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The 
American  Economic  Review 


VOLUME  XI 


BOARD  OF   EDITORS 

A.  E.  Cance  D.  A.  McCabe  C.  C.  Plehn 

W.  E.  Hotchkiss  J.  H.  Parmelee  O.  M.  W.  Spragtje 

MANAGING  EDITOR 
Davi6  R.  Dewey 


NEW  HAVEN,  CONN. 
AMERICAN    ECONOMIC  ASSOCIATION 

1921 


Copyright  1921 
American  Economic  Association 


£26 
v. II 

COp>  2 


CONTENTS 
ARTICLES:  page 

Business   Regulation,  The  Economic   Basis   for.  . .  .Rexford  G.  Tug  well 643 

Cost  of  Living  as  a   Factor  in   Recent  Wage  Ad- 
justments in  the  Book  and  Job  Branch  of  the 

Chicago    Printing    Industry F.   H.   Bird 622 

Family  Budgets  and  Wages Margaret   Loomis    Stecker  447 

Farm   Loan   System,   Recent   Developments   in  the 

Federal  George    E.   Putnam 427 

Farmers'  Cooperative  Associations   Asher  Hobson   221 

Federal  Reserve  Banks,  The  Efficacy  of  Changes  in 

the  Discount  Rates  of  the  Anna  Youngman   466 

Federal  Reserve  Banks,  Discount  Policy  of O.  M.  W.  Sprague 16 

Federal   Reserve  Policy    A.  C.  Miller 177 

Grain    Standardization    H.  Bruce  Price   227 

Great  Britain  from  the  Armistice  to  the  Beginning 

of  1921,  Industrial  Situation  in Herbert  Feis   252 

Labor  Contract,   The  Collective Theodore    M.   Ave-Lallemant  237 

Marketing  of  Agricultural  Products   James  E.  Boyle   207 

Marketing  Efficiency,   Criteria   of Fred   E.   Clark 214 

Merchant  Marine  Act  of  1920,  The  Failure  of  the.  .E.    S.   Gregg 601 

Post-War   Outlook,  The    Herbert  J.  Davenport.  ...       1 

Prices,  Stabilization  of   B.  H.  Hibbard 231 

Production,  An  Index  Number  of W.    W.    Stewart 57 

Production,  The  Theory  of Leo  Wolman    37 

Railway  Service  and  Regulation  in  Port  Terminals. C.   O.   Ruggles 438 

N  Strikes,   Cycles   of    Alvin   H.  Hansen 616 

Wages,  The  Movement  of  Real,   1890-1918 Paul  H.  Douglas  and 

Frances  Lamberson   409 

Webbs'    Constitution    for    the    Socialist    Common- 
wealth, The   John  R.  Commons 82 

COMMUNICATIONS: 

Marketing,  Integration  in    L.  D.  H.  Weld 93 

Marketing,  Integration  in    Lewis  H.  Haney 487 

Stabilized   Dollar,   A    Harold  L.  Reed 91 

Wages,  Budgets,  Cost  of  Living Victor   Rosewater    659 

War   Burden,   Shifting  the    Alvin   H.   Hansen 486 

ARTICLES  IN  PROCEEDINGS    (MARCH,  1921):  (in  Supplement) 

Coal   Industry,   Costs,   Prices,   and    Profits   of   the 

Bituminous    David  L.  Wing 74 

,  An  Introductory  Survey  of  the  Bitu- 
minous     Carl  E.  Lesher  49 

The     Irregular     Operation     of     the 


Bituminous    F.  G.  Tryon   57 

The   Transportation   Problem   in   the 


Bituminous    A.  G.  Gutheim 91 

Coal,  Selling   George  H.  Cushing   85 

Economic  Theory,  A  Revaluation  of  the  Traditional. Carl  E.  Parry 123 

Elementary   Economics,  The  Teaching  of — Round  Table   Conference 171 

Non-Euclidean  Economics,  Soundings  in John    Maurice    Clark....  132 

Ore  Engineer,  Comments  of  an Arthur  J.  Mason 106 

Railroad  Situation,  An  Appraisal   Frank   Haigh   Dixon 5 

Taxation  of  Income  and  Profits,  Federal Fred  Rogers  Fairchild.  . . .  148 

Trade    Balance    of    the    United    States    since    the 

Armistice,  The  Foreign  John   H.   Williams 22 

ARTICLES  IN  SUPPLEMENT  (DECEMBER,  1921): 
What  Can  a  Man  Afford?     (Karelsen  Prize  Essay,  First  Prize) 

Paul   H.   Douglas   and   Dorothy  Douglas 
What  Can  a  Man  Afford?     (Karelsen  Prize  Essay,  Second  Prize) 

Carl  S.  Joslyn 


REVIEWS  OF  BOOKS:  page 

Ansiaux,  Traite  d'Economie  Politique.     By  C.  E.  Persons 665 

Aronovici,  Housing  and  the  Housing  Problem.     By  J.   Ford 533 

Bachi,  L'ltalia  Economica  nel  1919.     By  R.  F.  Foerster 498 

Baker,  The   New   Industrial    Unrest.     By  C.   W.    Doten 133 

Baste,  History  and  Operation  of  Fraternal  Insurance.     By   H.  J.  H 723 

Beard,  History  of  the  American  Labor  Movement.     By  G.  G.  Groat 122 

Bell,  Opening  a  Highway  to  the  Pacific.     By  I.  Lippincott 670 

Bernhardt,  Government  Control  of  the  Sugar  Industry.    By  H.  B.  Vanderblue  300 
,  A  Statistical  Survey  of  the  Sugar  Industry.     By  H.  B.  Vander- 
blue   685 

Bing,  War-Time  Strikes  and  Their  Adjustment.     By  C.  W.  Doten 515 

Bogart  and  Thompson,  The  Industrial  State.     By  1.  Lippincott 667 

Bondhaji,  Le  Mai  Social  et  ses  Remedes.     By  G.  B.  Mangold 134,  334 

Bourbeau,  La   Bourse  des  Valeurs  de  Paris  Pendant  la  Guerre.     By   A.  M. 

Sakolski    688 

Boyle,  Agricultural  Economics.     By  A.  E.  Cance 676 

,  Speculation  and  the  Chicago  Board  of  Trade.     By  H.  B.  Vanderblue  301 

Browne,  Tea.     By  W.  M.  Duffus 504 

Bruce,  The  Non-Partisan  League.     By  G.  M.  Janes 668 

Burch,  American  Economic  Life.     By  A.  C.  Ford 490 

Butler,  Fifty  Years  of  Iron  and  Steel.     By  I.  L 671 

Carlton,  History  and  Problems  of  Organized  Labor.     By  G.  G.  Groat 516 

Carthage,   Retail  Organization   and  Accounting  Control.      By   M.  J.   S 506 

Carver,  Elementary  Economics.     By  C.  E.  Persons 274 

Chapin,  Field  Work  and   Social   Research.     By  G.  B.  Mangold 534 

Chapman,  Trade  Tests.     By   C.   L.   Stone 506 

Cheney,  An  Introduction   to  the  Industrial  and  Social   History  of  England. 

By  C.  D 219 

Cherington,   Elements  of  Marketing.     By  H.   B.   Vanderblue 293 

Cole,  Social  Theory.     By  H.  P.  Fairchild   271 

Collins,  Straight  Business  in  South  America.     By  H.  R.  T 297 

Comerford,  The  New  World.     By  G.  L.   A 135 

Commons,  Trade  Unionism  and  Labor  Problems.     By  G.  M.   J 516 

Commons  and  Andrews,  Principles  of  Labor  Legislation.     By  G.  E.  B 305 

Commons  and  others,  Industrial  Government.     By  D.  A.   McCabe 702 

Cotter,  United  States   Steel.     By  G.   M.   Janes 704 

Cunningham,  Products  of  the  Empire.     By  W.  M.  Duffus 505 

Cunnison,  Economics.     By  C.   E.   P 490 

Curtler,  The  Enclosure  and  Redistribution  of  Our  Land.     By  L.  C.  Gray.  .  .  .  494 

Dalton,  Inequality  of  Incomes.     By  Wr.   I.   King 100 

Damiris,  Le  Systeme  Monetaire  Grec  et  le  Change.     By  E.  W.  K 707 

Davis,  Immigration  and  Americanization.     By  A.  B.   Wolfe 130 

Dealey,  Sociology.     By  H.   P.   Fairchild    271 

Dewing,  The  Financial  Policy  of  Corporations.     By  S.  E.   Howard 694 

Douglas,  P.  H.     American  Apprenticeship  and  Industrial  Education.     By  D. 

A.    McCabe    *.  ...  705 

Douglas,  A.  W.,  Merchandising  Studies  of  the  States.     By  H.  B.  Vanderblue  297 

Dow,  Introduction  to  the  Principles  of  Sociology.     By  H.  P.  Fairchild -'71 

Drachsler,  Democracy  and  Assimilation.     By   R.   F.   Foerster 532 

Duncan,  Marketing.    By  H.  B.  Vanderblue 293 

Bates,  Training  for  Store  Service.     By  B.  M.  Cannon 507 

Economic  History  of  Chosen.     By  A.  P.  W 501 

Economic   History  of  Manchuria.     By   A.   P.  W 501 

Eggleston  and    Robinson,  Business  Costs.     By  M.  J.   Shugrue 508 

Eldridge,  Social  Legislation  in    Illinois.     By  G.  B.  Mangold 716 

Fish,  How  to  Manage  Men.     By   W.  J.   Matherly 298 

Fisher,  C.  B.,  The   Fanners'    Union.      Bv    I.   Lippincott 677 

Fisher,  I.,  Stabilizing  the  Dollar.     By  C.  A.  P 125 

Foerster,  The  Italian   Emigration  of  Our  Times.     By  H.  P.  Fairchild 329 

Ford,  The  Foreign  Trade  of  the    United   Slates.      By  H.   R.  T 113 

Friday,   Profits,  Wages,  and   Prices.     By  W.   I.  King  140 

Fhobt,  Labor  and    Revolt.     By  D.  A.  McC 305 

Goodrich,  The  Frontier  of  Control.     By   I).  A.   McCabe 513 

Gregory,  Foreign  Exchange  Before,  During,  and  After  the  War.     By  M.  J.  S.  707 

iv 


PAGE 

Haig,  Adams,  etc-.,  The  Federal  Income  Tax.     By  C.  C.  Plehn 523 

Hammond  and  .Jexks,  Great  American   Issues.     By   F.  H.  Streightoff 714 

Harrisox,  Cost  Accounting  to  Aid   Production.     By   M.  .(.  Shugrue 691 

Hawtre v,   Currency   and   Credit.     By   C.   A.    P 126 

Heaton,  Yorkshire   Woollen  and  Worsted   Industries.     By   A.   P.   Usher 49,' 

Hermberg,  Der  Kampf  urn  den  Weltniarkt.     By  H.   It.  Tosdal 686 

Hetheringtox,   International   Labour   Legislation.     By   D.   A.   McCabe 123 

Hodge  and  McKinsey,  Principles  of  Accounting.     By  M.  J.  Shugrue 117 

Howe,  Denmark,  a  Cooperative  Commonwealth.     By  A.  E.  Cance 503 

Huebner,   Marine   Insurance.     By  A.   L.    Bishop 719 

Hyndman,  The  Evolution  of  Revolution.     By  G.  B.  L.  Arner 538 

Ives,  The  Pere  Marquette  Railroad  Company.     By  I.  Lippincott 292 

Jordan  and  Harris,  Cost  Accounting.     By  M.  J.  S 119 

Keir,  Manufacturing  Industries  in  America.     By  I.  Lippincott   679 

Kierxax,  British  War  Finance  and  the  Consequences.     By  C.   C.  Plehn 527 

Kirkaldy,  Wealth:   Its  Production  and  Distribution.     By  C.  E.   P 491 

Kniffix,  The  Business  Man  and  His  Bank.     By  W.  W.  S 316 

Koehler,  The  Passing  of  the  Gold  Reserve.     By  W.  W.  S 316 

Labor  Terminology.    By  C.  W.  Doten 518 

Laing,  An  Introduction  to  Economics.     By  C.   E.  P 277 

Laughlix,  Banking  Progress.     By  W.   W.  Stewart    519 

Leigh,  The  Human  Side  of  Retail  Selling.     By   A.   Hobson 302 

Lixcolx,  Central  Electric  Light  and  Power  Stations.     By  A.  S.  Dewing. . .  .  288 

Lippixcott,  Economic  Development  of  the  United  States.     By  A.  C.  Ford....  499 
Litman,   Prices   and   Price   Control   in   Great   Britain   and  the   United   States 

during  the  World  War.     By  M.  S.  Wildman  317 

Loria,  Karl  Marx.     By  G.  L.  A 539 

Lyoxs,  Wages  and  Empire.     By  A.  E.  Cance 512 

McPhersox,  The  Flow  of   Value.     By  W.   H.   Hamilton 98 

Marshall  and  Lyox',  Our  Economic  Organization.     By   E.   W.  Goodhue 663 

Mead,  E.  S.,  Corporation  Finance.     By  F.  E.  Armstrong 120 

Mead,  E.,  Helping  Men  Own  Farms.     By  A.  J.  Dadisman 110 

Mitscherlich,   Skizze   einer   Wirtschaftsstufentheorie.     By   E.    Schwiedland.  .  672 

Montgomery,  Tax  Procedure,  1921.     By  C.  C.  Plehn   320 

Muller-Lyer,  The  History  of  Social  Development.     By  H.  P.  Fairchild 271 

Myers,  Mind  and  Work.     By  C.  L.  Stone 517 

Naylor,  Trade   Associations.     By  H.   R.   Tosdal 509 

Xewsholme,  Public  Health  and  Insurance.     By  C.  E.  Turner 333 

Xotz  and  Harvey,  American  Foreign  Trade.     By  H.  R.  Tosdal 687 

Oakey,  Principles  of  Government  Accounting  and  Reporting.     By  M.  J.  S...  510 

O'Briex,  Mediaeval   Economic  Teaching.     By   J.   A.    Ryan 106 

Olds,  The  High  Cost  of  Strikes.     By  X.  R.  Whitney . 69S 

Patrick,  The  Psychology  of  Social  Reconstruction.     By  C.  L.  Stone 136 

Pepper,  American  Foreign  Trade.     By  H.   R.   T. 114 

Phillips,   Bank  Credit.     By   W.    A.    Scott    313 

Plehn,  Introduction  to  Public  Finance.     By   R.   S.  Tucker 325 

Postgate,  The   Workers'   International.     By  G.   B.   L.   A 724 

Prato,  Fatti  e  dottrine  economiche  alia  vigilia  de  1848.     By  R.  F.  F 107 

Rathexau,  The  Xew  Society.     By  G.  B.  L.  Arner " 674 

Rosexkampf,  Bookkeeping  Theory  and  Practice.     By  M.  J.  S 120 

Ross,  E.  A.,  The  Principles  of  Sociology.     By  H.  P.  Fairchild 102 

Ross,  V.,  The  Evolution  of  the  Oil  Industry.    'By  I.  Lippincott 287 

Rush,  The  Port  of  Xew  York.     By  C.  O/Ruggles 292 

Rushmore,  Social  Workers'  Guide.     By  G.  B.   Mangold 718 

Rishforth,  The  Indian  Exchange  Problem.     By  M.  J.  S 708 

Russell,  Bolshevism.     By  G.  L.   Arner    338 

Ryan  and  Hussleix-,  The  Church  and  Labor.     By  D.  A.  McCabe l.'l 

St.  Clair,  The  Physiology  of  Money  and  Credit.     By  W.  W.  S 318 

Sakolski,  Elements  of  Bond  Investment.     By  S.   E.   Howard 692 

Saliers,  Accounts  in  Theory  and  Practice.     By  M.  J.  Shugrue 117 

Shugrue,  Problems  in  Foreign  Exchange.     By  E.  M.  Patterson 522 

Smith,  The   World's  Food  Resources.     By  A.   B.   Wolfe 282 

Spurr,  Political  and  Commercial  Geology.     By  A.  L.  Bishop 679 

Stamp,  Fundamental  Principles  of  Taxation.'    By  R.   S.  Tucker 710 


Standards  of  Living.     By  F.   H.   S 320 

Steixer,  Some  Aspects  of  Banking  Theory.     By  W.  W.  Stewart    319 

Studeksky,  Teachers'  Pensions  in  the  United  States.    By  H.  J.  Harris 7^1 

Tannenbauji,  The  Labor  Movement.     By  F.  T.  Stockton  701 

Tead  and  Metcalf,  Personnel  Administration.     By  H.  C.  Link  115 

Truchy,  Cours  d'Economie  Politique.     By  C.  E.  Persons 666 

Tucker,  A  History  of  Imperialism.     By  G.  L.  A 339 

Veblen,  The  Place  of  Science  in  Modern  Civilization.     By  W.  H.  Hamilton..   268 
Walling,  Sovietism,  the  A  B  C  of  Russian  Bolshevism.     By  G.  L.  Arner....   140 

Wallis  and  Wallis,  Prices  and  Wages.     By  W.  I.   King 708 

Walsh,  The  Problem  of  Estimation.     By  W.  I.  King 540 

Webb,  Grants  in  Aid.     By  C.  C.  P 530 

,  Industrial  Democracy.     By  B.  M.  Janes 339 

Wilcox,  The  Electric  Railway  Problem.     By  J.  Bauer   682 

Williams,  J.   H.,   Argentine   International  Trade  under   Inconvertible   Paper 

Money,  1800-1900.     By  H.  G.  Brown   308 

Williams,  M.     The  Social  Interpretation  of  History.     By  J.  G.  Brooks 537 

Winter,   Marine   Insurance.     By  A.   L.   Bishop 719 

TITLES  OF  NEW  BOOKS: 

Accounting,   Investments,   and   the   Exchanges 115,  298,  506,  688 

Agriculture,   Mining,   Forestry,   and   Fisheries    109,  282,  503,  676 

Capital  and  Capitalistic  Organization   304,  511,  698 

Economic  History  and  Geography  105,  279,  492,  670 

General  Works,  Theory  and  Its  History    98,  268,  490,  665 

Insurance  and   Pensions    138,  333,  536,  723 

Labor  and  Labor  Organizations   122,  304,  512,  70i 

Manufacturing    Industries     , 112,  288,  504,  681 

Money,  Prices,  Credit,  and  Banking    125,  308,  519,  707 

Pauperism,  Charities,  and  Relief  Measures    336,  723 

Population  and  Migration    130,  329,  532.  713 

Public  Finance,  Taxation,  and  Tariff   128,  320,  523,  712 

Socialism  and  Cooperative  Enterprises    138,  337,  537,  724 

Social  Problems  and  Reforms  130,  331,  533,  716 

Statistics  and  Its  Methods    140,  540,  725 

Trade,  Commerce  and   Commercial  Crises    113,  293,  505,  6S5 

Transportation  and  Communication    112,  291,  504,  684 

DOCUMENTS,  REPORTS,  AND  LEGISLATION : 

California  Legislative  Report  on  Public  Utilities.  .C.   O.   Ruggles 550 

Corporations    544,  730 

Grain  Trade,  Report  on  the Floyd  L.  Vaughan 340 

Industries  and  Commerce   144,  340,  544,  727 

Insurance    349 

Labor     146,  346,  552,  731 

Massachusetts    Special   Commission   on   the    Neces- 
saries of  Life,  Report  of  the Paul  H.  Douglas   553 

Money,  Prices,  Credit,   and  Banking 147,  348,  553,  733 

New  York  Public  Service  Commissions  Law,  Recent 

Amendments  of  the   John  Bauer  544 

Population     735 

Public  Finance   147,  348,  557,  734 

Public   Utilities    146,  34(5 

Rural  Credits,  Report  of  the  Committee  on Alexander  E.  Cance 555 

Wool-Growing    Industry,    Report    of    the    United 

States  Tariff  Commission  on  the Abraham  Berglund  727 

PERIODICAL  ABSTRACTS: 

Accounting.     By  Martin  J.  Shugrue    163,  364,  571,  750 

Agricultural  Economics.     By  A.  J.  Dadisman 153,  356,  563,  740 

Commerce.     By  H.   R.  Tosdal    158,  360,  567,  746 

Economic    History,   Foreign    354,  562,  739 

,  United  "States.     By  Amelia  C.   Ford 151,  353,  561,  738 


PAGE 

Insurance  and  Pensions.     By  Henry  J.  Harris 169,  379,  582,  756 

Labor  and  Labor  Organizations.     By  David  A.  McCabe 163,  367,  572,  751 

Money,  Prices,  Credit,  and  Banking.     By  Chester  A.  Phillips 167,  372,  576 

Pauperism,  Charities.     By  George  B.  Mangold    171,  382,  584,  758 

Population  and  Migration.     By  A.  B.  Wolfe 169,  378,  581 

Public  Finance.     By  Charles  P.  Huse    374,  578,  755 

Public  Utilities.     By  Charles  S.  Morgan    160,  362,  568,  747 

Railways  and  Transportation.     By  Julius   H.  Parmelee 155,  357,  565,  742 

Socialism     " 383,  584,  759 

Statistics.     By  Horace   Secrist    383,  585,  759 

Theory.     By   Walton   H.   Hamilton    149,  351,  558,  736 

EIGHTEENTH    LIST     OF     DOCTORAL    DISSERTATIONS     IN     POLIT- 
ICAL ECONOMY    388 

NOTES     172,  399,  589,  762 


CONTRIBUTORS 

Leading  articles  are  marked  (a);  communications  (c)  ;  papers  read  at  the  annual 
meeting,  published  in  the  Supplement  separately  paged,  are  marked  (s)  ;  document 
notes   (d)  ;  periodical  abstracts  (p) ;  and  all  others  are  reviews. 


Armstrong,  F.   E.,   120. 

Arner,  G.  L.,  135,  140,  338,  339,  538,  539, 

674,  724. 
Ave-Lallemant,  T.  M.,  237   (a). 
Barnett,  G.  E.,  305. 
Bauer,  J.,  544   (d),  682. 
Berglund,  A.,  727    (d). 
Bird,  F.  H.,  622  (a). 
Bishop,  A.  L.,  679,  719. 
Boyle,  J.  E.,  207   (a). 
Brooks,  J.  G.,  537. 
Brown,  H.  G.,  308. 
Cance,  A.  E.,  503,  512,  555    (d),  676. 
Cannon,  B.  M.,  507. 
Clark,  F.  E.,  214  (a). 
Clark,  J.  M.,  132  (s). 
Commons,  J.  R.,  82   (a). 
Cushing,  G.  H.,  85  (s). 
Dadisman,  A.  J.,  110,  153   (p),  356   (p), 

563   (p),  740   (p). 
Davenport,  H.  J.,  1   (a). 
Day,  C,  279. 
Dewing,  A.  S.,  288. 
Dixon,  F.  H.,  5    (s). 
Doten,  C.  W.,  133,  515,  518. 
Douglas,  P.  H.,  409  (a),  553  (d). 
Duffus,  W.   M.,  504,  505. 
Fairchild,  F.  R.,  148   (s). 
Fairchild,  H.  P.,  102,  271,  329. 
Feis,  H.,  252  (a). 
Foerster,  R.  F.,  107,  498,  532. 
Ford,  A.  C,  151   (p),  353   (p),  490,  499, 

561   (p),  738  (p). 
Ford,  J.,  533. 
Goodhue,  E.  W.,  663. 
Gray,  L.  C,  494. 
Gregg,  E.  S.,  601   (a). 
Groat,  G.  G.,  122,  516. 
Gutheim,  A.  G.,  94   (s). 
Hamilton,  W.   IL,  98,   149   (p),  268,  351 

(p),  558    (p),  736    (p). 
Haney,  L.  H.,  487  (c). 


Hansen,  A.  H.,  486   (c),  616   (c). 
Harris,  H.  J.,  169  (p),  379  (p),  582  (p), 

721,  723,  756   ())). 
Hibbard,  B.  H.,  231   (a). 
Hobson,  A.,  221   (a),  302. 
Howard,  S.*  E.,  692,  694. 
Huse,  C.  P.,  374  (p),  578  (p),  755   (p). 
Janes,  G.  M.,  339,  516,  668,  704. 
Kcinmerer,  E.   W.,  707. 
King,  W.  I.,  100,  140,  540,  708. 
Lamberson,  F.,  409   (a). 
Leffingwell,   R.   C,   30    (a). 
Lesher,  C.  E.,  49   (s). 
link,  H.  C,  115. 
Lippincott,    L,    287,   292,   667,    670,    671, 

677,    679. 
McCabe,   D.   A.,   123,   124,   163    (p),  305, 

367    (p),  513,  572    (p),  702,  705,  751 

(P). 
Mangold,  G.  B.,  134,  171    (p),  382   (p), 

534,  584  (p),  716,  718,  758   (p). 
Mason,  A.  J.,  106  (s). 
Matherlv,  W.  J.,  298. 
Miller,  A.  C,  177   (a). 
Morgan,  C.  S.,  160  (p),  362  (p),  568  (p), 

747  (p). 
Parmelee,  H.  J.,  155    (p),  357    (p),  565 

(p),  742  (p). 
Parry,  C.  E.,  123   (s). 
Patterson,  E.  M.,  522. 
Person,  H.  S.,  70   (a). 
Persons,  C.  E.,  274,  277,  490,  491,  665,  666. 
Phillips,  C.A.,  125,  126,  167  (p),  372  (p), 

576   (p). 
Plehn,  C.  C,  320,  523,  527,  530. 
Price,  H.  B.,  227  (a). 
Putnam,  G.  E.,  427  (a). 
Reed,  H.  L.,  91    (c). 
Rosewater,  V.,  659   (c). 
Ruggles,  C.  O.,  292,  438  (a),  550  (d). 
Rvan,  J.   A.,  106. 
Sakolski,  A.  M.,  688. 


Schwiedland,  E.,  672.  Tugwell,  R.  G.,  643  (a). 

Scott,  W.   A.,  313.  Turner,  C.   E.,  333. 

Secrist,  H.,  383  (p),  585   (p),  759  (p).  Usher,   A.   P.,  '493. 

Shugrue,   M.  J.,   117,   119,   120,   163    (p),  Vanderblue,  H.  B.,  293,  297,  300,  301,  685. 

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707,  708,  750  (p).  Weld,  L.  D.  H.,  93  (c). 

Sprague,  O.  M.  W.,  16   (a),  316.  Whitnev,  N.  R.,  698. 

Stecker,  M.  L.,  447   (a).  Wildman,  M.  S.,  317. 

Stewart,  W.  W.,  57  (a),  316,  317,  319,  519.  Williams,  J.  H.,  22   (s). 

Stockton,  F.  T.,  701.  Wing,  D.  L.,  74   (s). 

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Tosdal,  H.  R.,  113,  114,  158  (p),  297,  360  581  (p). 

(p),  509,  567  (p),  686,  687,  746  (p).  Wolman,  L.,  37    (a). 

Tryon,  F.  G.,  57   (s).  Youngman,  A.,  466   (a). 
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The 
American  Economic  Review 

VOL.  XI  MARCH,  1921  No.  1 

THE  POST-WAR  OUTLOOK1 

To  fix  the  bearing  of  what  I  have  to  say,  it  is  at  the  outset  well  to 
make  clear  my  point  of  view. 

I  believe  that  the  democratic  political  movement  in  the  civilized  world 
is  likely  to  overbear  all  opposition :  that  the  immediate  political  future — 
I  hope,  also,  the  ultimate  political  future — is  with  democracy.  Thus,  I 
am  concerned  to  examine  the  terms  on  which  the  political  democracy  of 
the  future  can  be  an  enduring  and  a  worth  while  thing. 

I  am,  that  is  to  say,  convincedly — even,  I  suspect,  dogmatically — a 
democrat,  in  the  sense  that  I  believe  thoroughly  in  popular  government, 
in  the  equality  of  individuals,  in  political  rights  and  responsibilities,  as 
also  in  the  high  and  substantive  value  of  freedom  in  its  own  behalf.  I 
do  not,  however,  ascribe  to  political  freedom  any  essential  sanctity  of 
ultimate  or  natural  or  inevitable  rightness.  I  hold  it,  instead,  to  be  an 
issue  of  time  and  place  and  circumstance,  as  fit  only  for  those  people 
that  are  fit  for  it.  Democracy  may  easily  approach  to  the  worst  of 
all  forms  of  government — in  danger  of  being  no  government  at  all,  but 
mere  license,  disorder,  revolution  and  counter-revolution — in  the  de- 
gree that  any  people  falls  short  of  meeting  its  severe  requirements.  A 
populace  incapable  of  understanding  its  own  needs,  but  attempting  to 
rule  in  its  own  interest,  is  almost  certain  to  blunder  into  its  own  great 
harm.  It  might  better  rely  on  such  incidental  welfare  as  may  befall 
from  an  intelligent  and  efficient  government  conducted  primarily  in  an- 
other interest.  The  present  cult  of  democracy  is  undiscriminating. 
But  democracy  at  its  credible  best  carries  with  it  the  highest  assurance 
of  human  welfare,  precisely  because  it  is  the  only  government  in  which 
the  welfare  of  the  governed  becomes  the  direct  and  the  ultimate  prob- 
lem of  the  governors. 

Political  democracy  is  doubtless  as  readily  possible  in  a  collective  as 
in  a  competitive  economic  order;  perhaps,  indeed,  is  more  easily  pos- 
sible, in  the  sense  of  making  call  for  a  less  vigilant  intelligence.  But  I 
an  not  a  socialist,  if  for  no  other  or  better  reason  than  that  I  am  un- 
able to  make  out  what  the  socialistic  ideal — the  family  writ  large,  the 
brotherhood  of  man — would  concretely  turn  out  to  be  or  do.     I  just 

V 

i  Presidential  address  delivered  at  the  Thirty-third  Annual  Meeting  of  the  Ameri- 
can Economic  Association  held  in  Atlantic  City,  December  29,  1920. 


2  Herbert  J.  Davenport  [March 

don't  get  it.     But  further  I  hold  with  the  practical  working  necessity 
of  competition,  and  of  competition  within,  as  well  as  without,  the  eco- 
nomic field — only  that  also  I  seem  to  myself  to  know  that  it  is  not  all 
wholesome,  and  that  some  of  its  unregulated  workings  are  perni 
and  extremely  dangerous,  not  merely  directly  to  the  general  wc 
but  to  the  very  perpetuity  of  competitive  institutions.     A  regu 
competition  I  take  to  be  imperative,  if  competition  is  to  be  and  t 
main  a  tolerable  system.      Successful  competitive  institutions,  I  hold, 
require  an  intelligent  guidance,  which,  so  far,  they  have  measurably 
lacked,  and  in  that  lack  have  seriously  and  essentially  suffered.     The 
most  dangerous  menace  to  the  competitive  order  I  take  to  be  with  those 
partisans  of  it  who  resist  resolutely  all  change  or  amelioration  of  it. 
There  is  a  better  service.     Lowell,  we  recall,  could  best  attest  his  love 
of  his  country  by  his  intense  loathing  of  its  shame.     I  hold,  as  for  that 
matter  do  also  the  Guild  Socialists,  that  no  system,  thoroughgoing  and 
systematically  noncompetitive,  could  be  tolerable  at  all.     But  the  com- 
petitive system  needs  to  be  made  tolerable  and,  as  I  hold,  can  be  made 
tolerable,  but  not  by  the  method  of  eliminating  all  coercive  regulation 
and  restriction  of  it. 

Essential,  therefore,  to  the  success  of  those  voluntary  cooperations 
that  are  the  characteristic  traits  of  competition  are  the  compulsory  co- 
operations that  are  in  ultimate  principle  socialistic.  Government,  for 
whatever  there  is  of  it,  is  so  far  an  expression  of  the  collective  prin- 
ciple. Believing,  therefore,  in  the  present  order  of  society  in  its  gen- 
eral outlines,  I  believe  also  in  the  limited  acceptance  of  the  socialistic 
principle.  To  get  along  without  government — a  systematic  and  un- 
limited individualism,  the  competitive  principle  at  its  utmost  extension 
— I  esteem  as  little  as  a  government  coercive  over  the  entire 
field,  an  unlimited  and  systematic  collectivism. 

So  much  as  this,  however,  is  obviously  neither  a  radical  n 
servative  pronouncement.     Instead,  it  is  a  mere  commonplace 
tical  policy.     In  the  very  institution  of  government  the  commonser 
of  the  world  has  recognized  the  necessity  of  limitations  imposed  or 
dividual  activities,  gain  getting  as  well  as  other.      Systematic  ) 
faire  is  as  thoroughly  discredited  as  systematic  collectivism  on 
be.     The  antithetical  principles  of  liberty  and  of  compulsion  a 
each  in  its  own  place  and  degree.     The  problem  is  one  of  ar 
and  of  adjustment  between  them.    Wherever  the  ends  or  the 
individual  striving  conflict  with  the  common  good,  there  is  the  spi. 
the  state,  restrictive  or  coercive.     Such  is  the  plain  meaning  of  the  law 
and   order  jurisdiction,   the   enforcement   of   contracts,   the  decree  of 
damages  against  torts,  the  enactment  of  pure-food  laws,   the  license 


1921]  The  Post-War  Outlook  3 

or  the  regulation  of  products  and  of  markets.  When  the  individual 
effort  at  gain  appears  to  concur  with  the  common  good,  as  in  the  grow- 
ing of  corn  or  the  spinning  of  cotton — perhaps  also  in  the  culture  of 
silk  and  in  the  providing  of  champagne,  face  powder,  and  cigarettes — 
the  state  may  well  keep  hands  off.  All  interference  is  a  question  of 
expediency  and  not  of  ultimate  ethical  imperatives,  a  problem  of  the 
costs  and  perplexities  of  the  attempted  control  set  over  against  the 
putative  good  to  be  achieved.  But  government,  the  coercive  control  of 
some  things,  is  as  necessary  as  are  any  of  the  things  controlled.  It  is 
only  the  anarchist  that  condemns  all  collectively  coercive  activities. 

There  is,  then,  as  little  validity  in  the  wholesale  denunciation  of  col- 
lectivism as  in  the  wholesale  advocacy  of  it.  The  all-inclusive  govern- 
mental problem  is  to  conform  the  working  of  individual  activity  to  the 
interests  of  the  common  welfare.  For  it  is  obvious  that  the  sum  of 
individual  welfares  can  report  the  sum  of  general  welfare  only  so  far 
as  the  individual  good  is  attained  neither  through  parasitism  nor  pre- 
dation.  A  rational  society  will  combine  liberty  and  authority.  Always 
the  problem  is  to  draw  lines  of  wise  adjustment  between  the  antithetical 
principles.  Subjected,  then,  to  the  test  of  the  common  good,  neither 
collectivism  nor  individualism  can  make  its  exclusive  case.  The  prox- 
imate ideal  of  society,  perhaps  also  the  ultimate  ideal  (about  this  last 
I  know  something  less  even  than  I  care)  is  that  of  individualism,  col-* 
lectively  controlled  and  supplemented — competition  under  collective 
limitation.  Never  in  society  has  there  workably  been,  nor  ever,  as  I 
hold,  will  there  wisely  be,  nor  ever — in  the  absence  of  cataclysmic  and 
disastrous  change — will  there  credibly  be  a  systematic  collectivism  or 
a  systematic  individualism  or,  for  that  matter,  a  systematic  and  logical 
anything  else.  Under  conditions  of  orderly  and  wholesome  develop- 
ment, systematic  collectivism  equally  with  systematic  anarchism  is  a 
dream  of  mad  logicians.  As  well  look  for  flourishing  life  under  abso- 
lute zero  of  cold  or  in  unlimited  heat.  Societies  are  not  thus  monistic. 
They  are  dualistic  in  principle  of  organization,  precisely  because  they 
are  societies  made  up  of  individuals. 

I  protest  then  against  the  wastes  of  intellectual  energy  and  of  prac- 
tical effectiveness  that  attend  the  division  of  forward-looking  men  into 
opposing  doctrinaire  schools  of  thought  as  to  ultimate  ideals  in  social 
organization  or  as  to  the  ultimate  destination  of  society.  I  urge  that 
all  constructive  emphasis  be  centered  on  the  near-by  things.  The  thing 
to  do  is  always  the  next  thing.  It  is  a  tragic  waste  of  social  forces  to 
divide  on  remote  and  rear-ground  issues.  The  immediate  problems  are 
difficult  enough  and  are  pressing.  With  the  ameliorative  program  so 
conceived  and  so  limited,  the  agreements  are  vastly  more  important  than 


4  Herbert  J.  Davenport  [March 

the  differences.     Only  so  can  the  next  things  get  done.     Single-taxers 
and  socialists,  for  example,  should  postpone  their  issues  of  ultimate  in- 
stitutional programs — their  antithesis  of  individualistic  as  against  col- 
lective ethical  presuppositions — so  long  as  the  doctrinal  positions  con- 
cur in  proscribing  private  property  in  natural  bounty.   Only  when  prac- 
tical policies  diverge  because  of  differences  in  theory  are  theoretical 
dissensions  to  the  purpose.    When  what  to  do  is  not  at  issue,  it  is  folly 
to  fall  to  quarreling  about  why.     The  immediate  problems  of  progress, 
the  policies  common  to  programs  ultimately  divergent,  are  enough  to 
absorb  all  present  attention  and  effort.     So  long  as  for  every  type  of 
progressive  thought,  a  step  is  recognized  as  in  the  right  direction,  it  is 
mere  blundering  to  complicate  the  case  with  the  issues  that  can  wait — 
that  as  unactual  are  for  the  purposes  unreal.     Go   along  with  your 
neighbor  till  your  paths  diverge.     To  the  socialist  all  merchandising 
is  parasitic.     To  me,  these  activities  tend  merely  to  proliferate  into 
extreme  wastes.     There  should  then  be  agreement  on  measures  of  limi- 
tation— say,  high  license  taxes.     If  actual  taxation  is  working  regress- 
ively  on  private  wealth  and  income,  socialists  and  individualists  may 
unite  in  efforts  toward  a  system  less  obnoxious  to  the  ideals  of  both. 
Higher  inheritance  taxes?    Yes,  say  I,  who,  in  order  that  the  competi- 
tive system  may  both  endure  and  deserve  to  endure,  would  check  eco- 
nomic stratification,  would  hinder  the  emergence  of  differentials   and 
handicaps :  if  also  the  socialist  says  yes,  as  directed  by  his  opposition 
to  private  property  in  general,  we  can  so  far  work  together  instead  of 
at  cross  purposes.     Our  differences  are  not  actual.     We  desire  the 
same  particular  thing,   the  thing  at   hand,   only   for   different   ends. 
Join  we  then  to  get  the  thing  that  we  both  now  want.     Later  we  may 
contest  in   another  field.      Sufficient  unto   each   day   are   the  quarrels 
thereof.    I  advocate  progressive  taxation  in  general  in  order  to  mitigate 
the  economic  inequality  that  in  my  view  is  putting  in  hazard  the  politi- 
cal and  economic  democracy  of  the  competitive  order.     If  to  my  so- 
cialistic neighbor  the  same  policy  appeals  as  a  step  toward  the  aban- 
donment of  the  competitive  order,  it  is  still  true  that  on  either  basis  of 
policy  the  thing  is  good.     Our  hopes  diverge  merely  as  to  what  will 
come  of  it.     I  would  have  the  officers  of  justice  public  functionaries, 
and  justice  free — not  dear,  and  therefore  only  for  the  rich,  and  there- 
fore not  justice? — as  also  now  I  approve  of  free  schools  and  free  police 
protection:  and  all  of  this  not  because  I  am  a  socialist  but  because  I 
am  not ;  because,  solicitous  to  preserve  the  competive  order,  I  fear  and 
deplore  its  inadequacies  and  excesses.     Some  among  all  the  things  that 
the  socialist  condemns  I  also  condemn,  but  from  the  standpoint  of  an- 
other ideal.     Not  in  denying  his  criticisms  where  they  are  due,  but  in 
admitting  and  then  helping  to  remove  them,  is  my  best  service  to  my 


1921]  The  Post-War  Outlook  5 

cause.  That  also  the  socialist  wants  these  ameliorations  because  he  is 
a  socialist,  leaves  it  none  the  less  true  that  he  wants  them.  So  far 
we  may  work  together.  Because  I  desire  equality  in  competition,  I 
want  to  be  rid  of  property  in  privilege,  in  tolls,  in  restrictions  of  out- 
put, in  nostrums,  in  every  ill  good-will.  With  whomsoever  also  wants 
to  be  rid  of  them  I  am  glad  to  make  common  cause.  I  want  a  fair  and 
intelligent  and  adequate  trial  of  the  possibilities  of  competition  for 
human  welfare,  before  the  question  of  its  abandonment  for  unknown 
things  is  to  attain  the  dignity  of  a  present  issue.  Thus  with  another 
man  who  takes  these  methods  of  amelioration  of  the  existing  order  as 
merely  steps  toward  getting  altogether  rid  of  it,  I  have  no  present 
quarrel.  That  he  wants  to  improve  it  is  enough  for  me,  no  matter  what 
may  be  his  ultimate  end.  I  also  want  to  improve  it — to  the  ultimate 
end  of  preserving  it.  So  improved,  I  hold  it  likely  better  to  serve  the 
ends  of  human  life  than  any  new  thing  that  he  can  offer  as  substitute 
for  it.  My  mistake?  It  may  be.  We  shall  see  about  it  then.  Mean- 
while now  he  is  welcome  to  his  own  line  of  prophecy,  as  later,  in  its  due 
and  appropriate  time,  he  will  be  welcome  to  his  own  line  of  effort,  di- 
vergent from  mine. 

And  now  I  arrive  at  positions  perhaps  more  controversial.  The  so- 
ciety to  which  as  working  ideal  I  pin  my  faith  is  a  consistently  demo- 
cratic society,  a  society  of  competitive  equality ;  not,  however,  a  so- 
ciety of  economic  equality,  so  far  as  individual  powers  and  accomplish- 
ment must  and  will  differ,  but  of  inequality  limited  solely  to  differences 
in  individual  ability  and  achievement;  a  society  free  of  differentials  of 
privilege  or  of  inherited  opportunity;  a  society  in  which  men  may  be 
unequal  solely  by  the  title  of  individual  gifts  and  accomplishment,  but 
equal  still  in  all  their  objective  conditions;  a  society  of  equality  only 
in  the  sense  of  equality  of  opportunity,  where  it  can  be  only  in  the  sub- 
jective sense,  never  in  the  objective,  that  a  man  have  no  chance,  that 
he  arrive  in  the  world  not  less  obviously  damned  into  it  than  born  into 
it.  And  this  means  that  a  competitive  society  progressively  stratifying 
through  the  passing  down  from  one  generation  to  another  of  the  dif- 
ferentials inevitably  emerging  in  each  generation,  I  hold  to  be  a  so- 
ciety that  by  the  test  both  of  its  worth  and  of  its  promise  of  endurance 
is  grievously  sick. 

This  credo,  I  admit,  or  that  part  of  it  that  sounds  in  the  ethical 
emphasis,  makes  a  not  much  better  claim  to  validity  than  may  attach 
to  any  mere  act  of  faith.  Such  with  me  in  point  of  derivation  it  doubt- 
less was.  I  offer  now  no  support  of  it ;  though,  as  ex  post  facto  to  its 
getting,  I  think  I  have  come  into  some  reasons  for  holding  it — con- 
siderations of  the  aggregate  serviceability   of  income,   of  competitive 


Q  Herbert  J.  Davenport  [March 

consumption,  of  standards  of  living  imposed  by  the  haves  that  can  and 
pursued  by  the  have-nots  that  can't;  of  the  rainbow  fading-out  of 
affirmative  enjoyment  into  drab  necessity;  of  the  racial  menace  of  de- 
clining birth-rates;  of  the  dreary  futility  and  the  spreading  harm  of 
the  decorative  life  for  women — questions  for  the  discussion  of  which 
there  is  here  no  time. 

All  the  more  urgently,  then,  not  as  matter  of  inscrutable  faith  but 
only  of  sheer  factual  outlook,  I  stress  my  assumption  that  democracy  is 
coming.  And,  if  so,  I  insist,  economic  institutions  that  shall  make 
room  for  it  there  must  imperatively  be,  on  penalty  ultimately  of  a 
fundamental  reconstruction  of  society  or  of  the  debacle  of  civilization. 
New  social  forces  are  preparing.  With  the  man  whose  ideals  of  worth 
incline  to  political  or  economic  aristocracy  I  offer,  I  repeat,  no  confi- 
dent issue.  His  faith — just  another  faith  it  is — may  be  the  right  one 
as  to  the  organization  of  society  which,  if  attainable  and  workably 
enduring,  would  be  best.  It  is  doubtless  arguable  that  with  the  in- 
telligent, according  to  the  test  of  their  own  or  their  progenitor's  suc- 
cess in  the  pecuniary  competition,  shall  wisely  go  the  governing  of 
society,  while  the  rest  of  us  shall  accept  our  welfare  as  an  incidental 
by-product  of  a  government  conducted  by  them  in  furtherance  of  their 
own  interests  and  purposes.  But  I  judge  that  in  any  case  this  is  not 
to  be.  In  this  connection  I  note  a  recent  declaration  of  faith  by  Mr. 
Charles  M.  Schwab:  "I  am  not  a  socialist.  I  believe  in  aristocracy; 
but  only  because  I  believe  that  the  aristocracy  of  this  country  is  the 
aristocracy  of  men  and  women  who  do  things — the  aristocracy  of  ac- 
complishment." More  important  with  me,  however,  than  the  faith  that 
the  aristocratically  competitive  order  ought  not  to  be,  is  the  factual 
conviction  that  it  cannot  enduringly  be,  and  that  the  effort  to  achieve 
or  to  maintain  it  is  fraught  with  great  intermediate  dangers  and  pen- 
alties. I  proceed  on  the  frank  assumption  that,  for  better  or  for  worse, 
political  democracy  is  to  come,  and  that,  as  intelligently  as  may  be, 
place  must  be  made  for  it. 

But  it  is  neither  mere  faith  nor  dogmatic  prophecy  to  assert  that 
political  and  economic  democracy  cannot  exist  apart.  It  is  a  foolish 
temerity  and  an  improvident  stupidity  to  attempt  to  articulate  politi- 
cal democracy  with  economic  aristocracy.  One  or  the  other  must  in  the 
long  reckoning  perish.  On  the  issues  both  of  fact  and  of  worth  I  am  a 
democrat  in  the  economic  sense  because  I  am  a  democrat  in  the  politi- 
cal sense.  I  take  it,  therefore,  that  the  modern  world  has  to  face  the 
question  whether  it  will  have  political  democracy  under  the  competitive 
order  as  over  against  some  form  of  democratic  collectivism.  This  issue 
needs  squarely  to  be  faced.     To  plan  for  competition  and  for  aristoc- 


1921]  The  Post-War  Outlook  7 

racy  is  to  hazard  both.  I  plead  for  radicalism  to  conservative  ends, 
for  a  progressive  conservatism. 

I  hold  it,  therefore,  to  be  our  enduringly  serious  blunder  in  the  con- 
duct of  the  great  war  that  we  failed  to  realize  the  long  meanings  of  the 
financial  policies  that  we  followed.  We  have  now  promptly  to  take  ac- 
count of  our  newly  emerging  dangers.  In  point  of  degree  the  war  has 
vastly  added  to  the  perplexities  of  our  institutional  life  by  further  solidi- 
fying the  economic  stratification  of  society.  The  world  has  now  to 
reckon  with  250  billions  of  war  debts.  The  peace  with  Germany  was 
made  to  turn  upon  adding  to  its  domestic  war  debt  further  billions  of 
debt  to  be  externally  held  and  collected.  Consider  the  domestic  debt 
alone.  These  forty  billions  of  war  bonds  are  a  promise  that  for  an  in- 
definite future  from  the  taxpayers  of  Germany  the  bondholders  shall  en- 
joy a  two  billion  dollar  revenue.  We  did  not  substitute  our  own  claims 
for  these  but  added  ours  to  these — and  all  of  this  is  our  solicitude  for  the 
domestic  peace  and  the  institutional  democracy  of  Germany.  Not  only 
do  we  leave  it  to  the  German  taxpayers  instead  of  to  the  malefactor 
classes  to  provide  our  scant  indemnity — and  to  our  own  taxpayers  to 
meet  the  deficit — but  we  allow  to  the  malefactor  classes  two  billion  dol- 
lars of  annual  revenues  at  the  cost  of  their  victim  classes — enhanced 
class  wealth  and  enhanced  mass  poverty — not  that  we  have  so  little 
care  but  so  little  understanding  of  democracy  and  its  needs.  Even  if 
the  rulers  of  Germany  shall  cease  to  plot  wars,  the  peace  which  we  leave 
to  the  German  people  they  cannot  abide.  For  them  it  is  an  intolerable 
poverty  that  has  its  cause  and  correlate  in  class  wealth.  Germany  will 
hardly  win  through  to  democracy  excepting  on  terms  of  some  sort  of 
repudiation ;  peaceable  conceivably,  disorderly  probably,  revolutionary 
possibly.  We  have  made  no  gift  of  democracy.  Democracy  is,  I  still 
believe,  to  arrive  in  Europe,  but  only  as  the  need  and  aspiration  gain 
the  necessary  strength  to  override  the  new  barriers  that  the  war  has 
erected  and  that  the  peace  has  reinforced. 

I  urge,  in  sum,  that  the  present  problem  of  the  institutional  conserva- 
tive is  the  establishment  and  the  maintenance  of  economic  democracy. 
Failing  of  this,  we  shall  at  the  best  provide  solely  the  forms  but  never 
the  realities  that  are  at  the  heart  of  democratic  institutions.  We  shall 
decline  to  the  dangerous  and  temporary  equilibrium  of  the  servile  state 
— the  aristocratic  competitive  order — to  end  either  in  a  return  finally 
to  the  ways  of  equalitarian  competition,  or  in  social  disintegration,  or 
in  a  drifting  out  upon  the  unplumbed,  uncharted,  and  perhaps  shore- 
less seas  of  democratic  socialism.  Or  there  is,  it  may  be,  one  other  way : 
Guild  Socialism  may  get  a  hearing,  a  captivating  and  not  incredible 
compromise  between  the  collective  and  the  competitive  principles, 
equally  unfittingly  to  be  named  either  socialism  or  anarchism. 


8  Herbert  J.  Davenport  [March 

For  those  of  us,  therefore,  who,  convinced  that  democracy  must 
come,  are  glad  to  welcome  it — who  are  not  socialists,  who  instead  re- 
gard with  favor  the  going  institutions  of  working  compromise  between 
the  extremes  of  systematic  anarchism  and  systematic  collectivism,  who 
look  ahead  in  limitless  foreboding  to  the  hazards  and  horrors  of  any 
cataclysmic  change,  who  have  scant  faith  in  the  promise  of  any  better 
order  into  which  these  changes  could  finally  lead — it  is  for  us  to  ask 
ourselves  the  terms  on  which  the  political  democracy  that  is  to  come 
can  be  harmonized  with  the  competitive  economic  order.  And  thus, 
once  again,  we  return  to  examine  what,  in  its  economic  aspect,  the  war 
has  meant,  the  problems  which  it  has  imposed,  the  solutions  that  it  has 
left  possible.  For  we  believe  in  political  democracy  as  also  we  believe 
in  economic  democracy,  in  the  sense,  be  it  repeated,  that  we  hold  neither 
to  be  in  essentials  enduringly  possible  excepting  in  the  presence  of  the 
other. 

