at any given time, having regard to the arts of industry, on the one hand, and the arts of consumption, on the other, a right balance or equilibrium between spending and saving. It has been held by the classical school of economists that this equilibrium was necessarily maintained by the free play of natural economic laws, which would check any such tendency to over-save and over-invest as appears actually to take place. But a closer scrutiny of the motives which actuate saving show that they do not conform to the ordinary price-law. A rise or fall in the price of saving, i.e. rate of interest, though serving to distribute saving properly among the several channels of investment, does not operate to any appreciable extent to increase or diminish the total volume of saving. There is a check upon saving, but it comes too late, after a wasteful trade depression has occurred. For most saving comes from profits, dividends, rents of the owning well-to-do classes. When a trade depression is in actual course, these sources of saving are greatly diminished and though for a time some actual over-saving lies idle in banks waiting an opportunity for favourable investment, the period of bad trade is soon attended by a fall in the rate of saving below the level which a normal trade condition would justify.
Now this argument signifies that the constant impulse to push for overseas markets in normal times and the periodic slumps of national trade in the home markets, are due to a chronic tendency to try to save a larger proportion of the national income than can find a useful expression in new capital, This is not due to the folly of individual savers, but to a distribution of the general income which puts too small a share in the hands of the working-classes, too large a share in the hands of the employing and owning classes. For it is to the latter that over-saving is attributable.
Now we are not here concerned with the important
