The Gold Deflation, France, and the Coming of the Depression, 1919–1932

The dissertation argues for a distinction between two varieties of price deflation, one offset by declining costs, the other induced by declining profits. Where the second type of deflation occurs, the usual result is contraction of output, income, and employment. We can roughly measure the relative amounts of cost and profit deflation underway in different situations. Price declines usually aggravate profit downturns, and in some cases directly cause them. An international profit deflation that (except for its milder consequences) anticipated that of 1929 to 1932 occurred during 1891 to 1896.