BRITISH FINANCE.

Auckland Star, Volume LXX, Issue 32, 8 February 1939, Page 8

BRITISH FINANCE.

GOLD REVALUATION. NO TRACE OF INFLATION. MONETARY POLICY UNALTERED. LONDON, February 6. Before giving the third reading, with a debate, .to the Export Credit Guaran-1 tees Bill, the House of Commons heard an explanation by the Chancellor of the Exchequer, Sir John Simon, of the Currency and Bank Notes Bill. Sir John Simon emphasised eeveral time; that there was no question of any change in the monetary, policy, and the bill made i no sort of difference to the fundamentals !of British currency. It made certain changes in the machinery and it provided for the more accurate presentation ol facts by - showing the true value of the gold cover for the note wmie. The proposals contained no trace of inflation <*■ deflation. Recent events, Sir John Simon said, had made it opportune to introduce and carry this legislation. There had been a continuous increase over a long period in the gold stock of the country up to laet March, when the combined go-Id in the Bank of England and the exchange equalisation account reached the value of I £835,000,000. But much of that, growth J represented the deposit in London of I short-term funds owned by foreignere, and in the next eix months, to September last, the withdrawal of these deposits reduced the combined gold holding to £689,000,000. The lose of the gold for the most part need not be regretted, for it meant the removal of a volatile element which was a nuisance rather than a source of strength, and aleo a return of confidence in the French financial situation, which they welcomed. But there wag also an element of speculation which made it advisable to carry out the operation announced in the Treasury minute made early in Jauuary. — Regarding the provision for the weekly valuation of the assets of the Issue Department of the Bank of England, Sir John Simon recalled that under the present arrangements any" profits on the note issue accrued to the Exchequer revenue, while there was no provision for making good any deficiency. It seemed the most convenient solution of this difficulty that the exchange equalisation account should receive from the Issue Department any profit on the. note issue, including appreciation, and should make good any depreciation. The Chancellor also made a statement on the .profit, about £95,000,000, resulting from the revaluation of the gold reserves of the Bank of England. "This unrealised capital appreciation could not appropriately be used as revenue, and I am not so proposing to use it," he said. "My proposal ie that this sum shall be passed to reserve. It will increase the assets of the exchange equalisation account." The bill, which was favourably received by the Opposition, was given its second reading. After passing the Export Guarantee Bill the House rose.