70 HOW TO PAY FOR THE WAR

any departure, which would be anathema tothe city, from the voluntary system."

Ambiguous though this may be, as a defence ofthe principles of liberty, it would be a sound andconvincing argument to the worker in favour ofincreased saving if it were not for one flaw. Anindividual cannot by saving more protect himselffrom the consequences of inflation if others do notfollow his example; just as he cannot protecthimself from accidents by obeying the rule ofthe road if others disregard it. We have here theperfect opportunity for social action, where every-one can be protected by making a certain rule ofbehaviour universal.

This analysis of how inflation works is funda-mental. And it is fairly simple. But it is not yetunderstood by everyone,—for the reason, sur-prising perhaps, that it is comparatively novel.Economists have only got clear about it (althoughit is a case much simpler than what happens inpeace-time, when, instead of a fixed maximumoutput, we have to allow for the effect of fluctua-tions in employment) in the last quarter of acentury, since, that is to say, those now inauthority acquired their dogmas. During the lastwar I was in the Treasury. But I never at thattime heard our financial problem discussed alongthese lines.

It will be interesting, therefore, to throw ourminds back and consider, in the fight of thisanalysis, what happened on that occasion.