s to say, upon the consumption of cotton goods. If 300 mills are
sufficient to do the work of supplying yarn to meet the demand of all
manufacturers, the value of 500 mills is no greater than of 300;
assuming that the 500 mills equally distributed the trade, it would
simply mean that the real capital was thinly spread over 500 mills,
which could only work a little over half-time without producing a glut
of goods, instead of being concentrated upon 300 mills fully occupied.

Turning once more to the diagram,

[Illustration]

_f_ (the current rate of consumption) determines the quantity of real
productive power of capital that can be effectively employed at each
point, _a_, _b_, _c_, _d_, _e_. The condition of the arts of industry,
including the rates of wages and other conditions of the labour
market, determines how many forms of capital (mills, warehouses,
ironworks, raw material, etc.) at any given time are socially
requisite to embody this capital. But though _f_ has an economic power
to force into existence the requisite minimum of these forms of
capital, it has no power to prevent the pressure of individual
interests from exceeding that minimum and planting at _a_, _b_, _c_,
_d_, _e_ more forms of capital than are required.

Secondly, over-production or a general glut is only an external phase
or symptom of the real malady. The disease is under-consumption or
over-saving. These two imply one another. The real income of a
community in any given year is divisible into two parts, that which is
produced and consumed, that which is produced and not consumed--_i.e._,
is saved. Any disturbance in the due economic proportion of these two
parts means an excess of the one and a defect of the other. All
under-consumption therefore implies a correspondent over-saving. This
over-saving is embodied in an excess of machinery and goods over the
quantity economically required to assist in maintaining current
consumption. It must, however, be remembered that this over-saving is
not measured by the quantity of new mills, machinery, etc., put into
industry. When the mechanism of industry is once thoroughly congested,
over-saving may still continue, but will be represented by a
progressive under-use of existing forms of capital, that unemployment
of forms of capital and labour which makes trade depression.

An increased quantity of saving is requisite to provide for an
expected increase of consumption arising from a growth of p