THE TRUE CAUSE OF INFLATION SIR,—" A truth that is
half a truth is ever the blackest of lies." Your paragraph " Wages and Inflation " is calculated to convey to at least nine out of ten of your readers that the nasty greedy manual workers have somehow contrived, between October, 1938, and July 1941, to secure wage increases averaging 42 per cent. and that in consequence the country is threatened with the evils of inflation. The figures you quote relate to " actual earnings received " and it has not occurred to you to co-relate them with actual hours worked. Speaking for the engineering trades: the working week in October, '38 was 44-46 hours; in July, '41, it was 66-67 hours in a majority of shops and factories—an increase of roughly 5o pet cent If actual earnings were to be kept to pre-war levels a steep decline in wage rates would have been necessary. Incidentally a weekly wage of zoos. 8d. on a 66-hour week represents a wage of £3 its. id. on a normal peace-time week; hardly excessive for a skilled trade like engineering.
But wage increases apart, it is obvious that the writer of that paragraph does not understand what inflation actually is. Inflation is an absolutely unavoidable part of national economics in time of war, and has nothing to do with any particular section of the com- munity. It is a symptom, not a disease. The disease is the produc- tion of " guns " instead of " butter." At the present moment we are, as never before, a nation of wealth-producers. Each individual of us receives, in wages, salaries, army-pay, &c., token wealth which roughly represents his or her share in the national output. But of that out- put a very much smaller proportion than usual consists of commodi- ties which we want to consume. The wealth is there but it is in shells, guns, tanks, ships and aeroplanes: things we should not buy as individuals even if we had the chance. The remaining wealth of food, clothing and other necessaries is seriously diminished in bulk and its price, therefore, rises (if uncontrolled) as naturally as that of scarce and desirable goods in an auction room. The unavoidable in- flation from which we are suffering is the issue of currency, not against imaginary wealth, but against wealth which we can consume only as a nation and not as individuals.
If this is clearly understood the sentence ". . . a depreciation in the value of money which successive increases of wages have played the greatest part in bringing about," is seen at once to be nonsense. What is true is that the depreciation in the value of money cannot be remedied by successive increases in wages, but only by the deflection of labour from " guns " back to " butter," which none of us desires,