INFLATION [To the Editor of the SPECTATOR.]
SIR,—The letter from the Marquess of Tavistock, in which he briefly outlines two methods of putting into distribution additional money, is very interesting, but the plain man will be left wondering whether the giving away by the Government of almost unlimited largesse would have the delightful results that your correspondent envisages.
I have nothing so revolutionary to place before your readers, but I venture to suggest that an increase in the uncovered note issue of a small proportion—say, 2 or 3 per cent. per annum— may have to be resorted to, in order that our currency may expand with the normal growth of production and (perhaps in lesser degree nowadays) of population.
The principle of a fixed fiduciary issue, which was incorpor- ated in the Bank Act, 1844, would, in the opinion of all com- petent observers have proved to be unworkable had it not been for the marvellous development of this country's banking system. Banking progress has doubtless not finished, but one cannot hope for such striking developments in future as We have witnessed during the past eighty years ; and under present legislation—although there are certain very circum- scribed provisions for temporary changes in the amount of the fiduciary issue—the only means by which an expansion of currency is rendered possible, is by an increase in the stock of gold held by the Bank of England. In view of the scramble for gold on the part of the chief Central Banks, this is not a situa- tion that we can view with equanimity.—I am, Sir, &c.,
Previous page
