trial equipment at the starting-point, by approximately the amount of the aggregate deposits and loans on collateral ; (e) the overrating swells the business capital, thereby raises the valuation of collateral, and gives rise to a further extension of credit, with further results of a like nature ; (/) commonly beginning at some point where thei extension of credit is exceptionally large in propoM tion to the material substratum of productive goods, or where the discrepancy between nominal capital] and earning-capacity is exceptionally wide, the overrating is presently recognized by the creditor and a settlement ensues ; (g) on the consequent withdrawal of credit a forced rerating of the aggregate capital follows, bringing the nominal aggregate into approximate accord with the facts of earning-capacity; {/<) the shrinkage which takes place in reducing the aggregate rating of business capital from the basis of capital goods plus loans to the basis of capital goods alone, takes place at the expense of debtors and nominal owners of industrial equipment, in so far as they are solvent ; (i) in the period of liquidation the gain represented by the credit inflation goes to the creditors and claimants of funds outside the industrial process proper, except that so much as is cancelled in bad debts is written off; (j') apart from secondary effects, such as heightened efficiency of industry due to inflated values, changes of the rate of interest, insolvencyi
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