Thisvisibledifferencebetweentheoldorderandthenewiscloselydependentonthedifferencebetweenthepurposesthatguidetheolderschemeofeconomiclifeandthoseofthenew。
　　Undertheoldorder，industry，andevensuchtradeastherewas，wasaquestoflivelihood；undertheneworderindustryisdirectedbythequestofprofits。Formerly，therefore，timesweregoodorbadaccordingastheindustrialprocessesyieldedasufficientoraninsufficientoutputofthemeansoflife。
　　Latterlytimesaregoodorbadaccordingastheprocessofbusinessyieldsanadequateorinadequaterateofprofits。Thecontrollingendisdifferentinthepresent，andthequestionofwelfareturnsonthedegreeofsuccesswithwhichthisdifferentulteriorendisachieved。Prosperitynowmeans，primarily，businessprosperity；whereasitusedtomeanindustrialsufficiency。
　　Atheoryofwelfarewhichshallaccountforthephenomenaofprosperityandadversityunderthemoderneconomicordermust，accordingly，proceedonthecircumstanceswhichconditionthemodernsituation，andneednotgreatlyconcernitselfwiththerangeofcircumstancesthatmadeormarredthecommonwelfareundertheolderregime，beforetheageofmachineindustryandbusinessenterprise。1*Undertheoldorder，whenthoseinwhosehandslaythediscretionineconomicaffairslookedtoalivelihoodastheendoftheirendeavors，thewelfareofthecommunitywasregulated“bytheskill，dexterity，andjudgmentwithwhichitslaborwasgenerallyapplied。“2*WhatwouldmarthiscommonwelfarewastheoccasionallydisastrousactofGodinthewayofunpropitiousseasonsandthelike，ortheactofmaninthewayofwaranduntowardgovernmentalexactions。Pricevariations，exceptasconditionedbytheseuntowardintrusiveagencies，hadcommonlyneitherawidenoraprofoundeffectupontheevencourseofthecommunity’swelfare。Thisholdstrue，inageneralway，evenafterresorttothemarkethadcometobeafactofgreatimportanceinthelifeoflargeclasses，bothasanoutletfortheirproductsandasabaseofsuppliesofconsumablegoodsorofrawmaterials，-asinthebetterdaysofthehandicraftsystem。
　　Untilthemachineindustrycameforward，commercewithitshandmaiden，bankingwastheonlybranchofeconomicactivitythatwasinanysensibledegreeorganizedinacloseandcomprehensivesystemofbusinessrelations。“Business“wouldthenmean“commerce，“andlittleelse。Thiswastheonlyfieldinwhichmenhabituallytookaccountoftheirowneconomiccircumstancesintermsofpriceratherthanintermsoflivelihood。Pricedisturbances，evenwhentheywereofconsiderablemagnitude，seemtohavehadgraveconsequencesonlyincommerce，andtohavepassedoverwithoutbeingtransmittedmuchbeyondthecommercialhousesandthefringeofoccupationsimmediatelysubsidiarytocommercialbusiness。
　　Crises，depressions，hardtimes，dulltimes，brisktimes，periodsofspeculativeadvance，“erasofprosperity，“areprimarilyphenomenaofbusiness；theyare，intheiroriginandprimaryincidence，phenomenaofpricedisturbance，eitherofdeclineoradvance。Itisonlysecondarily，throughthemediationofbusinesstraffic，thatthesemattersinvolvetheindustrialprocessorthelivelihoodofthecommunity。Theyaffectindustrybecauseindustryismanagedonabusinessfooting，intermsofpriceandforthesakeofprofits。Solongasbusinessenterprisehabituallyranitscoursewithincommercialtrafficproper，apartfromtheindustrialprocessassuch，solongtheserecurringperiodsofdepressionandexaltationbeganandendedwithinthedomainofcommerce。3*Thegreatestfieldforbusinessprofitsisnowafforded，notbycommercialtrafficinthestrictersense，butbytheindustriesengagedinproducinggoodsandservicesforthemarket。Andtheclose-knit，far-reachingarticulationoftheindustrialprocessesinabalancedsystem，inwhichtheinterstitialadjustmentsaremadeandkeptintermsofprice，enablespricedisturbancestobetransmittedthroughouttheindustrialcommunitywithsuchcelerityandeffectthatawaveofdepressionorexaltationpassesoverthewholecommunityandtoucheseveryclassemployedinindustrywithinafewweeks。Andsomewhatinthesamemeasureastheseveralmodernindustrialpeoplesareboundtogetherbythebusinesstiesoftheworldmarket，dothesepeoplesalsoshareincommonanywaveofprosperityordepressionwhichmayinitiallyfalluponanyonememberofthisbusinesscommunityofnations。Exceptionsfromthisrule，ofcourse，aresuchperiodsofprosperityordepressionasresultfromlocalmaterialaccidentsoftheseasonsandthelike，-accidentsthatmayinflictupononecommunityhardshipswhichthroughthemediationofpricesaretransmutedintogainfortheothercommunitiesthatarenottouchedbythecalamitousactofGodtowhichthedisturbanceisdue。
