OVER-CONSUMPTION OR OVER-PRODUCTION ? 313 



be inseparable from it. It may be asked, moreover, if the currency 

 is the cause of our suiFering here, how is it that a similar condition 

 of business affairs exists in England, where the currency has remained 

 unchanged ? There is no doubt in the world that an inflated currency 

 does have a hot-house effect upon trade and production, and, as with 

 all forced things, a corresponding reaction follows ; but it is wholly 

 inadequate to account for the present difficulty, although it has doubt- 

 less contributed toward it. 



What, then, is the real cause of the evil? In endeavoring to 

 answer this question, we shall probably startle not a few well-estab- 

 lished convictions ; but we bespeak a fair and patient hearing. 



Almost any practical man of business, upon being asked what the 

 trouble is, would attribute it to over-production. To this the econo- 

 mist promptly exclaims that there can be no such thing. " What," he 

 would say, "over-production! too much wealth ! an excess of pros- 

 perity ! The thing is impossible. No people ever yet was made poor 

 by an excess of wealth, by a superfluity of goods." This seems very 

 plausible ; but, if the economist is pressed, he will admit that there 

 may be, and often is, over-production in certain thuigs that more 

 may be produced of special articles than there are goods of other 

 kinds to exchange for them but general over-production is, he will 

 reaffirm, impossible. Inasmuuch, however, as production is fairly never 

 general, never uniformly active, there is always over-production in 

 some branches of trade ; and it so happens that this over-production 

 is commonly coupled with great centralization of wealth and enor- 

 mous appliances of machinery. 



We must not be understood to utter a word against the power, 

 the advantages, the immense boon of machinery ; but, as all things 

 have their compensations and their penalties, so machinery, benefi- 

 cent and marvelous as it is, is one means of bringing about certain 

 unfortunate consequences, as we think may be demonstrated. 



Production and consumption do not have that intimate relation to 

 each other they once had. In old times the weaver, for instance, was 

 in contact with his customers : he wove cloth as he discovered the 

 need; he cautiously set up a second loom when it became fully evi- 

 dent that it could be kept employed ; and thus supply and demand 

 went, as it were, hand-in-hand. But now gigantic mills filled with 

 many spindles have little accurate relation to consumption. The 

 power of production by means of improved machinery is something 

 immense, and it is exercised with no very watchful or cautious regard 

 to the immediate needs of the community. Goods are piled up in 

 vast quantities in waiting for a future market, or for an anticipated 

 change in price ; or they are pressed upon the market at such low 

 rates or on such long credits that buyers are seduced into over- 

 purchases. In favorable times these establishments are run at high 

 pressure. The old-fashioned nice relation between producer and 



