GOLD STANDARD BILL

Dominion, Volume 18, Issue 184, 6 May 1925, Page 9

GOLD STANDARD BILL

DEBATED IN HOUSE OF COMMONS LABOUR PARTY’S OPPOSITION TO MEASURE MR. CHURCHILL ON THE WEALTH OF THE BRITISH EMPIRE The Gold Standard Bill has been read a second time in the House of Commons. A Labour amendment refusing assent to the Bill was moved by Mr. Snowden, who said he was not opposed to a return to the gold standard, but pi otested against the Government’s precipitancy.. The Chancellor of the Exchequer denied that the decision was come to precipitately, \ and declared that the Government had . taken every precaution which forethought, patience and long preparation could suggest. He scouted the suggestion that Britain might be unable to hold her own against strong trans-Atlantic influences.

Br Telegraph—Press Association- Copyright.

(Rcc. May 5, 7.45 p.m.) London, May 4. In the House of Commons, Lieuten-ant-Commander W. H. Guinness, Financial .Secretary to the Treasury, in moving the second reading of the Gold Standard Bill, pointed out in connection with the proposal that the Bank of England was bound to sell gold in amounts not less than 400 ounces troy weight and fine gold in bar; that each bar would be worth about £l7OO, and the size of the bar alone would prevent this proposal being used to bring back gold into general use and limit the possible drawing of gold for export. The clause of the bill empowering the Treasury to borrow lor exchange operations di<l not increase the total amount of money which might be borrowed. Any sum raised under these powers must come out of the usual provisions for borrowing up to the total of the supply services for the year voted yearly in the Appropriation Act. CREDITS SECURED IN UNITED STATES. Two credits have already been conditionally negotiated under this head, the Minister said. One with the Federal Reserve Bank of New York, who gave the Bank of England a revolving credit of 200,000,000 dollars for two years from May 10; the second with the syndicate headed by Mr. J. P. Morgan to His Majesty’s Government direct for a revolving credit of 100,000,000 dollars, also for two years, the interest in each case being payable when the 7 credit is drawn upon at 1 per cent, above the Federal Reserve discount rate, with a minimum of 4 per centum and a maximum of 6 per centum; or, if the Federal Reserve rate exceeded 0 per cent., at the Federal discount rate. “If we do not use the credits no interest will be payable,” Colonel Guinness explained. “There will merely be a very small commission on the right of call on the money.” He hoped in view of its urgency that the House would pass the Bill without delay. He did not fear a rise in the bank rates or higher prices. The Government believed the country had reached the stage of purchasing power being at parity, and that in the long run the producer would have more gain from the security of the gold standard than the banking interest. LABOUR AMENDMENT. Mr. P. Snowden moved a Labour amendment refusing assent to the Bill, which by providing for a return to the gold standard with undue precipitancy might aggravate the existing grave conditions of unemployment and trade depression. Mr. Snowden emphasised that he was not opposed to a return tn the gold standard, but protested against the Government’s undue precipitancy. The. Labour Party by the amendment dissociated itself from the disastrous consequences which might follow Mr. Snowden declined to ?'■. cept Mr. Churchill’s statement of the existence of practical parity between prices in Britain and the United States He thought the difference amounted to S per cent. The Government should have waited a little longer in the hope of parity gold level prices being reachable by the normal operation of trade. DECISION NOT PRECIPITATE. Air. Churchill, the Chancellor of the Exchequer, denied that the decision to return to the gold standard should be described as one of precipitancy. Ou the contrary they had acted on the finest expert financial advice in the world The'Government had taken every precaution which forethought, patience, and long preparation could suggest. He mentioned the disadvantage of giving long notice of the return to gold, and pointed out that if we waited for the Act to expire at the end of the. year everyone could under the existing Jaw have withdrawn and hoarded gold

against the date of free export, namely. January, when the normal demand for bullion would be high. He insisted that no country in the world was I«’ss able to afford to diverge from the economic facts than Britain. As regards the allegation that the decision would shackle, them to America, the Chancellor said it would oertainly shackle them to reality, for good or ill. He personally believed it was the only basis offering permanent security. NECESSITY FOR IMPERIAL UNITY. Referring to the necessity for Imperial unitv regarding the gold basis, Mr. Churchill said bad we shown ourselves incapable _of taking any decision, the self-governing Dominions might have adopted gold and thev would have traded together, leaving the Mother Country to pursue a different policy. They would have traded with the United States on a gold basis, but with sterling left out. That would have been a disastrous state of affairs from our viewpoint. He knew nothing which would justify an increase in the bank rate in. the immediate future. Indeed, the situation was stable, and everything tended to show that the tiausition to gold hitherto had been effected with success. FINANCIAL CENTRE OF THE WORLD. Air. Churchill declared that Britain was not only the financial centre of the world, she was the centre of a wide Ifmpne. If Britain detached herself from their movements, she ran a great risk of becoming isolated and loosening the bond, whereas the fortification tbeieot wa» indispensable to her wellbeing. He scouted the suggestion that we might be unable to hold our own against strong transAtlantic influences, and pointed out that Britain still controlled a vast amount ol the world’s business. She had magnificent credits, also £3,000,000,000 M foreign investments. She held £153,000,000 in gold, and the Dominions held £107,000,000. The Empire supplied 7 per cent, of the world’s gold. He cited instances ol pre-war discrepancies between British, and American price levels, and their normal timely readjustment, in order to disprove tliat absolute equation .of prices was essential to the restoration of the gold standard. He concluded that the Dominions united were an enormous power. They were great, intricate and comprehensive enough to exist side by side in amicable association with an even larger economic financial power without their own essential independence being prejudically affected. < The Bill was read a second time without division.—Reuter. APPROVAL OF DOMINIONS London, Alay 4. In reply to a question in the House of Commons as to whether communications had been received from the Dominion authorities in regard to the restoration of tlie gold standard, Lieut.Colonel W. E. Guinness, Financial Secretary to" the Treasury, recalled Air. Churchill’s Budget, speech concerning the collaboration of the Dominions. He added that he understood from Press reports that the return to the gold standard was widely approved in the Dominions. —Reuter. STERLING AND DOLLAR EXCHANGE (Rcc Alay 5, 5.5 p.m.) New York, Alay 4. Sterling is quoted in the exchange market at. 4 dollars 81| cents.—Aus.N.Z. Cable Assn.