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These monetary difficulties were in a great measure the consequence of over-speculation, and therefore form no sounder evidence against the utility of railways, than does over-speculation in tea condemn the prudent employment of capital in the tea-trade. Besides which, it must ever be remembered that the judiciousness of an undertaking is not always to be judged of by its immediate results.
When there is nothing laid by nothing saved to relieve sickness when it comes nothing to alleviate the wants of old age, this is the skeleton hid away in many a cupboard. In a country such as this, where business is often brought to a standstill by over-trading and over-speculation, many masters, clerks, and workpeople are thrown out of employment. They must wait until better times come round.
These were the facts which really suggested his theory of the 'excrescent' population, produced by the over-speculation of capitalists. The paupers of Glasgow were 'excrescent, and the 'gluts' were visible in the commercial crises which had thrown numbers of poor weavers out of employment and degraded them into permanent paupers.
Money may be redundant as much as men, and the real causes of every economic calamity are the 'over-speculation of capitalists, and the 'over-population of the community at large. In this question, however, Chalmers gets into difficulties, which show so hopeless a confusion between 'capital, income, and money, that I need not attempt to unravel his meaning.
Of course the necessary danger in such a condition is that of over-speculation. But nearly every man who amasses wealth or wins large commercial success in the United States habitually takes risks which would be folly in England. They are not folly in him, because the universal growth of the country, dragging with it and buoying up all industries and all values, as it goes, is on his side.
The violent decline in prices was the natural and only remedy for a long period of over-speculation, and it would have been worse had it been artificially postponed. Considerations of this general character, up to July 30th, caused the authorities of the New York Stock Exchange to take no action, although the other world markets had all virtually suspended dealings.
In that message I analyzed the causes of the collapse of 1929 in these words: "over-speculation in and overproduction of practically every article or instrument used by man. . . millions of people, to be sure, had been put to work, but the products of their hands had exceeded the purchasing power of their pocketbooks. . . . Under the inexorable law of supply and demand, supplies so overran demand which would pay that production was compelled to stop.
"Don't you see that it was Getall's sin of greed and over-speculation, and the clerk's sin of embezzlement, which led to all these good results; but, of course, as neither of them had any desire or intention to achieve the good results which God brought about, they were none the less guilty, and were entitled to no credit, but, on the contrary, to condign punishment.
If we add to these causes of distress, the influence of over-speculation, the accession of disbanded soldiers to the ranks of the unemployed, and the substitution of the factory system with machinery for domestic manufactures with hand labour, we can partly understand why Great Britain, never harried by invading armies, should have suffered more than France itself from popular misery and disaffection for several years after the restoration of peace.
Enterprise, like Icarus, had soared too high, and melted the wax of her wings; like Icarus, she had fallen into a sea, and learned, while floundering in its waves, that her proper element was the solid ground. She has never since attempted so high a flight. In times of great commercial prosperity there has been a tendency to over-speculation on several occasions since then.
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