COMMERCE, CURRENCY AND CREDIT

Britain's Coming Crash : Being Letters to my Son on Currency. By A. S. Baxendale. (Cecil Palmer. 5s. net.) Tnis is an interesting, suggestive, and stimulating little book. We by no means iigree with all the things that Mr. Baxendale says, .andwe occasionally disagree strongly with the way in which he says the things with which we do agree. But, though like the rest of mankind he is liable to be mistaken in his theories and harsh in his judgments, he has great stores of knowledge on the problems of Commerce, Currency and Credit, a clear mind and a notable power of poignant exposition. Few men use a quotation from some older writer, an anecdote, or a wise saying with greater effect than he does. For example, he .puts on his fly-leaf three paragraphs from Bishop Berkeley's

Querist which will be, we fear, .as a lance in the side of many. upholders of the Gold Standard. The said upholders form a

kind of hieratic caste and feel, we are sure, a natural sympathy. with Bishops of all kinds. It could not but be a grief to them to sec an eighteenth-century Bishop—and one who wore a very large wig—supplying arguments to people with unor- thodox views about Currency.

But Bishop Berkeley, it may be remembered, was something

more than a Bishop.. lie was a great philosopher, 'one ofathe greatest indeed from- the point of View of imaginative insight., He was also dprinee among controversialists and dialecticians.

He realized; like Socrates, that the proper way to argue is to force men to ask themselves questions, and ia his Querist, which deals with politics, economics and other social matters,• he stings men into thought with hiS queries. Here arc the queStions selected by Mr. Baxendale from Berkeley's

Qacrist

" Whether the sure way to supply people with tools and materials And set them to work be not a free circulation of money, whether silver or paper ? . . . Whether the wealth of the richest nations in Christendom cloth not consist in paper vastly more than in gold or silver ? . . . Whether money circulating ho not the life of trade, and whether the want thereof cloth not render . a State gouty and inactive ? " - •

These questions it would be well for the British Government and British people to consider with the utmost care. By all

• men'sadmissionwe.are in danger of becoming " a State gouty and inactive." Also, we think it is universally adMitted that money circulating " is " the life of trade." It would, how- ever, be begging the question to assume that it is the want of circulation of money, and not some other cause, which has given the State the gout. All we say is that these are three questions which demand an answer, and till an answer, and the right answer, is given we shall remain in great peril. We do not go so far as to accept Mr. Baxendalc's pessimism and belief that " Britain's coining crash " can now-hardly be avoided, but we do sincerely believe that we are going to get-into very deep waters if we persist in carrying out the so-called policy of

• - the Conliffe Commission and continue to deflate—that is, ereate a condition of dearer money, which, of course, is the same as less money. We have never yet heard of a business which flourished by deliberately reducing the rolling-stock by means of which the goods are put into customer's hands and so invested with value.

-Mr. Baxendale's book is in the form of aeries of letters to his son Philip. As is usual with books of this -kinT- Phillip is, 'for -

the purposes of the argument, assumed to have the unpre- judiced 'Iliad. Upon this virgin soil his father sows what he believes to be the good seeds of economic -theory. Further, he teaches him to prevent the enemy coming by night to sow tares in the field.

We must leave our readers to explore the book for them- selves, but desire to draw their special attention to one or two • pints. In the first place, they should consider what Mr. • Baxendale calls " the catch in the quantity theory of money." Next they should study his account of the Egyptian Currency System. Further, they will find scattered up and down the book a number of very appropriate instances, ancient and ' modern, of what happens when people have not a right under- standing of the mechanism of barter. At present the confusion in the public mind is vastly increased by the opaqueness, or rather muddiness, of the • nomenclature employed. What is wanted is someone who will provide us with words which have clean and clear mean- ings, and does not invite us to beg all the questions at issue. Inflation, for example, is a devastating word, because it is used in several senses: SometimeS people mean by it a dilution of the media of exchange, sometimes an expansion of these media. But dilution and expansion arc very different things. Dilution means an increase in quantity caused by a diminution of quality. Expansion, on the other hand, means an increase in the quantity, without any diminution of the quality, of the media of exchange. When an expansion in the media of exchange takes place we have not only more tickets issued, but have also more goods prepared to be handed over when the tickets are presented. To put it in another way, under dilu- tion water is poured into a barrel of wine, and the mixture becomes thin and loses a good part of its savour. Under expansion the barrel is filled up, not with water, but with more wine.

Deflation, as now used, is almost as deceptive a word as inflation. Deflation sometimes means distillation—that is, an increase in the strength of the liquor, though a diminution in its quantity as when wine is turned into brandy. But deflation is also used for diminution----that is, when there is a waste or destruction of the liquor without an increase in its strength.

But our object on the present occasion i!.r, not to reargue the problems of Currency, Credit-and Cornmercbut merely to let our readers know of a book in which these questions are dis- cussed in. simple language and in a style stimulating to` the point of raciness.