“To unstable money are to be traced nearly all our economic troubles since 1918: the unemployment of the inter-war period; the over-employment and scarcity of labour since the Second World War; the labour unrest incidental to perpetual wage demands; the hardships and dislocation caused by the declining value of small savings, annuities and endowments; the vexation of continual price rises even for those whose incomes on the whole keep pace with them; the collapse of the prices of Government securities through distrust of the unit in which they are valued.”

‘Foreword’ (1961) to A Century of Bank Rate (1962, 2nd ed.), p. xxii.
A Century of Bank Rate (1938)

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Ralph George Hawtrey11

British economist 1879–1975

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“But it is clear that the price of labour has no necessary connection with the price of food, since it depends entirely on the supply of labourers compared with the demand.”

David Ricardo (1772–1823) British political economist, broker and politician

Source: The Principles of Political Economy and Taxation (1821) (Third Edition), Chapter XVI, Taxes on Wages, p. 141

“We want to keep prices stable for two reasons—to hold on to our share of world markets, and to avoid strains and dislocations at home. We are probably entering a period when it will be more difficult to keep prices from rising. It is a matter for both sides of industry to see that increased money returns, either dividends or wages, are matched by increased output.”

Rab Butler (1902–1982) British politician

Speech to the quarterly meeting of the National Production Advisory Council on Industry (28 May 1954), quoted in The Times (29 May 1954), p. 3
Chancellor of the Exchequer

“Let there be no doubt that our present rate of inflation is the main cause of our economic difficulties. There never has been a more mistaken piece of economic analysis than the view that we should accept inflation to avoid unemployment. Inflation today, so far from being an alternative to unemployment, is its main cause. If our rate of cost increase is allowed to continue close to twice that of the average for the developed world it will increasingly price us out of world markets. Employers…will have to restrict their activities and still more their labour force in response to mounting and uncontainable wage and salary bills.”

Roy Jenkins (1920–2003) British politician, historian and writer

Hugh Anderson Memorial lecture at the Cambridge Union (28 February 1975), quoted in The Times (1 March 1975), p. 2
1970s

“Conditions have greatly changed in Great Britain since the end of the war owing to the existence of full employment. Negotiations about wages between the two sides of industry now take place in entirely different circumstances. There is no reserve of labour to compete for jobs. … If wages rise faster than productivity the increases in cost can usually be passed on in increased selling prices. There is thus in the economic system very much less check on the upward movement of money wages. …if wages at home rise unchecked, it is more likely in general that exports will gradually cease to be competitive and there will be balance of payments difficulties. These can be met, in the end, by devaluation. A succession of devaluations completely undermines confidence in any currency. … It is clear that a very difficult problem faces a country such as ours, which wishes to maintain full employment and yet to avoid the undoubted evils of rising prices and balance of payments difficulties abroad.”

Hugh Gaitskell (1906–1963) British politician

Memorandum, 'Wages and Prices and Full Employment' (1 December 1950), quoted in Correlli Barnett, The Lost Victory: British Dreams, British Realities: 1945–1950 (London: Pan, 1996), pp. 350–352
Chancellor of the Exchequer

“LABOUR, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price. The natural price of labour is that price which is necessary to enable the labourers, on with another, to subsist and to perpetuate their race, without either increase or diminution.”

David Ricardo (1772–1823) British political economist, broker and politician

Source: The Principles of Political Economy and Taxation (1821) (Third Edition), Chapter V, On Wages, p. 52

“I do not mean to suggest that all those who call themselves monetarists make this unconscious assumption that an inflation involves this uniform rise of prices. But we may distinguish two schools of monetarism. The first would prescribe a monthly or annual increase in the stock of money just sufficient, in their judgment, to keep prices stable. The second school (which the first might dismiss as mere inflationists) wants a continuous increase in the stock of money sufficient to raise prices steadily by a "small" amount—2 or 3 per cent a year. These are the advocates of a "creeping" inflation. … I made a distinction earlier between the monetarists strictly so called and the "creeping inflationists." This distinction applies to the intent of their recommended policies rather than to the result. The intent of the monetarists is not to keep raising the price "level" but simply to keep it from falling, i. e., simply to keep it "stable." But it is impossible to know in advance precisely what uniform rate of money-supply increase would in fact do this. The monetarists are right in assuming that in a prospering economy, if the stock of money were not increased, there would probably be a mild long-run tendency for prices to decline. But they are wrong in assuming that this would necessarily threaten employment or production. For in a free and flexible economy prices would be falling because productivity was increasing, that is, because costs of production were falling. There would be no necessary reduction in real profit margins. The American economy has often been prosperous in the past over periods when prices were declining. Though money wage-rates may not increase in such periods, their purchasing power does increase. So there is no need to keep increasing the stock of money to prevent prices from declining. A fixed arbitrary annual increase in the money stock "to keep prices stable" could easily lead to a "creeping inflation" of prices.”

Henry Hazlitt (1894–1993) American journalist

Where the Monetarists Go Wrong (1976)

“Labour was the first price, the original purchase-money that was paid for all things.”

Adam Smith (1723–1790) Scottish moral philosopher and political economist

It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.
Source: The Wealth of Nations (1776), Book I, Chapter V, p. 38.

“It has so happened in all ages of the world, that some have laboured, and others have, without labour, enjoyed a large proportion of the fruits. This is wrong, and should not continue. To each labourer the whole product of his labour, or as nearly as possible, is a most worthy object of any good government.”

Abraham Lincoln (1809–1865) 16th President of the United States

The Collected Works of Abraham Lincoln edited by Roy P. Basler, Volume I, "Fragments of a Tariff Discussion" (1 December 1847)
1840s

“It is indeed true that the reduction of inflation came at a big price—that Volcker's tightening, for instance, succeeded in lowering inflation only in the wake of a severe recession. But this possibility was, first of all, one concerning which monetarists were perfectly aware: they understood the danger that, once inflation, and accelerating inflation especially, came to be anticipated by the public, putting the breaks on money growth would result in prices and wages continuing for some time to rise beyond their new, less-rapidly rising equilibrium values, with a consequent rise in unemployment.”

George Selgin (1957) economist

In Defense of Monetarism (2008)

“We must move toward a soundly based and widely distributed economic well-being. This is the 'theory of plenty' as distinguished from the 'theory of scarcity' which has dominated our recent economic thinking and politics. Our yardstick, according to my thinking, I consists of the most effective balance between the following: First, the reduction in the real costs and selling! prices of goods and services; second, a more economic balance of national income through policies affecting wages, hours, prices and profits.”

Alfred P. Sloan (1875–1966) American businessman

Cited in: Charles Cullen Chapman (1936), The development of American business and banking thought, 1913-1936. p. 265
New York Times interview, 1935

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Ralph George Hawtrey11

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