‘Depression’, wrote Thorstein Veblen shortly after the end of the Great Depression of 1873–96, ‘is primarily a malady of the affections of the business men. That is the seat of the difficulty. The stagnation of industry and the hardship suffered by the workmen and other classes are of the nature of symptoms and secondary effects’. To be efficacious remedies must, therefore, be such ‘as to reach this emotional seat of the trouble and . . . restore profits to a “reasonable” rate’.footnote1 Between 1873 and 1896 prices had fallen unevenly but inexorably, in what David Landes has called ‘the most drastic deflation in the memory of man’. Along with prices, the rate of interest had dropped ‘to the point where economic theorists began to conjure with the possibility of capital so abundant as to be a free good. And profits shrank, while what was now recognized as periodic depressions seemed to drag on interminably. The economic system appeared to be running down’.footnote2

In reality, the economic system was not ‘running down’. Production and investment continued to grow not just in the newly industrializing countries of the time (most notably, Germany and the US) but in Britain as well—so much so that, writing at the same time as Landes, another historian could declare the Great Depression of 1873–96 nothing but a ‘myth’.footnote3 Nevertheless, as Veblen suggests, there is no contradiction in saying that there was a ‘great depression’ at a time of continuing expansion in production and investment. On the contrary: the great depression was not a myth precisely because production and trade, in Britain and in the world economy at large, had continued to expand too rapidly for profits to be maintained at what was considered a ‘reasonable’ rate.

More specifically, the great expansion of world trade from the middle of the nineteenth century had led to a system-wide intensification of competitive pressures on the agencies of capital accumulation. An increasing number of business enterprises, from an increasing number of locations across the UK-centred world economy, were getting in one another’s way in the procurement of inputs and disposal of outputs, thereby destroying one another’s previous ‘monopolies’—that is, their more-or-less exclusive control over particular market niches.

This shift from monopoly to competition was probably the most important single factor in setting the mood for European industrial and commercial enterprise. Economic growth was now also economic struggle—struggle that served to separate the strong from the weak, to discourage some and toughen others, to favour the new . . . nations at the expense of the old. Optimism about the future of indefinite progress gave way to uncertainty and a sense of agony.footnote4

But then, all of a sudden, as if by magic,