EN CLAIR AND BY BAG
Fiber
IMMEDIATE FOREIGN AND COMMONWEALTH OFFICE TO CERTAIN MISSIONS
28
TELNO GUIDANCE 215
UNCLASSIFIED
21 OCTOBER, 1969
(GUID DEPT.)
T
GVD IN
51
IMPORT DEPOSITS AND TRAVEL ALLOWANCE.
111/16/548/16
THE CHANCELLOR TODAY ANNOUNCED IN THE HOUSE THAT POWER TO
IMPOSE IMPORT DEPOSITS WOULD BE CONTINUED FOR ANOTHER YEAR UNTIL
DECEMBER 1970 WITH THE DEPOSIT REDUCED FROM 50% TO 40% AND THAT THE
EXISTING TRAVEL ALLOWANCE REGULATIONS WILL CONTINUE.
IS BEING SENT IN VERBATIM SERVICE.
FULL TEXT
FOLLOWING IS SUPPLEMENTARY
BRIEFING FOR USE IN RESPONSE TO QUESTIONING.
2. A. IMPORT DEPOSITS.
THE IMPORT DEPOSIT SCHEME HAD TWO AIMS: TO TIGHTEN THE INTERNAL
CREDIT SITUATION, AND TO DISCOURAGE IMPORTS.
(I) INTERNAL CREDIT.
GIVEN EXPECTATIONS THAT THE SCHEME WOULD END ON 5 DECEMBER, ITS
CONTINUATION, MEANING THAT MUCH LESS WILL BE REPAID TO THE SYSTEM
THAN WAS EXPECTED, WILL TEND TO INCREASE PRESSURES ON THE MONETARY
SYSTEM OVER THE COMING MONTHS CALTHOUGH BY SLIGHTLY LESS THAN WOULD
HAVE BEEN THE CASE IF THE DEPOSIT HAD NOT BEEN REDUCED FROM 50 TO
40 PER CENT). BUT IT HAS TO BE REMEMBERED THAT THE LONDON CLEARING
BANKS ARE STILL COLLECTIVELY ABOVE THEIR CREDIT CEILING. THE OVERALL
TIGHTNESS OF CREDIT MAY THUS BE MUCH WHAT WAS ORIGINALLY INTENDED.
BANKS WILL BE REQUIRED, AS BEFORE, TO BE VERY RESTRICTIVE ABOUT
LENDING TO FINANCE IMPORT DEPOSITS.
(1) IMPORTS.
WE CANNOT DISENTANGLE THE EFFECTS OF THE SCHEME FROM OTHER FACTORS
AND SO QUANTIFY THE EFFECT OF THE SCHEME OR OF CHANGES IN IT ON
/IMPORTS,