ctive
goods is checked in one or more of the manufacturing stages, or in the
hands of the merchant, or even in the retail shop. This congestion of
the channels of production automatically checks production, depriving
of all use a large quantity of the machinery, and a large quantity of
labour. The general fall of money income which has necessarily
followed from a fall of prices, uncompensated by a corresponding
expansion of sales, induces a shrinkage of consumption. Under
depressed trade, while the markets continue to be glutted with unsold
goods, only so much current production is maintained as will
correspond to the shrunk consumption of the depressed community.
Before the turn in the commercial tide, current production even falls
below the level of current consumption, thus allowing for the gradual
passage into consumption of the glut of goods which had congested the
machine. After the congestion which had kept prices low is removed,
prices begin to rise, demand is more active at each point of industry,
and we see the usual symptoms of reviving trade.

[Illustration: TEXTILE PRICES.]

This is an accurate account of the larger phenomena visible in the
commercial world in a period of disturbance. When the disease is at
its worst, the activity of producer and consumer at its lowest, we
have the functional condition of under-production due to the pressure
of a quantity of over-supply, and we have a corresponding state of
under-consumption.

Sec. 7. Machinery thus figures as the efficient cause of industrial
disease, but the real responsibility does not rest on the shoulders of
the inventor of new machinery, or of the manufacturer, but of the
consumer.

The root-evil of depressed trade is under-consumption.[157] If a
quantity of capital and labour is standing idle at the same time, in
all or in the generality of trades, the only possible reason why they
remain unemployed is that there is no present demand for the goods
which by co-operation they are able to produce.

English economists, most of whom, ever since the time of J.B. Say,
have denied the possibility of the condition of general over-supply
which is seen to exist in depressed trade, are contented to assume
that there can be no general over-supply because every one who
produces creates a corresponding power to consume. There cannot, it is
maintained, be too much machinery or too much of any form of capital
provided there exists labour to act with it; if