308 THE GENERAL THEORY OF EMPLOYMENT bk. v

centres was about 5 per cent., and the gilt-edged ratebetween 3 and 3J per cent.; and that these rates ofinterest were modest enough to enourage a rate of in-vestment consistent with an average of employmentwhich was not intolerably low. Sometimes the wage-unit, but more often the monetary standard or themonetary system (in particular through the develop-ment of bank-money), would be adjusted so as to ensurethat the quantity of money in terms of wage-units wassufficient to satisfy normal liquidity-preference at ratesof interest which were seldom much below the standardrates indicated above. The tendency of the wage-unitwas, as usual, steadily upwards on the whole, but theefficiency of labour was also increasing. Thus thebalance of forces was such as to allow a fair measure ofstability of prices;—the highest quinquennial averagefor Sauerbeck’s index number between 1820 and 1914was only 50 per cent, above the lowest. This was notaccidental. It is rightly described as due to a balanceof forces in an age when individual groups of employerswere strong enough to prevent the wage-unit fromrising much faster than the efficiency of production,and when monetary systems were at the same timesufficiently fluid and sufficiently conservative to providean average supply of money in terms of wage-unitswhich allowed to prevail the lowest average rate ofinterest readily acceptable by wealth-owners under theinfluence of their liquidity-preferences. The averagelevel of employment was, of course, substantially belowfull employment, but not so intolerably below it as toprovoke revolutionary changes.

To-day and presumably for the future the scheduleof the marginal efficiency of capital is, for a variety ofreasons, much lower than it was in the nineteenthcentury. The acuteness and the peculiarity of ourcontemporary problem arises, therefore, out of thepossibility that the average rate of interest which willallow a reasonable average level of employment is one