-'~ I. ~

•-

• • •

LARIFORMASOCIALERI\'ISfA CRITIC4 il I ECOSO~IM n DI F1NANll

ç () N1T~ TCI "' " ~TT"'O

LUIGI EIN AUm . Dlffll",y. _ l' AS ltl l,l l.ll J AI>"NACCUI'f)

T.u1g1 Etnau dtn mio ptann non r. quelle di Keynes

uomini; chot siano un panldosso; tan ti op<!ral edili disoccup;1ltiquando tan lo bisogno \''ho di case ; chot il problema llOD su di-m e di \'OIOOtiO di 1a\"Onl'1'; non sia t ....mco, né açicolo,Dé comme rciùe, né o rganizzati \'o , bancario. 1Ia sia unproblema dello spirit:o, ..t assomigli an'imbarauo di due abilioondu.centi di autocarri in potrfetlo stato , i quali, incolltraDdosiin iimP;O SPU;O, DOtI SI.D p~ potrcl>O" ip:>rando le Jeuid..1Ia~ COU&J>O potr non Silpel'1' cl:ti <lebl>. iindue a destra.. chi il sinistra. Il puadosso economim odiertlO sta aeIlamaneoll.. di COllta tto tra fattori produtti,-; disponibili _ uominidisoccup;1ltì, macchine inoperose, le"", incolte, materie pt'ÙDt'inutilimote - e dol'S'idoI'rio o bisogno dei beni chot i fa ttoridisoccup;1ltì prodll!'t't'bbotro, ... fossero OCCUp;1lti.

0Ui il contatto non si Op<!Ul. p<!rcl>O, l'imprendilore DOlI"P<!1'll pro fitti . LI maoc:hina otalllO.mc.. • ~tatL I fattori

Il . :Sormalment• • il cont allo Ira fattori produtti\; edMidotrio di b<.ni. posto da imp",nditori in cerca di pro fitti. Ilme<:canismo economico • messo in moto da imprenditori, iquali, acquistando sul m..rcato fattori produtti\; e \'endendoprodotti, com piono n..na s.ocietà odi"rna l'ufficio del pad re difamiglia nelle 50cietà p<ltriareali chiuse, del priore > gua rdianonei conventi medienli, del minist ro della produzione ili Unasoci~tà colletti'istica, Ma l'imprenditore o pera, ossia cor",rischi, quando ,·ed.. la possibilità di un profitto, di unadiff"l'1'llZa positiva fra il prezzo ri"",,]to dai p rodotti n enduti edil costo dei fattori produtti,,j acquistati, Stabilito il ccnt attc ,messa in moto l'imp resa, quotSta. basta a se stessa, potrch. ifattori produttivi COm umano quanto essi med"Simi producono,:\">? llliIterialmente gli nessi beni, CM qu"Stì SOllO dati inscambio di b<.ni prodotti da altri; llliI in sosl.anl.a gli stessi sottomutata specie.

, I :-:o • 8- I A.;o

Tho!' .\1....." fa 1'rrJspntty, di John l>b ,}-u.ard M}'IleS010........110" &Dd Co,. Sì. llarti]l'$ Street, LondoIl. 1<)33, pp. :rJ.preuo 1 se. nlrt).

Il "saggio" del Ke}'De5, dunque, può essere riassunto inproposizioni cosi concatena te:

I. Supponiamo chot la crisi odierna sia do\...ta ad undifettoso funzionamento dei congopi menlali psicologici, ;quali OODdDCOl>O allot decisioni ..t ~ atti di \'OIontit degli

n "saggio. dl'l M}'Des._ Adop<!fO la p;1lro/a "saggio· noni1\'endone tfO\."la altra miglio,.., alluoco deD~mdese tract. dl'lfrolllcese pamphllrt. Ma in l'1'altà "saggio· llOll lradul'l' 1Mon. ilCODCe'ttO di ocnttura d'Ottasiolle, nrumenlo di battagliapolitica o HlOllOmica, che • c.aratteristica deogli scritli b l'1'\-;\'e-ementi, n"; quali furono condotte battaglie prati che odichiarati principi teorici, La letteratura economica, la grandeletteratura econo mica è ti picam"nte com posta di saggi, Chifacesse un dizionario deD" """p<!rte economiche, con lacitazione delle fo nti , in cui prim.am" nte quelle scop<!rte furo noenunciate, cit" ",boo assai più b l'1'vi saggi che grossi lib ri, Laparola-meno-"ra un t"mpo usata, assai propriam..nt.., per talsorte di scritli b",\,j .. significati ,,j; ma non si può usar più, acausa d..l malo uso fatton..,

Ca p itolo 8 - TI mio pia n o non io quello diKeynes

C~"'r"' i K,!\dle 1>1" PC2· In Iod~ d~1 prol itto ~ . lln '<!1

, ' . Pare dunque~ • risoh 'ere piellall>E'n!e il paradQSSQ

sugo del discol"SO è in queste poche parole). Se in,,_ esistono<·el"llm..nte uomini e fattori prod uttivi disoccupati, il contattoopel"llto m ~ non è cagione di danl1050e perturbarioni in ....,noad altri gruppi sociali.Sarebbe 00..... se il milion. di disoccupatipotesse 65E're trasportato in ull·isola finol"ll d..... rta ed i<ipro<'"odesse da sé alla pro pria <i ta. Qual danno $ubinobb.. ilR'Sto deIb coIIetti<-1tio?Anzi ..·rebbe due "antaggi: risparmianola falcidiil dei rumdi di disoceupaziOlle e disuibuire su di sé esugli n-disoceupati, inv_ ~he SU di sé soltan lo, il eosIo denespese pubbli~(imposle).

Il problema si complicherebbe se esist65E'ro solo operaidiooceupa ti e llOIl anche fattori maleriali produttivi disponibili;peI'eM in tal etiO la llUQ\'a domanda da pane dei I O miliilrdi dim.. di fondo otatalesi fO\-escerebbe suIlIltlUSil fi$SiJ dezIi altrifattori produtli'i e ne farebbe <:TeSCeI'e il prezzo. Lo SUlo simetterebbe in roncorrenza con sti imprenditori prin ti,scmnpisJiandone tutte le basi di eakolo economiro, oonoonsegull'l1ZO' lIOIl. facilmerlle pI'e\"edibili. ~eD'ipotesi fatu, nulladi tutto ciO: esistoDo uomini.. =bine, ~ITI!. n'....;, felTO\-M.,porti iDoperosi; che llOIl prodlK'OOO, perehé dissociati.:!olettiamoli a contatto; e roi beni prodotti, sti uominidiooceupati~t..rI.IUlQ se stessi., sen.zilliulla chiede... altrui,anzi .,...."00 di ric<'\..... da altri ~ll. ProbabiJm.,nte,ilnzi, il prodotto totale ereso:erà in misurapiù che proponio.w...al magg;or la<'O..o pre!itato, Che, se, do\.. 9 milioni di uomini1a<'OnIlO ad alim..ntarr>e I O, il prodotto llIlitario è 90 milK>ni diunità, oo.·e la.'Onoo tutti IO, per la più. perfetti di<~.... del1a<'Oro .. il _&Por~ al la<'Oro do\"\.to alla in<·ilriataWcidia d<'II<' imposle. il prodotto llIlitario ari, probilbùmente100 .. J[ milioni di anitil.

'!t 0 e I ltn "'fitt i (Men:llo ,,,tto , rt. ~t. l ,. n Edition

• c • S, I .. El I x

prod utti <i , beni strumentali e uomini, rimangono disoccupatiod ; dl'Sideri deogli uomini t"1>sta1lO insoddisfatti . I fattoriprodutti<i occupati devono assogge ttarsi a ta gli.. enormi perlWIntenere in <ita queni disoccu pati. O<:COITI! disin~anta.... lamacchina.

l". Supponiamo ~ lo SUto ottenp a mutuo daquakuDo che lo possiede (o lo cru) il fondo dei l a miliardi dilire; suppOlli.lmo che il mutuo sU concesso il lunga scadenza oda t<'Due (mlndeGdosi lenue, probilbol .....n~ qUilkuno dei pilibusi SIgi stor'icilmenle OO!lOSciuti) Silgio di inte~. Uo:outilizz:lti i fi tto '; produttivi, p esistenti e disponibili: te lTl! daboai6eare. spetthi d-acqua da tnsfo~ in porti, materi.ali..dilizi da ridulTl!a case lirtite e uomini diooceupati da applimrean.. t" ITI!, an.. aeque ed an.. eI.Se. tcee (1'Nto il miraookI d..l.rimI'tt..re in !DOtO la~ ecollOmica, ....,D.U. aumentare iprezzidei fattori prodntti<'Ì e dei prodotti. La $pesa. pubb&a siesalll'imlbe in vali pane Mi CRSCer prezzi o ....n"importare dipiù. daD·estero• ...., llOIl esist_ro ll1UJini di fattori produtti<idisoccupati. fiiI~ 1L'Vt' link or no rruJ'l1Ì11 01 unnnplnynI7nOUroH, rhA (••J 1M Ì1\crNRd ~itun 1L'Ollld Iarg~b;

IL-asft itMf in Irigltt-rpricn and incrtaMd imports. Riproducoil 1,"",0 , perché dopo ISSai rompimenlO di capo , ronclusi~ il

III. Poiché, Il disillealllO , IlOn Po\"a il IlOrmal.. moti<'oPCOOOIJlÌco del profi tto , fa d 'uopo Iro"""" ono spedienle."uoIsi dar lavoro I d UIl mi!iQlle di disoccupati? Basta, a 10 .000

lire I 1e5ta,[6W UIl fOlldo di I O miliardi di m... Se gliimpr.ndilori privati llOIl asma, osi lo SUlo. Sui l a miliardispesi, lo SIIIO è sicuro di ricupenroe, m quel~ risJ>MtDia inminori sussidi ai disoccupati e quel ebe lucra per ~resciute

imposi.. sul cresciUIO reddilo dei con~ti, alm..110 cinque.

Ilibliot.....

Ce,.",d i Kindle per

Viw.lin. VOi Slru"'."" GU'1If

" Ce..", d i ~;"'; I. per PC 2 · ln lode de l P.'oIitto • • Itri ",,,tti (Men:e lo Di,itto l ibert' ta li, n Ed,tion

eoeooomlCO odiemo manchi solo ull llIleIIo d.lbl ca!ena: i l O~rdi di !in di fOlldo lIl'<.'f'SSario aDo Stato per far domamlasul merc;ltO dei fattori produtti" atti a c,,"", il nl1O\..,p........

\1 . Pare in,''''''' che Ill'Ì paesi a...nuti i pasticci di lep.... sif..eeaec ora COli i conigli. Ho )'im press>one cioè che do. qualchetempo g!i economisti inglesi siano ass1dui alla nobile fatica dicercar coni&fi do. 505lituire ..ne lepri. Quando sentono parlare dirisparmio ..n'antica, fanno 5II1Ome. O che non ci sia. J:>ìsolno di

llllIta fatica o di tanta rinUllcia., p" rcb p le disgrazie ilttuali noli5ODO OO'...te a carestia., terremoti e 1""'"'" e lIl'ppure a diff(lodi fatt ori produttivi, ma al difettoso operare di una qu.alche~ello. nella testil desii uomini; o che sia dispenta impresi1indUl'te g!ilKlllIini il rispa.rmia.re, con i redditi tanto falcidiati econ le imposte cosi aIt.. (incomn are !lO curtailN today ondtamtio:nt !lO ,"udI~ thal many p«>pl~Q~ a1rNdy, mth.. ~ffort to lIIQiruam thLir standard 0/ lift. Jatillg /n.s thansounJ pnsona./ habit$ ~), 5l.a di fatto che moltieconomisti d ·a'·il.flJUI.f'dia. m-oJgoDO a p....fe renza la loroattellZÌOllf al su.nopto di risparmio pRrttoslOche al rispa.nniointeso IlO! senso tndizionaJoo. Che """" sia cotal SIIrT01ato dirisparmio non ef..cile spiegare. t un .....rt o che di nebuloso, uncomJ>O'ito di conoeUi vecchi ~ pbusibi!i e di astrazioIli nuove.La patemilìl, involontaria. e ad altro scopo indiriui1ta,risalirebbe ad un economista. di non gnnde fama , apparteOlMlle

alla pll'Ìade ricardia.na., J ames Pennington , il quale nel 18 2gL2llav bbe dimostrato che le bancbe possono , elltro eerti limiti,c ar e redito. La teoria. secondo la quale prima il rispa rmiatoremette da. parte 20 lire (o . 0 miliardi t ra tutti i risparmiatori diun pa..se insieme), poile reca. aII.a banca e fina!m ..nte la banca I..dà a mutuo all 'impre ndito re 0 , se questi sia. ti mido , allo Statoper m<'llere in moto la macchina eeonomica inca ntata , sa.re bbeuna teoria.antiquata o , p" r lo me no , insu ffici..nte. C'e , acca nto il

questa. e nl'Ì paesi moderni parrebbe di ben maggio r portata,un'altra teoria , la quale direbbe cbe prima la banca apre un fidaal cliellt e (imprenditore °Stato), poi il cliellt~ t rae assegni $uIIaballca fino a concotTt'lllA del fido rice'"\I to , pc>$CÌa ilbe....ficiario deO'ilSSoO'gDO se Ile fa acc ....mtare l'import o pressob stessa OUn'all ra banca e cosìfinalm..,.re na.scono i dq>Q$iti inballca; in media. i d..J>O'iti presso le bancb. lOSSl'Ildo COlISf1U""tied equi.-alenti ..ne ap" rture di credito concesse daDe biinchelIIl'desime.

