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THE THEORY OP MODEEN WELFARE 23*
Id BO far as the process of investmeDt and busioess management involves the use of credit, in the way of interest-bearing securities or loans equivalent to fluch securities, this element of credit retards the readjustment by force of the fixed charges which it involves. This retardation (aided as it is by the reluctance of business men to lower their capitalization) is of suflBcient effect to hinder recapitalizar tion, on the whole, from overtaking the progressive need of it, with the result that a fair or " ordinary " rate of profits on industrial investments is not pei^ manently attainable in the field of open competition. In order that the rate of interest should effectually further business depression in this way, therefore, it is not necessary that the rate should rise or fall, or that it should be relatively high or low, or that it should be uniform over the field, but only that there should be a rate of interest in each case, and that there should be some appreciable volume of credit involved in industrial investments. Credit is, in fact, a ubiquitous factor in modem • industrial business, and its effects in the way indicated are therefore to he counted in as a constant force in the situation.
However, even apart from the presence of this ubiquitous credit element, a similar effect would probably result from the progressive enhancement of industrial efficiency when this enhancement proceeds at such a rate as has been the case for some
time past. As has been shown in an earlier chapter, business men keep account of their wealth, their outgo and their income, in terms of money value, not in terms of mechanical serviceability or of consumptive effect.