SHORTAGE OF GOODS

Evening Post, Volume CXXXI, Issue 38, 14 February 1941, Page 8

SHORTAGE OF GOODS

PROPHET J. M. KEYNES

BRITAIN FACING INFLATION

(From "The Post's" Representative.)

LONDON, December 12,

Events have proved certain forecasts of Mr. J. M. Keynes, the authority on finance, to be correct. He foretold that the failure of the Government to restrict public consumption by drastic financial means would not in the short run lead to price inflation- but would first of all produce shop shortages.

Manufacturers and retailers, he explained, were restrained by public opinion, by the Prices of Goods Act. and by E.P.T. from raising prices to the full extent of the excess demand. Retailers, he predicted, would clear their shelves and leave the next customer unsatisfied rather than l'aise prices. This is exactly what has happened. The Government has not tackled consumption from the financial side, but has instead cut" down wholesale supplies to the shops.

The result is that the shops still present a facade of plenty while their reserve stocks are dwindling, so that the public will be let down gently. Prices, instead of being b ' up by the purchasers, have been deliberately and suddenly raised by the Governrnent through the purchase tax.

In October, it is stated by the Board of Trade Journal, the public spent more on, merchandise thaiV it did in September, and there was a steady reduction of retailers' stocks.

Mr. -.Keynes has stated that inflation in England will be the worse for being so long delayed. - His view is supported by Lord Arnold, who stated this week that. unless something is done, and done expeditiously and decisively, there is a danger of the count:y being faced with serious.inflation. It is indisputable, he says, that national expenditure will-exceed receipts during the current financial year, and that the gap' is not • likely to be less than £300,000,000. \

Lord Arnold declares that there is no evidence of any effective policy by the Government to close this. gap. although the financial outlook gives cause for concern. He suggests thai a remedy lies in introducing another Budget before next April and in establishing a definite wages policy. He foresees the "vicious spiral" of higher wages, followed ,by higher prices, coming, nearer' and nearer.