o o

0"0A.iI. III• <]0o•

In~ antiqu.o.ti e do. <'COIlOIIlisti antiqu.o.lÌ, co"'" loscri'~nte, Lo. risposu allo.ci<>nuryl •. oo.~ tro\"Ue i IO miliMdi?~ P"""'"' i risparmi.o.tori. F'1I1O a qualche anno fa, qu.o.ndosi puIa,~ di risparmio, il pensiero COl'ft'\.. al solito bollUS patnfu,"ilias , il quaJoo~gna ..n'anI1O al mese o al Pomo .00 e,spendendo 80, NCJ.; restalIti 20 alla cassa di risparmio o allo.banca. Se, a furia di 0'0, lungo un anno sioosti~ lllI fondo di. 0 miliardi, ..",.. lo~e, il dn u cereeec ed utM amenere in molo Lo. maccbin.o. Qualche minore ..!!rito do vràessere superato: p"rclu' lo Sta to possa farsi Illultare l Omiliardi, ocoo"",rà probIDibnente cbe il fondo del nuovorispamùo annuo sU. parecchio sUp"riore ai IOmiliMdi, essendoincredibile che non esista altresi una domando. privata dirisparmio, non foss·allroda. partedi quegli oslÙli1tiche, pure intempo di crisi, continuano ad <=t're afflitti da1ll ntala.ttia.dellapietra o da. quello. del campo bene sist.mato O d..n... bottega inperfetto o rdi ne e simiglianti pazzie an ti -eccnc miche , cbe sonopero la r..gio n di ,-ita di tanti più uo mini che no n si creda.All'uo mo d..n... st rada ed agli econo misti ..ntiquati pare d unqueassurdo tronr.. a prestito IO milia.rdi, se prima i IO milia.rdinon siaac stati messi da parte .. nOn sia.no tuttora disponibili.seeza la I..pre 1l0 1l si faImo pasticcidi le pre.

-"-.. ( emodi Kir>d l. P"" PC • In ki<Ie de l prof itt o • • Il~ sc"tt, (Me"' . lo D" ,tlo libe rtà} ~1. l i. n Ed il io n

\1] . Ecco I fferrata 11 codi d~1 coniglio in<fupensabile amanipolare il pasticcio desid~l'Ito. Bisogna dar modo allebanche di fare un·lpenutll di cl'E'dito di I O miliardi. Se gliimpn>nditori pri\"lti non \"OI!io no SlpeTne di chiede", cl'E'ditoneppure al 3 per c.nto O al :I per c.nto, perch~ temono diperde", suDe imprese I d essi consi&\iate, sia concesso il cl'E'ditoallo Stlto, il quale llOIl ba d·uopo di fare con ti di profitti e costie puO tro\"are un profitto (minori sussidi ai dis<>ccupali,magior Cetti10 deDe imposle), do'·e ai pri,...ti non sarebbeconcesso.

\111. )lI le banche _ possono aprir crediti, sia allamam..1'1 antica dopo l ' ·er m'"1rtO depositi, .... alla mam..n.nDO,·a dooU·l prir pl"e\Umente crediti SlpeDdo che SII"J.lIIKI poicopt'rti dadooposili, se IlOll 05Se',..'ÌDO tIhme rez* prodenzialj~te dlIb esperienza. Per opi .00 lire di depositi,OCCOln' ,i sU.oo solo .00 - Il lire di Ipt'rture di credito, Il...,."Ddo la rise,...,. in contallti (bialietti) o in~ti a ,'irto.p""'50 cii istituti di emissioolle che le banche pru<ienzialmentedoo."Ol>O sero.re per essere sempre pronte I far fronte ali..doma...w. di rimborso dei depositi; che è '-u:>o. quello di fanirimborsare, comune ai depositlDti fi tti lIl·antica ed a quelli, ...nuti fuori allamoderna. E cioè i depositi e quindi le aperturedi credito 5OtlO lUlI funziolle. Wl multiplo deDe l''isero...possedute dille bancbe orditwie di credito. Se I"esperienza, acaPm d'esempio, consi&liò lU1I riser\.,. del. I O per cento. lebanche ordinarie possono, tra bl"e\; e 1unP>e. consentireaperture di credito solo fiDo al multiplo di 110'''' , ..HIe le rise,......possedute. Anche i teorici della "bili"" la quale crea il credito·atlIIlIKlono che 11 potesti! ct'Ntm iniziatrice della banca nonsia arbitnria.

IX. A sua \"0111, 11 rise,...·1 delle bInche ordinarie .consistendo in bi&Jietti emessi dacJi istituti ceutrali di emiss.ioneo in depositi I ,isll presso i medesimi istituii, non ~ unaquan tità arbi traria. Essa è una frazione d~lla massa totale dibiglietti emessi in un peese, il resto Iro' ·l ndosi sparpagliato innumerosissime piccole ocrosse rise,...·e di bi&Jietti, in opi dalomomento ~enti neOe lUCbe o nei eassetti di pri '.,. ti cittadinio di enti di\"ersi.

X. La massa toule deibi&beni circolanti in Wl paese è, dalcanto suo, un multiplo deUa rise,...·I-oro po5Sedlltll dIIl"istitutoC<'ntnle di emismr>e. Se I·esperienu. O le Iegi, le qualido".-bbero _re es periena cristaIIizzata, consicliano agliistituti centrali di emissioolle di tellere 1llI.I rise,...,. nguale al 4 0pe r cento dei biPetli. l"anuoontan. totale dei bi:cDetti. llOIl poi>essere m.a.gg;ore di d ..... ,..HIee mezD 1·&m1DOntan. deD.a rise,.......

AlIli, po;ehé l"es peneQl:l illsepu.~ elastiche in,''''''che ,.;pde, Po"1 in tempi penccMosi. crescere 11 pl'OpO.-zKmedella rise n ... ai bipietti.. III tempi 1lOrmal:i., se 11rise,...~... è diIO miliardi, i bi&beni cirrolanti possono spiqeni I due ' vite emezza, ossia I 2S miIi.ardi. III tempi di crisi, quando per farfronte a rirhies\e di papmenti lIl-estft'O, 11 rise,....,.-oro si èridotta a 8 miIi.ardi e si è in ansia per u1tmori riduzioni,1~l5t::ituto c.ntrale riduce prudentemente il multiplo I due e lamassa dei~ emessi1 16miliardi.

XI. Rifacendo, 01'1, il cammino 1Il~1Il"eno, scopriamofacilmente I"espediente, il rimedio, il dn"Ìa"di Ke."'lleS:

se ad una 1"isero·I-oro di 8 miliardi, corrispolIde. al multiplo 2

-"-.. ( emod i Kir>d l. P"" PC • In ki<Ie del profin o • • Il~ se"n, (Me"' . lo D" ,tlo libe rtà}~1. l i. n Edil io n

~ allio proporzione del 50 per cento, una massa di biglietticirrol.o..ole di 16 miliardi;

... dei 16 miliardi cirrolanti. 4 si tro\'ano neDe casse dellebanche of'dini,rie di credito (casst' di risparmio ed altriistituti di credito compresi) e costituiscono 10"",,""a-bi&Jietti deDe blnche medesime;

se ~ UlliO rise,,"a·b;cIietti di 4 miIindi delle bancheordinarie corrispollde wl"attitudine di queste . d .prircredi to per l"ammoIlllre di 4 X 9 " 36 miliardi;

quale c:ondiliooe è sufficiellte per nddoppiare quest'1l1tima.ttitudine,ossia per portlre le aperture di eredito da 36• 72­ciJu.?

Ll rispD$tl è 0\"''''': lumentlre sufficientemente lerise"-e-oro deU"istitutocentrale;

5e q<-,e SOllO c:resriute da 8 a ' 0 , eeec l"istituto nontnle,più. tnnquiUo, pronto a spingere 11 lDISSoI di biglietti em<=adal ml,Ù1;jplo 2 a quello 205 e la~ a 25 miliardi;

... dei 25 miIindi c:ircolanti, Wl quarto, <:ome dianzi,~6,25 miIi.udi. eesercece la riser\...--bipietti deDe bancheordinarie di credito;

... Ie bIncbe ordilwie di credito, forti di UDI riser\-a, tantocresciuti, spinsotlo il loro multiplo di enoazione di 'pe~di credito da 9 a 12, ecco le aperture di credito ba1zare. 6.25X 12 " 75 miliardi. Ossia, ecco più che ngiunto !"effettodesidenoto.

XII. Quella ora orditwtamente racionat. è 10 1l"'l':5Ì della

proposta ...~nale di Ke)"Iles: si crei una massa di 5 mùiardidi dol1ari.gro di biglietti internazionali Id opera di un istitutocentrale mondiale di emissione, la Banca dei regolamentiintemuionali di 8asiJe., od altra" I bi&!ietti do\Tl'bbero essere.ccettati allio PMi deD 'oro; non do\Tebbero en~ neD.~one effetti \"a; sarebbero usati esclusi\'amente dalletesorerie desii Suti panecipanti, da&Ii istitu ti centrali diemissione e sarebbero equiparati alla """"..-eee propriamentedetta desii istituti medesimi.

I big\iKti do\Tebbero essere fOl'lliti I mutuo, controobbIigazio";..gro di identico ammonllre I sagio bassissimo diinteresse, • quei JO\"emi i quU ne faoessero richiesta e siobbIig_ro ~ abolire qualsilsi restrizione sui ambi esteri eogni dazio e oontintente doclllÙe che fosse StIlO introdottol>Dn a causa di UlliO <bu politica eeDl>Dmòca, llII esclasi'"ImI'ntepe r difendert<i contro imporuziooi da paesi esteri I ,·ahrtadeprezzati O contro esporuzioni di capitali.

I gD\..mi e p istituti di emisAone potrebbero,.<Ubof'dini,umente al ritorno aDa bbertà dei cambi ed I quflladegli ..... mbi di merci, &re dei biglietti nee."Ilti l'uso cMrepuU5Mro mipore: papi" debiti esteri ut!"Dti. ridareequihbrio al 1>0',000, es~re le emissioIIi interue eartKeesuIIaba... della cresciuti riser\... Iurea..

Ogni SUto ••Tebbe dirino I nee.-ere I prestito UDI ql>Otadei cinque miIindi la quale fosse proporzioIIIIe allio massa di"""n 'a . urea posseduti nel l<p8, fino ad un mlSsimo di 450milioni di dollari per osnuno di essi. 0JDi 5t1to~re:o;ponsabile, in proponione aDa propria quota, delle perdi tesubite nella gestione della n\lO\"I lIIISSlI monetaria.

-"-.. ( emod i Kir>d l. P"" PC • In ki<Ie del profitt o • • Il~ sc"tt, (Me"' . lo D" ,tlo libertà} ~1. l i. n Edil io n

XIII . f in qui, i1l'11cionam..nto fila diritto . P..ricolosam..n­t.. eome sullil~ di Un rasoio, ma diritto. Ad un tratto, dalcielo Cild.- un bolid..: oli eonsillio dil'l'ttivo [d..l nuo'.., istitutoc<>ntral.. mondW.. di ..mi55ion..] do'Tl'bb.. far uso d..U.. suefacol tà dì5crerionali fÌ5peno aU·ammontarl' C'Ompll'SSÌ'''' deibiglimi emessi [al disopra O al disotto dl'i S miliardi dido&ri-oro] O fÌ5peno al sagio di int..ressl' do caricar1' sulleobNigarioni-oro rila5ciat.. dagli Stati adl'l'l'Ilti, ~'..",.."le

aDo 5COJ>O di ....;lafl', pl'l' qua nlo sia po5SIbill', un rialzo nellivello dl'Ì pruzi-oro dei prodotti fondaml'ntali costituenti ileoll1m<Orm inl"rnazionaIe al disopn di un Ii,·.uo con'·..nlllo ­forw q...I\o del ' 930 - po5Io tn i11i,...no pl"l'Sl'nt .... qo..rJo del19:>8~.

