n INFLATION AND DEFLATION 151

by ourselves. But this is not the only reasonwhy we are inactive. Nor is it a sufficientreason. For something we can do by our-selves. The other principal reason, in myopinion, is a serious misunderstanding as towhat kind of action is useful and what kind isnot. There are to-day many well-wishers oftheir country who believe that the most usefulthing which they and their neighbours can doto mend the situation is to save more than usual.If they refrain from spending a larger propor-tion of their incomes than usual they believethat they will have helped employment. Ifthey are members of Town or County Councilsthey believe that their right course at such atime as this is to oppose expenditure on newamenities or new public works.

Now, in certain circumstances all this wouldbe quite right, but in present circumstances, un-luckily, it is quite wrong. It is utterly harm-ful and misguided—the very opposite of thetruth. For the object of saving is to releaselabour for employment on producing capital-goods such as houses, factories, roads, machines,and the like. But if there is a large unemployedsurplus already available for such purposes, thenthe effect of saving is merely to add to this sur-plus and therefore to increase the number ofthe unemployed. Moreover, when a man isthrown out of work in this or any other way,his diminished spending power causes furtherunemployment amongst those who would haveproduced what he can no longer afford to buy.