===== PAGE 1 ===== THE CONSUMPTION OF CAPITAL IN AUSTRIA’ FRITZ MACHLUGP THE Austrian theory of economics has often find it adequate to correct the figures for changes been reproached with over-abstractness and in costs of reproduction. remoteness from real life. The Austrian theory Sources of information about changes in capital of consumption of capital is, unfortunately, more stock. In a growing economy, factual informa- than an unreal construction based upon unreal tion about capital formation is obtained in three assumptions, more than a plaything for the ways: (1) by figures concerning new physical mental gymnastics of scholars; it is an attempt to equipment, especially activity in the construc- explain very real facts. The discussion of capital tion industries, (2) by figures concerning the consumption and economic decline was provoked supply of money capital from the various sources, by the course of events observed in Austria dur- and (3) by figures concerning the valuation of the ing the war, during the post-war inflation, and existing capital of corporations. during the years of social reform.? For a declining economy only the third way Physical destruction and value destruction of seems practicable. The difference between the capital. What is the connection between physical valuation of capital at different points of time is destruction and value destruction of capital? The the measure for the decline. The reasons for such two things do not always run parallel. When a decline are to be sought either in physical capital equipment is physically destroyed —say destruction of capital, or in depreciation by by war, by fire, by wear and tear — its value is changes in the horizontal economic structure gone simultaneously. But the .loss in value such as changes in demand, or in the consump- might occur before the capital goods are physi- tion of capital. cally impaired. Equipment might be rendered The Austrian Institut fiir Konjunkturfor- valueless by certain economic changes. Itisthen, schung (Institute for Business Cycle Research) so to speak, designated for progressive dilapida- undertook such a comparison of the valuation of tion; it does not pay to maintain equipment stocks over a period of 18 years. A report was of no value; hence the physical destruction published by Dr. Oskar Morgenstern in the will follow the value destruction after a con- Zeitschrift fiir Nationalokonomie. Some of the siderable lag. results are shown on Table 1 (page 15). There is a case in which the capital values in The valuation arrived at for corporation cap- terms of money decrease without any physical ital in Austria in 1913 is compared in the table capital destruction following: that of the fall in with the valuation in 1930. Both sums were ob- costs of reproduction. For some purposes the tained by combining the capital values of all statistician who records values of capital will Austrian corporations the shares of which were 1 This article is based upon an address delivered at a meet- listed on the Viennese stock exchange. The ing of the Boston Chapter of the American Statistical Asso- value of capital of each corporation was calcu- ciation on December 3, 1934. o 1s . 2 Literature: Professor Ludwig v. Mises was the first, so far lated by multiplying the number of shares issued as I know, to point to the phenomenon of the consumption by the average price during the whole year. of capital. As a member of a committee appointed by the Corporations which existed in 1913 but had dis- Austrian Government (including two other committeemen, . . . . Dr. Dollfuss and Dr. Palla) he also emphasized comprehensive appeared in 1930 were not included in either factual information. See Bericht diber die Ursachen der wirt- SUI. Only the surviving firms or merged firms schaftlichen Schwierigkeiten in Oesterreick (Vienna, 10931). An were taken into account. This procedure con- important investigation of the capital of Austrian corporations . . . was made by the Institut fiir Konjunkturforschung. See Oskar cealed the loss of capital of corporations which Morgenstern, “Kapital- und Kurswertinderungen der an disappeared completely, but it was imposed by der Wiener Borse notierten osterreichischen Aktiengesell- the fact that some corporations had moved, fol- schaften 1913 bis 1930,’ Zeitschrift fiir Nationalskonomie, III . . ian Mon- (1032). For theoretical expositions see F. A. v. Hayek, ‘“Kap- lowing the dismemberment of the Austria n italaufzehrung,” Weltwirischaftliches Archiv, xxxvi (1932), archy, from Vienna into the capitals of the new and Erich Schiff, Kapitalbildung und Kapitalaufzsehrung im nations. The investigation was therefore con- Konjunkturverlauf (Vienna, 1933). For a short survey on the fined to all Austrian corporations which existed Austrian experience see Nicholas Kaldor, “The Economic | . Situation of Austria,” Harvard Business Review, xt (1932). in 1930. Those which had been founded later [13] ===== PAGE 2 ===== 14 THE REVIEW OF ECONOMIC STATISTICS than 1913 were included in the statement, the kinds of