A GREAT BANKER

Press, Volume LXXX, Issue 24150, 8 January 1944, Page 8

A GREAT BANKER

TRIBUTE TO MR M’KENNA

The Rt. Hon. Reginald McKenna, chairman of the Midland Bank, whose death occurred last year was described by the City Editor of the “Sunday Times," Norman Crump, as “a great statesman” —between 1907 and 1916 he successively held Cabinet rank as President of the Board of Education, First Lord of the Admiralty, Home Secretary, and Chancellor of the Exchequer—and as “one of the chief architects of our modern monetary system, which has proved one of the bulwarks of the country during the past four critical years.” “Thanks to him,” Mr Crump continued, “the nation learned that a managed currency could offer greater economic stability than a currency based rigidly on gold. Early in 1925 he admitted that ‘so long as nine people out of ten in every country think the gold standard the best, it is the best.’ By 1939, the British people had been educated to know and trust a paper currency. To-day it is common ground that the best monetary system is the one which fosters an orderly economic and social progress. Monetary Policy

“A few days after Mr McKenna’s death I heard that during the last few weeks of his life he reread his speeches of the last 20 years, and found nothing which he wished to retract. He also repudiated most strongly the modern heresy that the banks create money out of nothing, and profit by this creation. The power to expand and contract credit lies solely with the Bank of England, and it exercises that power in conformity with the policy of the Government.

“Mr McKenna’s speeches will provide many a key to present and future problems. In 1936 he said that there must be enough money to finance ‘an ordinarily growing volume of trade,’ yet not so much as to cause an inflationary price movement. In one sentence, this is the key both to post-war monetary policy and to the allied questions of Government expenditure, taxation. and general finance. Unemployment will be the sign that more money is needed. A rapid rise in prices, and a threat of the vicious spiral of prices, wages, and costs, will show that the nation has too much money.”