Prosperity and Depression.pdf

Chap. 10The ExpanJioll Processwill be impeded. In order to appraise this possibility correctly,it should be remembered that money flowing from an inflationarysource, after it has become income and is saved, has to be cOWltedas saving. It has been assumed by many writers-e.g., byMr. HAWTREy-that profits which have been brought about byan inflationary rise in demand are the most important source ofsupply of investible funds dbring the. upswing of the cycle.But, even if such exceptions are deemed unimportant and ourrule that savings during the expansion slow down the latter remainssubstantially unimpaired, it does not by any means follow that, forthe purpose of obtaining the maximum long-run productivity, alow rate of saving during the upswing of the· cycle is desirable.We are notyet in a position to give a definite answer tothis question.There can, however, be no doubt that good reasons can be adducedfor the proposition that an expansion which develops slowlywill last longer and give rise to less serious maladjustment thanone which progresses very rapidly.We tum now to the· second problem pre­Saving dllTing sented at the beginning of this section. Whatthe earlY proportions of available incomes are likely toexpansion. be saved as the expansion develops? Are thereany reasons for believing .that the proportion ofincome saved by the economic community varies at differentpoints in the cycle?Unfortunately, for lack of statistical data, there is no possibilityof measuring directly how savings behave during different phasesof the cycle.! We have to rely· on very general considerationswhich cannot provide a precise answer to the above questions.So far as the wage-earning section ofthe community is concerned,there are various considerations which do not all point in thesame direction. The real incomes of those who were employedduring the slump probably fall during at least the ~rst part of theupswing. The proportion of income saved by such people willprobably tend to diminish, particularly as the danger ofunemploymentrecedes. On the other hand, as the unemployed of theslump are re-employed, they obtain a saveable surplus, and in some1 Ct. America's Capacity to Consume, passim.