Economic loss

“ This waste of labor and capital constitutes an addition to the cost of production of the commodity, which raises its value and price in a corresponding ratio, and thus the owners of the capital are indemnified. The loss falls on the consumers; though the capital of the country is also eventually diminished, by the diminution of their means of saving, and, in some degree, of their inducements to save. ”

“ In a few weeks, money, except for depreciated paper, vanished into vaults, into holes, into the walls of houses, into ten million hiding-places. Money vanished, and at its disappearance trade and industry came to an end. The economic world staggered and fell dead. ”

“ Glutted markets, shops filled with goods nobody could buy, frequent bankruptcies—and on the other hand the glaring poverty of the toiling masses—for the first time all this starkly met the eyes of theorists who had preached the gospel of the beautiful harmonies of bourgeois laissez-faire and had sung its praises in all keys. All contemporary trade reports, periodicals and travellers’ notes told of the losses sustained by English merchants. In Italy, Germany, Russia, and Brazil, the English disposed of their commodity stocks at a loss of anything between 25 per cent and 331⁄3 per cent. ”

“ In all such cases, considerable distress, and no doubt some loss, will be experienced by those who are engaged in the manufacture of such commodities; and it will be felt not only at the time of the change, but through the whole interval during which they are removing their capitals, and the labour which they can command, from one employment to another. ”

“ Instead of simpering and averring that “there always is a harvest,” the most exclusive members of society know that this tremendous loss of capital restricts expenditure through all ranks, sets everybody economising, slackens manufacture, diminishes earnings, and affects the money market injuriously by carrying away our gold to foreign countries: for we must have the grain and flour, whether the countries which produce it can or cannot take any of our products in exchange. ”

“ A million people out of employment, crippling all dependent upon them, means a loss to the consumptive power of the country of at least $1,000,000 per day, or a crippling of the trade of the country of over $300,000,000 per annum.—Report on Industrial Depression, United States Bureau of Labor, 1886. ”

“ 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." ”

“ It tempts a nation to lose an existing, in pursuit of an imaginary, surplus. Further, if we consider the skilfulness of all occupations in computing profit and loss, we may safely conclude that it has been applied to these two, so as to have produced an equilibrium of value between them. Suppose, however, we should obtain a mechanical in lieu of our agricultural surplus; would it promote or wound the interest of the mechanicks, still to adhere to the policy of discouraging exchanges? ”

“ Individual losses of course become national, according as they affect a greater mass of the national capital, and a greater number of individuals; and I think it must be allowed further, that no loss, in proportion to its amount, affects the interest of the nation so deeply, and vitally, and is so difficult to recover, as the loss of agricultural capital and produce. ”

“ But, aside from the effect on the individual, what benumbing consequences are entailed upon the nation by the idleness of so large a number of its people. The loss of the wealth which the labor of those men might have created is a loss never to be retrieved. ”

“ There is, moreover, no evidence that this loss was anything more than a part of our surplus; the assumption that it impaired our capital, and depleted our productive resources, is wholly groundless. No one can say, we imagine, that capital was withdrawn from any other pursuit; that productive industry in any direction was weakened by a secession of its resources by this "craze." The nation was much in the position of a merchant who has many ventures abroad, some of which have proved disastrous. ”

“ Commerce is at a standstill, the markets are glutted, products accumulate, as multitudinous as they are unsaleable, hard cash disappears, credit vanishes, factories are closed, the mass of the workers are in want of the means of subsistence; bankruptcy follows upon bankruptcy, execution upon execution. The stagnation lasts for years; productive forces and products are wasted and destroyed wholesale, until the accumulated mass of commodities finally filter off, more or less depreciated in value, until production and exchange gradually begin to move again. ”

“ Everything seems to be going on as usual, commerce and industry vigorous and expanding, when suddenly there comes a shock, as of a thunderbolt out of a clear sky—a bank breaks, a great manufacturer or merchant fails, and, as if a blow had thrilled through the entire industrial organization, failure succeeds failure, and on every side workmen are discharged from employment, and capital shrinks into profitless security. ”

“ And, as is now well known to all of us, the same net loss to society comes from reckless overproduction and monopolistic underproduction of natural and manufactured commodities.
Overproduction, underproduction and speculation are three evil sisters who distill the troubles of unsound inflation and disastrous deflation. It is to the interest of the Nation to have Government help private enterprise to gain sound general price levels and to protect those levels from wide perilous fluctuations. ”

“ Other causes of Economic depression than “slumps” in speculative Land-values there doubtless are. They spring from such superficial maladjustments in the processes of Trade as are connected with defective banking, fluctuations in the values of corporate stocks and variations in Money standards from lack of effective stabilization. ”

“ It amounts to thousands or millions of men and constitues a great and irreparable loss in national economy. This economical side of the question is so serious and commonly acknowledged that it is able to resist all prejudices. ”

