II

INFLATION AND DEFLATION

95

goods by lucky gambling. To convert thebusiness man into the profiteer is to strike ablow at capitalism, because it destroys thepsychological equilibrium which permits theperpetuance of unequal rewards. The eco-nomic doctrine of normal profits, vaguely appre-hended by every one, is a necessary conditionfor the justification of capitalism. The busi-ness man is only tolerable so long as his gainscan be held to bear some relation to what,roughly and in some sense, his activities havecontributed to Society.

This, then, is the second disturbance to theexisting economic order for which the deprecia-tion of money is responsible. If the fall in thevalue of money discourages investment, it alsodiscredits enterprise.

Not that the business man was allowed, evenduring the period of boom, to retain the wholeof his exceptional profits. A host of popularremedies vainly attempted to cure the evils ofthe day; which remedies themselves — sub-sidies, price and rent fixing, profiteer hunting,and excess profits duties—eventually becamenot the least part of the evils.

In due course came the depression, withfalling prices, which operate on those who holdstocks in a manner exactly opposite to risingprices. Excessive losses, bearing no relationto the efficiency of the business, took the placeof windfall gains; and the effort of every oneto hold as small stocks as possible brought in-dustry to a standstill, just as previously their