BANK POLICY

Hokitika Guardian, 18 November 1931, Page 5

BANK POLICY

INTERNATIONAL CONTROL.

lAI.PORTANT A DAIISvSIONS

(United Press Association.—By Electric Telegraph.—Copyright.)

LONDON, November 16

The Bank of England is always silent. Rt. Hon. Montagu Norman is its sphinx. Yet . some of the motives actuating the Bank’s policy, which were discussed in Air Norman’s evidence before the MacMillian Committee are now for the first time published.

Herein Mr Norman declared his faith in rationalisation. He also spone of a necessity for a “marriage of finance to industry.” He disagreed with tlie view that the fluctuations in the bank rate have had any serious internal effect, and he discounted [the theory that an increase in credit would result in an increase in employment, except over a long period. Asked how far the Bank of England . was a free; agent', he replied: “It is free as far as the legislative position goes, but it is not free as far as the international position goes. The whole international machinery is bound together, and it necessarily works as a •whole.” He said he did not believe that the unfortunate position of industry was due to finance, except a a far as finance was dependent on certain international liaisons, from which llasons it could not, and should not, detach itself. It %as a longe period of mischance that had disheartened industry. He. did not think that the fall in the prices of raw material had aggravated the economic position. He expressed the opinion that an increased volume of credit, by the buying of securities, would affect industry over a long period.’ He was not sure that there was any certain relation between the fluctuations in the volume of credit and the fluctuations of employment. There might be a relation between them and there might not.

OTHER, VIEWS

LONDON, November 17

In addition' to Air Norman there were other witnesses. Sir Otto Niemeyer, was .inclined to-think that the joint stock banks, on occasion, went too far in the direction of participation in industry. Sir Ernest Harvey. Deputy Governor of the Bank of England, said that the Bank must be free from political pressure. It was not the l duty of the Central Bank to enter into ordinary banking business asociated with trade and commerce.

Sir Josiah Stamp did not see why the Bank' of International Settlements should not deni with all kinds of international problems,*