452 SECTIONAL TRANSACTIONS.— F. 



The resulting increase in investment has, on the one hand, not merely 

 abolished unemployment but caused an acute shortage of labour, and on the 

 other hand, increased the difficulty of maintaining stability of wages and 

 prices. However there has been no inflation and prices are little higher 

 than in 1932. The national income increased from 45 milliard marks in 

 1932 to 68 milliards in 1937, and the standard of living of the workers as a 

 whole has risen largely, though not proportionately, owing to the scarcity 

 of some commodities and to deterioration in the quality of others. 



The greatest economic problems with which Germany is to-day confronted 

 relate to the shortage of labour and raw materials ; to the necessity for 

 neutralising much of the income created by full employment and the high 

 level of investment ; and to foreign trade. 



Prof. J. TiNBERGEN. — Statistical testing of the trade cycle mechanism 

 (ii.o). 



For the fluctuations in a given phenomenon (or variable) there are ' proxi- 

 mate ' and ' deeper ' causes. A proximate cause to investment activity 

 may be profits ; if a proximate cause of profits is consumers' outlay, the 

 latter is one of the ' deeper ' causes of investment activity. There are 

 ' deeper * causes of the second, third, etc., degree. The whole network of all 

 these causal connections is the economic mechanism, or, if we confine 

 ourselves to short-run fluctuations, the trade cycle mechanism. Economic 

 theories tell us what are the proximate causes of a given variable's fluctua- 

 tions. They do not, in general, tell us about their relative importance. 

 Nevertheless this knowledge is vital for problems of trade cycle policy. 

 Statistical methods enable us, in a number of cases, to determine this relative 

 importance. Extending the methods used for the determining of demand 

 and supply curves to large complexes of markets instead of single markets 

 yields some of the information desired. 



Some results of work in this field. The large elasticity of the supply of 

 labour, commodities and credit in the U.S. after the War. The remarkable 

 r61e of the stock exchange. Some consequences of the policy of President 

 Roosevelt. 



Mr. R. F. Bretherton. — Public investment and trade cycle policy (12.0). 



Capital expenditure by the central government, local authorities, and 

 semi-public bodies in Great Britain has since the War formed a large, though 

 variable, proportion of the total gross investment of the community. The 

 idea of timing this expenditure in such a way as to counteract, rather than 

 to exaggerate, the fluctuations of private investment in the course of the 

 Trade Cycle is not new : it was suggested by the Poor Law Commission 

 of 1905, has been elaborated by Bowley and some other economists, and has 

 been recently accepted as a regular instrument of trade cycle control in the 

 United States and Sweden. But in Great Britain it has not yet been given 

 any real trial. 



This paper is specially concerned with investment by the local authorities. 

 Since the War, this had varied between £155 millions and £70 millions a 

 year ; but it has varied zuith the indices of private business, though with a 

 considerable time-lag. The reasons for this are investigated, and the effects 

 upon employment are estimated. 



The case for attempting at least to stabilise public investment is stated" 

 and discussed, and some of the difficulties are then examined. They may 

 be classified as (i) financial — the present arrangements of British local 



