Each process, Inflation and Deflation alike, has inflicted great injuries. Each has an effect in altering the _distribution_ of wealth between different classes, Inflation in this respect being the worse of the two. Each has also an effect in overstimulating or retarding the _production_ of wealth, though here Deflation is the more injurious. The division of our subject thus indicated is the most convenient for us to follow,--examining first the effect of changes in the value of money on the distribution of wealth with most of our attention on Inflation, and next their effect on the production of wealth with most of our attention on Deflation. How have the price changes of the past nine years affected the productivity of the community as a whole, and how have they affected the conflicting interests and mutual relations of its component classes? The answer to these questions will serve to establish the gravity of the evils, into the remedy for which it is the object of this book to inquire. I.--CHANGES IN THE VALUE OF MONEY, AS AFFECTING DISTRIBUTION For the purpose of this inquiry a triple classification of Society is convenient--into the Investing Class, the Business Class, and the Earning Class. These classes overlap, and the same individual may earn, deal, and invest; but in the present organisation of society such a division corresponds to a social cleavage and an actual divergence of interest. 1. _The Investing Class._ Of the various purposes which money serves, some essentially depend upon the assumption that its real value is nearly constant over a period of time. The chief of these are those connected, in a wide sense, with contracts for the _investment of money_. Such contracts--namely, those which provide for the payment of fixed sums of money over a long period of time--are the characteristic of what it is convenient to call the _Investment System_, as distinct from the property system generally.