　　Thetrue，orwhatmaybecalledthenormal，crises，depressions，andexaltationsinthebusinessworldarenottheresultofaccidents，suchasthefailureofacrop。Theycomeintheregularcourseofbusiness。Thedepressionandtheexaltationareinameasureboundtogether。Intherecentpast，sincedepressionandexaltationhavebeennormalfeaturesofthesituation，everystronglymarkedperiodofexaltationprosperityhashaditsattendantperiodofdepression；althoughitdoesnotseemtofollowinthenatureofthingsthatawaveofdepressionnecessarilyhasitsattendantreactioninthewayofaperiodofbusinessexaltation。Intherecentpast-thelasttwentyyearsorso-ithasbeenbynomeansanomaloustohaveaperiodofhardtimes，orevenafairlypronouncedcrisis，withoutawaveofmarkedexaltationeitherprecedingorfollowingitinsuchclosesequenceasconvenientlytoconnectthetwoasactionandreaction。Butitwouldbeamatterofsomeperplexitytoastudentofthisclassofphenomenatocomeuponawaveofmarkedbusinessexaltationprosperitythatwasnotpromptlyfollowedbyacrisisorbyaperiodofdepressionmoreorlesspronouncedandprolonged。Indeed，astheorganizationofbusinesshasapproachedmoreandmorenearlytotherelativelyconsummatesituationofto-day，-sayduringthelasttwentyyearsofthenineteenthcentury，-periodsofexaltationhave，onthewhole，grownlesspronouncedandlessfrequent，whereasperiodsofdepressionor“hardtimes“havegrownmorefrequentandprolonged，ifnotmorepronounced。Itmightevenbeatenablegeneralization，thoughperhapsunnecessarilybroad，tosaythatforacoupleofdecadespastthenormalconditionofindustrialbusinesshasbeenamildbutchronicstateofdepression，andthatanymarkeddeparturefromcommonplacedulltimeshasattractedattentionasaparticularcasecallingforaparticularexplanation。Thecauseswhichhavegivenrisetoanyoneofthemorepronouncedintervalsofprosperityduringthepasttwodecadesarecommonlynotverydifficulttotrace；butitwouldbeabootlessquesttogooutinsearchofspecialcausestowhichtotracebackeachoftheseveralperiodsofdulltimesthataccountforthegreaterportionofthepastquarterofacentury。
　　Underthemorefullydevelopedbusinesssystemasithasstoodduringthecloseofthecenturydulltimesare，inaway，thecourseofnature；whereasbrisktimesareanexceptionalinventionofmanorararebountyofProvidence。
　　Whatcurrenteconomictheoryhastosayonthecommonwelfareismorefrequentlyfoundunderthecaptionofcrisisanddepressionthaninanyotheroneconnection。Andthetheoryofcrisisanddepressionhas，asiswellknown，beenoneofthelesshappypassagesintheeconomists’repertoryofdoctrines。Ithasbeencustomarytoapproachtheproblemfromthesideoftheindustrialphenomenainvolved-themechanicalfactsofproductionandconsumption；ratherthanfromthesideofbusinessenterprise-thephenomenaofprice，earnings，andcapitalization。Thisuntowardaccidentofafalsestartisprobablyaccountableforthefactthatnotenabletheoryofthesephenomenahasyetbeenoffered。Thesolutionsattemptedhavecommonlyproceededbyananalysisofindustriallifeapartfrombusinessenterprise；thatistosay，theyhavesoughttoexplaintheoccurrenceofcrisesunderthatold-fashioned“naturaleconomy“or“moneyeconomy“underwhichcrisesdidnotnormallyoccur。4*
　　Takingasapointofdeparturethepatentfactthatcrises，depressions，andbrisktimesareintheirfirstincidencephenomenaofbusiness，ofpricesandcapitalization，anexplanationoftheirappearanceanddisappearance，andoftheirbearinguponthecommonwelfare，maybesoughtbyharkingbacktothosebusinessprinciplesthatunderliemoderncapitalisticenterprise。Ananalysisofthecurrent，common-sensebusinessviewsofpriceandinvestmentshouldindicatethegenesisandmannerofgrowthofthesemassmovementsofthebusinesscommunity，aswellasthecharacterofthosecircumstanceswhichmayfurtherorinhibitsuchmovements。Businessdepressionandexaltationare，atleastintheirfirstincidence，ofthenatureofpsychologicalfact，justaspricemovementsareapsychologicalphenomenon。
　　Theeverydaycircumstanceswhichconditionthemodernbusinessmanagementofindustryaresufficientlywellknown，andtheyhavealreadybeenreviewedinsomedetailinearlierchapters；buttheymayperhapsadvantageouslybeoutlinedagaininsofarastheybearimmediatelyonthequestioninhand。