It  is  now  to  be  emphasized  that  the  world  war  has  not  left  the  world 
impoverished,  for  the  sole  reason  that  it  could  not.  Wars  are  sup- 
ported out  of  current  social  product  simply  because  they  have  to  be. 
It  is  present  dearth  as  it  is  present  death  that  war  imposes.  The  pov- 
erty of  public  debts  is  a  fallacy,  excepting  in  the  purely  separatist 
sense  that  a  national  debt  may  be  held  by  foreign  creditors — the  con- 
sumption of  the  warring  country  supported  out  of  the  current  supplies 
of  the  creditor  country.  But  just  as  in  a  national  inventory  of  wealth 
all  domestic  relations  of  debt  and  credit  cancel  out,  so  in  a  world  ac- 
counting all  international  debts  must  disappear. 

In  the  main,  these  war  debts  are  domestically  held.  And  such  part 
of  them  as  are  held  outside  the  country  of  their  issue  are  held  in  the 
allied  countries.  The  present  tragedy  of  want  in  Europe  reports,  for 
the  most  part,  not  the  impoverishment  of  resources  by  the  war  nor  the 
national  indebtedness  remaining  over  from  it  but  only  a  paralysis  of 
current  industry — a  war  legacy  of  disorder  and  disorganization,  or 
the  dire  gift  of  post-war  diplomacy — new  imperialisms,  and  continued 
wars.  It  is  not  chiefly  by  the  depletion  of  capital  funds  but  by  the 
interruption  of  income  flow  that  Europe  lacks  for  supplies,  precisely 
as  in  the  war  years  it  was  not  out  of  capital  resources  but  out  of  cur- 
rent production  that  the  war  was  supported. 

No?  But  it  has  become  as  commonplace  as  self-evident  that  no 
future  item  of  product  can  function  as  supply  for  either  the  civilian 
or  the  military  needs  of  any  warring  country.  Neither  war  loans,  nor 
war  taxes,  nor  any  other  loan  or  tax,  can  make  possible  the  present 
consumption  of  a  prospective  product.  Old  Sir  Thomas  Browne  saw 
this  truth  clearly :    "lie  had  caught  a  great  cold  had  he  no  other  clothes 


1921]  The  Post-War  Outlook  9 

to  wear  than  the  skin  of  a  bear  not  yet  killed."  An  exterior  loan 
merely  places  a  warring  nation  in  control  of  exterior  current  products, 
through  the  promise  of  a  later  and  offsetting  return  of  the  products 
of  a  later  time.  Domestic  loans  control  only  domestic  goods  of  cur- 
rent supply.  Like  taxes,  loans  distribute  purchasing  power  over  cur- 
rent goods  in  favor  of  the  government ;  but,  unlike  taxes,  they  provide 
for  a  later  redistribution  of  the  goods  that  the  future  will  produce. 
Loans  and  taxes  differ  not  at  all  in  point  of  the  current  national  re- 
sources out  of  which  the  support  of  the  war  must  be  provided.  The 
differences  attach  solely  to  later  accountings  of  principal  and  interest 
to  creditors,  creditors  who  might  instead  have  been  taxpayers.  Equal- 
ly, whether  by  loans  or  taxes,  subtractions  from  current  individual  in- 
comes there  must  inevitably  be,  so  far  as  war  is  to  be  supported  at 
all.  Whoever  can  buy  bonds  can  pay  taxes.  The  taxes  terminate  in 
slips  of  paper  that  are  receipts,  the  loans  provide  slips  of  paper  that 
are  the  beginnings  of  other  things — contractual  slips  of  paper,  promis- 
ing redistributions  of  future  incomes  and  secured  by  first  liens  against 
these  future  incomes.  But  the  future  incomes  do  not  thereby  become 
presently  available  for  present  needs.  The  bonds  induce  the  voluntary 
grant  of  present  income.  Taxes  get  the  same  results  coercively  out  of 
the  same  resources  of  present  goods.  Distinctions  of  equity,  tactical 
expediency,  administrative  complexity,  class  pressure,  and  general  in- 
telligibility are  another  matter.  Doubtless  the  opposition  to  war  is 
less  if  profits  to  many  and  costs  to  none  are  in  general  expectation. 

Equally,  for  the  most  part,  is  war  support  impossible  out  of  wealth 
remaining  over  from  the  past.  Most  of  it — houses,  lands,  factories, 
equipment,  furniture — is  unavailable  for  present  consumption  either 
civilian  or  military;  it  is  goods  serving  as  intermediates  toward  pro- 
duct but  themselves  not  final  products  for  consumption.  Stored  up 
war  supplies — munitions,  equipment,  war  bread — are  doubtless  possible, 
but  only  in  relatively  meager  volumes.  Something  also  is  possible,  so 
far  as  deterioration  can  practically  be  carried,  in  making  past  produc- 
tion directly  tributary  to  present  emergencies.  So  again,  goods  for 
civilian  consumption  may  not  merely  be  economized — consumption  re- 
stricted— but  can  be  worn  out  without  current  replacement,  whereby 
productive  forces  may  be  so  far  set  free  for  military  purposes.  But 
the  sum  of  all  of  these  levies  on  the  past  bulks  small  in  relation  to  the 
total  war  requirement.  In  the  large  it  still  holds  true  that  present  war, 
like  present  peace,  must  pay  its  way  as  it  goes. 

The  irrelevancy  of  bullion  supplies,  of  banking  reserves,  and  of  facili- 
ties for  currency  expansion — or  the  worse  than  irrelevancy — is  thus 
evident,  so  far  as  the  fundamentals  of  war  finance  are  concerned.  Wars 
are  questions  of  those  margins  of  productive  energy  and  output  that 


10  Herbert  J.  Davenport  [March 

are  left  available  for  military  purposes,  after  civilian  consumption  is 
provided  for.  Governmental  outpourings  of  clipped  coin  or  of  paper 
money  are  long-discredited  fallacies.  But  equally  also  was  our  vaunted 
preparedness  in  gold  reserves  for  credit  expansion  a  mere  preparedness 
for  inflation.  The  realities  in  the  situation  these  influences  barely 
brush.  Easy  credit  is  not  easy  or  plentiful  product.  New  dollars  will 
not  clothe  or  feed  men.  More  of  the  dollars  is  not  more  ships,  cannon, 
ammunition,  or  more  men  to  be  spared  from  industry  for  the  camps 
and  the  firing  lines,  or  for  supplying  military  goods  to  the  embattled 
men.  As  armies  march  on  their  stomachs,  so  wars  proceed  on  some- 
thing more  substantial  than  mere  necromancy — on  a  more  effective 
provisionment  than  the  present  shadows  of  coming  things — not  on  the 
present  worth  of  no  matter  how  credible  promises,  secured  never  so 
well  against  incomes  which  as  yet  are  not.  Social  unrealities  a  plenty 
there  are  in  competitive  individual  wealth.  But  the  actualities  of  war 
leave  no  place  for  intangible  assets.  True  it  is  that  one  may  sell  his 
individual  wealth  and  buy  bonds.  But  not  all  may  sell  to  one  another 
to  the  result  that  all  may  buy  bonds.  And  even  if  they  could  the  sup- 
plies to  be  purchased  would  be  no  whit  the  greater. 

Our  credit  devices  of  war  finance,  whether  wise  or  unwise  by  the  test 
of  their  total  effects,  and  whether  just  or  unjust  by  the  test  of  the 
ultimate  distribution  of  burdens,  were  processes  that  for  every  strictly 
war  purpose  moved  merely  upon  the  surface  of  things.  For  a  people 
like  ours  that  must  provision  and  munition  its  own  war — to  say  nothing 
of  financing  its  associates — the  essentials  of  success  lay  in  the  current 
productive  efficiency  of  its  industry,  as  supplemented  by  the  most  rigor- 
ous economy  in  civilian  consumption — the  utmost  speeding  up  of  the 
one,  the  utmost  practicable  retardation  of  the  other.  The  past  but 
little  and  the  future  not  at  all  could  serve  for  the  purpose.  At  the 
best,  the  financial  processes  were  merely  devices  of  guidance  and  ad- 
justment. 

Certain  other  issues  become  equally  clear.  The  choice  of  financial 
policies  lay  not  between  taxes  or  loans  on  the  one  side  as  over  against 
credit  inflation  on  the  other.  It  was  between  taxes  and  inflation. 
Taxes  from  ultimate  income  and  loans  from  ultimate  income  are  doubt- 
less indistinguishable  in  certain  of  their  effects.  If  only  the  funds  are 
secured  out  of  ultimate  incomes,  it  need  not  matter  that  the  scrap  of 
paper  that  is  a  contract  one  may  use  as  collateral  for  borrowing  and 
that  the  scrap  of  paper  that  is  a  receipt  one  can  not.  The  bonds  that 
so  readily  lend  themselves  to  inflation  need  not  of  strict  necessity  be  so 
used.  The  banks  might  be  led  to  refrain  from  carrying  the  paper,  or 
could  have  been  prohibited,  or  might  have  been  subjected  to  such  re- 


1921]  The  Post-War  Outlook  11 

serve  requirements  as  to  have  lacked  the  disposition — measurably  diffi- 
cult expedients,  doubtless,  all  of  them.  But  the  decisive  fact  is  that  no 
ultimate  income  borrowing  could  have  been  made  to  suffice  for  the  need. 
For  a  great  war  this  method  will  not  serve.  No  credible  rate  of  inter- 
est will  attract  the  necessary  degree  of  sacrifice,  imposing  sufficiently 
drastic  subtractions  from  individual  incomes  and  the  necessary  restric- 
tion of  individual  consumption.  This  can  be  accomplished,  not  by  the 
methods  that  work  through  inducement,  but  only  by  the  taxes  that  leave 
no  choice.  Nor  could  any  rate  of  interest  seriously  effective  in  this 
connection  have  avoided  so  drastic  recapitalizations  of  property  and 
security  values  as  to  precipitate  a  financial  hurricane.  And  correla- 
tive bank  rates  must  have  been  maintained,  or  directly  or  indirectly  the 
banks  would  have  absorbed,  on  inflation  terms,  the  issues  of  bonds.  If 
we  were  to  rely  on  gigantic  borrowing  for  war  funds,  we  had  to  follow 
the  inflation  method.     Taxation  was  the  sole  alternative. 

Doubtless  it  must  be  admitted  that  drastic  taxation — there  was  no 
escape  from  something  drastic  excepting  in  a  small  war — carries  with 
it  dangers  similar  to  those  of  high  interest  borrowing,  but  only  in 
minor  degree.  With  narrowing  residual  incomes,  some  holders  of  se- 
curities and  other  properties  will  be  pressed  to  sell  to  get  free  funds. 
Interest  rates  must  advance  appreciably,  but  not  at  all  in  the  degree 
attending  the  loan  process — precisely  because  the  necessary  restrictions 
of  civilian  consumption  are  left  not  to  choice  under  the  inducement  of 
higher  interest  rates  but  instead  to  the  coercion  of  taxes.  It  is  in 
favor  of  taxes  also  that  when  one  pays  the  tax  he  knows  that  he  is  so 
far  the  poorer.  The  buyer  of  bonds  feels  himself  an  investor,  as 
actually  he  is.  Bonds  placed  with  banks  or  carried  by  them  for  buy- 
ers bring  inflation,  huge  and  swollen  national  debts,  future  taxes,  infla- 
tion-swollen, upward  shifting  prices — and  therewith  such  increased 
civilian  economy  as  rising  prices  on  the  one  side  may  afford  as  against 
rising  profits  on  the  other.  Borrowing  from  ultimate  incomes,  in  the 
degree  of  its  possibility,  brings  only  a  slight  inflation,  no  appreciable 
upward  shift  of  general  prices,  future  taxes,  economy  of  civilian  con- 
sumption, sharp  advances  in  interest  rates,  and  a  disastrous  readjust- 
ment in  property  and  security  values.  Taxation  brings  an  even  less 
appreciable  inflation,  a  closer  approximation  to  stability  in  prices,  a 
more  marked  economy  in  civilian  consumption,  relatively  slight  changes 
in  interest  rates,  and  a  relative  immunity  from  financial  disturbance. 
Had  America  followed  the  English  rates  of  taxation,  it  need  not,  I  be- 
lieve, have  resorted  to  either  type  of  borrowing. 

And  here  the  analysis  returns  to  my  main  point  of  emphasis.  Taxes 
avoid  bonds.    Because  the  war  was  financed  in  the  main  by  the  inflating 


12  Herbert  J.  Davenport  [March 

bond-credit  method,  the  world  faces  a  situation  altogether  new  in  its 
seriousness. 

It  is,  in  strictness,  no  part  of  my  problem  to  appraise  the  weight 
of  the  war  costs  that  somehow  we  carried  and  somehow  had  to  carry. 
If,  relatively  to  our  carrying  ability,  these  were  so  light  that  non- 
inflation  methods  of  loan  finance  could  have  served,  so  also  the  alterna- 
tive taxes  could  have  been  light.  Modern  war,  waged  even  in  a  nearby 
field,  requires  for  each  soldier  in  the  ranks  two  tributary  civilian  work- 
ers. Our  three  and  one  half  millions  of  men,  allowing  for  their  trans- 
port requirements,  called  for  eight  or  more  millions  of  tributary  pro- 
ducers. The  bread-winners  of  the  country  numbered  approximately 
forty  millions,  many  of  these,  however,  not  socially  productive.  The 
less  than  thirty  remaining  millions  had  to  make  good  these  withdrawals 
of  men  and  to  supply  the  soldiers  and  tributary  workers  with  their 
quotas  of  goods  of  ordinary  civilian  requirement.  I  take  five  million 
of  combatants  to  have  been  the  limit  of  our  utmost  possible  contribu- 
tion to  the  war.  As  it  was,  our  supplies  ran  continuously  short  of  our 
commitments — warships,  freighters,  transports,  submarines,  airplanes, 
cannon,  machine  guns,  small  arms,  ammunition,  blankets.  It  was  things 
that  were  lacking  for  our  war  funds  to  buy. 

Whoever  holds  then,  as  I  do  not,  that  our  per  capita  product  of 
civilian  goods  for  civilian  consumption  was  maintained  in  the  war  years, 
proclaims  merely,  and  as  I  think  exaggerates,  the  ineptitude  of  Ameri- 
ca's economic  participation  in  the  war.  Even  if,  in  the  speeding-up 
aspect,  our  war  record  was  all  that  is  claimed  for  it  as  offsetting  the 
enormous  war  absorptions  of  men  and  of  products,  the  record  would 
remain  still  profoundly  humiliating.  We  came  perilously  near  to  los- 
ing the  war.  It  is  only  in  the  degree  of  possible  civilian  economies 
that,  in  the  main,  war  is  now  and  always  has  been  possible.  Both  the 
magnitude  and  the  methods  of  modern  warfare  are  solely  explicable 
through  the  increasing  margins  of  product  available,  above  civilian  re- 
quirements, for  the  things  of  war.  In  the  progress  of  the  industrial 
arts,  therefore,  are  the  explanations  for  the  surpassing  size,  the  sur- 
passing expensiveness,  and  the  surpassing  horrors  of  modern  war.  So 
far,  then,  as  the  wisdom  and  spirit  of  peace  lag  behind  industrial 
progress,  the  primitive  man  may  easily  have  been  the  more  fortunate 
man — our  tree  of  knowledge  heavy  with  bitter  fruit. 

In  some  sense  it  is  beside  my  point,  also,  to  stress  further  the  fact, 
that  those  inflation  methods  have  vastly  swollen  the  monetary  state- 
ment of  the  national  debts.  But  in  this  fact  is  the  decisive  argument 
against  deflation.  The  bond  issues  have  mortgaged  our  monetary  poli- 
cies.   The  governments  of  the  world  are  near  enough  to  fiscal  insolvency 


1921]  The  Post-War  Outlook  13 

already — not,  however,  I  repeat,  to  national  insolvency.  The  injus- 
tices also  are  great  enough,  with  the  debts  restricted  to  their  present 
burden.  The  men  who  forfeited  positions  and  earning  power  to  face 
the  chances  of  death  have  enough  to  pay  if,  winning  out  to  return  at 
all,  they  repay  to  us  stay-at-homes  in  cheap  dollars  the  cheap  dollars 
that  we  advanced  as  support  of  their  dangerous  adventure.  And  on 
these  terms  also  their  children  and  their  children's  children  will  have 
enough  to  pay  to  ours. 

Conceivably,  I  admit,  it  might  be  good  ethics — if  only  also  it  were 
possible — that  future  generations  should  share  with  the  present  gener- 
ation the  costs  of  a  war  that,  in  no  small  part,  will  enure  to  the  future 
advantage,  even  though  it  be  also  probable  that  these  coming  genera- 
tions will  have  their  own  wars  to  fight — and,  it  may  be,  the  more  of 
them  to  fight  by  the  very  fact  that,  vastly  increased  in  numbers,  they 
must  find  their  living  in  a  world  grievously  impoverished  by  our  own 
excesses  and  prodigalities.  But  this  thing — take  it  to  be  never  so 
just — cannot  be.  In  that  future  time  this  present  generation  will  rank 
as  a  past  generation.  Dead  and  departed,  it  can  have  no  payments 
made  to  it.  No  payments  can  ever  be  made  by  one  generation  but  to 
itself.  It  will  be  only  the  grandchildren  of  some  of  us  that  will  get  paid 
at  the  cost  of  the  grandchildren  of  others  of  us.  Solely  in  the  sense 
of  this  redistributive  bearing  on  the  future,  can  burdens  be  passed  on. 
So  far,  truly,  as  the  benefits  of  the  war  are  enduring,  there  is  a  gift 
by  us  to  the  future — but  a  gift  in  its  nature  common  to  the  children 
of  all  of  us.  But  for  some  of  these  children  the  gift  is  to  take  on  also 
the  quality  of  a  pecuniary  asset.  The  other  children  will  pay  these 
first  for  the  gift  provided  for  all.  Wisely,  then,  these  inheritors  of 
debt  in  favor  of  correlatively  inheriting  creditor  grandchildren  will 
adapt  to  their  own  case  Lloyd-George's  challenge  of  the  British  land 
system:  "Why  are  fifty  millions  of  us  Englishmen  trespassers  in  the 
land  of  our  birth?" 

Nor  is  this  all  of  the  truth.  In  large  part  the  bonds  were  pur- 
chased out  of  inflation-awarded  margins  of  profit.  The  masses  who 
paid  once  in  the  form  of  these  margins  the  money  by  which  the  profit- 
makers  bought  the  bonds  will  later  pay  in  taxes  the  cash  to  meet  the 
accruing  interest  charges  and  finally  also  to  retire  the  bonds. 

I  am  not  concerned  to  join  issue  with  anyone  on  the  question  of  the 
practical  inevitability  of  these  enormous  national  debts.  I  admit  that, 
in  the  lack  of  any  general  understanding  of  their  ultimate  meanings 
and  their  long  effects,  in  the  easy  and  improvident  opportunism  of 
political  life,  and  in  the  want  of  wisely  brave  leadership,  nothing  else 
was  credibly  possible.  I  charge  no  faults  of  purpose  anywhere.  But 
that  the  wealth  of  the  country  would  not  have  borne  whatever  share  of 


14<  Herbert  J.  Davenport  [March 

the  general  burden  it  could  recognize  as  its  duty  I  do  not  believe.  Had 
the  social  necessity  and  the  personal  and  institutional  justice  of  the 
conscription  of  current  income  been  understood — the  conscription  of 
wealth  was  nonsense — I  believe  that  the  war  idealism  of  America  would 
have  accepted  the  taxes  as  contentedly  as  it  accepted  the  selective 
draft.  The  truth  is  merely  that  we  didn't  know.  We  had  not  thought 
it  out.  The  fundamentals  of  war  finance  were,  even  to  the  economists, 
an  unknown  field.  We  had  busied  ourselves  with  other  things — the 
processes  and  the  problems  of  peace.  Thus  by  error  and  drift  we  al- 
lowed our  war  for  political  democracy  to  go  far  toward  making  dem- 
ocracy impossible,  carrying  us  thus  dangerously  forth  in  the  direction 
of  those  economic  institutions  in  which  political  democracy  cannot 
thrive.  We  have  blundered  into  our  almost  irremediable  harm.  We 
have  mortgaged  our  political  institutions,  and  therewith  have  hazarded 
either  the  perpetuity  or  the  worth  not  only  of  these  but  of  the  com- 
petitive economic  order.  Both  must  be  democratic  if  they  are  to  de- 
serve to  endure,  probably  also  if  they  are  actually  to  endure. 

But  most  of  the  evil  effects  of  the  war,  as  also  some  of  the  good, 
will  pass  with  the  lapsing  years.  The  international  bitterness  will  dis- 
appear, even  if  to  the  sole  end  of  making  place  for  others.  The  in- 
justices, the  hardships,  the  suspicions,  and  the  protests  attending  the 
inflation  process  will  fall  out  of  recollection.  The  earth  scars  will 
grow  green  with  the  changes  of  new  springs.  The  war  dead  passed 
promptly  out  of  the  domain  of  our  problems.  The  war-maimed  and 
the  war-invalided  will  early  arrive  at  their  infallible  ways  of  cure.  Time 
will  shortly  have  assuaged  the  pangs  and  stilled  the  sobs  of  bereave- 
ment ;  or,  if  there  come  no  earlier  surcease,  to  these  pangs  the  sun  and 
the  rain  will  offer  solace  and  these  sobs  the  grass  will  muffle,  the  things 
of  yesterday  ranking  with  all  the  other  tales  that  are  told — the  done 
and  gone  no  part  of  that  human  experience  to  which  the  current  life 
is  granting  its  new  meed  of  happy  living. 

But  still  not  all  things  pass.  These  institutional  effects  of  the  war 
in  the  stratification  of  wealth  will  remain  with  us.  To  these  nightmare 
debts  no  similar  principle  of  passage  or  of  mortality  attaches.  Their 
life  stretches  indefinitely  beyond  the  individual  life,  to  match  it,  it  may 
be  the  span  of  racial  or  institutional  duration.  But  surely,  as  I  hold, 
from  this  long-enduring  body  of  death,  the  democracy  of  the  future  will 
greatly  stir  to  shake  itself  free.  I  believe  also  that  it  will  succeed, 
and  will  succeed  within  the  limits  of  the  orderly  development  of  com- 
petitive institutions.  But  I  hold  that,  failing  of  the  wisdom  or  the 
determination  for  this  effort,  and  acquiescing  in  this  burden  of  debt, 
democracy  cannot  remain  democracy. 


1921]  The  Post-War  Outlook  15 

But,  after  all,  how,  within  the  present  institutional  situation,  with  its 
actual  distribution  of  leverage  and  power,  shall  the  democratically- 
minded  masses  hope  for  success?  Revolutionary  thinkers  declare  it  to 
be  impossible,  consistently  with  the  orderly  processes  of  political  de- 
velopment. My  belief — my  faith,  if  you  please — is  other.  I  hold 
that  it  is  precisely  through  the  progressive  understanding  and  the  en- 
lightened decision  of  the  classes  with  which  this  power  and  leverage 
lie — through  their  growing  recognition  of  the  ways  of  wisdom,  of  ob- 
ligation, of  provident  adjustment  and  of  sagacious  cooperation — that 
the  thing  will  come.  And  if  it  does  not  so  come,  it  will  be  solely  that 
the  wisdom  has  been  lacking  to  face  fairly  what  the  alternative  will 
mean.  Now,  as  always  in  social  problems,  the  primary  need  is  to 
understand. 

The  first  task,  then,  of  political  and  economic  sagacity  I  take  to  be 
the  retirement  of  these  debts — through  the  assertion  of  the  claim  to 
all  further  emerging  increments  upon  the  social  estates,  through  in- 
come and  inheritance  taxes,  through  severely  high  excises  on  middle- 
men activities,  and  even,  if  need  were,  as  in  Europe  need  actually  is, 
through  capital  levies.  If  we  allow  the  evils  resulting  from  the  war  to 
run  on,  unmitigated,  the  consequences  in  social  unrest,  in  loAvered  labor 
morale,  in  extravagant  and  destructive  radicalism,  in  riot  and,  it  may 
be,  in  attempted  revolution,  will  cost  us — and  will  cost  all  of  us — 
vastly  more  than  a  courageous  and  even  heroic  settlement  of  our  prob- 
lems now  with  the  means  at  hand.  Always  and  everywhere  it  is  for  each 
present  generation  to  protect  rather  than  to  impair  the  resources  of 
the  coming  generations  and  to  foster  rather  than  to  mar  their  liberties. 

Herbert  J.  Davenport. 

Cornell  University. 


THE  DISCOUNT  POLICY  OF  THE  FEDERAL 
RESERVE  BANKS1 

The  federal  reserve  banks  have  now  been  in  operation  for  a  little  more 
than  six  years,  a  period  much  too  short,  even  if  it  had  been  of  more 
normal  character,  for  the  reserve  system  to  reach  the  full  measure  of 
its  development.  Modifications  in  business  and  banking  practice  and 
in  public  opinion  are  involved,  changes  in  usage  which  are  not  made 
overnight.  But  the  last  six  years  have  been  far  from  normal.  Through- 
out the  entire  period,  the  development  of  the  reserve  system  has  been 
influenced  by  the  presence  of  unusual  conditions  and  requirements.  In 
some  important  respects,  these  abnormal  conditions  have  hastened  de- 
velopment— forcing  a  not  altogether  healthy  growth — while  in  other 
directions  development  has  been  positively  retarded.  Experience  with 
operation  in  normal  times  is  required  to  provide  a  basis  for  definite 
conclusions  regarding  the  regular  activities  of  the  reserve  banks  and  the 
policies  which  should  be  adopted  in  their  management.  This  experience 
will  not  be  available  until  the  reserve  banks  have  extricated  themselves 
from  the  position  in  which  they  have  been  placed  by  the  war  and  have 
passed  through  all  the  stages  of  at  least  one  peace-time  business  cycle. 

Addressing  an  assemblage  of  economists,  it  seems  appropriate  that  I 
should  engage  directly  in  an  examination  of  fundamental  monetary  and 
banking  principles  as  they  are  illustrated  in  the  structure  and  work- 
ing of  the  reserve  system.  I  am  the  more  inclined  to  adopt  this  method 
of  approach  because  whatever  may  be  the  case  in  the  operation  of  par- 
ticular commercial  banks,  monetary  and  credit  problems  of  a  very  gen- 
eral nature  are  matters  of  primary  and  immediate  concern  in  the  formu- 
lation of  the  policies  of  central  banks. 

In  what  may  be  styled  its  monetary  as  distinguished  from  its  bank- 
ing consequences,  the  effect  of  the  establishment  of  the  reserve  system 
has  been  more  immediate  and  is  more  clearly  and  completely  manifest. 
These  monetary  changes  are  notable,  not  only  on  account  of  the  rapid- 
ity of  the  changes  themselves,  but  also  on  account  of  their  extraordi- 
nary magnitude.  In  brief,  the  available  supply  of  credit  was  more  than 
doubled  as  a  result  of  the  establishment  and  operation  of  the  reserve 
banks  and  this  huge  addition  to  the  supply  of  credit  was  fully  absorbed 
in  the  course  of  less  than  six  years.  Moreover,  all  future  additions  to 
the  stock  of  gold  in  the  country  will  provide  the  basis  for  at  least  twice 
as  great  an  increment  to  the  volume  of  credit  as  was  possible  in  the 
later  years  of  the  national  banking  system. 

Before  1914,  in  periods  of  active  business   and   consequent  intense 

i  This  paper  was  read  at  the  Thirty-third  Annual  Meeting  of  the  American  Eco- 
nomic Association  held  in  Atlantic  City,  December  29,  1920. 


1921]       The  Discount  Policy  of  the  Federal  Reserve  Banks  17 

demand  for  credit,  the  money  in  the  vaults  of  the  national  banks,  in- 
cluding the  notes  of  other  banks,  was  never  less  than  one  eighth  of  net 
deposit  liabilities,  and  always  more  than  a  sixth  of  demand  deposits 
exclusive  of  those  due  to  other  banks.  For  state  banks  and  trust  com- 
panies, working  under  lower  legal  reserve  requirements,  cash  holdings 
appear  to  have  been  no  more  than  one  tenth  of  individual  demand  de- 
posits. Taking  both  classes  of  banks  together  demand  deposits  of  in- 
dividuals and  corporations  seem  never  to  have  exceeded  eight  times  the 
total  amount  of  money  held  by  the  banks. 

With  the  opening  of  the  reserve  banks  in  November,  1914,  reserve 
requirements  for  member  banks  were  modified  and  an  even  more  radical 
change  was  made  by  the  important  measure  amending  many  provisions 
of  the  Reserve  act  which  became  law  in  June,  1917.  All  cash  reserve 
requirements  for  member  banks  were  abrogated :  balances  at  reserve 
banks  of  7,  10,  and  13  per  cent  of  net  deposit  liabilities  of  country,  re- 
serve city,  and  central  reserve  city  banks  respectively,  together  with 
a  3  per  cent  balance  for  all  banks  against  time  deposits  becoming  the 
sole  legal  reserve  requirement.  It  is  convenient  and  sufficiently  accurate 
to  take  a  balance  of  10  per  cent  of  net  deposits  or  13  per  cent  of  indi- 
vidual demand  deposits  as  the  average  requirement  for  all  of  the  banks. 
Of  course,  quite  regardless  of  legal  requirements,  every  bank  must  have 
some  money  on  hand  for  counter  payments,  but  the  amount  needed  for 
this  purpose  has  been  found  to  be  surprisingly  small — about  3  per  cent 
of  net  deposits  or  4  per  cent  of  individual  demand  deposits. 

The  cash  regularly  held  by  the  national  banks,  even  in  periods  of  in- 
tense demand  for  credit,  13  per  cent  of  net  deposits,  it  will  thus  be 
seen,  was  sufficient  to  provide  an  adequate  amount  of  till  money  and 
also  the  required  balance  at  the  reserve  banks.  It  is  evident,  therefore, 
that  the  supply  of  credit  has  been  enlarged  by  the  full  amount  of  the 
loans  which  have  been  made  by  the  reserve  banks,  and  by  an  amount 
greatly  exceeding  those  loans  since  loans  at  reserve  banks  in  part  serve 
to  increase  reserve  balances  upon  which  member  banks  may  in  turn  in- 
cur a  tenfold  liability. 

From  reserve  deposits  by  member  banks  and  payments  on  capital 
stock  account,  the  reserve  banks  have  received  something  like  a  billion 
and  a  half  dollars,  almost  entirely  in  gold.  These  resources  would  have 
made  possible  a  very  considerable  increase  in  the  supply  of  credit.  But 
the  increase  would  have  been  comparatively  small  if  the  reserve  banks, 
like  the  Bank  of  England,  had  been  empowered  to  issue  notes  only  un- 
der restrictions  which  make  the  notes  virtually  gold  certificates. 

Power  to  issue  federal  reserve  notes  as  credit  instruments  has  in- 
creased the  supply  of  credit  in  two  ways.  In  the  first  place,  it  has  en- 
abled the  reserve  banks  to  acquire  large  amounts  of  gold  for  banking 


18  0.  M.  W.  Sprague  [March 

use  by  substituting  reserve  notes  for  gold  and  gold  certificates  which 
were  held  by  the  banks  for  till  money  purposes  or  were  in  circulation 
outside  the  banks  in  the  pockets  of  people.  Between  a  half  and  three 
quarters  of  a  billion  of  dollars  appear  to  have  been  acquired  by  this 
process  of  substitution.  It  was  a  process  which  was  much  facilitated  by 
the  elimination  of  the  legal  cash  reserve  requirement  for  member  banks, 
since  only  lawful  money  would  meet  that  requirement,  while  reserve 
notes  are  entirely  satisfactory  for  till  money  purposes. 

Although  the  power  to  extend  credit  in  the  form  of  the  federal  re- 
serve note  has  been  of  great  importance  as  a  means  of  acquiring  gold, 
it  has  been  of  vastly  greater  importance  as  a  means  of  retaining  it. 
Every  considerable  increase  in  the  volume  of  deposits  subject  to  check 
is  accompanied  or  speedily  followed  by  increasing  requirements  for 
some  kind  of  money  that  will  pass  readily  from  hand  to  hand.  In  the 
absence  of  additional  issues  of  bank  notes  or  of  government  paper 
money,  this  demand  absorbs  gold  which  would  otherwise  have  been  avail- 
able for  banking  use.  Between  June,  1914,  and  June,  1919,  for  ex- 
ample, the  estimated  stock  of  money  in  the  United  States  outside  the 
Treasury  and  the  banks,  not  including  subsidiary  silver,  increased  by 
more  than  $1,900  millions,  from  $1,600  to  $3,500  millions,  or  by  nearly 
120  per  cent.  During  the  same  years  demand  individual  deposits  in- 
creased $12,700,  from  $10,700  to  $23,400  millions. 

There  appears,  then,  to  have  been  an  increase  of  one  dollar  in  the 
money  in  use  outside  the  banks  for  every  six  dollars  of  increase  in  that 
portion  of  the  circulating  medium  which  consists  of  deposits  subject 
to  check.  I  am  by  no  means  confident  of  the  validity  of  this  exact  pro- 
portion, based,  as  it  is,  on  the  experience  of  a  short  and  abnormal 
period,  and  on  figures  which  in  the  case  of  money  are  in  part  estimates, 
and  in  the  case  of  deposits  involve  uncertainties  of  classification.  The 
estimated  stock  of  money  for  1914  is  probably  too  high,  and  the  in- 
crease to  1919  does  not  take  account  of  some  seepage  of  reserve  notes 
to  near-by  foreign  territory.  On  the  other  hand,  the  estimate  of  de- 
posits is  doubtless  swollen  by  the  inclusion  of  the  entire  amount  of  the 
unclassified  deposits  of  the  various  banks.  Finally,  it  may  be  observed 
that  confidence  in  the  substantial  correctness  of  the  ratio  is  strength- 
ened by  the  close  approximation  to  a  six  to  one  ratio  between  deposits 
and  money  outside  the  banks  in  both  1914  and  1919. 

We  are  now  in  position  to  compare  the  power  of  the  banks  to  expand 
credit  under  the  federal  reserve  system  with  that  under  the  national 
banking  system.  Before  1914,  an  increase  of  $1,000,000  in  demand 
individual  deposits  would  absorb  nearly  $300,000 — one  eighth  of  the 
increase  in  deposits  as  a  reserve  and  one  sixth  for  use  outside  the  banks. 
In  the  later  years  of  the  national  banking  system,  when  the  supply  of 


1921]       The  Discount  Policy  of  the  Federal  Reserve  Banks  19 

bonds  bearing  the  circulation  privilege  was  exhausted,  additional  gold 
was  the  only  means  of  meeting  practically  all  of  this  requirement  for 
more  money  with  increasing  deposits.  Under  the  reserve  system,  a 
similar  increase  of  $1,000,000  in  deposits  would  involve  a  similar  in- 
crease of  one  sixth  in  the  money  outside  the  banks,  4  per  cent  for  till 
money  purposes  and  a  13  per  cent  balance  at  reserve  banks,  a  total  of 
more  than  $330,000,  about  $30,000  more  than  in  the  preceding  calcu- 
lation. It  is  important  to  note  that  this  requirement,  though  larger, 
can  be  entirely  satisfied  by  means  of  credit  extended  by  the  reserve 
banks — credits  which  on  the  basis  of  a  45  per  cent  reserve  at  reserve 
banks  require  no  more  than  half  the  amount  of  gold  and  other  lawful 
money  which  was  absorbed  under  the  national  banking  system.  Stated 
in  another  way,  it  may  be  said  that  an  additional  million  dollars  in 
gold  now  provides  the  basis  for  about  $7,000,000  in  credit,  contrasted 
with  less  than  $3,500,000  before  1914.  Even  with  a  60  per  cent  ratio 
against  notes  and  deposits  at  the  reserve  banks,  credit  can  be  expanded 
50  per  cent  more  than  formerly.  This  increase  in  the  power  to  extend 
credit  is  the  most  fundamental  single  change  which  has  followed  from 
the  establishment  of  the  federal  reserve  system. 

The  enormous  increase  in  the  supply  of  credit  since  1914  is  not,  how- 
ever, entirely  due  to  the  operations  of  the  reserve  banks.  More  than  a 
billion  dollars  in  gold  was  imported  in  1915,  1916,  and  the  first  half 
of  1917,  none  of  which  would  presumably  have  been  acquired  if  there 
had  been  no  war  in  those  years.  On  the  contrary,  the  expansion  of 
credit  under  the  reserve  system,  on  the  basis  of  our  own  stock  of  gold, 
would  almost  certainly  under  peace-time  conditions  have  so  influenced 
the  balance  of  international  payments  as  to  have  occasioned  gold  ex- 
ports. An  intense  demand  for  American  commodities,  accompanied  by 
abnormal  credit  expansion  in  Europe,  both  direct  consequences  of  the 
war,  not  only  removed  the  restraining  influence  of  gold  exports  but 
also  provided  the  basis  for  much  credit  in  addition  to  the  huge  supply 
which  became  available  through  the  economy  of  gold  under  the  reserve 
system. 

But  the  war  did  much  more  than  shelter  our  stock  of  gold  and  in- 
crease its  amount ;  it  also  occasioned  the  far  more  speedy  utilization  of 
our  enlarged  supply  of  credit  than  would  have  been  possible  under 
peace-time  trade  conditions.  An  extraordinary  supply  of  credit  was 
absorbed  by  an  equally  extraordinary  demand.  Within  five  years  from 
the  opening  of  the  reserve  banks  in  November,  1914,  the  volume  of  out- 
standing credit  was  more  than  doubled.  Credit  expansion  on  so  colossal 
a  scale  could  not  have  occurred  during  a  similarly  short  period  of 
peaceful  business  activity.  The  aggregate  demand  for  credit  would  not 
be  sufficiently  great,  to  say  nothing  of  the  much  smaller  effective  de- 


20  O.  M.  W.  Sprague  [March 

mand,  that  which  meets  the  credit  tests  of  the  banks.  During  the  war, 
the  demand  for  credit  was  abnormally  great  and  it  was  an  effective  de- 
mand because  it  was  largely  based,  first  upon  the  credit  of  the  govern- 
ments of  Europe,  and  later  upon  that  of  the  federal  government. 

After  the  armistice,  the  intense  demand  for  credit  continued,  gradu- 
ally shifting,  however,  from  the  government  to  the  business  community. 
The  conditions  which  made  possible  the  continuance  of  trade  activity 
after  the  armistice  were  fundamentally  similar  to  those  which  are  pres- 
ent at  the  beginning  of  a  period  of  prosperity,  following  a  period  of  de- 
pression. Although  trade  had  been  feverishly  active  for  more  than 
three  years,  there  was  still  a  large  supply  of  credit  available  at  low 
rates.  Moreover,  and  this  is  a  matter  of  far  greater  significance,  there 
was,  unlike  the  situation  after  some  years  of  prosperity  in  a  peace-time 
business  cycle,  an  evident  widespread  scarcity  of  goods.  In  these 
circumstances,  an  intense  demand  for  credit  to  be  used  in  the  purchase 
of  goods  could  not  fail  to  develop,  since  it  was  reasonable  to  anticipate 
that  no  difficulty  would  be  experienced  in  marketing  them  at  an  advance 
in  price.  Finally,  toward  the  close  of  1919  the  available  supply  of 
credit  was  approaching  a  condition  of  complete  utilization.  A  few 
months  more  of  credit  expansion  at  an  undiminished  rate  would  have 
left  no  supply  of  credit  in  reserve  with  which  to  meet  an  emergency. 
Even  if  an  ample  supply  of  additional  credit  had  still  been  available  at 
that  time,  the  opinion  may  be  ventured  that  another  limit  on  continued 
credit  expansion  was  not  far  away — the  deterioration  in  the  average 
quality  of  the  loans  of  the  banks.  A  period  of  readjustment  and  liqui- 
dation was  inevitable.  Liberal  credits  at  low  rates  in  1920  would  have 
deferred  its  advent  somewhat,  but  with  the  certain  consequence  that  the 
difficulty  and  losses  incident  to  readjustment  would  have  been  materially 
enhanced. 

After  this  unavoidably  long  introduction,  I  am  finally  ready  to  take 
up  the  subject  proper  of  my  paper,  the  discount  policy  of  the  federal 
reserve  banks.  At  the  outset,  it  is  necessary  to  reach  some  conclusion 
as  to  the  responsibility  that  rests  upon  the  Reserve  Board  and  the 
management  of  the  reserve  banks  for  the  credit  expansion  of  the  last 
five  years.  For  by  far  the  greater  part  of  that  expansion  responsibil- 
ity clearly  rests  elsewhere.  The  volume  of  credit  has  been  subject  to 
conditions  and  influenced  by  policies  which  the  management  of  the  re- 
serve system  could  not  control.  This  is  obviously  the  case  as  regards 
the  large  additional  supply  of  credit  which  became  available  as  a  result 
of  the  gold  imported  before  we  entered  the  war.  Up  to  that  time,  the 
loans  of  the  reserve  banks  were  of  quite  insignificant  proportions. 

After  we  entered  the  war,  the  loans  of  the  reserve  banks  increased 
by  leaps  and  bounds ;  but  for  the  policy  of  war  finance  which  occasioned 


1921]       The  Discount  Policy  of  the  Federal  Reserve  Banks  21 

these  loans  and  the  manifold  greater  loans  of  the  commercial  banks, 
the  Reserve  Board  was  not  responsible.  That  it  is  possible  to  finance 
without  inflation  expenditures  as  great  even  as  those  incurred  by  the 
United  States  government  during  the  recent  war,  I  am  firmly  convinced. 
That  we  could  not  finance  that  war  without  credit  inflation,  I  am  equal- 
ly certain.  The  primrose  path  of  inflation  had  the  backing  of  public 
opinion ;  the  administrative  machinery  and  perhaps  the  constitutional 
power  for  adequate  taxation  were  lacking.  A  little  less  waste  in  ex- 
penditure, slightly  heavier  taxation  and  slightly  higher  interest  rates 
on  government  bonds  might  have  characterized  our  war  finance  pro- 
gram, with  the  desirable  result  that  there  would  have  been  somewhat 
less  of  credit  inflation.  But  I  must  not  allow  myself  to  digress  further 
on  this  tempting  subject.  The  important  point  in  the  present  con- 
nection is  that  whatever  the  financial  policy  adopted  by  a  government 
in  time  of  war  may  be,  it  is  the  imperative  duty  of  the  management  of 
a  central  bank  to  cooperate  103'ally  in  executing  that  policy.  The 
Reserve  Board  and  the  officials  of  the  reserve  banks  could  offer  advice 
and  criticism ;  they  could  not  decline  to  do  their  part  in  executing  the 
policy  of  the  Treasury. 

Presumably  there  would  have  been  no  less  use  of  credit  in  financing 
the  war  if  the  reserve  system  had  not  been  established.  In  that  event, 
the  government  would  doubtless  have  met  requirements  for  additional 
money  for  use  outside  the  banks  by  issues  of  paper  money  which  would 
surely  have  become  inconvertible.  The  economy  of  gold  under  the  re- 
serve system  permitted  credit  expansion  on  an  unexampled  scale  with- 
out suspension  of  specie  payments.     It  was  none  the  less  inflation. 

One  of  the  results  of  the  extensive  use  of  credit  in  financing  the  war 
was  to  place  the  banks  of  the  country  in  a  position  of  extreme  de- 
pendence on  the  reserve  banks.  At  the  time  of  the  armistice  the  re- 
serve banks  were  lending  member  banks  nearly  $1,800,000,000  and  in 
addition  held  nearly  $400,000,000  of  bills  bought  in  the  open  market. 
As  general  liquidation  of  loans  at  the  reserve  banks,  unless  due  to  the 
receipt  of  new  gold,  involves  much  greater  contraction  of  loans  by 
member  banks,  it  is  probable  that  they  must  continue  to  rediscount 
heavily  there  for  many  years  to  come  if  not  indefinitely.  No  progress 
whatever  in  reducing  these  obligations  has  been  made  during  the  two 
years  since  the  armistice.  On  the  contrary,  borrowing  at  the  reserve 
banks  has  increased  by  nearly  50  per  cent,  loans  standing  at  $3,126,- 
000,000  on  November  5,  1920. 

It  is  only  for  this  after-the-war  increase  in  the  loans  of  the  reserve 
banks  and  the  more  considerable  increase  in  the  loans  of  the  other  banks 
thus  made  possible  that  the  management  of  the  reserve  banks  can  be 
held  to  be  in  some  measure,  but  by  no  means  primarily,  responsible. 


22  0.  M.  W.  Sprague  [March 

Government  financial  policies  were  the  controlling  factor  in  the 
situation  for  at  least  a  year  after  the  armistice.  The  policy  of  bor- 
rowing at  abnormally  low  rates  was  insistently  maintained  by  the 
Treasury.  It  does  not  fall  within  the  scope  of  this  paper  to  discuss 
in  detail  the  wisdom  of  this  policy.  Much  can  be  said  on  both  sides 
of  the  question.  I  content  myself  with  observing  that  it  was  my  opinion 
at  the  time,  and  the  subsequent  course  of  events  has  not  altered  the  con- 
clusion, that  a  distinctly  higher  range  of  rates  on  government  certifi- 
cates in  the  summer  and  autumn  of  1919  would  have  been  a  wiser 
policy.  But  even  if  the  Federal  Reserve  Board  had  been  convinced  that 
the  after-the-war  financial  policy  of  the  Treasury  was  unwise,  as  to 
which  there  is  no  evidence  one  way  or  the  other,  I  do  not  think  the 
board  could  have  refused  to  cooperate  in  executing  that  policy,  taking 
an  independent  course  and  making  a  sharp  advance  in  discount  rates. 
It  is,  however,  reasonable  to  surmise  that  the  policy  of  the  Treasury 
after  the  armistice  would  have  been  subjected  to  more  searching 
scrutiny  if  the  Reserve  Board  were  less  heavily  weighted  with  Treasury 
officials.  When  account  is  taken  of  the  future  frequent  borrowing  re- 
quirements of  the  government,  the  retention  of  two  Treasury  officials 
as  ex-officio  members  of  the  Reserve  Board  seems  most  inexpedient. 
Borrowers  on  a  large  scale  are  not  the  most  desirable  of  persons  to  be 
selected  as  directors  of  any  bank.  The  Treasury  as  a  borrower  in  times 
of  peace  should  not  be  in  position  to  exert  a  considerable,  much  less 
a  controlling,  direct  influence  on  the  discount  policy  of  the  reserve 
banks.  Merely  as  a  matter  of  simplification  of  administrative 
machinery,  also,  the  functions  of  the  Comptroller  of  the  Currency 
should  be  transferred  to  the  Reserve  Board  and  the  reserve  banks.  So 
much  of  diminution  of  direct  Treasury  influences  as  is  involved  in  this 
proposal  seems  certainly  desirable.  Whether  the  Secretary  of  the 
Treasury  should  cease  to  be  a  member  of  the  board  is  a  question  as  to 
which  a  definite  answer  is  less  easily  given.  Upon  the  whole,  I  am  in- 
clined to  think  that  the  presence  of  the  Secretary  is  desirable.  The 
intimate  understanding  of  the  financial  situation  that  a  Secretary  may 
gain  as  a  member  of  the  Reserve  Board  can  hardly  fail  to  be  of  ad- 
vantage to  him  in  the  conduct  of  his  office.  The  Secretary  of  the  Treas- 
ury, as  a  member  of  the  Board  can  also  do  much  to  defend  the  reserve 
system  from  unreasonable  demands  on  the  part  of  the  public  and  above 
all  from  political  onslaughts. 

Returning  once  more  to  the  course  of  credit  under  the  reserve  system, 
there  remains  for  consideration  the  experience  of  the  last  twelve  months, 
during  which  the  reserve  banks  have  been  in  position  to  exert  complete 
control  over  the  suppty  of  credit  and  have  also  been  able  to  take  in- 
dependent action.     At  the  end  of  August,  1919,  the  gross  debt  of  the 


1921]       The  Discount  Policy  of  the  Federal  Reserve  Banks  23 

government  reached  its  maximum  and  though  the  Treasury  continued  to 
enter  the  market  as  a  chronic  borrower,  its  strongest-  ground  for  in- 
sisting upon  the  policy  of  liberal  loans  at  low  rates  could  be  urged  no 
longer.  With  evident  reluctance  Treasury  control  of  the  discount 
policy  of  the  reserve  banks  was  relaxed  and  seems  to  have  been  entirely 
relinquished  with  the  last  issue  of  4  %  per  cent  certificates  in  January 
1920. 

Full  responsibility  for  the  credit  situation  was  regained  in  circum- 
stances which  imposed  a  severe  test  upon  the  reserve  system  and  upon 
its  management.  After  nearly  five  years  of  unexampled  business  ac- 
tivity, accompanied  by  unprecedented  credit  expansion  and  advances 
in  prices,  the  activity  of  trade  was  unabated,  the  demand  for  credit 
was  if  anything  more  intense  and  prices  were  still  moving  rapidly  up- 
ward. Beneath  the  surface,  there  were  indications  that  even  though 
large  supplies  of  additional  credit  were  still  to  be  had,  a  period  of  re- 
adjustment could  not  be  long  postponed.  Liberal  credit  was  no  longer, 
as  at  the  beginning  of  a  period  of  activity,  serving  to  stimulate  produc- 
tion and  direct  industry  into  promising  channels.  It  was  rather  tending 
to  disorganize  industry,  subjecting  it  to  an  increasing  extent  to  specu- 
lative influences,  to  wage  disputes  and  numberless  other  strains.  The 
average  quality  of  the  loans  of  the  banks  was  becoming  less  satisfactory 
because  of  these  conditions  in  industry  as  well  as  on  account  of  ex- 
tensive sales  of  goods  in  foreign  markets  on  long  credit  terms.  In  short, 
the  situation  at  the  end  of  1919  was  one  which  by  no  possibility  could 
be  corrected  by  the  application  of  additional  supplies  of  credit.  A 
check  on  further  credit  expansion  followed  by  some  contraction  was 
the  one  sure  remedy  and  that  remedy  would  have  been  quite  as  much 
needed  even  though  an  abundant  supply  of  additional  credit  had  been 
still  available.  It  is,  however,  by  no  means  certain  that  the  Reserve 
Board  would  have  taken  measures  to  restrain  credit  during  the  course 
of  the  winter  and  spring  of  this  year  if  the  power  of  the  reserve  banks 
to  extend  credit  within  the  limits  of  legal  reserve  requirements  had  not 
been  nearly  exhausted.  The  successive  advances  in  discount  rates  made 
during  the  first  half  of  the  year  were  not  then  entirely  the  expression 
of  a  voluntary  policy.  It  was  a  policy  which  in  large  measure  was  en- 
forced by  the  reserve  position  of  the  banks.  It  was  necessary  to  check 
further  credit  expansion.  Otherwise,  the  reserve  banks  in  the  course 
of  a  few  months  would  have  held  no  reserve  above  legal  requirements 
as  a  basis  for  credit  to  be  used  in  meeting  an  emergency.  To  go  on 
expanding  credit  until  the  last  available  dollar  was  employed  was  in- 
deed our  former  practice,  and  the  initial  stages  of  the  transition  to  a 
period  of  readjustment  were  always  marked  by  crisis  and  panic.  It 
is  one  of  the  inestimable  advantages  of  the  reserve  system  that  the 


24  0.  M.  W.  Sprague  [March 

brakes  were  applied  before  the  supply  of  credit  was  entirely  exhausted 
and  before  trade  activity  had  culminated  in  a  crisis.  We  are  still  in 
the  midst  of  a  period  of  necessary  readjustment  and  liquidation,  but 
the  immense  superiority  of  the  reserve  system  as  compared  with  our 
former  means  of  meeting  similar  situations  is  already  conspicuously 
evident. 

