On Thursday, July 5th, as we went to press, came
the Announcement of the raising of the Bank Rate to 4 per cent. from .3 per cent., the figure to which it was reduced by slow gradations from the calamitous height which it reached on April 15th, 1920. We do not want to use the language of exaggeration and still less of alarm, yet we cannot but express considerable anxiety and regret at the decision of the 'Governor of the Bank of England and his advisers. The influences -which induced the change are said to rest upon a strong desire to main- tain the value of the pound sterling in New York. If this is so, we feel bound to note that the process is likely to prove-an exceedingly costly one, and-may very possibly have social and political reactions of a most deplorable kind. There are three things, it seems to us, which we want in the financial plane. The first of these is a reduc- tion in the numbers of the unemployed. Their immediate cost is great, but even worse is the moral loss caused by unemployment when once it becomes chronic. The man who has been out of work continuously for two years has, as a rule, become industrially dead. Our next need is stability. Our traders want, above all things, to have financial conditions which are not in a perpetual state of flux, and as little change in values as possible. That is why deflation and inflation are both such great evils. The third thing needed is for the Government to be able to borrow cheaply. But a rise in the Bank Rate negatives all these wants.
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