capital depreciation principally in two initial capital being added (in our table) to the ways. Normal depreciation by wear and tear 1913 valuation. and that part of depreciation normally due to technological obsolescence are met by reinvest- CAPITAL CONSUMPTION ments out of replacement funds. The deprecia- AND ITS MEASUREMENT tion which results from unforeseeable dynamic Is the stock-market valuation competent? The changes is met only by investments out of new first question which might be raised is whether savings. A certain portion of new savings is the commercial market-valuation is to be con- therefore needed for offsetting unavoidable but sidered competent by the statistician. It may unforeseeable capital depreciation. be urged that capital equipment which has lost Do great changes in demand really depreciate, its economic value by changes in demand might really reduce the value of the capital of the com- well regain it in the future. If business men, munity as a whole? Is it not true that what the however, expected such revaluation it would one industry loses another industry must gain? show in the present valuation. But the markets The increased profits of the latter are capitalized, are often blamed for being bearish. Should not of course. Does this make good the capital loss a valuation as the outcome of a bearish market of the former? It does not. The increased quasi- be accordingly corrected for “bearishness”’? The rent in the underequipped industry results in an statistician who would do so would behave, of increased demand for liquid funds available for course, as a “bull,” and I doubt that he would investment. If there is not an increased supply do so if he were likely to lose money by his of savings to provide these funds the rate of speculation. interest is raised, and the higher rate of capital- The next question to be dealt with is whether ization lowers present capital values. We men- the stock valuation is significant for corporations tion these ‘abstract’ ideas for three reasons. which raised their capital partly in ways other First, a good deal of capital loss in Austria is to than through the issue of equities. The answer be traced to changes in demand resulting from depends on the purpose of the investigation. the short-sighted protectionism in the new For calculations of absolute amounts of capital, national states succeeding the old monarchy. the stock values alone would certainly be insuf- Second, capital consumption is in itself a change ficient. For estimates of relative changes in a in demand, the demand for consumers’ goods. growing economy, it would be misleading to being increased at the expense of that for pro- “neglect bond issues and other forms of debts of ducers’ goods; hence capital consumption reduces. the corporation because it might happen that an capital directly (by neglect of maintenance) and increasing portion of capital was raised by bor- indirectly (by decreasing the demand for the out- rowing. In a declining economy, the error in put of construction industry). Third, in the estimating relative changes in capital values by absence of new saving, mere shifts in demand in- stock values alone would not be so large for the volve economic decline; in other words, an econ- following reason. If a corporation issues bonds to omy which is stationary in respect to the supply finance good investments, the value of the equi- of savings is declining in respect to its capital ties will not be decreased at all. The stock value base; or, to put it another way, quick change in is impaired if the loan is used for bad investments the objects of consumption without the emer- or for covering losses. The shrinkage of the share gence of new savings is itself a form of consuming values would show the loss of capital. For the capital. present investigation into capital values of The capital of corporations in Austria. Inspec- Austrian corporations the whole question is not tion of our Table 1 reveals an enormous loss of of importance, since issue of bonds by private corporation capital in Austria. Not only the dif- corporations has been unlawful in Austria. Only ference between the 1913 value and the 1930 a few semi-publicly owned utility corporations value must be considered as lost. From 1913 to were permitted, by special decree, to raise funds 1930 new funds were raised to increase the capital by that means. of corporations. In order to see what amount. Maintenance of capital. A community which ought to be in existence if all capital invested had maintains its capital intact meets the different been maintained, we must add the capital in- ===== PAGE 3 ===== THE CONSUMPTION OF CAPITAL IN AUSTRIA 15 creases to the initial value. The additions are reason to do so; neither the prices of Austria’s shown separately for the time of war and infla- products nor the costs of reproduction of capital tion, 7.e., 1913 to 1922, and for the time after the equipment have fallen during the time in ques- stabilization, i.e., 1923 to 1930. An amount tion. Where, then, is the enormous