BANKERS AND INDUSTRY [To the Editor of the SPECTATOR.] SIR,—May
I, on behalf of the Manchester Economic Research Council, reply to Mr. Kiddy's comments under this heading in your issue of May 18th? It is not the purpose of the Association to enter into controversy. It will suffice to say that no state- ment by Mr. Kiddy in any way invalidates the conclusions at which the Association has arrived. Mr. Kiddy based his remarks on different premises, which the Association consider either invalid or obsolete, e.g., that the function of banks is to lend out deposits, and their most important duty is to protect such deposits.
At the outset of the research work undertaken by the Association it was deemed necessary to come to conclusions on the following :—
(1) The purpose of the economic and financial systems.
(2) To what extent the theories underlying economic reasoning correspond with the facts of the present day, particularly as many such theories were propounded prior to the industrial revolution.
With regard to (1) it was decided : (a) That the purpose of an economic system is to supply the requirements of consumers ; (b) that the failure of the economic system to provide employment was not of necessity a fault, and might be an indication of industrial progress ;(c) the purpose of a financial system was to facilitate the consumption of goods, up to the limit of industrial capacity. With mgard to (2) it was decided : (a) That many of the theories commonly held were erroneous, e.g., the theory of economic scarcity ; (b) others again very doubtful and requiring re-examination from time to time in the light of present-day facts relating to applied science in industry ; (1) that a financial system could not legiti- mately be an end in itself, and that what might be regarded as sound financially might entail economic disaster.
From this point a good deal of research and study has been done mainly by those interested in such work, with the support of a membership including partners, directors, and other. officials of Lancashire business houses.—I am, Sir, &c.,
JOSEPH ONELLL,
Secretary-Treasurer.
44 Victoria Buildings, St. Mary's Gate, Manchester.
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