part ii INFLATION AND DEFLATION

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yet costs, as we all know, remain far above theirpre-war level. A week or two ago, it is said,wheat in Liverpool sold at the lowest price re-corded since the reign of Charles II . more than250 years ago. How is it possible for farmersto live in such conditions? Of course it is im-possible.

You might suppose—and some austere in-dividuals do in fact believe—that cheapnessmust be an advantage. For what the producerloses, the consumer gains. But it is not so.For those of us who work—and we are in thegreat majority—can only consume so long aswe produce. So that anything which inter-feres with the processes of production necessarilyinterferes also with those of consumption.

The reason for this is that there are all kindsof obstacles to the costs and prices of everythingfalling equally. For example, the wages-costsof most manufacturers are practically the sameas they were. See how the vicious processworks out. The prices of wool and wheat fall.Good for the British consumer of wheat andwoollen garments—so one might suppose. Butthe producers of wool and wheat, since they re-ceive too little for their products, cannot maketheir usual purchases of British goods. Conse-quently those British consumers who are at thesame time workers who make these goods findthemselves out of work. What is the use ofcheapness when incomes are falling?

When Dr. Johnson, visiting the Island ofSkye, was told that twenty eggs might be bought