not of the nature of speculative inflation affecting the entire business community occupied with industry. They are rather of the nature of commercial speculation verging on gambling.' So also, the crises of that earlier time, when they were not collapses of gambling ventures, were commonly produced by some great disaster which brought an absolute material loss upon the community, such as crop failures, invasions, or heavy war expenditures. On the other hand, as regards periods of depression prior to the early years of the nineteenth century, they were also rare if not unknown, except when due to failure of resources or the burdens of government. The conditions ' out of which depression could come, as a persistent disturbance of business through a divergence between the capitalization and the earning-capacity of investments, were not had. The developed machine system was absent, and without this the cost of production of productive goods could not
' So impressive a fact has the gambling chamcter of eArly periods of ioilatioii and criaeH beEii that it ha.a Icil economists to look for gambling as a matter of course in later phenomena that have been claxBed ai inflatioD and crises, even nfaen no gambling element lias been obvioust; present. It has been felt that gambling must presumptively be present whenever there is inflation or crines, because Cbe showing of liaitiei history runs (hat way.
THE THEORY OF MODERN WELFARE 247
be progressively lowered ^t a rate large enough to set up and maintain a persistent divergence between capitalization and earning-capacity in industrial enterprises.
At some uncertain point in the first half of the nineteenth century the system of machine industry, and the business system based upon it, attained such a breadth and consistency that business disturbances of appreciable magnitude in any part would affect values throughout the