MONETARY POLICY

Nelson Evening Mail, Volume LXIX, 31 January 1936, Page 9

MONETARY POLICY

BANK DEPOSITS USE AS ACTIVE INSTRUMENT

(British Official Wireless)

RUGBY. 29th January. The chairman of the Midland Bank, Mr Reginald McKenna, speaking at tne annual meeting to-day, discussed monetary policy, and observed that under the' centralised system m Britain bank deposits had become the subject of deliberate and unified control, and tins fact had made it possible to use them as an active instrument of monetary policy. A system had been evolved for regulating approximately the supply ot money in accordance with trade requnements. , . With the development of the great consolidated banks and with tlm steadily-growing authority of the Bank of England tlie framework of a comprehensive system of sound money had come ihto being. The ultimate control rested with the Government acting upon principles publicly declared or defined by Parliament. Dealing with the future of monetary policy, Mr McKenna, said that monetary management could do no more than remove obstacles in the way of industry and assist its expansion. It could help to extend the area of employment and bring production and consumption into a hotter relationship. The progress of the last hundred years had developed, a nation-wide machine centrally operated for regulating bank deposits. The immediate task was to use this machine in such a way as to assist lire steady upward trend in the standard of living which the immense advance in productivity had liapply brought within grasp.