It has appeared above that the depressing effect which a relatively low (declining) rate of interest has upon industrial business is due to its setting . up a discrepancy between the accepted capitalizar tion of older establishments and the cost of new establishments of an equivalent earning-capacity.
' Compare HoImod, Problem of Che Unfmploved, oh. V., and TugftnBftnuiowaky, Handtlikrlsen, cli. L and VI. In his criticism (pp. IBI103) Tugan baa quite miaaed the polot at Uobaoa'a theory aa well aa of his illuBiration, liaving apparently not underatood Hobeon'a expoaltlOQ, which la, in effect, very aimilar to hla own. See alao Uobeon, Moitnt Ci^paalint, cb. VIL, eapecially wca. 8 aad 10,
Now, under the circumstances of the more fuUy developed machine industry, such as it has stood for a couple of decades past, a similar discrepancy results from the gradual but uninterrupted proj gressive improvements of industrial processes. " The state of the industrial arts," as the older economists are in the habit of calling it, is no longer to be conceived as stationary, even for the I time being. No " statical " theory of the industrial / arts or of bnsiness prosperity is tenable, even for the purposes of a " statical " theory of the industrial situation. Progressively increasing efficiency of the processes in use is a pervading trait of the industrial situation. No two successive years are now on the same, or virtually the same, plane in respect of the efficiency of the industrial arts; indeed, the " period of production " can no longer safely be construed to