[3] 
r- 
preciation stimulates, and monetary appreciation Represses, trade and 
employment. For society as a whole, and in the long run', both the 
appreciation and the depreciation are, of course, evils. And for the 
laboring man in particular they are both £vils. Under rising prices 
his “real” wages shrink with the increase in his cost of living; while 
.under falling prices, he is thrown out of work. 
When producers get higher prices they do not at first have to 
pay correspondingly higher wages and salaries; much less do the 
rent and interest which they pay rise. This lagging behind of 
interest, rent, salaries and wages—not to mention raw materials 
which lag for a somewhat different reason—is inevitable because 
the laggards are fixed by contracts or understandings. Evi 
dently the lagging of these important elements of expense prac 
tically involves a lagging of total expenses behind total receipts. 
Consequently profits, the excess of receipts over expenses, tend 
to be increased at the expense of the wage-earner and others. 
In fact, during periods of rapid inflation when profits increase, 
because prices or receipts rise faster than expenses, we nickname 
the profit-taker the “profiteer.” Employment is then stimulated 
—for a time at least. The ultimate effects of a long-continued 
inflation are doubtless bad all around and, even while it helps 
make jobs for labor, it raises the cost of living against the labor 
ing man. 
On the other hand, when prices are falling expenses likewise lag 
behind and reduce profits, for exactly the same reason turned about. 
Consequently, during falling prices profits are reduced, bankruptcies 
are increased, concerns shut down entirely or in part, and men are 
thrown out of work. 
Therefore, reversely, falling prices hurt profits. Since the profit- 
taker is the captain of industry, on whose decision depends the rate 
of output, it is further inevitable that when profits increase, industry 
is expanded and business booms; while, when profits decrease, in 
dustry is contracted, business is depressed, and unemployment fol 
lows. We are here concerned mainly with the effects of unstable 
money on employment. We find in our statistics exactly what we 
would expect, that unemployment is correlated with the purchasing 
power of the dollar. 
The fact that deflation causes unemployment has been a well 
recognized fact for many years when applied in isolated instances,