TO STEADY STERLING

Grey River Argus, 6 May 1933, Page 5

TO STEADY STERLING

GREAT SUM VOTED Fear of Fluctuation INSURANCE AGAINST BAD" MONEY. NOT AIMED AGAINST r.".A. (British Official Wireless). (Received Alov .A at 7.30 p.m. i ’RUGBY, May IIn accordance with the intention he announced in his recent Budget statement, the Chancellor of the Exchequer, Mr Neville Chamberlain. to-day in the House of Commons moved a resolution for the increasing of the amount of the Exchange Equalisation Account from .£150,000.(1(10 to £350.000,(‘OO. He repeated, with great emphasis, that this increase had nothing whatever to do with the circumstance that the I’nited States had gone off the gold standard. In any case, the purpose for which this addition to the account was required was not one in which it crnld be used as had been alleged in some of the American journals, namelv. to force down the value of the pound relative I<, that of the dollar. The truth was that the purpose of the Equalisation Fund was not directed at all to any permanent alteration in the relative exchange value of the pound. It arose out of the experience of the working of this account since last June. He mentioned a new phenomenon, which he described as “refugee capital.’’ This was capital which came, to Britain because its owners were alarmed at the conditions in their own country, and thought it would be safer in London than in anv other place. The Government could not count on its remaining here, and its withdrawal might have a disturbing effect on the exchanges, unless they had a special machinery to meet such an eventuality . The Exchange Equalisation Fund was required for the smoothing out of exchange operations, because there were three stages of the phenomenon—such as seasonal fluctuations, the operations of speculators to increase these seasonal fluctuations. and a special flight of capital from other countries for the sake of finding safety in London for a lime. He claimed that the Fund had benefited tra-de by preserving exchange stability. It was impossible to be certain that they had reached the end of unexpected movements that might happen in the disturbed conditions oi the. world, and which affected the exchange movements; but he believed that the addition of £200,000.000 to the fund would give them an adequate margin.

CRITICISM OF THE INCREASE. LONDON, April 5. In the House of Commons, referring Io the Exchange Fund, Sir JStafford Cripps, K.C. (Labour) said he presumed that it was proposed to increase the fund in order to counteract the floating money which had been going about the world since the currencies went off gold, and thereby injuring the national currencies. Mr Chamberlain, ho said, might have taxed this undesirable capital. He declared that, America having followed France in paying off gold bonds in paper currency, it was hopeless to think of returning to a system which, though primarily intended to pay the international debts by the trapshipment of metal, had now become a question of hoarding. The use of the additional two hundred millions would bring no inflation to industry. It might, have been more advantageously used for the benefit of people. Mr Arthur M. Samuel (Conservative) said that wo seemed <o bo going upon an unchartered sea. It was preposterous to vote this two hundred millions in order to help America to keep up her new currency. She might take an opposite course, and might establish also a Stabilisation Fund for the purpose of keeping down the dollar as part, of her policy of inflation. Mr Chamberlain: “I stated emphatically that there is no intention of using this fund to support the dollar.” Mr Samuel: “II was to be used to iron out the inequalities of the dollar! Nobody could control the exchanges. The only way to set commerce going was by the lowering of tariffs, with an undertaking by France and America to make I he gold standard work. Mr Chamberlain, in replying, admitted. that it was anomalous this was the only fund where any information about it was not given io the Public Accounts Committee. The Government was quite willing to do so if this information stopped there, and did not reach the whole world; but the principal object was to counteract the speculation,- and the publication of the state of the Equalisation Fund at. different times would only furnish the speculator with valuable information. The resolution was carried as cabled. FUND NOT LOSING. LONDON, May I. In the House of Commons, Mr N. Chamberlain (Chancellor of the Exchequer) in moving for the addition of £200,000,000 to the Exchange Equalisation Fund, said that the question of profit and loss did not arise till the fund would be finally wound up. A valuation of the fund recently made showed that if it were wound up, it would balance on the right side, thus showing the skill with which the operations were conducted; but the House must not fall into the error if thinking that the question of profit and loss was the one object kept in mind. The object was to prevent their exchange moving rapidly either up or down. These operations had been conducted for a whole year without loss to the Exchequer. The House ought therefore, to trust the Govern-

ment t<> *lcal with the larger sum now sought. LONDON, May 5. The statements made by the Prime Minister and the Chancellor in the House of Common* naturally give a serious tone to the morning newspapers. Both statements open a wide field of discussion. The whole city of Loudon i.- behind the Chancellor in his increasing of Exchange Equalisation Fund. The impressive magnitude of the new figure. £350,000,000. will o f itself act as a very formidable deterrent to specula! The author]! K's are now in o verv powerful position, both to checkmato speculators, and even to stamp out anv big fluctuations resulting from any sudden wave in the movements of capital Mr N. Chamberlain (Chancellor), mentionod in his statement, that the amount of shortterm capital in this country at the beginning of 1933 had reached the amazing total of two thousand millions. How much “refugee” or “bad” money there may be here in tho next twelve months is uncertain, but it is agreed o n all hands that the Chancellor is wise in providing the additional two hundred millions for Hio Equalisation Fund with which tn deal with any emergency. New Complications BRITISH HOSTILITY TO USA WILL WASHINGTON PARLEY AYAH.. (Aus. & N.Z. Cable Assn.) (Received May 5 at 10. pm.’ WASHINGTON May 4. A strong element of uncertainty has been injected in the plans £or in tcrtiational economic coirectives as th e result of several developments of the past day or two It is unquestionable that to-days’ debate in the British Commons expressed strong dissatisfaction with the American attitude on tariffs, and on debts, and at her failure to inert the contract to pay her interest over seas in gold, it is unquestionable *hat this has created a very strong hn pression here. The political correspondent of one of the leading News Agency’s states that tin’ U.S.A. administration is hoping that London will act in accordance with the spirit of the Roosevelt MacDonald communiques.