Economic depression

“ So evident is this, that not only among the ignorant, but by men of high economic reputation, is industrial depression attributed to the abundance of machinery and the accumulation of capital; and war, which is the destruction of capital, is looked upon as the cause of brisk trade and high wages—an idea strangely enough, so great is the confusion of thought on such matters, countenanced by many who hold that capital employs labor and pays wages. ”

“ Upon high economic authority we have been told that the prevailing depression is due to overconsumption; upon equally high authority, that it is due to overproduction; while the wastes of war, the extension of rail11roads, the attempts of workmen to keep up wages, the demonetization of silver, the issues of paper money, the increase of labor-saving machinery, the opening of shorter avenues to trade, etc., are separately pointed out as the cause, by writers of reputation. ”

“ The people of the United States are now confronted with an emergency more serious than war. Misery is widespread, in a time, not of scarcity, but of overabundance. The long-continued depression has brought unprecedented unemployment, a catastrophic fall in commodity prices, and a volume of economic losses which threatens our financial institutions. [49] Some people believe that the existing conditions threaten even the stability of the capitalistic system. ”

“ In the present inadequate economic organization of society, far too much is staked on the unpredictable whims and caprices of the consumer. Changing habits of consumption have destroyed property values and opportunities for employment. The welfare of society has been left to pure chance and accident.
In a word, people generally, in a frightened and hysterical mood, are using everything that they own longer than was their custom before the depression. In the earlier period of prosperity, the American people did not wait until the last possible bit of use had been extracted from every commodity. ”

“ One school say that the speculation produced the depression by causing over-production and they point to warehouses filled with goods that cannot be sold at remunerative prices, to mills closed or working on half-time, to mines shut down and steamers laid up, to money lying idly in bank vaults and to workmen compelled to idleness and privation. ”

“ What the people can afford is very different at a time when the majority are gainfully employed than it is in a period when perhaps ten million are without gainful employment. The job of modern management is to balance production with consumption—to enable one large group, like the factory workers in the cities, to exchange the products of their hours of labor for the output of farmers. The prevailing defeatist assumption that depression and unemployment must continue because we have too much of everything, is the counsel of despair. ”

“ Can anything be clearer than that the cause of the poverty which festers in the centers of civilization is not in the weakness of the productive forces? In countries where poverty is deepest, the forces of production are evidently strong enough, if fully employed, to provide for the lowest not merely comfort but luxury. The industrial paralysis, the commercial depression which curses the civilized world to-day, evidently springs from no lack of productive power. Whatever be the trouble, it is clearly not in the want of ability to produce wealth. ”

“ The prostration of trade has arisen from extravagance, he repeatedly declares. "The commercial depression, so long, so monotonous, so heavy, and so dull, came from the excessive consumption of English capital in unwarranted constructions beyond savings, and unwarranted expenditure in living by all classes, which destroyed wealth without repairing it with new productions." ”

“ When it became evident to the least observant that something, after all, was wrong with industry—when the buying not only of jewelry and furs by the speculators but of shoes and groceries by the rest of the people began to fall off, and men were seen walking the streets in search of work—when these things happened, the tune was changed. It was admitted that depression had come to America, but this unhappy condition, it was said, was due to world-wide forces over which we had no control. That the industrial captains of the United States could be at fault was unthinkable. ”

“ A loss one-quarter as large would be enough to work serious havoc. Those who advocate reducing workers' buying power still further by wage cuts have failed to consider these facts."
VI.—Our general depression is homemade, and it is due fundamentally to the maldistribution of wealth.
There is now to be considered the general depression in the United States, to which the plight of the Government is due. ”

“ Is it not a fact that some lines of industry are so overdone that the production is far in excess of the demand, and is not this an evil rather than a benefit? Do not periods of business depression occur when all industries stagnate for want of a market for their goods? ”

“ A crisis is a jolt to prices which shatters the credit of some banks, brokers, merchants, and manufacturers. Crises are thus peculiar to the money economy and to a developed industry. Not every business misfortune is to be called an industrial crisis, but only those where prices and credit are generally depressed. A long period of hard times is sometimes called a crisis, but it is better to distinguish it by the term industrial depression. ”

“ That the continued and increasing depression of the manufacturing, commercial, and agricultural interests of this country, and the wide-spreading distress of the working classes, are most alarming:—manufacturers without a market, and shipping without freight; capital without investment, trade without profit; and farmers struggling under a system of high rents, with prices falling, as the means of consumption by the people fail; a working population rapidly increasing, and a daily decreasing demand for its labour ”

“ The manner in which the sufficient cause to which I have traced them explains the main features of these industrial depressions is in striking contrast with the contradictory and self-contradictory attempts which have been made to explain them on the current theories of the distribution of wealth. That a speculative advance in rent or land values invariably precedes each of these sea sons of industrial depression is everywhere clear. That they bear to each other the relations of cause and effect,279 is obvious to whomsoever considers the necessary relations between land and labor. ”

“ It is a time when common sense should be brought into play in the adjustment of means to ends in wages as well as other matters, for the more it is the quicker will be recovery from the effects of the panic, and the less will be the suffering from industrial depression by labor as well as capital. This in the concrete means that it would result in there being fewer workmen in actual want, and fewer corporations going to the wall. ”