difference? raised in crowns in the summer of 1921 is not What happened to the 79 per cent or 87 per cent equivalent to the same amount in crowns in the of capital invested in Austria? summer of 1922, because of the progressive infla- First of all, no earthquakes, no other abnormal tion. In order to make them comparable and catastrophes, no physical damages by the war, additive, the Research Institute had to “deflate” occurred in Austria. Second, changes in demand are, certainly, responsible for large depreciations of Austria’s capital equipment. If industrial equipment is adapted to satisfy the demand of a Further | Value 60 million people country and is then, by the TABLE 1. — VALUE OF CAPITAL OF CORPORATIONS (Unit: million schillings, gold, except last column) Capital my | plus | iia) (es. tariff policy of super-nationalists, restricted to Corporations value ro13- | xg25- | ment vaue | ger the demand of ab million people country, value 8 30 destruction is unmistakable, while new capital Banks. ........... 1718 | 649 | 380|2747| 347| 87 1S necessary to construct the plants for each Transportation. ...| so7| s54| 30| 50r| 57] 00 hational region. But this kind of destructive Metal industry ....| 886| 260| o3|1239| 218| 82 policy is far from sufficient to explain the loss. Breweries and sugar Not all industries were affected by the new pro- industries. ...... 104 5| 13| 122] 10Q| II tectionism, and nobody with a sense of propor- tion could trace all of the loss of Austria’s capital 4233 | 1172 | 747 |6152 |1201| 79 tO the new trade barriers. It is the consumption of capital which is the explanation of the disap- pearance of so great a portion of Austria’s wealth. Other industries ...| 1018 | 204 | 231|1453| 560 61 Capital value, Octo- 784 | 87 HOW CAPITAL IS CONSUMED Data from the Oesterreichisches Institut fiir Konjunktur- Capi talists who want to consume more than ber 1931........ forschung; see Oskar Morgenstern, loc. cit. SO their current income may liquidate capital by them according to the gold values of the time of selling it to other people. If it is bought out of issue of, or time of payment for, the new shares. new savings then, obviously, the dissaving by This correction is rather favorable because the some is offset by the saving by others. The indi- foreign exchanges and gold advanced much vidual consumption of capital is, under such con- more quickly than commodity prices and costs; ditions, no capital consumption of the com- so that the corporations were able to buy rela- munity as a whole. If there is, however, insuf- tively more than is expressed in the deflated val- ficient new saving within the community to ues of capital increments. absorb the dissaving, capital from foreign coun- The pre-war value plus additional investment, tries might fill the gap. Import of capital, in this. converted into Austrian schillings, amounts to case, does not increase the productive capacity of 6152 million schillings. In 1930, the value was, the country but only compensates for the in- instead, only 1291 million schillings. That means ternal capital consumption. This was obviously that only less than 21 per cent of the capital had the case in Austria. Money, borrowed from been maintained, while more than 79 per cent abroad, was lent (mostly through banks) to cor- had been lost. If we look at the values for sev- porations to cover their losses or to pay their eral months after the breakdown of the Credit unearned dividends, or, at the best, to finance Anstalt only 13 per cent of the capital had been investments which were in reality replacements. maintained and 87 per cent had been lost. of outworn or obsolete equipment. Later figures look still worse. If neither savings from within the community What caused such losses? The difference is so nor inflow of capital from without makes up for frightening that we look once more for any major the dissaving that goes on, then disinvesting errors. Have we forgotten to correct the values begins. Disinvesting takes place in the form of’ for a deflationary fall in prices? There is no using the replacement funds for consumptive ===== PAGE 4 ===== 16 THE REVIEW OF ECONOMIC STATISTICS purposes rather than for renewals. What would expansion is a phenomenon too well known to induce the entrepreneurs to do so? We shall need expounding to American readers. deal with various causes in the order of their his- Making and consuming fictitious profits was, torical relevance for Austria. probably, the most frequent method of consum- Miscalculation due to inflation. In spite of ing capital in Austria. A force which tended ordinary bookkeeping, inflationary price in- toward the same result consisted in taxing away creases lead to insufficient replacement reserves. profits. An example will make it clear. A manufacturer Overtaxation of incomes. It has been frequently owned a plant worth one million crowns. He asserted that only indirect taxation which in- used to write off 100,000 crowns a year for de- creases costs can have bad effects upon pro- preciation; that is, ten