Although  the  process  of  readjustment  is  not  completed,  experience 
already  furnishes  a  basis  for  fairly  definite  conclusions  regarding  some 
important  aspects  of  the  policy  of  the  reserve  banks  in  handling  the 
situation.  The  discount  rate  of  the  reserve  banks  is  clearly  an  effective 
means  of  checking  credit  expansion,  but  it  is  also  evident  that  advanc- 
ing rates  influence  the  situation  rather  slowly.  Credit  continued  to  ex- 
pand for  some  months  after  rates  were  finally  advanced  in  May  to  the 
present  high  level.  When  credit  is  expanding  rapidly,  there  is  at  any 
moment  a  considerable  supply  of  unused  credit  scattered  among  the 
thousands  of  banks  of  the  country  the  use  of  which  is  not  subject  to 
control  by  the  reserve  banks.  The  continued  increase  in  the  amount 
of  federal  reserve  notes  for  some  months  after  credit  expansion  was 
checked  is  in  accord  with  what  was  to  have  been  anticipated.  In- 
creased requirements  for  currency  accompany,  but  with  some  lag,  the 
increase  in  credit  in  the  form  of  deposits  subject  to  check. 

These  conditions  and  tendencies  prompt  the  suggestion  that  when 
rates  are  advanced  in  order  to  check  credit  expansion  the  practice  of 
the  Bank  of  England  of  advancing  rates  by  increments  of  one  per  cent 
should  be  adopted.  In  making  for  the  first  time  a  test  of  the  effects  of 
advancing  discount  rates,  it  was  perhaps  natural  and  proper  to  move 
slowly.  Experience  during  the  last  year  indicates  that  advances  of 
fractions  of  per  cent  are  ineffective.  It  may  be  added  that  in  this; 
particular  instance,  it  would  have  been  of  much  advantage  if  somewhat 
greater  progress  in  the  process  of  readjustment  had  been  made  before 
the  beginning  of  the  crop  moving  season,  a  result  which  would  have  fol- 
lowed a  less  hesitant  discount  policy. 

The  process  of  gradual  contraction  and  orderly  industrial  readjust- 
ment seems  at  first  sight  in  every  respect  superior  to  the  short  and 
severe  crisis  and  panic  followed  by  depression  with  which  we  have  had 
frequent  experience  in  the  past.  I  do  not  doubt  that  the  balance  of 
advantage  is  heavily  in  favor  of  the  slower  process.  At  the  same  time 
it  should  be  recognized  that  the  slower  process  is  attended  by  its  own 
peculiar  difficulties.  While  the  aggregate  loss  is  doubtless  reduced,  the 
burden  of  loss  is  apparently  distributed  in  a  somewhat  different  but 
by  no  means  certainly  in  a  more  equitable  fashion  among  the  various 
groups  of  producers.  The  slow  process  of  liquidation  does  not  succeed 
in  bringing  about   a  slow  and   uniform  general  decline  in  prices.     In 


1921]       The  Discount  Policy  of  the  Federal  Reserve  Banks  25 

fact,  price  changes  seem  to  be  more  irregular,  or  at  least  the  irregulari- 
ties are  more  prolonged  than  when  periods  of  trade  activity  culminated 
in  catastrophic  disturbances.  In  this  connection  the  query  suggests 
itself  whether  farmers  might  not  have  incurred  less  loss  if  there  had 
been  a  crisis  in  the  early  autumn  that  might  have  forced  a  more  imme- 
diate reduction  in  prices  of  the  goods  they  must  buy. 

The  irregular  distribution  of  the  burdens  of  liquidation  in  some 
measure  explains  even  though  it  does  not  give  sufficient  ground  for 
complying  with  the  widespread  demands  for  assistance  now  being  made 
by  various  classes  of  producers.  Much  of  the  occasion  for  special  con- 
sideration will  disappear  when  in  the  near  future,  as  now  seems  prob- 
able, the  decline  in  prices  has  completed  the  circle. 

There  is  grave  danger  that  the  quack  remedy  of  inflation  through 
enforced  accommodation  from  the  reserve  banks  may  be  attempted. 
Such  a  remedy  would  be  similar  in  all  essentials  to  the  grant  of  aid  by 
the  issue  of  paper  money  by  the  government,  a  form  of  assistance  that 
was  urged  but  successfully  resisted  after  the  Civil  War.  It  is  not  too 
much  to  say  that  it  is  now  to  be  determined  whether  the  people  of  the 
United  States  possess  sufficient  intelligence  and  endurance  to  permit  the 
successful  operation  of  anything  better  than  a  straight-jacket  credit 
system.  We  have  established  a  system  which  is  designed  to  prevent  col- 
lapse and  complete  disorganization.  This  presupposes  that  reserve 
banks  will  regularly  hold  in  reserve  large  potential  credit  power.  If  we 
insist  upon  using  such  power  as  a  means  of  temporary  relief  and  stimu- 
lation, ultimate  disaster  is  the  certain  consequence.  Past  experience 
shows  that  it  is  dangerous  for  governments  to  issue  paper  money. 
There  is  a  constant  temptation  to  overissue  when  confronted  by  real  or 
imaginary  emergencies.  The  same  danger  arises  in  the  case  of  the  re- 
serve system — that  public  opinion  and  perhaps  legislative  action  will 
compel  the  employment  of  its  resources  in  a  vain  endeavor  to  cure  evils 
which  are  mainly  due  to  credit  already  granted  in  excess. 

The  process  of  industrial  readjustment  at  best  is  painful  and  its 
burdens  are  most  unevenly  distributed.  It  seems  pertinent  therefore  to 
enquire  whether  something  more  cannot  be  accomplished  through  the 
reserve  system  than  the  mere  modification  and  amelioration  of  condi- 
tions at  the  culmination  of  periods  of  business  activity.  Would  it  be 
possible  so  to  operate  the  reserve  system  that  conditions  which  compel 
widespread  liquidation  would  not  be  developed,  or  at  least  would  not  be 
developed  to  so  serious  degree  as  in  the  past.  This  inquiry  is  ren- 
dered more  significant  by  the  serious  danger  that  conditions  which  ren- 
der subsequent  liquidation  unavoidable  will  develop  more  luxuriantly 
under  the  reserve  system  than  was  possible  under  the  national  banking 
system.     Let   us  examine  this  point. 


26  0.  M.  W.  Sprague  [March 

The  liquidation  now  under  way  will  doubtless  lead  to  a  considerable 
reduction  in  the  loans  of  the  banks  to  the  public  and  in  rediscounts  at 
the  reserve  banks.  It  is  not  unlikely  that  a  reserve  ratio  as  high  as 
70  per  cent  will  be  seen  before  the  beginning  of  the  next  period  of  active 
business  and  intense  demand  for  credit.  Moderate  if  not  low  discount 
rates  will  doubtless  prevail  at  the  beginning  of  the  period.  A  large 
supply  of  credit  will  be  available;  much  more,  as  we  have  seen,  than 
could  be  furnished  if  the  reserve  banks  like  the  Bank  of  England  could 
not  issue  credit  notes.  I  mention  this  familiar  fact  once  more  because 
the  pre-war  discount  policy  of  the  Bank  of  England,  with  its  changes 
in  rates  as  the  reserve  increased  or  decreased,  seems  to  give  the  sanction 
of  successful  experience  to  a  policy  for  central  banks  that  would  al- 
low credit  to  be  extended  freely  at  low  rates  whenever  reserves  are 
ample.  Bank  of  England  practice,  however,  loses  significance  and  is 
positively  misleading  when  it  is  applied  to  a  banking  system  which  loses 
no  gold  for  purposes  of  domestic  circulation  as  deposit  credit  expands. 
Again  in  pre-war  times,  comparatively  slight  influences,  whether  at 
home  or  abroad,  were  sufficient  to  subject  the  reserve  of  the  Bank  of 
England  to  depletion  from  gold  exports.  For  these  two  reasons  credit 
expansion  in  England  could  seldom  be  carried  far  without  bringing  the 
reserve  of  the  bank  down  to  a  point  at  which  an  advance  in  the  dis- 
count rate  would  become  necessary.  In  this  country,  whatever  may  be 
the  situation  in  the  distant  future,  gold  exports  for  many  years  to 
come  are  not  likely  to  be  the  almost  automatic  consequence  of  moder- 
ate credit  expansion.  This  restraint  on  excessive  credit  expansion  in 
any  single  country  was  effective  when  all  important  commercial  coun- 
tries were  on  the  gold  standard.  It  is  not  now  effective  because  most 
of  the  world  is  on  an  inconvertible  basis.  Consequently  the  volume  of 
credit  which  may  be  created  in  the  United  States  will  be  determined 
for  many  years  to  come  almost  wholly  by  domestic  influences.  In  these 
circumstances,  while  the  reserve  system  may  be  expected  to  prevent  the 
outbreak  of  panic,  its  expansive  power  is  so  great  that  with  the  reserve 
ratio  the  determinant  of  discount  policy  it  can  be  confidently  predicted 
that  far  wider  price  fluctuations  will  mark  the  successive  stages  of  the 
business  cycle  than  were  experienced  under  the  national  banking  system. 

It  should  also  be  noted  that  the  discount  rate  of  the  reserve  banks  is 
a  somewhat  less  immediately  effective  instrument  of  credit  control  than 
that  of  the  Bank  of  England  in  pre-war  days.  A  considerable  portion 
of  the  loans  of  the  British  banks  were  of  an  international  character 
which  could  readily  be  shifted  to  the  money  markets  of  other  countries 
when  London  rates  became  relatively  high.  Owing  to  the  present  dis- 
ordered financial  situation  of  most  countries,  loans  arising  out  of  for- 
eign trade  and  other  international  transactions  no  longer  possess  this 


1921]       The  Discount  Policy  of  the  Federal  Reserve  Banks  27 

quality  so  valuable  from  a  banking  standpoint.  International  loans 
have  become  no  more  transferable  than  domestic  loans  and,  it  may  be 
added,  with  respect  to  payment  at  maturity  without  delay  or  renewals 
have  become  decidedly  inferior  to  domestic  loans. 

The  absence  of  branch  banking  in  the  United  States  also  weakens  the 
validity  of  comparisons  between  the  discount  rate  of  the  Bank  of  Eng- 
land and  those  of  the  reserve  banks.  Credit  is  less  fluid  under  our  sys- 
tem of  some  thirty  thousand  banks.  There  are  much  wider  variations 
in  the  lending  rates  of  the  various  commercial  banks ;  there  is  no  such 
general  market  rate  of  discount  as  in  England.  Consequently,  the 
Bank  of  England  practice  of  a  discount  rate  slightly  above  the  market 
rate  cannot  have  so  pervasive  an  influence.  Moreover,  until  the  banks 
cease  to  be  constant  heavy  borrowers  at  the  reserve  banks,  a  condition 
largely  due  as  we  have  seen  to  the  war,  it  will  not  be  feasible  as  a  regu- 
lar policy  to  establish  discount  rates  above  the  lending  rates  of  mem- 
ber banks  even  of  those  in  the  large  cities.  When,  however,  it  is  the 
definite  purpose  of  the  management  of  the  reserve  banks  to  check  credit 
expansion,  it  will  probably  be  found  necessary  to  establish  discount 
rates  which  are  considerably  above  the  minimum  rates  at  which  some 
member  banks  are  making  some  of  their  loans. 

As  a  guide  to  discount  policy,  it  must  be  admitted  the  reserve  ratio 
has  certain  conspicuous  advantages.  It  is  definite  and  obvious.  Public 
opinion  may  be  expected  to  support  the  always  unwelcome  policy  of 
credit  restraint  when  that  policy  is  enforced  by  a  depleted  reserve.  It 
is  unhappily  very  doubtful  whether  the  public  would  have  been  recon- 
ciled to  the  advance  in  rates  made  last  spring  if  the  reserve  banks  had 
had,  let  us  say,  a  reserve  ratio  of  55  per  cent,  and  yet,  all  other  things 
being  the  same,  an  advance  in  rates  would  have  been  no  less  desirable. 

By  parity  of  reasoning,  it  follows  that  reductions  in  discount  rates 
need  not  wait  upon  the  acquisition  of  a  high  reserve  ratio.  The 
present  situation  furnishes  a  convenient  illustration.  Credit  expansion 
has  already  been  definitely  checked;  there  is  no  present  danger  that 
lower  discount  rates  would  stimulate  a  widespread  demand  for  credit 
that  would  permit  prices  to  move  rapidly  upward  once  more.  The  de- 
mand for  credit  is  now  largely  for  the  purpose  of  holding  goods  for 
which  purchasers  cannot  be  found.  It  is  no  longer  a  sellers'  market. 
In  these  circumstances,  it  is  at  least  possible  that  a  slight 
reduction  in  discount  rates,  by  encouraging  many  to  resume  normal 
business  dealings,  might  facilitate  the  process  of  liquidation,  and  so 
make  possible  a  more  speedy  reduction  in  the  total  volume  of  loans 
than  will  be  secured  through  the  maintenance  of  the  present  schedule  of 
rates. 

There  is  no  substitute  for  the  reserve  ratio  which  possesses  its  pe- 


28  0.  M.  W.  Sprague  [March 

culiar  virtues  of  simplicity  and  definiteness.  To  an  enlightened  busi- 
ness public,  however,  it  should  be  evident  that  so  delicate  and  at  the 
same  time  potent  an  instrument  as  credit  cannot  be  wisely  administered 
in  a  mechanical  fashion  in  accord  with  simple  definite  rules. 

Whether  at  any  time  it  is  desirable  to  impose  restraint  upon  credit 
depends  upon  the  uses  to  which  credits  are  being  put  and  upon  the 
effects  of  these  uses.  The  most  definite  indication  that  we  possess  of 
excessive  credit  is  found  in  the  decided  upward  movements  of  prices  ex- 
tending over  a  number  of  years.  There  is  practically  universal  agree- 
ment that  prices  cannot  be  held  at  an  absolutely  fixed  level.  Most 
would  agree  that  advancing  prices  at  the  beginning  of  a  period  of  ac- 
tivity stimulate  production  in  some  measure.  Few,  however,  would  ques- 
tion that  at  some  stage  in  every  period  of  business  activity  rising  prices 
facilitate  ill-judged  undertakings  and  fail  to  increase  industrial  output. 
No  doubt  there  would  be  wide  differences  of  opinion  as  to  just  when  this 
stage  is  reached  in  any  particular  business  cycle.  Even  so,  it  is  submit- 
ted that  the  expert  judgment  of  a  responsible  body  like  the  Federal 
Reserve  Board,  enjoying  the  benefit  of  general  public  criticism,  pro- 
vides a  far  more  satisfactory  basis  for  a  discount  policy  than  the  vari- 
ations of  a  reserve  ratio. 

The  proposal  to  base  the  discount  rate  largely  on  the  observed  effects 
of  credit  expansion  is  not  designed  to  secure  the  stabilization  of  prices. 
Such  a  policy  would  not  be  concerned  with  permanent  changes  in  prices 
associated  with  variations  in  the  world's  supply  of  gold.  It  would  aim 
merely  at  lessening  price  fluctuations  within  particular  business  cycles, 
checking  somewhat  the  upward  movement,  and  thereby  lessening  the 
subsequent  decline. 

Nearly  every  economic  and  social  question  is  complicated,  and  many 
are  rendered  insoluble  by  the  alternations  between  activity  and  depres- 
sion of  the  business  cycle.  To  mention  but  a  single  instance,  consider 
the  extent  to  which  efforts  to  enlist  an  interest  in  efficient  production 
on  the  part  of  wage  earners  have  been  frustrated  for  many  years  to 
come  by  the  present  widespread  unemployment,  an  inevitable  sequel 
of  the  orgy  or  inflation  of  the  last  five  years. 

This  proposal  to  administer  the  reserve  system  in  such  a  way  as  to 
moderate  the  fluctuations  of  the  business  cycle,  will  of  course  be  met 
with  the  objection  that  it  is  politically  hazardous.  It  will  be  urged 
that  any  attempt  to  influence  prices  will  be  resented  by  large  and  in- 
fluential classes  who  would  believe,  whether  rightly  or  wrongly,  that 
they  were  being  subjected  to  needless  loss  or  deprived  of  well  earned 
gains.  This  difficulty,  while  unquestionably  very  serious,  is  less  than 
would  appear  at  first  sight.  We  should  not  gauge  the  antagonism  to 
restraint  on  credit  exercised  at  an  early  stage  in  a  period  of  expansion 


1921]       The  Discount  Policy  of  the  Federal  Reserve  Banks  29 

by  the  outcry  which  is  heard  when  enforced  contraction  occurs  after 
years  of  excessive  credit,  rising  prices,  and  feverish  trade  activity. 
Restraint  in  the  use  of  credit  if  imposed  at  an  earlier  stage  in  the 
cycle  will  not  be  accompanied  by  widespread  liquidation,  followed  by 
years  of  depression.  Here  as  elsewhere  it  is  the  wiser  course  to  en- 
deavor to  remove  causes,  working  with  the  confident  expectation  that 
that  discount  policy  for  the  reserve  banks  which  will  yield  the  greatest 
permanent  advantage  will  finally  secure  general  public  approval. 

In  the  event  that  no  control  of  credit  based  on  the  observed  effects 
of  credit  expansion  at  different  stages  in  the  business  cycle  is  attempted 
by  the  Federal  Reserve  Board  or,  if  attempted,  is  given  up  because  of 
lack  of  public  support,  another,  but  in  my  judgment  less  satisfactory, 
method  of  lessening  the  danger  of  excessive  credit  should  be  adopted. 
At  some  favorable  moment,  when  the  public  is  in  a  conservative  mood, 
the  legal  reserve  requirements  against  federal  reserve  notes,  or  against 
both  notes  and  deposits  should  be  raised.  A  reserve  ratio  of  50  per 
cent  or  even  60  per  cent  would  permit  much  more  additional  credit  ex- 
pansion than  was  possible  under  the  national  banking  system,  and  quite 
as  much  as  could  be  advantageously  employed.  The  economic  develop- 
ment of  the  country  might  have  been  somewhat  more  rapid  at  times  in 
the  past  had  more  capital  been  available,  but  credit  is  not  capital;  it 
is  simply  an  agency  for  transferring  capital.  I  venture  to  assert  that 
at  no  time  in  the  past  has  the  economic  development  of  the  country 
been  retarded  because  of  an  insufficient  supply  of  credit,  while  very 
frequently  development  has  been  retarded  as  a  consequence  of  credit 
furnished  in  excess. 

The  experience  of  six  years  has  disclosed  no  serious  defects  in  the 
structure  or  management  of  the  federal  reserve  system,  while  the  ex- 
pansive credit  power  of  the  system,  enormously  greater  than  that  under 
the  national  banking  system,  presents  no  serious  danger  for  the  future 
if  suitable  policies  are  adopted.  Much  more  is  clearly  necessary  than 
the  adjustment  of  discount  rates  to  variations  in  the  reserve  position  of 
the  reserve  banks.  A  discount  policy  should  be  adopted  which  is  de- 
signed to  check  the  rapid  expansion  of  credit  in  periods  of  trade  activ- 
ity. Such  a  policy  is  entirely  practicable  but  it  cannot  be  adopted  in 
the  absence  of  general  confidence  in  the  wisdom  of  the  policies  of  the 
management  of  the  reserve  banks,  and  it  requires  readiness  on  the  part 
of  the  public  to  support  these  policies  even  when  the  immediate  con- 
sequences are  painful.  Satisfactory  results  from  the  working  of  the 
reserve  system  seem  assured  if  the  management  is  given  the  support  of 
an  intelligent  public  opinion. 

O.  M.  W.  Sprague. 
Harvard  University. 


30  R.  C.  Leffingrcell  [March 

DISCUSSION1 

R.  C.  Leffingwell. — No  university  man,  certainly  not  one  who  studied 
economics  in  the  university,  can  approach  this  audience  without — I  would 
not  say  trepidation,  but — respect.  I  accepted  your  invitation  not  only  with 
respect,  but  with  real  enthusiasm,  because  I  look  upon  the  economists  of 
today  as  the  priests  of  a  religion  of  material  salvation  which  must  be  suc- 
cessfully preached  throughout  this  land  if  we  are  to  survive  the  disastrous 
consequences  of  the  great  war. 

I  shall  not  allow  myself  to  be  diverted,  either  by  my  own  impetuous  dis- 
position or  by  Professor  Sprague's  cordial  invitation,  into  a  discussion  of 
the  Treasury's  policies.  I  had  the  honor  of  reading  a  paper  on  "Treasury 
Methods  of  Financing  the  War  in  Reference  to  Inflation"  before  the  Acad- 
emy of  Political  Science  last  spring  in  New  York,  and  any  one  who  is  in- 
terested in  my  answer  to  Professor  Sprague  is  respectfully  referred  to  its 
proceedings.2  The  problem  of  today  is  the  problem  of  banking  and  cur- 
rency, and  the  assigned  topic  of  this  meeting  is  Federal  Reserve  Board 
policy.  I  propose  to  talk  as  briefly  as  I  can  about  that  absorbingly  inter- 
esting subject.  But  in  passing  let  me  say  this:  the  Treasury  struggled, 
first  to  finance  the  war  so  that  it  should  be  won,  and  second  to  finance  it 
without  avoidable  inflation.  There  was  never  a  moment  when  the  latter 
thought  was  not  in  the  minds  of  Treasury  officials;  there  was  never  a  mo- 
ment when  the  American  people  did  not  know  that  their  duty  was  to  save 
and  to  buy  Liberty  bonds  and  pay  taxes  with  their  savings.  The  methods 
chosen  by  the  Treasury,  the  Federal  Reserve  Board,  and  other  instrumen- 
talities of  the  government  to  combat  inflation  were  chosen  thoughtfully  and 
were  on  the  whole  very  successful.  No  equal  financial  burden  was  ever 
assumed  in  a  like  period  of  time  by  this  or  any  other  government  in  this 
or  any  other  war,  yet  war  inflation  here  was  less  than  in  other  countries 
including  non-belligerents. 

But  inflation  did  come.  It  came  to  us  before  we  entered  the  war.  It 
came  to  Japan,  it  came  to  European  neutrals.  Inflation  came  because  the 
world  was  wasting  more  than  it  was  producing.  We  may  be  very  ingenious 
in  our  methods  and  very  wise  in  our  policies,  but  they  could  not  solve  the 
problem  presented  by  the  fact  that  the  world  was  using  up  more  than  it 
was  producing.  It  is  exceedingly  important  that  we  should  have  the  dis- 
cussion of  federal  reserve  policies  we  are  having  today.  But  it  is  more  im- 
portant that  we  should  realize  what  federal  reserve  or  treasury  policies 
will  not  do.  They  will  not  take  away  the  curse  of  war.  We  fought  a  great 
war.  We  are  proud  of  it  and  glad  of  it.  But  from  the  economic  point  of 
view,  it  was  a  reckless  debauch,  and  the  people  ought  to  be  told  that  the 
next  time  they  enter  upon  an  economic  debauch  they  must  pay  the  price, 
and  the  price  will  be  registered  in  inflation.  We  must  not  delude  ourselves, 
or  those  who  rely  upon  us,  with  the  belief  that  the  consequences  of  economic 
waste  can  be  avoided  by  any  amount  of  wisdom  and  ingenuity  in  finance 
or  banking. 

Having  thus  got  the  question  of  method  back  in  perspective,  let  us  con- 
sider the  Federal  Reserve  Board's  policies.     The  problem  of  credit  control 

i  The  remarks  of  Dr.  A.  C.  Miller,  who  took  part  in  the  discussion  will  appear  in 
more  amplified  form  in  an  article  to  he  puhlished  in  the  June  number. 

2  Proceedings  of  the  Academy  of  Political  Science   (New  York),  vol.  IX,  no.  1. 


1921]         The  Discount  Policy  of  the  Federal  Reserve  Banks  31 

since  the  creation  of  the  federal  reserve  system,  shortly  after  the  war  broke 
out  in  Europe,  has  passed  through  four  phases  :-(l)  before  we  entered  the 
war,  (2)  during  our  active  participation  in  the  war,  (3)  the  first  year  after 
armistice,  and   (4)  the  present  readjustment  period. 

Before  we  entered  the  war,  expansion  in  this  country  was  based  upon  the 
importation  of  gold  and  investment  securities.  The  federal  reserve  sys- 
tem was  as  powerless  as  a  babe  unborn  to  prevent  it.  The  federal  reserve 
banks  were  hard  put  to  it  to  earn  their  operating  expenses.  Member  banks 
did  not  have  to  borrow  and  therefore  bank  rates  could  not  be  effective. 

The  outbreak  of  the  war  in  Europe,  prior  to  the  organization  of  the  fed- 
eral reserve  banks,  found  this  country  well  nigh  helpless  to  meet  the  financial 
and  banking  problems  thrust  upon  it.  New  York  City  had  trouble  to  meet 
its  foreign  obligations  in  gold.  The  New  York  Stock  Exchange  was  closed 
for  a  protracted  period  and  later  hesitatingly  resumed  operations  under 
careful  restrictions.  These  things  happened  because  our  financial  system 
was  in  its  infancy,  and  notwithstanding  the  fact  that  America  was  not  a 
party  to  the  war.  It  was  not  long  before  the  federal  reserve  system  was 
put  in  operation,  and  when,  nearly  three  years  after  the  outbreak  of  the 
war  in  Europe,  America  herself  entered  the  war  and  assumed  financial  bur- 
dens of  unparalleled  magnitude,  the  federal  reserve  system  made  it  possible 
for  us  to  meet  them  without  financial  disturbance  and  without  embarrass- 
ment of  the  Nation's  capacity  to  produce  and  transport  war  materials  and 
supplies.  The  Federal  Reserve  authorities  have  no  need  to  shelter  behind 
the  Treasury's  broad  shoulders  and  they  are  entitled  to  high  praise  and  the 
lasting  gratitude  of  the  American  people  for  the  important  part  they  took 
in  financing  the  great  war.  They  advised  the  Treasury  in  the  dark  days  of 
the  war.  Treasury  officials  and  Federal  Reserve  authorities  did  not  always 
agree  among  themselves  or  with  each  other,  but,  in  the  proud  record  of  the 
Treasury,  as  well  as  of  the  federal  reserve  system,  members  of  the  Federal 
Reserve  Board  and  governors  and  chairmen  of  the  federal  reserve  banks 
are  entitled  to  claim  a  share. 

After  we  entered  the  war  the  addition  of  this  government's  buying  power 
to  the  buying  power  of  the  governments  of  Europe  created  a  wholly  abnor- 
mal situation.  The  enthusiasm  of  our  War  Department  and  Navy  Depart- 
ment was  unlimited.  Their  orders  and  contracts  called  for  goods  and  ser- 
vices far  in  excess  of  the  country's  capacity.  During  the  whole  period  of 
the  war  any  attempt  of  the  Federal  Reserve  Board  to  control  credit  through 
rates  would  have  been  futile.  The  Treasury  would  have  had  to  meet  any 
rate  they  made  at  home,  and  the  federal  reserve  bank  rate  could  have  no 
effect  upon  the  international  situation,  because  the  international  movement 
of  goods,  gold,  and  capital  was  controlled  by  foreign  governments  or  our 
own  for  the  purposes  of  the  war.  The  adoption  of  a  "dear  money"  policy 
during  the  war,  with  a  view  to  preventing  inflation,  would  have  failed  of 
that  purpose  unless  it  had  been  carried  to  such  an  extreme  as  to  bring  about 
such  conditions  in  war  time  as  exist  today,  in  which  case  we  should  have 
lost  the  war  and  would  have  had  to  inflate  afterwards  in  order  to  pay  the 
indemnity  which  Germany  would  have  imposed  upon  us !  No,  you  cannot 
use  rates  in  such  a  period  as  that  from  April,  1917,  to  November,  1918, 
effiectively  to  control  credit.  You  have  to  adopt  methods  such  as  were 
adopted,  and  with  a  very  extraordinary  degree  of  success.  The  response 
which  the  American  people  made  to  the  efforts  of  the  Treasury  and  Federal 


32  R.  C.  LeffingweU  [March 

Reserve  Board,  of  the  Liberty  Loan  and  War  Savings  organizations,  of  the 
Capital  Issues  Committee,  of  the  Food  and  Fuel  Administrations,  and  of 
the  War  Industries  Board,  for  the  most  part  without  compulsion  of  law,  to 
conserve  capital,  credit,  goods,  and  services,  was  amazing  proof  of  the 
passion  with  which  the  people  entered  the  war.  They  worked  and  they 
saved  and  they  did  without  things,  and  they  are  entitled  to  be  proud  of  it. 

After  the  war  was  over  in  the  fighting  sense,  it  went  right  on  in  the 
Treasury  sense.  We  reached  the  peak  of  expenditures  in  the  three  months, 
November  and  December,  1918,  and  January,  1919.  We  spent  two  billion 
dollars  a  month.  That  was  as  much  as  the  First  Liberty  Loan  each  month. 
Since  armistice  day  this  Government  has  paid  out  as  much  as  before  armi- 
stice day,  twenty  billions  before  and  twenty  billions  after.  The  gross  debt 
of  the  Government  on  armistice  day  was  eighteen  billions.  Nine  months 
later  it  was  twenty-six  and  a  half  billions.  While  the  Government  debt 
was  mounting  thus,  the  same  condition  continued  which  had  existed  during 
the  period  of  active  warfare.  It  was  no  more  practicable  to  exercise  con- 
trol of  credit  by  the  use  of  dear  money  than  it  had  been  before.  Indeed, 
it  was  less  practicable,  because  the  enthusiasm,  devotion  and  self-sacrifice 
of  the  American  people  while  war  was  on  vanished  over  night  with  the  sign- 
ing of  armistice.  The  bills  did  not  get  paid  any  easier,  but  a  good  deal 
harder,  because  the  Germans  had  capitulated. 

The  magnitude  of  the  Government's  expenditures  after  armistice  day  was 
such  that  plans  had  to  be  made  for  funding  the  greater  part  of  them.  The 
Victory  Liberty  Loan  was  floated  in  April  and  May,  1919,  successfully,  and 
a  large  part  of  the  after-armistice  indebtedness  was  lodged  with  investors. 
It  could  not  have  been  floated  in  any  such  amount  upon  any  terms  in  a 
period  of  dear  money.  If  it  had  not  been  for  the  Victory  Loan,  the  floating 
debt  would  have  amounted  to  more  than  $8,000,000,000  on  August  31,  1919. 
You  cannot  have  credit  control  with  an  unmanageable  floating  government 
debt.  If  the  Federal  Reserve  Board  had  prematurely  adopted  a  dear  money 
policy,  they  would  have  rushed  into  the  difficult  position  in  which  unfortu- 
nately the  Bank  of  England  found  itself  because  the  British  floating  debt 
had  gotten  out  of  hand.3 

The  situation  I  have  described  did  not  really  end  on  August  31,  1919 — 
not  indeed  until  January,  1920.  Notwithstanding  the  success  of  the  Vic- 
tory Loan,  it  was  not  paid  for  in  full  until  the  latter  part  of  November, 
1919,  nor  had  the  Fourth  Liberty  Loan,  issued  in  the  fall  of  the  previous 
year,  yet  been  paid  for  in  full;  and  the  Federal  Reserve  Board  remained 
in  a  difficult  position  with  respect  to  the  problem  of  credit  control  on  this 
account  and  on  account  also  of  the  fact  that  nearly  two  billion  dollars  of 

3  Economist,  London,  Jan.  24,  1920,  p.  113:  "Plenty  of  money  and  a  consequent  de- 
mand for  bills  have  been  the  chief  features  of  the  internal  history  of  the  money 
market.  The  plenty  may  be  attributed  to  the  fresh  creation  of  ways  and  means 
advances,  necessitated  by  the  maturing  of  more  Treasury  bills  than  were  applied 
for.  By  this  process,  as  we  have  frequently  pointed  out,  dealers  in  and  users  of 
credit  can  now  at  any  time  oblige  the  government  to  create  more  'cash  at  the  bank' 
by  the  weapon  that  they  hold  in  the  shape  of  1,000  millions  odd  Treasury  bills  out- 
standing. Thus  the  powers  that  be  can  make  money  dear  by  paying  more  for  it,  but 
they  can  not  make  it  really  scarce  until,  by  taxation  or  otherwise,  they  have  re- 
duced the  effectiveness  of  this  weapon." 


1921]         The  Discount  Policy  of  the  Federal  Reserve  Banks  33 

treasury  certificates  of  indebtedness  matured  within  six  weeks,  or  there- 
abouts, in  December,  1919,  and  January,  1920.  The  last  six  months  of  1919 
were  therefore  trying  months,  and  the  Federal  Reserve  authorities,  rightly  I 
think,  moved  cautiously  in  the  use  of  the  discount  rate,  testing  that  instru- 
ment under  novel  conditions.  Early  in  November,  1919,  they  began  a 
series  of  fractional  increases  in  rates,  but  notwithstanding  that  caution,  a 
quasi-panic  in  the  securities  market,  particularly  in  government  bonds,  de- 
veloped in  the  latter  part  of  November,  1919. 

There  were  a  number  of  other  obstacles  in  the  way  of  more  rapid  progress 
in  establishing  credit  control  during  that  period: 

The  Treasury  was  in  honor  bound  to  use  the  bond  purchase  fund  estab- 
lished by  Congress  for  that  purpose  to  support  the  market  for  Liberty 
Bonds.  Thus  whatever  pressure  upon  the  money  market  resulted  from  the 
efforts  of  the  Federal  Reserve  authorities  to  control  credit  was  automatically 
relieved  by  the  Treasury.  It  is  noteworthy  that  efforts  to  control  credit 
never  gave  any  sign  of  becoming  effective  until  in  April,  1920,  the  Treas- 
ury's moral  obligation  having  been  satisfied,  it  discontinued  purchases  for 
the  bond  purchase  fund. 

The  Federal  Reserve  authorities  had,  wisely  I  think,  undertaken  the  task 
of  creating  a  market  for  acceptances,  but  in  the  effort  to  do  so  had  felt  it 
necessary  to  take  acceptances  at  an  artificially  low  rate. 

An  arrangement  had  been  entered  into  during  the  war  by  which  an  in- 
crease in  the  clearing  banks'  rate  on  interbank  deposits  would  result  from 
any  increase  in  the  reserve  banks'  ninety-day  rate  on  commercial  paper. 
It  was  generally  agreed  that  such  an  increase  in  the  rate  upon  interbank 
deposits  would  be  harmful  to  the  whole  situation,  but  the  Federal  Reserve 
authorities  did  not  find  it  possible  to  eliminate  this  arrangement  until  Janu- 
ary, 1920. 

The  effort  to  eliminate  the  differentials  in  favor  of  loans  on  government 
securities,  which  had  much  to  commend  it  from  a  theoretical  point  of  view, 
placed  the  federal  reserve  system  in  a  dilemma  between  subsidizing  infla- 
tion by  maintaining  a  rate  much  below  the  market  on  commercial  paper, 
or,  on  the  other  hand,  creating  a  disaster  in  the  market  for  government  se- 
curities. It  was  finally  solved  in  January,  1920,  subordinating  theory  to 
the  practical  requirements  of  the  situation,  by  elevating  the  commercial  rate 
considerably  more  than  the  rate  on  war  paper.4 

Though  something  may  be  said  for  the  view  that  in  the  latter  part  of 
1919  there  might  have  been  a  somewhat  earlier  and  greater  advance  in  rates 

4  The  Federal  Reserve  Banks'  holdings  of  paper  secured  by  Government  war  obli- 
gations reached  their  peak  on  May  16,  1919  (just  before  the  date,  May  20,  1919, 
when  the  first  payment  on  the  Victory  Loan  reached  the  Federal  Reserve  Banks), 
when  the  amount  of  such  paper  was  $1,863,000,000.  On  the  same  date,  May  16, 
1919,  the  Federal  Reserve  Banks'  holdings  of  commercial  paper,  including  bills 
bought  in  the  open  market,  were  at  about  low-water  mark,  $359,000,000.  Since  May 
16,  1919,  there  has  been  a  pretty  continuous  contraction  in  their  holdings  of  paper 
secured  by  Government  war  obligations  and  expansion  in  their  holdings  of  com- 
mercial paper.  On  December  26,  1919,  war  paper  had  been  reduced  to  $1,510,000,000, 
but  commercial  paper,  including  acceptances,  had  increased  to  $1,270,000,000.  On 
December  3,  1920,  war  paper  had  been  reduced  to  $1,161,000,000,  but  commercial 
paper  had  increased  to  $1,859,000,000. 


34  J?.  C.  Lefjingwell  [March 

on  commercial  paper  and  in  the  open  market  buying  rates  for  acceptances, 
my  own  judgment  is  that  this  is  a  question  of  detail,  rather  than  of  sub- 
stance, and  that  the  effort  to  make  money  really  dear  before  January,  1920, 
when  the  Government  was  first  able  to  reduce  its  floating  debt  to  manage- 
able amounts  and  maturities,  would  have  risked  more  than  it  could  have 
hoped  to  gain. 

During  the  whole  of  1919  the  continuance  of  war  expenditures  and  poli- 
cies by  the  other  departments  of  our  Government,  such  as  the  War  and 
Navy  Departments,  the  Shipping  Board  and  the  Food  and  Railroad  Ad- 
ministrations, and  the  expenditures  of  foreign  governments  out  of  loans  made 
by  the  Treasury  in  pursuance  of  credits  or  commitments  previously  made, 
continued  the  abnormal  demand  for  goods  and  services  and  the  inflation  of 
prices  and  wages,  and  of  the  public  debt.  Professor  Sprague  spoke  of  one 
instance:  The  regrettable  fact  is  that  the  Government  of  the  United  States 
continued  to  furnish  railroad  transportation  at  less  than  cost  until  Sep- 
tember 1,  1920,  nine  months  after  the  Federal  Reserve  Board  adopted  its 
dear  money  policy,  and  continues  today  to  lend  money  to  the  railroads  at 
less  than  cost  and  much  less  than  the  market  rate. 

On  the  other  hand,  the  removal  by  the  Treasury  and  the  Federal  Reserve 
Board  of  the  gold  embargo  immediately  after  the  Victory  Loan  was  the 
most  important  and  effective  step  towards  deflation  taken  in  1919. 

During  the  latter  half  of  1919,  the  Federal  Reserve  Board  attempted  to 
deal  with  the  problem  of  inflation  by  what  Dr.  Miller  has  called  "direct 
action."  It  was  apparent  that,  because  of  the  gold  embargoes  maintained 
by  practically  every  country  except  the  United  States,  and  because  of  other 
extraordinary  conditions,  an  increase  in  the  reserve  banks'  rates  could  not 
operate  upon  the  international  situation,  in  accordance  with  the  pre-war 
classical  example  of  the  Bank  of  England,  for  instance,  either  to  cause  the 
importation  or  curtail  the  exportation  of  gold,  or  to  curtail  the  importation 
or  increase  the  exportation  of  commodities.  An  increase  in  rates  could 
operate  solely  upon  the  domestic  situation,  and  with  painful  results.  Under 
these  circumstances  the  Federal  Reserve  Board  was,  I  think,  bound  to  make 
the  effort  to  deal  with  the  problem  by  direct  action.  As  a  matter  of  fact, 
it  was  not  until  the  spring  of  1920,  when  both  direct  action  and  dear  money 
were  in  full  effect,  that  the  reserve  system  was  able  to  get  any  control  of 
credit.5 

A  difficulty,  peculiar  to  this  country,  in  the  way  of  the  successful  exer- 
cise of  credit  control  by  the  Federal  Reserve  Board,  whether  by  direct  ac- 
tion or  by  dear  money,  lies  in  the  fact  that  there  are  some  thirty  thousand 

e  The  Economist,  which  has  heen  a  consistent  critic  of  the  Bank  of  England's  dear 
money  policy,  puts  the  argument  for  direct  action  briefly  in  its  issue  of  January  3, 
1920,  page  3,  as  follows:  "In  old  days  when  the  gold  standard  was  effective,  raising 
money  rates  at  a  time  of  undue  credit  expansion  used  to  increase  the  basis  of  credit 
by  bringing  us  gold.  In  these  times  no  such  effect  can  be  counted  on,  and  the 
higher  price  that  has  to  be  paid  for  money  by  speculators  in  securities  and  com- 
modities has  little  effect  upon  them  in  view  of  the  great  fluctuations  in  prices  and 
the  large  profits  that  these  fluctuations  bring  them.  If  credit  is  to  be  reserved  for 
producers  and  distributors  of  necessaries  and  restricted  for  those  who  are  holding 
up  commodities,  this  end  would  seem  to  be  best  accomplished  by  joint  action  on  the 
part  of  the  banks." 


1921]         The  Discount  Policy  of  the  Federal  Reserve  Banks  35 

banks  and  trust  companies  in  the  country  of  which  only  some  ten  thousand 
are  members  of  the  federal  reserve  system,  and  that  non-member  banks  and 
non-borrowing  member  banks  possessed  an  enormous  capacity  for  expansion 
independent  of  the  federal  reserve  system. 

When  in  January,  1920,  the  Government's  floating  debt  had  at  last  been 
reduced  to  manageable  amounts  and  maturities,  but  the  hoped  for  liquida- 
tion did  not  materialize,  the  Federal  Reserve  Board  proceeded  with  vigor 
to  control  credit  through  rates.  There  was  no  reluctance  about  the  Treas- 
ury's acquiescence  in  this  change  in  the  discount  policy  of  the  Federal 
Reserve  Board.  On  the  contrary,  the  Treasury  strongly  advised  the  6  per 
cent  rate  which  was  adopted  in  January,  and  the  7  per  cent  rate  which 
was  adopted  in  May,  1920. 

In  thus  advancing  rates  the  Federal  Reserve  Board  proceeded  wisely  and 
courageously  in  the  effort  to  control  expansion.  With  equal  wisdom  and 
courage  it  has  not  attempted  to  prevent  it;  and  by  permitting  rates  to  re- 
main below  the  open  market  rates  and  credit  to  be  expanded  during  the 
period  of  deflation  of  prices,  it  has  prevented  the  present  business  depres- 
sion from  degenerating  into  an  old-fashioned  panic. 

The  experiment  made  in  1920  of  establishing  penal  rates  for  excessive 
borrowings  was  well  worth  trying.  It  may  be  questioned,  however,  whether 
experience  has  justified  it.  Certainly  the  adoption  of  the  system  of  penal 
rates  in  a  given  federal  reserve  district  does  not  justify  the  maintenance  of 
a  basic  rate  in  that  district  lower  than  the  rate  maintained  by  reserve  banks 
of  neighboring  districts  or  of  the  financial  centers  of  the  country. 

Turning  now  to  the  future  of  federal  reserve  policy: 

I  share  Dr.  Miller's  objection  to  Professor  Sprague's  suggestion  that 
federal  reserve  rates  should  be  determined  by  price  movements.  There  is 
no  man,  or  group  of  men,  to  whom  the  American  people  will,  or  should,  ac- 
cord the  right  to  determine  whether  they  shall  be  prosperous  or  miserable, 
whether  they  shall  have  high  prices  or  low  prices,  whether  they  shall  have 
good  times  or  bad  times.  The  day  Professor  Sprague's  suggestion  is 
adopted  by  the  Federal  Reserve  Board  marks  the  end  of  the  federal  re- 
serve system.  It  would  be  absurd  for  the  Federal  Reserve  Board  to  ignore 
price  movements  as  symptoms  of  the  general  situation,  but  it  cannot  base 
its  discount  policy  upon  them. 

On  the  other  hand,  the  reserve  alone  is  not  an  adequate  guide.  The  ob- 
vious first  principle  is  that  the  discount  rate  should  be  above  the  market 
rate,  whether  in  consequence  of  the  elevation  of  the  Reserve  Banks'  rates 
or  the  depression  of  market  rates.  When  it  is  possible  to  bring  about  this 
condition  it  will  be  the  first  duty  of  the  Federal  Reserve  authorities  to  see 
to  it  that  the  command  thus  obtained  of  credit  is  maintained.  When  the 
reserve  banks'  rates  are  above  the  open  market  rates  they  will  exert  an 
automatic  pressure  on  the  banks,  which  cannot  be  expected  to  meet  their 
customers'  demands  habitually  at  a  loss.  It  is  true  that  under  normal  con- 
ditions a  central  bank's  rate,  even  when  it  is  above  the  market  rate,  is  not 
always  effective.  As  I  have  pointed  out,  the  reserve  banks'  rates  were  in- 
effective before  we  entered  the  war.  But  that  situation  need  not  concern 
us  now  nor  for  a  long  time  to  come,  I  imagine.  It  cannot  happen  until 
the  production  and  saving  of  real  wealth  have  made  good  the  war's  waste, 
and  the  independent  resources  of  the  banks  suffice  for  the  normal  require- 
ments of  their  customers.     Then  the  member  banks'  dependence  upon  the 


36  R.  C.  Leflingwell  [March 

federal  reserve  system  will  be  as  it  should  be,  seasonal  or  occasional,  and 
not  habitual.  Until  then  the  market  rates  will  tend  to  maintain  themselves 
above  reserve  bank  rates  automatically,  unless,  of  course,  panic  rates  should 
be  established,  and  we  may  be  confident  that  they  will  not  be. 

If  the  reserve  gets  big  enough  to  be  embarrassing,  the  best  cure  for  the 
situation  which  will  then  arise  is  to  pay  out  gold  and  gold  certificates,  and 
restore  them  to  circulation.  Currency  and  credit  have  been  expanded  by 
the  federal  reserve  system  both  because  of  the  economy  in  the  use  of  the 
reserve  permitted  by  the  federal  reserve  act  and  because  of  the  withdrawal 
of  gold  and  gold  certificates  from  circulation  in  this  country  and  the  sub- 
stitution of  federal  reserve  notes  requiring  only  a  40  per  cent  reserve. 
We  shall  not  have  restored  our  pre-war  financial  strength  until  we  have  re- 
turned to  circulation  the  gold  and  gold  certificates  withdrawn  during  the 
war  and  since,  and  thus  re-created  the  greatly  depleted  "secondary  reserve." 
To  the  extent  that  gold  and  gold  certificates  are  thus  restored  to  circulation 
and  federal  reserve  notes  withdrawn,  the  practical  importance  of  the  ob- 
jection raised  by  Professor  Sprague  and  Dr.  Miller  to  the  federal  reserve 
note  as  a  credit  note,  as  compared  with  the  Bank  of  England  note  as  a  gold 
note,  will  be  reduced. 

In  conclusion:  Vastly  important  as  are  these  questions,  more  important 
by  far  is  the  fact  that  today  the  governments  of  the  world  are  busily  en- 
gaged in  dissipating  the  resources  of  the  people  of  the  world;  and  the  Gov- 
ernment of  the  United  States  of  America  is  not  guiltless.  Just  so  long  as 
we  enroll  armies  and  build  navies  in  preparation  for  future  wars,  as  men 
rush  to  Washington  for  relief  and  for  special  privileges,  just  so  long  will 
the  fabric  of  the  economic  state  be  in  peril.  There  is  nothing  that  econo- 
mists can  do,  nothing  that  the  American  people  can  do  to  save  themselves, 
except  demand  that  the  waste  of  public  funds  shall  stop — that  there  shall 
be  no  more  militarism,  no  more  subsidies  or  doles. 

The  Federal  Reserve  authorities  have  stood,  during  the  three  or  four 
years  of  my  acquaintance  with  them,  for  sound  things  in  finance,  for  sound 
things  in  banking  and  currency.  They  are  entitled  to  the  support  of  all 
good  citizens,  because  they  stand  today  with  their  shoulders  squared  against 
the  winds  of  popular  stupidity,  of  political  ingenuity,  and  of  selfish  interest. 
Give  them  your  support. 


THE  THEORY  OF  PRODUCTION1 

Writing  of  the  state  of  theories  of  production  and  distribution  that 
were  current  from  1776  to  1848,  Professor  Cannan  found  it  "not  very 
easy  to  understand  the  admiration  which  was  once  felt  for  the  progress 
made  during  that  period."2  In  another  part  of  the  same  work  he  calls 
attention  to  the  "unsatisfactory  character  of  theories  of  production 
and  distribution  regarded  from  a  purely  scientific  point  of  view."3 
Whether  the  theory  of  production  or  of  distribution  weighed  more 
heavily  in  his  scale  of  estimate,  it  is  difficult  to  say.  Whether,  also, 
his  disappointment  with  the  progress  of  economic  science  in  these  fields 
was  due  to  inherent  doctrinal  fallacy  in  the  system  of  political  economy 
he  is  reviewing  or  to  the  restricted  scope  of  subject-matter  which  eco- 
nomic science  set  up  for  itself,  it  is  likewise  difficult  to  say.  But  it  is 
clear  that  these  two  elements  in  scientific  systems  are  not  one  and  the 
same  thing.  For  science  may  fail  to  meet  current  needs  either  because 
its  laws  or  principles  cannot  stand  the  test  of  the  accepted  canons  of 
formal  logic  or  because  these  principles  are  based  upon  a  restricted 
range  of  phenomena.  A  theory  of  production  may,  in  other  words,  be 
true  as  far  as  it  goes,  but  it  may  at  the  same  time  be  practically  use- 
less because  it  does  not  go  far  enough.  Scientific  progress  is  effected, 
accordingly,  not  only  by  the  refinement  of  old  tools  and  the  rearrange- 
ment of  old  material,  but,  to  a  much  greater  degree,  by  the  fashioning 
of  new  tools  and  the  addition  of  new  material  that  requires  explanation 
and  formulation — in  short,  by  widening  the  range  of  scientific  inquiry. 
The  recognition  of  this  fact  makes  necessary  from  time  to  time  the  re- 
statement of  the  problems  of  a  science  in  such  a  form  as  to  permit  a 
survey  of  the  materials  of  science  that  have  hitherto  been  neglected. 
In  the  light  of  these  considerations,  this  paper  addresses  itself  to  an 
examination  of  the  current  theories  of  production. 


That  the  price  concept  dominates  contemporary  economic  theory  is 
a  truism.  It  is  not  altogether  clear,  however,  what  form  this  domina- 
tion takes  and  what  consequences  in  theory  it  entails.  For  the  pur- 
poses of  this  discussion  it  is  sufficient  to  say  that  thinking  in  terms  of 
money  units  has  created  serious  difficulties  in  the  measurement  of  na- 
tional income  and  wealth  and  in  the  interpretation  of  the  facts  of  pro- 
ductive processes,  and  that  the  price  paid  for  these  difficulties  is  not 

iThis  paper  was  read  at  the  Thirty-third  Annual  Meeting  of  the  American  Eco- 
nomic Association  held  in  Atlantic  City,  December  28,  1920. 
2  Cannan,  Theories  of  Production  and  Distribution,  second  edition,  p.  379. 
•Ibid.,  ch.  IX. 