T\ltIo llll capi'lolo delsagg;o ..n infatti m to dl'dicato dal~}'t>@$ ad iIIw:uafl' i lDOdi di~ i pfl'zzi. Chl' siacon•..,";"'nt.. &nzi lll'CeS5&M rialzafl' il 1i,..·1Io g......nIe deipruzi IlOn • llM$5O in dubbio~ pl'r un istant..dJlrautofl', il qlUil' llOII n!pUla 1Wpp<I.fl'~~ 1..ra,;ioni di tale lIll'U. Sir Arthur Salt..r, dicltiarandosi in unbl'U·articoIo suDo Sp«tator dt>l 24 lIW"ZO fa•..,fl"...l... oggi allo.propo5l.l del M)'tll'5, osser'l"il., rqionando dal punto di .isto.dl'D.,. odieml simuionl' di fatto inglese: chl' una l'SJWISÌ<>n"crMitiril. oggi oppol'tUtla, perché il mondo si tro>'a al fondodl'n... fase dì5cendl'nt.. del ciclo l'COtIOmico, chl' p;i.i. sono cornim anni di resIrizionidi credito, i q..aJi Iwmo ridotto i pruzi edi costi ed eliminat.. 1.. imprese d ubbie .. catti•.." chl' non si puòCOIl"'Otire mcorII aipreu:i di aDdII &ili in flecia ad un immensoOIll're di debiti .. di pesi fissi di og:ai 5P"'cie, cb.. pl'rciò qu..lIopresent.. O non pili • il _to buono pl'I" don con unapoIitieoo congioH di credito .. di la,..,ri pubblici una"",<lisciata ai prezzi; chl' agi, I diff..l'l'DDI del 1'J31,

lìnghilt.. lTiI. può prendersi il IllSSO di pl't'5titi grandiosi .. diLavori pubblici , il bilancio d..llo Stato l'SSl'ndo tOmltoaD·"'luih1>rioed l'SSl'ndo granitico il eredito piibblieo.

XI\·. :-;"on discuto il valOfl' del boIid.. in Sl' s!l'SSO; maaffermo cb.. l'SSO • un corpo l'5ttaOeo fÌ5JlE't1o al rag:ìonaml'lltoproprio del Ke}"tll'$. Il qual.. mov ..vl daDa preml'SSlld..U·esistl'lll.ll di fattori produtti , ; disponibili, cb.. O«on cs.;oofar mUlI'·..... con un l"5pedil'llt.., Sl'tlZiI. 10CCIfl' i11i,...tJo gl'll..n1..dei preu:i.. Cboo altro ,'all"·ano difl' 1.. parole sopn rip rodotl..chl' "'Sl' non ,; fosse m to un maJlÌlll' di riso,.,... dispoml>ili, lamaggio... S"",",,, [dl'gli l'Ilti pubblici O di pri" I ti, non conta] sisarebbO' oosaurita &nzi SPfl'C.ltll [ lLou1d /a"9fil1 lL'ClStt itstlfIl>O'1pro"""arl' allmO'nti di pruzi ed lumenti di importaz>ol>t':"o. Eprima a.·....a insistito che la nllO' ·a spesa [iD la•..,ri pubblicildo''''''a l'SSl'fl' aggiu.nti,.. e llOII lOb1::ituti... della 5pO'Sa chesarebbO' altrimenti fatti dai pri ,..ti; e che. poor k'O'UIUt' ladisott-upario..... la nUO\'a 5pO'Sa do\~'1 fÌ''01&..rni I fa tto rip rodutti.; disPOIll"bili. es.. ],e risorse del paesoo fosso,.... p;i.i.int..nment.. util:i.zzate. gli acqui5t:i aggiunti'; [ad <>pO''''- dl'i1a,..,fÌ pubblici) d.arebbero principalmeute luo&o I pili altip...zzi ed a cresciut.. importuionio ,

Xl'. Lo. caduta delbobdl' IlOtI ba, si lmmO'tta, importanz.o.troppo grandl'. Gio>.. Sl'pl1arIa., I 1Dl'ftl'te in ""'" C'OmO' il~'"lIl'S sia ÌlIcO'no fra due scopi dellaSUI proposta.: dar modoagli Stl.ti di p<M..re, t'OII prestiti pubblici, occupar.- i fa ttoriprodutti\; disponibili, Sl'IWI \"Uiare i prezzi, oppurO' don unaspinti. ad una political"5~ di credito, la qua1O' spinp; pruzi aD~msù, ri<:rl'i i profitti .. perciò lo stimolo ad qire pl'rgli imp.....ditori pri'·ati. l nterptl'Wldo nel modo pili conform..aD~mt..nzion.. dello 5CfÌttO"', si può 1Ochl' rit......re chl' il boIid..

-"-.. ( emodi Kir>d l. P"" PC • In ki<Ie de l prof itt o • • Il~ sc"tt, (Me"' . lo D" ,tlo libe rtà} ~1. l i. n Ed il io n

non sU. Wl corpo estraneo, ma UIUl Sl'COnda fase del processologico" Lio catellil compiuti sarebbe in tal CilSO la seguente:

si C""" la nUO'"11l1ISSI monetln. intemlZionale.

la riser\"a, così cresciuti, degli istituti di emissione consenteUDI politica creditizil espansi''&;

~ ne Po\"ano dioppriml lC!i Stlti pH diore, !.'On prestiti ela\"ori pubblici, la"oro li disoccupati ed utilizzare ; fattoriproduni'; inerti;

in r;egui10 I quesu primi spinta, .. fidocill rin.tsc-e," prezzirisaJ«ono, spuntltlO speranze di profitti, !Ii imprenditori sis\"~" Lio mKChinlIo ecoDOmÒCl anugginita. sollecitatadalI"oIio delJ"OftimiSlDO, si moo'"e pian pLano diopprima e poi,.... ,.... più'~meote.ll crisi efittili"

Lio ricost:uriorle del pensiero delJ"insigne """'DOmista di~Odp DOn bi per iscopo di facilitare la critico. .Iiparticobri della SIU proposti prinàpale" In quanto e=l di.,.­che "'" punti di I ,"'"&!la.mento della CW"'"& del ciclo~,UDI politia di Il.-ori pubblici Id opera dello Stato econ.~te, essi riespon.t lIDI teon. classica" Con I..opportune cautele l'iJIurdo li limiti delb effiac:i.o. dei Il'-oripubblici, ed alb necessiù di DOn continuare nei IInmq~Il CW"'"& del ciclo cblb .-aIle fonda •..:Jip I ris.alin •....,.., ilmonte, la teoriI dassica el1lChe pacifica.

" olli, in'"ece, ricostruendo, offrire un _pio tipico delb~ti del Clmminlre diritti sui fili di rasoK>. Tu1:tJ. lacat"llil pogil, nelli SUI pane principale, oulb ,..,riti delbproposizione prima, che la crisi presente sii d<n"Utl al difettoso~to di qlWche concepo mentale psicologi!.'O

dell"agire umano; e nella sna pa tte agiunta (il bolide dellaproposizione XIII) che a ric:re;II" profitti e quindi I rida re"dopoil primo impulso dei la' "o ri pubblici statali, incenti,..,all'operare spontaneo desii imprenditori lio'; il rialzo de]Ii\"ello generale dei prezzi, Se queste due premesse SOnO '"ere, laseque"", e \"era. Se il mondo esossopra perché a:Ji uomini~p.ati DOn riescono I menersi I con tano con le """"disponibili, elogico che basta I raddrizarlo e farlo mUO\"ere lospinton e, l'espediente, il dnÌ« di Ke)"tles. Sii qualsi,"ogI.Ù1 lospedieote, aperture di credito I spizzioo delle band>. o la....fIazione aD'inçosso con dilu'io interDaZionlJe di cartastamp.ala, lo spediente puO Po' ..re. Contro una malattia dellospirito, oontro l'inca.nlesimo, il medioo de'"e farsi strego"e edoperare con l,I(WI1i m di iDeallto. Tra le stJ'eCOO<'rie 0."...giustamente , van l\Ioto b bbbrica di calU stampata. Poicbt' ,.popoli DOn CrMono pilà, dopo I"esperienza del dopo-pern,....lla caru. stampata nuionale, esorrinj·"'OU 00" cartaSla.mp.ata a timbro mtemuiona1e. Se ciò PO';a fugar dal lorooorpo il demonio del ~ "mismoe delJ"inerzia. esorcinj·mo"

t però la crisi da,..-ere 1IIIiI malattia dello spirito dIn"Uta acotal specie di inca..nto? Ke)'lleS ricceosee,~ bel. priDcip;o delsagpo,che _~ la nostri P"'~rtifosse dlnouta aI1a carestia o alte....mol:O od aI1a prn,~ I lIDi m'oc'ssetO ecse materiali o imezzi di produrle, lIDinon potremmo sperare di tnn...... ko ,~del ritorno alb prosperiti a1tnn~ fuon:be nel. duro la,"OrO. nelrisparmio e Dello spirito in.~ti\'O• . AnlrrIette per Wl mom""toe per ipotesi astratta, solo per !lepre che quelle siano I.. causedella malatt:ia: _I" realti, le DOStre difficolti SODO notoriamentedi un"ahra.s~"" E secue la proposizioM sopra esposta COIl>t',-

l o direi che "notoriamente" le Cluse dei llOStri malanniSODO proprio quelle da lui negate: lalUert1l e le malan;. da essa

-"-.. Cemodi Kir>d l. P"" PC • In ki<Ie de l prof in o • • I l~ se" n , (Me"' . lo D" ,tlo libe rtà} ~1. l i. n Ed il io n

ino=late P..UO spirito degli uomini, ossia ingordigia., " ogIia. diimpro....;S; arricchimenti, impi.Zi"11l<I d..1la dura fatica.,incapacitio i.Ila rinuncia ed al risp.armio, intoU..ranza d..J lungoa'!P"!W'e il frutto della fl.tica ; spirito di nazionalismointoll"""'te, il quale ha chiuso opi popolo in se stesso .. hainutiliuato cran part e delle risors.. naturali l>Sistenti,producendo &1i stessi effetti delle car.stie d"un tempo;fanatismi reliPosi in RussiIo, in C'ma ed in India. religiosi anchese in forme puove comunistiche O xenofobe O gandhiste, chefanno preferiTe I.p uomini di su,r senza cibo e seDZll p=ni, purdi DOli ever OOPhtti pericolosi cee infedeli.

Come si può pretende re che bo crisi sia un incanto, e che amat>O'nn! qUi.kbe commutatore c.artaeeo l'incanto ""anisca,quando tunodi.anche ad l''ere sIi oochi mediocremente aperti,si .t"5timoni deIb ,...ritio del oolltrario? Si OSSl>I'\"aI>O, . "ero,casi di dist;ruia iIloolpe'w, di imprese sane tn.,'Olte daIlabuf..n.!th qu.anti e quanti esempi di .....ritata punizioll<'~ Ogni,..,}t;r,che , adellÒo qU&kbe edificio, si appuraDO i fatti, q.-..ti ciparlano di .mminisuatori ed impreDditori innlmpetenti, o..., ...otati, o disoDeSti.. Le impl'e$<! dirette da gente competente.. pl'\ldf>pte p;1lSS.JDO I.t!ra''''rso momenti duri. ma resistono.Gran fri.a.sso di l'O'IW in'"eCe anorno a chi f...,.. in p;rande afuria di dl>biti, a chi propnò eoIossi, dominazioni. controlli ecoosor:ri; I. chi pe r sostenere l'edificio di urta. fabbrim altra.carta e ,-eodette artl a mezzo mondo; a chi, in,"eCedi frustarel~mteD..tto per in"enW'e ed IPplicare~ ternici nllO'i ometodi perfetti di la,wazioDe e di OtpItinuione~plauso e profitti in,'elltmeio catene di societi, propine adamministntori-comp;lll'Se, r1"alutazioni e1eoganti di entip;1ltrimonii.li. L'incan to c'. stato e !>OD • ancono. rotto; ma •I~mca.nto desii scemi, dei fanoootti e dei superbi. A iniettarcarta, sia pure carta intemuionale, in un mondo da cui gli

scemi, ' fara butti ed , superbi non siano aucora stati ca.cciati ,ilse non in parte, non si IlUrisce, no, la malattia; ma la sialimenta ed incipri&nisce. ~>? l'euforia della carta monetaOCCOrTl>; ma il pentimento, la contrizione e la punizione deipeccatori, l'applicuione inventiv.. dei sopra'..'issuti. Fuor d..Jca.t.....h,.mo di santa rotnanl chiesa pop c". salvezza; daDa crisinon si esce se DOP allontanandosi dal ,izjp e praticando la ,-lrtù.