per cent. As inflation duction. A hard blow to entrepreneurs’ incomes raises prices and costs, and as the costs of an by way of direct taxation is often, and it was in equivalent plant would run up to two million Austria, a strong force toward the consumption crowns, the customary replacement quota repre- of capital. If a capitalist’s income is too heavily sents only five per cent; and the reserve, after taxed, he does not always cut down his expendi- the whole plant has been written off, allows the tures correspondingly but rather nibbles on his renewal of only half of the former equipment. If capital. High income taxes are seldom a transfer inflation raises prices to the fourteen-thousand- of consumers’ purchasing power from the rich fold, as was the case in Austria, the replacement people to the public, but more often a conversion reserve of a machine is just large enough to buy into consumption of funds which otherwise one new SCrew. would be saved, or (as in Austria) of funds which But does inflation not increase the profits and otherwise would be reinvested, and which are therefore the ability to build up reserves? I therefore disinvested capital. wish to emphasize that those money profits are A complete confiscation of profits would re- delusive profits; if parts of them are considered duce the exchange value of corporation capital real profits — that is, as a base for increased con- to zero, but would not necessarily imply actual sumption — capital is consumed. deterioration of capital. If the owners of the Capital consumption because of rising prices capital equipment were prevented from consum- is still better illustrated in the case of working ing their yieldless capital; that is, if the state capital. A dealer bought a thousand tons of undertook the maintenance of all equipment and copper. He sold them, as prices rose, with con- could do so with skill and prudence, we should siderable profit. He consumed only half of the be faced with a case of socialistic production. profit and saved the other half. He invested We mention this point in order to defend our again in copper and got several hundred tons. exposition against an objection which lies near Prices rose and rose. The dealer’s profit was at hand; namely, that the confiscation of the enormous; he could afford to travel and to buy return to capital would not involve deterioration cars, country houses, and what not. He also of capital, though its stock-market value would saved and invested again in copper. His money vanish. Our expectations regarding the main- capital was now a high multiple of his initial tenance of capital in a socialistic system may be one. After repeated transactions — he always high or low; the case is irrelevant for Austria. could afford to live a luxurious life — he invested The state cared only about the taxation of the his whole capital, grown to an astronomical returns and left the maintenance, or rather con- amount, in a few pounds of copper. While he and sumption, of capital to the discretion of its the public considered him a profiteer of the high- owners. est income, he had in reality eaten up his capital. Overtaxation of production. While the income Profits due to an increasing price level are only tax snatches the profits after they have come into fictitious profits. If they are consumed, capital existence, other kinds of taxation increase costs is consumed. This is one of the effects of infla- of production and, therefore, may prevent profits tion upon capital. Another one, the misinvest- from coming into existence. An increase in costs ments of capital, is of greater importance in the of production tends, as every economist knows, case of credit inflation than of governmental towards decrease in production and employment. inflation. Misdirection of capital due to credit If the state is engaged in relief works and sys- id ===== PAGE 5 ===== THE CONSUMPTION OF CAPITAL IN AUSTRIA 17 tems of unemployment benefits, more public ous — friends of public expenditures in Austria expenditures ensue. If they are covered by taxa- reiterated every day the high productivity of tion, increased taxes result. Increased taxes these expenditures and public works. I doubt by mean increased costs; increased costs, decreased which indexes one should measure this produc- employment. Decreased employment means in- tivity: by the increase in unemployment, or by creased public expenditure; increased public the decrease in profits, or by the steady decline expenditure, increased taxation. Increased ... in the capital stock of Austria. The same indexes da capo ad libitum. Or more correctly, da capo ad seem to be appropriate measures of the effects of another factor in raising costs of production: TABLE 2. — PuBLIC EXPENDITURES . _ . wage rates. (Unit: schillings per head of population) Forcing up wage rates. How efficient the Federal Municipality Austrian trade unions, with their political sup- Year government | of Vienna Total port, and the employers’ organizations were in 1023. nrrennnn. 