Ill

THE RETURN TO GOLD

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through them, the cost of living, with the ideathat, when the circle is complete, real wages willbe as high, or nearly as high, as before. Bywhat modus operandi does credit restriction attainthis result?

In no other way than by the deliberate intensifica-tion of unemployment. The object of credit re-striction, in such a case, is to withdraw from em-ployers the financial means to employ labour atthe existing level of prices and wages. The policycan only attain its end by intensifying unem-ployment without limit, until the workers areready to accept the necessary reduction of moneywages under the pressure of hard facts.

This is the so-called “sound” policy, whichis demanded as a result of the rash act of peggingsterling at a gold value, which it did not—measured in its purchasing power over Britishlabour—possess as yet. It is a policy, never-theless, from which any humane or judiciousperson must shrink. So far as I can judge, theGovernor of the Bank of England shrinks fromit. But what is he to do, swimming, with hisboat burnt, between the devil and the deep sea?At present, it appears, he compromises. Heapplies the “sound” policy half-heartedly; heavoids calling things by their right names; andhe hopes—this is his best chance—that some-thing will turn up.

The Bank of England works with so muchsecrecy and so much concealment of importantstatistics that it is never easy to state with pre-cision what it is doing. The credit restriction