CH. 8 THE PROPENSITY TO CONSUME: I I0I

Or again, in Great Britain at the present time(1935) the substantial amount of house-building andof other new investments since the war has led to anamount of sinking funds being set up much in excessof any present requirements for expenditure on repairsand renewals, a tendency which has been accentuated,where the investment has been made by local authoritiesand public boards, by the principles of“sound” financewhich often require sinking funds sufficient to writeoff the initial cost some time before replacement willactually fall due; with the result that even if privateindividuals were ready to spend the whole of their netincomes it would be a severe task to restore full em-ployment in the face of this heavy volume of statutoryprovision by public and semi-public authorities, entirelydissociated from any corresponding new investment.The sinking funds of local authorities now stand,I think,1 at an annual figure of more than half theamount which these authorities are spending on thewhole of their new developments.2 Yet it is not cer-tain that the Ministry of Health are aware, when theyinsist on stiff sinking funds by local authorities, howmuch they may be aggravating the problem of un-employment. In the case of advances by BuildingSocieties to help an individual to build his own house,the desire to be clear of debt more rapidly than thehouse actually deteriorates may stimulate the house-owner to save more than he otherwise would;—thoughthis factor should be classified, perhaps, as diminishingthe propensity to consume directly rather than throughits effect on net income. In actual figures, repay-ments of mortgages advanced by Building Societies,which amounted to£24,000,000 in 1925, had risen to

1 The actual figures are deemed of so little interest that they are onlypublished two years or more in arrear.

2 In the year ending March 31, 1930, local authorities spent£87,000,000on capital account, of which£37,000,000 was provided by sinking funds,etc., in respect of previous capital expenditure; in the year ending March 31,1933, the figures were£81,000,000 and£46,000,000.