0s 08 103 driving up wage rates in their collective bar- 1024 eennnnnn.. 124 177 301 gaining may be seen on Table 4. The movement 1025.0 .eennnnn. 138 216 354 is shown by indexes with the base 1914 for five 1926. .... oe... 155 241 396 different categories of labor. As in other coun- 1027. eeeneennan 182 254 436 1028. .0uiennn 179 257 436 TABLE 4. —— INDEXES OF WEEKLY WAGES OF WORKERS 1929 EERE EEE 196 265 461 IN Five INDUSTRIES (1914=100) Data from Wirtschaftsstatistisches Jahrbuch der Arbeiter- k len. ammer Wien Building | Furniture Moving and wether tn . . Year industry! | industry! | Bakeries? storage the metal Sinem. The end comes when the whole capital is trades? | industry? consumed. . . . 1922... 51 41 .. .e .e The development of public expenditures in 1023... 04 70 04 123 758 Austria may be seen in Tables 2 and 3. They 1924...| 124 03 114 169 go show a rapid upswing. Table 2 gives the amount 1925... 147 101 134 176 120 of public expenditures of the federal government 926---| 147 106 136 184 120 . eo qe . 1927... 153 108 150 197 120 of Austria and of the municipality of Vienna per 1928... 153 117 156 206 143 1029...| 16 122 16 216 © | 1 TABLE 3. — INDEXES OF PusLIC EXPENDITURES, PER rose. 1s 128 60 216 iy HeADp OF POPULATION, OF ALL MUNICIPALITIES IN AUSTRIA (1923 =100) 1 Data from Wirtschaftsstatistisches Jahrbuch der Arbeitere kammer Wien. Year Index 2 Data from Statistisches Handbuch fiir die Republik Oester- 1023. vs snennnnnnn. 100 reich, Bundesamt fiir Statistik. 1024. cee vennnnnnns 171 . . . 1025. vuueeneannn. 230 tries, the wages in the building industry ad- 19026... .uuinnnn.. 296 vanced most conspicuously. (The index in 1930 Tous RRR RALELE 355 was 172.) Regarding an allegedly common wage : 020. REESE Sos practice in the building industry in the United 1030. + evra, 380 States (the ‘“kick-back”), it is to be mentioned that in Austria the contracted wage and the wage Data from Wirtschaftsstatistisches Jahrbuch der Arbeiter- which is paid have always been equal. For a kammer Wien. judgment of the wage increase in terms of real income it should be remembered that the index (with the base 1914) of the cost of living (in the annual averages) never exceeded 111. Forcing up wage rates forced up unemploy- head of population. Table 3 shows the expendi- tures of all Austrian municipalities per head of population expressed in indexes with the base 1923. The zeal of all public bodies in increasing ment (Table 5). But why should it lead to cap- their activities was truly magnificent. See Statistisches Handbuch fiir die Republik Oesterreich, The numerous — at least at that time numer- Bundesamt fiir Statistik, 1925 to 1031. ===== PAGE 6 ===== 18 THE REVIEW OF ECONOMIC STATISTICS ital consumption? Because of the simple fact increase in labor cost due to social benefits that industries do not shut down before the losses amounted to from 14 to 30 per cent of the pay from operation considerably exceed the losses roll. Figures showing the cost of three items of social benefits are given in Table 7. Austria paid TABLE 5. — UNEMPLOYMENT AS A PERCENTAGE OF for her noble spirit and liberal social-mindedness THE WORKING POPULATION out of her capital. Year Per cent Paying unearned dividends. That the corpora- 1025. «tveenenennennns 9.7 tions paid dividends although they had zero or 1026... iii. 14.1 RE EERE EERY 15-5 TABLE 7. — SocIAL INSURANCE COSTS 1028... iii I 58 (Unit: million schillings) 2 0 7-0 JOA 17.0 T1030. ci iiin iin, 21.7 Illness Unemployment | _ Old-age Year insurance insurance insurance* Data from Bericht der Wirtschaftskommission (Vienna, 1931)- T1024. cveeenennn 64 ce from non-operation. That means that industry 1925........... 86 126 goes on producing at a loss, consuming its capital i EEERRERRE 89 ro ; by borrowing (see Table 6), or by omitting roa Sa ts he 0 renewals. ' 1020. cc eeerannn 127 158 24 TABLE 6. — LOANS, ADVANCES, AND INVESTMENTS OF T0380 cereenen 123 207 32 ALL AUSTRIAN BANKS EXCLUSIVE OF THE AUSTRIAN NatioNnaL BANK Data from Wirtschaftsstatistisches Jahrbuch der Arbeiter- (Unit: million schillings) kammer Wien. } } * Exclusive of old-age pensions of white-collar employees. Year Amount 1 Transfer of benefit-recipients to old-age insurance scheme. 1025. cove eecnnanns 2.104 1026... .eiiieeenn 2.930 negative profits had nothing to do with social- oar ARREARS Sq mindedness. It had to do with the banking situ- 1070. «vrs 3.058" ation. The banks had their portfolios filled up T030. + vv ueeannnnns 3.636* with shares of industrial corporations. In order to avoid having their assets fall they had to prop Data from Statistisches Handbuch fiir die Republik Oester- the stock prices. To cut dividends is to cut stock reich, Bundesamt fiir Statistik. prices. Hence they paid dividends out of capital. The figures for 1929 and 1930 are not strictly comparable The interest of hired business managers in main- with the former ones because of the disappearance of the Boden Credit Anstalt, one of the largest banks. taining their jobs and their salaries worked in the same direction. Forcing up social benefits. Austria