British experts saw credit as unruly and requiring active rate management.

Evidence

Th e Treasury controllers stood fast on Hawtrey’s main theoretical principle: credit was “unruly,” or “a peculiarly unstable and sensitive phenomenon,” as Blackett wrote in a note to Chamberlain. Th is theory had a weighty policy implication. Credit’s lack of selfregulation and its constant expansionary tendencies required “national control” over its supply (Hawtrey 1919, 50). Hence, rather than a handsoff monetary policy, British experts wholeheartedly endorsed monetary management through the manipulation of the bank rate in order to achieve the desired economic “equilibrium” (Hawtrey 1919a, 24). — Clara E. Mattei, The Capital Order, 981

Categorization

• DEFINE: Lays out the Hawtreyan rationale that credit must be controlled nationally — the conceptual foundation for interventionist rather than laissez-faire monetary policy.