Norman and Keynes: A New Interpretation

Abstract

The purpose of this paper is to reconsider the contribution of Montagu Collet Norman (1871-1950) in comparison with that of John Maynard Keynes (1883-1946). Norman, Governor of the Bank of England (1920-1994), was one of the key figures responsible for the monetary and industrial policies in interwar Britain.
There exist two sharply contrasting interpretations of Norman's work. The first interpretation is represented by Pollard [1922], who criticized Norman for implementing “the Designed Deflationary Policy.” The second can be found in Clay [1957] and Sayers [1976], who appreciated Norman's promotion of “Rationalization in Industry.” Of those in the second camp, Tanaka [1976] in particular characterized Norman's actual intention as “the Dis-deflationary Policy, ” i. e., as a policy intended to avoid further deflationary effects derived from the previous high bank rate.
In this paper, I concluded, when reading and reconstructing Norman's and Keynes's letters, memoranda, and other evidence for the Macmillan Committee (1930), that neither of these two understandings of Norman is appropriate. In the present work I introduce a new label for Norman's work: “the Dogma of Independence between Depression and Monetary Policy.”
Finally, upon rethinking the motives and results of the monetary and industrial policies of the 1920s in comparison with Keynes's ideas, I conclude that an understanding of Norman's “innovative contribution” as fairly restricted would be the most appropriate.