Mn MoKenna made a remarkable speech on financial policy on
Friday, January 28th, at the meeting of the London. Joint City and Midland Bank. Although he chose an extremely com- plicated and, of course, highly controversial subject—deflation- his arguments were notably lucid. He has persuaded us that the process of deflation will be much less dangerous It it is gradual. He argued that although a policy of dear money would be effective in checking inflation if inflation had been caused entirely by trading and speculation, it would not be effective in dealing with inflation caused by Government borrow- ing as well as by trading and speculation. That is to say, Mr. McKenna believes in a lower Bank Rate. His principles, of course, involve the condemnation not only of a high Bank Rate but of Capital levies of all sorts.
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