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ESSAYS IN PERSUASION

PART

must fall io per cent. But it also means, whenthe adjustment is complete, that the cost ofliving will fall about io per cent. In this casethere will have been no serious fall in real wages.Now there are two alternative ways of bringingabout the reduction of money wages. One wayis to apply economic pressure and to intensifyunemployment by credit restriction until wagesare forced down. This is a hateful and disas-trous way, because of its unequal effects on thestronger and on the weaker groups, and becauseof the economic and social waste whilst it is inprogress. The other way is to effect a uniformreduction of wages by agreement , on the under-standing that this shall not mean in the longrun any fall in average real wages below whatthey were in the first quarter of this year. Thepractical difficulty is that money wages and thecost of living are interlocked. The cost ofliving cannot fall until after money wages havefallen. Money wages must fall first in orderto allow the cost of living to fall. Can we notagree, therefore, to have a uniform initial re-duction of money wages throughout the wholerange of employment, including Governmentand Municipal employment, of (say) 5 per cent,which reduction shall not hold good unless,after an interval, it has been compensated by afall in the cost of living?”

If Mr. Baldwin were to make this proposalthe Trade Union leaders would probably askhim at once what he intended to do aboutmoney payments other than wages—rents,