1937-06-29 — Page 7

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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.

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