ESSAYS IN PERSUASION

PART

256

differ in any important respect from the Frenchpolicy, which we have so much condemned,of supporting the exchange with the help ofloans from Messrs. J. P. Morgan. Our policywould only differ from the French policy if thehigh rate of discount was not only intended toattract American money, but was also part of apolicy for restricting credit at home. This isthe aspect to which we must now attend.

To pay for unemployment by changing overfrom being a lending country to being a borrow-ing country is admittedly a disastrous course,and I do not doubt that the authorities of theBank of England share this view. They dis-like the embargo on foreign issues, and they dis-like having to attract short-loan money fromNew York . They may do these things to gaina breathing space; but, if they are to live up totheir own principles, they must use the breath-ing space to effect what are euphemisticallycalled “the fundamental adjustments.” Withthis object in view there is only one step whichlies within their power—namely, to restrictcredit. This, in the circumstances, is theorthodox policy of the gold party; the adversetrade balance indicates that our prices are toohigh, and the way to bring them down is bydear money and the restriction of credit. Whenthis medicine has done its work, there will nolonger be any need to restrict foreign loans or toborrow abroad.

Now what does this mean in plain language?Our problem is to reduce money wages and,