EXCHANGE FUND

Hokitika Guardian, 30 June 1933, Page 8

EXCHANGE FUND

PROPOSAL FOR. ITS INCREASE

LONDON, June 23

When moving the second reading of t!i« Exchange Equalisation Account Bill, to increase the Equalisation "Fund by £2(10,039,000 to £350,000,000, Mr Hore-Belislia, Financial Secretary to the Treasury, said the fund had served its purpose, which was to keep sterling in its natural commercial relationship with other countries, inidisturbed. The intention of the Chancellor of the. Exchequer never was and never could have been to try to reveal that natural law of commerce under which the balance of payments fundamentally regulated the relationship with one currency to another. .The stability of commodity .prices had been maintained; their price-level-was 97.7 in-July,- 1932, -and 97,6 in March. No other country had maintained its -price-level a.-, stable ns-that, and- it was just to ckini .'that the Exchajnge Equalisation Fund, together with Mr Chamberlain's policy of cheap money arid' abundant credit, had produced that very satisfactory result. It had been represented that they were engaged in-a. world gamble and that thev ''were bound to lose money. The reverse was the c?cse. It was other people wlio were -coming to Britain to buy sterling and to find temporary refuge for their capital. It was said, “Why did we not keep that capital out?” But it was impossible to distinguish money which came boro for legitimate commercial -deposit from money which tamo for speculative purposes. The fund had been'appreciated by the traders of Britain and of other countries. The policy behind the fund was both national and international, and every one dealing with Britain derived benefit from it.