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ESSAYS IN PERSUASION

PART

The futility of their policy and the want ofsound reasoning behind it have been finally de-monstrated by its failure even to secure a fall inthe rate of interest. For, as we have seen above,if outlets for investment at home are stopped up,savings flow abroad on a scale disproportionateto our favourable balance of trade, with theresult that the Bank of England tends to losegold. To counteract this position, the bank-rate has to be raised.

So in the end we have the worst of all worlds.The country is backward in its equipment, in-stead of being thoroughly up to date. Busi-ness profits are poor, with the result that theyield of the income tax disappoints the Chan-cellor of the Exchequer, and he is unable eitherto relieve the taxpayer or to push forward withschemes of social reform. Unemployment isrampant. This want of prosperity actuallydiminishes the rate of saving and thus defeatseven the original object of a lower rate ofinterest. So rates of interest are, after all,high. .

It is not an accident that the ConservativeGovernment have landed us in the mess wherewe find ourselves. It is the natural outcomeof their philosophy:

“You must not press on with telephones orelectricity, because this will raise the rate ofinterest.”

“You must not hasten with roads or housing,because this will use up opportunities for em-ployment which we may need in later years.”