ECONOMICS OF MR. SAVAGE

Evening Post, Volume CXXIV, Issue 60, 8 September 1937, Page 10

ECONOMICS OF MR. SAVAGE

(To the Editor.)

Sir,—There is something extraordinarily naive in Mr. Win. Morgan's letter appearing in your issue of September 3. Consider this amusing statement: "No decent man doubts the high ideals of the members of Cabinet, and no thinking man fails to realise their lack of qualification in the field of finance." I suppose people who spend their leisure in playing bridge and golf and listening into wrestling broadcasts know more about economics than the serious men who have devoted their lives to its study. No justification whatever exists for the idea that the Labour group or Mr. Savage are ill equipped to grapple with these economic and financial problems. Mr. Savage's statements, indeed, are in accordance with sound economic theory. In recent years economists have been studying the scientific measurement of value. Two main schools have developed, the one based on the work of Professor Irving Fisher, creator of the theory of the compensated dollar, and one on the work of Mr. David Atkins, discoverer of the factors of economic measurement. Irving Fisher is the inspirer of Mr. Roosevelt's monetary policy, and Mr. .Savage seems to have been influenced by the Atkins school. Whether so influenced or not, his pronouncements would certainly secure the ready support of that school. One of Atkins's discoveries is that population is an integral factor in the measurement of value. Put into popular terms this means that the more population we have the greater the amount of money

in circulation we require. If it requires the circulation of a million pounds a day to, keep a million men in employment, it wi}l require two millions a day to keep'two million men in employment. Corollaries from this doctrine are:—(l) An authority is required in every sovereign State to regulate the issue of the requisite amount of money. (2) Unemployment is a sigh that there is not sufficient money in circulation. (Note that word circulation. There may be enough money in existence, but unless it is in circulation, it is not functioning;)

A Government is. justified in going on issuing money until every employable man is fully employed. Such a proceeding cannot result in inflation, unless the issue-continues beyond the limit of employable capacity. It cannot result in inflation because the money issued will equate with the goods produced or the services rendered. If anything there will be a tendency to deflation in certain directions. For example: Suppose all the unemployed in this country, were capable builders (using that term to cover all the crafts required to build), and supposing the Government threw all these men, possibly 30,000 of them, into the house-building campaign. There would soon be a great deflation of rents. This would be counteracted i by an inflation of goods in short supply: but the general price level would be unaffected. This follows bedause in population we have a factor in a scale j of scientific economic measurement which, is an accurate . measure. Mr. ] Savage's remarks are based on the soundest monetary mechanics.—l am, etc., S. W. FITZHERBERT.

(To tne Editor.)

Sir, —In the "Evening Post" of September 3, Mr. Savage gave a long explanation about the newspapers misrepresenting him. In the same paper is a leader by "The Post" and a letter by myself. I desire to deal with one point of Mr. Savage's statement. ~ He states: "There again I emphasised that the money would be made available for the creation of national assets." Again he says: ". . . nobody will be able to say that it is held up because of the necessity for money. I hope I have made that plain enough." t . Yes, that is plain enough. Now I ask Mr. Savage to be equally plain and tell us, who have the . right to know, where the money is coming from .to build these assets? Is it by inflation? If not, where is it raised and what are the terms and conditions? — I am, etc., WM. MORGAN.