CHAPTER IX 
INCREASED CONSUMPTION AND PROSPERITY 
ACCEPTED AS AN OUTGROWTH OF LOWER 
COSTS AND HIGHER WAGES 
Leaders of industry, by accepting and applying the prin- 
ciple of increased productive efficiency as the underlying 
factor for determining wages, found a way by which, even 
in the face of the depression that continued after the break- 
down in 1921, rates of pay of industrial workers might be 
maintained or increased without the impairment of profits 
or returns to capital. Fundamentally, this new policy did 
not have its origin in any humanitarian considerations, but 
arose from the realization that if prosperity was to be re- 
vived there must be a corresponding expansion in domestic 
consumption. 
Europe was impoverished, and, urgent as were her 
needs, she could not buy our goods except through the pro- 
ceeds of loans or credits extended by the United States. 
In the period 1921-1922, the bases for giving either public 
or private credit abroad were very limited. The payment 
of war debts to this country had not been arranged. 
Almost all the leading foreign nations were still on a de- 
preciated paper basis; budgets had not been balanced, and 
private industry had not been rehabilitated since the war. 
As a consequence, the possibilities of European purchasing 
power were very limited. It was, therefore, evident that 
American prosperity must be stimulated and maintained, 
for a considerable time, at least, on the basis of its own re- 
sources. From this situation came the practical working 
procedure that advances in wages would make possible 
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