Political Career
McKenna was elected at the 1895 general election as Member of Parliament (MP) for North Monmouthshire. He served in the Liberal governments of Henry Campbell-Bannerman and Herbert Henry Asquith as President of the Board of Education, First Lord of the Admiralty and Home Secretary.
As Chancellor of the Exchequer in Asquith's coalition government, he opposed the introduction of conscription, and retired into opposition upon the fall of Asquith at the end of 1916.
McKenna oversaw the issue of the Second War Loan in June 1915, at an interest rate of 4.5%. The government also pledged that if they issued War Loan at even higher interest (as they did with the 5% issue of 1917), holders of the 4.5% bonds might also convert to the new rate. His predecessor David Lloyd George criticised McKenna in his memoirs for increasing the interest rate from the 3.5% of the 1914 War Loan at a time when investors had few alternatives and might even have had their capital "conscripted" by the government. Not only did the change ultimately increase the nation's interest payments by £100 million/year but it meant interest rates were higher throughout the economy during the post-war depression. Compared to France, the British government relied more on short-term financing in the form of treasury bills and exchequer bonds during World War I; Treasury bills provided the bulk of British government funds in 1916.
In September 1915, he introduced a 331⁄3% levy on luxury imports in order to fund the war effort. This excluded commercial vehicles, which were needed for the war. The tax, which became known as the "McKenna Duties", was intended to be temporary but lasted for 41 years until it was finally axed in 1956. It was briefly waived between August 1924 and June 1925, then extended on 1 May 1926 to cover commercial vehicles.
He lost his seat in the 1918 general election and became Chairman of the Midland Bank. In 1922, the new Prime Minister Andrew Bonar Law hoped to persuade him to come out of retirement and serve once again at the Exchequer, but he refused, and remained in private life. The following year Law's successor Stanley Baldwin repeated the request and McKenna was more agreeable. However he wished to enter Parliament as MP for the City of London and neither of the incumbent MPs would agree to vacate in order to make room. As a result McKenna declined.
It is said that he refused offers of a peerage throughout the rest of his life in order to be always in a position to be offered the Exchequer so that he could refuse.
Read more about this topic: Reginald McKenna
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