Giovasse, i.bneno, la streeoneril della Clrta stampa ta a""reH profitti ed I ridM perciO impulso aD"Openl desiiimprenditori priVl.ti ! AllitM ! che anche qui bo CI lena. delragionam..nto pare Spe.u.ilh! Sembno, I sentir taluno, ehe paneIIi siano:

sulla base delle cnsc:iute risel'\'e , le b&ncbe Crese<> DD leaperture di credito ~ pl'U2O mite ;

ilavori pubblicicoodotti ~ mezzo del credito danno la primaspinta ai prem;

il rialzo dei prezzi ncl'N i profitti o bo speranza dei profitti;

la l'ÌDDm"lta speranza dei profitti dà impulso allo spirito diintrapresa.pri'·I.ta.

la. prop<!'SÌrione c): il rialzo dn pruzi ricrN i profi1ti •n ra soltanto ""n"ipotesi che i 1a,'Oti pubblici. condotti a mezzodel .,redito spinpno in $V prec:isameute quei prezzi i qualideVODO Cfe5Cf're per ristabilire l'equilibrio. la. maDClIDZ.I. diprofitti !>OD PI'O'l"Ìl>De dal Ietto che i prezzi siano bassi, ma dalfatto ben dinrso che essi sono squilibnoti fra di loro. Se I1Itti iprezzi fos.wro ribi.swti del SO per ceuto - o, per opi ~ne.

neIl.. propor:rioni De<:! 5S)rie I tene!' con to delle condizioni. nel.franempo mutate, di produzione e di domanda - la crisi !>OD

-"-.. Cemodi Kir>d l. P"" PC • In ki<Ie de l prof itt o • • Il~ se"tt, (Me"' . lo D" ,tlo libe rtà} ~1. l i. n Ed il io n

~I"....bbe; ché si pUÒ vendere in profino a cinquanta com" a""nlo, se i prezzi dei fanori produtti'~ souo pu ... SCl>mati acinquanta. La crisi e la mancanza dei profitti nascono dallosquilibrio dei prezzi,dal fano ch e taluni p....ui non n1>assaronoOnon furono lasciati ribassa....; e poieh. ; p....ui sono l'l'ddilop"r &1i uni e COSIO per &1i altri, molti p"rdono e p"rdonoSOPl'llttutto &1i imp....nditori, Un rialzo dei p....ui che fossedo\"UIO a la' ·ori pubblici compiuti per mezzo di inflarionecreditiria lascerebbe sussistere la sproporz:ione fra p...zzo e

pr=, ossia fra costi e m 'i. f orse la Cres<.'l>rebbe.I2:ù

Se" vere, ad esempio, che wune demale agricole e tal unematerie prime minerarie SODO M"hassate troppo m rebzK>ne ataluni prodotti industriali, ai prezzi del 1o'"Oro e dei sel'\-mpobb&i (impost e) ed qli inteltiSÌ dei debiti, sarebbe-.ano che la oomanda deri'"1.IIt e dai nDO'~ meui dispende.... offerti daDa c:ruzioDe dellanOO'1I. massa mooetaria siri'"Olg_ esclusi,'a.mente verso ; beni ed i sel'\igi...tati'·_le de pl'lUZlti. l'Il Pl"Of;I1l.IDma n>siffatto """n·ordine dene possibilità IImane? EsistODO strumenti dimisun.rione rUfinati abblsuO" per \1l.1u~zii squilibri deiprezzi fra meree e meree? EsistOl>O strumenti adatti a~re il nbasso di prezzo Pl'O\...uient" da squilibrio dainba.<.si oo\"\.ti a rap:tni temiche: ridtlZioul> di costi. mutazion"di,u.sti?

P"rcM, se un tempo esiste\1I. equilibrio tnI. diff""""ti bl>ni(.04., B,C, D) ai prezzi l O, 12, 8, 15 ed on. i pruzi ec>ITl>nti 8 , 4­7, 5 non eeaseatoeo ai produnori di B " di D di 1a\..,l'llI'l>proficuamenle, cosiccbé essi ridUCO!lO for1eml'Dt" la lorodomanda di A e di C, percM iJDma&inare eh" la crisi possa_ .... liquidata, inietundo carta moneta nel monoo edalllnf>l]W1OO del 50 per celltO; pruzi a 12, 6, 10,50, 7,so?

Lo squilibrio ~te tuttl'Ù; B e D 11011 pot"ndo esse...prodotti ai prezzi (costi) ....lati,'amente troppo alti di A " di C. tposstl>ile fan! le iniezioni m (Ilisa da rauiUll&""" IIUO" llID"nt" ilIi\""no di par!"nu; IO, 12, 8 e 15? Come opera.... il minteolo?5iamo noi sicuriehe illi\"eno, ehe era equilibrato alla par!l>DU.,sia tale ancol'll adesso? Oh!, non è me&lio ten"r duro e, comeconsiglia il )Iachlup, con sagi di SCOlltOsufficien temente alti,forzarl> i B ed i D a liquidare, alla più s\"elta, le rimanenzeingombranti di maluzU>o, anzi con ulteriori tracolli di pnozzo,ma con conlempor;me; agiusumenti nelle quantiti. prodotte;sKrl>tò alla fin",~to il campo dellelll"endulOminal'cioso,i prezzi ritornino a 6 e ad 8?:SOel frattempo,llDCb.. i prodottoridiA e di C, C05U"eItia pllan! ildeoaro caro, e posti di fron te adatt"n""'te riclnesIe di B e di D, a''T&IlIlO 00'"11I0 al>Ch·essi eeode...sui prezzi.. I coll5Om costituiti per resistere a ''T&IlIlO abbassatele armi • .; 5"-l'll.nflO sciohi; ed alla fine lIll 1100' ''' «fUÙIbrio .;potIi formanoaiP~7,6. s. 8.

Alnl>D'''' Iin .llo ,'; torna a profittare ed a lU..Iapa"". Lacrisi. finita.

Il~ scocJio alla bqIDdaz>oue SODO i prezzi fusi p"riegg" (tmpost,,) o per contratti a 1u.llp scadooun. (mt,,"""'; didebiti pubblici e pri\1I.ti) o per con\'fllZioai rit;idl> fra uuppisociali (stip"ndi, saI.ari). III fOlldo, i COIlI"Illi iDt1aziomsticisono ;mmacinati allo scopodi assaltare di fianco con manO\ToI

an'oIz"n'" fonilizi che .; pudica impow"b,1e espup>an' conassalti frontali. I contribuellti, schiacciati da Wl peso troppofom di imposll> (compresi Pi mteressi dei debiti pubblici); eliindU5l:riali e eli açicoltori, im~enti a papre, m tempì dipruzi alanti, imposte, saI.ari ed mteressi m,1l.1'Ì.Iti, SJl"l'lllIO

nella mano,ToI lt1OI>etalV. :SOel tempo l se il noddito nazòoDaI""l'll 100 "la quot<t di esso assorbita dai pereenori di nodditi fissi

Chi ricordi cl>oo il disordiM soNle del dol'O"l"ern fudo,-uto DOIl alla pern in sé. ma alla infbrion<' monetaria laquale si accompagnò. sebbene DOIl~Ie. ad

~~ rimane SCOl1l<'llIO dinilnzi alle possibili COllSE'gUenzesociali di un nUO'o'O sperim<'lllo eamceo a tanta poea distanzadoqu..Do rt'<'ftIle. Sperim<'Ilti cosiffatti si possono. sebbene conZU"'issimo pl'lÌcoIo. ripetere solo 1 dista n'" di l,IlI5O'<'OIo l'unodall'altro: IUl'IT1I europea. 1914 '1918; assepti francesi.1:J9D-1796; sistema di taw, 1715-1720 . Ogi, rip..te....r~to. potnobbe sipifieare il croDo deIb ",-,iliioccidental...

e crt"ditori riuscissero a portar b lo ro quota da 25 a 35; ;salariati l'd altri semi·fissi da 30 a 4 0 , sicch. ; n riabili....stassero COlli rimanenti 25; megliodi ' 0 , ma non tanto co m..appa...., poicM i .0 erano sui 65 ed i 25 SOn sui ' 00. I n n abilipartl'cip"rt'b~ro, inoltre, forse N tti ugualmente alla CUCCJ,gna

o la preferenza andrebbe aipiù s" etti?

S; eoDOSCe la repIiea desii iniI. rioniq; O ri&rionisti,com<' oggi essi prefO'riscoDo chi amarsi: b refbzion<' SMiprudent... limita ta al 11ecessuio per nson...~ ; prezzi ed ;l'O'dditi DOU da 6S a '00, ma. appenil ad 80, cira>ndau dopranziO' stIO'ttissime. TtItto sommato , ritelllO che ; pe!'N>ttoridei redditi ,,,,,riabllicornoo minor rischio Ile! fan. boan puocoJ, catti,,,,, fo rtuna piuttosto che Ile!~ COn spedi<'nti Lospedi<'nte moDl'tlrio, "al cometenun la fortuna J, Mont~.

Può J.nd.ar ~DO' ; ma poò rinoo"are il disordinO' dO'! '9,8-'920.:X,K'...; arriechimO'nti Illtttiri e nllO,i impo,-.rimoonti incolpe..oIifarebbero ridj ,-ampare l'incendio. chefa~nte ...mbn....andas5O'~ dedi odi e deIJ,e in,_ sociali. Como­...mpl1' acadd.. ...na storia. ; les1:oflllti. ; procacciatori. gliarriechiti sapnobbooro porsi in SI I\'O peT tempo. Cadrebbero gli

'!to e I ltn "'fitti (Me",, ' o ,,,tto I rt. ~t. l ,. n Edition

• c • S, I .. El I x"'

Ma, oramai l'equilibrio o~ • rotto. Chi ci dino sidNlba ritol"ll.l.re ai rapporti "ecchi di 25 pl'r i redditi fu.si, 4 0pl'r i ...mi·fissi e 3S per i redditi n nablli? Quando si stampacarta, si ba por '.. di fu le 0050' con prbo e con giustizia..Ma ~Ihrnffa arnffa molldi.aJe dei 5 miliardi di doIlari~ro,

,-inCODO i più s" ehi; e DOIl mera,i&Jjerebbe affatto cl>oo imposte

(impiegatipubblici, interessi di debiti pubblici ., printi) era 25e quella ottenuta dai redditi s.emi·fu.si (5ti~"di privati , salari,canoni di fitto, ecc.) era 4 0 , ili po!'~ttori di rt'dditi n riabili(proprietari diretti conduttori, fittaioli, meuadri, industriali,commercianti, artigiani. professionisti) rimane,-ano 35. Laoituazione era !TOSSO modo equilibn,[;I.

Se nel lempo 11, essendo i prezzi ridotti del 35 p"r ""nlo,eppuciò il noddilo nazionale sommando a 6;;, la quotaassorbita dai po!'reeonori di nodditi fusi riman....do in" aria ta a 25~ qu.u.. ottenuta dai nodditi semi·fusi riducendosi forse a 30, aipl'rc.nori di redditi variabili, il eoloro~ com>no il ris"hio delpiù O del DIe2)(), l'inwl&ono eo.identemflll" solo 10. Essi, cl>eOODO molti, si Ial1'ano di DOlI pceer più \"Ì" _.

Se tutti i prezzi fossero fluidi, tutti si ridurrel>b<.ro di unt.no cirea: • 17, 27 e 21. Poiché~ fluidità si oppongonokui. eoatroDi, consuetudini, p ressioni ÌDlpoll"nti di , -izoroseforu social:i. i rappresenWlti dei fl!dditi ,~bili, ~titra r=diDe desii ODeri fusi e semi·fusi. i1 111Mte1lo dei prezziea1aDti. Pft'$UUÌ deDa impossibiliti di on_", ridlUioni diimposte. ronool'lÙti ' mjcbe\..xi con i cnditori, con.o;ensisiDd...· 1j a riduzioDi di Wri,in\~00ll ansi.o.lo spe<iiente,il~ eouseuta di rWu'" nW"~nteprezzi" nodditi da es a.100, eoI. minimo attrito e eoI. eont....to a.ni,..,~. K<oYDes

annW>cia aII 'oopo la ricettl da 5 miliardi di doIlari-<>ro5tl.mpati ad~mento deIJ,e nseo-. J, 1,ll'H.

Ilibliot .....

Ce" ...d i Kindl. P'"

" Ce..", d i ~;"'; I. per PC 2 - In lode de l P.'oIitto • • Itri ", ,,tti (Men:e lo Di,itto l ibert' ta li, n Ed ,tion

inno<:'fllti, &li industriali, &li agricoltori, i C'OllUlWrcian ti probi eiWIlSiIti, i quali hanno fin qui noristito aDuno delhl crisi.

