Mr. McKenna's Gospel
It is no reflection on other bank chiefs to say that the annual statement of the Chairman of the Midland Bank is awaited with particular interest, and more generally read in extenso than any comparable announce- ment. This year Mr. McKenna nails inflationist colours to the mast, and it is all to the good that he is not afraid to call a spade a spade. A deflated tyre cannot be reflated except by inflating it. He would like to see controlled inflation introduced into this country as a definite policy, and he gives reasons, which Mr. Chamber- lain's subsequent comment does not meet, for main- taining that inflation has as yet nowhere been given a chance to show whether it can raise the general price level. The main doubt in the minds of those who approach inflation with an open mind is whether any inflation can succeed unless it is operated internationally, and that doubt is not entirely dispelled by Mr. McKenna's lucid argument. It is clearly a matter to be discussed at the World Economic Conference. On the other hand, it must be admitted that the power of sterling to affect world prices has been rather surprising, and has grown with every accession to the sterling area. Moreover, there is much in the contention, recently elaborated by Professor Pigou, that some country must take financial leadership, and there is certainly no other which has in so high a degree as our own that public discipline without which controlled inflation is liable to get out of hand.
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