II

INFLATION AND DEFLATION

163

moral energies and enthusiasm of many trulyself-sacrificing and well-wishing people shouldbe so misdirected.

The objects of national policy, so as to meetthe emergency, should be primarily to improveour balance of trade, and secondarily to equalisethe yield of taxation with the normal recurrentexpenditure of the Budget by methods whichwould increase, rather than diminish, output,and hence increase the national income and theyield of the revenue, whilst respecting the prin-ciples of social justice. The actual policy of theGovernment fails on each of these tests. It willhave comparatively little efFect on the balance oftrade. It will largely increase unemploymentand diminish the yield of the revenue. And itoutrages the principles of justice to a degreewhich I should have thought inconceivable.

To begin with the last. The incomes of well-to-do people have been cut by 21 to 3^ per cent.The school-teachers are cut 15 per cent, 1 in addi-*tion to the extra taxes which they have to pay.It is a monstrous thing to single out this classand discriminate against them, merely becausethey happen to be employees of the Government.It is particularly outrageous, because efforts havebeen made in recent years to attract into the pro-fession teachers of higher qualifications by hold-ing out to them certain expectations. It is evenproposed to take powers to dissolve existing con-tracts. That the school-teachers should havebeen singled out for sacrifice as an offering to

1 [Afterwards reduced to io per cent.]