HEALTH AND BUSINESS 27 



spend than in years of scarcity. Perhaps they will use those dol- 

 lars for automobiles, new carpets, new pianos, or to send the boys 

 and girls to college. Or possibly they will pay old debts, clear off 

 mortgages, and fix up the old barns. In any case more than the 

 usual amount of money is thrown into circulation; the railroads 

 have more than the usual freight and passenger traffic; the 

 factories get unusually large orders; and business in general is 

 stimulated. At the same time other material resources, such as 

 coal, iron, machinery, lumber, and manufactured goods, are likely 

 to be produced in unusually large quantities. A few years later 

 there may be too much of these articles on the market, while the 

 farmers may have such poor crops that many are obliged to 

 borrow instead of having money to spend. No wonder business 

 is dull. When material resources can so alter the course of busi- 

 ness, it is not strange that many economists think that variations 

 in the quantity of such resources are the main cause of business 

 fluctuations. 



In spite of the importance of economic resources many people 

 believe that business fluctuations would be of slight importance, 

 and that hard times and panics would largely disappear, if only 

 our laws were better. Consider the effect of excessive taxation, 

 onerous banking restrictions, a currency that does not expand 

 easily, or that is subject to inflation. Think of the laws that 

 restrict the legitimate expansion of business. Surely it needs no 

 demonstration to show that many a factory has shut down because 

 a change in the tariff made it impossible to do business. So, too, 

 it has happened more than once that a railroad has gone into the 

 hands of a receiver because it could not comply with new laws 

 and restrictions. Bad financial legislation unquestionably pre- 

 cipitated the panic of 1837 when the government of the United 

 States insisted on payment for public lands in gold or silver coin, 

 and thus destroyed the value of bank notes. Here, then, there 

 seems good ground for the idea that business cycles are largely 

 the result of bad laws. 



