VOLUNTARY SAVING

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wages are increased, the act of spending thesewages will always push prices this much inadvance. If at the end of six months wages andother costs have risen by an average of 10 percent, prices will have risen 32 per cent (120 percent of 110). If at the end of two years costshave risen 40 per cent, prices will have risen 68per cent (120 per cent of 140). Thus, after all,the system of voluntary savings will have workedsuccessfully. That is to say, the money will havebeen raised "voluntarily" without an unlimitedincrease of prices. The only condition for itssuccess is that prices should rise relatively towages to the extent necessary to divert the rightamount of working class and other incomes intothe hands of the profiteers and thence into thehands of the Treasury, largely in the form oftaxes and partly in the form of extra voluntarysavings by the profiteers.

The larger the amount of voluntary savingsat each stage, the better, of course, it will be foreveryone. If the campaign of the National SavingsMovement increases the volume of voluntarysavings, the necessary rise in prices relatively towages will be correspondingly smaller. Let usgo back to our arithmetical illustration. Westarted with an excess of spendable incomes, overthe available supply of consumption goods valuedat pre-war prices, amounting to £1,350 millionand we assumed that £700 million of this wasvoluntarily saved. This left £650 million, or 20 percent more than the available supply of goodsat pre-war prices. But if the National Savings