THE PROBLEM OF UNEMPLOYMENT 
January 27, 1922 
Two years ago, when we were suffering the discom- 
fort of a rapid rise in the cost of living, it seemed 
appropriate at our Annual Meeting to take high 
prices as the subject of my Address. I ventured at 
that time upon a word of warning. Although the 
high prices were due to the monetary and credit 
inflation consequent upon the immense borrowing 
by the Government during the War, I endeavoured 
to show that any attempt to drive prices down by a 
policy of forced deflation would lead to grave 
trade depression and wide-spread unemployment. 
Last year when I addressed you, a policy of 
deflation had been publicly announced and steadily 
pursued for a considerable period. I discussed on 
that occasion inflation and deflation in detail, and 
outlined so far as I could the monetary, trade and 
social conditions which arise in either case. We have 
recently learnt the evil consequences of deflation in 
the school of experience and this policy has for 
the time being fallen into disrepute. But unfortun- 
ately the lesson has had the effect of turning a 
considerable body of opinion back in favour of 
inflation, and we seem now to have in prospect a 
regular alternation between the two policies, each 
to be adopted in turn as a remedy for the other. 
The danger of this proceeding is my apology for 
touching upon the subject again before I turn to 
the other matters upon which I wish to address vou. 
NEED FOR STABILITY OF PRICES 
The danger is a real one because of the force of 
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