I keep having to find these quotes, so I’ll post them here for posterity.
This is from the book Post-War Banking Policy - a series of Addresses published in 1928.
The Right Honourable Reginald McKenna P.C. was a former Chancellor of the Exchequer (1915-16) and ended up as Chairman of the Midland Bank in the 1920s
The quotes show that the way banks actually operate was known a century ago.
While banks have this power of creating money it will be found that they exercise it only within the strict limits of sound banking policy.
Hmmm. Well, we might disagree there. He goes on to acknowledge the power of banks to create money is kept quiet.
I am afraid the ordinary citizen will not like to be told that the banks or the Bank of England can create or destroy money. We are in the habit of thinking of money as wealth, as indeed it is in the hands of the individual who owns it, wealth in the most liquid form, and we do not like to hear that some private institution can create it at pleasure. It conjures up a picture of an autocratic and irresponsible body which by some black art of its own contriving can increase or diminish wealth, and presumably make a great deal of profit in the process"
For more see the Economania review