CURRENCY BILL

Evening Post, Volume CXXVII, Issue 32, 8 February 1939, Page 14

CURRENCY BILL

EXPLANATION IN COMMONS

(British Official Wireless.) j ' EUGBY, February 7. In his explanation in the House of Commons of the Currency and Bank: Notes Bill, the Chancellor of the Exchequer (Sir John Simon) said that recent events 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 last March, when the combined gold in the Bank of England and the Exchange Equalisation Account reached a value of £835,000,000. But much of that growth represented the deposit in London of short-term funds owned by foreigners, and in the next six months to September last, the withdrawal of these deposits reduced the combined gold holding to £689,000,000. The loss of 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 also the return of confidence in the French financial situation which they welcomed. But there was also an element of speculation which made it advisable to carry out the operation announced in the Treasury minute made early in January. Regarding the provision for a weekly valuation of the assets of the Issue department of the Bank of England, Sir John Simon recalled that under the present arrangements any profit on the note issue accrued to the Exchequer revenue, while there was no provision for making good "any deficiency. It 1 seemed a most convenient solution of this difficulty that the Exchange Equali-1 sation Account should receive from the issue department any profit on the note issue, including appreciation, and should make good any depreciation. Sir John Simon also made a statement on the profit of 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 is 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.