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THE CHINA MAIL, JUNE 29, 1937.
BRITISH EXCHANGE CONTROL Chancellor of the Exchequer's Important Outline
ADDITIONALITA
FUNDS ESSENTIAL TO BUY GOLD
London, To-day.
"
"It is unlikely that any sudden sustained gold losses can occur which will seriously embarrass us,' declared the Chancellor of the Exchequer, Sir John Simon, introducing the resolution authorising an increase of £200,000,000 in the Exchange Equalisa- tion Fund in the House of Commons yesterday.
Sir John said that on March 30 the Fund held 26,674,000 fine ounces and the issue department of the Bank of England 73,842,000 fine ounces, valued at £700,000,000.
Wag
SIR JOHN SIMON
The
Exchange Equalisation Account at that date did not hold
ore thi a trifling amount of
reign currency.
PROFIT OR LOSS
Not To Be Disclosed
That was the sort of statement hat would be made every six ths and he felt that it would ery great interest for those who followed these matters. When all considerations were weighed, we should not consider the present gold holding as excessive
action now proposed anand the fgold for that was what was neces-out did not indicate any change in
terms of the resolution that would carry it
sary to avoid the frequent wide fluctuations in exchange rates our present policy.
when new gold was coming in and
NECESSARY STEP also later on when the foreign There was no reason why owners call for the return of cer-present disturbed conditions The Treasury did not regard, enterprise. As long as currencies
tain quantities of it.
unsettlement in connection with the holdings as excessive.
were linked with gold there
For this purpose, the Govern the international movements
of The increase in the Fund was obviously in constant operation a
ment had come to the conclusion capital should be permanent and largely due to movements of re-restraining and limiting influence was prudent and timely to should persist, but the present fugee capital, he continued. which confined oscillation in for-
add t
hundred millions to exist situation compelled the Govern- An account of British gold hold-eign exchange to narrow limits.
ing borrowing powers.
ment for the purpose of maintains ings would be given every six When the measuring rod of the gold ment was pursuing was in accor
The line of policy, the Governing its general financial policy and months, three months in arrear. standard was removed the oscilla-
No change in present policy tions of currency exchange might States of America:
dance
in support of their undertakings with that of the United
and objectives under the tripartite was involved, declared the Chan- become more pronounced, more fre
Monetary Agreement to make this cellor.
quent and more serious, and the op-
further provision as an insurance portunity for speculators was great-
against additional movements in The policy was essential under ly increased. Hence, after we left
sterling, present international conditions as the gold standard we decided to set insurance and to carry out British up this account. obligations under the tri-partite agreement with the United States and France.
INSURANCE POLICY
Concluding the debate, Sir John Simon said he had good reason to believe the line he was asking the House, to take was exactly in ac- cordance with the policy of the United States.
That in itself was a very hopeful feature...
He declined to agree that the accumulation of gold debts in London and New York would al. ways continue.
THE FUTURE
AID TO RECOVERY There could be no doubt that the existence and operation of this ac- count has been instrumental in pro- moting and maintaining our steady recovery.
Under existing conditions such an account was an essential element in the financial machinery of
country in our position.
and
QUESTION OF SECRECY The Chancellor, discussing the question of secrecy regarding the operations of the Account, referred He was further ready to agree to the desire for more disclosure that the state of the account and said he had come to conclusion: ually as at 31st March, should not that there would be no harm in only be available to the Comptroller indicating to a committee at a date and Auditor General, whose duty held by the after the event, the amount of gold was to report to the House,
months, the
Account over six should also confidentially be information being municated to the Public Accounts made public three months ar Committee by January 21st in the rear.
following year. There would be no indication as
on as to whether the result was a profit or loss. British Wireless.
Accordingly, it being now the end any of June, he informed the house of Contem-the facts on 30th March last.
be conducted in the most complete porary operation of the account must
secrecy, for anything like a contem porary disclosure of what it was do- ing would be a Heaven-sent oppor tunity for currency speculators and
* He hoped the wisdom of the thus amplify every undulation which. -world would encourage a freer the Fund was engaged in reducing.
flow of trade so that areas which now sent gold to London and New York would want a proportion of it themselves.
"That is the future for which we ought to work,” he concluded.
The House agreed to the motion. Reuter.
SIR JOHN SIMON'S SPEECH
Clear Statement Of _________ Policy
Sir John Simon, who
SHIFT OF CAPITAL
New Phenomenom In Currency
There was a second sort of pheno menon which had greatly develop ed of late and was calculated to produce the same fluctuations exchange and which needed to be counteracted by similar methods.
It
in
HONOURED
THROUGHOUT THE WORLD
American Express
it was the deliberate sifting of Travelers Cheques
large quantities of gold capital
from one centre to another.
Under the gold standard regime
ing the resolution relating mov\gold movements took place mostly
was
to
proposal to increase the amount which may be issued to the
Account from change Equalisation * £350 to £550 millions, recalled the Account was established after -Britain left the gold standard.
for the purpose of settling inter- national trading balances but now they had large masses of capital moving from one country to an- other for quite a different reason and unless the bad effects of this in causing violent fluctuations“ in Her example în establishing such
currency exchanges, as far as may an account had since been follow be, were neutralised, the result ed the United States, France, would be exactly the same obstruc Holla ***Switzerland and other tion to trade the same loss of busi- countries.
ess confidence as those agains which the
directed
The account was set up to check undue luctuations in the
value of sterling and
enabling
traders to count with confidence on
dangers
GOLD, HOLDINGS
Thus the Exchange Account
- prices holding and permitting them the present circumstances must be
to venture freely on extensions of prepared to add
to
the holding
of
The safe and convenient means
carrying travel fands.
THE AMERICAN EXPRESS CO., INC.
Incorporated with Limited Liability in U.S.
4; Des Voeux Road, Central.