Another eminent economist, Sir Henry Strakosch, Chairman of the Union Corp, Ltd, London, member the Council of India, member of the financial committee League of Nations, elucidates this phase of deflation, thus: The nature of the economic disturbance caused by a (general fall in the price level is twofold. First, since the majority of transactions in a civilized com munity involve contracts expressed in terms of money and due for fuldiment. after a stated lapse of time, falling prices—uriless total productivity expands—increase automatically the share of the national Income accruing to the section of the community which has fixed money claims, The beneficiaries,. unlike the wage-earning class, will normally not lexereise their increased purchasing power in buying more consumer's goods; for their wants in these directions are generally already satisfied tup to the point to which they have become conventionally habituated. ner eased but diminished, there "is Second, as total productivity is not
bound to arise an economic friction between employers and "employed over the distribution of the diminish-fed residue left over after satisfying Axed interest claims. The economist explains that even though the, raw materials needed by the manufactur. Ing process are less costly, the profit margin disappears for the simple rea~ son that his production costs are Inormally represented by rigid items ike wages.
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