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ESSAYS IN PERSUASION

PART

industrial strife. We gain them in a way whichis strictly fair to every section of the community,without any serious effects on the cost of living.For less than a quarter of our total consumptionis represented by imports; so that sterlingwould have to depreciate by much more than25 per cent before I should expect the cost ofliving to rise by as much as 10 per cent. Thiswould cause serious hardship to no one, for itwould only put things back where they weretwo years ago. Meanwhile there will be a greatstimulus to employment.

I make no forecast as to the figure to wdiichsterling may fall in the next few days, exceptthat it will have to fall for a time appreciablybelow the figure which cool calculators believeto represent the equilibrium. There will thenbe speculation and profit-taking in favour ofsterling to balance speculation and panic sellingon the other side. Our authorities made agreat mistake in allowing sterling to open sohigh, because the inevitable gradual fall towardsa truer level must sap confidence and produceon the ignorant the impression of a slide whichcannot be stayed. Those who were guilty ofundue optimism will quite likely succumb toundue pessimism. But the pessimism will beas unfounded as the optimism was. The equi-librium value of sterling is the same as it wasa month ago. There are tremendous forces tosupport sterling when it begins to fall too far.There is no risk, in my judgement, of a cata-strophic fall.