MONETARY POLICY

Nelson Evening Mail, Volume LXIX, 3 February 1936, Page 2

MONETARY POLICY

PRONOUNCEMENT BY LEADING BANKER REPLY TO “MONEY CRANKS” FOREIGN TRADE QUESTION OF CHEAP MONEY (United Press Association—By Electrio Telegraph—Copyright) LONDON, Ist February. Bankers in the course of their annual reviews have chiefly concerned themselves with discussing their functions in the present-day economic system. Mr McKenna, of the Midland Bank, apparently considered (lie time ripe, in view of the widespread offensive of “money cranks,” notably the Towsendites in .America, to make ail authoritative pronouncement- on monetary policy.- He pointed out that the total supply of money has nothing whatever to do with its distribution among classes or individuals. Monetary management can do no more than remove obstacles in the wav of industry and expansion.” Air Beaumont and Mr J’ese, Lloyd’s Bank, deplored the belief that it is “within the capacity of bankers to extend credit indefinitely and to control not only the volume but tlie direction of credit, assuming an omnipotent knowledge of what type of loan is in the national interest and what ought to be withheld on the ground that it is anti-social.” Mr Beaumont and Air Pese opposed attempts to run the banks on excessively general principles, and held that the bankers should deal with every proposition on its merits. It was not a. part of a bank’s duty to lock up their depositors’ money in permanent loans of a capital nature. For that reason, while most sympathetic to attempts to rehabilitate depressed areas, they were able to assist them only indirectly. Bankers never had been prepared to simply industry with permanent capital. The bankers also stressed continued difficulties of the export industries. Sir Christopher Needham, of the District Bank, foretold that while the general lending business of the banks might be somewhat increased by further home trade development, a substantial increase would depend on the revival of foreign trade. Mr E. Ovine, of Martin’s Bank, hinted that patience with the slow recovery of the export trades was not the proper attitude. The spokesman of Barclays Bank contrasted the 15 per cent, increase in the output of manufactures with the 10 per cent, decline in exports between 1930-35, and emphasised that unless there is recovery in foreign markets, great adjustments would be necessary. Several bankers stressed the important part the building boom played in recovery and asked what would replace it liow that it showed signs of slackening. Both Mr Needham and Air Rupert Beckett, of the Westminster Bank, considered that Government public works schemes had come at the most opportune moment and would probably continue to employ industries subserving the building industry. Not one of the bankers went out of the wav to applaud the Government s cheap money policy. Air Colin Campbell, of the National Provincial Bank termed it satisfactory from the viewpoint of the Treasury and the Dominions, but not for depositors and new investors, who were forced to purchase annuities. The bankers unanimously emphasise the necessity for freeing international trade from constricting shackles, and consider the stability of exchanges a pressing need. Some even favour tlie resumption of foreign lending though iioue touch on the question how far'-'this would result in higher interest rates, ;or-how far-it would cause, giltedgeds to fall.’ However, it is now recognised that domestic recovery induced by monetary management cannot continue indefinitely. • The tendency is to look toward the wider problem' of restoring world trade.