II

INFLATION AND DEFLATION

reasons. It may fall on account of an abundantsupply of savings, i.e. of money available to bespent on investments; or it may fall on accountof a deficient supply of investments, i.e. ondesirable purposes on which to spend the sav-ings. Now a fall in the rate of interest for thefirst reason is, obviously, very much in thenational interest. But a fall for the secondreason, if it follows from a deliberate restrictionof outlets for investment, is simply a disastrousmethod of impoverishing ourselves.

A country is enriched not by the mere nega-tive act of an individual not spending all hisincome on current consumption. It is en-riched by the positive act of using these savingsto augment the capital equipment of the country.

It is not the miser who gets rich; but he wholays out his money in fruitful investment.

The object of urging people to save is inorder to be able to build houses and roads andthe like. Therefore a policy of trying to lowerthe rate of interest by suspending new capitalimprovements and so stopping up the outletsand purposes of our savings is simply suicidal.No one, perhaps, would uphold such a policyexpressed in so many words. But this, in fact,is what the Treasury has been doing for severalyears. In some cases, the pressure of publicopinion or of other Government Departmentsor Local Authorities has been too much forthem. But whenever it has been within theirpower to choke something off, they have done