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those necessary leakages of industry involved by the whole
some movements of modern industry.
THE CAUSE OF TRADE DEPRESSION.
He, however, was not among those who thought that the
great trade fluctuations which result periodically in depressions
could be explained by any mere addition of these small forms
of waste. He held that view for the reason that the small
changes to which he had alluded were chronic. They were
extremely numerous, and they took place over all parts of the
industrial system. Taken in the aggregate their effect must
be fairly regular. At certain periods there were a larger
number of changes, but they got a more even level of the
amount of disturbance as industry advanced. If this was
correct it involved a more serious attention to the problem of
trade depression, and the necessity of a more serious attempt
to explain what trade depression means. What they had
got to meet was the difference between the two per cent, of
unemployment in a booming year, and the nine or ten per
cent, of a year of deep depression. That difference was attri
buted to what was called a wave of trade depression, but to
call a thing a wave of trade depression was not to give an
explanation of it. They had to confront the problem of the
cause and nature of trade depression. He might occupy the
whole of that Conference in discussing this matter in detail,
but he would only mention two of the theories which had
been advanced to account for trade depressions. One of these
was the theory propounded in certain quarters that
these trade depressions were due to bad harvests which were
caused by some defects in the conduct of the sun—by sun
spots. When, however, they came to examine the arguments
brought forward in favour of this explanation they could find
no reason whatever for identifying periods of bad harvests
with periods of low prices and depressed trade, as measured by
figures of unemployment. There was no adequate reason to
suppose that the difference in the quantities of raw materials
that were brought into the industrial machine formed any
thing like an adequate explanation of the difference between
good and bad trade.
Other people put forward a psychological explanation of
trade depression. At one time a man’s prospects
•>re very bright, and he is highly speculative, and
then he begins to take a gloomy view, lie becomes de
pressed, and consequently less speculative, and these psycho
logical changes in men’s minds register themselves in the
actual world of industrial conduct. Those who put forward
this theory as adequate did not explain in the least the connec
tion which took place between this purely mental process and