Page:Progress and poverty - an inquiry into the cause of industrial depressions, and of increase of want with increase of wealth - the remedy (IA progresspovertyi00georiala).pdf/267

Chap. I. commercial paralysis cannot be charged either to over-pro- duction or to over-consumption. Manifestly, the trouble is that production and consumption cannot meet and satisfy each other.

How does this inability arise? It is evidently and by common consent the result of speculation. But of specu- lation in what?

Certainly not of speculation in things which are the pro- ducts of labor—in agricultural or mineral productions, or manufactured goods, for the effect of speculation in such things, as is well shown in current treatises that spare me the necessity of illustration, is simply to equalize supply and demand, and to steady the interplay of production and consumption by an action analogous to that of a fly-wheel in a machine.

Therefore, if speculation be the cause of these industrial depressions, it must be speculation in things not the pro- duction of labor, but yet necessary to the exertion of labor in the production of wealth—of things of fixed quantity; that is to say, it must be speculation in land.

That land speculation is the true cause of industrial de- pression is, in the United States, clearly evident. In each period of industrial activity land values have steadily risen, eulminating in speculation which carried them up in great jumps. This has been invariably followed by a partial ces- sation of production, and its correlative, a cessation of effective demand (dull trade), generally accompanied by a commercial crash; and then has succeeded a period of comparative stagnation, during which the equilibrium has been again slowly established, and the same round bcon run again. This relation is observable throughout the civil- ized world. Periods of industrial activity always culminate in a speculative advance of land values, followed by symp- toms of checked production, generally shown at first by cessation of demand from the newer countries, where the advance in land values has been greatest.

That this must be the main explanation of these periods of depression, will be seen by an analysis of the facts.