for sweeping "remedies," for the marshaling of new "white rabbits," and for much of the content of the large-spending philosophy. As long as unemployment is taken as a great single whole, the view that it has become a permanent characteristic upon the economy easily follows, together with a tendency to magnify its absolute volume. Among nonspecialists, even those who have not totally accepted the philosophy of despair, the belief that unemployment continues to range somewhere between 8 and 10 million is still usual. These large figures are still bandied about after the more credible estimates have fallen to from 6 to 8 million, and evidence is accumulating to suggest that an estimate in the neighborhood of 4 million as of the middle of the fall might well have been more realistic. What the further effects of the defense program may be as its scale of operations expands can only be conjectured as yet, but it appears that practically all of the stock assumptions of the last few years concerning the volume and permanence of unemployment, the extent to which a "hard core" has developed, among the unemployed, and the nature and extent of the labor supply generally, may have to be completely recast.

[From "The Worldly Philosopher," Simon and Schuster, Inc., publishers] THE SICK WORLD OF JOHN MAYNARD KEYNES

(BY ROBERT L. HEILBRONER)

A few years before his death, Thorstein Veblen had done something oddly out of character-he had taken a plunge in the stock market. A friend had recommended an oil stock, and Veblen, thinking of the financial problems of old age, had risked a part of his savings. He made a little money on the venture at first, but his inseparable bad luck plagued him-no sooner had the stock gone up than it was cited in the current oil scandals. His investment eventually became worthless.

The incident is unimportant in itself except insofar as it reveals another tiny chink in Veblen's armor. And yet, in another context, this pathetic misadventure is curiously revealing. For Veblen himself had fallen victim to the same dazzling lure which blinded America: When the most disenchanted of its observers could be tempted to swallow a draught, is there any wonder that the country was drunk with the elixir of prosperity?

Certainly the signs of prosperity were visible at every hand. America in the late 1920's had founds jobs for 45 million of its citizens to whom it paid some $77 billion in wages, rents, profits, and interesta flood of income comparable to nothing the world had ever seen. When Herbert Hoover said with earnest simplicity, "We shall soon with the help of God be within sight of the day when poverty will be banished from the Nation," he may have been shortsighted-as who was not?but he rested his case on the incontrovertible fact that the average American family lived better, ate better, dressed better, and enjoyed more of the amenities of life than had any average family hitherto in the history of the world.

The Nation was possessed of a new vision, one a great deal more uplifting than the buccaneering ideals of the robber barons. John J. Raskob, chairman of the Democratic Party, gave it precise expression in the title of an article he wrote for the Ladies' Home Journal: "Everybody Ought To Be Rich." "If a man saves $15 a week, wrote Raskob, "and invests in good common stocks, at the end of 20 years he will have at least $80,000 and an income from investments of around $400 a month. He will be rich."

That bit of arithmetic merely presupposed that such a man would keep reinvesting his dividends, figured at about 6 percent a year. But there was an even more alluring road to riches. Had a devotee of Raskob's formula spent his dividends and merely allowed his money to increase with the trend of stock prices, he would have achieved his goal of wealth just as rapidly and a good deal less painfully. Suppose he had bought stock in 1921 with the $780 he would have saved at $15 a week. By 1922 his money would be worth $1,092. If he then added

another $780 yearly he would have found himself worth $4,800 in 1925, $6,900 a year later, $8,800 in 1927, and an incredible $16,000 in 1928. Incredible? By May of 1929 he would have figured his worldly wealth at over $21,000: in less than 9 years his savings of $7,020 would have tripled. And when the great bull market had gone on for nearly half a generation in an almost uninterrupted rise, who could be blamed for thinking this the royal road to riches? Barber or bootblack, banker or businessman, everyone gambled and everyone won, and the only question in most people's minds was why they had never thought of it before.

It is hardly necessary to dwell upon the sequel. In that awful last week of October 1929, the market collapsed. To the brokers on the floor of the stock exchange it must have been as if Niagara had suddenly burst through the windows, for a cataract of unmanageable selling converged on the marketplace. In sheer exhaustion brokers wept and tore their collars; they watched stupefied as immense fortunes melted like spun sugar; they shouted themselves hoarse trying to attract the attention of a buyer. The grim jokes of the period speak for themselves: it was said that with every share of Goldman Sachs you got a complimentary revolver, and that when you booked a hotel room the clerk inquired, "For sleeping or jumping?"

When the debris was swept away the wreckage was fearful to behold. In 2 insane months the market lost all the ground it had gained in 2 manic years; $40 billion of values simply disappeared. By the end of 3 years our investor's inflated paper fortune of $21,000 had diminished by 80 percent; his original $7,000 of savings was worth barely $4,000. The vision of every man a wealthy man had been shown up as an hallucination.

In retrospect it was inevitable. The stock market had been built. on a honeycomb of loans that could bear just so much strain and no more. And more than that, there were shaky timbers and rotten wood in the foundation which propped up the magnificent show of prosperity. Chairman Raskob's formula for retirement was arithmetically accurate enough, all right, but it left unanswered the important question of how a man was to save $15 out of an average pay envelope which came to only $30.

The national flood of income was indubitably imposing in its bulk, but when one followed its course into its millions of terminal rivulets, it was apparent that the Nation as a whole benefited very unevenly from its flow. Some 24,000 families at the apex of the social pyramid received a stream of income three times as large as 6 million families squashed at the bottom-the average income of the fortunate families at the peak was 630 times the average income of the families at the base. Nor was this the only shortcoming. Disregarded in the hullabaloo of limitless prosperity were 2 million citizens out of work, and ignored behind their facade of classical marble, banks were failing at the rate of two a day for 6 years before the crash. And then there was the fact that the average American had used his prosperity in a suicidal way; he had mortgaged himself up to his neck, had extended his resources dangerously under the temptation of installment buying, and then had insured his fate by eagerly buying fantastic quantities of stock-some 300 million shares, it is estimated-not outright, but on margin.