~o. Sì co"'" minor mchio I papre imp<:>sU W ed.interessi inn riati. '-al meglio ras."t;"lni I DOIl I\~~ reddito,ed. I~lod,,~ tempotallNDWllte la propria quob, acuisa di p~ruio di~ deI1a pace 5Ociale, ad impiegatied opern. AIJa lunga, chi riusriri l pqa~ &li intel'e$$i pattuiti,.~ saJ:in. allo ù proprio crNito, Stlti e pri." ti potrannoCOIl....l'tin i propri debiti, appelli. sia 1eplmellle possibile,daD"8 al 6 ~r ""ilIo , dal 6 al S ~r ""alo, dal S al 4 .d al 3 "forse al 2 Vz ~r ""ilIo . La rigida O$Hl'\'anza della parola data,spinta b<!...."co alla soppol'tl1X>ne di quella cJ,. ~ o pari'

inciustizia sostallziale, ~ ,""cono e Siri per un peno la micliorpranzia di sureesso nella >;u degli indi>..dui e dei popoli.

• o • <]. A.iI. III • •»:

Capitolo 9 - Tema per gli storicidell 'economia: dell'anacoeetismo

economico

I . Gio\" ritornan, ~. propo...... DOIl. soluzioni b<!n.s:ip~rui, sopl'& al 1epme fra XI.... h"berale e h"beralismo

..e<lDOmico, che ù c~ l"KO'lll emellle"~le!f!,&] badichia l'&lOcolltinlell!e, .d in Ilessun tooeo forse meeJio che COIl.. parole secuenti:

L'idellliberile pvO i .'e~ un legame contingente eUinsitorìo, Illinon Iti nessull lepme neressario e perpetuo, COlI li proprim,pri u U delli Ifrri e delle industrie: essasi oppone primamente edirettamente all 'opp..-ione e falsificazione delli ."iU morale, daqUilu llque PUIf si _rriti, da assolutisti o da democ ratici, daCilpilalisti o da proletari, da <Zar o da bolsee"iet, e SO!tOqUilunque finzione mitiCil, sia quella delli rilm artena , sii1iI1tri della filee e lIUr!ello; e il promm'imenlOdelli libertio è ilcriterio con cui misura istituti politici e ordinamenti economici,in rapporto i111e nrie ,ituaziolli 'toriche, a volta il "Ollilae<:ettandoll o respillgendoli, """'lido che quegli lstltutl lfrb ino osmantscano efficirn p'" il suo fine, L'ideale libera le ha naturareligiosa, e la Itom della libertà ~ storia religiosache di cont inuo• gludlCil • clomilla la nom "c'momica•• non ~ già Sloriaeoonomiu. che della religione si ...rn di masc:llera , comeimma gilla>'i ~rt )lan, [...] Solo lnO...ndo dalla libem comeesigfflZoil morale è daUl intnl'!"l'tare I~ >IOri.a. Dflla qwole q\lfSUoesigfflZoil si ~ affemwUo e b~ <!"l'alo di volta in volu le propn..istitunoal, -00 che di volGi in volti era possibile Dflle \ 'i neopoc:!le: COllW IllOIWrdùe feudal i e come repubblidlf rom ullolli,tomf _rClUe iWIIute e come _ rcbie Olltituziollali. e ..Ìòl

• (e",~ i Kir>dl. per

fil , Vim. lina vai Slrum, nti Guiclo

.. C • €I " I A& [E] I :.:

(!I2J T l'llduco I modo mio in lire itl1il ne i calcoli de) Keynes.seDZ.a entrlre nei particolari dimostl'l ti' i . A......rto che. anchesorto I1tri IS~, il mio è Un t'ÌlSSunto, che non pretendolett erale, del Sluio del Ke)"tles. TI'ISCUrO una parte note'..,}.,deDe 5ue lflomentlZioni, che I me, sebbene forse non I lui,paiono UtTI"lptlti rispetto Il punto essenziale; e riespongoquest 'ultimo come lo riC05tnw:i nella mia mente, con qu.ùcheamplifieuione , inutil e per &Ii iniziIti, neC'eSSlri.l I chi ' 'DOlerit_ re la ClteDI del l'Ilcionamento Ìll tutti i ouoi anelli. Può<!ani che, riducendo ed I mplifiClndo, io . bbia mutl to. RestaÌllteso che a rilSsunto e le critiche si riferiscono non Il saggiooriginale d~ Ke)'1le5, mi .n.mia rico5truzione.

I21l 1ll una IlOtI COlllUIlic.iti lO 1boow Toob e do questipubbliati mlOppeodke ilio Ktirto A Lnkt IO Ltm1 Cmn:iIII' D~ fI!IoE/frcn A.Jo'lbtd IO rIIt RM<1Il,l:Q)fI ofC4M~ DII rIIt l<ùufo ofrIIt C\o1l'ncJ. LOIldon, JohIl l,JUITllY, , 829,

~ UUiSi su questo pI1Dto ed mI_nle ...ua politic.il.r=DCI~rien del credito un 5igi6, che _ esito I dichiara...=...ndo ...r dusin foru e dirittul'l. di nzlon.;l.mento. di Fritl:lbchlup, "ZW' f l'l.l e der .-\ll.kurbelnlll durch ~tpoIitik",

~fVr;\.~"lit, BmcII\' , Heft 3. pp. 39 8 104. La.\murI di qlleSto e cii litri Slgi pubblic.iti dilli riri>tl. ...."""'" mifa ",l1loIre che CUi 11~ del1I ecceIJenu. !TI. le t'lfelDl'ridi......."".,idw. che ...r quiIcbe lDIlO dopo il .890 pal"<e .-mu daKamI ed l'rISi poi tns1eriUI Loadn ed I Clmbridge CL ) sia Ol'l.dispu.uu., coa esito iIlcerto, da nmlll. È pn!ZZll dell ape conln> Lodiffu'I opìnio!le, del1I quale si fa eco anche il J:eyues.. undtcioo ribIwo del SIgio dello ICOllto YllltiUi<*> I!JlliqllicWioDe eIl Sl.lP"rllDl'll to del1I cri5i, riprodurre Lo Lopjdo.rio sente=l dellachIup: _La poliw del SlWO dello ICOllto dezIi istituti di~ ba indubbiatnetlte UIII &J'I1lde import llw, I nc he nelIlW. deIIl discesa. S«oado hlpillìone dei più. nmport llw, .....

_.

sU~ m un 1I1oggerùnellto o lenimentc delll crW Irtrl'-erso IIriduzione ripida e deciSI del SlUio dello sconto. Secondo II milopinione l 'imporu.nu sti m un differimento delli liquidazione delllcrisi, m un prolunp mento delll situulone dfpress;'-I p recisamentedo" uti ;o]]e b cilititrici ridlllÌOnÌ del SlUiO dello sconto. Se è "eroche il ......r l mento delll crisi consiste in un ristllbilimentodell"'l.ui!ibrio fra costi e prezzi, il qu.ùe renda Iluon mente possibilel1IlI produrione II qu.ùe copri l costi e lasd UII prolirto; se è ~ero

inol tre che l "'I.ui!ibrio nei l'mzi sirlgiunl e tinto più l'l.pidamenlOqllilllto più presto si liqui dano le rimanenze di merci mnnc!ute eqllilllto più rlpidamente si spinl ODO ;o]]',n&iii , costi dei fartoriprodutti,.; e del1I Ioni di Lo~oro; se è ~ero fllll!mmt. che uncresciuto saggiodi KIlIlto acceleT'11o s.. llOtllmeDtodei 1Do1l,il:l:ini edil lnCOIloo dei pmzi, la r ipida riduzioDe del SlWO dello !ICOI1to •• ridenl'lDl'nl' un mem> Irto I prolullp re 1.1 crisi. lJisericorcIioseridUlioni del SlWO dell'Interesse ftCàIlO lIOllie'1l. Esse spin,ODO I

lIlIlIl . ....... 1epositioni al rialzo, le qu.ù11!Jl fi de_""............lbiw>dorl.ale: ...... reIldooo possibile 1.1 tempon. p..-:nzior>e diprod urioni le qlllli da ultimo de.... pIl~ ~ .........: ......comoentnoo cii prolun'l~ Slgi di mlll1 nzione. che sidimostrer lDllO infine imopporu.bili: iD b~~e. essep~ DDdifferimento nella Iiquidarjww del1Icrisi, LeDilheDlO del1Icrisi vuoi.dire prolung=>entll del pl'OCe$llll cii CUI'l. del1I crisi _. n lIachlt:pgiunge ...rtiiI iIIe wguentl p.oposiZloitI eleplltemellt. pirù>5Slli:"r.ddo~e u.n riaIzIl pl'ftlllt\lnl del SlWO dello ICOllto donnte Lo fase~ndente dft rido « oo lOl " ico aaortiI il riaIzIl (e quiDlti IttenUl Locrisi~nte), DD ribIwo p~maturo dft SII&iO deIJo KO<Itonella W. discmdente può prolllllp~ 11 cJer..r ' .... r.ddo~e unriaIzIl troppo u.rdi~o del SIgio cii ICOllto lungo 11 fase ascendenteprolungl il riiIlo (e quillcli awl~11I crisi <:oaMfUeIIte), il riu.rdonel ribawl del SII&iO di scoato durante Lo fase disooIdente puòabb ...~w-. Lo dep~_ .

1UJ. Ho cercato, per lltllil. di dimostn~ m_te LoguelTll, dei miIi sociIli che Lo sesuirooo e di fWTI~ le lui e le Unsedel lfuordine pCI5t--bellico nel ~olllttle LG COIldotfa~ • g~

THE MEANS TO PROSPERITY

BY

JOHN MAYNARD KEYNES

FELLOW OF KING'S COLLEGE, CAMBRIDGE

MACMILLAN AND CO., LIMITED

ST. MARTIN'S STREET, LONDON

1933

THE MEANS TO PROSPERITY

BY

JOHN MAYNARD KEYNES

FELLOW OF KING'S COLLEGE, CAMBRIDGE

MACMILLAN AND CO., LIMITED

ST. MARTIN'S STREET, LONDON

1933

This pamphlet is an enlarged version of four

articles printed in The Times in March 1933.

PRINTED IN GREAT BRITAIN BY

R. & R. CLARK, LIMITED, EDINBURGH

CONTENTS

CHAPTER I

THE NATURE OF THE PROBLEM

CHAPTER II

INTERNAL EXPANSION

CHAPTER III

THE RAISING OF PRICES

CHAPTER IV

A PROPOSAL FOR THE WORLD ECONOMIC CONFERENCE

CHAPTER V

THE INTERNATIONAL NOTE ISSUE AND THE GOLD STANDARD

CHAPTER VI

CONCLUSION

CHAPTER I

THE NATURE OF THE PROBLEM

If our poverty were due to famine or earthquake or war—if we lacked material

things and the resources to produce them, we could not expect to find the Means to

Prosperity except in hard work, abstinence, and invention. In fact, our predicament is

notoriously of another kind. It comes from some failure in the immaterial devices of

the mind, in the working of the motives which should lead to the decisions and acts

of will, necessary to put in movement the resources and technical means we already

have. It is as though two motor-drivers, meeting in the middle of a highway, were

unable to pass one another because neither knows the rule of the road. Their own

muscles are no use; a motor engineer cannot help them; a better road would not

serve. Nothing is required and nothing will avail, except a little, a very little, clear

thinking.

So, too, our problem is not a human problem of muscles and endurance. It is not

an engineering problem or an agricultural problem. It is not even a business problem,

if we mean by business those calculations and dispositions and organising acts by

which individual entrepreneurs can better themselves. Nor is it a banking problem, if

we mean by banking those principles and methods of shrewd judgement by which

lasting connections are fostered and unfortunate commitments avoided. On the

contrary, it is, in the strictest sense, an economic problem, or, to express it better,

as suggesting a blend of economic theory with the art of statesmanship, a problem

of Political Economy.

I call attention to the nature of the problem, because it points us to the nature of

the remedy. It is appropriate to the case that the remedy should be found in

something which can fairly be called a device. Yet there are many who are

suspicious of devices, and instinctively doubt their efficacy. There are still people

who believe that the way out can only be found by hard work, endurance, frugality,

improved business methods, more cautious banking, and, above all, the avoidance of

devices. But the lorries of these people will never, I fear, get by. They may stay up

all night, engage more sober chauffeurs, install new engines, and widen the road; yet

they will never get by, unless they stop to think and work out with the driver

opposite a small device by which each moves simultaneously a little to his left.

It is the existing situation which we should find paradoxical. There is nothing

paradoxical in the suggestion that some immaterial adjustment—some change, so to

speak, “on paper”—should be capable of working wonders.

