Page:Popular Science Monthly Volume 11.djvu/321

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307
OVER-CONSUMPTION OR OVER-PRODUCTION?

Cent."[1] is eminently readable; the professor knows how to give literary grace and vivid interest to a theme commonly considered "dry;" it is further true that anything he may utter on the topic is entitled to great respect and. consideration. At the same time there is no reputation so exalted that the assertions and arguments made public under its sanction should not be and may not be examined and tested. Now, to our mind Prof. Price is often logically wrong in his essay referred to; we can but think that many of the reasons he assigns for the great business depression—which now prevails in America, England, and Germany—are fallacious and misleading, and, with all modesty, it is our present purpose to give the reasons why.

The title of "One per Cent." is given to Prof. Price's article because one per cent, has been for some time the ruling rate of discount in the London money-market (just as from two to three per cent, has been for many months the quotation for call loans in Wall Street), funds in the hands of bankers being in excess of the needs of borrowers and traders. Trade is curtailed, production restricted, stagnation is evident in every branch of industry, and this general paralysis causes in the financial centres such a flow of money that it is offered to loan at an almost nominal discount.

The cause of this wide-spread depression, according to Prof. Price, is one, and one only—"over-spending, over-consuming, destroying more wealth than is produced. This," he says, "is the real fons mali, the root of all the disorder and the suffering, the creator of the inevitable sequence of cause and effect. Men have acted as a man who farmed his own land and had consumed not only the portion of the crops which were his true income. . . but had himself and his dependents devoured a portion of the seed-corn and the breeding-stock, had exchanged a portion of the produce which was required for wages in the coming year for foreign luxuries, or had consumed these necessary reserves on an excess of drainage, however valuable in itself and ultimately enriching."

This is the core of Prof. Price's argument. 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."

But elsewhere he says: "Up to the extent of the savings of the nation, expenditure on railways can do no economical or financial harm; and these invaluable developers of wealth may on such a basis be rationally acquired for the public good. Any outlay made out of savings, be what it may, is innocent of mischief; it may do no good,

  1. Contemporary Review, London, and reprinted here in The Popular Science Monthly Supplement, No. 1.