has always Keeping industries going. Similar considera- been the most progressive country in the world. tions induced banks and business managers to There is compulsory illness insurance, accident keep industries going, even if the loss from opera- insurance, unemployment insurance, unemploy- tion surpassed the loss from non-operation. ment benefits, old-age pensions. There is oblig- There were, in addition, certain scruples which atory bonus for overtime, and a bonus for Sun- banks and government had about the social day work. Children’s labor is forbidden, women’s responsibility for the unemployment resulting night labor is forbidden. Safety and sanitationin from the shutdown of factories. They preferred plants are strictly controlled. Every worker is to avoid political attacks and kept industries entitled to paid yearly vacations, also the first going, covering their losses out of capital. days of illness have to be paid for by the em- Consumers’ demand. We have discussed, so ployer. Clerks are dismissed only after oneto far, sufficient causes of a consumption of capital twelve months’ notice and receive, moreover, a in Austria. It remains to be shown that the de- dismissal fee in the amount of one to twelve cline in capital was indeed paralleled by a main- months’ salary. tenance or even rise of the level of consumption. It is difficult to give exact figures of the “social The increase in the consumption of certain burden” on industry. For individual firms, the commodities, as compared with the years of war ===== PAGE 7 ===== THE CONSUMPTION OF CAPITAL IN AUSTRIA 19 and inflation, was considerable. In comparison not impair the value of equipment if the comple- with 1925, we find in 1929 the consumption of mentary factors react flexibly through lowering flour increased by 14 per cent, sugar by 19 per costs of production; e.g., if a foreign market is cent, potatoes by 52 per cent, colonial goods lost by an increase in tariffs, and other, less (coffee, tea, spices, etc.) by 49 per cent, tobacco advantageous, markets are to be sought, flexible by 16 per cent. The indexes of total sales of con- wages would reduce the depreciation of the fixed sumers’ goods, published by the Institut fiir equipment. “Sticky” wages (not to speak of in- Konjunkturforschung (base: average 1923-30) creasing wages) involve, therefore, capital con- were, in 1929, for consumers’ goods in general, sumption. Hence it is futile to attempt to im- 119; for food, 111; for clothes, 123; for shoes, 114; pute appropriate shares of the loss in capital for furniture and household articles, 114. values to tariff policy on the one hand and to Another indication might be seen in the status wage policy on the other. of the consumers’ goods industries. It is indeed Similarly, no attempt has been made, or could striking that breweries and sugar refineries suc- be made, to estimate the parts which were played ceeded relatively well in maintaining their by each of the causes contributing to the capital capital. Protection played its part, but so also consumption proper. Have the governments and did subsidized consumption, in limiting the loss municipalities, or have the unemployed, or has of capital in these industries to ten per cent. labor, or have the stock owners or their officers, Qualifications. We have to admit that the eaten up capital, and how much has each of statistics of capital values of the corporations them eaten up? No answer is possible. If all have their defects. But whatever allowances be together consume too much to leave the capital made, the fact of an enormous loss remains; base intact, one cannot determine by how much and — what is more significant — it was not a the portion of each was excessive. If several mere cyclical phenomenon. One of the major factors raise costs of production, it is an idle shortcomings of the method applied is that no question which factor raised them above prices. measure of the physical status of capital equip- With lower taxes, wages might be tolerable, with ment is available. The length of the time-lag of lower wages, taxes might be tolerable; together, physical deterioration behind value destruction they might be high enough to prevent main- may be considerable, but there is no doubt that tenance of capital. the equipment must be impaired after so long a time of decreasing values with rigid costs of CONCLUSION reproduction. Austria was successful in pushing through It is, of course, not possible to separate the loss policies which are popular all over the world. due to independent changes in demand from that Austria has most impressive records in five lines: due to the consumption of capital. The two she increased public expenditures, she increased factors are linked in two ways: (1) capital con- wages, she increased social benefits, she increased sumption brings with it secondary changes in bank credits, she increased consumption. After demand which affect the value of existent equip- all these achievements she was on the verge ment; (2) changes in demand of small order need of ruin.