THE THEORY OF MODERX WELFARE 245
machine industry and a perfect business organization, with active competition throughout, it is at least probable that depression would not be seriously interrupted by any other cause.
But it has been a point of economic dogma in modern times — not to call it a point of theory, since it is not held on reasoned grounds — that , depression and inflation, followed by crisis, succeed one another with a rough periodicity, interminably | and in the nature of the case. The periodicity (with an interval of some ten to twelve years from phase to phase) has not been established with any cogent show of evidence, except for the period from 1816 to 1873; and even within that period the evidence has not been convincing to all students of these phenomena. A tentative explanation of the periodicity, such as there may have been within that period, as well as of its absence before and after the period in question, may be offered on the basis of the views here set forth. Keeping in mind the point that the disturbance, both in the case of inflation and in that of depression, is a discrepancy between capitalization and eaming-capacity, and also the manner in which this discrepancy arises, it may he said that prior to the earlier date mentioned the modern industrial system was not such a comprehensive and articulate process that a disturbance in one part or one member of the system need be transmitted forthwith through the channels
of business to all the rest. A speculative move' ment need not spread forthwith throughout the industrial system. The great episodes of speculation and collapse that occurred during earlier modem timea were