British Floating Debt Policy

THE history of the British floating debt during the twenty years from I9I9 to I939 falls into three sharply divided parts. During the first, from I919 to 1923, the total floating debt was reduced by nearly half, from fI,500 Mn. to 800o Mn., though it seems likely that a large part of this reduction occurred in bills held by the Bank of England and government departments. With these we are not now concerned, for the details of financial arrangements between government departments, though sometimes interesting and occasionally revealing, do not throw much light upon the working of economic principles. The second period, from I923 to I93I, is the one which is richest in discussions of policy. Though during this period the total of Treasury Bills issued by tender to the public, which alone need be considered here, remained, apart from seasonal fluctuations, at an approximately constant level, the question of whether this level was a desirable one was discussed in detail before two important government committees,-the Colwyn Committee of I925 and the MacMillan Committee of I93i-as well as in numerous articles in newspapers and periodicals. Among the latter, the articles in the Midland Bank Review must be regarded as the most authoritative. In the third period, after Britain's departure from the gold standard, the methods used for the financing of the gold purchases of the Exchange Equalisation Account have had the incidental effect of causing the total of Treasury Bills issued by tender to show much wider fluctuations. During this period new considerations emerge, which will be discussed in the latter part of this article. From the discussions of floating debt policy during the second of the periods mentioned above there emerge three

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  Open Access•Antonio Avalos, Eduardo Graillet•American Journal of Economics and…•2013

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