“ Or you can favor it—and thereby favor, instead of prosperity and progress, bankruptcy for the owners, spiritual bankruptcy for its supporters, and, worse than all, a wide-spread business depression, which will force capital elsewhere, slow down and stop the wheels of industry, drive the storekeepers out of business, and drag your own wives and families into want, poverty, ultimate degradation and death.
"The smoke from those mining settlements and furnace stacks upon the mountain above our iron city is the symbol of life—life for all of us. ”

“ The essential and bitter irony of the present depression lies in the fact that millions of persons are deprived of a satisfactory standard of living at a time when the granaries and warehouses of the world are overstuffed [Pg 4] with surplus supplies, which have so broken the price level as to make new production unattractive and unprofitable. ”

“ At such times many laborers are thrown out of employment, many [Pg 52] more work part time only, the wages of nearly all are lowered, and most other classes of income are cut down. Depression and, in extreme cases, panic are the result, and these have serious consequences other than financial. ”

“ If we wish to prosper we must act together, and we must see to it that every form of labor is protected.
There has been a long period of depression in all business. The farmers have suffered least of all. Your land is just as rich and productive as ever. Prices have been reasonable. The towns and cities have suffered. Stocks and bonds have shrunk from par to worthless paper. Princes have become paupers, and bankers, merchants and millionaires have passed into the oblivion of bankruptcy. The period of depression is slowly passing away, and we are entering upon better times. ”

“ The cycle of business depression moved across the world, as those things come and go through the centuries. Moreover, General Ward was riding on the crest of a wave of unrest which expressed in terms of politics what the people felt in their homes. Debts were falling due; crops brought small returns; capital was frightened; men in the mills lost their work; men on the farms burned their corn; and Colonel Martin Culpepper sank deeper and deeper into the mire. ”

“ Our purpose is to show that these conclusions are not tenable, that an undue exercise of the habit of saving is possible, and that such undue exercise impoverishes the Community, throws labourers out of work, drives down wages, and spreads that gloom and prostration through the commercial world which is known as Depression in Trade. ”

“ Depression in Trade.There is capital in the country which can find no investment, there are goods produced year after year which find no market, there are millions of English labourers in the towns and in the country willing to work for their bread, but who can find no work and are on the brink of starvation. This is a real and a serious evil, and it seems to be a growing one also. The misery and destitution of these people occasionally find vent in acts of violence. ”

“ The employee participates in the risks of modern industry and suffers from a business derangement far more severely than his employer. The capitalist secures less profits but with his accumulated savings ordinarily endures no real privation, while large numbers of the workers with little or no savings face actual hunger or starvation. Demands upon charitable organizations increase, bread lines grow longer, and suffering becomes widespread and intense until the crisis and the ensuing depression are over.... ”

“ Now, let us see what effect depression in any one great branch of industry exercises upon the working-classes, who are not immediately dependent upon it for their subsistence.
This involves one of the most curious phenomena in economical science. When an interest is depressed, it does not always happen—especially in the first stage of depression—that the labourers attached to that interest feel immediately the consequences of the decline. Agricultural wages, for example, do not fluctuate according to the price of wheat. ”

“ It is only in the case of continuous and considerable depressions that the cause is in action long enough to produce discernible effects.
The most common, and by far the most important, case where the depression in one trade causes depression in all others, is that of depressed agriculture. When the agriculture of the world is ill off, food is dear. And as the amount of absolute necessaries which a people consumes cannot be much diminished, the additional amount which has to be spent on them is so much subtracted from what used to be spent on other things. ”

“ While, when laborers cannot find employment and wages droop, there is always an accumulation of capital seeking investment at low rates.4 The present depression has been no less marked by want of employment and distress among the working classes than by the accumulation of unemployed capital in all the great centers, and by nominal rates of interest22 on undoubted security. ”

“ The reason for this is to be found in the difficulty of transferring labour from the place at which it exists to that at which it is needed; and it is to that we have to attribute the fact that the tendency to depression in the wages of all labour is so very great when there is even a very small excess of supply, and the tendency to elevation so great when there is even a very small excess of demand. ”

“ Many economists believe it was one of the worst blows ever to our economy. By crippling free and fair trade with other nations, it internationalized the Depression. It also helped shut off America's export market, eliminating many jobs here at home and driving the Depression even deeper. ”

“ Everywhere land values have been steadily increasing with material progress, and everywhere this increase begot a speculative advance. The impulse of the primary cause not only radiated from the newer sections of the Union to the older sections, and from the United States to Europe, but everywhere the primary cause was acting. And, hence, a world-wide depression of industry and commerce, begotten of a world-wide material progress. ”

“ At the same time, it is clear that, from the discouragement of immigration and limitation to eight hours of the daily toil, there results an exceptional scarcity of labor, which cramps the development of the country, and causes a depression in trade which must soon diminish the wage-fund, and react upon the working men. ”

“ These recurring spasms of business stagnation; these long-drawn periods of industrial depression, common to the civilized world, do not come from our treatment of money; are not caused and are not to be cured by changes of tariffs. ”

“ Perhaps crops have failed in many countries, or unwise people have been speculating madly, or a great amount of money has been invested in utilities which will not become productive for a number of years. Whatever the reason is, the world passes through a time of business depression. ”

“ And the entire effect of a depression in any single large trade requires a considerable time before it can be produced. It has to be propagated, and to be returned through a variety of industries, before it is complete. ”