ESSAYS IN PERSUASION

PART

258

already in force has been effected in several wayswhich are partly independent. First, there is theembargo on new issues which probably retardsthe normal rate of the circulation of money; thenin March the bank-rate was raised; more re-cently market-rate was worked up nearer tobank-rate; lastly—and far the most importantof all—the Bank has manoeuvred its assets andliabilities in such a way as to reduce the amountof cash available to the Clearing Banks as abasis for credit. This last is the essential in-strument of credit restriction. Failing directinformation, the best reflection of the amountof this restriction is to be found in the depositsof the Clearing Banks. The tendency of theseto fall indicates some significant degree of re-striction. Owing, however, to seasonal fluctua-tions and to the artificial character of the end-June returns, it is not yet possible to estimatewith accuracy how much restriction has takenplace in the last three months. So far as onecan judge, the amount of direct restriction isnot yet considerable. But no one can say howmuch more restriction may become necessaryif we continue on our present lines.

Nevertheless, even these limited measures areresponsible, in my opinion, for an importantpart of the recent intensification of unemploy-ment. Credit restriction is an incredibly power-ful instrument, and even a little of it goes along way—especially in circumstances wherethe opposite course is called for. The policyof deliberately intensifying unemployment with