ABSTRACT
This chapter discusses certain factors which have sometimes been put forward as the causes of the periodic recurrence of crises and depressions. The rise of production cost during the prosperity phase and the reduction of production cost during the depression play a prominent role in the explanation of the cycle by Professor W. C. Mitchell. The border-line between horizontal and vertical maladjustments is sometimes very difficult to draw. But since the two are not mutually exclusive, since they can, and probably frequently do, coexist and reinforce one another, the fact that classification is sometimes difficult in concrete cases does not weigh too heavily in the balance. Professor Irving fisher thinks that there are two main causes of the recurrence of economic depressions, namely "over-indebtedness" and "deflation". "Over indebtedness means simply that debts are out-of-line, are too big relatively to other economic factors."
