Letters to the Editor
[Correspondents are requested to keep their Idlers as brief as is reasonably possible.- The most snitable length is that of one of our .News of the Week paragraphs.-7-Ed. THE SPECTATOR.]
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THE CASE FOR ORTHODOXY
[To the Editor of THE SPECTATOR.] SIR,—Obviously I cannot take Mr. Keynes through a detailed criticism of his two-volume Treatise in your columns, still less the whole petticoat of Parliamentary embtoidery which has been tacked round its nakedness. I do, however, assert that in common parlance his doctrine has been taken to mean that any fall in prices is due to such a disequilibrium between " savings " and " investment " as can appropriately be rectified by the Government letting on foot capital expen- diture at long term. I therefore took an'erxtreme example as a reductio ad absurdum. I repeat that in my submission Mr. Keynes' use of the words " savings " and " investment " bears no relation to their ordinary Sense, and this has caused grave confusion. In particular • their immediate proposals direct quite insufficient attention to the difference between provision people are desiring to make for long term saving, and the desire of banks to find some alternative use for'liquid resources mainly due to currency manipulation and to the closing. down of the normal channels of employment in inter- national trade.
The' alleged " excess savings " of Mr. Keynes' theory simply aren't there : they are just his confusing new name for the losses accompanying falling prices. His great theorem that the excess causes the fall is only an upside-down way of saying that falling prices may cause and measure losses— hardly startling. In conclusion, I assert that there is a complete contradiction between the doctrine of Mr. Keynes' Treatise, itself false, that every change in conditions only becomes operative in, and can be measured by, a change in prices' (which is what in fact he re-christens alterations in savings and investment) and the doctrine which he is now expounding to the public which asserts on the contrary that such great changes can take place prior to any change of prices. This is much less false than his former doctrine, but the particular deductions he has made from it and his par- ticular proposals at the moment -I have ventured to criticize in your columns and elsewhere.
While we are at it, what does Mr. Keynes think the Authorities ought to do when a tin pool goes bust ? I take it he does not deny that there doek -tend to be a fall of prices. Ought they to start a little wheat pool on their own to counter- balance this, or build a museurn,. or just borrow money to the a extent of Messrs. Lazarus' losses and give it away to them ?-
I am, Sir, &e., IAN HOROBIN. 89 Barking Road, London, E.16.
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