“ In the case of an altogether declining trade, in which it is necessary that the production should be, not occasionally varied, but greatly and permanently diminished, or perhaps stopped altogether, the process of extricating the capital is, no doubt, tardy and difficult, and almost always attended with considerable loss; much of the capital fixed in machinery, buildings, permanent works, &c. ”

“ 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 loss a bank may be at, in providing coin, is susceptible of estimation, let it be brought from ever so distant a country; because we know that the quantity to be provided, never can exceed the value of the grand balance. But who can estimate the loss a nation sustains, when an interruption is put to carrying on trade and manufactures? When the industrious classes of inhabitants are forced to be idle for a short time, the consequences are hardly to be repaired: they starve, they desert; the spirit of industry is extinguished ”

“ Such fall of prices has destroyed the profits of legitimate industry, injuring the producer for the benefit of the non-producer, increasing the burden of the debtor, swelling the gains of the creditor, paralyzing the productive energies of the American people, relegating to idleness vast numbers of willing workers, sending the shadows of despair into the home of the honest toiler, filling the land with tramps and paupers, and building up colossal fortunes at the money centres. ”

“ The other phenomenon from which the notion of a general excess of wealth and superfluity of accumulation seems to derive countenance, is one of a more permanent nature, namely, the fall of profits and interest which naturally takes place with the progress of population and production. The cause of this decline of profit is the increased cost of maintaining labour, which results from an increase of population and of the demand for food, outstripping the advance of agricultural improvement. ”

“ This, the greatest economic catastrophe that the modern human structure has known, immeasurably more calamitous than any other that ever occurred, was borne by the financial system of the United States almost without a tremor. ”

“ The loss in business, in commerce, in industry—in a state which just begins to realize that it has lagged in new efforts in these respects—is too costly even in prospect and in early results. It would be disastrous in the long run. ”

“ Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone. ”

“ Your trade was, a few years ago, unrestrained and flourishing—did it not enrich the most distant parts of your country? It has since been plundered and confined. Does not the industry of the country languish? Is not the income of every man impaired? If commerce were destroyed, the mercantile class, indeed, could exist no longer; but the merchant, the rich capitalist, at least, would individually suffer less than any other part of the community, because, while their property would become unproductive, the value of money would rise rather than fall. ”

“ Because for a long period before the crash our production had been outrunning our consumption. The workers were producing more than they could buy with the wages they received. Our predicament is primarily due to the inequitable distribution of the earnings of industry as between capital and labor. ”

“ Herein flows the lifeblood of material existence. The economic mechanism is intricate and its parts interdependent, and has suffered the shocks and jars incident to abnormal demands, credit inflations, and price upheavals. ”

“ Within the vitals of the economic system upon which it subsists the plutocracy has found a source of never-ending torment in the form of a constantly increasing surplus.
2. The Knotty Problem of Surplus
The present system of industry is so organized that the worker is always paid less in wages than he creates in product. A part of this difference between product and wages goes to the upkeep and expansion of the industry in which the worker is employed. Another part in the form of interest, dividends, rents, royalties and profits, goes to the owners of the land and productive machinery. ”

“ When those gentlemen, whoever they are, which have frightened the poor woman with a small security to have her sell it at a complete loss and robbed the estates of the little possessions which they may have from which income may have been afforded, and then the little-business man shall be compelled to get rid of what he possesses on the ground that what he has is a loss and then induced to enter doubtful investments again, this result will reproduce exactly the situation of 1929-30. ”

“ Our credit in finance today is greater than that of any other country on earth. Our standing before the world in credit is the very highest. Business in our land is prosperous, barring one or two instances, such, for example, as the decrease for a while in the demand for steel as building moves slowly and, if you please, something of a decadence in the -construction or selling of automobiles, caused by war, of nations decreasing export sales. ”

“ When the resources have been depleted, a precipitous collapse of the economic system will result, manifested in massive unemployment, decreased food production, and a decline in population as the death rate soars. ”

“ And the times of crash are succeeded by protracted periods of stagnation, which for all concerned are scarcely better than the crises which caused it.
3. The phenomena of waste, which are always more or less a feature of the competitive system, are particularly manifest during the great industrial and commercial crises. Not only are the products of industry intended for consumption wasted in vast masses, but the productive forces themselves, such as machinery and shipping, are sacrificed enormously, whilst great numbers of people are idle and starving. ”

“ As used in economics, the term, however, implies a sudden change of business conditions for the worse, a collapse of prosperity. What precedes has not the appearance of disease, but rather that of exuberant health. Crises in economics may be distinguished as industrial, speculative, and financial, according as one or another influence seems to be more potent, but all are essentially financial. The change that occurs always is connected in some way with the use of money and credit. ”