1. I was requested to submit evidence to the Treasury and Civil Service Committee for purposes of their inquiry into monetary policy, and for this purpose was sent a detailed questionnaire comprising thirty-five questions classified under three heads (excluding questions in the Appendix). I found after consideration that any attempt to answer the questions individually (whether comprehensively or selectively) would make it very difficult to present my views in a coherent manner. I therefore prefer to give my views in the form of a memorandum divided into sections followed by brief comments on a number of particular issues raised in the Committee's questionnaire.
2. I should like, however, by way of introduction to give an explicit answer to the first question. I believe that the four objectives listed there ((a) full and stable employment, (b) a satisfactory balance of payments, (c) the absence of inflation, (d) a high rate of economic growth) should severally and jointly, be regarded as the main objectives of Governmental 'economic management'. In that respect my views have not changed (or at least not significantly) since my address to the British Association in 1970.2 I believed then, and I believe now, that the simultaneous pursuit of these objectives requires a multiplicity of instruments (ideally the same number as there are objectives) though a given policy measure might have a favourable effect on the attainment of several objectives simultaneously, or else have a favourable effect on some and an unfavourable effect on others. In general it has been supposed that higher priority given to (a) and (d) is likely to be at the cost of (b) and (c) -- i.e. policies aimed at a higher level of employment and of economic growth may have adverse effects on the balance of payments and on inflation. But this is not invariably true. For example a successful policy aiming at export-led growth may lead to a higher____________________