Kevin Hoover wrote: "Pigou argues that, but for leakages to imports, the 
multiplier would have to be infinite, and apparently can't credit such 
nonsense.  He apparently doesn't imagine the possibility of leakages in 
the form of a propensity to save."

Adam Smith (/WN/, 1: 359) explains that "What is annually saved is as 
regularly consumed as what is annually spent, and nearly in the same 
time too; but it is consumed by a different set of people.  That portion 
of his revenue which a rich man annually spends, is in most cases 
consumed by idle guests, and menial servants, who leave nothing behind 
them in return for their consumption.  That portion which he annually 
saves, as for the sake of the profit it is immediately employed as a 
capital, is consumed in the same manner, and nearly in the same time 
too, but by a different set of people ..." 

J.S Mill (/Works/, 2:70) reaffirms the point: "The word saving does not 
imply that what is saved is not consumed, nor even necessarily that the 
consumption is deferred: but only that, if consumed immediately, it is 
not consumed by the person who saves it. If merely laid by for future 
use, it is said to be hoarded; and while hoarded, is not consumed at 
all. But if employed as capital, it is all consumed; though not by the 
capitalist."  And before Mill, Malthus also stated that "No political 
economist of the present day can by saving mean mere hoarding" (Quoted 
in Blaug 1996, 161).

Alfred Marshall in the /Pure Theory of Domestic Values/ restates the 
above meaning of saving when he writes, "The whole of a man=s income is 
expended in the purchase of services and of commodities. It is indeed 
commonly said that a man spends some portion of his income and saves 
another. But it is a familiar economic axiom that a man purchases labour 
and commodities with that portion of his income he saves just as much as 
he does with that he is said to spend. He is said to spend when he seeks 
to obtain present enjoyment from the services and commodities which he 
purchases. He is said to save when he causes the labour and the 
commodities which he purchases to be devoted to the production of wealth 
from which he expects to derive the means of enjoyment in the future" 
(Quoted in Keynes 1936, 19).

So, short of importing IOUs or financial assets, how does saving 
constitute a "leakage" from an economy's expenditure stream?

BTW, I'm with Rod Hay on the difference between Pigou's multiplying 
principle and the Kahn-Keynes multiplier analysis.  The latter is driven 
by consumer spending, hence Keynes's heavy reliance on the marginal 
propensity to consume (because he thinks saving is a leakage), without 
first asking what creates the means to make the purchases for 
consumption.  The former is driven by production, which may be initiated 
by a monetary injection.

James Ahiakpor