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Gold And Dollar Reserves

Volume 531: debated on Thursday 28 October 1954

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30.

asked the Chancellor of the Exchequer whether he is aware that the recovery over the past three years of the gold and dollar reserves of the sterling area has been less rapid than that in the reserves of most other European countries; and what steps he proposes to correct this relatively unfavourable trend.

Yes, Sir. I am also aware that when the Government took office at the end of October, 1951, the reserves were running out at the rate of over 300 million dollars a month; and that from June, 1952, when the policies of the Government began to have effect on their inheritance, the rate of increase in the reserves compares favourably with that of other countries as a whole. I am further aware that in this latter period members of the sterling area have been repaying old debt to the International Monetary Fund and European Payments Union, and that on this score the U.K. alone has repaid over 200 million dollars recently.

Will the hon. Gentleman not agree, in view of the clear statement in the recent Report of the International Monetary Fund, that Europe as a whole has been doing better over the period in which this Government has been in office, the Government ought not to be either too complacent or too self-congratulatory?

Since June, 1952, the reserves of Continental Western Europe have risen by 18 per cent. and the reserves of the United Kingdom have risen by 70 per cent. I have heard legatees complain about their inheritance, but it comes singularly oddly from a testator.

Even though the hon. Gentleman has given a very ingenious answer, is he not aware that the dollar loans arising during the war were repaid throughout the period 1945 to 1951, and is it not a matter of some serious concern that according to the International Monetary Fund, which I imagine the hon. Gentleman does not dispute, the sterling area was the only large trading area which did not show a substantial rise in reserves between 1951 and 1954?

I have given the exact figures and I do not think their accuracy can be challenged. If the right hon. Gentleman is interested in financial assistance and loans and the repayment thereof, he will be interested to know that in the period during the Administration of his party the average net assistance received was over £300 million a year; under our Administration it is £38 million.

Is the hon. Gentleman aware that the whole idea of gold reserves is quite fantastic, having regard to the amount of gold that the Americans have buried at Fort Knox?