38  Leo  Wolman  [March 

warranted  by  the  returns  in  economic  theory.  Whether  properly  a 
part  of  economic  theory  or  not,  discussions  of  the  magnitude  and  dis- 
tribution of  national  wealth  and  income  have  for  a  long  time  held  a 
prominent  place  in  economic  writing.  Both  lay  and  professional  stu- 
dents of  economic  life  want  to  know  not  only  how  industrial  organiza- 
tion works  but  also  what  its  practical  effects  are.  Measures  of  wealth 
and  income  are  ways  of  estimating  the  efficiency  of  the  industrial  or- 
ganization of  communities.  They  are  barometers  of  material  progress 
and  of  shifts  in  social  control.  And  they  are  almost  without  exception 
constructed  on  the  basis  of  money  units.  When  expressed  in  absolute 
terms  they  are  money  aggregates  and  when  expressed  in  relative  terms 
they  represent  simply  the  relationships  of  the  same  aggregates  to  one 
another.  Yet,  widespread  as  this  process  of  money  measurement  is, 
and  useful  as  the  results  of  inquiry  into  money  measures  may  be,  the 
fact  remains  that  the  initial  results  of  industrial  activity  are  physical 
goods  and  services — wheat,  coal,  locomotives,  power  generators,  and 
light.  And  it  is  on  the  abundance  or  scarcity  of  such  things  that  the 
material  well-being  of  peoples  depends.  Now,  it  is  conceivable  that  the 
relation  between  the  physical  output  of  a  country  and  its  money  value 
is  of  so  simple  and  constant  a  nature  that  conversion  from  one  to  the 
other  is  a  matter  of  elementary  arithmetic.  This  is  in  fact  sometimes 
the  case.  But,  for  the  most  part,  market  phenomena  in  modern  society 
are  so  complex  that  conversion  is  beset  with  technical  difficulties  almost 
insurmountable. 

This  difficulty  appears  in  its  simplest  form  where  money  wealth  and 
income  vary  because  of  changes  in  the  purchasing  power  of  the  pre- 
vailing unit  of  value.  Thus,  in  the  study  of  variations  in  wages,  a  form 
of  income  which  is  usually  expended  with  great  celerity,  devices  are  em- 
ployed to  neutralize  the  influence  of  price  fluctuations.  Much  time  and 
energy  have  been  expended  in  the  construction  of  correction  factors  that 
are  designed  to  bridge  the  span  between  money  and  goods.  Index 
numbers  of  wholesale  prices,  retail  prices,  and  of  the  cost  of  living — 
each,  with  all  of  its  variants,  has  at  one  time  or  another  served  this 
purpose.  Controversy  over  the  validity  of  alternative  devices  of  this 
nature  still  finds  a  place  in  the  technical  journals.  But  in  this  case 
the  problem  is  comparatively  simple.  The  incomes  of  individual  labor- 
ers are  relatively  small;  they  are  spent  almost  immediately  after  they 
are  received;  they  are  used  to  purchase  commodities  whose  prices  can, 
in  a  general  way,  be  easily  determined.  What,  however,  is  the  instru- 
ment that  should  be  used  to  correct  changes  in  the  money  value  of  cor- 
poration surpluses?  Should  an  income  of  one  million  dollars  in  a  period 
of  rising  prices  be  converted  from  money  to  real  income  on  the  same 


1921]  The  Theory  of  Production  39 

principle  as  that  by  which  conversion  is  made  of  incomes  under  three 
thousand  dollars  a  year? 

From  1904  to  1912,  the  national  wealth  of  the  United  States  in- 
creased 75  per  cent.  Population  in  the  same  period  increased  15  per 
cent  and  wholesale  prices  17  per  cent.  Even  if  allowance  be  made  for 
the  rise  in  prices  during  this  period,  the  wealth  of  the  country  shows 
a  substantial  increase.  The  question  is,  how  far  this  increase  in  total 
wealth  reflects  itself  in  the  material  status  of  members  of  the  com- 
munity. According  to  Watkins,  "some  of  this  sort  of  increase  in  na- 
tional wealth  is  doubtless  due  to  more  adequate  occupation  of  national 
advantages,  but  more  of  it  is  of  the  nature  of  the  increment  in  the  value 
of  the  ground  upon  which  New  York  City  is  built."*  That  is,  the 
money  wealth  of  the  country  increased  from  1904  to  1912,  not  through 
the  creation  of  more  goods  and  services,  but  through  appreciation  in 
land  values.  Nor  is  it  easy  to  estimate  with  only  a  small  margin  of 
error  the  portion  of  the  increment  of  wealth  that  originates  from  this 
source. 

Another  and  more  serious  class  of  problems  arises  from  the  effects  of 
the  progressive  utilization  of  the  natural  resources  of  a  country  and 
from  changes  in  public  policy  that  have  a  profound,  if  unknown,  in- 
fluence on  the  magnitude  of  national  wealth.  Enough  is  known  of  the 
system  of  valuation  of  public  utilities  in  this  country  to  permit  the 
generalization  that  their  advertised  money  value  may  bear  little  direct 
relation  to  their  physical  character.  A  private  water  company  on 
the  point  of  sale  to  a  municipality  will  have  one  value ;  for  the  purposes 
of  rate  valuation  it  will  have  a  second ;  as  taxable  property  it  may  have 
a  third ;  and  the  same  physical  property  finally  owned  by  the  state  may 
have  still  a  fourth.  By  only  the  smallest  stretch  of  the  imagination, 
all  of  these  stages  of  valuation  may  be  conceived  as  transpiring  within 
a  period  of  two  or  three  years.  Yet  the  water  company,  the  source  of 
potable  water  to  the  community  it  serves,  has  probably  experienced 
no  significant  change  in  its  physical  character  at  all.  Programs  of 
railroad  valuation  present  the  same  kind  of  picture.  Whether  one  or 
another  of  the  several  current  theories  of  railroad  valuation  earns  gen- 
eral acceptance,  the  railroads  of  the  United  States  will  at  any  one 
time  meet  the  needs  of  the  country,  not  by  showing  a  higher  or  lower 
valuation,  but  by  being  able  to  furnish  adequate  and  satisfactory  trans- 
portation service.     It  is  the  second  factor  that  counts. 

Public  utilities  also  exhibit  the  influence  of  a  class  of  phenomena  that 
probably  widen  the  gap  between  money  valuation  and  physical  capacity 
and  performance.     The  history  of  the  public  utility  has  been  a  story  of 

*  G.  P.  Watkins,  "Estimated  Valuation  of  National  Wealth,"  American  Economic 
Review,  September,  1915,  p.  689. 


40  Leo  Wolman  [March 

the  progressive  encroachment  of  the  authority  of  the  state  on  private 
control  and  ownership.  If  our  customary  conceptions  of  the  profit 
motive  are  sound,  this  development  must  produce  a  profound  effect  on 
the  money  value  of  public  utilities.  But,  whatever  has  happened  to 
money  value — and  the  material  for  answering  this  question  is  not  avail- 
able— the  increment  of  public  welfare  is  obviously  a  quantity  of  a 
different  nature  and  a  different  order  of  magnitude  from  anything  that 
can  be  reasonably  measured  in  money  terms.  This  is  particularly  the 
case  when  what  was  once  private  enterprise  has  passed  completely  into 
the  control  and  ownership  of  an  organized  community.  We  have  yet 
to  develop  a  continuous  system  of  money  accounting  that  can  accur- 
ately represent  the  value  to  communities  or  to  individuals  of  property 
that  has  so  changed  hands.  Conversely,  the  problem  appears  in  no 
simpler  form  when  the  economic  history  of  a  country  is  such  that,  de- 
scribed in  terms  of  well  known  economic  categories,  goods  are  con- 
stantly changing  in  status  from  free  to  economic  goods.  By  all  meth- 
ods of  measurement  with  which  we  are  familiar,  the  national  wealth 
would  under  such  conditions  increase.  Only  in  the  case  of  goods  whose 
supply  may  ultimately  be  entirely  exhausted,  is  it  possible  to  register 
in  money  accounting  the  loss  to  a  community  from  scarcity.  But  even 
in  such  a  situation,  the  time  when  money  wealth  falls  and  the  extent 
to  which  it  falls  are  largely  matters  of  speculation.  This  whole  ques 
tion  is  one  of  considerable  complexity  but  its  practical  implications  can 
be  indicated  in  a  question  of  this  nature:  "What  effect,  if  any,  will 
the  impending  exhaustion  of  our  natural  resource  of  crude  oil  exert  on 
the  next  estimate  of  the  national  wealth  of  the  United  States?" 

In  all  of  this  discussion  the  important  point  is  that  errors  of  one 
kind  or  another  are  likely  to  appear  in  estimates  of  national  wealth  and 
income.  The  errors  are  generally  of  such  a  character  that  neither 
their  number  nor  their  degree  is  calculable.  The  whole  process  is  one 
in  which  a  quantitative  goal  is  being  constantly  shifted  to  allow  for 
the  influence  of  a  range  of  variable  qualitative  factors.  Those  factors, 
furthermore,  are  usually  not  accidental  in  origin  but  are  directly  or 
indirectly  based  on  some  principle  of  economic  or  accounting  theory. 
An  estimate  of  the  national  wealth  of  a  country  is,  for  instance,  a 
money  aggregate  composed  of  a  large  number  of  constituent  money 
estimates.  The  determination  of  each  of  these  constituents  makes 
necessary  one  or  more  decisions  with  regard  to  content  and  magnitude 
and  the  resolution  of  all  of  the  difficulties  that  such  decisions  involve. 
Hence  the  larger  the  number  of  decisions  required,  the  more  complex 
the  raw  material,  the  greater  will  be  the  range  of  error.  Nor  is  it 
practically  possible  to  make  any  but  the  roughest  and  most  useless  al- 
lowances for  errors  of  this  nature.     For  most  estimates  of  this  kind 


1921]  The  Theory  of  Production  41 

rest  upon  a  great  deal  of  implicit  economic  and  accounting  theory  and 
an  insignificant  amount  of  explicit  theory.  One  reviewer  of  a  census 
estimate  of  national  wealth  left  "his  task  with  a  strengthened  feeling 
that  economic  statistics  must  be  as  much  economics,  even  theoretical 
economics,  as  statistics."  "It  would  do  no  harm,"  he  said,  "for  the 
Census  Bureau  to  make  its  theories  explicit."5  A  commentator  on 
King's  study  of  wealth  and  income,  while  expressing  great  admiration 
for  the  study,  lamented  the  absence  of  the  detailed  data  from  which 
the  validity  of  the  totals  might  be  tested.6  Given,  therefore,  an  un- 
known factor  of  this  nature  as  a  pervasive  component  of  all  estimates 
of  national  wealth,  and  the  difficulty  of  making  sound  judgments,  for 
the  purpose  of  accepting  or  rejecting  the  conclusions  of  the  study, 
should  be  evident. 

II 

Money  estimates  of  national  wealth,  then,  involve  logical  leaps  and 
methodological  assumptions  that  dictate  their  use  with  the  utmost  of 
caution  and  circumspection.  But  the  measurement  of  wealth  in  terms 
of  money  is  only  one  manifestation  of  a  universal  practice  which  un- 
derlies organized  economic  thinking.  And  it  is  to  the  more  subtle  and 
indirect  influences  of  a  pecuniary  economic  theory  that  our  attention 
should  turn.  Men  and  women,  in  contemporary  economic  life,  may  be 
described  as  leading  double  lives.  They  live,  on  the  one  hand,  in  the 
market  place,  bargaining  for  wages,  bread,  stocks  and  bonds,  locomo- 
tives, and  what  not ;  and,  on  the  other  hand,  they  live  in  factories, 
stores,  offices,  and  farms,  where  they  are  machine  tenders,  hand  oper- 
atives, managers,  promoters,  'and  clerks.  If  some  of  the  energy  of 
modern  men  is  expended  in  the  function  of  bargaining,  or  valuation, 
certainly  a  far  greater  amount  is  consumed  in  the  processes  of  inven- 
tion, management,  and  manual  labor.  Yet,  so  profoundly  has  the  study 
of  market  phenomena  and  price  determination  directed  scientific  eco- 
nomic thinking,  that  technological  and  psychological  phenomena,  funda- 
mental in  more  ways  than  one  to  a  proper  understanding  of  the  ma- 
chinery of  production,  have  been  almost  wholly  neglected.     The  meas- 

b  G.  P.  Watkins,  op.  cit.,  p.  689. 

6  "It  is  to  be  regretted  that  Mr.  King  has  not  taken  his  readers  more  into  his 
confidence  in  respect  to  these  and  other  details  of  the  methods  he  has  used.  He 
indicates  his  source  but  does  not  explain  all  of  his  estimates.  It  is  impossible  to 
verify  his  results  except  by  doing  his  work  over  again  from  the  beginning."  Allyn 
A.  Young,  Quarterly  Journal  of  Economics,  May,  1916,  p.  582.  It  is  interesting  that 
in  the  same  review,  Professor  Young  characterizes  the  book  as  "Free  from  irrelevant 
and  insignificant  detail,  it  represents  a  courageous  and  painstaking  attempt  to  get 
at  the  larger  facts  in  the  situation."  What  are  the  "larger  facts"  as  separate  and 
distinct  from  "irrelevant  and  insignificant  detail"? 


42  Leo  Wolman  [March 

urement  of  progress  in  terms  of  money  and  the  development  of  an  eco- 
nomic theory  in  almost  the  same  terms  have  had  the  effect  of  directing 
emphasis  and  of  throwing  light  on  one  class  of  economic  phenomena 
and  of  leaving  another  in  partial  obscurity.  Wherever,  in  the  prevail- 
ing theories  of  production,  the  attempt  has  been  made  to  consider  tech- 
nological and  psychological  factors,  the  results  have  been  formulae  of 
the  utmost  simplicity  and  generality  which  may  be  summed  up  in  the 
familiar  expressions  "division  of  labor"  and  "diminishing  returns." 

Nor  is  this  emphasis  on  the  market  place  limited  to  the  thought  of 
professional  economists.  It  permeates  popular  thinking  as  well. 
Whether  the  likeness  between  professional  and  lay  opinion  is  a  phe- 
nomenon of  cause  and  effect,  it  is  difficult  to  say.  But  that  it  exists 
there  is  no  doubt.  Mitchell's  description  of  the  situation  designates 
not  only  the  bare  facts  in  the  operations  of  a  pecuniary  economy  but 
also  the  nature  of  human  reactions  to  the  facts.  "The  economic  com- 
fort or  misery  of  a  modern  family  depends  not  upon  its  efficiency  in 
making  useful  goods  and  its  skill  in  husbanding  supplies,  but  upon  its 
ability  to  command  an  adequate  money  income  and  upon  its  pecuniary 
thrift.  Even  in  years  when  crops  are  short  and  mills  are  idle,  the 
family  with  money  need  not  go  cold  or  hungry.  But  the  family  with- 
out money  leads  a  wretched  life  even  in  years  of  abundance.  To  the 
single  family,  then,  prosperity  and  depressions  appear  not  as  prob- 
lems of  the  adequacy  of  the  goods  produced,  but  as  problems  of  the 
adequacy  of  money  income."7  The  accuracy  of  this  statement  needs 
no  confirmation.  Whether  popular  attitude  preceded  scientific  for- 
mulation or  vice  versa  may  be  a  debatable  question.  But  that  in  both 
spheres  of  thought  the  pecuniary  attitude  is  the  dominant  one,  there 
can  be  no  reasonable  doubt.  In  a  very  indirect,  but  at  the  same  time 
in  a  very  real  and  effective  way,  this  manner  of  regarding  economic 
activity  is  probably  at  the  bottom  of  some  of  the  restrictive  practices 
of  organized  groups  of  workmen.  But  it  is  not  within  the  province  of 
this  discussion  to  spread  propaganda  calculated  to  dissipate  this  com- 
mon error.  The  task  here  is  the  far  simpler  one  of  pointing  out  that 
the  limits  of  economic  science,  particularly  in  the  treatment  of  the 
theory  and  facts  of  production,  have  been  harmfully  restricted  by  the 
influence  of  the  pecuniary  point  of  view.  Because  of  this  influence 
technological  and  psychological  phenomena  have  been  subordinated  to 
those  of  the  market,  and  inadequate  theories  of  production  have  gained 
currency.  From  the  standpoint,  therefore,  of  both  economic  theory 
and  economic  measurement,  the  dominance  of  a  money  attitude  has 
had  the  effect  of  diverting  investigations  from  fields  in  which  the  scien- 
tific yield  should  be  very  high  indeed.     That  investigators  in  these  un- 

7  Mitchell,  Business  Cycles,  ch.  II,  p.  21. 


1921]  The  Theory  of  Production  43 

worked  fields  will  meet  new  and  unfamiliar  problems  is  true.  But  the 
fear  that  the  problems  they  will  meet  are  insoluble  will  deter  only 
the  timid. 

in 

What  types  of  problems,  then,  would  more  complete  theories  of  pro- 
duction comprehend?  The  first  step  in  the  extension  of  the  theory  of 
production  is  the  clear  recognition  of  the  place  in  theory  of  techno- 
logical and  psychological  facts.  Production  may,  from  one  angle,  be 
considered  as  a  synthesis  of  the  contributions  of  managers,  workers, 
and  inventors.  It  is  the  function  of  political  economy  to  be  aware  of 
these  contributions ;  to  know  the  conditions  under  which  such  contri- 
butions are  advantageously  made  and  the  conditions  under  which  they 
wither.  Competent  description  of  this  kind  of  knowledge  can  be  ac- 
complished only  through  the  medium  of  a  relevant  terminology.  Money 
units  are  not  specifically  and  directly  relevant  either  to  technological 
or  psychological  phenomena.  So  for  the  purpose  of  describing  such 
phenomena,  money  units  must  be  discarded.8  Once  economic  material 
is  collected  and  organized  from  that  point  of  view,  discussions  of  the 
nature  of  production  should  assume  another  and  more  realistic  form. 
Industrial  history  would  then  be  not  only  an  account  of  financial  or- 
ganizations and  reorganizations,  of  price  and  wage  movements,  of 
financial  and  business  crises,  enlivened  by  incidental  remarks  on  out- 
standing inventions  and  inventors,  but  also  the  story  of  the  technical 
progress  of  industry.  The  history  of  the  successive  steps  in  the  utiliza- 
tion of  water  power  may  not  lend  the  romance  to  economic  history 
that  it  deserves;  but  it  cannot  be  doubted  that  an  acquaintance  with 
the  course  of  water-power  development  is,  at  least,  as  essential  to  the 
intelligent  understanding  of  economic  progress  as  a  knowledge  of  world 
changes  in  the  output  of  gold.  And  what  is  true  of  a  knowledge  of 
the  use  of  water  power  is  equally  true  of  the  knowledge  of  a  great 
mass  of  other  technological  developments. 

Practically  from  the  beginning  of  systematic  political  economy,  the 
relevance  of  discussions  of  invention  in  theories  of  production  was  rec- 
ognized. Except,  however,  for  the  observations  of  Adam  Smith  and 
the  criticisms  of  Jevons,  economic  treatises  are  surprisingly  barren  of 
any  adequate  treatment  of  the  course  of  invention.  Here  and  there, 
stray  facts  appear,  some  new  and  some  old,  but  progress  in  theory  is 
painfully  absent.    And  yet  the  problems  of  invention,  in  so  far  as  they 

8  By  this  I  do  not  mean  to  question  either  the  importance  or  the  necessity  of  the 
analysis  of  price  mechanisms  and  institutions.  But  I  do  mean  that,  for  the  purpose 
of  explaining  the  kind  of  economic  facts  which  I  am  here  treating,  the  study  of 
market  processes  and  of  prices  has  failed  to  provide  illumination. 


44  Leo  Wolman  [March 

concern  economic  theory,  are  susceptible  of  systematic  statement  and 
probably  of  satisfactory  solution.  This  gap  in  economic  theory,  like 
others  of  the  same  nature,  is  probably  not  due  to  any  unusual  diffi- 
culty in  the  problem  but  to  an  almost  patent  disregard  of  it.  For  the 
purposes  of  orderly  treatment  a  theory  of  invention  resolves  itself 
into  three  or  four  constituent  elements. 

The  first  of  these  is  concerned  with  the  personality  of  the  inventor. 
It  seeks  to  answer  the  questions:  "What  kind  of  people  are  inventors?" 
"What  are  the  conditions  under  which  inventors  invent?"  On  this 
point  there  has  already  been  some  discussion  and  inquiry.  Interest  in 
the  question  has  turned  on  the  place  and  influence  of  the  pecuniary  mo- 
tive on  the  productivity  of  inventors.  There  seems  at  the  present  time 
to  be  no  serious  difference  of  opinion  with  regard  to  the  existence  of 
other  stimuli  that  produce  the  kind  of  intellectual  activity  that  leads  to 
invention.  But  the  real  debate  apparently  centers  on  the  question 
whether  these  stimuli  (instincts  of  workmanship,  contrivance,  or  cre- 
ative impulses)  are  primary  and  dominant  or  secondary  and  subordi- 
nate; whether,  that  is,  inventors  would  invent  as  freely  as  they  do  now 
without  having  always  before  them  the  prospect  of  economic  gain. 
That  the  pecuniary  motive  is  the  significant  one  has  for  a  long  time 
been  the  tacit,  if  not  the  expressed,  economic  doctrine.  But  even  the 
slightest  survey  of  economic  literature  shows  that,  where  the  question 
has  really  been  studied,  differences  of  opinion  have  appeared.  Taus- 
sig, for  example,  finds  that  "the  social  and  economic  structure  being 
what  it  is  now,  and  men  being  now  under  its  influence,  they  are  not 
likely  to  exert  their  powers  for  the  general  good  unless  guided,  stimu- 
lated, and  rewarded  in  much  the  same  way  as  leaders  in  other  forms 
of  creative  activity."9  Marshall,  on  the  other  hand,  is  not  so  sure  on 
this  point.  "An  improvement  in  business  method,"  he  writes,  "is  gen- 
erally initiated  by  a  man  of  affairs  who  sets  himself  to  attain  a  par- 
ticular practical  end  by  the  best  route.  The  same  is  generally  true  of 
advances  in  industrial  technic,  in  so  far  as  they  are  made  in  the  course 
of  business ;  but  the  greater  part  of  the  work  which  lies  at  the  bases  of 
these  advances  is  made  by  other  men  with  different  motives  and  differ- 
ent methods.  It  is  made  by  mere  students ;  that  is,  men  who  labor, 
not  with  reference  to  the  attainment  of  any  particular  practical  end, 
but  in  search  of  knowledge  for  its  own  sake."10 

Now,  it  is  true,  as  Taussig  says,  that  "on  these  topics  we  are  much 
in  the  dark."  But  that  our  ignorance  is  due  to  "the  same  cause  that 
prevents  decisive  answers  to  many  economic  questions,"  namely,  that 

9  F.  W.  Taussig,  Inventors  and  Moneymakers,  p.  54. 
io  Alfred  Marshall,  Industry  and  Trade,  p.  203. 


1921]  The  Theory  of  Production  45 

"we  are  unable,  or  at  least  unwilling  to  experiment  with  ourselves,"11 
is  not  so  clear.  At  any  rate,  the  problem  is  one  that  can  be  investi- 
gated with  a  hope  of  creditable,  if  not  revolutionary,  results ;  and  eco- 
nomic dicta  with  regard  to  the  matter  can  be  removed  from  the  realm 
of  pure  speculation  to  one  of  experience.  An  important  beginning  in 
this  direction  has  already  been  made  by  Taussig  in  his  study  of  the  lives 
of  a  group  of  great  inventors.  What  remains  to  be  done  will  involve 
both  the  accumulation  of  the  historical  records  of  the  reactions  of  in- 
ventors to  their  economic  milieu  and  careful  contemporary  observation. 
The  material  for  a  more  complete  theory  of  this  phase  of  invention  can- 
not and,  fortunately,  need  not  be  confined  to  that  which  may  be  ob- 
tained from  formal  biographical  records.  For  the  last  few  generations 
and  perhaps  earlier,  inventors,  in  their  relations  to  the  industrial  order, 
have  made  their  contributions  to  the  progress  in  the  arts  under  vary- 
ing conditions.  It  is  in  an  analysis  of  these  conditions  and  of  the 
character  of  the  contributions  made  under  their  influence  that  a  part, 
at  least,  of  the  answer  to  our  question  should  be  found. 

Disregarding,  for  the  moment,  brilliant  individual  inventors  who 
work  in  isolation  and  who  unaided  plan,  perfect,  and  exploit  their  own 
inventions,  it  may  be  said  that  much  of  the  contemporary  contribution 
to  progress  in  the  industrial  arts  originates  in  the  technical  and  re- 
search divisions  of  private  businesses  and  in  the  research  laboratories 
of  government  bureaus  and  of  universities.  An  increasing  proportion 
of  the  great  industrial  enterprises  in  this  country  have  organized  as 
an  integral  part  of  their  business  large  and  continuous  research  di- 
visions whose  function  it  is  to  point  the  way  to  improvements  in  indus- 
trial technic.  Depending  on  the  nature  of  the  industry,  mining  engi- 
neers, chemical  engineers,  chemists  and  physicists,  agricultural  and 
industrial  chemists,  rub  shoulders  daily  in  the  quest  for  technical  dis- 
covery. What  factors  determine  the  problems  on  which  this  army  of 
scientists  is  put  to  work?  What  is  the  relation  between  the  importance 
of  their  discoveries  and  the  pecuniary  reward  they  receive?  Are  dis- 
coveries in  institutions  of  this  character  sporadic  and  revolutionary,  or 
are  they  gradual,  slow,  and  cumulative?  These  are  types  of  questions 
on  which  a  well  informed  opinion  concerning  the  origins  of  invention 
must  rest.  The  records  for  answering  these  questions  are  there.  It  is 
"necessary  only  to  study  them.  While  it  may  be  argued  that  problems 
of  this  nature  are  intricate  and  hence  difficult,  it  is  doubtful  whether 
their  intricacy  is  any  greater  than  that  encountered  in  studying  other 
aspects  of  modern  business  phenomena.  American  economists,  for  in- 
stance, have  always  wanted  to  understand  and  explain  the  policies  of 

"Taussig,  op.  cit.,  p.  19. 


46  Leo  Wohncm  [March 

American  trade  unions.  A  knowledge  of  trade  union  policy  assumes  an 
acquaintance  with  human  acts  and  attitudes  of  the  utmost  intricacy 
and  obscurity.  But  the  mere  difficulty  of  the  question  has  not  stopped 
the  search  for  light. 

Alongside  these  men  who  apply  their  science  in  the  laboratories  of 
private  business  are  the  many  public  servants  who  are  engaged  in  the 
same  kind  of  pursuit  under  different  auspices.  In  the  Department  of 
Agriculture  a  corps  of  men  with  scientific  training  spend  their  time  in 
the  public  service  on  problems  of  agricultural  technic.  Similar  groups 
in  the  Bureau  of  Mines  and  the  Bureau  of  Standards  do  the  same  kind 
of  work  on  problems  of  technic  in  other  fields  of  industrial  activity. 
And  so  on,  throughout  the  whole  structure  of  federal  and  state  gov- 
ernment in  this  country,  there  are  thousands  of  men  and  women  so  en- 
gaged. Now  there  must  necessarily  be  certain  important  points  of 
likeness  and  of  difference  in  the  operation  of  these  two  systems  of  scien- 
tific investigation.  Perhaps  the  men  employed  in  public  agencies  are  of 
a  lower  order  of  competence,  or  vice  versa.  Perhaps  the  discoveries 
made  in  private  laboratories  are  applied  more  promptly  and  more  effi- 
ciently to  the  machinery  of  industry  than  those  made  under  the  public 
control.  It  may,  indeed,  very  well  be  that  the  needs  of  practical  in- 
dustry are  so  much  more  clearly  known  to  the  manager  of  the  private 
research  bureau  that  there  he  avoids  all  of  the  wastes  of  indecision  and 
ignorance,  and  moves  with  his  co-workers  swiftly  to  the  goal  of  his  in- 
quiry. Whatever  the  actual  facts  in  the  situation  may  be,  here  is  ob- 
viously much  food  for  thought  and  much  material  for  political  economy. 
On  the  face  of  the  matter,  too,  it  does  not  seem  fantastic  to  ask  for  a 
comparative  study  in  public  and  private  research  bureaus  of  the  fre- 
quency, originality,  brilliancy,  and  practicability  of  the  discoveries 
made  in  each. 

The  field  of  comparative  study  may,  indeed,  be  widened  by  introduc- 
ing a  third  variable,  namely,  the  conditions  of  discovery  in  the  labora- 
tories of  universities.  It  is  not  difficult  here  to  find  men  who  have  de- 
voted their  lives  to  search  for  truth;  the  pecuniary  motive,  if  it  func- 
tions at  all,  is  far  in  the  background.  The  university  investigator, 
further,  works  apparently  under  conditions  that  are  remote  from  the 
practical  phenomena  of  industrial  activity.  He  is  regarded  as  having 
a  detached  and  uninterested  attitude  toward  the  practical  problems  of 
economic  life.  This  feeling  about  the  university  scientist  is  strength- 
ened by  an  open  lack  of  interest  in  him  for  the  so-called  applied  science 
— the  chemistry  of  perfumed  soaps.  It  is  frequently  the  guild  prin- 
ciple among  some  scientific  faculties  that  the  task  of  their  members  is 
the  pursuit  of  knowledge  for  its  own  sake.  Now  where  this  is  true,  what 
is  the  nature  of  the  scientific  output?    Does  the  pursuit  of  pure  science, 


1921]  The  Theory  of  Production  47 

for  its  own  sake,  promote  or  retard  invention  as  applied  to  industry? 
What,  in  other  words,  are  the  differences  and  similarities  between  the 
discoveries  of  university  investigators  and  those  of  public  and  private 
servants?  Can  it  be  that  the  great  basic  discoveries  which  make  pos- 
sible the  later  progress  in  the  industrial  arts  originate  within  the  walls 
of  our  universities?  Or  are  they  the  product  of  the  well-equipped  and 
efficiently  organized  laboratories  of  private  business? 

It  should,  of  course,  be  clear  that,  in  our  present  state  of  knowledge, 
it  is  impossible  to  present  definitive  answers  to  the  questions  we  have 
raised.  All  that  we  can  hope  to  do  now  is  to  find  the  problem,  formu- 
late it,  and  estimate  its  importance.  But  it  may  be  well  to  call  at- 
tention briefly  here  to  observations  on  the  same  questions  made  by  one 
or  two  economic  students  of  the  same  problem.  In  an  acute  discussion 
of  the  conditions  under  which  technical  progress  in  industry  takes  place, 
Marshall  not  only  recognized  the  existence  of  what  we  may  call  large- 
scale  research  and  inventions  but  suggested  the  effects  that  the  growth 
of  such  institutions  might  have  on  our  traditional  conceptions  of  mo- 
tives. In  some  measure,  he  writes,  "the  world  is  saved  by  the  influ- 
ence of  motives  other  than  the  desire  for  gain.  To  begin  with,  the  in- 
crease in  the  size  of  industries  is  often  accompanied  by  the  substitution 
of  scientific  methods  for  empirical ;  while  a  sound  basis  of  scientific 
technic  is  largely  provided  by  laboratory  work,  to  which  an  ever  in- 
creasing number  of  elastic  and  enterprising  minds  are  rising  from 
among  the  people;  being  stimulated  a  little  by  the  hope  of  gain,  and 
much  by  intellectual  ambition,  and  the  sympathy  of  other  students  of 
science.  .  .  ,"12  Similarly,  much  earlier,  John  Rae  made  in  this  very 
connection  the  interesting  and  pertinent  suggestion  that  the  motives 
that  promote  discover}'  and  inventions,  applicable  to  the  industrial 
arts,  are  probably  of  the  same  nature  as  those  that  move  men  in  the 
pursuit  of  pure  science.13 

The  possibilities  of  a  theory  of  invention  are,  however,  not  exhausted 
by  the  consideration  of  the  incentives  to  inventors  and  discoverers.  Of 
equal,  if  not  greater,  importance  in  the  theory  is  the  statement  of  the 

12  Alfred  Marshall,  op.  cit.,  p.  325. 

is  "Our  subject  leads  us  to  attend  to  invention  merely  as  it  concerns  itself  with 
the  material  world.  But,  as  the  motives  exciting  the  men  in  whom  it  is  exhibited  to 
give  themselves  up  to  its  requirements,  must  be  held  among  the  chief  of  the  causes 
of  its  manifestation,  and  as  they  who  in  this  department  have  been  most  extensively 
inventors,  have  in  general  communicated  little  of  the  principles  that  animated  and 
sustained  them  in  their  career,  science  and  art  being  silent  of  themselves,  we  may 
be  allowed  to  give  wider  compass  to  our  view,  and  to  cite,  when  our  purpose  re- 
quires it,  those  who  have  been  real  discoverers  in  any  of  the  various  regions  over 
which  the  power  of  this  principle  extends."  The  Sociological  Theory  of  Capital, 
edited  by  Charles  W.  Mixter  (1905),  p.  132. 


48  Leo  Wolman  [March 

history  of  an  invention  after  its  discovery.  It  is  a  fact  of  common  ob- 
servation that  only  a  very  small  proportion  of  the  total  number  of  scien- 
tific discoveries  and  inventions  find  practical  application  in  industry. 
Some  inventions  are,  no  doubt,  impracticable  in  every  sense  of  the  term. 
But  is  it  generally  true  that  suppression  or  exploitation  of  inventions 
in  this  country  is  dictated  by  a  uniform  business  and  industrial  policy, 
the  character  of  which  is  understood  by  economists  and  the  effects  of 
which  on  economic  development  are  known  by  them?  The  probability 
is,  rather,  that  business  practice  in  this  regard  varies  considerably 
from  business  to  business,  from  industry  to  industry,  from  time  to 
time.  If  our  experience  with  this  question  exhibits  a  modal  character, 
the  nature  of  the  mode  still  remains  to  be  explained.  One  of  the  very 
striking  business  developments  of  the  last  generation  has  been  the  or- 
ganization of  great  corporations  whose  primary  function  has  been  the 
exploitation  and  control  of  new  machines.  Such  corporations  are  the 
United  Shoe  Machinery  Company  and  the  Owens  Glass  Bottle  Blowing 
Machine  Company.  In  organizations  of  this  character  are  vested  usu- 
ally all  of  the  rights  to  the  machine  and  out  of  this  control  grows  the 
power  to  determine  the  conditions  under  which  the  machine  may  be 
used.  In  the  proper  exercise  of  such  power  both  the  general  public  and 
inventors  are  intimately  concerned;  the  general  public  because  the 
policy  of  utilization  has  a  direct  and  far-reaching  effect  on  the  per- 
formance of  an  industry  which  supplies  its  needs,  and  the  inventor  be- 
cause the  policy  may  result  in  the  extension  or  in  a  complete  restric- 
tion of  his  sphere  of  usefulness  and  activity.  The  enormous  practical 
importance  of  this  whole  question  has  always  been  recognized  with 
reference  to  the  policy  of  organized  labor.  Opposition  of  trade  unions 
to  the  introduction  of  machinery  and  restrictions  of  trade  unions  on  the 
full  use  of  machinery  are  universally  considered  in  economic  treatises. 
But  the  more  fundamental  practices  of  business  in  the  same  direction 
have  received  neither  as  competent  nor  as  extensive  treatment.14 

A  third  phase  of  the  invention  problem  is  the  relation  between  in- 
vention and  patent  legislation.  An  analysis  of  the  character  and  effects 
of  patent  legislation  should  throw  light  not  only  on  the  influence  of 
certain  types  of  legislation  upon  the  utilization  of  the  fruits  of  inven- 
tion but  also  on  the  incentives  that  motivate  inventors.  A  recent  stu- 
dent of  the  practice  of  suppression  and  non-working  of  patents  finds 

i*  Studies  by  Professor  George  E.  Barnett  on  the  relation  between  the  intro- 
duction of  machinery  and  trade  union  policy  are  admirable  exhibits  of  what  research 
can  accomplish  in  this  field.  See,  for  instance,  his  "Introduction  of  the  Linotype," 
Yale  Review,  November,  1904;  and  "The  Stonecutters'  Union  and  the  Stone-Planer," 
Journal  of  Political  Economy,  May,  1916.  He  has  made  also  similar  studies  in 
other  industries  but  these  have  not  yet  been  published. 


1921]  The  Theory  of  Production  49 

that  the  purchase  and  suppression  of  patents  in  this  country  promotes 
monopoly  and  also  "discourages  invention  and  retards  industrial 
progress.  .  .  ."  He  quotes  a  statement  of  the  Inventors'  Guild  to  the 
effect  that  "modern  trade  combinations  tend  strongly  toward  constancy 
of  processes  and  products,  and  by  their  very  nature  are  opposed  to  new 
processes  and  new  products  originated  by  independent  inventors,  and 
hence  tend  to  restrain  competition  in  the  development  and  sale  of  patents 
and  patent  rights ;  and  consequently  tend  to  discourage  independent  in- 
ventive thought.  .  .  ."  This  is,  of  course,  an  ex  parte  statement.  But  it 
is  significant  that  the  same  writer  leaves  his  discussion  of  this  charge 
with  the  conclusion  that  "it  is  difficult  to  find  specific  evidence  with 
which  to  prove  this  practice,  as  no  general  intensive  investigation  of  it 
has  ever  been  made."15  It  is  one  of  the  functions  of  political  economy 
to  organize  inquiries  that  attempt  to  supply  the  necessary  evidence. 

IV 

While  the  first  formulations  of  a  scientific  theory  may  contain  all  of 
the  elements  essential  to  the  proper  development  of  that  theory,  later 
influences  may  direct  attention  from  these  elements  and  thus  limit  the 
content  of  the  theory.  This  is  apparently  what  happened  to  the  theory 
of  production.  Thus  Cannan  wrote  some  years  ago  that  "a  discussion 
of  the  different  circumstances  which  regulate  the  amount  of  per  capita 
produce  is  exactly  what  we  should  expect  to  find  in  a  theory  of  produc- 
tion."16 And  by  this  demarcation  of  the  field,  such  a  question  as  in- 
vention would  find  a  respectable  place  in  it  as  one  of  the  "circumstances 
which  regulate  the  amount  of  per  capita  produce."  A  second,  and  by 
no  means  less  important,  circumstance  affecting  the  amount  of  per 
capita  produce  is  the  attitude  of  the  worker  toward  his  work.  Tradi- 
tionally this  question  has  been  treated  as  a  problem  in  the  incentives  to 
economic  activity.  When  the  industrial  machine  is  working  smoothly 
and  the  rate  of  individual  output  seems  to  be  reasonably  high,  the 
factor  of  incentives  is  regarded  as  having  little  theoretical  or  practical 
importance.  But  when,  as  during  the  past  three  years,  the  need  of  in- 
creased production  appears,  attention  is  centered  on  devices  for  stimu- 
lating men  to  work.  Nevertheless,  even  in  periods  of  the  first  kind,  a 
science  of  economics,  dealing  as  it  does  largely  with  the  motives  and 
acts  of  men,  must  build  its  principles  upon  a  foundation  of  psychologi- 
cal observation.  This  necessity  political  economy  has  met  in  the  past 
with  a  substratum  of  psychology  characterized  by  extreme  simplicity 

if  Floyd  L.  Vaughan,  "Suppression  and  Non-Working  of  Patents,  with  Special 
Reference  to  the  Dye  and  Chemical  Industries,"  American  Economic  Review,  De- 
cember, 1919,  p.  693. 

i«  Cannan,  op.  cit.,  p.  36. 


50  Leo  Wolman  [March 

and  uniformity.  Human  nature  it  regarded  as  simple,  and  everywhere 
and  at  every  time  the  same.  Differences  between  men  are  external  and 
ephemeral;  similarities,  deep-rooted  and  dominant.  The  mainsprings 
to  economic  activity  were  so  well  known  that  they  could  be  and  were 
reproduced  in  tables,  in  which  motives  or  incentives  were  arranged  in 
order  of  magnitude  or  strength.  Such  precision,  of  course,  has  its  in- 
fluence. If  political  economy  consists  of  a  body  of  economic  princi- 
ples, and  if  these  principles  rest  in  turn  upon  a  fund  of  psychological 
observations,  then  the  more  certain  we  are  of  the  truth  of  our  psycho- 
logical observations,  the  readier  we  are  likely  to  be  to  accept  the  eco- 
nomic principles. 

The  psychological  data  on  which  economists  built  their  systems  are 
now  being  frequently  and  successfully  challenged.  While  there  is  yet 
no  complete  psychological  system  to  replace  the  one  now  in  use,  the 
observations  of  contemporary  psychology  are  such  as  to  indicate  that 
motives  are  more  complex  and  more  variegated  than  the  economists  as- 
sumed. Attempts  to  revise  political  economy  with  reference  to  later 
psychological  notions  are  now  being  made.  In  this  neglected  field  bril- 
liant contributions  have  already  been  made  by  Veblen,  Mitchell,  and 
Carleton  Parker.  It  is  unfortunate,  however,  that  some  of  the  large 
and  important  currents  of  economic  thought  have  remained  untouched 
by  these  developments.  The  psychology  of  the  bulk  of  political  econ- 
omy is  still  the  fruit  of  limited  personal  observation  and  of  a  species  of 
introspection.  When  we  remember  that  the  contact  of  the  average 
economist  with  many  of  the  realities  of  economic  life  is  slight  and  infre- 
quent, then  we  may  be  pardoned  for  doubting  that  he  is  a  representative 
type  of  economic  actor  and  for  doubting,  therefore,  that  his  contem- 
plation of  himself  will  produce  a  representative  and  reliable  psychology. 

Probably  nowhere  in  economic  writing  has  this  failure  to  recognize 
the  complexity  and  diversity  of  human  nature  brought  results  that 
more  clearly  need  revision  and  restatement  than  in  American  studies  of 
organized  labor.  Under  the  implicit  influence  of  an  economist's  psy- 
chology, the  American  labor  movement  has  acquired  for  the  science 
of  economics  a  homogeneity  and  uniformity  which  it  probably  docs 
not  possess  at  all.  Not  that  there  are  not  important  and  outstanding 
points  of  similarity  in  the  movement ;  but  that  there  are  at  the  same 
time  marked  differences,  and  for  purposes  of  understanding  and  expla- 
nation the  differences  are  at  least  as  real  and  as  efficacious  as  the  simi- 
larities. What  there  is  of  a  labor  movement  in  the  South,  for  instance, 
is  in  many  of  its  characteristics  quite  a  different  thing  from  the  labor 
movement  in  New  York  City;  and  west  of  Chicago  it  is  as  different 
from  that  in  New  York  as  the  movement  in  New  York  is  from  that  in 
the  South.     Within  the  same  geographical  limits,  also,  the  contrasts 


1921]  The  Theory  of  Production  51 

are  as  striking  as  the  points  of  agreement.  One  need  only  compare 
trade  unionism  in  New  York  in  the  needle  trades  with  that  in  the  build- 
ing trades ;  trade  unionism  in  Chicago  among  the  teamsters  and  chauf- 
feurs with  that  in  the  packing  houses.  The  existence  and  influence  of 
types  of  trade  unions  were  recognized  and  described  by  Hoxie ;  but  the 
whole  problem  still  presents  a  virgin  field  for  further  study.  Econo- 
mists must  admit  within  the  phenomenon  of  organized  labor  the  exist- 
ence of  types  of  human  behavior.  The  next  stages  in  the  investigation 
of  trade  unionism  may  with  much  profit  be  concerned  with  studying 
patterns  of  behavior;  with  relating  these  patterns  to  the  technical  or- 
ganization of  the  industry  in  which  members  of  the  union  work;  with 
the  financial  and  industrial  policy  of  the  business ;  with  the  conditions 
under  which  the  workers  live ;  and  with  the  better  known  hereditary  and 
environmental  influences  that  are  usually  regarded  as  shaping  the  con- 
duct of  men.  The  program  of  research  outlined  with  reference  to  this 
restricted  field  of  economic  activity  should  be  no  different  in  its  essen- 
tial details  from  that  to  be  followed  in  discovering  the  cause  and  nature 
of  economic  behavior  under  other  conditions.  Economic  life,  in  its 
largest  sense,  may  be  conceived  as  a  mass  of  complex  situations.  Among 
the  many  factors  that  are  responsible  for  creating  economic  situations, 
certainly  two  are  always  active.  These  two  factors — technology  and 
psychology — act  and  react  upon  one  another.  It  is  impossible  to  con- 
ceive scientific  progress  without  a  painstaking  and  detailed  study  of 
both. 


No  analysis  of  the  prevailing  economic  theory  of  production  is  com- 
plete without  the  consideration  of  such  elements  of  the  theory  as  have 
been  the  subject  of  inquiry  but  where  physical  and  technological  factors 
have  not  received  the  attention  they  deserve.  The  problems  of  the  utili- 
zation of  natural  resources  and  of  the  localization  of  industry  answer 
this  description.  Each  is  a  problem  that  has  its  technological  side. 
Political  economy  has  treated  both  problems ;  but  the  terms  of  its 
treatment  have  been  general,  and  it  has  failed  to  bring  to  bear  upon 
them  pertinent  technological  material.  The  gaps,  in  this  case,  must  be 
filled  with  facts  about  business  practice  and  with  evidence  designed  to 
test  the  soundness  of  our  generalizations.  The  foundation  of  the  eco- 
nomic life  of  the  United  States  consists  of  an  enormous  reservoir  of 
natural  resources — plant,  animal,  and  mineral.  The  well-being  of  the 
community  depends  upon  their  effective  and  restrained  utilization. 
Whether  or  not  the  people  of  a  country  receive  to  the  full  the  benefits 
which  should  come  from  the  possession  of  natural  resources  depends 
upon  the  degree  to  which  business  practice  recognizes  and  accepts  the 


52  Leo  Wolman  [March 

limitations  imposed  by  the  natural  or  technological  characteristics  of  the 
resources.  In  economic  writing,  analysis  of  the  problem  of  natural  re- 
sources has  been  limited  almost  entirely  to  pointing  out  the  relation 
between  a  growing  population  and  the  inevitable  exhaustion  of  material 
resources.  The  implication  is  that  the  rate  of  depletion  is  a  function 
of  the  rate  of  growth  of  the  population.  Hence  the  rate  of  fall  in  the 
average  standard  of  living  in  a  country  is  also,  after  a  certain  point 
of  development  has  been  reached,  a  function  of  the  rate  of  growth  of 
the  population.  But  scientific  theory  does  not  gain  strength  and  con- 
viction by  being  general  and  vague  in  its  terms.  The  more  specific  its 
observations,  the  greater  its  body  of  supporting  evidence,  the  more 
reason  there  will  be  for  accepting  its  principles  and  generalizations. 

Engineering  art  and  technological  science  have  only  within  the  past 
decade  accumulated  and  interpreted  a  vast  body  of  material  with  re- 
gard to  natural  resources.  The  contributions  from  these  sources  are 
important  in  that  they  indicate,  first,  the  availability  of  substitutes  for 
various  classes  of  natural  resources,  and,  second,  that  they  describe  the 
wastes  due  to  unregulated  exploitation  both  in  the  early  and  late  stages 
of  the  processes  of  industry.  With  such  resources  as  coal,  crude  oil, 
timber,  the  history  of  depletion  has  not  been  the  simple  one  of  the  en- 
croachment of  a  growing  population  on  limited  reserves ;  but  the  situ- 
ation has  been  overcomplicated  by  the  injection  of  a  set  of  business  mo- 
tives and  practices  that  also  have  had  their  effect  on  the  rate  of  ex- 
haustion. These  motives  and  practices,  sometimes  due  to  ignorance  of 
scientific  methods,  sometimes  to  the  mad  desire  for  temporary  advan- 
tage, constitute  influences  which  no  representative  system  of  political 
economy  can  afford  to  ignore.  In  very  much  the  same  way,  business 
practices  and  customs,  almost  independent  of  changes  in  the  size  of  the 
population,  are  represented  as  leading  to  waste  in  industrial  consump- 
tion at  stages  in  the  industrial  progression  far  removed  from  the  natural 
resources  themselves.  Recent  studies  by  mechanical  engineers  of  the 
technology  of  coal,  for  instance,  point  to  wastes  in  production  and  con- 
sumption of  coal  beyond  all  imagination.  The  elimination  or  reduc- 
tion of  these  wastes  can  only  be  accomplished  by  a  study  of  the  eco- 
nomic causes  from  which  they  originate  and  the  economic  situations  in 
which  they  thrive.  The  existence  of  natural  resources  is  an  economic 
fact;  their  depletion  is  also  an  economic  fact.  All  of  the  situations, 
customs,  practices,  motives,  that  determine  the  nature  of  the  exploita- 
tion of  the  resources  are,  like  price  control,  speculation,  industrial  com- 
bination, and  so  on,  the  materials  with  which  an  economic  science  must 
work.  It  is  not  enough  to  say  that  natural  resources  tend  to  become 
exhausted  and  that  exhaustion  follows  increases  in  the  population.  We 
must  go  farther  and  analyze  the  conditions  that  are  responsible  for 


1921]  The  Theory  of  Production  53 

rapid  depletion  and  ultima le  exhaustion.  Is  it  too  much  to  ask  of 
economic  theory  that  it  estimate  for  us  the  cost,  in  any  terms,  to  pres- 
ent and  future  generations  of  exploiting  our  natural  resources  at  a 
rate  much  slower  than  the  actual  one? 

In  very  much  the  same  way  as  business  custom  and  practice  involve 
waste  as  well  as  efficiency  and  advantage  in  the  use  of  material  resources, 
the  movement  from  one  place  to  another  within  a  country  of  business 
and  industrial  establishments  similarly  produces  waste  and  expense  as 
well  as  benefit  and  gain.  If  the  development  of  transportation  facilities 
permits  the  fuller  utilization  of  geographical  advantages  and  superiori- 
ties, it  is  at  the  same  time  true  that  railroad-building  and  ship-building 
are  costly.  The  underlying  assumption  of  economic  theory  in  this  re- 
gard has  always  been  that  the  gains  outweigh  the  costs.  In  an  auto- 
matic way,  industry  becomes  localized  in  one  place  rather  than  in  an- 
other because  of  the  operation  of  one  or  all  of  the  following  factors — 
proximity  to  raw  materials,  availability  of  power  and  transportation 
facilities,  the  presence  of  auxiliary  industries  and  of  capable  and 
trained  labor.  If  this  be  a  true  analysis  of  the  major  forces  that  have 
stimulated  the  building  of  industries  in  the  places  in  which  they  are 
now  found,  then  the  advantages  of  the  present  and  future  localization 
of  industry  are  what  they  have  always  been  assumed  to  be.  Indeed, 
however  great  these  advantages  may  be  they  would  redound  to  the 
benefit  not  only  of  enterprisers  but  also  to  that  of  the  general  com- 
munity. 

