London, Feb. 21.
The speech on defence by Sir John Simon, Chancellor of the Exchequer, during the debate on defence in the House of Commons yesterday, was received with profound relief in London Stock Exchange circles, who, in common with other sections in the City, inferred from its tone that no substantial increases of direct taxation were envisaged in the coming Budget.
The main problem now -agitating their minds is the question of what forms the borrowing of the huge sum of £350,000,000 for defence will take.
With the total annual savings of the nation in the neighbourhood of £400,000,000, it is evident that the entire sum will not be borrowed from the public in the form of long-dated loans.
The Chancellor of the Exchequer, is believed, will resort to an increase in the floating debt by issuing additional Treasury bills. A sum of £175,000,000, it is pointed out, may thus be found without exceeding the level of last year's floating debt.
This short-term financing would alleviate the scarcity of the bill position by affording banks an opportunity to increase their holdings of bills by between £130,000,000 and £180,000,000. It is emphasized that the swelling of the bill portfolios of banks would also enable them to take up additional long-dated gilt-edged securities.
Nevertheless, it is considered that the loan expenditure would inevitably lead to expansion of credit, which, while the reserve of 2,000,000 unemployed exists, should have a beneficial coot on the nation, while industry is certain to profit by the enhanced circulation of money.
Other cheering news in the market today was evidence of the firm intention of the Government to foster overseas trade provided by announcement of pending visits to Northern capitals by Mr. R. S. Hudson, Secretary for Overseas Trade, for trade talks, together with the vigorous support given to the moves to improve Anglo-German commercial Felstions and eliminate the dadber of under-cutting in world markets.—Reuter.
Text read from the printed page and cleaned; old type leaves the occasional error.