CURRENCY REFORM AND INTOLERANCE. [To the Editor of -the SPECTATOR.]

SIR,—Your review of Mr. Keynes' book on monetary reform raises the question that has frequently been discussed in the past, namely, whether economics is ever likely to become one of the exact sciences. It is deplorable to think that a branch of knowledge which has probably more to do with human welfare than any other should be deliberately held in check by selfish interests.

It has been well said : " In the domain of political economy free scientific inquiry meets not only the same enemies as in all other sciences. The peculiar nature of the material with which it deals summons as foes into the field of battle the most violent, mean and malignant passions of the human breast—the furies of private interest I The Established. Church would sooner pardon an attack upon 38 of its 39 Articles than upon 1-39th part of its income." It is notorious that the free discussion of many of these economic problems, and particularly those pertaining to finance, is banned from the columns of -most of our daily and weekly journals. And the country is now 'reaping the reward of this intolerance of independent thought and discussion. As an illustration of this intolerance, let me give two or three instances.

Some years ago two Professors of Economics introduced a work of mine on the subject of money at their respective colleges. This book was intended to be a text-book for college students, and was introduced for this purpose. No sooner had the attention of the financial supporters of these colleges been called to the character of my book, and its unorthodox teachings, than. both Professors were expelled. No attempt was made to dispute the theories propounded, nor to challenge the truth of my conclusions. The editor of one of our weekly. journals some years ago became interested in this subject, and was good enough to place at my disposal the columns of his paper for a period of several weeks. He also met the same, fate as the American Professors, and had to resign his position. I learned afterwards that pressure was brought to bear on the proprietor of this journal by his banker to refrain from publishing articles of this character in future. One wonders what there is so sacred about the so-called " principles " of finance as to render those who challenge them subjects of persecution !

If our orthodox financial theories are based on truth, what have their upholders to fear from open discussion, and why do they do all in their power to prevent it ?

During the past few years invitations have been sent to the President and the Secretary of the Sound Currency Association, to debate publicly the question as to whether it is to the public interests to restore the gold standard. Needless to say, the invitations were declined and all attempts to get the advocates of this " standard " into the open to defend their theories have proved unavailing.. Your recent attack on the policy of deflation aroused such a storm of indignation among the money-lending class that you must doubtless have realised the degree of intolerance that exists in regard to the mere discussion of this subject.

In regard to Mr. Keynes. It is both interesting and gratifying to find that this gentleman has at last realized the evils of currency deflation: But it is only fair to point out that when I and my associates of the BankingsReform League

were doing our best to warn the Government of the perils to which the country would be exposed by the adoption of the Cunliffe Currency Committee's proposals, we could get no assistance from either Mr. Keynes or any other orthodox economist. On the contrary, practically all the orthodox writers were clamouring for deflation. As far back as 1917 I warned the Government in a series of articles published in the Times Trade Supplement of the inevitable results of contracting the currency after the War, which I foresaw would be urged by the money-lending class.

Currency contraction has been practised after every great national crisis in which the country has had to be burdened with fresh debts. The reason is simplicity itself. During great wars, Governments have to inflate credit, and in borrow- ing they borrow what is known as " cheap " money, but when peace has been declared the holders of the national bonds demand their pound of flesh, and hence they agitate for a return to what they call " honest " money, which means repayment to them of the loans in money of twice the value of that originally loaned. I pointed this out to the Cunliffe Currency Committee in my criticism of their first Interim Report. I said : " In advising the restoration of the gold standard, they (the Committee) arc advising the Government to increase the National Debt, and so add to the burdens of taxation, which the British public will have to bear. At present our National Debt approximates £8,000,000,000, but what are these pounds, and with what were they subscribed ? The Committee must know that the War Loans were subscribed in cheap pounds, approximating in value to only one-half of the pre-War pounds. Hence our War Debt, expressed in pre-War pounds, would be less than £4,000,000,000. By restoring the gold standard, the public debt would therefore be doubled and become £8,000,000,000 at the pre-War value. Hence every taxpayer would be com- pelled to pay at least twice the amount of taxes in his own products and services, by reason of the Committee's recom- mendations."

Both Mr. Keynes and Professor Gustav Cassell became wise after the event. Had they used their influence, at the time I mention, 1917, 1918 and 1919, to persuade the Government against adopting the moneylenders' Committee's proposals, it is possible the nation might have been saved from the terrible losses and experiences of the past three years. However, it is all to the good that Mr. Keynes is now working against this ruinous financial policy.

In regard to stabilization. It has been well said that " to stabilize at the present time means stabilizing trade depression and unemployment." Justice demands that the National Debt should be repaid, both as to principle and interest, in pounds of the same value as those originally loaned.

As to the so-called gold standard of value, is it not time that this barbarous institution was abolished. ? It is wholly irrational and unscientific. It has done more harm to the world than probably any other institution that has ever been created by human agency, and but for the power of the State to enforce it, it would have died a natural death long ago.

A true science of economics has yet to be written, and will

only be written by men who are entirely outside the influence of private and vested interests. Economics should be a progressive science. It is a serious reflection upon our intelli- gence that we should still be governed by laws and policies which originated in the ignorant superstitions of the past. I agree with Lord Balfour when he said : " I would as soon entrust my health to a doctor whose knowledge of the Pharma- copoeia was that of 1840, as I would entrust my trade and financial policies to men who had learned nothing since the days of Sir Robert Peel and Richard Cobden."—I am, Sir, &c,

ARTHUR KITSON.

(President Banking Reform League.)

12 St. James's Square, S.W.