But  on  what  specific  evidence  does  this  theory  of  localization  rest? 
Is  it  an  explanation  after  the  fact  or  a  statement  of  the  advantages 
that  accrue  one,  ten,  fifty  years  after  settlement  of  an  industry  in  a 
new  situs  has  taken  place?  May  it  not,  indeed,  be  that  to  an  unknown 
degree  the  kind  of  localization  of  industry  which  we  see  has  thrown  on 
the  general  community  a  burden  of  direct  and  indirect  cost  for  which 
there  has  been  no  proportionate  return  in  benefit?  Throughout  the 
whole  development  of  rail  transportation  in  this  country,  factors  mak- 
ing for  increase  in  cost  have  generally  been  operative.  Considered  in 
simple  terms,  any  railway  rate  structure  which  was  not  based  on  the 
factors  in  localization  enumerated  above  would  produce  a  localization 
of  industry  that,  in  its  origins,  at  least,  would  not  satisfy  the  needs  of 
a  program  of  economical  national  development.  Yet  the  local  favorit- 
isms  incident  to  the  railway  history  of  this  country  are  matters  of 
common  knowledge.  In  quite  the  same  way,  the  general  competition 
among  American  municipalities  for  factory  and  business  settlements  in- 
volves those  communities  in  costs  which  they  do  not  see  but  which  are 
nevertheless  real.  Reduction  in  the  tax  rate  to  new  manufacturing 
enterprises  may  constitute  a  legitimate  aid  to  localization,  but  it  can- 


54  Leo  Wolman  [March 

not  be  so  considered  until  its  further  consequences  are  known.  Mi- 
grations by  manufacturers  to  escape  labor  conditions  imposed  by  trade 
unions  exhibit  the  same  kind  of  conflicting  evidence.  The  chronicle  of 
such  movements  for  the  purpose  of  deriving  the  advantages  of  an 
available  supply  of  labor  is  an  old  one  in  economic  history.  The  cloth- 
ing industry  in  England  is  placed  where  its  leaders  can  use  as  labor  the 
wives  and  children  of  dock  laborers.  The  wives  and  children  of  Ameri- 
can miners  are  the  magnets  that  attract  the  textile  mills  in  this  coun- 
try. And  in  the  present  migration  in  the  clothing  industry  from  cities 
to  rural  settlements,  similar  forces  operate.  That  localization  of  this 
character  contributes  to  the  general  level  of  well-being  is  a  gratuitous 
assumption  that  is  certainly  open  to  question. 

The  question  is  all  the  more  valid  when  we  reflect  that  the  change 
of  situs  is  dictated  not  by  economic  considerations  alone,  but  by  a 
combination  of  economic  and  "moral"  principles  that  are  very  hard  to 
disentangle  and  to  weigh.  If  such  influences  as  these  are  at  all  uni- 
versal, much  of  the  localization  of  industry  we  are  acquainted  with  can- 
not be  satisfactorily  explained  in  terms  of  arithmetic  formulae  of  geo- 
graphical diversities.  For  there  resides  in  the  condition  of  localized 
industry  much  that  is  artificial  and  deliberate,  much  that  is  due  to  the 
purposeful  adoption  of  one  economic  policy  as  opposed  to  another,  as 
well  as  much  that  results  from  the  free  and  unimpeded  operation  of 
pure  economic  forces. 

VI 

If  what  has  been  said  concerning  the  insufficiencies  in  the  theory  of 
production  carries  conviction,  we  should  agree  that  economic  theory 
must  open  its  doors  to  the  psychological  and  technological  material 
that  will  shed  light  on  its  problems.  The  admission  of  such  material 
and  analysis  of  it  by  means  of  a  relevant  terminology  should  have  not 
only  theoretical  but  important  practical  bearings.  Nowhere  is  this 
clearer  than  in  the  contemporary  practice  of  wage  adjustment.  If,  in 
this  confusion  of  wage  principle  and  practice,  any  theories  of  wages  at 
all  seem  particularly  to  challenge  attention,  they  are  the  theories  con- 
tained in  the  expressions  "standard  of  living"  and  "the  ability  of  in- 
dustry to  pay."  In  the  highly  organized  industries,  in  which  the  em- 
ployer and  working  forces  are  more  evenly  balanced,  wage  adjust- 
ments are  more  and  more  being  made  with  reference  to  one  or  another 
of  several  standards  of  living  and  to  the  ability  of  the  industry  to  stand 
a  further  increase  in  wages.  With  regard  to  both  measurement  and 
theory,  it  is  becoming  increasingly  difficult  to  make  decisions  without 
invoking  material  not  yet  found  in  traditional  economic  writing.  The 
leap  from  one  part  of  an  economic  text,  where  the  national  dividend 


1921]  The  Theory  of  Production  55 

is  described  as  a  flow  of  physical  goods  and  services,  to  another,  where 
wages,  rent,  and  interest  are  described  as  $30  a  week,  $500,  and  6  per 
cent  per  annum,  raises  questions  which  arbitration  boards  and  ne- 
gotiating bodies  cannot  dodge.  There  is,  in  the  first  place,  the  simple 
fact  that  "standard  of  living,"  assumes  a  real  meaning  only  when  it  can 
be  expressed  in  terms  of  physical  and  nutritional  units.  In  fact,  dur- 
ing the  past  five  years  types  of  standards,  so  constructed,  came  widely 
into  use,  principally  because  standards  expressed  in  money  units  did  not 
throw  that  direct  light  upon  human  needs  and  comforts  which  an  in- 
telligent consideration  of  the  question  required.  But  if  there  is  any 
advantage  in  the  use  of  such  a  physical  standard,  it  is  most  likely  to  be 
derived  from  a  comparison  between  that  standard  and  the  capacity  of 
the  whole  of  industry  to  meet  it.  Such  a  comparison,  of  course,  our 
present  system  of  money  accounting  does  not  pretend  to  make.  An- 
other angle  of  the  same  problem  appears  in  even  a  more  interesting 
form  in  the  attempt  to  determine  the  ability  of  a  single  industry  to  as- 
sume a  specific  wage  scale.  At  first  the  discussion  was  altogether  in 
terms  of  money  wages,  prices,  and  profits.  But  in  the  English  coal 
mine  adjustments,  while  the  same  elements  still  remained,  the  scope  of 
the  inquiry  was  soon  widened  to  include  material  on  the  per  capita  out- 
put of  miners,  the  total  product  of  the  British  coal  mines,  the  internal 
and  external  coal  requirements  of  the  country,  and  the  factors  respon- 
sible for  variations  in  output.  Without  a  consideration  of  these  factors, 
intelligent  settlement  of  the  dispute  would  have  been  impossible.  Simple 
as  it  may  seem  on  its  face,  the  whole  procedure  is  revolutionary  in  that 
it  makes  possible  the  admission  as  economic  evidence  of  a  whole  new 
range  of  economic  fact,  hitherto  inadmissible.  The  English  coal  min- 
ing industry  was,  of  course,  at  the  time  under  arraignment,  and  the 
nationalization  issue  was  in  the  air.  But  there  is  evidence  that  the 
same  kind  of  tendencies  are  already  at  work  in  this  country  in  con- 
nection with  industries  that,  as  yet,  show  none  of  the  earmarks  of 
public  utilities. 

It  may,  however,  be  argued  that  interesting  as  these  problems  are, 
the  material  with  which  they  can  be  solved  does  not  exist.  The  reply 
is,  that  here,  as  elsewhere,  scientific  material  is  not  at  hand  until  there 
is  someone  prepared  to  use  it.  The  whole  experience  of  statisticians 
and  economists  in  Washington  during  the  war  pointed  to  the  existence 
and  availability  of  facts  about  industry  the  reality  of  which  will  never 
be  admitted  except  by  those  who  worked  with  them.  No  one  would  say 
that  the  need  for  an  index  of  physical  production  is  any  more  real  and 
urgent  today  than  it  was  ten  years  ago.  Yet  with  practically  no  new 
material,  the  recognition  of  the  problem  has  produced,  first,  the  measure 


56  Leo  Wolman  [March 

of  national  production  by  Mitchell  in  1919,  and,  second,  extensions  of 
the  same  device  by  Stewart  and  Day  at  the  present  time. 

The  task  outlined  in  this  paper  may  seem  to  be  a  job  of  a  large 
order.  It  is.  But  in  its  essential  character  it  is  no  different  and  no 
more  arduous  than  that  which  always  confronts  the  builders  of  any 
science.  The  work  of  Galton  and  Pearson,  Davenport  and  Pearl  in 
biological  science  produced  in  that  field  results  as  revolutionary  as  any 
that  may  be  proposed  in  economic  science.  Not  only  was  the  problem 
in  biology  one  of  admitting  new  material,  but  there  was  also  the  fur- 
ther necessity  of  providing  biologists  with  the  technic  of  mathematical 
statistics.  The  development  of  biometrics  finds  its  counterpart  in  the 
profound  changes  that  the  science  of  chemistry  has  gradually  ex- 
perienced. With  the  rise  of  physical  chemistry,  and  the  hypotheses  of 
colloidal  chemistry,  the  limits  of  chemistry  were  extended  and  the  es- 
sential elements  in  the  personal  equipment  of  chemists  were  forced  to 
keep  pace.  In  political  economy  the  matter  seems  no  different.  Formal 
delimitation  of  the  scope  of  the  science  cannot  be  defended  unless  it 
results  in  positive,  concrete,  scientific  advance.  It  may  be  convenient 
to  know  precisely  what  the  limits  of  the  theory  of  production  are. 
But  if  the  knowledge  and  the  practice  lead  to  sweet  contentment  and 
nothing  else,  the  wisdom  of  the  limitation  may  well  be  questioned.  It 
has  become  customary,  unfortunately,  to  lead  the  graduate  student  in 
economics  through  a  first  minor  in  history  and  a  second  minor  in  po- 
litical science;  or  vice  versa.  This  regimen  has  created  a  definite  atti- 
tude toward  the  character  and  content  of  economic  theory.  To  satisfy 
the  new  demands  of  the  science,  the  course  of  training  may  have  to  be 
changed,  just  as  it  has  been  in  other  fields  of  knowledge,  to  enable  the 
investigator  to  collect  and  interpret  another  type  of  material.  With 
a  background  of  psychology  and  technology,  the  future  economists 
will  enter  an  unploughed  field,  full  of  promise  and  hope  for  economics 
as  a  science. 

Leo  Wolman. 

The  New  School  for  Social  Research. 


AN  INDEX  NUMBER  OF  PRODUCTION1 

The  fluctuations  in  the  physical  volume  of  production  must  be  meas- 
ured before  they  can  be  interpreted  or  controlled.  The  nature  and 
causes  of  the  increase  in  production,  the  relative  significance  of  the 
various  sources  from  which  products  are  drawn,  the  extent  of  the  waste 
involved  in  the  decrease  of  output  during  periods  of  industrial  depres- 
sion are  matters  to  be  determined  quantitatively.  These  changes  are 
the  outcome  of  influences  so  diverse  that  in  order  to  explain  them  casu- 
ally the  date  and  the  degree  of  the  fluctuations  must  be  specified.  To 
make  these  measurements  is  the  purpose  of  an  index  number  of  produc- 
tion. 

The  need  for  such  measurements  is  so  evident  and  the  use  of  index 
numbers  of  prices  so  common  that  the  question  arises  why  index  num- 
bers of  production  were  not  made  long  ago.  One  explanation  lies  in  the 
kind  of  limits  imposed  upon  inquiries  by  the  traditions  of  economic 
theory,  limits  which  left  the  study  of  production  in  terms  of  physical 
units  outside  the  pale.  When  the  economist  regarded  production  as  a 
technological  process  it  became  to  him  a  mass  of  bewildering  details. 
Technology  seemed  to  comprise  fields  of  specialized  knowledge  either 
beyond  the  comprehension  of  an  economist  or  at  least  beyond  the  reach 
of  his  theoretical  formulations.  The  variety  and  unfamiliarity  of  the 
units  of  measurement,  the  rate  of  change  in  methods  of  production,  the 
scale  and  complexity  of  industrial  operations  discouraged  any  search 
for  generalizations.  Such  a  field,  he  concluded,  might  better  be  left 
to  the  specialists,  to  the  technicians  of  industry.  So  far  as  economic 
theory  was  concerned,  therefore,  the  cause  and  consequences  of  the 
growth  of  technology  remained  the  great  unknown,  and  conclusions 
from  deductive  arguments  were  protected  by  the  phrase  "assuming  the 
state  of  the  industrial  arts  to  remain  the  same."  In  the  meantime,  the 
problem  of  properly  managing  our  industrial  resources  suffered  from 
the  faults  characteristic  of  all  merely  specialized  thinking. 

A  further  reason  why  the  economist  shunned  the  analysis  of  the  pro- 
duction process  in  terms  of  physical  units  is  that,  in  common  with  the 
business  community,  he  believed  the  facts  could  be  adequately  stated 
and  handled  in  pecuniary  terms  alone.  He  congratulated  the  com- 
munity on  having  a  common  denominator  of  money  in  which  to  do  its 
thinking.  Like  the  accountant  he  took  inventories  in  terms  of  dollars 
and  cents  and  in  the  absence  of  any  specific  knowledge  about  the  changes 
in  the  volume  of  goods  and  of  equipment  he  ordinarily  assumed  a  co- 

i  A  paper  read  at  the  Thirty-third  Annual  Meeting  of  the  American  Economic 
Association,  held  at  Atlantic  City,  December  28,  1920.  In  the  collection  of  the  sta- 
tistics and  in  the  computation  of  the  index  numbers  the  writer  has  had  the  as- 
sistance of  Miss  Caroline  Emerson  and  Miss  Stella  Stewart. 


58  Walter  W.  Stewart  [March 

incidence  between  statements  of  money  values  and  the  underlying  in- 
dustrial quantities.  Statements  of  national  income  and  of  national 
wealth  in  money  terms  may  be  given  a  clear  meaning,  but  to  fund  these 
items  and  measure  them  in  money  terms  alone  is  to  obliterate  distinc- 
tions which  must  be  preserved  if  we  are  to  understand  and  administer 
industrial  processes.  No  question  need  be  raised  about  the  usefulness 
of  this  pecuniary  accountancy  for  business  purposes ;  likewise  there 
can  be  no  question  about  the  need  for  an  industrial  accountancy  for 
industrial  purposes. 

A  system  of  industrial  accountancy  cannot  be  confined  to  recording 
the  activities  of  a  single  plant ;  it  must  measure  the  flow  of  products 
from  great  groups  of  industries.  As  industrial  economists  we  are  in- 
terested not  merely  in  the  management  of  single  factories ;  we  are  con- 
cerned also  with  the  effectiveness  of  the  correlation  between  industries 
and  groups  of  industries.  Fields,  mines,  factories,  and  railroads  work- 
ing together  under  a  coordinated  plan  make  up  the  industrial  system; 
their  total  product  is  largely  determined  by  the  effectiveness  with  which 
they  come  into  gear  with  one  another.  What  is  needed,  for  purposes 
of  measurement  and  for  guidance,  is  a  system  of  index  numbers  of  pro- 
duction so  constructed  as  to  reveal  the  behavior  of  the  industrial  sys- 
tem in  its  parts  and  as  a  whole. 

Experience  in  the  construction  and  use  of  index  numbers  of  prices 
indicates  the  methods  to  be  used  in  measuring  the  changes  in  the  level 
of  production.2  In  making  a  production  index  one  is  confronted  with 
difficulties  similar  to  those  met  in  constructing  a  price  index.  There  is 
the  problem  of  selecting  the  commodities  to  be  included,  the  choice  of 
base  periods,  and  the  problem  of  weighting  the  selected  samples  in  such 
a  way  that  each  will  have  its  proportionate  influence  upon  the  final  re- 
sult. To  an  explanation  of  how  these  problems  were  dealt  with  in  the 
construction  of  the  present  index  number  of  production,  we  may  now 
turn. 

2  The  work  of  the  Price  Section  of  the  War  Industries  Board  was  especially  use- 
ful in  making  a  choice  of  methods  of  construction.  In  addition  to  the  index  of 
prices,  an  index  was  constructed  under  the  direction  of  Professor  "Wesley  C.  Mitchell, 
measuring  the  fluctuations  in  the  physical  volume  of  production  for  the  period  1913 
to  1918.  (History  of  Prices  During  the  War.  Summary.  War  Industries  Board 
Price  Bulletin,  No.  1,  pp.  44-'46.)  Also  Mr.  Wolman,  as  chief  of  the  Division  of 
Statistics  of  Production,  made  it  evident  during  the  war  that  the  problem  of  pro- 
duction could  be  handled  statistically.  Out  of  the  war  experience,  in  fact,  there 
came  a  new  recognition  of  the  desirability  of  measuring  the  physical  volume  of 
production.  Mr.  Edmund  E.  Day,  working  from  much  the  same  data  as  those  used 
in  the  present  study,  but  by  a  somewhat  different  method,  has  also  just  completed 
the  construction  of  an  index  number  of  production.  (The  Review  of  Economic 
Statistics,  September-December,  1920,  The  Harvard   University  Press.) 


1921]  An  Index  Number  of  Production  59 

This  index  number  is  based  upon  a  total  of  91  different  series  of 
commodities.3  For  two  thirds  of  these,  production  figures  are  available 
for  every  year  from  1890  to  1919,  and  for  the  remainder  the  informa- 
tion is  available  beginning  in  1904.  The  following  table  shows  the 
number  of  commodities  in  each  of  the  groups  and  sub-groups : 

All  Commodities 91    Materials    39    Manufactures    50 

Materials    39        Farms   16  From  farm  products.. .  22 

Manufacture   50        Mines    13  "      mineral  products  23 

Transportation   2        Forests   7  "       forestry  products     4 

Fisheries 2  "       fishery    products     1 

Of  the  50  different  series  under  Manufacture,  14  are  not  manufac- 
tured products,  but  are  estimates  of  the  amount  of  certain  materials 
used  in  manufacture.  In  the  absence  of  information  about  the  produc- 
tion of  cotton  cloth,  for  example,  the  figures  showing  how  much  cotton 
was  used  in  manufacture  in  a  given  year  were  taken  as  indicating  the 
production  of  cotton  textiles  in  that  year.  In  other  series,  imports  of 
certain  materials  were  taken  as  indicating  the  production  of  the  com- 
modities into  which  they  entered.  This  method  of  estimate  was  not 
used  where  there  was  reason  to  believe  that  the  accumulation  of  stocks 
from  one  year  to  the  next  was  an  important  factor. 

The  production  statistics  of  certain  commodities  were  excluded  from 
the  index.  The  figures  for  the  production  of  distilled  and  fermented 
liquors,  for  example,  were  not  used  because  they  are  for  fiscal  years 
while  the  other  data  are  for  calendar  years.  The  decision  against  these 
series  was  made  only  after  fair  trial,  and  when  it  became  evident  that 
production  figures  for  the  year  ending  June  30  could  not  be  used  as 
equivalent  to  the  production  for  the  year  ending  December  31,  if  the 
purpose  were  to  make  year  to  year  comparisons. 

The  figures  for  the  production  of  freight  cars,  passenger  cars,  and 
locomotives,  which  are  available  for  the  entire  period  from  1890  to 
1919,  were  also  excluded  because  during  that  period  the  type  of  car 
and  of  locomotive  underwent  great  change.  Though  today  they  pass 
by  the  same  names  they  are  in  reality  quite  different  products.  The 
locomotive  increased  from  the  average  weight  of  approximately  40 
tons    to    89.5    tons.      The    average    capacity    of    freight    cars    almost 

3  A  list  of  the  commodities  arranged  by  groups,  and  a  table  of  the  index  numbers 
are  presented  on  pages  67-69.  The  sources  of  information  were  for  the  most  part 
official  publications.  Among  these  were  the  bulletins  issued  by  the  various  bureaus 
of  the  Department  of  Agriculture,  the  Geological  Survey,  the  Bureau  of  the  Census, 
the  Bureau  of  Fisheries,  Bureau  of  Internal  Revenue,  Bureau  of  Foreign  and  Do- 
mestic Commerce,  and  the  Interstate  Commerce  Commission.  Other  sources  were 
the  publications  of  such  commercial  organizations  as  the  American  Iron  and  Steel 
Institute,  the  New  York  Board  of  Trade,  and  the  New  Orleans  Board  of  Trade. 


60  Walter  W.  Stewart  [March 

doubled.  Numbers  of  freight  cars  and  of  locomotives,  therefore,  are 
not  satisfactory  statistical  units  to  use  in  a  measurement  of  changes  in 
production  over  long  periods.  It  is  hoped  later,  however,  to  make  use 
of  these  figures  in  a  study  of  the  changes  from  year  to  year  in  the  out- 
put of  equipment. 

In  some  instances  the  series  included  are  the  result  of  estimates.  In 
the  live  stock  industry,  for  example,  a  large  number  of  estimates  were 
necessary  and  the  results  are  only  partially  satisfactory.  From  1907 
to  1919  the  figures  for  meat  production  are  based  upon  the  number  of 
animals  inspected  for  slaughter,  and  a  further  estimate  for  the  slaughter 
which  did  not  come  under  federal  inspection.4  Prior  to  1907  the  figures 
for  inspected  slaughter  cannot  be  used  as  indicating  meat  production. 
For  the  earlier  years,  therefore,  the  estimates  are  based  on  the  differ- 
ences between  receipts  and  shipments  of  cattle,  hogs,  and  sheep  in  the 
fifteen  principal  markets.  These  markets  include  the  great  packing 
centers.  A  comparison  of  receipts  minus  shipments  with  the  figures  of 
inspected  slaughter  during  the  period  when  the  latter  are  trustworthy, 
shows  that  though  the  degree  of  fluctuation  is  not  the  same  yet  they 
agree  in  the  direction  of  change.  In  the  absence  of  anything  better, 
therefore,  the  differences  between  receipts  and  shipments  were  used  as 
indicating  the  general  trend  of  meat  production. 

Another  industry  which  required  calculation,  but  not  estimates,  was 
Transportation.  Here  it  was  necessary  to  convert  figures  for  ton- 
miles  and  passenger-miles  from  fiscal  years  to  calendar  years.  The 
method  of  conversion  consisted,  first,  in  pro-rating  the  fiscal  year  total 
of  ton-miles  among  the  months,  the  basis  of  the  distribution  being  the 
percentage  of  the  annual  freight  revenue  received  each  month;  second, 
in  adding  up  the  ton-miles  by  calendar  years.  The  same  method  was 
used  to  convert  fiscal  year  totals  for  passenger-miles  into  calendar  year 
totals.  This  was  done  for  each  year  from  1907  to  1916,  when  the  Inter- 
state Commerce  Commission  began  publishing  the  figures  by  calendar 
years.  The  information  necessary  to  make  the  conversions  was  not 
available  back  of  1907,  and  consequently  from  1890  to  1907  the  figures 
for  transportation  service  are  for  fiscal  years. 

There  are  other  estimates  involved  in  establishing  the  91  series  but 
this  is  not  the  place  to  set  them  forth  in  detail.  The  instances  that 
have  already  been  given  are  typical  of  the  difficulties  with  which  one  is 
confronted  in  taking  the  initial  step  of  selecting  the  commodities  to  be 
included. 

*  From  1911  to  1918  the  figures  used  are  those  furnished  by  the  Food  Adminis- 
tration, which  make  allowance  for  the  seasonal  fluctuation  in  the  weight  of  live 
stock.  See  Production  of  Meat  in  the  United  States  and  its  Distribution  during  the 
War,  by  Stephen  Chase,  Food  Administration,  1919. 


1921]  An  Index  Number  of  Production  61 

In  view  of  the  various  degrees  of  importance  of  the  different  com- 
modities included  in  the  index  a  system  of  weighting  must  be  used. 
Weights  are  provided  in  order  that  each  commodity,  standing  as  the 
representative  of  part  of  a  sequence  of  production,  may  exercise  upon 
the  index  number  an  influence  proportionate  to  its  importance.  For 
the  purposes  of  the  present  method  of  weighting  the  production  process 
is  regarded  as  consisting  of  a  series  of  sequences,  each  starting  from 
some  initial  raw  material,  and  passing  through  various  stages  to  the 
finished  product.  It  is  important  in  such  a  plan  to  avoid  duplication 
in  those  series  which  have  a  large  number  of  representatives,  and  to 
give  wherever  possible  the  full  value  of  a  sequence  to  such  representa- 
tives as  can  be  found. 

In  the  beginning,  therefore,  the  so-called  raw  materials  produced  at 
farms,  mines,  forests,  and  fisheries  are  weighted  according  to  their 
value  at  the  place  of  production.  The  average  farm  values,  for  ex- 
ample, in  the  base  year,  are  taken  as  indicating  the  importance  of  each 
of  the  materials  from  farms.  Each  manufactured  commodity  is  then 
weighted  according  to  the  "value  added"  to  it  by  manufacture,  that  is, 
the  difference  between  the  initial  value  of  the  constituent  materials  in 
the  base  year  and  the  value  of  the  commodity  at  that  particular  stage 
of  manufacture  in  the  same  year.  So,,  for  instance,  coke  is  included 
only  at  the  difference  between  its  value  and  the  cost  of  the  coal  used  in 
its  manufacture,  and  structural  steel  only  at  the  value  by  which  it  ex- 
ceeds the  steel  ingot  from  which  it  was  rolled.  Thus  the  value  of  the 
sequence  as  a  whole  is  distributed  among  its  various  representatives. 
In  cases  where  there  is  a  single  series  it  carries  the  weight  for  the  whole 
sequence.  For  instance,  "wool,  used  in  manufacture,"  is  weighted  for 
all  the  products  manufactured  from  wool.  In  deciding  upon  the  weight 
to  be  assigned  Transportation  it  was  necessary  to  estimate  the  "value 
added"  by  the  transportation  service  and  to  divide  it  between  freight 
and  passenger  service.  The  "value  added"  was  estimated  by  subtract- 
ing from  the  operating  revenues  the  cost  of  materials,  including  an  al- 
lowance for  depreciation  chargeable  to  operating  expenses.  Various 
methods  of  estimate  have  necessarily  been  used  in  determining  the 
weights,  but  the  objective  has  remained  the  same — that  is,  the  assign- 
ment to  each  commodity  of  a  value  which  when  it  was  added  to  the 
values  assigned  other  commodities  in  the  same  sequence  would  keep  that 
sequence  in  proper  proportion  to  other  sequences. 

The  results  of  the  system  of  weighting,  so  far  as  it  affects  the  de- 
gree of  influence  exercised  by  each  group  upon  the  All  Commodities 
index,  is  indicated  by  the  following  table.  The  figures  are  percentages 
showing  the  distribution  among  the  various  groups  of  the  total  pro- 


62 


Walter  W.  Stewart 


[March 


duction  aggregates  (production  in  physical  units  multiplied  by  weights) 
for  the  year  1914. 


All  Commodities   100    Materials 


51    Manufacture    35 


Materials    51 

Manufacture   35 

Transportation   14 


Farms    39 

Mines   9 

Forests    3 


From  farm  products...  21 
"  mineral  products  13 
"       forestry  products     1 


The  year  1914  has  been  used  as  a  base  year  for  purposes  of  weight- 
ing, because  of  the  information  made  available  in  that  year  by  the  Cen- 
sus of  Manufactures.  The  question  arises,  in  view  of  the  business  con- 
ditions which  prevailed  during  1914  whether  that  is  a  satisfactory 
year  to  use  as  a  base  for  weighting.  It  has  been  thought  that  the  de- 
pression in  that  year  may  have  affected  industries  unevenly.  The  fol- 
lowing table,  which  shows  the  percentage  distribution  of  the  total  "value 
added  by  manufacture"  among  the  various  groups  of  industries,  for 
four  successive  census  years,  may  be  used  in  determining  that  question. 

Percentage  of  Total  "Value  added  by  Manufacture" 


Group 

1914 

1909 

1904        1         1899 

100.0 

10.0 
14.4 
14.8 
8.5 
3.6 
8.7 
5.3 
7.2 
3.8 
4.0 
2.9 
4.5 
3.0 
9.3 

100.0 

8.8 

15.4 

16.0 

10.2 

3.8 

8.5 

5.7 

7.0 

4.1 

4.1 

2.8 

3.0 

2.6 

8.0 

100.0 

8.6 

14.3 

16.0 

11.2 

3.9 

8.8 

5.7 

7.0 

4.3 

4.2 

3.3 

2.3 

2.6 

7.9 

100.0 

8.6 

15.2 

Iron  and  steel  and  products... 

16.9 

10.9 

3.8 

8.2 

6.0 

Stone,  clay  and  glass  products. 
Non-ferrous  metals  and  products 

Vehicles  for  land  transportation 

6.4 
3.8 
4.5 
3.5 

2.6 
2.4 

7.2 

The  table  indicates  that  in  spite  of  changes  in  prices,  methods  of 
production,  and  conditions  of  business,  there  is  a  remarkable  degree  of 
constancy  among  various  groups  of  industries  with  respect  to  the  per- 
centage of  the  total  "value  added  by  manufacture"  contributed  by  each 
group.  During  the  entire  period  each  of  the  fourteen  industries  oc- 
cupies approximately  the  same  rank  with  regard  to  the  others.  Such 
changes  in  relative  importance  as  actually  took  place  between  1909  and 
1914  are  not  due  exclusively  to  the  character  of  the  business  condi- 
tions in  1914.  Five  years  elapsed  between  the  census  takings,  and  even 
if  business  conditions  had  been  the  same  in  the  two  years,  there  would 
have  been  some  shifting  in  industry.     Since  the  same  general  propor- 


1921]  An  Index  Number  of  Production  63 

tions  are  maintained  throughout  the  period  it  seems  satisfactory  for 
purposes  of  the  present  system  of  weighting  to  use  figures  from  the 
census  of  1914. 

One  further  technical  point  needs  to  be  noted.  When  the  list  of 
commodities  was  revised  in  1904  to  include  the  new  commodities  for 
which  production  statistics  had  become  available  by  that  year  it  was 
necessary  to  adjust  the  production  aggregates  for  the  years  1890  to 
1903  during  which  those  commodities  were  not  included.  This  adjust- 
ment was  made  simply  by  raising  the  series  of  aggregates  for  the 
earlier  years  to  the  level  of  the  aggregate  of  1904  with  the  new  com- 
modities included.  Since  the  index  measures  only  the  relative  changes 
this  adjustment  does  not  affect  in  any  way  the  fluctuations  of  the  in- 
dex in  the  earlier  years,  and  it  makes  possible  the  inclusion  of  commodi- 
ties which  could  not  otherwise  have  been  used. 

This  statement  of  methods  may  now  be  brought  to  a  close  by  reciting 
briefly  the  steps  in  the  computation  of  the  index  number.  These  com- 
putations consist  for  a  single  year  in  multiplying  the  production  of 
each  commodity  in  that  year  by  the  assigned  weight,  and  then  adding 
these  results  to  obtain  the  production  aggregate  for  that  year.  The 
weights,  of  course,  are  kept  constant  so  that  in  the  calculations  for 
the  successive  years  the  only  variable  is  the  production  in  physical 
units.  When  this  is  done  for  each  of  the  thirty  years  the  result  is  a 
series  of  total  production  aggregates  and  series  of  sub-totals  for  the 
groups  which  may  be  turned  into  relatives  on  any  base  desired.  The 
base  selected  for  the  index  numbers  here  presented  is  the  average  pro- 
duction aggregate  for  the  three  pre-war  years;  that  is,  the  average  of 
the  production  aggregates  for  the  years  1911  to  1913  is  taken  as  100. 

We  may  now  consider  the  fluctuation  of  these  index  numbers  as 
shown  by  the  charts  and  comment  briefly  on  the  meaning  of  those  fluc- 
tuations. Chart  I  furnishes  a  comparison  of  the  changes  in  the  level 
of  production  with  the  changes  in  the  level  of  prices.  The  chart  is  a 
graphic  representation  of  the  All  Commodities  index  of  production  and 
the  All  Commodities  index  of  prices  as  given  in  the  table  on  page  68. 
Perhaps  the  most  apparent  fact  is  that  prior  to  the  war  inflation  the 
volume  of  production  rose  at  a  rate  more  rapid  than  the  level  of  prices. 
During  the  period  from  1890  to  1914  the  index  of  production  rose 
from  45  to  101  while  the  index  of  prices  rose  from  82  to  101.  But 
during  the  next  four  years,  that  is  from  1914  to  1918,  the  level  of 
prices  rose  99  per  cent  above  the  pre-war  level,  while  production  in- 
creased 23  per  cent. 

This  increase  in  production  looks  small  compared  with  the  rise  in 
prices,  yet  it  is  in  itself  a  remarkable  fact.  It  is  still  more  remarkable 
that  in  an  earlier  period  of  the  same  length  production  increased  at  an 


64 


Walter  W.  Stewart 


[March 


i 

» 
i 

■ 

i 

i 

i 

i 

i 

KEY 

All  Commodities            — 

Prices  -  All  Commodities . 

■ 

Average  Production  1911-1913=100 

/ » 
/  • 
/ 1 

/  i 

vs^V 

/ 

-N                                                                                                                                                                                           ' 
"'\                                   /                                            / 

Je  - 

U90 


Chabt  I. — Weighted  Index  Numbers  of  Production  and  of  Prices 
Index  of  production  includes  91  series;  index  of  prices  is  that  compiled  by  Bureau 
of  Labor  Statistics.     Base  periods,  1911-1913  =  100. 


1921]  An  Index  Number  of  Production  65 

even  more  rapid  rate.  From  1908  to  1912  the  increase  was  26  per 
cent.  Both  periods  begin  in  a  year  of  depression  and  end  at  a  peak 
of  industrial  activity.  The  increased  production  of  the  war  period, 
therefore,  was  not  due  merely  to  a  patriotic  effort  to  increase  output, 
but  was  made  possible  by  the  industrial  slack  which  existed  in  1914. 

The  sources  of  this  increased  production  of  the  war  period  become 
more  evident  from  an  analysis  of  the  curves  on  Chart  II.  This  chart 
presents  the  index  numbers  of  Total  Materials,  Total  Manufactures, 
and  Transportation.  From  1914  to  1915  there  is  a  marked  increase  in 
all  three.  After  1915,  however,  Materials  does  not  rise  above  the  point 
reached  in  that  year,  while  both  Manufacture  and  Transportation 
make  great  advances  in  1916  and  rise  again  in  1917.  Some  conception 
of  the  magnitude  of  the  task  performed  by  the  railroads  while  under 
government  operation  is  apparent  from  the  chart.  At  a  time  when  the 
aggregate  production  of  the  country  was  increasing  24  per  cent,  the 
burden  upon  the  railroads  increased  by  41  per  cent,  and  this  increased 
traffic  was  carried  without  substantial  increases  in  equipment. 

A  comparison  of  the  curves  for  the  entire  period  of  thirty  years 
shows  the  relative  rates  of  increase  of  the  three  groups.  Transporta- 
tion ranks  first  in  the  rate  of  growth,  manufactured  products  second, 
and  materials  third.  There  is  a  similarity  in  the  movement  of  the 
Transportation  index  and  the  index  of  Manufactures,  especially  over 
the  period  where  both  are  on  a  calendar  year  basis.  Prior  to  1906  the 
effect  of  using  fiscal  year  figures  for  Transportation  can  be  noted.  The 
use  of  totals  for  the  year  ending  June  30,  makes  the  changes  come  a 
year  later  than  the  corresponding  changes  in  Manufacture. 

We  speak  of  the  rate  of  growth  in  production,  but  the  increase  has 
not  been  a  steady  advance.  The  tendency  of  prices  and  production  to 
keep  step  is  especially  significant  in  those  periods  when  the  volume  of 
production  falls  off  because  of  the  condition  of  the  markets.  As  a 
single  instance,  take  the  depression  year  of  1908.  A  striking  fact  in 
that  year  is  the  divergent  movement  of  Materials  and  of  Manufacture. 
The  output  of  materials  actually  increased  while  the  production  of 
manufactured  goods  decreased.  The  explanation  for  this  divergence 
seems  to  be  that  the  production  on  farms  is  not  under  the  influence  of 
market  conditions  to  the  same  degree  as  production  at  mines  and  fac- 
tories. In  1908  the  production  of  corn  and  wheat  and  hay  and  hogs 
and  cotton  was  greater  than  in  1907.  But  the  production  of  bitumi- 
nous coal  was  62,000,000  tons  less,  a  decrease  of  16  per  cent;  the  out- 
put of  steel  was  9,300,000  tons  less,  a  decrease  of  40  per  cent.  Though 
the  cotton  crop  was  greater  by  19  per  cent,  there  was  less  cloth  pro- 
duced, because  the  cotton  actually  used  in  manufacture  decreased  9 


66 


Walter  W.  Stewart 


[March 


Total  Materials  — 

Total  Manufactures    

Total  Transportation  

Average  Production  1911-190 -100 


Chart  II. — Weighted  Index  Numbers  ok  Production 
Index  of  Materials  includes  39  series;  Manufacture  includes  50;  Transportation,  2. 
Base  period,  1911-1913  =  100. 


1921]  An  Index  Number  of  Production  67 

per  cent.  The  farms  were  busy,  but  the  textile  mills  and  steel  plants 
were  idle. 

Perhaps  these  figures  in  physical  units  seem  unfamiliar  and  you  pre- 
fer to  count  the  loss  in  money  values.  Assuming,  then,  that  in  1907 
the  national  income  was  $30,000,000,000,  whatever  that  may  mean,  the 
decrease  in  total  production  in  1908  of  5.36  per  cent  cost  the  country 
over  $1,600,000,000.  I  would  add  other  items  to  this  total,  but  I 
know  of  no  way  to  include  in  the  reckoning  the  costs  in  worry  and  pri- 
vation borne  by  men  out  of  work  and  by  their  families.  This  decrease 
in  production  occurred  not  because  there  was  a  shortage  of  materials 
nor  a  lack  of  equipment,  nor  because  there  were  no  men  willing  to  work, 
but  because  there  was  not  an  adequate  organization  for  bringing  these 
elements  together  for  the  purpose  of  producing  goods. 

Such,  approximately,  were  the  losses  due  to  the  depression  of  1908. 
We  are  now  entering  another  depression,  the  duration  and  intensity  of 
which  no  one  can  predict  with  certainty,  and  as  a  community  we  seem 
to  count  the  losses  as  inevitable.  To  regard  waste  of  such  magnitude 
as  the  necessary  accompaniment  of  business  cycles  and  to  give  up  the 
problem  of  stabilizing  the  level  of  production  is  to  confess  our  incompe- 
tence.5 Instead  of  such  confession,  however,  one  ordinarily  hears  com- 
plaints about  workmen  soldiering  on  the  job.  For  the  analysis  of  such 
problems  we  need  a  re-introduction  into  economic  theory  of  the  con- 
cept of  waste,  and  we  need  the  tools  to  locate  and  to  measure  it. 

In  conclusion,  the  index  numbers  here  presented  are  not  to  be  re- 
garded as  definitive  and  final.  They  are  in  the  experimental  stage  and 
are  subject  to  additions  and  betterments  whenever  a  way  of  improve- 
ment is  suggested.  As  information  concerning  the  output  of  other 
commodities  becomes  available  they  may  be  included  in  the  index.  The 
present  method  of  construction  permits  their  inclusion  without  break- 
ing the  continuity  of  the  index.  The  gathering  of  such  additional  in- 
formation and  the  testing  of  the  adequacy  of  existing  data  are  tasks 
which  must  not  be  slighted.  In  the  present  state  of  the  statistics  of 
production  such  work  is  more  important  than  the  choice  between  alter- 
native methods  of  organizing  the  information  after  it  is  once  collected. 
So  long  as  whole  industries  are  omitted  from  the  index,  such  as  the 
building  industry,  the  work  of  measuring  the  changes  in  the  volume  of 
production  is  little  more  than  begun.     Certainly  the  extent  of  agree- 

5  One  plan  for  stabilizing  production  was  proposed  by  Professor  David  Friday 
a  year  ago,  while  there  was  still  a  chance  of  preventing  the  present  decline  in  out- 
put. See  article  in  Journal  of  Political  Economy,  February,  1919,  entitled,  "Main- 
taining Productive  Output — A  Problem  in  Reconstruction."  Whatever  the  merits 
of  his  particular  proposal  may  be  he  has  at  least  recognized  the  nature  and  serious- 
ness of  the  problem. 


68 


Walter  W.  Stewart 


[March 


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1921] 


An  Index  Number  of  Production 


69 


ment  among  the  index  numbers  of  production  which  have  so  far  been 
constructed  is  no  more  significant  than  the  fact  that  they  all  have  the 
common  shortcoming  of  omitting  the  building  industry.  Any  interpre- 
tation of  these  index  numbers  must  begin  with  a  recognition  of  those 
industrial  activities  which  are  now  unmeasured  and  omitted.  The 
increase  in  precision  will  be  in  proportion  to  the  attention  paid  these 
present  shortcomings. 

Walter  W.  Stewart. 
Amherst  College. 


List  of  Commodities  Included  in  Index  of  Production 


Materials  from 
I     Farms  : 

Apples 

Barley 

Corn 

Cotton,  raw 

Hay 

Oats 
*Peaches 

Potatoes,  white 
*Potatoes,  sweet 

Rice 

Rye 

Sugar,  beet 

Sugar,  cane 

Tobacco 

Wheat 

Wool,  raw 


II     Mines: 


Coal,  anthracite 
Coal,  bituminous 
Copper 
Gold 
Iron,  ore 
Lead 

Petroleum 
Pyrites 
Quicksilver 
Salt 
Silver 

'Sulphur  ore 
Zinc 


Manufacture 

V  Manufactured  from  Farm  Products: 

Coffee,  used  in  manufacture 
*Cotton,  used  in  manufacture 

Cotton  seed 

Cotton  seed  oil 

Cake  and  meal,  cotton 
*HulIs,  cotton 
*Linters,  cotton 

Hemp;  Manila,  used  in  manufacture 

Jute,  used  in  manufacture 

Sisal  grass,  used  in  manufacture 

Molasses 

Cigarettes 

Cigars 

Tobacco  and  snuff 

Wheat,  used  in  manufacture 
•Beef 
*Mutton 
*Pork 

"Hides,  cattle 
•Skins,  sheep 

Silk,  used  in  manufacture 

Wool,  used  in  manufacture 

VI  Manufactured  from  Mineral  Products: 
•Brick,  common 

•Brick,  front 
•Brick,  vitrified 

Cement 

Coke 

Copper,  used  in  manufacture 

Gold,  used  in  manufacture 

Pig  iron 

Steel  ingots  and  castings 
•Bars,  merchant 

Plates  and  sheets 

Rails 
•Structural  shapes 
•Skelp 
•Wire  rods 
•Tin  plate 

Nails,  cut 

Nails,  wire 

Lead,  used  in  manufacture 
•Lime 

Silver,  used  in  manufacture 

Tin,  used  in  manufacture 

Zinc,  used  in  manufacture 


70  Carl  Snyder  [March 

III  Forests:  VII     Manufactured  from  Forest  Products: 

*Douglas  fir  *Lath 

*Hemlock  *Shingles 

*Oak  Turpentine 

*Spruce  Rubber,  used  in  manufacture 

'Western  yellow  pine 

*\Vhite  pine 

*Yellow  pine 

IV  Fisheries:  VIII     Manufactured  from  Fishery  Products: 
*Cod  *Salmon,  canned 

*Haddock 
*Mackerel 

Transportation 

IX     Transportation: 
Freight — ton  miles 
Passenger — passenger  miles 
*  Included  from  1904-1919. 


DISCUSSION 

Carl  Snyder. — In  his  comprehensive  work  on  Business  Cycles,  1913, 
Mitchell  pointed  out  as  among  the  hrst  requisites  for  a  larger  understanding, 
the  need  of  an  index  of  the  physical  volume  of  trade.  An  inquiry  under- 
taken by  the  writer  showed  that  a  reliable  index  of  the  volume  of  trade  was 
much  more  difficult  of  compilation  than  an  index  of  production  in  the  lead- 
ing lines  of  industrial  activity,  including,  of  course,  agriculture.  But  the 
preparation  of  this  latter  revealed  that  an  index  of  production  is  likewise 
probably  the  most  accurate  index  of  trade  that  we  have.  There  is  probably 
no  great  variation  in  trade  aside  from  the  variations  in  product.  That  is  to 
say,  what  is  produced  is  very  largely  consumed  year  by  year;  and  there  ap- 
pears to  be  very  rarely  any  accumulated  surplus  of  moment. 

Probably  the  best  general  index  of  trade  that  we  had  was  the  bank  clear- 
ings outside  of  New  York  City.  It  had  been  supposed  that  these  grew  more 
rapidly  than  the  general  trade  of  the  country,  and  also  that  they  were  very 
greatly  affected  by  periods  of  intense  speculative  activity,  like  those  of 
last  year.  g  *^±& 

Prior  to  1890,  these  clearings  did  grow  very  rapidly,  owing  to  the  rapid 
extension  of  the  clearing  house  system,  and  the  actual  number  of  clearing 
houses.  Subsequent  to  1890  these  clearings,  corrected  for  price  changes  by 
dividing  by  the  Bureau  of  Labor's  index  of  commodity  prices,  show  a  fairly 
consistent  growth  at  the  average  rate  of  close  to  4  per  cent  per  annum. 
The  preparation  of  an  index  of  production  revealed  that  the  average  annual 
increase  in  the  product  was  practically  the  same.  Periods  of  speculative 
activity  do  show  a  sensible  variation  between  the  two  indices;  but  only  for 
a  brief  time. 

It  is  remarkable  that,  until  the  present  year,  there  had  been  no  serious 
effort  to  measure  the  total  national  product  or  its  rate  of  growth  over  an  ex- 
tended period  of  years.  This  was  the  more  regrettable,  for  it  left  the  field 
wide  open  for  the  most  conflicting  views  as  to  whether  production  in  a  given 
year  was  low  or  high,  labor  inefficient  or  the  reverse,  whether  there  was  a 
scarcity  of  goods,  and  so  on. 

Professor  Kemmerer  had  made  an  excellent  beginning  in  his  Money  and 


1921]  Production  71 

Prices,  and  Professor  Fisher  had  attempted  the  same  thing  in  the  working 
out  of  his  standard  work  on  the  purchasing  power  of  money.  Then,  as  so 
often  happens,  the  problem  was  attacked  anew  this  year,  from  somewhat 
different  angles,  by  Dr.  King,  Dr.  Stewart,  Dr.  Day,  and  the  present 
speaker.  A  very  substantial  agreement  appears  between  each  of  the  investi- 
gations. Dr.  King  obtained  weighted  averages  embracing  15  principal  pro- 
ducts; and  these  averages  show  a  fairly  steady  rate  of  growth  of  about  3.4 
per  cent  per  annum.  Dr.  Stewart's  line  shows  about  the  same  trend.  Dr. 
Day  had  not  yet  combined  his  series  into  a  single  line.  We  took  simple 
averages  of  his  unadjusted  indices  for  his  three  series,  and  obtained  a  slope 
of  close  to  3.5  per  cent. 

We  worked  out  three  different  series,  first  one  of  28  principal  products 
running  back  40  years;  then  one  of  49  items  running  back  50  years;  and 
finally  one  beginning  with  these  49  items  and  adding  others  as  rapidly  as 
they  were  available,  so  that  for  the  last  20  years  the  average  was  above  70 
and  latterly  the  total  number  of  items  87.  Unweighted  averages  were 
taken  of  these,  and,  save  in  the  earlier  period  from  1870  to  1890,  there  was 
no  substantial  difference  between  the  three  series.  Taking  the  slope  only 
from  about  1890,  the  rate  of  increase  on  the  first  was  4.3  per  cent;  on  the 
second,  49  items,  about  3.3  per  cent;  and  on  the  longest  list  about  4.2  per 
cent  per  annum. 

The  problem  of  weighting  is  obviously  a  difficult  one,  and  the  method 
necessarily  one  of  arbitrary  choice.  Happily,  the  number  of  items  available 
is  large  enough  so  that,  as  Bowley,  Mitchell,  and  others  have  been  at  much 
pains  to  demonstrate  in  other  fields,  there  was  no  very  marked  difference, 
save  in  minor  details,  between  these  and  the  weighted  averages  of  King, 
Stewart,  and  Day.  In  general  all  of  these  agreed  in  a  slope,  in  the  last  30 
years,  of  around  3^/o  to  4  per  cent. 

Considering  the  amount  of  material  available,  its  nature,  and  the  consider- 
able probability  of  error  involved,  it  may  now  be  said  with  confidence  that 
this  is  approximately  the  annual  rate  of  growth  within  the  last  generation. 
It  will  be  noted  that  this  rate  is  considerably  lower  than  that  estimated  by 
Professor  Fisher,  and  somewhat  lower  than  that  of  Professor  Kemmerer. 
This  also  disposes  of  the  idea  that  the  ton  mileage  of  the  railroads  is  a 
good  index  of  production.  For  the  last  40  years  the  freight  traffic  of  the 
railroads,  expressed  in  ton  miles,  has  shown  a  remarkably  even  growth  at 
the  rate  of  about  6.2  per  cent,  or  50  per  cent  greater  than  any  probable 
rate  of  production  growth.  This  simply  expresses  the  fact  that,  as  the  urban 
population  grows  and  production  is  concentrated  more  in  large  centers,  the 
greater  must  be  the  haul  of  food,  fuels,  and  materials  back  and  forth  to 
feed  and  supply  this  population  and  their  specialized  industries. 

The  fact  which  stands  out,  of  course,  in  all  these  investigations,  is  the 
amazingly  even  character  of  this  production  growth,  and  how  very  slight  is 
the  variation  in  the  flow  of  goods  from  year  to  year  throughout  periods  of 
wide  prosperity  or  deep  depression ;  how  slightly  it  was  affected  by  the  war, 
and  how  little  relationship  it  often  bore  to  the  prevailing  spirit  or  tradi- 
tional idea  of  any  given  time.  Thus,  the  period  after  the  great  panic  of  '73 
is  usually  referred  to  as  one  of  the  deepest  depressions  the  country  ever 
knew,  and  yet,  beginning  a  year  or  two  after  that  panic  there  appears  to 
have  been  a  very  marked  expansion,  at  a  rate  seldom  equalled  since.     We 


72  Carl  Snyder  [March 

have  here  a  transfer  of  the  usual  delusion  that  profits  and  prices  are  a 
measure  of  the  real  prosperity  of  a  nation. 

In  the  same  way  we  see  that  there  was,  contrary  to  almost  universal  im- 
pression, no  unusually  rapid  expansion  in  the  late  war.  The  peak  appears 
to  have  been  reached  in  1916  or  1917 — there  was  seemingly  little  difference 
in  the  total  of  the  two  years.  And  in  the  same  way,  contrary  to  almost 
universal  expectation,  there  has  been  no  great  diminution  since  the  war 
closed.  So  we  had  no  huge  surplus  of  goods  to  dispose  of.  On  the  con- 
trary, there  never  seemed  a  greater  scarcity  than  last  winter  and  last  spring ; 
and  never  such  an  extraordinary  rise  in  prices  in  peace  times. 

