on a trade depression. In those circumstances, a reduction of the
general level of prices and wages is an essential condition of a trade
revival. A reduction of prices _and wages_. That point has a
significance to which I will return.

The second cause is the distorted balance which grows up in every boom
between different branches of industrial activity. When trade is good,
we invariably build ships, produce machinery, erect factories, make
every variety of what are termed "constructional goods" upon a scale
which is altogether disproportionate to the scale upon which we are
making "consumable goods" like food and clothes. And that condition of
things could not possibly endure for very long. If it were to continue
indefinitely, it would lead in the end to our having, say, half a dozen
ships for every ton of wheat or cotton which there was to carry. You
have there a maladjustment, which must be corrected somehow; and the
longer the readjustment is postponed, the bigger the readjustment that
will ultimately be inevitable. Now that means, first on the negative
side, that, when you are confronted with a trade depression, it is
hopeless to try to cure it by looking for some device by which you can
give a general stimulus to all forms of industry. Devices of that nature
may be very useful in the later stages of a trade depression, when the
necessary readjustments both of the price-level and of the relative
outputs of different classes of commodities have already been effected,
and when trade remains depressed only because people have not yet
plucked up the necessary confidence to start things going again. But in
the early stages of a depression, an indiscriminating stimulus to
industry in general will serve only to perpetuate the maladjustments
which are the root of the trouble. It will only put off the evil day,
and make it worse when it comes. The problem is not one of getting
everybody back to work on their former jobs. It is one of getting them