MR. McIMNNA'S SPEECH.
[To the Editor of the SPECTATOR.] Sra,—The speeches of the chairmen of our great banks at their annual meetings are so weighty and valuable in their wide survey of trade conditions, both at home and abroad, that all persons look forward to them with the greatest interest. The recent speech of Mr. McKenna, chairman of the London Joint City and Midland Bank and ex-Chancellor of the Exchequer, is no exception to this rule. There is so much that is good in it that I am loth to criticize some parts of it. The fact that Mr. McKenna is an ex-Chancellor of the Exchequer secures for his utterance additional publicity, and in case his remarks should affect the deflationary policy of the Government I beg to offer my humble protest. Mr. McKenna takes credit to himself for having prophesied two years ago that any attempt to carry through a policy of deflation could only end in the strangulation of business and widespread unemployment. This is a most dangerous opinion to give expression to, first, because it is misleading, and secondly, because it may increase the unrest and discontent among a large section of the community who may think that unemployment is entirely due to this cause, and that a contrary policy will get rid of all our difficulties.
It is true that the cessation of inflation and a moderate amount of deflation do reduce purchasing power, and while in progress do tend to promote a contraction of trade. It is only right, however, to remind Mr. McKenna that the fall in prices which led to the depression preceded the contraction of the currency. This fall in prices and the cost of living was bound to take place, and came about because consumers refused to buy at the inflated levels which prevailed. I do not press this point, however, because the two processes were almost simultaneous, but I ask why we pursue a policy of deflation, and the answer is because we desire to see the restoration in this country of an effective gold standard, i.e., a free market in gold. During these two years the paper currency of this country has been reduced by about seventy million pounds, and because of this and because there is a certain amount of inflation taking place in America, our exchange with that gold standard country is approaching parity. It has cost us some distress, but it is worth it. Why ? Because the restoration of the gold standard will give us that stability in prices which Mr. McKenna desires, it will improve British credit and thus enable us to refund a large portion of our debt and thus reduce the burden of it. It will attract foreign and Dominion loans to the London money market and thereby stimulate trade. All these things will lead to a vast expansion of our trade and commerce, and this surely Is the best way to get rid of unemployment. A contrary policy of standing still when we are within sight of the goal is unworthy of Mr. McKenna and of the high office which he formerly held.—I am, Sir, &c., D. M. MASON (Chairman Executive Committee, Sound Currency Association).
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