SECTION CCXVI.. Commercial Crises in General.--a General Glut.

COMMERCIAL CRISES IN GENERAL.--A GENERAL GLUT.

The greater number of such crises are doubtless special; that is, it is only in some branches of trade that supply outweighs demand. Most theorists deny the possibility of a general glut, although many practitioners stubbornly maintain it.[216-1] J. B. Say relies upon the principle that in the sale of products, as contradistinguished from gifts, inheritances, etc., payment can always be made only in other products. If, therefore, in one branch there be so much supplied that the price declines; as a matter of course, the commodity wanted in exchange will command all the more, and, therefore, have a better vent. In the years 1812 and 1813, for instance, it was almost impossible to find a market for dry goods and other similar products. Merchants everywhere complained that nothing could be sold. At the same time, however, corn, meat and colonial products were very dear, and, therefore, paid a large profit to those who supplied them.[216-2] Every producer who wants to sell anything brings a demand into the market exactly corresponding to his supply. (J. Mill.) Every seller is ex vi termini also a buyer; if, therefore production is doubled, purchasing power is also doubled. (J. S. Mill.) Supply and demand are in the last analysis, really, only two different sides of one and the same transaction. And as long as we see men badly fed, badly clothed, etc., so long, strictly speaking, shall we be scarcely able to say that too much food or too much clothing has been produced.[216-3]

There was then a complaint, not only in Europe but also in America, Hindoostan, South Africa and Australia, of the unsaleableness of goods, overfull stores, etc.; but this, when more closely examined, was found to be true only of manufactured articles and raw material, of clothing and objects of luxury; while the coarser means of subsistence found an excellent market, and were sold even at the highest prices. Hence, in this case, there was by no means any such thing as over-production. The trouble was that in the cultivation of corn and other similar products, too little was produced. There was a bad harvest even in 1816.

The most important authorities in favor of the possibility of a general glut are Sismondi, N. Principes, IV, ch. 4, and in the Revue encyclopédique, Mai, 1824: Sur la Balance des Consommations avec les Productions. Opposed by Say in the same periodical (Juilliet, 1824); where the controversy was afterwards reopened in June and July, 1827, by Sismondi and Dunoyer. Compare Etudes, vol. I; Ganilh, Théorie, II, 348 ff.; Malthus, Principles, II, ch. 1, 8. Compare Rau, Malthus and Say, über die Ursachen der jetzigen Handelsstockung, 1821. Malthus' views were surpassed by Chalmers, On Political Economy in Connexion with the moral State of Society, 1832. But even Malthus himself in his Definitions, ch. 10, No. 55, later, so defined a "general glut" that there could be no longer question of his holding to its universality. For an impartial criticism, see especially Hermann, Staatsw. Untersuchungen, 251, and M. Chevalier, Cours, 1, Leçon, 3.]