turnover in the unofficial market in sterling during March bore to transactions in the official market;
(2) in view of the fact that recent depreciation of the free sterling rate tends to cause a rise in the price level and of the cost of living in this country, what steps he intends to take to reverse the fall of sterling by tightening the exchange restrictions?The matters referred to in these Questions are technical and it is difficult to compress an answer within ordinary limits. I have prepared a considered statement, and, with the leave of hon. Members, I will circulate it in the Official Report.
Is that method of answering all these questions a way of avoiding inconvenient Supplementary Questions?
No, it has nothing to do with that at all.
Is my right hon. Friend aware that there is a growing feeling in the country that the Treasury are not using their full powers in regard to foreign exchange?
May I invite my hon. Friend to consider the statement which I am circulating?
Is the right hon. Gentleman aware that the feeling in the country is that he is not taking enough from the rich?
Is it not the case that all the monetary reformers up to now have been in favour of the depression of the pound sterling because they wanted inflation?
Following is the statement:
I am glad to have this opportunity of making a statement which will, I hope, serve to correct some of the misapprehensions current, both at home and abroad, on this subject.
The recent fall in the unofficial rate for sterling on foreign markets was in no way a sign of financial weakness or difficulties on the part of this country. It was the natural result of the recent regulation providing that exports of tin, rubber and certain other commodities must be paid for in foreign currencies or in sterling obtained from authorised dealers in exchange for foreign currencies. The object of the regulation was to ensure that these exports contribute directly to our foreign exchange resources. The fall in the quotation was the incidental result of tightening up the Exchange Control.
Sterling is the basic currency of vast areas in many parts of the world and the problem of controlling it is thereby rendered both more important and more difficult. The House will appreciate that this fall is limited to a very small proportion of sterling, namely, that held by such foreigners as choose to dispose of it to another foreigner at the rate current on foreign markets. Our policy is to maintain the purchasing power of sterling for the national needs and in pursuit of that policy we have arranged that the vast bulk of transactions between sterling and other currencies shall be conducted in London through our control and at our official rates. That may have the incidental result that any outside market for sterling becomes a very thin market and a thin market is always erratic and fluctuating. If our general policy is sound, as I am convinced that it is, we must not be deflected from it by secondary considerations. By far the greater part of sterling transactions are carried through at the official rate. I am satisfied that the proportion of transactions carried through outside the official market is a very small one.
The proportion becomes very much smaller still if we allow for the fact that a very great proportion of our purchases are made from the sterling and franc using areas and do not involve the intervention of foreign currencies at all. Any suggestion that the rates quoted in the free market are important in the cost of living in this country cannot be sustained.
I think that it would be a wrong policy altogether to intervene in support of sterling in the free market.
As regards the question whether we should block sterling assets belonging to foreigners, a great deal of foreign money has been invested in this country in securities, or entrusted to our banking system because sterling is, and remains, a currency in international use. At the outbreak of war, we assumed complete control over the international uses to which the money belonging to our own people might be put, but we left the foreigner—by which I mean people living outside the sterling area—free to dispose of his assets, here or elsewhere. That decision was in accord with the principles and traditions on which, in this market, foreigners have always felt able to rely. We were, of course, under no obligation to convert such foreign holdings into gold or into foreign currencies at the expense of our reserves: every foreign holder was aware that he held sterling and nothing else. But we could have prevented him from taking his money or his securities home. To do this, we should have had to make it impossible for him to deliver to another foreign buyer. In other words, we should have had to put an embargo upon the use of his money or his securities. On a balanced review of all the considerations we chose not to do so, exposing ourselves no doubt thereby to the risk that some foreign holders would use their freedom in order to dispose of their sterling assets. That has not happened to any substantial extent and it would not be to our advantage to take the action suggested in the direction of blocking these assets.
Sterling, I maintain, is good to hold; and I believe that this opinion is spreading in neutral countries. The best way of ensuring that it will continue to spread is to maintain, for ourselves and others, so far as we can, the essential liberties which, in the financial and every other field, are traditional in this country. I have considered this matter very carefully and am satisfied that our policy is in the best interests of this country—the test by which, of course, all our policy has to be settled.
Treasury Bills (Discount Rates)
56.
asked the Chancellor of the Exchequer whether he is aware that the rate at which Treasury bills are discounted is virtually fixed by a powerful market syndicate; that the rate to-day at over 20s. per cent. is nearly double the average rate for the first 11 weeks of 1939, although the Bank Rate is the same; and what steps he proposes to take to see that Treasury bills are allotted through a system of genuine tendering?
I am satisfied that no syndicate does, or could, virtually fix the rate at which His Majesty's Government can borrow on Treasury bills; this is inevitably governed by a number of factors on which the rate must depend. I see no reason to alter the conditions under which tenders for Treasury bills are lodged.
Is the Chancellor not aware that there is a group of 16 firms, virtually a syndicate, who settle the price at which Treasury bills are discounted before even the five joint stock banks come in?
Although the hon. Member speaks very confidently I think he will find that he is wrong. If he will examine his Question he will see that it contains three different dates. On each of those dates the price of Treasury bills was different, and yet on all those dates the Bank Rate was the same.
Does the Chancellor realise that he has not even attempted to answer my Supplementary Question? If I furnish him with the names of the persons, will he give an assurance that they have nothing to do with the fixing of the Treasury discount rate?
Is it not a fact that the interest rate on Treasury bills is 200 per cent. less than it was during the last war?
Is it not a fact that the last war was a racket?
Bank Rate
57.
asked the Chancellor of the Exchequer whether he is aware that during the first eleven weeks of 1939 the Treasury bill discount rate averaged 11s. per cent., and that the average rate for 1938 was 12s. 6d. per cent., as compared with over 20s. per cent. to-day; and whether he will take steps to reduce the Bank Rate so that the discount rate may be restored to the lower figure?
Although my information gives slightly different figures from those in the first part of the Question, their relations are broadly the same. As regards the second part of the Question, I would refer to the reply given to a Question by the hon. Member for Kennington (Mr. Wilmot) on 27th February last. I see that it was to this Question that I was referring in reply to the hon. Member's Supplementary Question just now.
Does the Chancellor of the Exchequer wish us to understand that the Treasury do not at the present time instruct the Bank as to the alteration of the Bank Rate?
If the hon. Member will refer to the answer which I gave he will find that the considerations which he asks about are dealt with there.
Taxation Policy (Press Conference)
58.
asked the Chancellor of the Exchequer whether it was with his authority that Lord Stamp, economic adviser to the Government, addressed a Press conference at the Ministry of Information on Monday, 1st April, at which he made certain statements regarding future taxation policy?
I was aware that the Ministry of Information proposed to arrange a Press conference on economic issues, excluding budgetary and financial matters, and to a conference which observed these limitations I took no objection. I am informed that it was explained at the outset that the talk would be confined to economic issues; for this reason, and because it is well known that any statements about future taxation policy made in advance of the Budget are without authority, there would be no justification for interpreting what was said on this occasion as in any way indicative of such policy.
Does the Chancellor think it is good public policy that a person occupying so high a position, and concerned with financial matters, should make statements on financial subjects without consulting the Chancellor, which statements subsequently had to be repudiated?
If the hon. Member will study my original answer he will see that I have explained what were the limits of this conference.
Is it not the case that Lord Stamp's statement was to the effect that if £12 a week men did not accept additional taxation they would have to submit to compulsory savings?
I have not the least idea.