CH. 23

NOTES ON MERCANTILISM, ETC.

349

an import of the monetary metal at the expense of theirneighbours. Never in history was there a method de-vised of such efficacy for setting each country’s advantageat variance with its neighbours’ as the international gold(or, formerly, silver) standard. For it made domesticprosperity directly dependent on a competitive pursuitof markets and a competitive appetite for the preciousmetals. When by happy accident the new supplies ofgold and silver were comparatively abundant, thestruggle might be somewhat abated. But with thegrowth of wealth and the diminishing marginal pro-pensity to consume, it has tended to become increas-ingly internecine. The part played by orthodoxeconomists, whose common sense has been insufficientto check their faulty logic, has been disastrous to thelatest act. For when in their blind struggle for anescape, some countries have thrown off the obligationswhich had previously rendered impossible an auto-nomous rate of interest, these economists have taughtthat a restoration of the former shackles is a necessaryfirst step to a general recovery.

In truth the opposite holds good. It is the policyof an autonomous rate of interest, unimpeded by inter-national preoccupations, and of a national investmentprogramme directed to an optimum level of domesticemployment which is twice blessed in the sense that ithelps ourselves and our neighbours at the same time.And it is the simultaneous pursuit of these policies byall countries together which is capable of restoringeconomic health and strength internationally, whetherwe measure it by the level of domestic employment orby the volume of international trade . 1

1 The consistent appreciation of this truth by the International LabourOffice, first under Albert Thomas and subsequently under Mr. H. B. Butler,has stood out conspicuously amongst the pronouncements of the numerouspost-war international bodies.