of short-time loans are made. Most of the long-time
loans do not fall due in such seasons of stress, and the great mass of
slowly exchanging wealth alters little and slowly in price. Such loans
as fall due can generally be renewed for long periods at rates little
higher than usual, the market for long-time and short-time loans being
in large measure independent of each other. But they are not quite
independent, and some lenders take whatever sums they can collect on
maturing long-time obligations and loan them on short terms at high
rates of interest, or buy goods, whole enterprises, bonds, and stocks,
at the unusually low prices temporarily prevailing. The effect of this
is to raise somewhat the interest rate on long-time paper to accord
with the new conditions.

Sec. 13. #Dynamic conditions and price readjustments.# Another condition
favorable to the rhythmic movement of capitalization is a dynamic
economic society. The past century has opened up new fields for
investment on an unexampled scale. Investment has advanced both
intensively and extensively in a series of great waves. New machinery
and processes have given undreamt of opportunities for enterprise in
the older countries, and the physical frontier of investment has moved
outward with the march of millions of immigrants to people the fertile
wilderness. Such factors disturb the equilibrium of prices both in
time and space, give a powerful impulse toward higher values in
the older lands, and stimulate the hopes of all investors. When the
balance between the capitalizations of various industries and between
the incomes of the various periods proves to be false, the inevitable
readjustment causes suffering and loss to many, but particularly in
the inflated industries. But, because of the mutual relations of men
in business, few even of those who have kept freest from speculation
can quite escape the evils.

Among the dynamic conditions in industry are changes in the general
price level whether due to changes in the production of the standard
money commodity (relative to population) or to changing methods of
doing business. If the price level is falling (i.e., the standard unit
is appreciating), the burden of the great mass of outstanding debts
is growing heavier upon the debtors.[12] Sooner or later some of them
break down under its weight. At such times many attempt to shift their
capital from active investments such as stocks, to passive investments
such as