What are the root causes which bring every period of active trade to an
inevitable end? There are two which are almost invariably present
towards the end of every boom. First, the general level of prices and
wages has usually become too high; it is straining against the limits of
the available supplies of currency and credit, and, unless inflation is
to be permitted, a restriction of credit is inevitable which will bring
on a trade depression. In those circumstances, a reduction of the
general level of prices and wages is an essential condition of a trade
revival. A reduction of prices _and wages_. That point has a
significance to which I will return.
The second cause is the distorted balance which grows up in every boom
between different branches of industrial activity. When trade is good,
we invariably build ships, produce machinery, erect factories, make
every variety of what are termed "constructional goods" upon a scale
which is altogether disproportionate to the scale upon which we are
making "consumable goods" like food and clothes.
Pages:
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
255