So  far  as  we  can  judge,  there  has  been,  between  the  last  five  years,  no 
very  great  difference  in  the  total  of  the  annual  product;  and  the  consider- 
able increase  in  the  rate  in  1916-1917  has  been  compensated,  apparently,  by 
a  somewhat  lower  rate  since.  From  this  I  think  we  can  say  pretty  surely 
that  there  is  no  huge  overgrowth  of  manufacturing  or  productive  capacity 
in  this  country,  save  perhaps  in  a  few  lines  too  obvious  to  need  mention.  So 
there  does  not  seem  any  cause  for  apprehension  that  the  present  depression 
through  which  we  are  passing  will  be  of  any  longer  duration  than  those  of 
the  past ;  and  in  the  minds  of  many  careful  observers  the  forces  at  work  are 
such  as  to  make  this  depression,  for  the  United  States  perhaps,  briefer  and 
lighter  than  for  any  of  the  other  great  commercial  nations. 

In  the  same  way  it  is  perfectly  evident  that  between  the  total  of  the  na- 
tional product  and  the  general  price  level  there  is  only  the  slightest  dis- 
coverable relation,  and  this  only  of  the  briefest  duration.  Periods  of  the 
most  rapid  growth  in  production,  as  in  1874-1880,  have  likewise  been  periods 
of  rapidly  declining  prices;  and  vice  versa. 

Hardly  greater  foundation  has  the  traditional  belief  that  "iron  is  the 
barometer  of  business."  It  is  no  doubt  true  that  the  volume  of  new  con- 
struction makes  up  the  larger  part  of  that  which  we  call  the  business  cycle, 
that  is,  the  variation  between  periods  of  expansion  and  relative  quiescence. 
And  iron  and  steel  are,  of  course,  a  most  important  element  in  this  new  con- 
struction. It  is  further  probably  true  that  when  the  steel  trade  is  good, 
other  business  is  brisk  and  profits  satisfactory.  But  just  as  the  variation  in 
the  mercury  tube  in  extreme  depression  and  a  "high  barometer,"  when  every- 
one feels  buoyed  up,  is  normally  on  the  order  of  less  than  5  per  cent,  so 
we  may  say  that  the  difference  in  national  product  from  one  period  to  an- 
other is  probably  not  much  more — 8  or  10  per  cent  at  the  outside,  as  meas- 
ured by  years. 

The  difference  produced  by  extreme  depression  and  prosperity  in  the  iron 
trade  is  fairly  set  forth  in  the  estimates  of  manufacturing  products  which 
have  been  given  us  by  Dr.  Stewart  and  by  Dr.  Day.  For  the  rest,  it  is 
evident  that  the  iron  trade  lags  rather  than  leads  the  general  expansion, 
and  is  one  of  the  last  of  the  industries  to  feel  the  turn  of  the  tide,  as  was 
so  notably  evident  this  year. 

But  if  the  problem  of  measurement  of  the  national  product  has  now 
been  disposed  of,  there  still  remains  yet  another,  and  that  is  the  measure- 
ment of  the  current  product;  and  for  practical  affairs  this  is  of  far  greater 
importance.  The  variations  in  the  business  cycle,  as  Professor  Mitchell 
has  so  clearly  set  forth,  lie  perhaps  as  much  as  anything  in  a  dislocation 
between  the  even  pace  in  the  different  lines  of  industry — too  rapid  expan- 
sion in  one  direction,  too  little  in  another,  so  as  to  disturb  the  normal  equi- 


1921]  Production  73 

librium.  The  whole  of  the  national  product  does  not  greatly  vary,  but  that 
of  the  several  industries  may  vary  quite  widely.  Now,  in  very  large  part, 
goods  are  exchanged  for  goods  and  services  for  services ;  and  if  there  be 
overexpansion  in  this  line  or  that,  there  comes  inevitably  overproduction  in 
special  lines,  a  period  of  crisis  for  these  industries,  unemployment,  failures, 
and  all  the  traditional  phenomena  of  lack  of  balance. 

This  and  little  else  is  what  is  happening  now.  It  is  not  because  of  any 
fall  in  our  foreign  trade,  or  because  of  overextension  of  credits  abroad,  or 
the  inefficiency  of  labor,  or  any  of  the  nine  and  forty  special  reasons  which 
are  always  urged  at  such  times.  Our  foreign  trade  has  been  good,  but  it 
has  not  been  enormous.  Its  rate  of  growth  over  the  last  ten  years  was  not 
deeply  affected  by  the  war.  It  is  not  now  due,  it  does  not  seem  to  me,  for 
any  violent  or  long-continued  collapse.  And  if  national  production  has  been 
at  the  peak  of  its  history  in  the  last  five  years,  it  is  very  evident  that  the 
idea  of  the  inefficiency  of  labor  is  very  largely  a  subconscious  impression,  or 
what  Professor  Ogburn  would  probably  call  a  wish  thought. 

What  is  troubling  us  is  simply  industry  out  of  balance.  In  certain  par- 
ticular and  very  obvious  lines  we  have  been  going  a  little  too  fast.  Now,  if 
we  wish  to  get  rid  of  these  periods,  or  cycles,  of  industrial  disturbance,  we 
ought  to  know  that  the  several  industries  are  marching  in  step,  in  other 
words,  what  is  the  current  rate  of  production  in  the  several  lines.  This  is 
one  question  that  has  especially  engaged  my  department  this  year.  We  have 
so  far  been  able  to  obtain  satisfactory  indices  in  about  25  of  the  major  in- 
dustries of  the  country,  including  perhaps  60  or  70  per  cent  of  the  raw  pro- 
ducts and  basic  materials,  and  in  some  of  the  more  fudamental  manufactures, 
as  the  production  of  pig  iron  and  steel,  refined  sugar,  refined  copper,  and 
so  on. 

In  the  course  of  a  few  months  we  hope  to  have  at  least  ten  or  a  dozen 
more,  and  with  these  we  shall  have,  I  think,  a  very  clear  and  accurate  pic- 
ture of  the  industrial  flow  from  month  to  month.  By  reducing  each  of  the 
industries  to  a  common  denominator,  we  shall  know  by  means  of  index 
figures  exactly  whether  we  are  producing  very  much  more  pig  iron  or  copper 
or  sugar,  or  importing  much  more  rubber  or  silk  or  wool  than  the  normal 
need.  It  was  very  striking,  when  we  first  obtained  these  indices,  to  note 
how  clear  was  the  overproduction  in  certain  lines  and  the  very  large  cer- 
tainty that  there  would  be  inevitably  a  collapse  in  these  special  industries. 
In  fact,  from  the  relative  height  of  the  indices  you  could  pretty  well  pick 
them  off  in  the  order  in  which  the  decline  would  and  did  come. 

The  preparation  of  these  indices  was  obviously  a  much  more  difficult  mat- 
ter than  the  annual  product.  For  here  we  have  to  deal  with  a  wide  seasonal 
variation.  In  many  lines,  as  for  example  the  milling  of  flour,  the  slaughter 
of  meat,  the  production  of  sugar,  cement,  and,  in  fact,  a  majority  of  the 
industries,  the  variation  may  be  very  wide,  amounting  to  as  high  as  30  or 
40  per  cent  above  or  below  the  average  for  the  12  months  of  the  year. 

To  work  out  this  seasonal  index  it  was  needful  to  have  the  figures  of  pro- 
duction by  months  for  a  series  of  years,  ten  or  twelve  at  least,  and  then 
to  determine  by  examination  of  the  scatter  as  to  whether  this  seasonal  was 
fairly  even  and  whether  a  given  industry  tended  to  run  fairly  true  to  form. 
In  most  of  the  cases  a  fairly  satisfactory  seasonal  was  obtainable,  in  some 
less  so.  But  now  that  we  have  some  25  or  30  of  the  major  industries,  the 
individual  variations  are  ironed  out  so  that,  in  the  summation  of  the  aver- 


74 


Carl  Snyder 


[March 


ages,  we  have  a  fairly  good  picture  of  the  nation's  monthly  product.  And 
as  one  industry  after  another  is  added  to  the  list,  the  picture  will,  of  course, 
become  more  complete  and  satisfactory. 

A  summary  of  these  monthly  indices  in  1920,  follows: 

INDICES  OF   CURRENT   PRODUCTION  AND   TRADE 

1920 

BASE  :      AVERAGE  OF  THE  TWELVE  MONTHS  OF   1917=100 

SEASONAL  VARIATION  ELIMINATED 


1919 

1919 

1920 

1920 

1920 

I 

l 

Aver- 

Aver- 

Aver- 

Aver- 

Aver- 

age 

age 

age 

age 

age 

July 

August 

Sep- 

Oc- 

No-      De- 

third 

fourth 

first 

second 

third 

tember 

tober 

vember  cember 

quar- 

quar- 

quar- 

quar- 

quar- 

ter 

ter 

ter 

ter 

ter 

82.2    71.5 

98.5 

90.5 

100.2 

994 

100.9  |100.4     98.5 

93  2  |  85.0 

2.  Steel   ingots.  .    . 

83.4    73.9 

98.5 

90.0 

96.9 

93.2 

98.8     98.7     92.7 

86.0     75.5 

3.   Bituminous  coal.  . 

91.6    75.8 

99.2 

96  4 

96. Op 

97.4p 

98.3p(  92.3p   99.4p 

114  3pll0.4p 

4.   Anthracite  coal  .   . 

92.6   94.3 

89.4p 

85.1p 

77. 7p 

94.9p 

87. 4P   50  9ps  86. 7p 

89.7pl01.9p 

5.  Copper 

67.2   71.0 

76.1 

73.5 

70.1 

69.7 

74.0  j  66.7 

66.9 

67. 8p   60.8p 

6.  Tin  deliveries.  .    . 

64.3 

114.1 

98.4 

92.3 

97.7 

114.7 

77.7  ;100.8 

70.8 

70.4     53.5 

92.9 

97.8121.7 

94  6 

97.9 

92.3 

98.2   103.3 

116.2 

124.5 

136.0 

8.   Petroleum  ... 

123  3 

119.1 

125.5 

134.3 

140.8 

140.6 

143.7   138.2 

144.4 

141.1 

142.1p 

9    Gas  &  fuel  oil  rfd  . 

127.7 

129.0 

120.5 

129.8 

154.1 

143.4 

159.2  1159.7 

157.1 

157.0 

10.  Cotton  consumption 

90.7 

917 

97.1 

96.1 

88.7 

94.4 

87.7  j  83.9 

69.7 

59.1 

52.4 

11.   Wool  consumption 

110.1 

119.1 

125.7 

105  5 

68.5 

68.5 

70.1      67.0 

71.0 

51.9 

12.  Silk  imports.  .    .    . 

165.1 

120.2 

144.7 

91.7 

78.5 

104.8 

81.2     49.4 

43.4 

39.1 

13.   Wheat  flour  .    . 

119.3 

109.2 

113.1 

95  1 

97.0e 

115.4e 

94.7e'  81.0e 

82  le 

75.5 

7fi.3e 

14.  Cattle  slaughtered. 

105.1 

104.0 

107.0 

97.9 

92.5 

89.3 

91.6  1  96.6 

82.4 

89.3 

74.4 

15.  Swine  slaughtered 

115.0 

108.3 

115.0 

120.7 

115.5 

114.1 

117.5   114.8 

1023 

103.8 

94.0 

16    Sheep  slaughtered. 

145.2 

148.1 

118.7 

108.2 

128  2 

134.6 

123.8   126.3 

113.3 

114.1 

113.0 

17.  Sugar  refined.   . 

121.7 

94.1 

124.9 

121.0 

108.8 

129.2 

121.2 

76.0 

396 

76.9 

81.9 

18.  Tob.,  cigars  &  cigs. 

93.4 

106/ 

113.8 

106.4 

93.2 

91.7 

93.0 

94.8 

87.4 

83.0 

73.3 

19.   Rubber  imports.   . 

114.7 

157.7 

222.0 

130.1 

130.5 

135.8 

160.9 

94.8 

66.0 

98  6 

30.  Wood  pulp.   .    .    . 

93.6 

111.5 

106  2 

124.7 

108.2 

111.2 

108.8   104.6    113.8   116  0   107.7 

21.   Pap^r 

113.5 

118.7 

125.5 

131.0 

132.2 

133.6 

132.6   130.4  |l26.2 

105.1 

90.4 

22.   Railway  car  output 

181  6 

103.2 

52.7 

37  7 

40.5 

30  0 

43.7 

47.9  1  66.2 

68.5 

85.0 

23.  Locomotive  output 

59.8 

30.5 

26  2 

43.2 

52.9 

45.8 

62.2 

50.8     79.2 

72.1 

76.8 

24.   Building  activity*0 

73.3 

73.4 

56.9 

36.1 

33.9 

33.1      37.5 

31.1  ;  29.4 

32.4 

37. 9p 

25.  Imports0.  .    .    . 

122.5 

124.2 

132  7 

131.9 

140.1 

155.9   151  4   112.9   105.9 

111.8 

98. 5p 

Average  of  25 

| 

comparable  items 

106.0 

102.7 

108.4 

98.6 

97.6 

101  3    100.6 

90.9     88  4 

89.6 

Bank  clearings  outside 

New  York  City.  .    . 

121.5 

117.1 

112  8 

108  2 

118.2 

112.1    118.1 

124.5   121.1 

124.0 

133.5p 

Railway  tonnage  .    .    . 

103.0 

97.1 

108  8 

104.8 

117  6 

H8.8   118.3 

111.5   111.6 

103.8 

94.8p 

Employment, New  York 

95.5 

98.6 

102.7 

101.9 

98.8 

100.8     98.3 

97  4     9-3  8 

89.1p 

83. 3p 

Bank    clearings,    New 

1 

York  Citv° 

117.5 

113.0 

98.8 

92.2 

95.9 

92  8     93.5 

101.4     99.9 

108.1 

122.0 

Shares  sold,  !New  York 

Stock  Exchange.  .    . 

179.0 

199.1 

152.4 

117.3 

89.6 

81.1 

88.7     98.9 

88.4 

142.7 

156.1 

Per  cent  of  firms  failing 

to  firms  reporting  .  . 

.37 

.36 

.32 

.41 

.50 

.48 

.50     I  .62 

.62 

.70 

.85 

Exports0 

106  5 

78  9 

'.Mi.  7 

99  9 

95.5 

108.7 

92.9  1  85  0 

89.0 

90  0 

99. 4p 

Foreign  trade  tonnage 

105.8 

10.7.6 

121  8 

121.0 

139.5 

128.8   1426  1147.2    165.6    155.5 

e  Estimated 

*  Base 

=  191 

6 

p  Preliminary 

3  Pric* 

s  chanp 

e  allov 

red  for 

1921]  Production  75 

H.  S.  Person. — Mr.  Wolman's  paper  is  an  argument  for  an  extension  of 
the  factual  basis  on  which  the  theory  of  production  rests,  and  not  a  discus- 
sion of  that  theory.  The  thesis  seems  to  be  embodied  in  the  following 
sentences:  "While  the  first  formulation  of  a  scientific  theory  may  contain 
all  of  the  elements  essential  to  a  development  of  that  theory,  later  influences 
may  direct  attention  from  these  elements  and  thus  limit  the  content  of  the 
theory.  This  is  apparently  what  happened  to  the  theory  of  production." 
"It  is  one  of  the  functions  of  political  economy  to  organize  inquiries  that 
attempt  to  supply  the  necessary  evidence." 

That  "later  influence"  which  has  apparently  directed  attention  from  the 
elements  essential  to  a  proper  development  of  a  theory  of  production,  ac- 
cording to  the  author,  is  the  dominance  of  the  price  concept  in  industry  and 
in  economic  theory;  he  believes  that  the  relation  between  the  real  facts  of 
production — physical  output — and  monetary  valuation  is  far  from  simple 
and  constant;  that  the  habit  of  recording  these  facts  in  pecuniary  terms  has 
not  only  resulted  in  a  misinterpretation  of  many  of  them  but  has,  so  to 
speak,  laid  a  smoke  screen  between  observers  and  a  multitude  of  new  facts 
of  recent  industrial  development,  and  that  our  problem  is  now  one  of  elimi- 
nating the  smoke  in  order  to  observe  these  new  data  and  bring  them  to 
bear  upon  the  theory  of  production. 

I  agree  with  the  author  that  the  theorists  have  largely  failed  to  observe 
and  analyze  these  new  data,  particularly  those  pertaining  to  the  technologi- 
cal and  psychological  aspects  of  industry.  Their  analysis  would  undoubtedly 
yield  new  corollaries  to  the  theory  of  production,  but  I  have  no  idea  whether 
or  to  what  extent  it  would  modify  the  fundamentals  of  that  theory.  I  be- 
lieve also  that  the  habit  of  recording  the  facts  in  pecuniary  terms  has  hid- 
den or  perverted  many  of  them,  but  I  doubt  whether  that  explains  why  the 
theorists  have  not  kept  contact  with  their  data.  The  body  of  economists 
is  not  large;  the  routine  of  the  classroom  preempts  the  greater  part  of  their 
energies;  their  research  is  highly  individualistic,  while  the  field  of  inquiry 
has  broadened  so  much  as  to  demand  cooperative  research;  economists,  like 
other  folk,  are  subject  to  inertia  and  yield  to  the  line  of  least  resistance; 
above  all,  the  new  research  requires  actual  participation  in  industrial  oper- 
ations— the  most  significant  of  the  new  facts  cannot  be  observed  from  with- 
out. May  not  these  circumstances  go  a  long  way  towards  explaining  the 
theorists'  inadequate  knowledge  of  the  technology  of  industry  and  of  the 
psychology  of  worker,  manager,  capitalist,  and  entrepreneur? 

When  the  economist  has  broken  away  from  the  classroom  and  from  ex- 
clusive dependence  on  the  library,  he  has  brought  back  rich  treasure.  Carle- 
ton  Parker  placed  himself  cheek  and  jowl  with  the  worker  and  the  boss,  and 
came  back  with  new  vision  born  of  new  facts ;  a  Hotchkiss,  Jacobstein, 
Leiserson,  Willits,  or  a  Wolman  break  away,  sit  at  the  table  of  negotiation 
with  managers  and  workers,  and  discover  new  cold,  hard  facts  of  industry 
of  which  the  theorist  has  not  yet  taken  account  in  his  reasoning;  a  Friday 
yields  part  of  his  abilities  to  the  demands  of  industry,  and  is  emboldened 
by  what  he  observes  to  add  a  corollary  to  his  theory  of  production — that  the 
producers'  out-of-pocket  expenses  be  insured  by  the  state.  During  the  war 
many  young  economists  were  torn  from  their  particular  interests  and  in 
emergency  service  were  made  aware  of  the  extent  and  depth  of  the  un- 
touched field  of  data  and  of  the  resources  hidden  in  it.     Let  us  hope  that  in 


76  H.  S.  Person  [March 

their  re-adjustment  to  peace  conditions  they  are  not  returning  to  exactly 
their  former  limitations. 

These  limitations  to  an  adequate  familiarity  with  the  new  facts  of  in- 
dustry have  been  due  chiefly  perhaps  to  the  economist's  organization  for  the 
pursuit  of  his  professional  activity.  He  has  been  so  limited  in  freedom  for 
contact  with  industry  as  to  have  been  able  to  make  the  contact  with  the  high 
spots  of  industry  only — with  presidents,  directors,  and  general  managers; 
through  annual  reports  and  general  reviews  of  business  conditions.  It  has 
been  felt  that  these  high  spots  are  the  rich  spots  to  tap,  for  it  is  there  that 
results  are  summed  up,  judgments  made,  and  governing  policies  determined. 
But  the  apparent  advantage  of  such  contact  is  precisely  the  disadvantage. 
In  the  first  place,  the  point  of  view  of  the  administrators  in  private  industry 
is  determined  by  the  profits  motive ;  their  facts  are  translated  into  pecuniary 
terms,  and  their  summarized  data  and  judgment  made  on  that  basis.  The 
economist,  however,  must  interpret  facts  from  the  social  point  of  view  as 
well,  in  order  to  secure  theories  universally  true ;  and  to  accomplish  that  end 
he  should  have  the  naked  unit  data.  In  the  second  place,  the  summaries 
at  the  top  are  not  only  inadequate  summaries  of  the  facts  they  represent 
but  they  ignore  a  vast  quantity  of  vital  facts  at  the  bottom.  Presidents  and 
directors  and  many  managers  are  as  ignorant  of  the  real  facts  at  the  bot- 
tom of  their  industries  as  are  the  economists;  beneath  the  hard  crust  of 
surface  facts  is  a  seething  boiling  mass  of  facts  seeking  for  expression  at 
the  top,  of  which  they  know  only  too  little.  It  is  not  true  that  all  admin- 
istrators are  ignorant  of  these  facts  (the  Dennisons  and  other  resident  di- 
rectors of  relatively  smaller  units  are  not)  ;  but  in  the  larger  unit  there  is 
woeful  ignorance  and  it  is  at  the  top  of  the  larger  industrial  unit  that  the 
economist,  for  some  reason  or  other,  believes  it  profitable  to  have  the  con- 
tact. 

Furthermore,  non-coordinated  specialization  among  economists  is  in  part 
responsible.  Specialists  in  theory  have  remained  too  much  aloof  from  the 
contacts  which  can  furnish  them  the  new  data  for  their  reasoning,  and  those 
whose  specialization  has  afforded  them  contacts  with  the  new  data  have  too 
frequently  lost  touch  with  the  formulators  of  theory  and  the  results  of  their 
investigations  have  not  become  available  to  the  latter.  There  must  be 
specialization,  the  field  is  so  vast,  but  we  must  learn  how  to  coordinate  it. 

The  theory  of  production  which  we  have  modified  but  little  was  formulated 
when  the  trading  motive  dominated  a  productive  activity  which  expressed 
itself  chiefly  in  the  household  and  in  the  small  factory.  It  is  to  be  assumed 
that  Adam  Smith  and  his  successors  got  a  pretty  good  picture  of  the  indi- 
vidual worker,  the  individual  master,  and  the  individual  trader  of  that  day, 
each  the  member  of  a  homogeneous  group.  But  since  then,  in  the  United 
States  particularly,  the  changes  have  been  momentous.  The  trading  mo- 
tive still  dominates  the  mind  of  administrator  and  even  of  manager,  but  the 
elements  of  production  he  directs  to  his  purposes  are  now  infinitely  varied, 
complicated,  highly  technological  and  psychological,  and  neither  he  nor 
we  have  more  than  scratched  the  surface  in  the  effort  to  classify  and  ap- 
praise them.  It  is  no  longer  merely  land,  labor,  and  capital — or  manage- 
ment, labor,  and  capital — but  hundreds  of  kinds  of  land,  thousands  of  kinds 
of  technical,  material  forms  of  stored-up  capital  and — who  yet  knows  how 
many — kinds  of  workers,  all  offering  a  confusing  number  of  permutations 
and  combinations  of  practical  situations.     It  is  now  a  canon  of  management 


1921]  Production  77 

engineers  of  the  highest  professional  standing  that  there  is  no  one  best  sys- 
tem of  management  which  is  transferable  and  applicable  in  detail  to  any 
two  establishments;  each  establishment  is  a  problem  unto  itself  of  develop- 
ment for  productive  efficiency.  Is  it  unreasonable  to  assume  that  were  the 
economist,  like  the  management  engineer,  to  spend  a  season  in  the  shops  and 
in  the  offices,  he  would  find  it  necessary  to  at  least  supplement  his  standard 
theory  of  production  by  a  large  number  of  significant  corollaries  and  ex- 
ceptions? Might  not  the  textbook  in  economics  take  on  the  appearance  of 
a  Latin  grammar? 

In  such  an  excursion  he  would  meet  workers  face  to  face  and  each  with 
an  individual  temperament  and  reactions ;  he  would  be  in  practical  relation- 
ship with  those  incorporeal  entities  called  "labor  organizations,"  no  two  of 
them  exactly  the  same,  no  one  yet  understanding  their  motives  and  purposes 
or  guessing  what  these  will  be  tomorrow  and  again  the  next  day;  he  would 
be  puzzled  how  to  adjust  to  his  theory  the  claim  of  the  worker  that  the 
latter's  dedication  of  self  to  an  industry  is  as  much  an  investment  to  be 
capitalized  and  guaranteed  an  income  as  is  the  investment  of  capital;  he 
would  be  still  more  puzzled  over  some  workers'  assertion  that  an  indi- 
vidual's dedication  of  self  to  an  industry  is  as  much  entrepreneurship  as  is 
any  other  kind  of  risk.  He  would  meet  the  boss — the  liaison  officer  between 
management  and  worker — and  find  him  in  his  technical  relations  and  psy- 
chology elusive  and  difficult  to  comprehend;  he  would  have  contact  with  the 
management  and  be  amazed  at  the  multitude  of  varying  technological  and 
psychological  problems  involved  in  coordination  and  direction;  he  would 
study  the  general  manager — the  liasion  officer  between  entrepreneur  and 
management — and  find  him  between  the  devil  of  the  entrepreneur's  trading 
motive  on  the  one  hand  and  the  deep  sea  of  technological  difficulties  on  the 
other  hand.  He  would  search  for  that  clean-cut  individual  of  economic 
theory — the  entrepreneur — and  wonder  where  to  find  him:  he  would  ob- 
serve stockholders  who  are  theoretically  entrepreneurs  and  practically  irre- 
sponsible investors;  bondholders  who  are  theoretically  lenders  and  practi- 
cally controlling  administrators.  He  would  observe  the  motives  for,  con- 
sequences of,  and  reactions  to  arbitrarily  overextended  or  overrestricted 
production.  He  would  come  away  with  a  trunk  full  of  recorded  facts  to 
classify  and  analyze,  a  haze  of  impressions  to  clarify,  and  possibly  a  num- 
ber of  corollaries  modifying  his  conventional  theory  of  production  in  the 
classroom. 

In  conclusion  I  take  the  liberty  of  offering  a  few  practical  suggestions  to 
this  national  assembly  of  fellow-economists:  Establish  as  a  professional 
group  a  long-run  policy  of  going  after  the  elemental  facts  of  actual  in- 
dustrial experience  for  what  bearing  they  may  have  upon  the  formulation 
of  a  twentieth  century  theory  of  economics  as  follows: 

1.  Catch  our  incipient  professor  of  economics  while  he  is  still  a  student, 
and  inspire  him  to  make  an  important  part  of  his  training,  service  in  shop 
and  office  as  a  wage-earner  in  contact  with  fellow  wage-earners,  bosses,  and 
technical  processes; 

2.  When  the  time  comes  to  add  him  to  our  teaching  and  research  staff, 
organize  his  work  in  such  manner  as  to  permit  occasional  genuine  excursions 
into  the  field  of  industrial  service; 

3.  Appoint  a  commission  of  this  association  to  develop  plans  for  co- 
ordinated research  in  graduate  schools; 


78  Willford  I.  King  [March 

4.  Establish  closer  relations  (without  impairing  the  autonomy  of  either) 
between  our  schools  of  commerce  or  business  administration  and  our  grad- 
uate departments  of  economics — the  former  are  accumulating  data  and  for- 
mulating principles  which  would  be  available  to  the  coming  theorists ; 

5.  Bring  thinking  managers  and  even  workers  into  the  teaching  of  theory 
— not  in  the  conventional  way  of  permitting  them  to  talk  on  whatsoever  they 
may  choose,  but  in  a  manner  which  requires  them  to  discuss,  in  the  light 
of  their  experience,  phases  of  theory  which  have  been  submitted  to  them  in 
ABC  terminology; 

6.  Establish  closer  relations  with  the  engineers  in  their  professional  as- 
sociations— they  have  begun  to  consider  industrial  problems  in  a  theoretical 
way,  and,  although  deficient  in  a  background  of  training  in  the  social 
sciences,  they  can  bring  keen  and  splendidly  trained  minds,  and  a  fund  of 
experience  with  technical  processes  and  with  men  into  our  discussions ; 

7.  Agree  upon  and  formulate  some  method  of  standardizing  the  dollar, 
and  educate  business  men  and  other  electors  and  eventually  the  congress  to 
the  necessity  of  its  adoption — then  will  be  removed  a  defective  instrument 
which  makes  for  confusion  in  our  measurement  and  valuation  of  the  facts  of 
production ; 

8.  And  alongside  this  more  precise  pecuniary  measure  of  production  in 
terms  of  "material  units,"  start  one  under  the  auspices  of  this  association, 
or  promote  one  already  established,  and  make  it  so  useful  as  to  compel  its 
continuance  by  an  agency  of  the  government. 


Willford  I.  King. — Logic  appears  to  demand  the  consideration  of  theory 
before  proceeding  to  deal  with  its  application;  hence,  I  shall  first  discuss 
Professor  Wolman's  paper. 

I  believe  none  of  us  will  disagree  with  his  statement  that  the  measure- 
ment of  the  national  income  from  year  to  year  is  a  laborious  task.  It  is  by 
no  means  easy  even  to  approximate  it  in  terms  of  money  value.  The  chance 
of  error  is  somewhat  increased  if  we  proceed  to  convert  this  money  value 
into  a  commodity  index — in  other  words,  into  an  index  of  purchasing  power. 
However,  I  feel  that  the  chief  difficulty  involved  in  this  operation  lies  in 
the  first  step  rather  than  in  the  second.  The  prices  of  different  groups  of 
commodities  fluctuate  in  a  manner  so  similar  that  indices  of  average  prices 
are  likely  to  be  very  much  alike  no  matter  what  particular  process  is  fol- 
lowed in  their  computation.  Once  given,  then,  the  actual  money  or,  to  be 
more  accurate,  book  income,  it  is  perfectly  feasible  to  obtain,  through  divi- 
sion, by  any  one  of  a  dozen  different  types  of  index  numbers,  quotients  which 
will  represent  with  an  accuracy  ample  for  most  practical  purposes  changes 
in  the  average  economic  welfare  of  the  people. 

The  second  problem  mentioned  by  Professor  Wolman,  namely,  the  meas- 
urement of  the  changes  in  the  national  wealth  from  year  to  year,  is,  in  the 
present  state  of  our  statistical  knowledge,  a  decidedly  more  difficult  one 
than  that  of  ascertaining  the  national  income.  There  are  two  chief  ob- 
stacles in  the  road  to  success  in  this  direction:  first,  we  have  less  accurate 
and  much  less  frequent  measurements  of  the  value  of  the  components  of  our 
national  wealth  than  we  have  of  the  various  items  composing  the  annual  pro- 
duct of  our  different  industries;  second,  no  one  seems  to  have  taken  the 
trouble  thus  far  to  construct  an  index  number  measuring  the  average  changes 


1921]  Production  79 

in  value  of  our  chief  articles  of  wealth.  Once  a  properly  weighted  price 
index  has  been  computed  showing  the  changes  taking  place  from  year  to 
year  in  the  average  prices  of  such  goods  as  farm  and  urban  lands,  houses, 
factories,  office  buildings,  machinery,  livestock,  raw  materials,  household 
furnishings,  etc.,  it  will  then  be  more  practicable  to  ascertain  changes  in  the 
real  national  wealth  by  dividing  the  totals  of  the  money  value  of  our  pos- 
sessions by  this  price  index  for  the  same  year.  As  Lauderdale  pointed  out 
over  a  century  ago,  it  is  impossible  for  all  values  to  rise  together,  hence  this 
method  would  tend  to  solve  the  problem  of  what  to  do  with  rising  values  of 
land,  minerals,  and  forests,  for  their  rise  would  be  balanced  by  falls  in  the 
relative  values  of  other  groups  of  commodities.  It  appears,  therefore,  that 
we  can  scarcely  hope  to  obtain  really  valuable  estimates  of  changes  in  the 
national  wealth  until  some  painstaking  work  is  done  in  the  way  of  compu- 
ting an  adequate  index  of  average  prices  of  the  more  important  articles 
making  up  our  national  equipment. 

I  cannot  share  with  Professor  YVolman  his  apparent  feeling  that  it  is 
practically  impossible  to  differentiate  "the  larger  facts"  from  "irrelevant 
and  insignificant  detail."  It  seems  to  me  that  this  task  is  one  of  the  essen- 
tial duties  of  a  statistician  and  that  it  ought  to  be  a  prime  function  of  econ- 
omists. Details  are  all  of  interest  to  some  one,  but  only  a  limited  number 
of  generalizations  have  any  appeal  for  the  great  majority  of  mankind — or 
even  for  scientists.  This  is  necessarily  true  because  the  human  mind  is  in- 
capable of  visualizing  more  than  a  very  limited  number  of  facts  at  one 
time.  The  man  who  can  best  hew  away  all  non-essentials  and  display  the 
chief  facts  and  forces  in  clear-cut  silhouette  is,  to  my  mind,  the  scientist 
who  has  achieved  the  highest  mark  of  success. 

If  I  interpret  correctly  Professor  Wolman's  position,  he  believes  that  the 
development  of  economic  theory  will  be  greatly  furthered  by  substituting. 
in  general,  training  in  psychology  and  industrial  technique,  for  that  in  po- 
litical science  and  economic  history.  As  a  matter  of  fact,  is  it  not  true  that 
the  field  of  economics  has  grown  so  large  that  no  one  can  hope  to  cover  it 
all?  Furthermore,  is  there  any  advantage  in  attempting  to  delimit  the 
field?  Why  not  let  students  working  along  the  borderland  class  themselves 
where  they  will?  Whether  the  investigator  calls  himself  a  psycho-econo- 
mist or  an  economic-psychologist  is  wholly  immaterial  so  long  as  he  is  con- 
versant with  his  line  of  inquiry  and  seeks  to  set  forth  the  facts  as  they  are. 

Specialists  in  psychological  and  industrial  economics  we  must  have,  as  also 
men  who  study  out  in  detail  the  historical  development  of  economics  and  its 
legal  and  social  relationships.  But  is  it  more  essential  that  every  econo- 
mist should  be  an  expert  psychologist  than  that  he  be  a  trained  historian  or 
a  skilled  mathematician?  Is  there  any  real  evidence,  for  example,  that  the 
theory  of  value  would  have  been  much  further  advanced  today  had  econo- 
mists been  schooled  in  psychology  and  technique  at  the  expense  of  history 
and  mathematics? 

I  am  inclined  to  doubt  that  lack  of  familiarity  with  industrial  conditions 
and  a  poor  understanding  of  psychology  have  really  handicapped  to  any 
considerable  extent  the  leading  students  in  the  realm  of  economic  theory. 
The  economist  in  a  garret  poring  over  musty  tomes  and  dealing  with  me- 
chanical automatons  rather  than  with  men  as  they  actually  exist  may  be  a 
most  useful  character  for  a  novel  but  it  has  never  fallen  to  my  lot  to  meet 
a  Queed  or  even  a  near-Queed  in  real  life.     I  am  inclined  to  believe  that 


80  WUlford  I.  King  [March 

while  better  training  in  psychology  and  in  the  technique  of  industry  are  to 
be  heartily  commended  because  they  will  prove  effective  in  opening  up  new 
fields  of  research,  it  is  nevertheless  probable  that  such  training  will  improve 
relatively  little  the  clarity  of  the  reasoning  required  in  dealing  with  such 
time  honored  subjects  as  the  theory  of  value. 

It  does  not  seem  to  me  that  a  lack  of  special  training  along  the  lines  sug- 
gested by  Professor  Wolman  has  been  the  chief  hindrance  which  has  pre- 
vented economists  from  being  as  successful  as  scientists  in  other  lines  in 
establishing  a  large  mass  of  accepted  laws.  I  would  suggest  that  the  most 
important  real  obstacle  which  has  prevented  the  attainment  of  this  desired 
goal  is  the  attempt  of  economists  to  state  their  ideas  in  the  language  of 
everyday  conversation.  The  motive  behind  this  policy  is  the  admirable  one 
of  trying  to  bring  the  facts  home  to  the  masses  of  the  people,  but  this  effort 
has  resulted  disastrously  in  other  directions.  Because  the  words  used  by 
the  man  on  the  street  have  numerous  meanings,  economists  have  themselves 
become  confused  by  their  use  or  have  spent  the  time  in  fruitless  arguments 
over  definitions  which  should  have  been  devoted  to  the  development  of  new 
ideas.  But,  still  worse,  this  use  of  ordinary  words  for  technical  purposes 
has  enabled  charlatans  of  every  sort  to  bury  the  studies  of  the  real  scien- 
tists in  a  veritable  avalanche  of  wholly  worthless  pseudo-economic  liter- 
ature. Under  these  circumstances,  how  can  one  expect  the  man  on  the 
street,  who  is  supposed  to  be  the  beneficiary  of  this  policy,  to  pick  out  the 
few  grains  of  gold  among  the  great  mass  of  debris?  Since  he  finds  no 
harmony  of  opinion  but  only  numerous  degrees  of  variance,  he  naturally 
concludes  that  economics  is  not  a  science  but  a  mass  of  confused  and  aim- 
less bickering  and  discussion. 

The  obvious  remedy  for  this  state  of  affairs  is  for  economics  to  take  refuge 
in  that  stronghold  long  ago  sought  out  by  nearly  every  other  science,  a  com- 
plete technical  terminology  which  the  person  ignorant  of  the  science  is 
totally  unable  to  use.  This,  to  my  mind,  will  do  more  than  any  other  one 
thing  to  advance  economic  science  and  to  secure  for  it  the  general  recog- 
nition and  respect  which  it  deserves. 

The  very  fact  that  modern  statistical  economics  has  a  technique  so  com- 
plex that  to  a  considerable  degree  it  excludes  popular  writers  from  the 
field,  is  today  helping  to  gain  prestige  for  this  phase  of  the  science.  The 
addition  of  such  carefully  worked  out  studies  of  fundamentals  as  the  set 
of  indices  of  physical  production  just  presented  by  Professor  Stewart  will 
do  much  to  add  to  this  feeling. 

Furthermore,  it  is  most  gratifying  to  see  that  different  economists  working 
in  very  different  ways  should  arrive  at  indices  of  production  so  similar  as 
those  which  have  recently  been  developed.  I  have  plotted  together  Pro- 
fessor Stewart's  index  for  manufactures  and  that  published  by  the  Harvard 
Committee  on  Economic  Research  and  find  that  the  two  conform  very  closely 
indeed,  both  in  trend  and  in  cyclical  fluctuations,  though  Professor  Stew- 
art's index  is  about  ten  points  higher  than  the  other  during  the  years  1916 
to  1919  inclusive.  I  have  also  compared  Professor  Stewart's  index  for  all 
commodities  with  a  similar  one  prepared  recently  under  my  direction  for 
the  Bankers'  Statistics  Corporation  and  find  the  trends  almost  identical 
throughout,  though  differences  of  a  year  appear  occasionally  in  the  cyclical 
crests.  This  is  probably  due  to  different  methods  used  in  converting  re- 
ports  for  fiscal  years  to  a  calendar  year  basis   and  to  different  ways  of 


1921]  Production  81 

treating  agricultural  products.  Professor  Mitchell's  index  of  the  production 
of  all  raw  materials  differs  somewhat  from  Professor  Stewart's  similar  in- 
dex for  the  years  1913  to  1918,  but  does  not  diverge  widely  therefrom. 

The  chief  peculiarity  of  Professor  Stewart's  indices,  both  for  all  com- 
modities and  for  manufactures  only,  is  that  they  show  a  rise  in  production 
from  1916  to  1918  while  the  Harvard  index  and  mine  both  show  a  fall 
during  the  same  period.  A  study  of  the  data  leads  me  to  believe  that  this 
difference  arises  from  the  fact  that  Professor  Stewart  has  directly  or  in- 
directly weighted  mineral  products  much  more  heavily  than  has  been  done 
in  the  other  cases  cited.  Without  making  a  painstaking  investigation  of  the 
facts,  it  is  impossible  to  express  an  opinion  as  to  which  weighting  is  the 
more  logical  one. 

To  my  mind,  however,  the  really  significant  fact  is  that  the  trends  of  all 
these  independent  indices,  though  computed  in  rather  radically  different 
ways,  are  so  nearly  uniform  that  there  can  be  little  doubt  that  they  repre- 
sent the  approximate  truth.  This  arrival  at  harmonious  results  concerning 
the  volume  of  production  seems  to  add  another  stone  of  some  importance  to 
the  foundation  for  economic  research. 


THE  WEBBS'  CONSTITUTION  FOR  THE  SOCIALIST 
COMMONWEALTH1 

If  looked  at  from  the  standpoint  of  the  ultimate  goal,  the  Webbs' 
plan  for  a  constitution  for  the  socialist  commonwealth  of  Great  Britain, 
while  economically  sound,  is  politically  and  humanly  impossible.  If 
looked  at  from  the  standpoint  of  the  immediate  situation,  it  is  a  master- 
piece of  analysis,  criticism,  and  construction. 

The  authors  had  before  them  the  guild  socialism  of  England,  with 
its  sisters  and  cousins,  the  Soviets  of  Russia,  the  syndicalism  of  France, 
the  independent  socialists  of  Germany,  and  the  Plumb  plan  of  America. 
The  genesis  of  this  interesting  family  of  reconstruction  is  the  "self- 
governing  workshop"  of  employees  electing  their  foremen,  superinten- 
dents, and  board  of  directors,  affiliated  with  other  shops  of  the  same 
industry  and  governed  by  a  national  board  of  representatives  from  the 
shops — in  other  words,  government  by  producers.  The  Webbs  pro- 
ceed to  extirpate  this  idea  by  history,  logic,  and  argument  ad  hominem. 
They  show  that  producers'  cooperation  has  always  failed.  Even  when 
it  succeeds,  the  insiders  close  their  doors  to  outsiders,  and  become  "as- 
sociations of  small  capitalists  exploiting  non-members  at  wages."  To 
elect  their  own  bosses  is  to  make  it  impossible  for  said  bosses  to  main- 
tain discipline.  And,  ad  hominem,  would  you  have  the  officers  of  a  trade 
union  elected  by  the  stenographers,  clerks,  and  janitors  whom  they 
now  employ  or  by  the  rank  and  file  of  the  union?  If  so,  that  would  be 
not  democracy  but  the  negation  of  democracy  (pp.  158-160). 

On  the  other  hand  democracies  of  consumers  have  wonderfully  suc- 
ceeded. The  1500  cooperative  societies,  with  their  wholesale  agencies, 
with  an  annual  turnover  of  £200,000,000,  a  banking  turnover  of 
£1,000,000,000,  and  a  manufacturing  output  of  £60,000,000,  all  gov- 
erned by  manual  workers,  are  the  present  achievement  of  the  twenty- 
eight  Rochdale  pioneers  of  1844.  Most  significant  of  all,  they  succeed 
as  great  employers  and  farmers,  manufacturing  products,  growing  tea 
in  Ceylon  and  wheat  in  Canada,  operating  steamships  and  warehouses, 
employing  200,000  wage-earners,  and  even  taking  over  the  bankrupt 
democracies  of  producers.  Moreover  this  kind  of  democracy,  unlike 
that  of  producers,  "automatically  remains  always  open  to  newcomers." 

But  these  democracies  of  consumers  are  as  "soulless"  as  capitalists. 
They  know  quantity,  quality,  and  price,  but  not  the  human  aspirations 
of  their  200,000  employees  (p.  23).  Here  is  where  the  democracies  of 
producers  come  in,  and  will  be  needed  just  as  much  in  the  socialist  com- 
monwealth as  in  the  capitalist  one.     Their  function  consists  in  mutual 

i  Sidney  and  Beatrice  Webb,  A  Constitution  for  the  Socialist  Commonwealth  of 
Great  Britain.     (New  York:    Longmans,  Green  &  Co.     1990.    Pp.  xviii,  364.    $4.25.) 


1921]  The  Webbs'  Constitution  83 

insurance  and  in  maintaining  the  standard  rate,  the  normal  day,  and 
the  conditions  of  employment  through  collective  bargaining.  Even  in 
the  socialist  commonwealth,  they  must  retain  the  right  to  strike,  and 
will  retain  it  if,  according  to  the  plan,  the  democracy  of  consumers  is 
not  allowed  to  have  the  use  of  the  military  as  strike  breakers  (p.  141). 
But  it  is  "highly  improbable  that  matters  would  often  come  to  such  a 
pass,"  for  a  strike  on  a  large  scale  is  unlikely,  if  "once  the  distorting 
influence  of  profit  is  out  of  the  way."  Furthermore,  in  the  socialist 
commonwealth  the  legitimate  retort  to  "direct  action"  from  one  of  the 
democracies  of  producers,  such  as  a  strike  of  the  coal  miners,  is  not 
to  be  the  military,  but  "direct  action"  by  the  other  democracies  who 
"refuse  to  supply  them  with  spirits,  beer,  picture-palaces,  and  tobacco" 
(p.  298).  This  looks  mildly  like  the  conforming  process  adopted  in 
Lenin's  dictatorship  of  the  proletariat,  made  possible  there,  however, 
by  an  army  of  the  proletariat. 

The  democracies  of  consumers,  in  the  socialist  commonwealth,  will 
be  of  two  kinds,  as  they  now  are  of  two  kinds,  voluntary  and  obligatory. 
The  voluntary  are  the  above-mentioned  cooperative  societies  which 
purchase  food,  clothing,  coal,  etc.,  and  build  homes  for  members.  The 
obligatory  are  the  municipalities  which  provide  water,  gas,  electricity, 
drainage,  etc.,  and  which  already  employ,  in  Great  Britain,  a  million 
wage-earners  (p.  11).  Every  person  in  the  several  local  areas  is  a 
member  of  these  obligatory  democracies  of  consumers.  A  municipality 
is  "not  wholly  autonomous,  as  the  ultimate  control  is  shared  between 
the  local  electors  resident  within  its  area  and  the  electorate  of  the  na- 
tion as  a  whole."  The  national  government  places  three  limitations 
on  the  freedom  of  local  government,  the  limitation  of  the  several  na- 
tional minimums  of  schools,  sanitation,  relief  of  defendents  and  police 
force;  a  limitation  of  the  purposes  and  powers  for  which  they  may  in- 
cur expense;  and  a  limitation  in  the  interests  of  financial  accuracy  and 
solvency  (p.  10). 

Up  to  this  point  the  great  work  which  the  Webbs  have  heretofore 
done  in  portraying  the  history  and  philosophy  of  unionism,  of  co- 
operation and  of  local  government,  is  admirably  summarized.  But 
now  we  come  to  the  ultimate  goal. 

This  begins  with  the  national  government,  and  here  is  the  democracy 
of  citizen-consumers.  Here  the  Webbs  split  from,  and  yet  agree  with, 
the  guild  socialists.  If  I  understand  the  ultimate  goal  of  the  guild 
socialists,  it  is  based  on  the  hypothesis  that  sovereignty  is  not  indi- 
visible but  is  "plural."  The  so-called  "state"  is  but  one  of  the  several 
forms  in  which  people  associate  for  common  purposes — but  it  is  not 
supreme  over  the  other  forms,  it  is  only  "first  among  equals."  The 
most  important  of  the  other  forms  are  the  democracies  of  producers, 


84  John  R.  Commons  [March 

and,  so,  the  coming  parliament  of  England  will  be  a  producers'  parlia- 
ment equal  in  power  but  separate  from  the  other  existing  parliament 
that  now  controls  the  army,  navy,  and  police. 

Here  is  the  split  and  the  agreement.  While  shattering  the  guild 
socialists'  dream  of  a  "self-governing  workshop"  with  its  producers' 
parliament,  the  Webbs'  succumb  to  their  dream  of  a  plural  sovereignty. 
Like  the  guildsmen,  they  would  have  two  parliaments,  a  political  parli' 
ament  and  a  social  parliament,  each  with  its  executive.  But  the  socia*. 
parliament  would  be  a  consumers'  parliament,  instead  of  a  producers' 
parliament.  On  the  political  parliament  they  seem  to  agree.  The  po- 
litical parliament  would  handle  the  army  and  navy,  foreign  affairs, 
colonies,  criminals,  and  courts  of  justice.  The  social  parliament  would 
handle  the  "mental  and  physical  environment  of  the  present  generation," 
and  would  provide  for  the  future  of  the  community.  This  would  be 
done  by  the  nationalization  of  all  profit-making  industries  and  services 
not  municipalized  by  local  authorities. 

This  social  parliament  would  divide  itself  into  committees,  each 
in  control  but  not  in  administration  (p.  189)  of  its  particular  indus- 
try or  service.  The  administration  would  be  devolved  on  its  executives 
and  on  that  "civil  service  of  exceptional  capacity  and  integrity"  which 
"it  has  been  the  supreme  good  fortune  of  Great  Britain"  to  have  de- 
veloped "during  the  past  century"  (p.  67). 

Most  important  of  all,  the  social  parliament  would  control  prices, 
taxes,  and  wages — prices,  because  it  operates  the  industries ;  taxes,  be- 
cause the  political  parliament  must  not  be  permitted  to  run  off  to 
militarism;  wages,  by  collective  bargaining  with  the  producers'  dem- 
ocracies. While  the  Webbs  apparently  agree  with  the  guild  socialists 
in  the  control  of  prices  and  taxes,  they  split  on  the  control  of  wages. 

The  social  parliament  in  both  plans  will  control  prices  and  taxes, 
and  here  they  agree.  The  political  parliament  must  come  to  the  social 
parliament  with  a  budget  for  the  army,  navy,  police,  and  justice.  The 
social  parliament  cannot  amend  the  details  of  the  budget,  it  can  only 
fix  the  aggregate.  There  is,  however,  a  suggestion  that,  "if  after  con- 
ference between  the  two  assemblies,  a  total  could  not  be  agreed  upon, 
the  difference  might  be  settled  by  the  aggregate  vote  of  the  members 
of  the  two  parliaments  in  joint  session  assembled"  (p.  124). 

On  other  points  of  conflict  between  the  two  national  assemblies,  the 
"law  courts"  would  decide,  and  so,  we  find  the  latest  socialism  taking 
refuge  in  a  supreme  court  of  the  United  States.  "As  in  the  United 
States  to-day,"  say  the  Webbs,  "any  enactment  by  either  the  political 
parliament  or  the  social  parliament  which  went  beyond  the  powers  en- 
trusted to  that  assembly  would,  in  effect,  be  declared  unconstitutional" 
(p.  141). 


1921]  The  Webbs'  Constitution  85 

The  great  advantage  of  the  plural  sovereignties  of  the  Webbs  and 
the  guild  socialists,  over  the  unified  sovereignty  of  Marxian  socialism, 
realized  in  Russia,  is  the  liberty  of  the  individual  and  the  private  own- 
ership of  a  large  bulk  of  the  property,  such  as  homesteads,  not  used 
for  profit.  With  a  social  parliament  equal  in  power  to  a  political  par- 
liament, and  with  trade  unions  and  professional  associations  independent 
of  either  and  sovereign  in  their  own  field  with  the  right  to  strike,  the 
individual  is  expected  to  slip  through  with  a  large  amount  of  personal 
liberty  and  private  property. 

The  guild  socialists,  however,  have  no  place  for  collective  bargaining, 
with  its  "plural  sovereignty"  of  trade  unions,  unless  the  debates  in  a 
producers'  parliament  are  fictitiously  called  collective  bargaining. 
For,  with  them,  it  is  the  producers'  representatives  who  are  to  be  the 
social  parliament  which  controls  prices,  wages,  and  taxes,  hence  with- 
out collective  bargaining.  Here  they  split.  The  Webbs  would  have 
collective  bargaining  with  the  labor  unions,  since  it  is  the  citizen-con- 
sumers only  who  are  to  be  represented  in  their  social  parliament,  and 
these  would  oppress  the  producers.  Indeed,  there  is  no  place,  say  the 
Webbs,  for  a  vocational,  that  is,  producers'  parliament,  with  sover- 
eign powers,  as  the  guildsmen  propose  (pp.  309-317).  The  Webbs 
concede  that  the  several  vocations  can  appropriately  discuss  and  de- 
cide concerns  peculiar  to  the  vocation  in  question,  but  cannot,  as  pro- 
ducers, either  separately  or  jointly,  decide  the  concerns  that  are  of 
common  interest  to  the  nation  as  a  whole.  The  latter  concerns  belong 
to  the  citizen-consumers.  Hence  the  need  of  collective  bargaining  to 
prevent  these  soulless  consumers  from  exploiting  the  soulful  producers. 

