It takes two or three years to produce this full calamity, and the recovery from it takes two or three years also.  If corn should long be cheap, the labouring classes have much to spend on what they like besides.  The producers of those things become prosperous, and have a greater purchasing power.  They exercise it, and that creates in the class they deal with another purchasing power, and so all through society.  The whole machine of industry is stimulated to its maximum of energy, just as before much of it was slackened almost to its minimum.

A great calamity to any great industry will tend to produce the same effect, but the fortunes of the industries on which the wages of labour are expended are much more important than those of all others, because they act much more quickly upon a larger mass of purchasers.  On principle, if there was a perfect division of labour, every industry would have to be perfectly prosperous in order that any one might be so.  So far, therefore, from its being at all natural that trade should develop constantly, steadily, and equably, it is plain, without going farther, from theory as well as from experience, that there are inevitably periods of rapid dilatation, and as inevitably periods of contraction and of stagnation.

Nor is this the only changeable element in modern industrial societies.  Credit—­the disposition of one man to trust another—­is singularly varying.  In England, after a great calamity, everybody is suspicious of everybody; as soon as that calamity is forgotten, everybody again confides in everybody.  On the Continent there has been a stiff controversy as to whether credit should or should not be called capital:’  in England, even the little attention once paid to abstract economics is now diverted, and no one cares in the least for refined questions of this kind:  the material practical point is that, in M. Chevalier’s language, credit is ‘additive,’ or additionalthat is, in times when credit is good productive power is more efficient, and in times when credit is bad productive power is less efficient.  And the state of credit is thus influential, because of the two principles which have just been explained.  In a good state of credit, goods lie on hand a much less time than when credit is bad; sales are quicker; intermediate dealers borrow easily to augment their trade, and so more and more goods are more quickly and more easily transmitted from the producer to the consumer.

These two variable causes are causes of real prosperity.  They augment trade and production, and so are plainly beneficial, except where by mistake the wrong things are produced, or where also by mistake misplaced credit is given, and a man who cannot produce anything which is wanted gets the produce of other people’s labour upon a false idea that he will produce it.  But there is another variable cause which produces far more of apparent than of real prosperity and of which the effect is in actual life mostly confused with those of the others.