Ill

THE RETURN TO GOLD

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thus intensifying unemployment and usingevery other weapon in our hands to force downmoney wages, trusting in the belief that, whenthe process is finally complete, the cost of livingwill have fallen also, thus restoring average realwages to their former level. If this policy canbe carried through it will be, in a sense, success-ful, though it will leave much injustice behindit on account of the inequality of the changes itwill effect, the stronger groups gaining at theexpense of the weaker. For the method ofeconomic pressure, since it bears most hardlyon the weaker industries, where wages are al-ready relatively low, tends to increase the exist-ing disparities between the wages of differentindustrial groups.

The question is how far public opinion willallow such a policy to go. It would be politic-ally impossible for the Government to admitthat it was deliberately intensifying unemploy-ment, even though the members of the Cur-rency Committee were to supply them with anargument for it. On the other hand, it is pos-sible for Deflation to produce its effects withoutbeing recognised. Deflation, once started everso little, is cumulative in its progress. If pessi-mism becomes generally prevalent in the busi-ness world, the slower circulation of money re-sulting from this can carry Deflation a long wayfurther, without the Bank having either to raisethe bank-rate or to reduce its deposits. Andsince the public always understands particularcauses better than general causes, the depression