Both  the  social  parliament  and  the  political  parliament  will  be 
elected  for  fixed  terms  of  years,  by  popular  vote  of  citizen-consumers 
based  on  inhabitancy,  and  the  Webbs  have  great  faith  in  the  British 
secret  ballot,  if  once  the  electors  are  permitted  to  vote  separately  at 
different  dates,  on  political  and  social  issues,  undisturbed  by  profits 
(pp.  102,  116,  120,  310). 

It  is  embarrassing  for  socialists  to  be  called  upon  to  work  out  in 
detail  their  ultimate  goal.  They  did  not  need  to  work  it  out  when  they 
were  hopeless  minorities.  "Labor  the  producer  of  all  wealth"  and 
"dictatorship  of  the  proletariat"  were,  at  that  time,  good  enough  slo- 
gans for  agitation.  Likewise  it  must  have  been  embarrassing  to  the 
Webbs,  to  whom  the  whole  world  of  serious  thinkers  is  deeply  indebted 
for  the  solid  work  they  have  done  in  the  history  and  philosophy  of 
unionism,  cooperation,  and  local  government,  to  be  called  upon  to  make 
a  guess  at  the  ultimate  goal.  This  book  was  called  forth  by  the  In- 
ternational Socialist  Bureau  in  a  request  that  each  national  body 
should  submit  a  report  on  socialization  and  on  the  socialist  constitu- 


86  John  R.  Commons  [March 

tion  that  shall  be  adopted  by  each  nation  when  the  socialists  get  con- 
trol. The  plan  was  submitted  to  the  Fabian  Society.  It  is  an  elabora- 
tion of  the  authoritative  program  of  the  British  Labor  Party  published 
some  time  ago  under  the  title  Labor  and  the  New  Social  Order  and 
known  to  have  been  drawn  up  mainly  by  the  Webbs,  yet  it  is  put  for- 
ward as  expressing  only  the  Webbs'  own  opinions,  and  merely  to  start 
discussion  (pp.  v,  vi).  It  does  not  pretend  to  be  a  scheme  for  any 
other  country,  for  it  has  the  great  British  virtue  of  building  on 
Britain's  own  history,  for  Britain  only.  But  it  is  called  forth  by  the 
fact  that  socialists  have  come  into  power  or  near  power  and  responsi- 
bility in  Russia,  Germany,  France,  Italy,  without  a  program,  and 
therefore  they  have  split  into  groups  running  aimlessly  into  dictator- 
ship of  the  proletariat  at  one  extreme  and  subjection  to  capitalistic 
schemes  at  the  other. 

When  an  American  remembers  that  in  the  British  Isles  are  jammed 
together  a  population  of  more  than  40,000,000,  four  fifths  of  them 
wage-earners,  and  all  of  rather  homogeneous  race,  within  an  area  no 
greater  than  the  state  of  Wisconsin  with  its  only  two  and  one  half 
million  souls,  half  of  them  independent  farmers'  families  and  all  re- 
cruited from  a  dozen  nations  or  races,  he  may  well  hesitate  to  criticise 
a  program  designed  only  for  the  British  Isles.  Especially,  he  may 
not  appreciate  the  consumers'  cooperatives  or  the  efficient  civil  ser- 
vice, of  which  we  know  mainly  failures.  He  certainly  will  appreciate 
that  "due  process  of  law"  which  distinguishes  the  socialism  of  the 
Webbs,  and  indeed  distinguishes  that  of  the  very  first  British  socialist, 
William  Thompson  in  1824,  from  that  of  Karl  Marx  and  Russia,  in 
that  it  proposes  to  compensate  both  wage-earners  and  property-owners 
for  the  expropriation  of  their  jobs  and  their  property.  The  community 
will  remember,  the  Webbs  tell  Us,  "that  those  on  whom  the  Tower  of 
Siloam  fell  were  not  greater  sinners  than  other  men.  .  .  Accordingly, 
those  British  Socialists  who  have  experience  of  administration,  do  not 
contemplate  a  method  of  expropriation  essentially  different  from  that 
which  prevails  today  whenever  a  Local  Authority  takes  over  a  local 
gas  or  water  company,  or  acquires  property  for  widening  a  street. 
Each  owner  should  receive  in  compensation  the  fair  market  value  of 
that  of  which  he  is  compulsorily  dispossessed,  as  between  a  willing  buyer 
and  a  willing  seller"  (pp.  333,  334).  The  Webbs  go  further  than  this. 
"In  the  new  social  order  aimed  at  by  Socialists,  as  was  proposed  by 
John  Stuart  Mill  three-quarters  of  a  century  ago,  one  of  the  first 
obligations  to  be  recognized  will  be  that  of  taking  generously  into  con- 
sideration the  claims  of  workers  of  every  grade  whose  services  are,  in 
the  public  interest,  superseded  by  new  developments  of  technique"  (p. 


1921]  The  Webbs'  Constitution  87 

288).  This  due  process  of  law  means,  of  course,  gradual  socialization 
and  not  revolution. 

We  may  also  certainly  appreciate  the  need  of  a  separation  of  the 
political  from  the  social  constitution  of  government.  Indeed  the  Ameri- 
can states  and  nation  have  already  gone  very  far  in  this  separation, 
through  strong  appreciation  of  the  inability  of  political  legislatures 
to  administer  social  and  industrial  affairs.  Our  congress  and  legisla- 
tures, in  widely  different  degrees,  have  turned  over  the  regulation  or 
administration  of  schools,  vocational  education,  railroads,  public  utili- 
ties, labor,  health,  insurance,  prisons,  hospitals,  etc.,  to  administrative 
boards  and  commissions,  often  independent  of  the  legislatures  and  even 
elected  separately  by  popular  vote.  The  state  of  Wisconsin  has  at 
least  forty  of  these  specialized  and  quasi-independent  social  and  in- 
dustrial agencies.  One  can  even  imagine  these  regulative  and  admin- 
istrative bodies  coming  together  as  a  kind  of  "social  parliament,"  and 
they  are  even  doing  so  already  through  interdepartmental  committees, 
and  must  necessarily  come  still  closer  together  where  their  powers  over- 
lap, as  in  the  case,  for  example,  of  boards  regulating  labor,  health, 
education,  insurance,  and  prices  of  public  utility  services.  One  can 
perceive  also,  that,  with  the  progress  of  public  ownership,  the  political 
government  will  not  operate  these  utilities,  as  it  does  the  post  office, 
but  will  turn  them  over  to  administrative  boards,  as  it  does  the  schools, 
universities,  prisons,  and  hospitals. 

But  to  say  that  it  will  ever  be  possible  to  split  sovereignty  into 
"plural"  sovereignties,  each  equal  to  the  others,  is  to  fly  in  the  face  of 
practical  politics  and  also,  we  may  be  allowed  to  say,  of  human  nature. 
That  part  of  sovereignty  which  controls  and  monopolizes  the  use  of 
violence  will  always  be  the  sovereign.  Every  other  so-called  plural 
sovereignty  will  always  be  a  delegation  of  power  and  not  an  equal  shar- 
ing of  power.  To  attempt,  as  is  done  by  the  Webbs  and  the  guild  so- 
cialists, to  separate  the  assessment  and  collection  of  taxes  from  the 
use  of  violence  could  be  dreamed  of  only  by  one  who  has  been  accustomed 
to  see  violence  operate  so  smoothly  under  the  control  of  the  taxpayers, 
courts,  and  "political"  parliaments  that  he  imagines  it  is  not  there. 
Not  "no  taxation  without  representation,"  but  "no  violence  without 
representation,"  has  been  the  real  struggle  of  those  who  have  sought  po- 
litical power.  Having  this  they  have  the  power  to  fix  taxes.  The 
same  will  be  far  more  the  aim  when,  through  public  ownership,  the  "so- 
cial" parliament  proceeds  to  fix  all  prices,  as  well  as  taxes,  and,  in  the 
last  resort,  to  fix  wages  by  compulsory  arbitration,  for  these  also  must 
be  backed  by  the  power  to  call  out  the  police  and  army  in  case  of  dis- 
obedience and  revolt. 

Even  in  the  United  States  with  its  alleged  divided  sovereignty  of  the 


88  John  R.  Commons  [March 

federal  government  and  the  state  governments,  the  states  are  really 
created  by  the  federal  government  and  granted  power  to  use  violence, 
which,  in  a  real  sense,  is  therefore  delegated.  Moreover,  for  the  past 
sixty  years,  since  the  Civil  War  settled  this  question  of  plural  sover- 
eignty, the  federal  government  has  been  resuming  a  large  part  of  the 
powers  of  the  states,  and  is  authorized  to  resume  all  of  them  if  neces- 
sary to  preserve  what  it  may  deem  to  be  a  republican  form  of  govern- 
ment. 

To  overlook  this  outcome  is  to  overlook  practical  politics  and  its 
basis  in  human  nature.  Politicians  may  be  expected  to  know  where  the 
ultimate  decision  resides.  Capitalists  and  trade  unionists  may  be  ex- 
pected to  line  up  behind  the  politicians,  and  to  reach  out  for  control 
of  that  power  of  violence,  and  not  reach  for  the  mere  agencies  which 
exercise  the  shadow  of  power.  If  it  turns  out  to  be  the  social  parlia- 
ment of  the  Webbs  where  this  power  resides,  no  mere  label  over  the 
doorway,  "This  is  a  Parliament  of  Citizen-Consumers — Producers  not 
Admitted,"  will  keep  the  trade  unions  or  the  capitalists  from  getting 
in.  And  I  name  the  "capitalists,"  for  although  they  are  to  be  shut  out 
when  the  goal  is  reached,  they  will  have  much  to  do  with  the  gradual 
process  of  getting  there.  And  even  when  we  are  there  we  are  still  to 
have  the  "vocational  associations,"  and  doubtless  will  have  alliances  of 
these  associations,  and  therefore  doubtless  will  have  political  parties  of 
these  alliances,  each  of  them  going  after  control  of  that  ultimate 
smoothly  regulated  physical  coercion  that  will  fix  taxes,  prices,  and 
wages.  This  means  that  probably  the  producers,  the  unions  and  the 
capitalists  will  not  pay  much  attention  to  the  "social  parliament"  or 
its  collective  bargaining,  except  by  way  of  diverting  attention,  and 
will  go  after  that  "political  parliament,"  as  they  now  do,  which  con- 
trols the  police,  army,  and  navy. 

But,  however  they  get  control  of  the  real  physical  power  of  the  na- 
tion or  the  state,  they  may  well  decide  to  delegate  the  administration 
of  power  to  the  social  parliament,  but  never  delegate  the  policy  of  de- 
termining what  wages,  prices,  and  taxes  shall  be.  In  which  case  we 
should  have,  exactly  what  we  now  have,  legislatures  or  parliaments  in 
control  of  physical  power,  but  with  a  more  or  less  elaborate  set  of 
delegated  administrative  boards,  each  busy  with  making  the  minor 
regulations  that  carry  out  the  major  policies  of  the  political  parlia- 
ment. But  the  political  parliament  will  be  the  sovereign  one,  and  the 
sovereign  one  will  be  the  one  that  controls  the  instruments  of  physical 
power.  This  would  seem  to  be  an  elementary  principle,  and  a  starting 
point  for  all  schemes  of  the  ultimate  goal,  namely,  that  sovereignty  is 
the  monopoly  of  violence,  else  there  is  crime,  anarchy,  and  civil  war, 
and  that  this  monopoly  of  violence  is  none  other  than  a  unified  sov- 


1921]  The  Webbs'  Constitution  89 

ereignty — a  sovereignty  that  may  delegate  power  to  corporations, 
unions,  cooperatives,  and  administrative  boards,  but  never  let  these 
subsidiaries  use  violence  in  exercising  their  power. 

With  this  outcome  we  need  not  question  the  soundness  of  the  Webbs' 
economic  program.  It  is  sound  enough,  economically,  whatever  we 
may  say  politically,  and  eagerly  to  be  obtained  if  possible,  for  it  turns, 
as  everybody  knows  respecting  the  programs  of  socialism,  on  balancing 
demand  and  supply,  so  as  to  avoid  the  great  wastes  and  cycles  of  the 
competitive  system.  This  is  to  be  done  by  a  grand  super-trust,  with 
its  board  of  directors,  the  social  parliament  in  this  case,  which  is  to 
combine  the  virtues  of  the  single  trust,  multiplied  by  the  balancing  of 
all  of  the  trusts  in  one  supreme  harmony.  Everybody  will  be  kept 
constantly  employed,  capitalists  will  not  be  permitted  to  construct 
factories  and  open  up  mines  far  in  advance  of  demand,  only  to  remain 
idle  and  lay  off  workers,  through  oversupply. 

Likewise,  when  wages  are  fixed  by  collective  bargaining  it  will  be 
simple  enough,  through  the  accurate  cost-keeping  recommended  by  the 
Webbs,  to  put  prices  a  little  higher  than  costs,  and  thus  to  bring  in 
whatever  surplus  is  needed  to  build  new  capital  out  of  the  profits  of 
the  business.  Thus  there  will  be  no  trouble  about  borrowing  and  sav- 
ing. The  saving  will  be  done,  just  as  it  is  largely  done  now,  merely  by 
fixing  prices  higher  than  operating  costs,  and  reinvesting  the  surplus 
by  employing  laborers  on  permanent  construction,  instead  of  paying 
the  surplus  out  in  dividends  or  by  reducing  prices  or  raising  wages. 
And  the  social  parliament  will  also  provide  for  the  future  of  the  in- 
dustries of  the  nation  just  as  the  capitalists  now  provide  for  the  future 
of  their  business,  not,  however,  by  borrowing  if  their  own  profits  are 
inadequate,  but  simply  by  transferring  the  surplus  obtained  in  one 
industry  to  the  capital  account  of  another  industry  which  is  to  be  ex- 
panded. 

This  stabilizing  and  better  proportioning  of  the  factors  of  produc- 
tion is  not  only  economically  conceivable,  but  economically  sound  and 
much  to  be  desired.  The  questions  that  arise  are,  Will  the  political 
parliament,  controlling  physical  coercion  and  therefore  becoming  the 
object  of  struggle  for  power  by  sections  of  the  country,  by  classes  of 
producers  and  consumers,  by  militarists  and  pacifists,  by  alliances  and 
counter-alliances,  be  able  to  do  this  stabilizing  and  proportioning 
when  it  fixes  all  prices  and  all  wages  as  well  as  taxes?  Will  the  dis- 
torting influence  of  a  greatly  augmented  stake  to  be  won  by  practical 
politics  be  less  distorting  than  the  influence  of  profits?  Might  not  the 
desired  stabilizing  and  better  proportioning  of  factors  be  done  measur- 
ably better  if  attention  be  not  diverted  towards  the  dubious  goal  of  a 
super-trust  and  a  plural  sovereignty,  but  concentrated  on  a  policy  of 


90  John  R.  Commons  [March 

bringing  pressure  to  bear  on  capitalists  through  unions  and  legislation, 
through  taxation,  compulsory  unemployment  insurance,  >the  police 
power,  and  otherwise,  thus  inducing  them  to  do  it  by  their  individual 
initiative,  as  has  already  been  begun?  Is  it  necessary  to  oust  capital- 
ism altogether,  which  is  doing  wonders  through  individual  and  cor- 
porate initiative,  in  order  to  oust  the  abuses  of  capitalism?  The  capi- 
talist system  is,  indeed,  in  jeopardy  on  account  of  these  miserable 
cycles  of  overwork  and  out-of-work,  which  reduce  efficiency,  impoverish 
labor,  and  arouse  class  struggle,  and,  if  it  cannot  cure  itself  then 
something  like  government  ownership  may  be  preferable.  However, 
the  line  of  progress  would  seem  to  be,  not  towards  a  politically  impos- 
sible goal  on  a  misguided  hypothesis  of  plural  sovereignty  and  an  in- 
adequate appreciation  of  individual  or  corporate  initiative,  but  along 
the  line  of  a  delegation  of  power  to  voluntary  and  obligatory  agencies, 
regulating,  as,  is  now  done,  the  power  of  both  unionism  and  capitalism, 
and  even  taking  over  private  property  as  needed  or  where  it  proves  it- 
self incompetent,  to  be  operated  by  administrative  boards  with  dele- 
gated power.  In  any  case  the  reliance  must  be,  not  on  a  plural  sover- 
eignty of  equal  sovereigns,  but  on  that  single  sovereignty  which  is  in 
position  to  lay  down  the  rules  of  the  game  because  it  monopolizes  the 
use  of  violence. 

John  R.  Commons. 
University  of  Wisconsin. 


COMMUNICATIONS 

A  Stabilized  Dollar 

In  the  December  number  of  the  American  Economic  Review  Mr.  C.  C. 
Arbuthnot  presents  some  interesting  objections  to  Fisher's  plan  for  a  "sta- 
bilized dollar."1  Arbuthnot  arrives  finally  at  the  conclusion  that  Fisher's 
plan  would  not  eliminate  the  alternate  fluctuations  in  business  from  boom 
periods  to  depressions  and  that  in  the  post-crisis  period  the  "stabilized 
dollar"  would  produce  more  violent  drops  in  prices  than  those  to  be  ex- 
perienced under  our  present  monetary  system.  To  demonstrate  that  the 
price  drops  would  be  more  violent  it  becomes  necessary  for  Arbuthnot  to 
prove  that  under  the  Fisher  plan  the  upward  swings  in  prices  would  be 
almost  as  pronounced  as  those  we  would  experience  otherwise.  For  unless 
the  price  level  rises  high  it  can't  drop  far.  In  the  argument  over  this  point 
Arbuthnot  is  forced  to  tackle  the  old  question  as  to  whether  credit  expan- 
sion is  the  cause  or  the  result  of  rising  prices.  He  concludes  that  when 
bank  credit  is  employed  not  for  investment  purposes  but  "to  assist  in  the 
purchase  and  sale  of  marketable  goods"  and  "takes  the  form  of  short-time 
notes  which  are  to  be  paid  from  the  receipts  from  the  sold  goods  .  .  .  [the] 
extension  of  credit  is  accompanied  almost  simultaneously  by  an  offer  in  the 
market  of  salable  commodities,  the  equilibrium  between  supply  and  demand 
is  not  seriously  disturbed  and  the  extension  of  credit  has  no  lifting  influence 
on  the  general  level  of  prices."2  Consequently  Fisher  must  be  in  error  in 
insisting  that  inflation  explains  such  rises  in  prices  as  could  be  modified  by 
the  "stabilized  dollar." 

Now  the  writer  conceives  that  this  analysis  involves  certain  errors;  that 
the  fact  of  the  speedy  emergence  of  the  goods  on  the  market  is  of  no  great 
pertinence  in  explaining  the  relation  between  expanding  grants  of  com- 
meicial  credit  and  rising  prices.  As  the  writer  has  pointed  out  elsewhere3 
the  effect  of  increasing  commercial  credits  on  prices  is  largely  a  matter  of 
the  industrial  circumstances  of  the  time.  In  some  situations  easy  credit 
must  be  followed  by  rising  prices;  in  other  situations  it  may  not  be  so  fol- 
lowed; but  in  no  situation  is  the  quick  appearance  of  the  goods  on  the 
market  the  sole  criterion  as  to  the  effect  on  prices.  If  the  writer's  conception 
is  correct  in  this  matter  the  attacks  on  the  Fisher  propaganda  must  be  of 
a  different  sort. 

Let  us  assume  that  we  are  in  the  midst  of  a  boom  period.  Let  us  assume 
that  manufacturers  in  general  have  pushed  production  as  far  as  can  be 
without  increasing  the  expenses  per  unit  of  output.  Let  us  assume  that 
additional  good  labor  is  not  easily  available,  and  that  employment  of  further 
labor  is  expensive,  if  for  no  other  reason,  because  the  best  labor  was  ab- 
sorbed first.  Certain  necessary  materials  can  be  obtained  in  additional 
quantities  only  by  bidding  against  manufacturers  in  other  industries  who 
are  also  behind  in  their  orders.  Finally,  it  may  be  that  extra-production 
will  necessitate  enlargement  of  buildings,  changes  in  machinery,  or  other  ex- 
pensive alterations. 

Under  these  circumstances  our  retailers,  jobbers,  or  wholesalers  are  in- 
formed by  the  banks  that  they  will  be  treated  liberally  in  their  requests 

i  See  C.  C.  Arbuthnot,  "A  Stabilized  Dollar  Would  Produce  Violent  Changes  in 
Periods  of  Falling  Prices,"  American  Economic  Review,  vol.  X  (December,  1920), 
pp.  776-784. 

2  Ibid.,  pp.  779-780. 

s  Cf.  H.  L.  Reed,  "Work  of  the  Federal  Reserve  Board,"  Journal  of  Political 
Economy,  January,  1921. 


92  Harold  L.  Reed  [March 

for  commercial  credit.  They  are  simply  given  large  lines  of  credit.  What 
must  be  the  effect  to  retailer  A  of  liberal  extensions  of  credit  lines  to  com- 
peting retailers,  B,  C,  and  D  ?  Obviously  it  is  likely  to  encourage  lively  bid- 
ding between  the  retailers  for  the  limited  quantity  of  available  goods.  Tak- 
ing advantage  of  this  situation  the  manufacturers  shove  up  prices,  and  all 
down  the  line  from  producer  to  consumer  this  advance  is  passed  along. 
With  the  same  easy  credits,  and  difficulties  of  expanding  inexpensively,  in 
other  fields  of  industry,  there  is  gradually  diffused  throughout  the  com- 
munity the  buying  power  in  terms  of  dollars,  in  anticipation  of  which  re- 
tailers bid  for  goods  and  fix  their  prices.  Even  though  the  goods  are  not 
withheld  indefinitely  from  the  market  they  make  their  appearance  under 
changed  conditions  of  supply  and  demand. 

Clearly  the  situation  would  have  been  different  if  manufacturers  had 
known  that  retailers  could  obtain  commercial  credit  only  with  difficulty. 
There  would  not  then  have  been  the  same  opportunity  to  play  off  one  buyer 
against  another,  and  the  market  could  not  have  been  made  so  easily  a 
sellers'  market.  Why  then  assert  that  banks  with  their  credit  offers  did 
not  help  to  create  the  rise  in  prices?  Explanation  of  this  common  mistake 
is  undoubtedly  to  be  found  in  the  fact  that  in  each  individual  transaction 
economists  have  customarily  focused  attention  upon  the  credit  finally  granted 
rather  than  the  credit  which  competitors  of  the  successful  bidder  for  the 
goods  could  have  had.  HA  gets  the  goods  instead  of  B,  C,  or  D  it  appears 
that  the  amount  A  borrows  depends  upon  the  height  of  prices  rather  than 
the  reverse.  But,  though  the  prices  may  have  been  fixed  before  credit  is 
called  into  being,  the  prices  A  had  to  pay  and  the  volume  of  bank  credit 
actually  created  for  A  was  influenced  by  the  amount  of  credit  B,  C,  D,  or 
others  could  have  got  had  they  been  the  successful  bidders  for  the  goods.  If 
this  be  true  the  adjusting  of  the  volume  of  the  circulating  media  to  the 
level  of  prices,  as  under  the  Fisher  plan,  might  aid  in  restraining  rapid 
rises  by  limiting  the  amount  of  credit  available  to  competing  retailers.4  In 
other  words,  Arbuthnot's  objection  is  due  to  his  inability  to  see  that  the 
amount  of  commercial  credit  available  for  the  prospective  borrower  de- 
termines, among  other  considerations,  the  amount  finally  extended  to  the 
actual  borrower. 

Of  course  under  differing  industrial  conditions  liberal  credit  offers  need 
not  have  the  same  effects.  Suppose  the  situation  is  one  in  which  additional 
labor  and  materials  are  easily  available,  that  new  orders  need  not  neces- 
sitate enlargements  of  plants  or  changes  in  equipment.  Larger  production 
may  create  possibilities  of  economy  in  the  amount  of  overhead  or  fixed 
charges  allocated  to  each  unit  of  output.  If,  under  these  circumstances, 
retailers  are  stimulated  to  a  reasonable  extent  by  information  that  the  re- 
quired credit  will  be  forthcoming,  prices  are  not  necessarily  disturbed.  As 
a  matter  of  fact  they  may  even  be  lowered  in  that  the  retailers'  orders  may 
make  possible  production  under  conditions  of  greater  efficiency.  It  may  no 
longer  be  a  matter  of  setting  up  greater  dollar  competition  for  the  limited 
quantity  of  goods  but  rather  using  more  dollars  to  effect  the  transfer  of 
more  goods.  Easy  and  abundant  credit  may  thus  affect  either  the  level  of 
prices  or  the  volume  of  production  or  both.  Undoubtedly  the  situations  in 
which  prices  and  production  are  both  affected  outnumber  the  cases  in  which 
abundant  credit  works  upon  the  one  alone.     But  as  to  which  is  most  in- 

*  Particularly  in  times  when  bank  reserves  are  low. 


1921]  A  Stabilized  Dollar  93 

fluenced  an  a  priori  answer  is  not  possible.     It  all  depends  on  the  industrial 
situation. 

If  the  foregoing  be  correct,  Arbuthnot's  objections  fall.  But  Fisher's 
plan  would  then  be  subject  to  attack  on  the  following  grounds:  (a)  Pro- 
duction rather  than  price  statistics  should  determine  the  need  for  a  change 
in  the  volume  of  dollars,  (b)  Because  of  the  all  importance  of  bank  credit 
in  our  media  of  exchange  Fisher's  efforts  should  be  confined  to  en- 
deavors to  influence  the  policy  of  our  bankers  and  particularly  the  Federal 
Reserve  Board  rather  than  to  attempt  the  more  difficult  and  less  promising 
task  of  securing  the  assent  of  a  far  larger  number  of  minds  to  what  appears 
to  be  a  radical  change  in  our  monetary  system. 

In  regard  to  the  first  we  must  recall  that  Fisher  would  adjust  the  volume 
of  the  circulating  media  as  prices  rise  or  fall.  Suppose,  as  is  undoubtedly 
frequently  the  situation,  that  production  increases  cannot  be  effected  without 
easier  credit  which  if  granted  may  bring  about  some  rise  in  prices.  In  this 
situation  should  we  not  take  the  position  that  price  stability  is  primarily  a 
consideration  of  distributive  justice  and  should  be  subordinated  to  the  re- 
quirements of  rendering  as  large  as  possible  the  total  volume  of  production? 
Should  we  not  first  of  all  adapt  our  credit  policy  to  production  needs  and 
then  consider  the  measures  necessary  for  securing  fair  distribution? 

In  the  second  place,  under  certain  favoring  circumstances  such  as  plenti- 
ful reserves,  the  banks  could  easily  nullify  any  effect  created  by  the  change 
in  the  theoretical  weight  of  the  dollar.  Unless  our  banking  administration 
can  be  taught  a  different  price  theory  than  any  they  have  thus  far  enunciated 
clearly  the  possibilities  of  a  "stabilized  dollar"  are  limited.  But  if  bankers 
can  be  induced  to  limit  their  credit  grants  to  the  requirements  of  produc- 
tive efficiency  we  need  not  worry  about  such  matters  as  the  invention  of  new 
processes  for  mining  gold  or  the  importation  of  gold  from  abroad.  Despite 
great  difficulties  will  it  not  be  easier  to  educate  our  bankers,  and  having 
educated  them  to  make  use  of  existing  machinery,  than  to  attempt  to  con- 
vince the  far  larger  class  whose  assent  to  the  "stabilized  dollar"  would  be 
necessary?  At  any  rate  it  will  not  be  necessary  to  argue  for  a  change 
which  will  appear  violently  to  alter  our  present  monetary  system. 

Harold  L.  Reed. 

Washington  University. 

Integration  in  Marketing 

In  the  September  number  of  this  Review  Mr.  Lewis  H.  Haney  analyzes 
the  reasons  for  integration  in  marketing  (which  amounts  to  what  is  com- 
monly referred  to  as  elimination  of  middlemen)  and  attempts  to  answer  the 
question  whether  the  tendency  in  this  direction  is  in  the  public  benefit.1  His 
general  conclusion  is  that,  although  integration  may  be  socially  desirable 
within  certain  limits,  there  exists  "no  prima  facie  case  for  integration  in 
marketing."  Broadly  speaking,  the  conclusions  uphold  the  orthodox  system 
of  marketing,  especially  where  the  wholesale  grocer  is  concerned,  and  ap- 
pear to  find  little  justification  for  such  innovations  as  the  chain  store,  mail- 
order house,  cooperative  buying  exchanges,  or  direct  sale  from  manufacturer 
to  retailer. 

i  "Integration  in  Marketing,"  by  Lewis  H.  Haney,  American  Economic  Review, 
vol.  X  (Sept.,  1920),  p.  528. 


94  L.  D.  H.  Weld  [March 

He  begins  with  the  assumption  that  recent  departures  from  the  "old 
smooth  channel"  through  the  wholesaler  result  in  "a  most  unfortunate  and 
wasteful  amount  of  duplication  and  friction";  and  seems  to  think  that  the 
traditional  method  should  be  left  undisturbed  rather  than  that  we  run  the 
risk  of  making  progress  by  trying  to  find  new  and  better  methods  of  market- 
ing. His  principal  object  is  apparently  to  justify  the  wholesale  grocer 
as  against  other  marketing  agencies;  and  the  unfounded  criticisms  against 
the  packing  industry  which  have  resulted  impel  the  present  writer  to  point 
out  some  of  the  mistakes  in  Mr.  Haney's  article. 

Before  taking  up  these  points,  however,  it  may  be  well  to  name  two  or 
three  serious  defects  in  Mr.  Haney's  argument.  He  enumerates  eight  "eco- 
nomic forces  tending  to  integration  in  marketing."  He  has  omitted  what  is 
perhaps  the  most  important  reason  of  all,  and  that  is  the  perishability  of 
products.2  This  is  the  main  reason  why  the  packing  industry  has  to  "do  its 
own  jobbing"  and  why  it  cannot  rely  on  outside  dealers.  The  president  of 
the  National  Biscuit  Company  told  me  in  person  that  the  products  of  the 
National  Biscuit  Company  too  often  got  stale  in  the  hands  of  the  wholesale 
grocers  and  did  not  reach  retailers  in  the  best  condition,  and  that  this  was 
the  principal  reason  why  his  company  had  been  forced  to  sell  direct  to  re- 
tailers. Also  the  marketing  of  cheese  has  been  taken  over  largely  by  the 
meat  packer  because  the  wholesale  grocer  did  not  have  the  facilities  for 
handling  this  perishable  product  efficiently. 

Another  very  serious  error  appears  on  page  540,  where  Mr.  Haney  at- 
tempts to  prove  that  the  cost  of  marketing  groceries  through  the  mail-order 
house  is  very  similar  to  the  cost  of  marketing  through  the  wholesale  and 
retail  grocer.  He  has  overlooked  the  fundamental  fact  that  the  different  de- 
partments of  a  mail-order  house  have  different  costs  of  doing  business.  If 
the  expense  of  the  entire  business  of  a  mail-order  house  is  approximately 
22  per  cent,  the  expenses  of  the  grocery  department  would  be  considerably 
less  than  that — probably  not  more  than  15  or  16  per  cent.3  This  would 
show  a  decided  advantage  for  the  mail-order  house  as  compared  with  the 
jobber-retailer  route,  and  Mr.  Haney's  comparison  is  obviously  unsound. 

One  other  merchandising  fallacy  is  apparent  when  Mr.  Haney  decries  the 
"inequality  in  margins  of  profit"  on  different  items  handled  by  wholesalers 
and  retailers.  There  is  room  for  argument  on  this  point  in  so  far  as  the 
inequality  in  margins  results  from  the  pushing  of  "leaders,"  but  to  complain 
of  the  customary  variation  in  margins  as  "not  a  healthful  condition"  com- 
pletely ignores  the  reason  for  the  low  margin  on  sugar,  for  example,  as 
compared  with  the  high  margin  on  imported  delicacies  and  perishable  pro- 
ducts. The  point  is  that  the  cost  of  doing  business  varies  for  different  in- 
dividual articles,  according  to  the  rapidity  of  turnover  of  these  individual 
articles,  and  the  amount  of  salesmanship  necessary  in  their  sale.4     If  this 

2  It  might  be  argued  that  this  question  of  perishability  is  covered  in  paragraph  6, 
where  "special  service"  is  given  as  one  of  the  reasons  for  integration.  Mr.  Haney, 
however,  apparently  did  not  have  this  in  mind,  because  he  gave  as  examples  "such 
machinery  as  typewriters  and  phonographs"  (p.  531).  If  he  did  have  perishability 
in  mind,  he  certainly  should  have  mentioned  it. 

»  The  writer  has  been  informed  by  an  official  of  one  of  the  large  Chicago  mail- 
order houses  that  the  expenses  of  the  grocery  department  are  substantially  less  than 
the  cost  of  operating  the  whole  business. 

*  See  my  article  entitled  "The  Right  Selling  Price,"  System,  May,  1918. 


1921]  Integration  in  Marketing  95 

inequality  appears  to  be  increased  by  the  operation  of  chain  stores,  depart- 
ment stores,  mail-order  houses,  etc.,  as  Mr.  Haney  claims  is  the  case,  this 
merely  means  that  in  these  forms  of  marketing  agencies  there  is  a  better 
adjustment  of  margins  on  individual  products  to  actual  merchandising 
costs — something  to  be  encouraged  rather  than  discouraged. 

Taking  up  the  specific  references  to  the  packing  industry,  we  find  that 
one  of  the  principal  reasons  given  for  the  tendency  toward  integration  is 
the  concentration  of  manufacturing  in  the  hands  of  a  few  large  producers. 
With  this  general  proposition  we  cannot  disagree,  but  in  developing  his 
thought  Mr.  Haney  says  that  this  tendency  may  be  due  to  the  possession  of 
"large  surplus  earnings,"  especially  when  there  is  a  desire  to  "insure  a  stable 
outlet"  or  to  "maintain  prices  to  the  consumer";  or  that  the  tendency  may 
also  arise  from  a  desire  to  introduce  "some  new  and  expensive  method  of 
marketing."  "All  of  these  conditions,"  he  says,  "may  be  found  in  the  ex- 
pansion of  the  large  meat  packers  and  oil  refiners  into  the  marketing  field" 
(page  529). 

One  might  infer  from  this  discussion  that  the  packers  had  extended  their 
marketing  functions  in  order  to  find  some  means  of  disposing  of  surplus 
earnings  for  which  they  could  find  no  other  use.  This  is  an  idea  advanced 
by  the  Federal  Trade  Commission  in  its  report  and  by  opponents  of  the 
packing  industry  that  have  appeared  before  congressional  committees  in 
Washington.  It  is  a  sensational  suggestion  utterly  without  foundation. 
In  so  far  as  the  packers  have  had  "surplus  earnings"  to  reinvest  in  their 
businesses,  they  have  been  governed  entirely  by  the  economic  need  of  ex- 
tending facilities  and  developing  means  for  financing  operations ;  they  have 
not  had  to  cast  about  to  find  some  way  to  invest  such  earnings  and  abso- 
lutely no  evidence  has  been  produced  to  show  that  such  is  the  case.  As  for 
a  desire  to  insure  a  "suitable  outlet,"  this  is  true  of  the  packing  industry  and 
accounts  for  one  reason  why  it  has  been  found  necessary  to  market  through 
their  own  branch  selling  houses  rather  than  through  outside  dealers.  As 
for  the  desire  to  "maintain  prices"  to  the  consumer,  this  has  not  been  a 
factor  with  the  packing  industry.  No  attempt  at  price  maintenance  has 
been  made  or  would  be  feasible  with  reference  to  the  great  bulk  of  products 
distributed  by  the  packers,  because  these  products  are  perishable,  they  are 
sold  in  bulk,  they  are  of  varying  grades  and  qualities,  and  most  of  them 
(such  as  beef)  cannot  be  sold  to  the  consumer  under  the  packer's  label. 
There  are  a  few  advertised  specialties,  such  as  soap,  on  which  attempts  to 
have  retailers  maintain  prices — a  practice  very  common  in  other  industries — 
may  have  been  made;  but  this  has  been  of  no  significance  whatever  in  the 
packing  industry. 

As  for  the  "need  of  introducing  some  new  and  expensive  method  of 
marketing,"  Mr.  Haney  has  adopted  a  wording  which  creates  a  wrong  im- 
pression. The  large  packers  had  to  establish  their  own  wholesale  selling 
outlets  in  Eastern  markets  just  as  soon  as  they  began  preparing  dressed 
meats  in  the  Middle  West.  This  method  was  "new"  at  the  time,  but  it  has 
never  appeared  to  be  an  expensive  method  of  marketing  as  compared  with 
the  cost  of  marketing  by  other  means. 

On  this  same  point  it  is  said  that  this  centralization  of  marketing  tends 
to  increase  the  field  of  monopoly,  eliminate  competition  among  independent 
wholesalers,  increase  the  average  spread  between  the  factory  price  and  re- 
tail price,  and  results  in  "economic  waste  through  the  encouragement  of 
overgrown  manufacturing  units  and  excessive  advertising  campaigns."     The 


96  L.  D.  H.  Weld  [March 

meat  packers  are  cited  as  an  example.  In  making  this  point  Mr.  Haney 
follows  the  time-worn  assumption  that  there  is  a  monopoly  in  the  packing 
industry;  he  assumes  that  the  doing  away  with  "independent  wholesalers" 
tends  toward  monopoly  and  increases  the  spread  between  factory  price  and 
the  retailer.  Neither  of  these  assumptions  is  or  can  be  borne  out  by  positive 
evidence.  As  for  "economic  waste"  resulting  from  "overgrown  manufac- 
turing units/'  Mr.  Haney  again  makes  an  assumption  that  cannot  be  proved. 
The  company  which  the  writer  represents  has  twenty-five  manufacturing 
plants  in  the  United  States,  distributed  according  to  location  of  livestock 
producing  sections,  consuming  centers,  and  also  with  respect  to  the  proper 
size  of  manufacturing  units. 

This  brings  us  to  the  question  of  "excessive  advertising  campaigns."  Mr. 
Haney's  remarks  (pp.  530,  532)  are  suggestive  of  the  views  of  many  lay- 
men and  of  many  economists.  Where  would  he  draw  the  line  between  reason- 
able and  excessive  advertising?  Surely  not  by  adopting  an  absolute  figure; 
he  would  consider  the  relation  between  advertising  expenditure  and  total 
sales.  The  writer  made  a  study  of  advertising  expenditures  of  various  con- 
cerns while  he  was  in  academic  work,  and  found  that  the  average  advertis- 
ing expenditure  for  a  large  number  of  advertising  manufacturers  amounted 
to  something  over  five  per  cent  of  their  sales.5  Swift  and  Company,  one  of 
the  largest  advertisers  in  the  country,  spent  in  1919  less  than  one  fourth 
of  one  per  cent  of  its  sales,  including  both  product  and  institutional  ad- 
vertising. Who  shall  say  that  this  money  was  not  well  spent?  Advertising 
is  merely  an  economical  way  of  selling,  just  as  the  use  of  a  machine  is  an 
economical  method  of  fabricating  products.  The  public  pays  less  for  the 
service  performed  than  it  would  pay  if  some  other  method  of  distribution 
of  fabrication  were  used.  Even  institutional  advertising  could  be  defended 
on  the  ground  of  economy,  at  least  economy  in  the  long  run.  Wilful  mis- 
representation of  an  industry,  with  the  resulting  prejudice  that  is  built  up 
in  the  minds  of  many  people,  results  in  an  ill  will  (instead  of  a  good  will). 
Such  an  ill  will  makes  it  harder  to  sell  products,  makes  it  easy  for  federal 
and  state  governments  to  pass  harmful  and  uneconomic  laws,  and  threatens 
the  very  stability  of  the  business.  If  advertising  designed  to  overcome 
such  ill  will  should  fail  of  its  purpose,  then  it  would  have  been  wasted;  if 
it  succeeds,  the  benefits  both  to  the  corporation  and  to  the  public  cannot  be 
measured  in  dollars  and  cents. 

Mr.  Haney  points  out  that  the  packers'  marketing  organizations  dupli- 
cate, step  by  step,  the  regular  distributive  system.  This  is  of  course  true, 
in  that  the  same  functions  have  to  be  performed  whether  under  one  owner- 
ship or  a  succession  of  different  ownerships.  But  Mr.  Haney's  statement 
that  the  "packers'  method  tends  to  be  less  economical  than  the  regular 
method  because  of  the  dependence  upon  the  hired  man,  and  because  of  the 
enormous  overhead,"  is  not  based  on  the  facts  in  the  case.  Consider  the 
packer,  for  example,  and  the  wholesale  grocer.  Although  not  directly  com- 
parable, the  cost  of  doing  business  through  the  packer's  branch  house  is  less 
than  4  per  cent  of  sales ;  the  cost  of  doing  business  through  the  wholesale 
grocer  is  from  7  or  8  to  10  per  cent  of  sales.  Even  the  Federal  Trade 
Commission  admits  that  the  advantage  is  with  the  packer  in  this  respect.6 

"See  "The  Economics  of  Advertising,"  Printers'  Ink,  July  11,  1918. 

8  See  Report  of  the  Federal  Trade  Commission  on  The  Meat  Packing  Industry, 
part  IV,  pp.  49  to  53.    After  pointing  out  the  difficulties  of  making  an  exact  com- 


1921]  Integration  in  Marketing  97 

The  packer's  whole  expense  and  profit  for  manufacturing  and  selling  ani- 
mal products  and  by-products  is  about  15  per  cent  of  sales,  and  this  includes 
buying  of  animals,  slaughtering,  paying  freight  to  distant  markets,  operat- 
ing branch  selling  houses  with  refrigeration  facilities,  the  paying  of  sales- 
men, accounting  forces,  etc.,  and  the  cost  of  delivery  to  retailers.  Com- 
pare this  with  the  wholesale  grocer's  margin  of  about  11  or  12  per  cent, 
which  covers  nothing  but  the  merchandising  function  (although  in  some 
cases  there  is  a  little  incidental  manufacturing).  This  is  not  a  reflection  on 
the  efficiency  of  wholesale  grocers,  whose  business  is  very  different  from 
that  of  the  packers.  But  is  there  any  method  whereby  the  services  that 
the  packers  perform  can  be  accomplished  at  any  lower  expense  than  under 
the  present  organization? 

Mr.  Haney  attempts  to  clinch  his  argument  against  the  large-scale,  inte- 
grated marketing  system  of  the  packer  by  saying  that  many  small  packers 
thrive  without  any  such  marketing  organization.  It  seems  curious  that  this 
point  should  be  raised  when  Mr.  Haney  has  every  reason  to  know  that  the 
large  packers  and  the  small  packers  are  not  comparable.  This  was  ex- 
plained by  the  writer  at  the  meeting  of  the  American  Economic  Association 
in  December,  1919.  The  small  packer  does  a  local  business;  he  cannot  pos- 
sibly market  efficiently  (especially  fresh  meats)  in  distant  markets.  The 
large  packer  is  absolutely  essential  to  market  the  surplus  livestock  products 
of  the  West  in  the  large  consuming  centers  of  the  East.  The  marketing  or- 
ganization of  the  large  packer,  therefore,  is  based  on  absolute  necessity  and 
is  not  at  all  comparable  with  that  of  the  small  packer. 

This  same  failure  to  recognize  lack  of  comparability  between  large  and 
small  units,  because  of  the  differences  in  services  performed,  is  evident  in 
the  conclusion  (p.  545)  that  large-scale  operations  in  the  wholesale  grocery 
trade  are  not  based  upon  economic  efficiency.  The  large-scale  wholesaler 
cannot  be  compared  with  the  small  local  jobber  for  the  reason  that  he  per- 
forms a  different  and  more  important  service.  For  example,  he  usually  de- 
velops a  line  of  standardized  canned  goods  under  his  own  label — an  impor- 
tant service  which  the  small  local  jobber  cannot  hope  to  perform. 

Finally,  the  writer  cannot  help  protesting  against  Mr.  Haney's  vague  use 
of  relative  terms.  His  expression  "excessive  advertising"  is  anything  bujt 
enlightening,  and  only  tends  to  confuse  the  mind  on  an  important  economic 
problem  on  which  there  should  be  clear  thinking.  His  references  to  "public 
benefit"  and  to  "wasteful"  methods  of  competition,  etc.,  also  indicate  a 
cloudy  state  of  mind,  and  only  tend  to  inflame  certain  economic  prejudices 
and  suspicions,  without  advancing  positive  evidence,  and  without  proceed- 
ing from  a  basis  of  sound  definition.  The  same  vagueness  is  apparent  in 
the  last  three  or  four  pages  of  conclusions,  and  in  spite  of  a  few  positive 
statements,  the  reader  really  wonders  just  how  far  Mr.  Haney  would  go 
in  defending  the  wholesale  grocer  as  against  such  developments  as  the 
chain  store  and  the  mail-order  house,  or  just  when  he  thinks  that  "public 
benefit"  results  from  integrated  marketing. 

L.  D.  H.  Weld. 

parison,  and  qualifying  its  conclusion  by  saying  that  greater  efficiency  in  handling 
non-meat  products  is  not  established,  the  Federal  Trade  Commission  says:  "After 
all  allowances  are  made,  however,  the  facts  if  fully  known  might  well  show  that  on 
the  average  a  given  volume  of  sales  can  be  made  at  less  expense  by  the  packer 
than  by  the  wholesale  grocer  (p.  52)." 


REVIEWS  AND  NEW  BOOKS 
General  Works,  Theory  and  Its  History 

The  Flow  of  Value.  By  Logan  Grant  McPherson.  (New  York: 
The  Century  Company.     1919.     Pp.  xvi,  473.) 

In  The  Flow  of  Value  Mr.  McPherson  has  attempted  "to  set  forth 
in  general  and  in  broad  outlines  the  sequence  of  cause  and  effect  in  the 
determination  of  prices."  His  vehicle  is  a  textbook  which,  although  an 
independent  treatise,  is  "in  a  way"  a  companion  volume  to  his  How  the 
World  Makes  its  Living.  His  immediate  object  is  to  throw  light  upon 
the  important  questions  "concerning  the  determination  of  wages,  of 
prices,  and  the  acquisition  and  tenure  of  property."  His  more  ulterior 
purpose  is  to  illuminate  the  larger  problems  of  "changes  in  the  institu- 
tions and  practices  of  the  past"  which  are  necessary  to  enable  the  com- 
munity "to  coordinate"  its  efforts  "for  the  common  good."  Or,  more 
briefly,  he  considers  "the  flow  of  value"  (or  is  it  the  system  of  prices?) 
in  its  relation  to  "economic  reconstruction." 

To  this  end  Mr.  McPherson  points  out  the  nature  of  human  effort 
and  human  want,  shows  how  utilities  come  into  existence,  how  these 
give  values  to  the  articles  embodying  them,  and  how  these  values  are 
articulated  into  a  comprehensive  system  of  prices.  In  a  community 
which  he  hypothetically  builds  up  he  traces  the  "flow  of  value"  from 
the  most  finished  of  consumers'  goods  to  the  most  primary  elements  of 
production.  Since  his  society  is  a  developing  one  he  introduces  ma- 
chinery and  traces  the  results  of  this  technical  change  upon  the  sys- 
tem of  prices.  He  notes  particularly  the  functions  which  wages  and 
profits  perform  in  the  economic  order.  His  regard  for  the  relevancy 
of  values  leads  him  to  a  consideration  of  the  nature  of  money  and  its 
role  in  price  determination.  Finally,  after  a  summary  of  his  subject- 
matter  from  another  angle,  he  concludes  with  a  discussion  of  "sound 
minds  in  sound  bodies,"  which  is  the  human  end  which  he  would  have 
the  industrial  system  serve. 

The  method  followed  by  the  author  has  all  the  traditions  of  neo- 
classical theory  back  of  it.  Our  schools  of  law  have  long  bent  their 
efforts  upon  teaching  students  to  think  legally.  So  our  teachers  of 
theory  have  made  thinking  economically  their  principal  object.  In 
seeking  to  extract  the  whole  truth  from  a  few  simple  premises  and  in 
keeping  his  reader  away  from  the  wilderness  of  modern  economic  fact 
Mr.  McPherson  follows  them.  Like  them  he  builds  up  his  argument  by 
deduction ;  like  them  he  arrives  at  statements  that  approximate  actu- 
ality by  adding  his  complicating  factors  one  at  a  time ;  and  like  them 
the  truths  lie  garners  represent  tendencies  rather  than  actual  condi- 
tions.    Like  them  he  aims  to  substitute  simplicity  of  statement  for  be- 


1921]  General  Works,  Theory  and  Its  History  99 

wildering  variety,  and  is  led  to  reduce  the  miscellaneous  assortment  of 
goods,  services,  and  wants,  which  are  the  materials  of  the  market  prob- 
lem, to  "units  of  force"  and  "units  of  wants."  In  terms  of  "man-hours" 
and  "man-units"  baffling  appraisals  are  reduced  to  manageable  prob- 
lems. The  student  who  masters  his  pages  will  be  sadly  put  to  it  to 
escape  thinking  economically. 

In  method,  in  detail,  and  in  conclusion  the  volume  will  provoke  ap- 
proval and  criticism  from  many  economic  camps.  The  classicists  will 
approve  of  his  hypothetical  method,  but  will  look  askance  at  an  argu- 
ment which  introduces  "dynamic"  factors  into  the  value  problem.  The 
statisticians  will  approve  the  emphasis  upon  price  and  quantitative 
measurement,  but  will  see  in  his  reduction  of  his  terms  to  simple  units 
an  encroachment  upon  their  vested  interests.  The  welfare  economists 
will  approve  the  human  ends  which  he  would  make  industry  serve,  but 
will  quarrel  with  him  over  assumptions,  as,  for  example,  his  hypothesis 
of  a  living  wage  as  a  condition  essential  to  the  utilization  of  labor. 
Even  the  protestants,  who  will  see  no  good  in  so  unreal  a  method,  will 
welcome  the  wider  basis  in  assumption  which  underlie  his  value  theory. 
But  such  criticisms  are  inevitable.  So  long  as  we  will  differ  about  the 
very  nature  of  our  subject,  no  book  can  give  us  what  all  of  us  would 
like  to  have. 

