[To the Editor of the SPECTATOR.] SIR,—I have read your
most illuminating article, and I think your diagnosis of the situation entirely correct. You say, truly, that there is only one fiscal ideal—stabilization. Deflation and inflation are specifics to meet a temporary emergency. I think that what is called the " Bankers' policy " of deflation, which we have pursued generally since the Armistice, was on the whole the right one, but it may easily be carried too far. A sound business can cripple itself by paying off its debentures too quickly. The great fact before the Government at the moment is the wide area of unemployment, and our fiscal policy cannot be an abstract ideal, but must be framed in direct relation to this fact. I would add that it seems to me that any proposals as to Preference or Protection must be tried by the same touchstone.
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