CH. 18 CHANGES DUE TO INVESTMENT FACTOES 285

ensued on the previous Cycle or for some other cause.In this case the earnings of the factors of productionincrease from the outset, without there being any in-crease in available output. Prices rise, therefore, atonce relatively to earnings and costs ; the differencebetween this case and case (i.) being that the upward-price phase of the Credit Cycle begins immediately.

(iii.) Let us next take type (iii.) where factors ofproduction previously unemployed are put to workon producing, not fixed-capital goods as in type (ii.),but particular categories of consumption-goods. Thecourse of events is exactly as in type (ii.) for a period oftime equal to the duration of the process of production,after which the available output coming on to themarket is increased by the same amount—assumingthat the rate of efficiency-wages is unchanged—astotal earnings had been increased at the earlier date,so that prices fall back again to their previous level.

It is to be noticed that expansions of types (ii.)and (iii.) cannot come about without a substantialchange in the monetary situation, since they involvean increase in aggregate earnings as well as in pro-fits. Thus it requires the acquiescence of the bank-ing authorities ; though if the banks have got intothe habit of concentrating their attention on thevolume of the total deposits to the exclusion of otherfactors, the monetary adjustment may come aboutwithout arousing their notice. For an increased volumeof money may be furnished for the Industrial Circu-lation as the result of a decrease of the FinancialCirculation, i.e. of the savings-deposits, since it isparticularly likely that in the earliest phases of a boomthere will be a unanimity of bull sentiment leadingto a decrease of the “ bear ” position. Failing this, aslight rise in bank-rate, which is insufficient to counter-act the tendency towards Commodity Inflation, mayserve to increase monetary facilities sufficiently to lookafter the increased earnings ; either by increasing the