II

INFLATION AND DEFLATION

T 55

reduce our standard of life, work harder and con-sume less; and that that is the way out of thewood. This view is not, in my judgement, inaccordance with the facts. We have plenty ofcloth and only lack the courage to cut it intocoats. I want, therefore, to give you some cheer-ful facts to dispose you to take an ampler view ofthe economic strength of this country.

Let me first of all remind you of the obvious.The great mass of the population is living muchbetter than it ever lived before. We are sup-porting in idleness, at a higher standard of lifethan is possible for those who are in work inmost other countries, nearly a quarter of ouremployable population. Yet at the same timethe national wealth is increasing year by year.After paying wages which are far higher than,for example, in France or in Germany , aftersupporting a quarter of our population in idle-ness, after adding to the country’s equipmentof houses and roads and electrical plant and soforth on a substantial scale, we still have a sur-plus available to be lent to foreign countries,which in 1929 was greater than the surplusfor such purposes of any other country in theworld, even of the United States .

How do we do it? If the pessimists were rightwho believe that we are terribly inefficient, over-extravagant and getting poorer, obviously itwould be impossible. We can only do it be-cause the pessimists are quite wrong. We arenot nearly so rich as we might be if we couldmanage our affairs better and not get them into