Deprearioa of Trade and Jnduitry (1886), "The repliei received from Chambers of Commerce to the inquiries we addresseil la them confirm the statements made by the witnesses who appeared before us. Those replies le«[lfy to the general maintenance or increase of the volume ot trade, accompanied In many cases bf a shrinkage In Its value, and In all cases by a serious diminutJon of profit. They also show how general is the belief In commercial circles that overproduction, the fall ot prices, and more effective foreign competition assisted by high tariOs, go tar Ui account tor the exiBting position of traile and industry la this country " (pp. ix-i}. Cf. also pp. xl-xr of the
rTHE THEORY OF MODERN WELFARE 221 B 18 readily to be had on good security during any ^M protracted depression.' There is also the fact that investment is continually going on, which argues that the difficulty is neither that capital cannot be found for investment, nor that investment has no prospect of reasonable profits. Practically, no exceptional amount of fluent funds is withheld from the market, — except in time of panic, which is another matter. It may be added that the rate of interest need not be notably low in time of depression, just as, on the other hand, a period of business exaltation is not uniformly accompanied by a notably high rate of interest.
But a low or declining rate of interest is effective in the way of depressing the business situation, even though a depression may go on without it. The line of its bearing upon business depression, or at least one line, is as follows : Established business concerns (particularly corporations) engaged in industry have some appreciable fixed (interest) charges to meet — on leases, mortgages, and interest-bearing securities (preferred stock and bonds). These outstanding obligations and securities may have been negotiated, "floated," at an earlier period of higher interest rates and higher profits, or they may have been carried over through a period of higher interest rates. In the former