CURRENCY SYSTEM

Wanganui Chronicle, Volume 83, Issue 27, 3 February 1939, Page 7

CURRENCY SYSTEM

REVOLUTIONARY CHANGE

BANK OF ENGLAND’S GOLD

REGULATION OF NOTE ISSUE

(By Telegraph—Press Association—Copyright] Received Feb. 2, 9.45 p.m. LONDON, Feb. 1. The Chancellor of the Exchequer, Sir John Simon, introduced in the House of Commons a Bill amending the law in respect to the fiduciary issue in accordance with the terms of the recent Treasury announcement. The Daily Mail’s City editor says that the Bill means that the Bank of England’s gold and other assets in future must be valued weekly at the current market price, instead of the old statutary price, which the City editor of The Times describes as a revolutionary change in the currency system. The Bill further lays it down that the difference between the new weekly valuation and the amount of notes outstanding small be made up by a transfer from the exchange fund to the bank or vice versa. The section of the bank charter of 1844 re-

Chancellor of the Exchequer.

quiring the issue of notes in return for gold will be repealed, the net effect of which will be that the bank will have a great deal of freedom in regulating the note issue. The City editor of The Times adds: “This will be the first time in history of central banking that the monetary gold stocks will be reckoned for currency purposes on the basis of the independent market price. It is regarded as a valuable and desirable step in the development of managed currency aid is certain to arouse much interest and controversy throughout the world.” The Daily Telegraph’s City editor says: “There is nothing to imply inflation of currency or credit. On the contrary the additional proposal to reduce the fiduciary note issue by a hundred millions will strengthen the currency.” The Daily Mail says that gold stocks of the Bank of England will be written up by nearly £100,000,000 as the logical sequel of January's transfer to the Exchange Fund. The value of the gold at present held by the bank’s issue department is £126,414,257, taken into the books at the old statutory price of £4 5s an ounce. The paper profit involved in the writing up will bo to the Exchange Fund, where it will be held in reserve.