chapter  X
7 Pages

The Bank Rate Controversy

WE have seen in the last two chapters that the British authorities have been criticized for pursuing a ·policy of cheap money both before and during the crisis. While the other points of criticism with which we dealt in those chapters were mainly of a technical nature, the criticism of the Bank rate policy pursued raises fundamental questions of principle. We propose, therefore, to deal with these criticisms at some length. These criticisms provide a characteristic example of being wise after the event, for very few of those who are at present ready to condemn the authorities for what they consider to have been a mistaken monetary policy, suggested the necessity for a higher Bank rate previous to September 2 I. This, however, does not affect the merits or demerits of their arguments, which are certainly worth examining.