Bank Credit

Oral Answers to Questions — National Finance – in the House of Commons on 20th October 1942.

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Photo of Mr William Craven-Ellis Mr William Craven-Ellis , Southampton

asked the Chancellor of the Exchequer whether he will take steps to place the issue of money in the form of bank credit in the same legal position as the issue of bank-notes was given by the Bank Charter Act of 1844 and the Currency and Bank Notes Act, 1928; that is to say, that the future increase of bank credit shall be subject to Treasury control, and that the profits accruing from such increase shall revert to His Majesty's Treasury?

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

No, Sir. The comparison which my hon. Friend seeks to draw between the note issue and bank credit cannot be sustained.

Photo of Mr William Craven-Ellis Mr William Craven-Ellis , Southampton

Is it not reasonable that bank credit should come into the same category as the issue of notes, and that any additional increase of bank credit should be controlled by the Treasury, so that the country would have the benefit of that issue?

Mr. Graham White:

Is my right hon. Friend aware that the suggestion in the Question is that it is open to the banks to create credit without consultation with the Treasury, and will he dispel that erroneous suggestion?

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

I think it is held only by my hon. Friend the Member for Southampton (Mr. Craven-Ellis).