Notes By The Way: Robbing the Thrifty

Elsewhere in this issue (Fifty Years Ago) two contrasting quotations are given, the first relating to the vast army of people who, forty years ago, were dependent on the Poor Law and the second a quotation from Colin Clark about the 1,700,000 now receiving National Assistance. As he says, the so-called Welfare State has done little more than change the name from Poor Relief to National Assistance.

His main point is, however, the way in which Labour and Tory Governments, by steadily raising the cost of living—60 per cent. since 1947—have whittled away the purchasing power of savings and fixed pensions.

While this was happening to the humble and weak the rich and powerful had great opportunities for adding to their wealth through the rise of prices of company shares and properties of all kinds. Many great new fortunes have been made under the “Welfare State,” while the governments, the Trades Union Congress and the National Savings Committee were preaching thrift to those who could least afford it, and deploring the growth of gambling and football pools.

If the Labour and Tory governments in Britain have whittled away the value of savings by their policy of raising the cost of living, the government in Russia has achieved the same end by much more drastic methods.

In 1947, when they revalued the currency, issuing new currency in place of the old (but much less of it) they cancelled one-third or one-half of all deposits in Savings Banks above 3,000 roubles (about £143), and cancelled two-thirds of the face value of most State bonds. Thus, the worker who had invested £100 found himself owning only £33.

Earlier this year a still more drastic action was taken, particulars of which were given in Soviet News (10th April, 1957). published by the Russian Embassy in London. (See also Economist, 20th April, 1957.) The announcement was made by Mr. Krushchev. He stated that the total amount of loans outstanding was 260,000 million roubles (about £24,000 million), so that the cost of the tax free lottery prizes paid out on the bonds in place of interest must have been nearly £900 million a year, an amount much bigger than the cost of interest on the British National Debt.

Mr. Krushchev blandly explained that the Russian government has decided to raise no more loans, and as this could not be done “unless the payment of winnings and redemptions on the previous loans was suspended at the same time,” the government also proposed to postpone the payment of winnings for a period of 20 to 25 years.” Instead, they would repay the 260,000 million roubles at the rate of about 13,000 million roubles a year (about £1,200 million), but without interest or lottery prizes until the end of 25 years.

Mr. Krushchev did not say that the Russian government was going to do this: they were merely proposing it. and would only carry it out if the Russian workers approved! The same issue of Soviet News reported that the Russian workers had approved.

The suggestion of the Economist as to the reason for this move is that the size and cost of the debt had become so large (nearly half the annual budget) that it had become “a real burden” on State finances. The British Chancellor of the Exchequer must be envious of his Russian opposite number’s freedom of action.

In the Observer (1/12/57) Mr. Alan Day had an article on “Inflation and the Middle Classes,” discussing whether it is true, as some Tories say, that “the middle classes” have suffered more harshly from inflation than have other people.

He agreed that “one section” have undoubtedly been badly squeezed—”the pensioners and other retired people living on fixed-money incomes.” He also agreed that the same is true of “the elderly working classes,” but with the difference that the former have been on a higher standard of living and therefore have farther to fall before they can qualify for national assistance.

Apart from this, Mr. Day believes that the “middle classes” as a whole have not been badly hit, though some of them (he mentions “classics masters” as an example) have suffered because they are less in demand than they used to be. The others have had their salaries raised with the cost of living, though, as Mr. Day points out, it is done with less publicity than the raising of wages of railwaymen. dockers, etc.

But what is of more interest is what Mr. Day means by “middle classes.” He deals in the main with people who sell their mental and physical energies, just like dockers, but who call their pay salaries instead of wages. In short, they are members of the working class, and the name “middle class” is inapplicable.

Mr. Day admits this. He confesses that he cannot define the term and writes:—

But surely the remedy is too simple. If people can belong to a non-existent class merely by thinking that they belong to it, all they have to do about their problem of low pay is to think that their pay isn’t low. Or, since they think the working class are better off, why not think themselves into the working class? Or, better still, why not “think” instead of day-dreaming? Think about capitalism and their working class status in it; then think about Socialism, in which they would be able to live and work as intelligent members of a free society, no longer hag-ridden by notions about class.

Under the above heading the Daily Mail reports a survey made in America by the magazine “Fortune.”

The Daily Mail says that, according to the survey, in America’s biggest and richest cities like San Francisco, Cincinnati, Pittsburgh and Houston, the number of people crowding into slums is growing proportionately faster than the population of the city as a whole.

The major reason for the slums is said to be “prosperity itself,” because, as jobs are to be had, people come in from small towns and farms, the South, and Puerto Rico.

Many writers have used the theme of a visitor from another planet as a means of taking a fresh look at the imbecilities of our world. Naturally, he cannot see any more or any deeper than his creator and most of the creators, being accepters of the present structure of society, have seen the odd little evils and missed the accustomed big ones. All the same, a visitor from another planet which had a developed capitalist system, and who was blind to the major evils of capitalism, might well blink at some of the crazier activities of official and unofficial legislators and moralisers. A latest example comes from Washington, U.S.A., and was reported in the Daily Telegraph (30/11/57).

Because the local legislature believes “that people are liable to drink more standing up,” they made a law requiring that people who want to drink in public must do so sitting down.