The paradox is to be found in 250,000 building operatives out of work, when

more houses are our greatest material need. It is the man who tells us that there is no

means, consistent with sound finance and political wisdom, of getting the one to

work at the other, whose judgement we should instinctively doubt. The calculations

which we ought to suspect are those of the statesman, who, being already burdened

with the support of the unemployed, tells us that it would involve him in heavy

liabilities, present and to come, which the country cannot afford, if he were to set the

men to build the houses; and the sanity to be ques]tioned is his, who thinks it more

economical and better calculated to increase the national wealth to maintain

unemployed shipbuilders, than to spend a fraction of what their maintenance is

costing him, in setting them to build one of the greatest works of man.

When, on the contrary, I show, a little elaborately, as in the ensuing chapter, that

to create wealth will increase the national income and that a large proportion of any

increase in the national income will accrue to an Exchequer, amongst whose largest

outgoings is the payment of incomes to those who are unemployed and whose

receipts are a proportion of the incomes of those who are occupied, I hope the reader

will feel, whether or not he thinks himself competent to criticise the argument in

detail, that the answer is just what he would expect,—that it agrees with the

instinctive promptings of his commonsense.

Nor should the argument seem strange that taxation may be so high as to defeat its

object, and that, given sufficient time to gather the fruits, a reduction of taxation will

run a better chance, than an increase, of balancing the Budget. For to take the

opposite view to-day is to resemble a manufacturer who, running at a loss, decides to

raise his price, and when his declining sales increase the loss, wrapping himself in

the rectitude of plain arithmetic, decides that prudence requires him to raise the price

still more;—and who, when at last his account is balanced with nought on both sides,

is still found righteously declaring that it would have been the act of a gambler to

reduce the price when you were already making a loss.

At any rate, the time seems ripe for reconsidering the possibilities of action. In

this belief I here reexamine the advantages of an active policy, beginning with our

own domestic affairs and proceeding to the opportunities of the World Conference.

This Conference may be well-timed in spite of its delay. For it will come at a season

when bitter experience makes the assembled nations readier to consider a plan. The

world is less and less disposed “to wait for the miracle”—to believe that things will

right themselves without action on our part.

CHAPTER II

INTERNAL EXPANSION

The reluctance to support schemes of capital development at home as a means to

restore prosperity is generally based on two grounds—the meagreness of the

employment created by the expenditure of a given sum, and the strain on national

and local budgets of the subsidies which such schemes usually require. These are

quantitative questions not easily answered with precision. But I will endeavour to

give reasons for the belief that the answers to both of them are much more

favourable than is commonly supposed.

It is often said that it costs £500 capital expenditure on public works to give one

man employment for a year. This is based on the amount of labour directly

employed on the spot. But it is easy to see that the materials used and the transport

required also give employment. If we allow for this, as we should, the capital

expenditure per man-year of additional employment is usually estimated, in the case

of building for example, at £200.

But if the new expenditure is additional and not merely in substitution for other

expenditure, the increase of employment does not stop there. The additional wages

and other incomes paid out are spent on additional purchases, which in turn lead to

further employment. If the resources of the country were already fully employed,

these additional purchases would be mainly reflected in higher prices and increased

imports.

But in present circumstances this would be true of only a small proportion of the

additional consumption, since the greater part of it could be provided without much

change of price by home resources which are at present unemployed. Moreover, in

so far as the increased demand for food, resulting from the increased purchasing

power of the working classes, served either to raise the prices or to increase the sales

of the output of primary producers at home and abroad, we should to-day positively

welcome it. It would be much better to raise the price of farm products by increasing

the demand for them than by artificially restricting their supply.

Nor have we yet reached the end. The newly employed who supply the increased

purchases of those employed on the new capital works will, in their turn, spend

more, thus adding to the employment of others; and so on.

Some enthusiasts, perceiving the fact of these repercussions, have greatly

exaggerated the total result, and have even supposed that the amount of new

employment thus created is only limited by the necessary intervals between the

receipt of expenditure of income, in other words by the velocity of circulation of

money. Unfortunately it is not quite as good as that. For at each stage there is, so to

speak, a certain proportion of leakage. At each stage a certain proportion of the

increased income is not passed on in increased employment. Some part will be saved

by the recipients; some part raises prices and so diminishes consumption elsewhere,

except in so far as producers spend their increased profits; some part will be spent on

imports; some part is merely a substitution for expenditure previously made out of

the dole or private charity or personal savings; and some part may reach the

Exchequer without relieving the taxpayer to an equal extent. Thus in order to sum

the net effect on employment of the series of repercussions, it is necessary to make

reasonable assumptions as to the proportion lost in each of these ways. I would refer

those who are interested in the technique of such summations to an article by Mr. R.

F. Kahn published in The Economic Journal, June 1931.

It is obvious that the appropriate assumptions vary greatly according to

circumstances. If there were little or no margin of unemployed resources, then, as I

have said above, the increased expenditure would largely waste itself in higher

prices and increased imports (which is, indeed, a regular feature of the later stages of

a boom in new construction). If the dole was as great as a man's earnings when in

work and was paid for by borrowing, there would be scarcely any repercussions at

all. On the other hand, now that the dole is paid for by taxes and not by borrowing

(so that a reduction in the dole may be expected to increase the spending power of

the taxpayer), we no longer have to make so large a deduction on this head.

My own estimate, taking very conservative figures in the light of present

circumstances, makes the multiplier to be at least 2. It follows that the loan-

expenditure per man-year of employment is, not the figure of £500 with which we

began, but £100. Since, however, I am anxious not to overstate what will be a

sufficiently striking conclusion anyhow, let us take it at 1½, i.e. that two men

employed by loan-expenditure lead indirectly to the employment, not of two further

men, which represents my own belief, but of one further man. I do not think that

anyone who goes through the detailed calculation can bring it out at less than this;

which means that additional loan-expenditure of £200 on[Pg 12] materials, transport,

and direct employment puts, not one man to work for a year, but—taking account

of the whole series of repercussions—one and a half men. This gives us a figure of

£133 as the amount of additional loan-expenditure required to-day to stimulate a

man-year of employment.

But let us, in order to give ourselves a further margin of safety, base our

argument on the figure of £150. This answers, most conservatively, the first of our

two questions.

Next consider the magnitude of the relief to the Budget. For purposes of broad

calculation, the average cost of a man on the dole is usually taken, I think, at £50 a

year. Since, on the basis of the above calculation, a loan-expenditure of £3,000,000

will employ at least 20,000 men for a year directly or indirectly, it follows that it will

save the dole £1,000,000. Here is one-third of the expenditure already accounted for.

But there is a further benefit to the Budget. The yield of the taxes rises and falls

more or less in proportion to the national income. Our budgetary difficulties to-day

are mainly due to the decline in the national income. Now for the nation as a whole,

leaving on one side transactions with foreigners, its income is exactly equal to its

expenditure (including in expenditure both consumption-expenditure and new

capital-expenditure, but excluding intermediate exchanges from one hand to

another);—the two being simply different names for the same thing, my expenditure

being your income. Thus new capital-expenditure of £3,000,000, paid for by an

additional loan and not by reducing consumption-expenditure or existing capital-

expenditure, increases the national income by more than £3,000,000 if we allow for

repercussions. The calculation to obtain the appropriate multiplier is much the same

as in the case of employment; except that it is somewhat greater, since to obtain the

national money-income we do not have to make the same deduction for a rise in

prices. However, to be on the safe side, let us, as before, take the multiplier as being

1½.

It follows that our capital expenditure of £3,000,000 will increase the national

income, subject to taxation, by £4,500,000. Now on the average about 20 per cent of

the national income is paid to the Exchequer in taxes. The exact proportion depends

on how the new income is distributed between the higher ranges of income subject to

direct taxation, and the lower ranges which are touched by indirect taxes; also the

yield of some taxes is not closely correlated with changes in national income. To

allow for these doubts, let us take the proportion of the new income accruing to the

Exchequer at 10 per cent, i.e. £450,000. There will, it is true, be some time-lag in the

collection of this, but we need not trouble about that; though it is a powerful

argument in favour of proposals for modifying the rigidity of our annual Budget and

for making our estimates, on this occasion, cover a longer period than one year.

Owing to the time-lag in the effect of increased taxation in reducing the national

income our existing budgetary procedure is open to the serious objection that the

measures which will balance this Budget are calculated to unbalance the next one;

and vice versa.

Thus the total benefit to the Exchequer of an additional loan-expenditure of

£3,000,000 is at least £1,000,000 plus £450,000; or, in round figures,

£1,500,000, i.e. a half of the loan-expenditure; or two-thirds of it, if we were to take

the multiplier as 2. We need see nothing paradoxical in this. We have reached a

point where a considerable proportion of every further decline in the national income

is visited on the Exchequer through the agency of the dole and the decline in the

yield of the taxes. It is natural, therefore, that the benefit of measures to increase the

national income should largely accrue to the Exchequer.

If we apply this reasoning to the projects for loan-expenditure which are receiving

support to-day in responsible quarters, we see that it is a complete mistake to believe

that there is a dilemma between schemes for increasing employment and schemes for

balancing the Budget,—that we must go slowly and cautiously with the former for

fear of injuring the latter. Quite the contrary. There is no possibility of balancing the

Budget except by increasing the national income, which is much the same thing as

increasing employment.

Take, for example, the proposal to spend £7,000,000 on the new Cunarder. I say

that this will benefit the Exchequer by at least a half of this sum, i.e. by £3,500,000,

which vastly exceeds the maximum aid which is being asked from the Exchequer.

Or take the expenditure of £100,000,000 on housing, whether for rebuilding slums

or under the auspices of a National Housing Board, this would benefit the Budget by

the vast total of some £50,000,000—a sum far exceeding any needful subsidy. If the

mind of the reader boggles at this and he feels that it must be too good to be true, let

him recur carefully to the argument which has led up to it. And if he distrusts his

own judgement, let him wait and see if any competent person has been able to

confound the bases of the argument, where I first offered it coram publico in the

forum of The Times.

Substantially the same argument also applies to a relief of taxation by suspending

the Sinking Fund and by returning to the practice of financing by loans those

services which can properly be so financed, such as the cost of new roads charged on

the Road Fund and that part of the cost of the dole which can be averaged out against

the better days for which we must hope. For the increased spending power of the

taxpayer will have precisely the same favourable repercussions as increased

spending power due to loan-expenditure; and in some ways this method of

increasing expenditure is healthier and better spread throughout the community. If

the Chancellor of the Exchequer will reduce taxation by £50,000,000 through

suspending the Sinking Fund and borrowing in those cases where formerly we

thought it reasonable to borrow, the half of what he remits will in fact return to him

from the saving on the dole and the higher yield of a given level of taxation;—

though, as I have pointed out above, it will not necessarily return to him in the

same Budget. I strongly support, therefore, the suggestion which has been made that

the next Budget should be divided into two parts, one of which shall include those

items of expenditure which it would be proper to treat as loan-expenditure in present

circumstances.

I should add that this particular argument does not apply to a relief of taxation

balanced by an equal reduction of Government expenditure (by reducing school

teachers' salaries, for example); for this represents a redistribution, not a net increase,

of national spending power. It is applicable to all additional expenditure made, not

in substitution for other expenditure, but out of savings or out of borrowed money,

either by private persons or by public authorities, whether for

capital purposes or for consumption made possible by a relief of taxation or in some

other way.

It is often pointed out that, when loan-expenditure was on a larger scale as a result

of official encouragement, this did not prevent an increase of unemployment. But at

that time it was offsetting incompletely an even more rapid deterioration in our

foreign balance. The effects of an increase or decrease of £100,000,000 in our loan-

expenditure are, broadly speaking, equal to the effects of an increase or decrease of

£100,000,000 in our foreign balance. Formerly we had no visible benefit from our

loan-expenditure, because it was being offset by a deterioration in our foreign

balance. Recently we have had no visible benefit from the improvement in our

foreign balance, because it has been offset by the reduction in our loan-expenditure.

To-day for the first time it is open to us, if we choose, to have both factors

favourable at once.

If these conclusions cannot be refuted, is it not advisable to act upon them? The

contrary policy of endeavouring to balance the Budget by impositions, restrictions,

and precautions will surely fail, because it must have the effect of diminishing the

national spending power, and hence the national income.

CHAPTER III

THE RAISING OF PRICES

It is the declared policy of the Government, and also of the representatives of the

Empire assembled at Ottawa, to raise prices. How are we to do it?

To judge from some utterances of the Chancellor of the Exchequer, he has been

attracted to the idea of raising the prices of commodities by restricting their supply.

