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ESSAYS IN PERSUASION

PART

parity of internal prices was watered down toa fraction of its true value. This led them tothink that the gap to be bridged was perhaps2 or 3 per cent, instead of the true figure of10 or 12 per cent, which was the indicationgiven by the index numbers of the cost of living,of the level of wages, and of the prices of ourmanufactured exports—which indexes are amuch better rough-and-ready guide for thispurpose, particularly if they agree with oneanother, than are the index numbers of whole-sale prices.

But I think that Mr. Churchill’s experts alsomisunderstood and underrated the technicaldifficulty of bringing about a general reductionof internal money values. When we raise thevalue of sterling by 10 per cent we transferabout ,£ 1,000,000,000 into the pockets of therentiers out of the pockets of the rest of us, andwe increase the real burden of the NationalDebt by some ^750,000,000 (thus wiping outthe benefit of all our laborious contributions tothe Sinking Fund since the war). This, whichis bad enough, is inevitable. But there wouldbe no other bad consequences if only there wassome way of bringing about a simultaneous re-duction of 10 per cent in all other money pay-ments; when the process was complete weshould each of us have nearly the same realincome as before. I think that the minds ofhis advisers still dwelt in the imaginary academicworld, peopled by City editors, members ofCunliffe and Currency Committees et hoc genus