27 JULY 1956, Page 4

REBUILDING THE TREASURY

THE dramatic appointment of Sir Roger Makins to the new post of Joint Permanent Secretary of the Treasury is the most hopeful move that this Government has made so far in the economic field. As was strongly argued in the Spectator some weeks ago, all has not been well inside the Treasury for a long time. The machinery of economic co-ordination has become ramshackle, and a number of the men who have been trying to work it are misfits. Sir Roger's task will be to pull together the various financial and economic divisions and units which have been occupying themselves so ineffectively, and thus to restore some of the Treasury's prestige. He will have to ensure that in future the Treasury is able to provide better and quicker analysis. judgement and advice than in the past two years.

Sir Roger brings many assets to this new post, in addition to a fine reputation. His stay in Washington will have convinced him of the overriding need for real understanding in Anglo- American economic affairs. More specifically, he cannot have failed to appreciate, while in Washington. the splendid skill with which the authorities there have guided the American economy since the end of the war, in contrast to our own humiliating record. It cannot be too often stated that there is nothing inherently unmanageable in the British economy: it has simply been badly managed.

The Chancellor's conference with the bankers on Tuesday showed how badly improvement is needed. It was an extra- ordinary affair. Normally the Government makes its wishes known to the City on the back stairs, so to speak, of the Bank of England. But on Tuesday an unusually large number of bankers and representatives of banking interests, accompanied by the Governor and Deputy Governor of the Bank of England, were summoned down to Whitehall to listen to what the Chan- cellor had to say in person. Mr. Macmillan first explained that the credit squeeze would be 'resolutely' pursued, as indeed it must be. He then went on to try to answer some of the criticisms of his policies which are attracting growing support in the City. What the bankers said in reply is not known. But it is to be hoped that they pointed out that in spite of over eighteen months of credit squeeze the banks are still in a more comfort- able position to make fresh advances than they were a year ago. Perhaps some fearless banker added that the banks existed to lend money, and may even have whispered that it was by doing this that they paid their way and made a profit. Perhaps that is too much to expect, but it is to be hoped that the Government was left in no doubt that until the Treasury shows signs of being able to manage its debt in a less maladroit manner than it does the credit squeeze it will always be in peril —and may even one day be beyond salvation by a tea-party.