150 MILLION LOAN

Grey River Argus, 28 April 1932, Page 3

150 MILLION LOAN

To Assist Sterling BRITISH EXCHANGE FUND. (British Official Wireless.) RUGBY, April 25. The main business in the Houpe of Commons to-day was consideration of a resolution regarding the exchange ■equalisation account, the object of which is to provide for the establishment of a fund not exceeding £150,000,- i 000 to strengthen the currency and cheque undue fluctuations in the exchange value of sterling. Owing to the indisposition of Air Neville Chamberlain, Major W. E. Elliott, Financial Secretary to the Treasury, introduced the resolution i The purpose of the fund, h e explained, was to provide greater control ovei , currency. The fund was to build up 1 ihe old dollar exchange account. That , gave the ma nucleus of £25,000,000. In addition, the Treasury sought power to borrow for the purpose of that fund a I sum not exceeding £150,000,000. It | would be used to purchase and hold I loreign securities of all kinds. Although | large it was not out of scale with the gigantic movements of liquid capital during the last few months. The liquid iesources of the world had been setting towards Loudon because of the confi deuce engendered by the speedy repayment of last year’s credit and because of the balancing of both last year’s and this year’s Budget. Sterling thereby had been strengthened, but .ecent fluctuation had proved an cmbairassment, not merely to traders in Britain, but to traders in sterling in many other countries also. The new account was a capital account and wou’d not be drawn upon for revenue purposes.

Explaining how the Government pro. p’osal connected the issue department of the Bank of Elngland and the new fund. Major Elliott said that the issue departnmet held cover against the note issue, which amounted in all to £400,000,000. The management of that department was under the Bank - of England, subject to notifying the Treasury of securities payable and the profits of the note issue were pa ; d to the Treasury. Their note issue had been under thp expert management of the Bank of England and so great was the confidence engendered throughout the world that country after country had joined what was called the sterling convoy and hdd followed the pilot light of those (’Xpert managers. Gold held by the issue department could only be valued at gold par. It was not proposed to revalue gold, for that must await the re-establishment of sterling. 'I he effect of the proposals was that the issue department would be absolutely solvent in every contingency and the note issue would be covered by real assets.