21 
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