T24

ESSAYS IN PERSUASION

PART

on the other hand, on the eagerness of entre-preneurs to invest, of whom the Governmentitself is nowadays the most important. So farfrom the total of investment, as determined bythese factors, being necessarily equal to the totalof saving, disequilibrium between the two is atthe root of many of our troubles.

When investment runs ahead of saving wehave a boom, intense employment, and a tend-ency to Inflation. When investment lags be-hind, we have a slump and abnormal unemploy-ment, as at present.

It is commonly objected to this that an ex-pansion of credit necessarily means Inflation.But not all credit-creation means Inflation. In-flation only results when we endeavour, as wedid in the war and afterwards, to expand ouractivities still further after everyone is alreadyemployed and our savings are being used upto the hilt.

The suggestion that a policy of capital ex-penditure, if it does not take capital away fromordinary industry, will spell Inflation, would betrue enough if we were dealing with boomconditions. And it would become true if thepolicy of capital expenditure were pushed un-duly far, so that the demand for savings beganto exceed the supply. But we are far, indeed,from such a position at the present time. Alarge amount of deflationary slack has first tobe taken up before there can be the smallestdanger of a development policy leading to In-flation. To bring up the bogy of Inflation as