Inevitable or not, it was far from visible at the time. It was a rare day that did not carry the news of some typical figure assuring the Nation of its basic health. Even so eminent an economist as Irving Fisher of Yale was lulled by the superficial evidences of prosperity into announcing that we were marching along a "permanently high plateau" a figure of speech given a macabre humor by the fact that stocks fell off the brink of that plateau 1 week to the day after he made his statement.

But dramatic as it was, it was not the wild decline of the stock market which most damaged the faith of a generation firmly wedded to the conviction of never-ending prosperity. It was what happened at home. A few items from those dreary years may serve to illustrate. In Muncie, Ind.-the city made famous by its selection as "Middletown"every fourth factory worker lost his job by the end of 1930. In Chicago the majority of working girls were earning less than 25 cents an hour and a quarter of them made less than 10 cents. In New York's Bowery alone, 2,000 jobless crowded into breadlines every day. In the Nation as a whole, residential construction fell by 95 percent. Nine million savings accounts were lost. Eighty-five thousand businesses failed. The national volume of salaries dwindeled 40 percent; dividends 56 percent; wages 60 percent.

And the worst of it, the most depressing aspect to the great depression, was that there seemed to be no end to it, no turning point, no relief. In 1930, the Nation manfully whistled "Happy Days Are Here Again," but the national income precipitously fell from $87 billion to $75 billion. In 1931 the country saying "I've Got Five Dollars"; meanwhile its income plummeted to $59 billion. In 1932 the song was grimmer: "Brother Can You Spare a Dime?"-national income had dwindled to a miserable $42 billion.

By 1933 the Nation was virtually prostrate. The income of the country was down to $39 billions. Over half the prosperity of only 4 years back had vanished without a trace; the average standard of living was back where it had been 20 years before. On street corners, in homes, in Hoovervilles, 14 million unemployed sat, haunting the land. It seemed as if the proud spirit of hope had been permanently crushed out of America.

It was the unemployment that was hardest to bear. The jobless millions were like an embolism in the Nation's vital circulation; and while their indisputable existence argued more forcibly than any text that something was wrong with the system, the economists wrung their hands and racked their brains and called upon the spirit of Adam Smith, but could offer neither diagnosis nor remedy. Unemployment-this kind of unemployment-was simply not listed among the possible ills of the system: it was absurd, impossible, unreasonable, and paradoxical. But it was there.

It would seem logical that the man who would seek to solve this impossible paradox of not enough production existing side by side with men fruitlessly seeking work would be a leftwinger, an economist with strong sympathies for the proletariat, an angry man. Nothing could be further from the fact. The man who tackled it was almost a dilettante with nothing like a chip on his shoulder. The simple truth was that his talents inclined in every direction. He had, for example, written a most recondite book on mathematical probability, a book

that Bertrand Russell had declared "impossible to praise too highly"; then he had gone on to match his skill in abstruse logic with a flair for making money-he accumulated a fortune of £500,000 by way of the most treacherous of all roads to riches: dealing in international currencies and commodities. More impressive yet, he had written his mathematics treatise on the side, as it were, while engaged in Government service, and he piled up his private wealth by applying himself for only half an hour a day while still abed.

But this is only a sample of his many-sidedness. He was an economist, of course a Cambridge don with all the dignity and erudition that go with such an appointment; but when it came to choosing a wife he eschewed the ladies of learning and picked the leading ballerina from Diaghilev's famous company. He managed to be simultaneously the darling of the Bloomsbury set, the cluster of Britain's most avant-garde intellectual brilliants, and also the chairman of a life insurance company, a niche in life rarely noted for its intellectual abandon. He was a pillar of stability in delicate matters of international diplomacy, but his official correctness did not prevent him from acquiring a knowledge of other European politicians that included their mistresses, neuroses, and financial prejudices. He collected modern art before it was fashionable to do so, but at the same time he was a classicist with the finest private collection of Newton's writings in the world. He ran a theater, and he came to be a director of the Bank of England. He knew Roosevelt and Churchill and also Bernard Shaw and Pablo Picasso. He played bridge like a speculator, preferring a spectacular play to a sound contract, and solitaire like a statistician, noting how long it took for the game to come out twice running. And he once claimed that he had but one regret in life— he wished he had drunk more champagne.

His name was John Maynard Keynes, an old British name (pronounced to rhyme with "rains") that could be traced back to one William de Cahagnes and 1066. Keynes was a traditionalist; he liked to think that greatness ran in families, and it is true that his own. father was John Neville Keynes, an illustrious enough economist in his own right. But it took more than the ordinary gifts of heritage to account for the son; it was as if the talents that would have sufficed half a dozen men were by happy accident crowded into one person.

By a coincidence he was born in 1883, in the very year that Karl Marx passed away. But the two economists who thus touched each other in time, although each was to exert the profoundest influence on the philosophy of the capitalist system, could hardly have differed from one another more. Marx was bitter, at bay, heavy, and disappointed; as we know, he was the draftsman of capitalism doomed. Keynes loved life and sailed through it buoyant, at ease, and consummately successful to become the architect of capitalism viable. Perhaps we can trace Marx's passionate prophecy of collapse to the threat of neurotic failure which marked his practical life; if so we can surely credit Keynes' persuasive salesmanship of reconstruction to the exhilaration and achievement which marked his.

His boyhood was Victorian, old school, and premonitory of brilliance. At age 41% he was already puzzling out for himself the economic meaning of interest; at 6 he was wondering about how his brain worked; at 7 his father found him a "thoroughly delightful