enance of wage
levels would confer such indirect assistance to recovery as might come
from the lessening of the fear that a future fall in wages will make
present production unprofitable. The factor of industrial unrest and
discontent is apt to be less menacing. Lastly, it may be said that wage
reductions might be reflected in the efficiency of the least favorably
placed groups of workers.[67]

These objections should be overridden only if it is believed that a
decline in the price level greater than that which could be secured
without wage reduction must precede industrial recovery. Or that such a
decline would, at all events, greatly facilitate the recovery. It must
be believed that at the level of prices existing at the outset of the
crises, or at a position somewhat but not markedly under that level, the
margin of safety in the financial system by virtue of which modern
industry is carried on, is too small--the ease with which the
unfavorable turn of affairs could produce another crisis too great. Or
that consumers will not resume buying until prices drop greatly. Under
which circumstances the policy of wage reduction would be as much to the
benefit of the wage earners as to the rest of the community.

This case is to be distinguished from the previous one really only by
the decided seriousness of the situation it reveals. In this case it is
presumed that a decided judgment may be made that the price level must
be greatly lowered before business operations can revive and be carried
on with confidence in steady markets. In the previous one it is presumed
that a decided judgment can be formed to the effect that the shock to
business will be satisfactorily gotten over with just that reduction of
prices that liquidation and a more careful conducting of business
operations will bring about. The difference is, in the last analysis,
one of degree.

A price decline that is in reality a movement from a state of
depreciated paper money back to a gold standard may be looked upon as a
variant of the third case. For it is obvious that if the depreciation is
extensive, the decline in the price level necessary to the attainment of
the gold basis must also be extensive.

There is a fourth possible case which will be described, but will not be
followed up, since it is not applicable to the United States at the
present time. It is the case of a country whose chief industries are
export industries--the prices of the products of wh