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ESSAYS IN PERSUASION

PART

has not been infringed, since these investmentswere not in gold bullion but in the legal tenderof the realm. Nevertheless, if this class of in-vestors could be dealt with separately, considera-tions of equity and the expedience of satisfyingreasonable expectation would furnish a strongcase.

But this is not the actual situation. The vastissues of War Loans have swamped the pre-warholdings of fixed interest-bearing stocks, andSociety has largely adjusted itself to the new situ-ation. To restore the value of pre-war holdingsby Deflation means enhancing at the same timethe value of war and post-war holdings, andthereby raising the total claims of the rentierclass not only beyond what they are entitled to,but to an intolerable proportion of the total in-come of the community. Indeed justice, rightlyweighed, comes down on the other side. Muchthe greater proportion of the money contractsstill outstanding were entered into when moneywas worth more nearly what it is worth nowthan what it was worth in 1913. Thus, in orderto do justice to a minority of creditors, a greatinjustice would be done to a great majority ofdebtors.

When, therefore, the depreciation of the cur-rency has lasted long enough for Society toadjust itself to the new values, Deflation is evenworse than Inflation. Both are “unjust” anddisappoint reasonable expectation. But whereasInflation, by easing the burden of national debtand stimulating enterprise, has a little to throw