increasing efSciency in the production of other forma of wealth iii detrimental to the bUBinees interests, in that it brings depreuion ; but a rapid increase of the precioifs laetalg is the most fortiiiia.te material oircumstance for the buninew interetiU that indastrial actlvit; can bring, because jt pate oS depresaion by keeping ap prices.
THE THEORY OF MODERN WELFARE 237
is not to b« regarded as substantially the only factor that comes in question here. Accordingly, it is only under very exceptional circumstances, at times when the precious metals are supplied with extraordinary freedom, that the increased output of these metals can offset the trend of business toward depression. Ordinarily this factor can count for j no more than a mitigation of the " tendency of \ profits to a minimum," And even this mitigating effect, it may be remarked, appears to be of less radical consequence for the general situation of business now than it was during the earlier phases of the machine industry's regime. The most telling effect of an increased supply of the precious metals seema to be the incitement which it gives to speculative inflation.'
It will be noted that the explanation here offered ! of depression makes it a malady of the affections. ' The discrepancy which discourages business men is a discrepancy between that nominal capitalization which they have set their hearts upon through habituation in the immediate past and that actual capitalizable value of their property which its currant earning-capacity will warrant. But where the preconceptions of the business men engaged have, as commonly happens, in great part been
i CtSmart, Stndiet in Eeonomicji.EeBAy VL, " Muat Prices Fall ?" DiHrlhution of Income, bk. U, ch. lU.