OH. 18 CHANGES DUE TO INVESTMENT FACTORS 279

(ii.) The Genesis and Life-history of aCredit Cycle

It is not surprising that Saving and Investmentshould often fail to keep step. In the first place—aswe have mentioned already—the decisions whichdetermine Saving and Investment respectively aretaken by two different sets of people influenced bydifferent sets of motives, each not paying very muchattention to the other. Especially is this the case overshort periods. There are many reasons, as we shallsee in Vol. ii., why the volume of investment shouldsuffer fairly wide fluctuations. The development ofan investment boom certainly does not mean that theentrepreneurs who initiate it have deliberately decidedthat the public are going to save out of their incomeson a larger scale than before. Nor is an investmentslump to be explained by entrepreneurs having decidedbeforehand that the public’s savings are going tofall off. There is, indeed, no possibility of intelligentforesight designed to equate savings and investmentunless it is exercised by the banking system ; for it isthe facilities allowed by the banks which are the mar-ginal factor determining the precise degree to whichentrepreneurs will be in a position to carry out theirenterprises. Yet hitherto the banking system has beenmainly preoccupied with a different objective.

Not only are the decisions made by different sets ofpersons ; they must also in many cases be made atdifferent times. When the increased investment repre-sents an increase of working capital, the act of savingis required, it is true, immediately. But when there isa change-over in the character of production whichwill lead later on to an increased output of fixed capital,the additional saving is only needed when the processof production is finished. This results from the dura-tion of the process of production, whether of capital-