[157] For the view that over-consumption is cause, see Appendix II.
[158] "What is annually saved is as regularly consumed as what is annually spent, and nearly in the same time too; but it is consumed by a different set of people." (Wealth of Nations, p. 149b, McCulloch.) "Everything which is produced is consumed; both what is saved and what is said to be spent, and the former quite as quickly as the latter." (Principles of Political Economy, Book I., chap. v., sec. 6.)
[159] An able analysis of the nature of "paper savings" is found in Mr. J.M. Robertson's Fallacy of Saving. (Sonnenschein.)
[160] Chap. v. § 5.
[161] Bk. III., chap. xiv. § 3.
[162] The stock of a small retailer will not, however, in all cases vary proportionately with the aggregate sales of all classes of goods. A small shopkeeper, to retain his custom and credit, is often required to keep a small stock of a large variety of goods not often in request. If he sells them rather more quickly, he does not necessarily increase his stock in hand at any particular time.
[163] It likewise determines the quantity of plant and stock at a, b, c, d down each of the perpendicular lines, for the demand at each of these points in the production of plant and machinery is derived from the requirements at the points A, B, C, D, E. The flow of goods therefore up these channels, though slower in its movement (since in the main channel only goods flow, while fixed capital is subject to the slower "wear and tear"), is equally determined by and derived from the consumption at F. The whole motive-power of the mechanism is engendered at F, and the flow of money paid over the retail counter as it passes in a reverse current from F towards A, supplies the necessary stimulus at each point, driving the goods another stage in their journey.
[164] Böhm-Bawerk, Positive Theory of Capital, p. 67. See Appendix I. for conflict of opinion among English economists.
[165] Principles of Political Economy, Bk. I., chap. v. § 3; see also Bk. III., chap. xiv. § 3.
[166] It should be noted that an increased amount of consumption in the future does not necessarily compensate for a disturbance of the current balance of saving and spending, for an increased proportion of future income will have to be spent in order to compensate.