Now, it may well benefit the producers of a particular article to combine to restrict

its output. Equally it may benefit a particular country, though at the expense of the

rest of the world, to restrict the supply of a commodity which it is in a position to

control. It may even, very occasionally, benefit the world as a whole to organise the

restriction of output of a particular commodity, the supply of which is seriously out

of balance with the supply of other things. But as an all-round remedy restriction is

worse than useless. For the community as a whole it reduces demand, by destroying

the income of the retrenched producers, just as much as it reduces supply. So far

from being a means to diminish unemployment, it is, rather, a method of distributing

more evenly what unemployment there is, at the cost of somewhat increasing it.

How, then, are we to raise prices? It may help us to think clearly, if I proceed by

means of a series of very simple, but fundamental propositions.

(1) For commodities as a whole there can be no possible means of raising their

prices except by in]creasing expenditure upon them more rapidly than their supply

comes upon the market.

(2) Expenditure can only be increased if the public spend a larger proportion of

the incomes they already have, or if their aggregate spending power is increased in

some other way.

(3) There are narrow limits to increasing expenditure out of existing incomes,—

whether by saving less or by increased personal expenditure of a capital nature.

Incomes are so curtailed to-day and taxation so much increased, that many people

are already, in the effort to maintain their standard of life, saving less than sound

personal habits require. Anyone who can afford to spend more should be encouraged

to do so, particularly if he has opportunities to spend on new capital or semi-capital

objects. But it is an evasion of the magnitude of the problem to believe that we can

solve it in this way. It follows, therefore, that we must aim at increasing aggregate

spending power. If we can achieve this, it will partly serve to raise prices and partly

to increase employment.

(4) Putting on one side the special case of people who can earn their incomes by

actually producing gold, it is broadly true to say that aggregate spending power

within a country can only be raised either (i.) by increasing the loan-expenditure of

the community; or (ii.) by improving the foreign balance so that a larger proportion

of current expenditure again becomes income in the hands of home producers. By

means of public works the Labour Government—though rather half-heartedly and in

adverse attendant circumstances—attempted the first. The National Government has

successfully attempted the second. We have not yet tried both at once.

(5) But there is a great difference between the two methods, inasmuch as only the

first is valid for the world as a whole. The second method merely means that one

country is withdrawing employment and spending power from the rest of the world.

For when one country improves its foreign balance, it follows that the foreign

balance of some other country is diminished. Thus we cannot increase total output in

this way or raise world prices, unless, as a by-product, it serves to increase loan-

expenditure by strengthening confidence in a financial centre such as Great Britain

and so making it a more ready lender both at home and abroad.

Currency depreciation and tariffs were weapons which this country had in hand

until recently as a means of self-protection. A moment came when we were

compelled to use them, and they have served us well. But competitive currency

depreciations and competitive tariffs, and more artificial means of improving an

individual country's foreign balance such as exchange restrictions, import

prohibitions, and quotas, help no one and injure each, if they are applied all round.

We are left, therefore, with the broad conclusion that there is no effective means

of raising world prices except by increasing loan-expenditure throughout the world.

It was, indeed, the collapse of expenditure financed out of loans advanced by the

United States, for use both at home and abroad, which was the chief agency in

starting the slump.

A number of popular remedies are rightly popular because they tend to facilitate

loan-expenditure. But there are several stages in the task of increasing loan-

expenditure; and, if there is a breakdown at any one of them, we shall fail to attain

our object. I must ask the reader, therefore, to be patient with a further attempt at

orderly analysis.

(1) The first necessity is that bank-credit should be cheap and abundant. This is

only possible if each Central Bank is freed from anxiety by feeling itself to possess

adequate reserves of international money. The loss of confidence in bank balances

held in leading financial centres as constituting international money for this purpose,

has greatly aggravated the shortage of reserves.

So has the accumulation of a large proportion of the world's gold in a few Central

Banks. On the other hand, we all welcome an increased output of the gold mines or a

reduction in India's sterile hoards, because the quantity of reserve money is thus

increased. The devaluation of national currencies in terms of gold is another remedy

belonging to this category. Or, again, the abandonment of rigid gold parities may

help the case, since a Central Bank which can, if necessary, relieve a strain by

allowing the foreign exchanges to move against it, will be satisfied with a smaller

reserve of international money. The abatement of the legal proportion of

international money, which a bank must hold against its note issue, might also help

on a minor scale.

But this is only the first stage. In the early phase of recovery there is not much

loan-expenditure which can be safely financed by short-term bank-credit. The rôle of

bank-credit is to finance the restoration of working capital after business recovery

has definitely set in. In ordinary times we were able to rely on the first stage leading

automatically to the subsequent stages. But not in the conditions of to-day.

(2) The second stage, therefore, must be reached, at which the long-term rate of

interest is low for all reasonably sound borrowers. This requires a combination of

manœuvres by the Government and the Central Bank in the shape of open-market

operations by the Bank, of well-judged Conversion Schemes by the Treasury, and of

a restoration of financial confidence by a Budget policy approved by public opinion

and in other ways. It is at this stage that a certain dilemma exists; since it may be

true, for psychological reasons, that a temporary reduction of loan-expenditure plays

a necessary part in effecting the transition to a lower long-term rate of interest.

Since, however, the whole object of the policy is to promote loan-expenditure, we

must obviously be careful not to continue its temporary curtailment a day longer

than we need.

A few countries have reached the first stage. But we alone have reached the

second stage. It is a great achievement of the Treasury and the Bank of England to

have effected so successfully a transition which France and the United States, for

whom the task was, until recently, much easier, have bungled so badly.

(3) But there remains a third stage. For even when we have reached the second

stage, it is unlikely that private enterprise will, on its own initiative, undertake new

loan-expenditure on a sufficient scale. Business enterprise will not seek to expand

until after profits have begun to recover. Increased working capital will not be

required until after output is increasing. Moreover, in modern communities a very

large proportion of our normal programmes of loan-expenditure are undertaken by

public and semi-public bodies. The new loan-expenditure which trade and industry

require in a year is comparatively small even in good times. Building, transport, and

public utilities are responsible[Pg 22] at all times for a very large proportion of current

loan-expenditure.

Thus the first step has to be taken on the initiative of public authority; and it

probably has to be on a large scale and organised with determination, if it is to be

sufficient to break the vicious circle and to stem the progressive deterioration, as

firm after firm throws up the sponge and ceases to produce at a loss in the seemingly

vain hope that perseverance will be rewarded.

Some cynics, who have followed the argument thus far, conclude that nothing

except a war can bring a major slump to its conclusion. For hitherto war has been the

only object of governmental loan-expenditure on a large scale which governments

have considered respectable. In all the issues of peace they are timid, over-cautious,

half-hearted, without perseverance or determination, thinking of a loan as a liability

and not as a link in the transformation of the community's surplus resources, which

will otherwise be wasted, into useful capital assets.

I hope that our Government will show that this country can be energetic even in

the tasks of peace. It should not be difficult to perceive that 100,000 houses are a

national asset and 1,000,000 unemployed men a national liability.

(4) Yet if we are to raise world prices, which is our theme, there is yet a fourth

stage. Loan-expenditure must spread its beneficent influence round the world. How

to assist that will be the subject of the next chapter.

CHAPTER IV

A PROPOSAL FOR THE WORLD ECONOMIC CONFERENCE

We have reached the conclusion that there is no means of raising world prices

except by an increase of loan-expenditure throughout the world. How to achieve this

should, I suggest, be the central theme of the World Economic Conference. There

are, I think, three, and only three, possible lines along which we can lend assistance.

(1) The first, and perhaps the most obvious, means is that of direct foreign loans,

in the style to which we have been accustomed in the past, from the strong financial

countries, which have a favourable foreign balance or excessive reserves of gold, to

the weaker, debtor countries.

The time may be coming for a return to this traditional policy, as opportunity

offers. But it would be chimerical to suppose that such foreign loans can play a large

part to-day in bringing about recovery. Those countries which are best able to make

them are least likely to do so. Nor is it reasonable to expect private investors to

assume new risks of this kind, when those which they have already assumed are

turning out so badly.

(2) The second, and more promising, means is for the stronger financial countries

to increase loan-expenditure at home, on the lines recommended in Chapter II above.

For such expenditure will be twice blessed. In so far as it sets up a stream of

expenditure on

home-produced goods, the favourable repercussions of the initial loan-expenditure

on employment will be multiplied. In so far as it leads to expenditure on imported

goods, it will set up similar favourable repercussions abroad, and will strengthen the

position of the countries from which we buy, both to make reciprocal purchases and

also to augment their own loan-expenditure. It will have set the ball rolling.

It may be better, therefore, to use our available resources to finance the additional

imports, to which a bold policy of loan-expenditure at home is likely to lead, than to

make foreign loans. This will be just as beneficial to the outside world, and

decidedly more healthy than further additions to international indebtedness.

(3) Yet, once again, it seems obvious that we are discussing, so far, remedies of

which the quantitative effect is hopelessly disproportionate to the problem of raising

world prices. I see no reliable prospect of a sufficient rise in world prices within a

reasonable time, except as the result of a substantial, and more or less simultaneous,

relief of taxation and increase of loan-expenditure in many different countries. We

should attach great importance to the simultaneity of the movement towards

increased expenditure.

For the pressure on its foreign balance, which each country fears as the result of

increasing its own loan-expenditure, will cancel out if other countries are pursuing

the same policy at the same time. Isolated action may be imprudent. General action

has no dangers whatever.

We are now advanced a stage further in our argument. We have reached the point

where combined international action is of the essence of policy. We have reached,

that is to say, the field and scope of the World Economic Conference. The task of

this Conference, as I[Pg 25] see it, is to devise some sort of joint action of a kind to

allay the anxieties of Central Banks and to relieve the tension on their reserves, or

the fear and expectation of tension. This would enable many more countries to reach

the first of the stages which I distinguished in Chapter III—the stage at which bank-

credit is cheap and abundant. We cannot, by international action, make the horses

drink. That is their domestic affair. But we can provide them with water. To revive

the parched world by releasing a million rivulets of spending power is the primary

task of the World Conference.

For the Conference to occupy itself with pious resolutions concerning the

abatement of tariffs, quotas, and exchange restrictions will be a waste of time. In so

far as these things are not the expression of deliberate national or imperial policies,

they have been adopted reluctantly as a means of self-protection, and are symptoms,

not causes, of the tension on the foreign exchanges. It is dear to the heart of

Conferences to pass pious resolutions deploring symptoms, whilst leaving the

disease untouched. It should be the rôle of the British Government to make a reality

of this forthcoming Conference by concrete proposals which would go to the root of

the disease.

There are certain preliminaries which must be accomplished before positive

remedies will have a fair chance. We all agree that the settlement of War Debts and

of Reparations are, first of all, indispensable. For these are of primary importance in

creating fear of acute tension on the foreign exchanges. But have we a positive

scheme of action wherewith to seize the opportunity which the settlement of these

issues would create?

No remedies can be quickly efficacious which do not allay the anxieties of

Treasuries and Central Banks throughout the world by supplying them with more

adequate reserves of international money. There is a considerable variety of schemes

which can be devised with this end in view, having a close family resemblance to

one another. After much private discussion and borrowing the ideas of others, I am

convinced that the following scheme is the best one. If other variants command

more support, that would be a reason for preferring them.

There are certain conditions which any scheme for increasing the reserves of

international money should satisfy. In the first place, the additional reserves should

be based on gold. For whilst gold is rapidly ceasing to be national money, it is

becoming, even more exclusively than before, the international money most

commonly held in reserve and used to meet a foreign drain. In the second place, it

should not be of an eleemosynary character, but should be available, not only to the

exceptionally needy, but to all participating countries in accordance with a general

formula. Indeed there are few, if any, countries left to-day which are so entirely

without anxiety that they would not welcome some strengthening of their position.

In the third place, there should be an elasticity in the quantity of the additional

reserves outstanding, so that they would operate, not as a net permanent addition to

the world's monetary supply, but as a balancing factor to be released when prices are

abnormally low as at present, and to be withdrawn again if prices were to be rising

too much. These conditions can be satisfied as follows:[Pg 27]

(i) There should be set up an international authority for the issue of

gold-notes, of which the face value would be expressed in terms of the gold

content of the U. S. dollar.

(ii) These notes would be issuable up to a maximum of $5,000,000,000,

and would be obtainable by the participating countries against an equal face

value of the gold-bonds of their governments, up to a maximum quota for each

country.

(iii) The proportionate quota of each country would be based on some

such formula as the amount of gold which it held in reserve at some recent

normal date, e.g., at the end of 1928, provided that no individual quota should

exceed $450,000,000, and with power to the governing board to modify the

rigidity of this formula where special reasons could be given for not adhering

to it strictly. (Some provision, for example, would be required for silver-using

countries.) The effect of this formula would be that the quota of each country

would add to its reserves an amount approximately equal to the gold which it

held in 1928, subject to the above maximum proviso. The detailed allocation

for each country is given in an Appendix to this chapter.

