AMERICAN PROSPERITY AND BRITISH DEPRESSION IIQ 
country as here an inevitable period of business 
liquidation followed the post-war boom, and down 
to the late summer of 1921 conditions in the two 
countries were very similar. From that time on- 
wards, however, their paths have been far apart. 
With occasional and comparatively brief intervals, 
the United States, judged by the tests of production, 
employment, wages and profits, has enjoyed excep- 
tional prosperity. In England, on the other hand, 
a large portion of our population has been con- 
tinuously unemployed, and the pre-war standard of 
production, although there have been noticeable 
fluctuations, has at no time been recovered. 
The similarity of trade conditions in England 
and America in the first three years after the armis- 
tice, contrasted with the subsequent dissimilarity, 
points to the occurrence of some vital change in 
1921 capable of producing or at any rate markedly 
contributing to these different results. Monetary 
conditions exercise such an all-pervading influence 
that in investigating a matter of this kind we are 
forced to turn our attention to them; and as we 
find that from 1921 onwards there was a wide 
divergence between English and American mone- 
tary policy, we have in this fact at least a partial 
explanation of the phenomenon. 
MONEY AND THE VOLUME OF TRADE 
~The importance of the place occupied by money 
in modern production and trade is well understood. 
Bank credit facilitates every branch of production. 
Goods are raised from the soil, manufactured, 
carried and marketed with the assistance of credit 
at every stage. To the borrower the price paid for 
accommodation is not so vital, except in extreme