Ste.--In Mr. Nicholas Davenport's' article 'Next April' he presses quite
rightly for expansion and he proposes to finance it by means of loans and new money. I am not competent to follow the technical details, but presume that the first, if not the second, method becomes a permanent charge on the tax- payer, i.e.. part of the National Debt.
Has the growth of the National Debt been con- sidered in relation to the purchasing power of the £
as given in The Times chart of July 25, 1962? The graph shows an average decline in purchasing power from 1938 to 1962 of 4.6 per cent. of itself per
annum. The decline was exceptionally severe for the first part of the war; it averaged 5 to 6 per cent. during the Labour Government's term of office; and about 3 per cent. during the ten years of Conserva- tive Government.
The real market value of the National Debt, measured in terms of the purchasing power of the £, is almost the same now as in 1938, i.e., £7,500 tn. The nominal value has increased to £28,000 m. Moreover, investment in gilt-edged (or anything else) at 5 per cent. compound interest during this period would just about have held its own in real value, instead of trebling itself as it would have done nominally. Is it possible that this maintenance of real values conceals a regulating feature inherent in the present financial control of our capitalist system? Or is the trouble, in fact, due to the birth-pangs of our emergence from the chrysalis stage of 'gold equals money equals wealth'?
The problem of the creation of new money should be thoroughly understood. not merely by financiers, but by ordinary intelligent people. It lies at the heart of the matter. Does new money become a per- manent charge on the community?
Barn ham, Sussex
R. O. WHITING
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