With hindsight, there is nothing unusual about Arsenal not wanting (or being able) to pay high transfer fees. Nearly ninety years ago they actually tried to limit them; how would the history of football look now? In today's game, player salaries would no doubt be considerably higher although matters might not be so simple with clubs who survive on transfer income, severely limited in their ability to pay high salaries. In all likelihood, the status quo would have been maintained with the rich getting richer.
Combined with the maximum wages for players, it would have made football finances a lot more certain, with the transfer market possibly regulated by how much money clubs needed to make to survive.
Setting the fee at £1,650 seems perverse and it is little wonder that Norris' proposal failed. Early in 1922, the English transfer record had moved from its pre-war record of £2,500 through £5,000 to £5,500. The level proposed by Norris was unfeasibly low which begs the question as to why it was suggested. It is unreasonable to view the move as saying more about the state of Arsenal's finances than anything else.
Quite possibly, it was a move on his part to allow Arsenal to make the leap into challenging for silverware, enabling them to buy sufficient quality of players 'on the cheap'. We may never know the true motives of the move.