MALADJUSTMENT IN INDUSTRY
.-tTo -the -Editor of- THE SPECTATOR.] Sta,=As far as I am able to follow Lord Tavistoek's letter in your issue of-January 28th, the arguntents he adduces are limed on the old Wages Fund Theory.. This, in its crudest form, asserted -that the amount of wages which can and will be paid in a country -in, say,- a *ear; is fixed absolutely by the: amount of capital existing there at the time. Surely, however, this theory is long out of date.
Mr. McKenna at the recent meeting of the Midland Bank went very fully into this matter. He . gave a most lucid explanation of how the Banks, acting under the lead of the Bank of England, could and did expand or contract the amount of. capftal available for commercial and industrial needs by the purchase or sale of securities. He estimates that since February, 1932, nearly L300,000,000 of " addi- tional purchasing power has been put at the disposal of the Public by the action of the Bank of England in buying first securities and later gold."—! am, Sir, &c.,
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