(iv) Each participating government would undertake to pass legislation

providing that these gold-notes would be acceptable as the equivalent of gold,

except that they should not enter into the active circulation but would be held

only by Treasuries, Central Banks, or in the reserves against domestic note-

issues.

(v) The governing board of the institution would be elected by the

participating governments, who would be free to delegate their powers to their

Central Banks, each having a voting power in proportion to its quota.

(vi) The gold-bonds would carry a rate of interest, nominal or very low

in the first instance, which could be changed from time to time by the

governing board subject to (viii) below. They would be repayable at any time

by the government responsible for them, or on notice given by the governing

board subject to (viii) below.

(vii) The interest, after meeting expenses, would be retained in gold as a

guarantee fund. In addition, each participating government would guarantee

any ultimate loss, arising through a default, in proportion to the amount of its

maximum quota.

(viii) The governing board would be directed to use their discretion to

modify the volume of the note-issue or the rate of interest on the bonds, solely

with a view to avoiding, so far as possible, a rise in the gold price-level of

primary products entering into international trade above some agreed norm

between the present level and that of 1928—perhaps the level of 1930.

APPENDIX

Under the formula for distributing the $5,000,000,000 gold-notes in proportion to

the gold held in reserve by each country at the end of 1928 subject to a maximum of

$450,000,000 to any one country, the allocation would work out as follows:

Seven countries (Great Britain, United States, France, }

Germany, Spain, Argentine, and Japan) would } $450,000,000 each

qualify for the maximum }

$

$

Italy 266,000,000

Poland 70,000,000

Holland 175,000,000

Uruguay 68,000,000

Brazil 149,000,000

Java 68,000,000

Belgium 126,000,000

Sweden 63,000,000

India 124,000,000

Denmark 46,000,000

Canada 114,000,000

Norway 39,000,000

Australia 108,000,000

South

Africa 39,000,000

Switzerland 103,000,000

New

Zealand 35,000,000

$

$

Hungary 35,000,000

Bulgaria 10,000,000

Czecho-

Slovakia 34,000,000

Portugal 9,000,000

Roumania 30,000,000

Finland 8,000,000

Austria 24,000,000

Greece 7,000,000

Colombia 24,000,000

Chile 7,000,000

Peru 20,000,000

Latvia 5,000,000

Jugoslavia 18,000,000

Lithuania 3,000,000

Egypt 18,000,000

Esthonia 2,000,000

No country would have injustice done to it by this particular choice of date except

Chile, whose case might deserve special consideration, and, to a lesser extent,

Greece and Canada. If we were to take the highest figure held at the end of any year

from 1925 to 1928, the following would be the only changes in the above total:

1928. Highest of 1925 to

1928.

$ $

Denmark 46,000,000 56,000,000

Greece 7,000,000 10,000,000

Holland 175,000,000 178,000,000

Canada 114,000,000 158,000,000

Chile 7,000,000 34,000,000

New Zealand 35,000,000 38,000,000

Java 68,000,000 79,000,000

South Africa 39,000,000 44,000,000

CHAPTER V

THE INTERNATIONAL NOTE ISSUE AND THE GOLD STANDARD

In the last chapter I have proposed the creation of an International Note Issue

designed to relieve the anxieties of the world's Central Banks, so as to free their

hands to promote loan-expenditure and thus raise prices and restore employment.

The necessity of this policy is a consequence of the conclusion, which I reiterate

with emphasis, that there is no means of raising world prices except by increasing

loan-expenditure. But it is desirable that I should attempt to fill in some further

details in this far-reaching proposal.

Its adoption would afford a good opportunity, if sufficient agreement could be

obtained, to secure promises that the assistance thus given would be used, in the first

instance, to abate certain unsound international practices which have become

common under stress of hard circumstances. Exchange restrictions should be

abolished. Standstill agreements and the immobilisation of foreign balances should

be replaced by definitive schemes for gradual liquidation. Tariffs and quotas

imposed to protect the foreign balance, and not in pursuance of permanent national

policies, should be removed. The stronger financial centres should re-open their

money markets to foreign loans. Defaults on public debts held abroad should be

terminated, with the aid of the postponement of sinking funds and some writing[Pg

31] down of interest or principal, perhaps based on an index number of prices, where

incapacity, even in the new circumstances, is proved to the satisfaction of an

independent expert body. For my own part, I should withhold participation in the

scheme from any country which was acting in defiance of its international

agreements and obligations.

Subject to these external conditions, it would be advisable to leave to each

participant an unfettered discretion as to the best means of utilising its quota. For

there is great variety in the needs of different countries. Some would discharge

pressing foreign obligations; some would restore budgetary equilibrium; some would

re-establish commercial credit; some would prepare for conversion schemes; some

would organise schemes of national development; and so on. But all uses alike

would tend in the desired direction.

There remains, however, one essential condition, upon which I have not yet

touched. The notes would be gold-notes, and the participants would agree to accept

them as the equivalent of gold. This implies that the national currencies of each

participant would stand in some defined relationship to gold. It involves, that is to

say, a qualified return to the gold standard.

It may seem odd that I, who have lately described gold as “a barbarous relic”,

should be discovered as an advocate of such a policy, at a time when the orthodox

authorities of this country are laying down conditions for our return to gold which

they must know to be impossible of fulfilment. It may be that, never having loved

gold, I am not so subject to disillusion. But, mainly, it is because I believe that gold

has received such a gruelling that conditions might now be laid down for its future

management, which would not have been[Pg 32] acceptable otherwise. At any rate my

advocacy is subject to the qualifications which follow.

It would be a necessary condition for the adoption of the proposed International

Note Issue that each participating country should adopt a de facto parity between

gold and its national currency, with buying and selling points for gold separated by

not more than 5 per cent. With the increased supply of gold and its equivalent

brought into existence by the new Note Issue, such a commitment by this country

would be, in my judgement, both safe and advisable. The de facto parity should be

alterable, if necessary, from time to time if circumstances were to require, just like

bank-rate,—though by small degrees one would hope. An unchangeable parity

would be unwise until we know much more about the future course of international

prices, and the success of the board of the new international authority in influencing

it; and it would, moreover, be desirable to maintain permanently some power of

gradual adjustment between national and international conditions. In addition, the

governing board should have some discretionary power to deal with emergencies

and exceptional cases. The margin of 5 per cent between the gold points would be

essential, in the light of recent experience, as a deterrent and a protection against the

wild movements of liquid funds from one international centre to another, and to

allow a reasonable independence of bank-rate and credit policy to suit differing

national circumstances,—though there would be nothing to prevent a Central Bank

from maintaining the gold equivalent of its national money within narrower limits in

normal practice.

With these precautionary safeguards there would be much to gain and little to lose

from the greater stab[Pg 33]ility of the foreign exchanges which would ensue. There

can be no object in exchange fluctuations except to offset undesired changes in the

international price level, or, occasionally, to make an adjustment, with the minimum

of friction, to special national conditions, temporary or permanent; and they should

not be allowed to occur for any other reason.

It can be claimed, I think, as a considerable incidental advantage of the plan here

set forth, that it would enable the condition to be satisfied which our authorities have

laid down for even a qualified return to gold on the part of this country, namely, that

there must be a more equal distribution of the world's gold reserves. Indeed I can

imagine no other way by which this condition could be satisfied within a reasonable

time. For if it means that the Bank of France and the Federal Reserve System of the

United States are to share out their gold reserves with the impecunious countries of

the world, it is clearly quite remote—to-day more than ever—from anything which

can possibly happen. Equally if it means that these countries are to lend abroad sums

so much greater than their foreign balance as to lead to a heavy outward drain of

gold, this also is what no reasonable person would expect. Moreover, in the

conditions of to-day, with the employment of foreign balances as reserve money

completely at an end, and after the experiences by the world's strongest financial

centres of the scale on which balances can seek to move, it is not merely a question

of the maldistribution of gold. We need a much greater absolute amount of reserve

money to support a given level of world-prices, than was necessary before the recent

shocks to international credit. This may not be a permanent requirement. But it exists

to-day, and it must be satisfied[Pg 34] before we can expect that ease of mind and

absence of anxiety on the part of Central Banks which is a condition of their freely

encouraging the increased loan-expenditure without which world prices cannot rise.

Some such plan, therefore, as that which I have proposed has become an

indispensable condition of world recovery. It is useless to do lip-service to the need

of raising world prices if we neglect the only measures which can have that result.

The alternative, sometimes suggested, of a simultaneous devaluation of all

national currencies in terms of gold, whilst offering some advantages, has the great

defect that it would only strengthen the position of those countries which already

hold large reserves of gold and are, therefore, relatively strong.

CHAPTER VI

CONCLUSION

I have endeavoured to cover a wide field in a few words. But my theme has been

essentially simple, and I am hopeful, therefore, that I have been able to convey it to

the reader.

Many proposals now current are substantially similar in intention to the proposals

of this pamphlet. Some deal with one part of the field; some with another. We shall

have need of more than one, if our action is to be adequate to the problem. After

making all due allowances for the factors which will cause a larger number of men

to appear in the unemployment returns even in good times, we have the task of

putting at least 1,000,000 men back to work. On the figure of £150 primary

expenditure to put one man to work for a year, which I have adopted above as my

working hypothesis, we should need an increased loan-expenditure plus an increased

foreign balance amounting altogether to £150,000,000. If we take the more

optimistic figure of £100 per man, which I am myself disposed to favour, the

primary expenditure required will be £100,000,000 per annum. We cannot rely on

much further assistance towards this total from the foreign balance, until after world

recovery has set in. Thus it would be prudent to assume that we have urgent need of

the addition of at least £100,000,000 to our annual primary expenditure from

increased loan-expenditure at home.

This is a formidable, but not an impossible, figure to[Pg 36] attain. At least £50,000,000 might reasonably come from a relief of taxation as a result of suspending the sinking fund and borrowing for appropriate purposes; though this would not lead to increased primary expenditure of so much as £50,000,000. On this basis an additional loan-expenditure of (say) £60,000,000 by private enterprise, assisted and unassisted, local authorities, public boards, and the Central Government, would be a substantial step towards re-establishing employment.

We are, I think, too much discouraged as to the potentialities of fruitful action

along these lines, because the effect of previous efforts has been masked by

offsetting influences. It is most important to understand that the effects of loan-

expenditure and of the foreign balance are in pari materia. Thus it was the rapid

decline of the foreign balance by £75,000,000 in 1930 and by £207,000,000 in 1931

as compared with 1929,[1] which defeated the attempt of the Labour Government to

increase employment by loan-expenditure; the additional loan-expenditure for

which they were responsible being on a much smaller scale than this. But, again, the

improvement of the foreign balance in 1932 by £74,000,000 as compared with 1931

has brought no increase in employment, because it has been offset by the drastic

measures of the National Government to reduce loan-expenditure. Heaven knows to

what plight a combination of the policy of the Labour Government in doing nothing

to protect the foreign balance, with the policy of the National Government to curtail

loan-[Pg 37]expenditure might not have brought us! Business losses would have risen

to a figure comparable with those in the United States,[2] bankrupting our railways

and bringing the industry of the country virtually to a standstill. On the other hand,

we have the other combination still untried—the policy of protecting the foreign

balance and at the same time doing all in our power to stimulate loan-expenditure.

I plead, therefore, for a trial of this untried combination in our domestic policy;

and for the World Economic Conference an advocacy by our representatives of an

expansion of international reserve money on the general lines proposed above.

For we have reached a critical point. In a sense, it is true that the mists are lifting.

We can, at least, see clearly the gulf to which our present path is leading. Few of us

doubt that we must, without much more delay, find an effective means to raise world

prices; or we must expect the progressive breakdown of the existing structure of

contract and instruments of indebtedness, accompanied by the utter discredit of

orthodox leadership in finance and government, with what ultimate outcome we

cannot predict.

The authorities in power have pronounced in favour of raising world prices. It is,

therefore, incumbent upon them to have some positive policy directed to that end. If

they have one, we do not know what it is. I have tried to indicate some of the

fundamental conditions which their policy must satisfy if it is to be successful, and

to suggest the kind of plan which might be capable of realising these conditions.

: FOOTNOTES

[1]These figures are the estimates of the Board of Trade, except that the American debt

payment in 1932, which was paid for in gold, has been omitted. I believe myself that in all

these years the absolute figures may have been some £25,000,000 better than the Board of

Trade allows. But this would not affect the comparative figures given above.

[2]I should attribute the extremity of the plight of the United States largely to the combined

effect of their having no dole financed out of loans, as there was in this country prior to 1932,

and no means of improving the foreign balance such as we employed after September 1931.