　　Industryiscarriedonbymeansofinvestment，whichismadewithaviewtopecuniarygaintheearnings。Thebusinessman’sendeavorsinmanagingtheaffairsoftheconcerninwhichinvestmenthasbeenmadelooktothesameend。Thegainsarekeptaccountofasapercentageontheinvestment，andboththeyandtheindustrialplantorprocessthroughthemanagementofwhichtheyareprocuredarecountedintermsofmoney，and，indeed，innootherterms。Theplantorprocessortheinvestment，whateverformittakesiscapitalizedonthebasisofthegainswhichaccruefromit，andthiscapitalizationproceedsonthegroundaffordedbythecurrentrateofinterest，weightedbyconsiderationofanyprospectivechangeintheearning-capacityoftheconcern。Themanagementoftheconcerniseffectedbyamoreorlessintricateandmultifarioussequenceofbargains。Thedecisiveconsiderationateverypointinthistrafficofinvestmentandadministrationistheconsiderationofpriceinonerelationoranother。
　　Theindustrytowhichthebusinessmeninthiswayresortasthewaysandmeansofgainisofthenatureofamechanicalprocess，oritissomeemploymentascommerceorbankingthatiscloselyboundupwiththemechanicalindustries。Broadly，itissuchindustryasliesunderthedominionofthemachine，inthatitisinvolvedinthatcomprehensivequasi-mechanicalprocessofmodernindustriallifethathasbeendiscussedinanearlierchapter。Thisimplicationofeachindustryinacomprehensivesystem，orthisarticulationwithotherbranchesofindustry，isofsuchanatureastoplaceeachindustrialconcernindependenceononeormoreotherbranchesofindustry，fromwhichitdrawsitsmaterials，appliances，etc。，andtowhichitdisposesofitsoutput；andtheserelationsofdependenceandarticulationformanendlesssequence。Thatistosay，theinterindustrialrelationsintowhichanybranchofindustrynecessarilyentersdonotruntoafinalterminanydirection；
　　withintheprocessofindustryatlargethereisnomemberthatstandsintherelationofaninitialtermtoanysequenceofprocesses。Theramificationofindustrialdependenceiswithoutlimits。Themethodoftheserelationsofoneconcerntoanother，orofonebranchofindustrytoanother，isthatofbargaining，contractsofpurchaseandsale。Itisapecuniaryrelation，inthelastresortapricerelation，andthebalanceofthissystemofinterstitialrelationsisapricebalance。
　　Theseinterstitialpecuniaryrelations，betweentheseveralconcernsorbranchesofindustrythatmakeupthecomprehensiveindustrialsystematlarge，involvecreditrelationsofgreaterorlessduration。Thebargaining，bymeansofwhichindustryismanagedandtheinterstitialrelationsadjusted，takestheformofcontractsforfutureperformance。Allindustrialconcernsofappreciablesizeareconstantlyinvolvedinsuchcontracts，whichare，onanaverage，ofconsiderablemagnitudeandduration，andcommonlyextendinseveraldirections。Thesecontractsmaybeofthenatureofloans，advances，outstandingaccounts，engagementsforfuturedeliveryorfutureacceptance，butinthenatureofthecasetheyinvolvecreditobligations。Credit，whetherunderthatnameorunderthenameoforders，contracts，accounts，andthelike，isinseparablefromthemanagementofmodernindustryinallthatconcernstheworkingrelationsbetweenbusinessesthatarenotunderoneownership，orbetweenwhichtherelationsrestingonseparateownershiphavenotbeenplacedinabeyancebysomesuchexpedientaslease，pool，syndicate，trustagreement，andthelike。Creditrelationsofonekindandanotherarealsofoundexpedientandprofitableatmanypointswheretheiremploymentisnotpreciselyunavoidable。Theseextendedcreditrelationsarerequisitetothemostexpeditiousandprofitableconductofbusiness，andsotothehighestdegreeofsuccessofthebusiness。Undertheregimeofthemachineindustryandmodernbusinessmethodsitisprobablyfairtosaythattheuseofcredit，apartfromloancapitalandleases，unavoidablygoestotheextentrequiredtocoverallgoodsinprocessofelaboration，fromtherawmaterialtothefinishedgoods，insofarasthegoodschangehandsinpointofownershipduringtheprocess。
　　Theconductofindustrybycompetingbusinessconcernsinvolvesanextensiveuseofloancredit，asspokenofinChapterVabove。
　　Thefourconditionsrecitedarecharacteristicfeaturesofthatrecentpastduringwhichbrisktimes，crises，anddepressionsfollowedoneanotherwithsomeregularityasincidentsofthenormalcourseofbusiness。5*Certainqualificationsofthischaracterizationarenecessarytofittheimmediatepresent。Thesewillbeindicatedpresently。