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ESSAYS IN PERSUASION

PART

in bank-credit, to defeat the best-laid plans andto ensure that the expenditure financed by theTreasury was at the expense of other businessenterprise.

Thus we accept Mr. McKenna’s contentionthat an expansion of credit is the key to thesituation. But if we were simply to increasecredit without providing a specific use for it athome, we should be nervous that too much ofthis extra credit would be lent to foreigners andtaken away in gold. We conclude, therefore,that, whilst an increased volume of bank-creditis probably a sine qua non of increased employ-ment, a programme of home investment whichwill absorb this increase is a sine qua non of thesafe expansion of credit.

The third source of the funds required forthe Liberal policy will be found by a net reduc-tion of foreign lending.

An important part of our savings is nowfinding its outlet in foreign issues. Grantedthat a big policy of national development couldnot be financed wholly out of the existing ex-penditure on unemployment and out of thesavings which are at present running to waste,granted that, to meet the borrowing demandsof the State other borrowers must go without,why should we assume that these other bor-rowers must be British business men? Thetechnique of the capital market makes it farmore probable that they would be some of theoverseas Governments or municipalities whichLondon at present finances on so large a scale.