Ill

THE RETURN TO GOLD

profits, and interest. As regards rents andprofits, he can reply that these are not fixed interms of money, and will therefore fall, whenmeasured in money, step by step with prices.The worst of this reply is that rents and profits,like wages, are sticky and may not fall quickenough to help the transition as much as theyshould. As regards the interest on bonds, how-ever, and particularly the interest on theNational Debt , he has no answer at all. For itis of the essence of any policy to lower pricesthat it benefits the receivers of interest at theexpense of the rest of the community; thisconsequence of deflation is deeply embeddedin our system of money contract. On thewhole, I do not see how Labour’s objection canbe met, except by the rough-and-ready expedientof levying an additional income-tax of is. inthe £ on all income other than from employ-ments, which should continue until real wageshad recovered to their previous level . 1

If the proposal to effect a voluntary all-roundreduction of wages, whilst sound in principle,is felt to be too difficult to achieve in practice,then, for my part, I should be inclined to stakeeverything on an attempt to raise prices in theoutside world—that is on a reversal of thepresent policy of the Bank of England. This, I

1 This will not prevent bondholders from gaining in the longrun, if in the long run prices do not rise again. But such profitsand losses to bondholders are an inevitable feature of an unstablemonetary standard. Since, however, prices generally do rise inthe long run, bondholders in the long run are losers, not gainers,from the system.