War-time financial problems

298 MONEY OR GOODS?

believed to be in favour of the working classes,
since reductions in wages generally lag behind the
fall in prices, which means increased buying power
to the wage-earner.

Mr Kitson's view that the volume of trade is
limited by the quantity of currency and credit is
thus based on confusion between volume and value.
Moreover, it follows also from the '' Quantity Theory
of Money/' which he holds, that if he applies his
remedy and multiplies currency and credit as fast
as he appears to want to, the result will be a still
further depreciation in the buying power of money,
and a further rise in prices and an increase in all the
bitterness, discontent, suspicion, and strikes that
the rise in prices has already caused during the war.
Is this a prospect to pray for ? Surely if we want
to enjoy " boundless wealth and prosperity " the
way to do so is to turn out goods—things to eat and
wear and enjoy—and not to multiply money, thereby
merely depreciating its value, on Mr Kitson's own
admission. He thinks that " nothing but an
abundant supply of currency in the shape of legal
tender notes and bank credit, could have enabled
us to undertake successfully such unprecedented
burdens" as we have borne during the war. But
it may equally well be argued that we have borne
these burdens because we worked harder than ever
before to turn out the needed stuff, organised better,
used our machinery to its full power, and spent less
of our product on luxuries ; and that the abundant
currency, by forcing up prices, immensely increased
the cost of the war and produced industrial friction