ECONOMIC MYSTERY OF THE, WAR

Dominion, Volume 35, Issue 45, 17 November 1941, Page 8

ECONOMIC MYSTERY OF THE, WAR

British Note Circulation At All Time High

NO CAUSE FOR ALARM

(By Telegraph.—Press Assu.—Copyright.) (Received November 16, 6.30 p.m.)

LONDON, November 15.

One of the economic mysteries of the war is provided by the United Kingdom note circulation, which is now £704,000,000, the highest yet. This should be a matter for grave concern but official circles say there is no cause for alarm.

Leading financial commentators agree with this view because though the palter money issue is reaching unprecedented heights there is no evidence of a proportionate increase in spending. The expansion has amounted to nearly £40,000,000 since August 31. Among the explanations given for the Increase is the fact that the national wages distribution is leaching an increasing number of people who are not bank customers. Also the break-up of innumerable homes owing to the demands of national service has compelled people to maintain additional cash reserves. Black market dealers who carry out transactions . in small cash in order to avoid detection and tax dodgers have probably helped the demand for paper money. Well-informed quarters, emphasizing that note circulation must not be misinterpreted, say it certainly should not be associated with the use of the printing press as a means of finance. The Government is meeting in orderly fashion through the banking system its finance requirements in excess of current revenue.