The increase in land value, based on speculation, results in lower earnings both for capital and labor and stifles production. As the land value growth pushes the production margin (or cultivation margin) beyond the norm, both labor and capital have to “accept a smaller return, or […] to cease production” (262). If production stops, it impacts other parts of the industry, such as demand. As production and exchange become partly disconnected from each other, the relationship between production and consumption will be out of balance, such as overproduction or overconsumption. An economic depression is the result.

Thus, such an increase in land value is also “the main cause of those periodical industrial depressions” that occur in every industrialized country (261). Of course, there are also other, smaller causes because of the increasingly complex industrialized society in which “geographically or politically separated communities blend and interlace their industrial organizations in different modes and varying measures” (263).

Economic depressions last until labor becomes more efficient; capital and labor work to produce smaller returns; the land rent growth through speculation stops. However, neither wages nor interest fully recover from losing their ground and gradually tend “toward their minimum” (279).