Mr. Robertson's Views on Banking Policy

MR. ROBERTSON begins' with his habitual quotation thus: ' She's in that state of mind,' said the White Queen, ' that she wants to deny something-only she doesn't know what to deny! ' ' A nasty, viciouIs ten,mper,' the Red Queen remarked. What Mr. Robertson seeks to deny, it turns out, is that price stabilisation is universally, or even usually, the best policy. At the samne time he says, I believe firmly in a policy of ' credit control ' as contrasted with a policy of laisseY faire in monetary affairs. He is thus on the side of the monetary reformers, but goes beyond them in their analysis of fluctuation and elaborates more minutely. He stands to the modern orthodoxy of stabilisation, as the sound economist pointing out a special case for protection stands to free trade. The ardent stabiliser may well be roused to fury that the native vigour of his wide generalisation should be sapped so early by more than one exception. As Ricardo found McCulloch and J. S. Mill found Cobden, so Mr. Robertson may find those who affirm that he has spoilt their whole case. The following are three of Mr. Robertson's principal propositions: (I) In a frictionless state of barter in which producers knew and sought their own interest, output would be liable to alternating expansion and contraction. (The waves would be smaller than those to which we are accustomed in our world.) (II) Such a fluctuation, but neither more nor less, is desirable. (III) Paradoxically it is the case that in a money economy output would be made identical with the output of frictionless barter, not by price stability, but by an alternating rise and fall of general prices. The prima facie view that, if you do not want the introduction of money to upset the natural rhythms and harmonies of barter, it should be made a perfect measure of 1 Banking Policy and the Price Level, by D. H. Robertson. P. S. King and Son, London. I926

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