332 THE GENERAL THEORY OF EMPLOYMENT bk. vi

cultural products—still stood at a very high level. The“New Deal” partly consisted in a strenuous attempt toreduce these stocks—by curtailment of current outputand in all sorts of ways. The reduction of stocks to anormal level was a necessary process—a phase whichhad to be endured. But so long as it lasted, namely,about two years, it constituted a substantial offset tothe loan expenditure which was being incurred in otherdirections. Only when it had been completed was theway prepared for substantial recovery.

Recent American experience has also afforded goodexamples of the part played by fluctuations in the stocksof finished and unfinished goods—“inventories” as itis becoming usual to call them—in causing the minoroscillations within the main movement of the TradeCycle . Manufacturers, setting industry in motion toprovide for a scale of consumption which is expectedto prevail some months later, are apt to make minormiscalculations, generally in the direction of runninga little ahead of the facts. When they discovertheir mistake they have to contract for a short timeto a level below that of current consumption so as toallow for the absorption of the excess inventories; andthe difference of pace between running a little aheadand dropping back again has proved sufficient in itseffect on the current rate of investment to displayitself quite clearly against the background of theexcellently complete statistics now available in theUnited States .