which they require at post-war constructional prices. High
profits (taking always good years together with bad) on capital sunk
before the war in buildings and machinery are thus a likely
consequence of an increase in the price-level.

This fact is, indeed, the counterpart or complement of another
phenomenon with which we are more familiar. While prices are actually
rising, profits, as we have come to recognize, necessarily rule high,
because every trader or manufacturer is constantly in the position of
selling at a higher price-level, stock which he purchased, or goods
made from materials which he purchased at a lower level. He thus
acquires an abnormal profit on his circulating capital, which is
essentially similar to the profit on fixed capital, which we have just
examined. The difference is that the former profit is crowded into the
years when prices are actually on the increase, and thus is very
noticeable indeed; while the latter profit continues to accrue in
smaller instalments after prices have settled down, as it were, at the
higher level, and is not exhausted until the buildings and machinery
have become obsolete. But the two profits are essentially similar,
and in the long run should be commensurate. In the one case, stock can
be sold for a large profit, because it cannot be replaced except at a
higher price; in the other case, plant and buildings yield a higher
income because _they_ cannot be replaced except at a higher
price. Indeed, if the owners choose, the plant and building can, like
the stock, be sold at their appreciated value, as has been widely done
by the owners of cotton mills in Great Britain since the armistice.

There is nothing in these considerations that should surprise us, or
even shock our moral sense. For what they have indicated is an
increase of money profits in rough proportion to the price-level, so
that the aggregate profits will represent about as much real income as
before.[1] The conclusion therefore amounts to no more than this, that
you cannot alter fundamentally the distribution of wealth between
labor and capital by merely inflating the currency, or otherwise
juggling with the price-level. And this is only what we should expect,
if there are any laws of distribution of sufficient importance and
permanence to justify the many volumes which have been devoted to
them.

[Footnote 1: Assuming that the rate of interest has remained
unaltered. In fact it has greatly increased sin