The  essential  thing  is  that  the  author  has  come  through  these  tra- 
ditional and  hypothetical  exercises  without  losing  his  head.  He  is  not 
won  over  to  the  belief  that  ours  is  a  natural  and  automatic  order,  that 
the  system  of  prices  is  a  perfect  regulator  of  production  and  consump- 
tion, and  that  under  the  guidance  of  market  values  we  get  out  of  our 
resources  all  they  have  to  give.  On  the  contrary  he  realizes  that  how- 
ever prices  may  be  made,  in  competitive  markets,  by  the  few  who  control 
large  industries,  or  by  official  "price-fixers,"  human  judgments  lie  at 
their  bases,  and  that  the  real  problem  is  to  make  them  as  intelligent, 
as  enlightened,  and  as  little  prone  to  error  as  possible.  He  sees  a  pos- 
sibility for  a  much  better  coordination  of  economic  processes  than  that 
furnished  by  the  current  system  of  prices.  In  fact  "an  administrative 
and  executive  board  constituted  of  men  of  proved  integrity,  of  large  ex- 
perience, and  broad  grasp,  can  obtain  the  widest  information  from  time 
to  time  as  to  the  probable  demands  for  the  products  .  .  .  and  there- 
fore can  make  the  provisions  which  will  more  closely  approximate  the 
demand."  Again,  "an  administrative  board,  composed  of  representa- 
tives of  boards  administering  each  great  division  of  industry  and  com- 
merce, could  maintain  that  relativity  between  the  production  of  sub- 
stances of  different  kinds,  their  transformation,  and  the  proportions  in 
which  final  utilities  would  be  produced  .  .  .  that  would  result  in  a 
minimum  of  overproduction  or  of  underproduction." 


100  Reviews  and  New  Books  [March 

In  this  conception  of  the  instrumental  character  of  the  system  of 
prices  Mr.  McPherson's  greatest  service  lies.  There  was  a  time  when 
economists  were  lost  in  delight  at  their  discovery  of  how  adequately 
changing  prices  adjusted  demand  and  supply,  and  through  them  pro- 
duction and  consumption,  to  each  other.  They  failed  to  see  in  the 
constant  use  of  such  a  mechanism  with  the  wide  fluctuations  in  prices 
which  it  entailed  evidence  of  great  imperfections  in  the  coordination  of 
economic  processes.  Mr.  McPherson  is  right  in  regarding  this  question 
of  organization  as  the  great  problem  of  "reconstruction."  He  is  to 
be  thanked  for  restating  the  problem  in  terms  of  the  human  judgments 
which  make  prices  and  of  the  factors  of  industrial  organization  which 
condition  them.  And,  most  important  of  all,  he  is  to  be  congratulated 
upon  coming  to  so  clear  an  appreciation  of  his  problem  through  a  tra- 
ditional exercise  in  value  theory. 

Walton  H.  Hamilton. 

Amherst  College. 

Some  Aspects  of  the  Inequality  of  Incomes  in  Modern  Communities. 
By  Hugh  Dalton.  (New  York:  E.  P.  Dutton  &  Co.  1920. 
Pp.  360.) 

The  book  begins  with  a  painstaking  discussion  of  the  views  of  promi- 
nent economists  with  regard  to  the  distribution  of  incomes  among  fami- 
lies and  especially  of  the  effect  of  inheritance  in  producing  inequality. 
This  summary  of  the  ideas  of  others  is  followed  by  an  analysis  from 
the  author's  own  standpoint  of  the  various  forces  which  tend  to  give 
rise  to  inequality  in  income  and  of  all  possible  devices  which  may  be 
utilized  to  make  incomes  more  equal. 

Professor  Dalton  considers  that  very  little  argument  is  necessary  to 
show  that  the  present  distribution  of  income  is  too  unequal.  However, 
he  concludes  that  absolute  equality  would  be  absurd  and  leans  toward  a 
policy  of  distributing  income  somewhat  more  in  proportion  to  the  needs 
therefor  than  is  accomplished  by  the  present  system.  He  everywhere 
recognizes,  however,  the  fact  that  society  cannot  afford  to  sacrifice 
production  in  order  to  improve  distribution.  The  problem,  as  he  sees 
it,  is  how  to  lessen  inequality  in  incomes  without  materially  reducing  the 
output  of  industry. 

A  few  seeming  inaccuracies  and  oversights  in  the  book  are  out  of 
harmony  with  the  general  carefulness  of  the  work.  On  page  51,  for 
example,  he  quotes  Marshall  approvingly  as  saying  that  Ricardo  '"was 
inclined  to  envisage  mankind  as  wholly  composed  of  city  men,"  and  then 
immediately  discusses  Ricardo's  propositions  concerning  agriculture! 
The  statement  is  made  on  page  281  that  the  custom  of  allowing  the 
living  to  inherit  the  property  of  the  dead  "is  a  very  curious  fact,"  but 


1921]  General  Works,  Theory  and  Its  History  101 

he  fails  to  show  anything  curious  about  it.  In  his  discussion  of  why 
women  are  paid  less  than  men,  he  entirely  overlooks  the  important  cir- 
cumstance that  women  commonly  expect  their  calling  to  be  terminated 
soon  by  marriage,  and  hence  it  is  not  worth  while  for  the  employer  to 
train  them  for  positions  of  great  responsibility  in  his  business. 

On  page  173,  occurs  the  error,  common  to  most  economists,  of  as- 
suming that  interest  is  a  payment  for  the  services  of  "capital  goods" 
rather  than  for  a  money  loan.  In  the  first  chapter  of  part  IV,  natural 
wealth  gaining  ability  and  merit  are  tacitly  assumed  to  be  identical, 
which  seems  to  imply  a  very  narrow  definition  for  the  idea  of  "merit." 

The  preceding  are  minor  points,  but,  in  the  opinion  of  the  reviewer, 
other  more  fundamental  errors  occur  which  tend  to  weaken  Professor 
Dalton's  line  of  reasoning.  He  states  on  page  48,  for  example,  that  the 
rate  of  increase  of  agricultural  production  "has  blown  .  .  .  [Mal- 
thus']  thesis  into  thin  air,  and  exhibited  him,  not  indeed  as  a  moral 
delinquent,  but  as  a  very  inadequate  economist."  As  a  matter  of  fact, 
it  appears  probable  that  Malthus'  fundamental  mathematical  proposi- 
tions can  be  shown  to  have  held  even  during  that  rapid  spread  of  popu- 
lation into  comparatively  unoccupied  regions,  which  characterized  the 
last  century,  and  the  most  cursory  thought  convinces  one  that  the 
fixed  area  of  the  earth's  surface  necessarily  makes  such  an  expansion 
into  new  territory  a  transitory  rather  than  a  permanent  phenomenon. 
As  for  improvements  in  agriculture,  a  circumstance  to  which  Professor 
Dalton  attaches  considerable  importance,  it  can  scarcely  be  said  that 
they  have  thus  far  succeeded  in  affecting  any  startling  increases  in 
yields  per  acre. 

Furthermore,  Professor  Dalton's  assumption  that  the  western  world 
has  progressed  beyond  all  danger  from  the  disproportionately  rapid 
multiplication  of  the  most  inefficient  types  of  mankind  is  delightfully 
optimistic  but  seems  to  contradict  the  statistical  evidence  presented  by 
many  investigators  of  the  actual  facts  concerning  birth  rates  in  the 
different  strata  of  society. 

Throughout  the  entire  book  runs  an  undercurrent  of  assumption  that 
all  persons  are  actually  endowed  by  nature  with  equal  talents  and  abil- 
ity and  that,  therefore,  unequal  advantages  are  wholly  responsible  for 
the  differences  that  we  observe  in  humankind.  For  instance,  on  page 
258,  he  speaks  of  the  belief  that  some  workers,  even  with  proper 
training,  would  not  be  able  to  fill  certain  occupations,  as  "hypotheti- 
cal." Is  it  not  strange,  however,  that  human  beings  alone,  of  all  the 
plant  and  animal  kingdom,  should  show  this  practical  identity  of  nat- 
ural gifts?  His  conclusion  that  educational  opportunities  for  all  would 
tend  to  lessen  differences  in  wages  seems  to  be  belied  by  conditions  in 


102  Reviews  and  New  Books  [March 

the  United  States  where  free  schools  have  long  been  available  to  all, 
but  where  very  wide  differentials  in  wages  and  salaries  still  prevail. 

The  correctness  of  the  assumption  that  much  greater  equality  of 
wages  than  now  exists  would  be  desirable  is  nowhere  demonstrated  and 
the  proposition  appears  to  be  one  of  very  doubtful  validity.  Under 
such  circumstances,  what  incentive  would  a  worker  have  to  "make 
good"? 

While,  for  the  reasons  just  stated,  the  reviewer  believes  that  Profes- 
sor Dalton  has  gone  somewhat  too  far  in  his  desire  for  greater  equality 
of  incomes,  there  can  be  little  doubt  of  the  fact  that  he  has  done  a  great 
service  to  students  in  this  field  by  gathering  together  the  material  on 
the  subject  and  presenting  a  logical  discussion  of  the  whole  philosophy 
of  distribution  of  income.  The  practical  recommendations  which  he 
makes  for  modifications  of  inheritance  laws  are  mainly  those  previously 
suggested  by  Professor  Ely  and  Rignano  in  their  respective  writings 
and  are  distinctly  moderate  and  logical.  These  propositions  include 
the  abolition  of  the  intestate  succession  of  distant  relatives  and  the 
partial  or  total  extinction  of  the  right  to  bequeath  inherited  property. 
The  last-mentioned  limitation,  aimed  at  the  abolition  of  the  class  known 
as  "the  idle  rich,"  certainly  contains  far-reaching  possibilities  and  has 
much  to  commend  it.  Professor  Dalton  points  out,  however,  the  seri- 
ous danger,  overlooked  by  most  writers  on  the  subject,  that  heavy  in- 
heritance taxation  is  likely  to  dissipate  the  accumulations  of  wealth  so 
essential  to  abundant  production.  He  wisely  suggests  that  with  any 
measure  causing  the  state  to  take  over  any  considerable  share  of  estates 
should  go  suitable  legal  safeguards  so  drafted  as  to  prevent  material 
diminution  in  our  aggregations  of  industrial  equipment. 

The  book  throughout  is  thoroughly  scientific  and  is  characterized  by 
abundant  references  and  a  logical  style  of  presentation. 

Willford  I.  King. 

The  Principles  of  Sociology.  By  Edward  Alsworth  Ross.  (New 
York :  The  Century  Company.     1920.     Pp.  xviii,  708.) 

Those  who  have  followed  Professor  Ross's  series  of  articles  in  recent 
issues  of  the  American  Journal  of  Sociology,  and  have  looked  forward 
to  the  publication  of  the  volume  which  they  foreshadowed,  will  not  be 
disappointed  in  the  book  itself.  In  fact,  Professor  Ross's  analyses  are 
even  more  convincing  and  illuminating  when  combined  in  an  integrated 
and  connected  system  than  they  were  as  scattered  monographs. 

The  book  is  divided  into  five  parts :  The  Social  Population,  Social 
Forces,  Social  Processes,  Social  Products,  Sociological  Principles. 
The  section  on  Social  Processes  is  by  far  the  most  extensive,  occupying 
480  pages  out  of  a  total  of  693  pages  of  reading  matter.     It  is  also 


1921]  General  Works,  Theory  and  Its  History  103 

the  most  important.  Here  the  author  is  at  his  best.  Professor  Ross's 
unique  qualifications  are  those  of  an  observer,  and  interpreter  of  what 
he  observes.  He  has  the  gift  of  discerning  the  real  nature  of  the  doings 
of  men  and  women  and  children,  and  through  this  discernment  of  show- 
ing the  relationship  between  the  different  departments  of  human  ac- 
tivity, and  of  reducing  the  infinite  varieties  of  acts  and  behavior  to 
certain  definite  types  and  categories.  Professor  Ross  is  what  the 
character  analysts  would  undoubtedly  describe  as  the  dynamic  type  of 
man.  Accordingly,  what  interests  him  most  is  society  as  a  "going  con- 
cern." And  his  ability  to  see  what  is  going  on  enables  him  to  see  what 
the  results  of  the  "goings  on"  will  be,  and  to  point  out  what  changes  in 
human  activity  are  required  if  certain  desired  ends  are  to  be  accom- 
plished. His  practical  conclusions  are  therefore  almost  invariably 
sound,  sensible,  and  positive.  This  is  most  fortunate,  since  he  unre- 
servedly commits  himself  to  the  telic  conception  of  sociology,  and  ad- 
mits that  his  "over-mastering  purpose"  is  "to  better  human  relations." 

The  author  distinguishes  thirty-eight  different  social  processes,  to 
each  of  which  he  gives  an  appropriate  name.  These  are  not  all  of 
equal  weight,  nor  does  their  importance  as  commonly  recognized  corre- 
spond with  the  amount  of  space  given  them.  Thus  "association"  which, 
in  the  conception  of  many  sociologists,  includes  practically  the  whole 
subject-matter  of  the  science,  occupies  only  about  twice  as  many  pages 
as  "professionalization,"  and  "class  struggle"  stands  on  a  par  with 
"ossification."  This  is,  of  course,  due  partly  to  the  use  of  words  in  a 
sense  somewhat  different  from  the  commonly  accepted  one,  but  also  to 
the  obvious  impossibility  of  giving  a  clear  exposition  of  a  concept  in 
the  exact  number  of  words  which  its  relative  importance  would  indicate. 
In  fact,  it  may  require  more  space  to  clarify  an  unfamiliar  idea  than 
one  which,  just  because  of  its  importance,  is  more  widely  known. 

The  gross  result  of  this  section  is  to  leave  upon  the  reader  the  im- 
pression of  an  undreamed  of  orderliness  and  system  in  the  doings  of 
human  beings,  a  system  not  the  result  of  a  deliberate,  pre-arranged  or- 
ganization, but  of  the  working  out  of  problems  by  innumerable  indi- 
viduals who  are  fundamentally  alike  in  their  essential  qualities,  and 
therefore  tend  to  follow  certain  well  defined  channels  of  conduct.  The 
science  of  society  looms  large  not  only  as  a  possibility  but  as  an  actu- 
ality in  the  light  of  such  a  discussion. 

The  book  opens  with  a  brief  analysis  of  the  make-up  of  the  social 
population,  taking  into  account  number,  sex,  age,  urban  and  rural  dis- 
tribution, growth  of  population,  etc.  This  is  followed  by  an  analysis  of 
the  social  forces.  In  recognizing  the  instincts  as  the  fundamental  so- 
cial forces  the  author  is  in  close  accord  with  the  best  modern  thought. 
His  exposition  of  these  original  forces,  however,  as  well  as  his  treat- 


104  Reviews  and  New  Books  [March 

ment  of  the  derivative  forces,  leaves  considerable  to  be  desired.  The 
reader  does  not  quite  feel  that  he  has  had  his  feet  planted  solidly  on 
the  substructure  of  natural  forces  and  natural  law  upon  which  the  edi- 
fice of  sociology  must  ultimately  rest  if  it  is  to  withstand  all  the  winds 
and  floods  that  beat  upon  it. 

Somewhat  the  same  feeling  is  engendered  by  the  closing  sections  on 
social  products  and  sociological  principles.  Thus  it  is  surprising  to 
find  the  recreation  center  included  in  a  brief  list  of  institutions,  but 
the  church  omitted;  industry  included,  but  commerce  and  transporta- 
tion— certainly  two  of  the  most  distinct  social  products — omitted. 
There  is  also  much  reason  to  question  the  author's  position  that  the 
extension  of  social  control  over  industry  is  a  matter  which  should  be 
left  to  the  economists  to  decide.  Rather  is  it  just  at  such  points  as 
this  that  the  dividing  line  between  economics  and  sociology  is  most 
clearly  defined.  Similarly,  in  the  discussion  of  sociological  principles,  it 
is  strange  to  find  no  mention  of  that  great  principle,  by  whatever  name 
it  may  be  called,  by  which  men's  recognition  of  the  interests  and  wel- 
fare of  others  as  factors  in  conduct  is  becoming  so  continually  extended. 

To  cite  these  shortcomings,  however,  is  merely  to  illustrate  the  fact 
that  the  science  of  sociology,  as  at  present  developed,  is  much  too  dif- 
fuse to  be  adequately  covered  in  one  work — not  to  say  one  volume — by 
any  man,  however  wide  the  scope  of  his  mind.  To  have  produced  an 
exposition  of  one  major  department,  such  as  Professor  Ross  has  given 
us  in  his  Social  Processes,  is  glory  enough  for  one  man. 

It  hardly  need  be  said  that  the  book  is  highly  readable,  crammed  with 
unique  and  picturesque  incidents  and  cases,  all  pertinently  attached  as 
illustrations  to  some  generalization.  The  author's  powers  of  observa- 
tion and  wide  acquaintance  with  foreign  lands  have  enabled  him  to  pro- 
vide a  storehouse  of  invaluable  citations  for  others  working  in  similar 
fields. 

Henry  Pratt  Fairchild. 

New  York  University. 

NEW  BOOKS 

Barnich,  G.  Essai  de  politique  positive  basee  sur  I'energetique  sociale  de 
Solvay  avec  tableau  de  synthese  sociale.  (Bruxelles:  Office  de  Publicite 
Lebegue  &  Cie.    1919.    Pp.410.) 

Bogardus,  E.  S.  Essentials  of  social  psychology.  New,  enlarged  edition. 
(Los  Angeles:    Univ.  S.  Calif.  Press.     1920.     Pp.  304.     $1.75.) 

Dow,  G.  S.  Introduction  to  the  principles  of  sociology;  a  textbook  for  col- 
leges and  universities.  (Waco,  Texas:  Baylor  Univ.  Press.  1920.  Pp. 
505.) 

Galesnoff,  W.  Grundziige  der  Vollcswirtschaftslehre.  (Berlin:  Teubner. 
1920.     10  M.) 


1921]  Economic  History  and  Geography  105 

Hamilton,  W.  H.  Current  economic  problems.  (Chicago:  University  of 
Chicago.      1920.     $4.25.) 

Hoeltzel,  M.  Friedrich  List.  Vol.  I.  (Berlin:  Puttkammer  &  Muhl- 
brecht.     1919.     Pp.  113.) 

Murray,  R.  A.  Les  legons  d'economie  politique  suivant  la  doctrine  de  VEcole 
de  Lausanne.     (Paris:    Payot.     1920.     Pp.  506.) 

Nickel,  K.  E.  Normative  Wirtschaftswissenschaft.  (Berlin:  F.  Diimmler. 
Pp.  xxiv,  172.     19  M.) 

Parker,  U.  S.  Elements  of  economics  for  high  schools.  Revised  edition. 
(Quincy,  111.:     Author.     1920.     Pp.  iv,  243.) 

Rawie,  H.  C.  Natural  economic  law.  (Baltimore:  Williams  &  Williams. 
1920.     Pp.  231.) 

Schmidt,  M.  Die  soziale  JVirtschaft  der  menschlichen  Organisation. 
Grundriss  der  ethnologischen  Volkswirtschaftslehre,  vol.  I.  (Jena: 
Fischer.     1920.    Pp.  viii,  222.) 

Turner,  J.  R.  Riciardian  rent-theory  in  early  American  economics.  (New 
York:    New  York  Univ.  Press.     1920.) 

Economic  History  and  Geography 

NEW  BOOKS 

Bailey,  E.  A.  Influences  toward  radicalism  in  Connecticut,  175^.-1775. 
Smith  College  studies  in  history,  vol.  V,  no.  4.  (Northampton,  Mass.: 
Dept.  Hist.,  Smith  College.     1920.     Pp.  252.) 

Baruch,  B.  M.  The  making  of  the  reparation  and  economic  sections  of  the 
treaty.     (New  York:    Harper.     1920.     Pp.  353.     $3.) 

Bengsten,  N.  A.  Norway.  A  commercial  and  industrial  handbook.  Spe- 
cial agent's  series,  Bureau  of  Foreign  and  Domestic  Commerce.  (Wash- 
ington:   Supt.  Docs.     1920.     10c.) 

Bougle,  C.     Proudhon  et  notre  temps.     (Paris:    Chiron.     1920.     7.50  fr.) 

Enock,  C.  R.  Spanish  America:  its  romance  and  future.  (London:  T. 
Fisher  Unwin.     1920.     Two  vols.    30s.) 

Contains  chapters  on  natural  resources  and  industry. 

Fay,  C.  R.  Life  and  labour  in  the  nineteenth  century;  being  the  substance 
of  lectures  delivered  at  Cambridge  University  in  the  year  1919  to  students 
of  economics.     (New  York:   Macmillan.     1920.     Pp.  319.     $8.) 

Guillet,  L.  and  Durand,  J.  L'industrie  francaise;  I'oeuvre  d'hier — I'effort 
de  demain.     (Paris:   Masson  et  Cie.     1920.     Pp.  iv,  283.) 

Hecht,  J.  S.    The  real  wealth  of  nations.     (London:   G.  G.  Harrap  &  Co. 

1920.     15s.) 
Hoare,  A.     The  national  needs  of  Britain.     (London:    King.     1920.     Pp. 

32.     6d.) 
Howard,  A.,  compiler.     The  leaders  of  the  Nonpartisan  League;  their  aims, 

purposes   and   records   reproduced  from   original   letters   and  documents. 

(Minneapolis:   Author.     1920.     Pp.  127.) 


106  Reviews  and  New  Books  [March 

Hunt,  G.  and  Scott,  J.  B.,  editors.  The  debates  in  the  federal  convention 
of  1787  which  framed  the  constitution  of  the  United  States  of  America, 
reported  by  James  Madison,  a  delegate  from  the  state  of  Virginia.  Inter- 
national edition.  (New  York:  Oxford  Univ.  Press.  1920.  Pp.  xcvii, 
731. 

Janicki,  S  and  Doerman,  A.  The  economic  aspect  of  the  Upper  Silesian 
question.  (London:  Polish  Press  Bureau,  2  Upper  Montague  St.  Rus- 
sell Square,  W.  C.  I.     1920.     Pp.  35.) 

Kale,  V.  G.  India's  war  finance  and  post-xcar  problems.  (Poona,  India: 
Author,  Fergusson  College.     1919.     Pp.  153.) 

Knowles,  L.  C.  A.  The  industrial  and  commercial  revolutions  in  Great 
Britain  during  the  nineteenth  century.     (London:   G.  Routledge.     1920.) 

Koehler,  E.  Die  Beziehungen  der  thiiringischen  Industrie  sum  Weltmarkt. 
Probleme  der  Weltwirtschaft,  32.     (Jena:   Fischer.     1920.    Pp.  xvi,  245.) 

Lake,  E.  C.  and  H.  A.  History  of  social  development.  From  the  German 
of  F.  Miiller-Lyer's  "Phasen  der  Kultur,"  1908.  (London:  Allen  & 
Unwin.     1920.     Pp.  362.     18s.) 

Lane,  R.  W.  The  making  of  Herbert  Hoover.  (New  York:  Century. 
1920.     Pp.  356.     $3.50.) 

Langer,  W.  The  Nonpartisan  League;  its  birth,  activities  and  leaders. 
(Mandan,  N.  D.:    Norton  County  Farmers  Press.     1920.     Pp.  240.) 

La  Follette,  R.  M.  The  political  philosophy  of  Robert  M.  La  Toilette  as 
revealed  in  his  speeches  and  writings.  Compiled  by  E.  Torelle.  (Mad- 
ison, Wis.:    Robert  M.  La  Follette  Co.     1920.     Pp.  426.     $2.) 

Lieber,  R.,  editor.  One  hundred  years  of  Indiana's  resources.  (Fort 
Wayne:    Conservation  Commission.     1920.     Pp.  45.) 

Lovett,  V.  A  history  of  the  Indian  nationalist  movement.  (New  York: 
Stokes.     1920.) 

Marburg,  T.  and  Flack,  H.  E.,  editors.  Taft  papers  on  league  of  nations. 
(New  York:    Macmillan.     1920.     Pp.  xx,  340.     $4.50.) 

O'Brien,  G.  An  essay  on  mediaeval  economic  teaching.  (London:  Long- 
mans, Green.     1920.     Pp.  242.     $4.75.) 

In  the  words  of  the  author,  this  volume  endeavors  "to  examine  and 
present  in  as  concise  a  form  as  possible  the  principles  and  rules  which 
guided  and  regulated  men  in  their  economic  and  social  relations  during 
the  period  known  as  the  Middle  Ages."  It  is  not  very  many  years  since 
the  announcement  of  such  a  book  would  have  been  received  by  many 
economists  with  polite  indifference,  if  not  with  positive  irritation.  If 
they  took  notice  of  the  work  at  all  they  would  have  asked,  "What  possible 
interest  can  medieval  economic  notions  have  for  us?  Can  anything  good 
come  out  of  the  Middle  Ages  ?"  However,  the  researches  of  such  eco- 
nomic historians  as  Cunningham  and  Ashley  have  rendered  that  attitude 
henceforth  impossible  in  anyone  who  desires  to  be  or  to  pass  for  a  scholar. 
Students  of  economic  history  now  realize  that  the  ethical  and  economic 
doctrines  and  institutions  of  the  Middle  Ages  constituted  a  distinct  and 


1921]  Economic  History  and  Geography  107 

fairly  coherent  system  which  endured  for  several  centuries,  and  which 
produced  a  large  and  important  body  of  results. 

The  author  quotes  with  approval  Ashley's  statement  that  the  study  of 
medieval  economics  is  necessary  as  an  introduction  to  later  theories,  but 
he  insists  that  its  chief  value  is  in  helping  toward  a  solution  of  present- 
day  problems.  This  is  because  of  the  emphasis  which  the  medieval 
writers  placed  upon  the  ethical  element  in  economic  transactions.  Ac- 
cordingly, the  author  attempts  to  set  forth  fully  the  ethical  teaching  of 
the  canonists  and  theologians  on  the  right  of  property,  the  exchange  of 
property  and  the  lending  of  money,  and  to  expound  the  fundamental 
principles  that  underlay  the  specific  teaching  on  all  these  subjects.  His 
exposition  contains  nothing  new.  According  to  some  reviewers,  the  book 
has  evidently  been  constructed  entirely  upon  the  basis  of  secondary 
sources.  Whether  this  criticism  is  entirely  accurate  or  fair,  the  work  is 
of  great  value,  inasmuch  as  it  presents  for  the  first  time  in  English  the 
entire  body  of  medieval  economic  teaching  between  the  covers  of  a  single 
volume,  and  in  a  fundamental  and  systematic  way. 

Undoubtedly  the  critical  portion  of  the  book  is  unsatisfactory.  For 
example,  when  the  author  tries  to  reconcile  the  medieval  condemnation  of 
interest  on  loans  with  the  medieval  approval  of  interest  on  capital  in- 
struments, his  insistence  upon  the  fact  that  the  money  loaned  was  re- 
garded as  sold  to  the  borrower,  is  hardly  a  conclusive  explanation.  In 
the  first  place,  the  conception  of  the  loan  as  a  sale  was  artificial  and  tech- 
nical rather  than  realistic  and  natural.  In  the  second  place,  if  a  loan  was 
a  sale  in  the  Middle  Ages  it  is  a  sale  today,  and  the  product  or  increase 
which  the  borrower  (or  buyer)  obtains  through  exchanging  the  money  for 
productive  capital  even  now  belongs  entirely  to  the  borrower;  therefore, 
the  lender  is  guilty  of  extortion  when  he  requires  a  part  at  least  of  this 
product  in  the  form  of  interest.  Nor  is  the  difficulty  squarely  met  by  re- 
course to  the  title  of  lucrum  cessans.  The  simpler  and  more  effective  ex- 
planation is  that  in  the  medieval  period  the  great  majority  of  loans  were 
used  for  the  purchase  either  of  consumption  goods  or  of  the  simple  tools 
needed  by  the  artisan.  In  either  case,  the  exaction  of  interest  was  looked 
upon  as  a  species  of  extortion,  as  an  unjust  advantage  taken  of  the  weak 
by  the  strong.  John  A.  Ryan. 

Park,  J.  H.  The  English  reform  bill  of  1867.  Columbia  University  studies 
in  history,  economics  and  public  law,  XCIII,  1.  (New  York:  Longmans. 
1920.     Pp.  285.     $3.) 

Prato,  G.  Fatti  e  dottrine  economiche  alia  vigilia  del  18Jf.8 :  L'Associazione 
agraria  subalpina  e  Camillo  Cavour.  (Turin:  Tip  S.  Giuseppe  degli 
Artigianelli.     1920.     Pp.  352.) 

This  book  makes  a  valuable  contribution  to  Italian  economic  history  of 
the  nineteenth  century.  The  agricultural  organization  whose  develop- 
ment during  the  significant  years  of  the  forties  it  details  had  among  its 
members  many  men  already  prominent,  or  soon  to  become  prominent,  in 
the  affairs  of  Italy;  Cavour  himself  here  advanced  and  tested  his  ideas 
on  many  subjects  and  had  the  skirmishes  that  preceded  his  important  bat- 
tles. Ostensibly  agricultural  in  the  pivot  of  its  interest,  the  society  really 
reflected  the  sum  of  the  larger  economic  interests  of  Piedmont  in  its  day. 
Agricultural  technique  and  instruction,  forestry,  credit,  various  sorts  of 


108  Reviews  and  New  Books  [March 

insurance,  roads  and  railroads,  trade  and  markets,  tariff  systems,  prob- 
lems of  poverty  and  of  labor,  social  peace  and  radical  theories,  these  were 
studied  by  men  familiar  with  the  reasoning  of  economists,  with  the  older 
economic  conditions,  and  with  contemporary  needs  and  demands.  Neither 
the  social  and  political  history  of  1848  in  Italy  nor  the  subsequent  atti- 
tude of  Cavour  upon  many  public  questions  can  be  understood  without 
acquaintance  with  this  significant  episode,  so  skillfully  and  so  broadly 
treated  in  Prato's  volume.  R.  F.  F. 

Quentin-Bauchart,  P.  La  crise  sociale  de  184-8;  les  origines  et  la  revolu- 
tion de  fevrier.     (Paris:    Hachette.     1920.     Pp.326.) 

Rowe,  L.  S.  Early  effects  of  the  war  upon  the  -finance,  commerce,  and  in- 
dustry of  Peru.  Carnegie  Endowment  of  International  Peace.  Division 
of  Economics.  Preliminary  economic  studies  of  the  war,  no.  17.  (New 
York:    Oxford  Univ.  Press.     1920.     Pp.  v,  60.) 

Sait,  E.  M.  Government  and  politics  of  France.  (Yonkers-on-Hudson, 
N.  Y.:   World  Book  Co.     1920.     Pp.  xv,  478.) 

Contains  descriptive  matter  on  budgets,  taxation,  money  bills,  socialists, 
and  radical  movements. 

Schuler,  H.  Brasilien.  Ein  Land  der  Zuhunft.  Fourth  edition,  enlarged. 
(Berlin:    Deutsche  Verlagsanstalt.     1919.     Pp.  232.     15  M.) 

Scott,  J.  B.  The  United  States  of  America:  a  study  in  international  or- 
ganization.    (New  York:    Oxford  Univ.  Press.     1920.     Pp.  xix,  605.) 

Starke v,  G.  W.  Maine,  its  history,  resources  and  government.  (Boston: 
Silver,  Burdett.     1920.     Pp.  x,  249.) 

Sweetser,  A.  The  league  of  nations  at  work.  (New  York:  Macmillan. 
1920.     Pp.  vii,  215.     $1.75.) 

Two   chapters   discuss    "The    International   Labor   Organization"    and 
"Economic  Cooperation." 

Tsouderos.  Le  relevement  economique  de  la  Grece.  (Paris:  Berger- 
Levrault.     1920.) 

Tucker,  I.  St.  J.  A  history  of  imperialism.  (New  York:  Rand  School  of 
Social  Science.     1920.     Pp.  404.     $2.25.) 

Turner,  F.  J.    The  frontier  in  American  history.    (New  York:   Holt.    1920. 

$2.50.) 

Wall,  W.  W.    Labour,  capital  and  finance.     (London:   Pitman.     1920.    8s. 

6d.) 
Wendel,  H.  C.  M.     Evohition  of  industrial  freedom  in  Prussia  184-5-1849. 

(New  York:    New  York  Univ.  Press.     1920.) 
William,  M.     The  social  interpretation  of  history.     A   refutation  of  the 

Marxian  economic  interpretation  of  history.     (Brooklyn,  N.  Y.:    Author, 

87  Norman  Ave.     1920.     Pp.  222.) 
Wood,  G.  A.     William  Shirley,  Governor  of  Massachusetts,  174.1-1756:  a 

history.     Vol.  I.     Columbia  University  studies  in  history,  economics  and 

public    law,    vol.    XCII.      (New    York:     Longmans.      1920.      Pp.    433. 

$4.50.) 

Chapter  8  is  entitled  "Reforms,  Chiefly  Economic." 


1921]  Agriculture,  Mining,  Forestry,  and  Fisheries  109 

Wunderlich,  F.  Hugo  Miinsterbergs  Bedeutung  fiir  die  Nationalokonomie. 
(Jena:   Fischer.     1920.     Pp.  vii,  104.     7.50  M.) 

Mexico  today.  As  seen  by  our  representative  on  a  hurried  trip  completed 
October  80,  1920.  (New  York:  American  Exchange  National  Bank. 
1920.     Pp.  25.) 

Report  on  the  commercial,  industrial,  and  financial  situation  of  Japan,  1911/. 
to  1919.     (London:    H.  M.  Stationery  Office.     1920.) 

Social  and  industrial  conditions  in  the  Germany  of  today.  The  Annals,  vol. 
XCII.     (Philadelphia:  Am.  Acad.  Pol.  &  Soc.  Sci.     1920.    Pp.  166.) 

Agriculture,  Mining,  Forestry,  and  Fisheries 

NEW  BOOKS 

Davis,  J.  W.  and  Hughes,  T.  H.  A  brief  commercial  geography.  (New 
York:    Hinds,  Hayden  &  Eldredge.     1919.     Pp.  274.     90c.) 

Dixon,  H.  M.  and  Hawthorne,  H.  W.  Farm  profits.  Figures  from  the 
same  farm  for  a  series  of  years.  Washington  county,  Ohio,  twenty-five 
farms  1912-1918.  Clinton  County,  Indiana,  one  hundred  farms,  1910 
and  1918-1918.  Dane  county,  Wisconsin,  sixty  farms,  1918- 
1917.     (Washington:    Supt.  Docs.     1920.     15c.) 

Findlay,  H.,  editor.  The  handbook  of  practical  farmers;  dealing  with  the 
more  important  aspects  of  farming  in  the  United  States;  special  chapters 
dealing  with  farm  problems  and  practices  by  practical  experts  in  differ- 
ent parts  of  the  United  States.  (New  York:  Appleton.  1920.  Pp. 
558.     $5.) 

Francke,  F.  W.  Abriss  der  neuesten  Wirtschaftsgeschichte  des  Kupfers. 
(Munich:    Duncker  &  Humblot.     1920.     Pp.  206.     32  M.) 

Gibson,  W.  Coal  in  Great  Britain;  the  composition,  structure,  and  resources 
of  the  coalfields,  visible  and  concealed  of  Great  Britain.  (New  Yorkf 
Longmans.     1920.     Pp.  311.     $7.50.) 

Ghambashidze,  D.  Mineral  resources  of  Georgia  and  Caucasia.  Manganese 
industry  of  Georgia.  (London:  Allen  &  Unwin;  New  York:  Macmillan. 
1919.     Pp.  182.) 

Gray,  L.  C.  and  Turner,  H.  A.  The  farm  lease  contract.  Farmers'  bull. 
1164.     (Washington:   U.  S.  Dept.  Agri.     1920.     Pp.  35.) 

Hay,  J.  H.  Investigation  of  the  production,  distribution  and  prices  of  milk. 
(St.  Paul,  Minn.:   State  Dept.  Agri.     1920.     Pp.  14.) 

Hay,  J.  H.  Investigation  of  the  fuel  situation  in  Minnesota.  (St.  Paul, 
Minn.:    State  Dept.  Agri.     1920.     Pp.  5.) 

Hibbard,  B.  H.  and  Black,  J.  D.  Farm  leasing  systems  in  Wisconsin. 
(Madison,  Wis.:   Agri.  Ex.  Sta.     1920.     Pp.  60.) 

King,  C.  L.     The  price  of  milk.     (Philadelphia:   J.  C.  Winston  Co.     1920. 

Pp.  336.) 
Koengeter,    E.       Das    Kohlenwirtschaftsgesets    und    der    Kohlenhandel. 

(Berlin:    Deutsche  Kohlenzeitung.     1920.     Pp.  7.) 


110  Reviews  and  New  Books  [March 

Macpherson,  F.  H.,  and  others.  Primer  relating  to  special  forest  indus- 
tries questionnaire  for  the  paper  and  pulp  industry  prepared  by  commit- 
tee representing  the  industry,  appointed  by  American  Paper  and  Pulp 
Association.  (New  York:  Am.  Paper  and  Pulp  Assoc.,  18  East  41st 
St.     1920.) 

Martin,  C.  C,  and  others.  Mineral  resources  of  Alaska;  report  on  progress 
of  investigation  in  1918.  U.  S.  Geological  Survey,  bull.  712.  (Wash- 
ington:   Supt.  Docs.     1920.     Pp.  204.) 

Mead,  E.  Helping  men  own  farms.  A  practical  discussion  of  government 
aid  in  land  settlement.    (New  York:   Macmillan.    1920.    Pp.  228.    $2.25.) 

Dr.  Mead  gives  as  his  main  purpose  "to  help  in  the  solution  of  land 
problems  of  the  future  by  describing  the  conditions  and  the  influences 
which  led  to  the  passage  of  the  Land  Settlement  Act  in  California  and 
by  explaining  the  methods  and  policies  which  it  has  brought  into  opera- 
tion." The  book  presents  the  social  and  economic  needs  for  the  develop- 
ment of  the  rural  people  of  California,  the  national  policy  of  the  distri- 
bution of  public  lands,  and  defects  of  private  colonization.  Land  settle- 
ments in  Australia  and  California  are  described  in  considerable  detail. 

The  author  is  well  prepared  to  speak  authoritatively  on  the  subject  of 
land  settlement  both  in  Australia  and  in  California,  having  served  as 
chairman  of  the  commission  in  charge  of  this  work  in  Australia  for  eight 
years  and  chairman  of  the  Land  Settlement  Board  of  California  since 
1915. 

The  colonization  work  in  California  was  undertaken  by  the  state  be- 
cause private  colonization  was  not  rendering  the  kind  of  service  the  peo- 
ple needed.  Land  unfit  for  cultivation  was  sold  as  farm  land,  settlers 
were  charged  exorbitant  prices  for  land,  time  for  making  payment  was 
too  short,  and  men  bought  land  without  money  enough  to  stock  it.  The 
success  of  a  colonization  plan  in  Australia  where  climate,  products,  and 
people  are  very  similar  to  those  of  California,  influenced  public  opinion. 

The  basis  of  the  land  settlement  policy  in  Australia  was  "the  purchase 
and  subdivision  of  large  estates  and  their  sale  in  small  improved  farms  to 
actual  settlers.  These  settlers  were  to  be  helped  by  generous  credit  and 
by  expert  advice  and  direction."  In  California  the  governor  selected  a 
competent  board,  the  legislature  provided  funds,  6300  acres  of  land 
were  purchased  for  the  settlement,  a  system  of  irrigation  provided  for  on 
a  large  area,  the  land  divided  into  farms  of  from  9  to  300  acres  each, 
and  settlers  who  had  at  least  $1500  and  farm  experience  began  filing  ap- 
plications for  farms.  Under  the  California  act,  farm  workers  obtained 
allotments  of  one  and  three  fourths  or  two  acres  each.  All  members  of 
the  settlement  cooperate  in  carrying  on  their  work. 

The  author  points  out  the  pitfalls  and  notes  mistakes  made  and  also 
tells  of  the  successes.  He  sees  the  mistakes  made  in  parceling  out  the 
public  domain  and  believes  that  the  colonization  plan  is  the  best  method 
to  encourage  settlers  to  own  their  own  homes  and  become  successful  farm- 
ers. He  discusses  essentially  the  one  type  of  colonization,  that  used  in 
Victoria  and  California.  He  has  not  discussed  other  types  such  as  that 
in  which  the  state  cooperates  with  private  societies  in  colonization,  found 
in  Holland  and  Sweden;  nor  has  he  mentioned  several  countries  which 
have  provided  farms  for  soldiers  during  and  since  the  late  war. 


1921]  Agriculture,  Mining,  Forestry,  and  Fisheries  111 

The  author's  methods  are  doubtless  sound  and  his  descriptions  illumi- 
nating, but  he  has  not  pointed  out  the  limitations  of  his  scheme,  and  is 
perhaps  over-optimistic  of  successes  which  may  be  met  with  under  dif- 
ferent conditions.  A.  J.  Dadisman. 

Mead,  E.  How  California  is  helping  people  own  farms  and  rural  homes. 
(Berkeley:    Univ.  California  Agri.  Ex.  Sta.     1920.     Pp.  28.) 

Moorehouse,  L.  A.  and  Cooper,  M.  R.  The  cost  of  producing  cotton. 
Dept.  bull.  896.     (Washington:    U.  S.  Dept.  Agri.     1920.     15c.) 

Newell,  F.  H.  Water  resources,  present  and  future  uses.  (New  Haven: 
Yale  Univ.  Press.     1920.     Pp.  310.) 

A  revision  of  the  addresses  delivered  in  the  Chester  S.  Lyman  lecture 
series,  1913,  before  the  senior  class  of  the  Sheffield  Scientific  School. 

Pothmann,  W.  Zur  Frage  der  Eisen-  und  Manganerzversorgung  der 
deutschen  Industrie.  Probleme  der  Weltwirtschaft.  Schriften  des  In- 
stituts  fur  Seeverkehr  und  Weltwirtschaft  an  der  Universitat  Kiel,  31. 
(Jena:   Fischer.     1920.     Pp.  xii,  312.) 

Roush,  G.  A.  The  mineral  industry;  its  statistics,  technology,  and  trade 
during  1919.     (New  York:    McGraw-Hill.     1920.     Pp.  xix,  902.) 

Schmidt,  E.  W.  Die  agrarische  Exportwirtschaft  Argentiniens.  (Jena: 
Fischer.     1920.     Pp.  xv,  296.) 

Spurr,  J.  E.,  editor.  Political  and  commercial  geology  and  the  world's 
mineral  resources.     (New  York:   McGraw-Hill.     1920.    Pp.  ix,  562.    $5.) 

Thomas,  G.  The  development  of  institutions  under  irrigation,  with  special 
reference  to  early  Utah  conditions.     (New  York:    Macmillan.     1920.) 

White,  B.  Gold,  its  place  in  the  economy  of  mankind.  (New  York:  Pit- 
man.    1920.     Pp.  130.     $1.) 

The  agriculture  of  Ohio.  Bulletin  326  (1918).  (Wooster,  O.:  Ohio  Ex. 
Sta.     1920.     Pp.  438.) 

Contains  a  history  of  agriculture  in  Ohio,  by  W.  A.  Lloyd;  a  detailed 
statistical  study  of  Ohio  agriculture  from  1850  to  1910,  by  J.  I.  Fal- 
coner; and  statistics  of  crop  production  by  counties  since  1850,  by  C.  E. 
Thorne. 

Analysis  of  the  bill  creating  a  federal  live  stock  commission  and  statement 
on  behalf  of  the  packing  industry  by  the  Institute  of  American  Meat 
Packers.     S.  3944.     (Washington:    Supt.  Docs.     1920.     Pp.  38.) 

Denmark — agriculture,  commerce,  finance.  (New  York:  Brown  Bros.  & 
Co.     1920.     Pp.  32.) 

Farm  labor  in  Wisconsin.  Bull.  316.  (Washington:  Office  of  Farm  Man- 
agement.    1920.     Pp.  48.) 

Forestry  and  farm  income.  Farmers  bull.  1117.  (Washington:  U.  S.  Dept. 
Agri.     1920.     Pp.  35.) 

A  mineral  almanac.  Census  of  mineral  production  in  the  United  States  in 
1919.     (Washington:    U.  S.  Geol.  Survey.     1920.     Pp.  128.) 

The  petroleum  outlook.  (Cambridge,  Mass.:  Arthur  D.  Little,  30  Charles 
River  Road.     1920.     Pp.  18.) 


112  Reviews  and  New  Books  [March 

Stocks  of  leaf  tobacco  and  American  production,  import,  export,  and  con-> 
sumption  of  tobacco  and  tobacco  products,  1919.  Bull.  143.  (Washing- 
ton:   Bureau  of  the  Census.     1920.     Pp.  54.) 

Timber  depletion  and  the  answer.  A  summary  of  the  report  on  timber  de- 
pletion and  related  subjects  prepared  in  response  to  Senate  Resolutions- 
811.    Dept.  Circ.  112.     (Washington:   U.  S.  Dept.  Agri.     1920.    Pp.16.) 

Summary  of  operations.  California  oil  fields.  (San  Francisco:  State  Min- 
ing Bureau.     1920.     Pp.  74.) 

Manufacturing  Industry 

NEW  BOOKS 

Butler,  J.  G.,  Jr.  Fifty  years  of  iron  and  steel.  (Youngstown,  O.: 
Author.     1920.     Pp.  158.) 

Ganswindt,  A.  Die  Wolle  und  ihre  Verarbeitung.  (Leipzig:  Hartleben. 
1919.     Pp.  vi,  796.     12  M.) 

Hay,  J.  H.  Investigation  of  the  cost  of  clothing.  Bull.  no.  6.  (St.  Paul, 
Minn.:    Dept.  Agri.     1920.     Pp.  12.) 

Hay,  J.  H.  Investigation  of  the  trade  practices  and  profits  involved  in  the 
manufacture  and  sale  of  boots  and  shoes.  Bull.  no.  7.  (St.  Paul,  Minn.: 
Dept.  Agri.     1920.    Pp.  15.) 

Keir,  M.  American  manufacturing  industries.  Fundamental  economic  fac- 
tors.    (New  York:    Ronald  Press.     1920.     $3.) 

Poole,  B.  W.  The  clothing  trades  industry.  (New  York:  Pitman.  1920. 
Pp.  100.     $1.) 

Seybert,  C.  W.  Der  Arbeiternachwuchs  in  der  deutschen  Maschinenindtis- 
trie.     (Berlin:    Springer.     1920.     Pp.  100.) 

Warburg,  J.  P.  Wool  and  wool  manufacture;  a  brief  analysis  for  the  lay- 
man.    (Boston:   First  Nat.  Bank.     1920.     Pp.  50.) 

Willms,  M.  Zur  Frage  der  Rohstoffversorgung  der  deutschen  Jute-Indus- 
trie. Probleme  der  Weltwirtschaft  Schriften  des  Instituts  fur  Weltwirt- 
schaft  und  Seeverkehr  an  der  Universitat  Kiel.  (Jena:  Fischer.  1920. 
Pp.  77.     12  M.) 

Transportation  and  Communication 

NEW    BOOKS 

Atterbury,  W.  W.  The  railroad  labor  situation.  An  address  delivered  be- 
fore the  National  Industrial  Conference  Board,  New  York  City,  Novem- 
ber, 18,  1920.     (New  York:   Office  of  Pa.  R.  R.  System.     1920.    Pp.  32.) 

Dressel,  C.  Die  Entwichlung  des  deutschen  Schiffbaues  unter  besonderer 
Beriicksichtigung  des  Frachtdampferbaues.  (Weida:  Thomas  &  Hubert. 
1919.     Pp.  i07.) 

Fayle,  C.  E.  Seaborne  trade.  Vol.  1.  The  cruiser  period.  (New  York: 
Longmans.     1921.     Pp.  xviii,  442.     $7.50.) 

Giese,  K.     Das  Seefrachttarifwesen.     (Berlin:  Springer.     1919.    Pp.  395.) 


1921]  Trade,  Commerce,  and  Commercial  Crises  113 

Ivey,  P.  W.  The  Pere  Marquette  Railroad  Company.  An  historical  study 
of  the  growth  and  development  of  one  of  Michigan's  most  important  rail' 
way  systems.     (Lansing,  Mich.:   Historical  Commission.    1919.   Pp.  259.) 

Watkins,  E.  Shippers  and  carriers  of  interstate  and  intrastate  freight. 
Third  edition.  (Atlanta:  The  Harrison  Co.  1920.  Pp.  1-852;  853- 
1778.    $18.) 

Address  of  Hon.  John  J.  Esch  on  the  occasion  of  the  dinner  in  New  York, 
December  IS,  1920,  given  in  honor  of  S.  Davies  Warfield.  The  address 
of  S.  Davies  Warfield.  (Baltimore:  Nat.  Assoc,  of  Owners  of  Railroad 
Securities.     1920.     Pp.  17,  34.) 

The  freight  traffic  red  book.  (New  York:  The  Traffic  Pub.  Co.  1920. 
Pp.  428.) 

A  list  of  references  on  the  conflict  of  authority  between  the  state  commis- 
sions and  the  Interstate  Commerce  Commission  in  the  control  of  rates 
under  the  Transportation  act  of  1920.  (Washington:  Bureau  of  Rail- 
way Economics.     1920.     Pp.  19,  typewritten.) 

A  list  of  references  on  the  Cummins  railroad  bill  and  the  Transportation 
act  of  1920.  (Washington:  Bureau  of  Railway  Economics.  1920.  Pp. 
55,  typewritten.) 

Railway  earnings  in  1919.  Consecutive  no.  150.  Miscellaneous  series  no. 
34.     (Washington:    Bureau  of  Railway  Economics.     1920.     Pp.  18.) 

The  relation  of  costs  to  motor  truck  transportation.  (Akron,  O. :  The  Fire- 
stone Ship  by  Truck  Bureau.     1920.     Pp.  15.) 

The  telephone  industry.  A  report  submitted  to  the  governor,  prepared  by 
the  Bureau  of  Women  in  Industry.  ( Albany:  Dept.  Labor.  1920.  Pp. 
95.) 

Trade,  Commerce,  and  Commercial  Crises 

NEW    BOOKS 

Barker,  A.  The  British  corn  trade;  from  the  earliest  times  to  the  present 
day.     (New  York:    Pitman.     1920.     Pp.  132.     $1.) 

Collins,  J.  H.  Straight  business  in  South  America.  (New  York:  Apple- 
ton.     1920.     Pp.  305.     $2.50.) 

Copeland,  M.  T.  Marketing  problems.  (Chicago:  A.  W.  Shaw  Co.  1920. 
Pp.  363.) 

Duncan,  C.  S.  Marketing.  Its  problems  and  methods.  (New  York:  Ap- 
pleton.     1920.     Pp.  xv,  500.) 

Ford,  T.  F.  and  L.  C.  The  foreign  trade  of  the  United  States.  (New 
York:    Scribners.     1920.     Pp.  xiv,  325.     $3.) 

This  is  intended  for  the  general  public  and  admittedly  not  for  the  ex- 
porter. We  should  differ  with  the  recommendation  given  it,  however,  for 
use  as  "a  text  in  business  schools  and  in  universities  which  give  practical 
courses  in  political  economy."  The  reviewer  would  consider  of  doubtful 
value  any  university  course  in  which  this  was  used  as  the  text,  although 
there  would  be  no  objection  to  assigning  it  as  a  brief  introduction.     Except 


114  Reviews  and  New  Books  [March 

for  the  purpose  of  giving  a  very  general  review  of  the  field  to  a  beginner, 
it  has  little  place  in  a  course  which  aims  to  go  deep  enough  into  any  phase 
of  foreign  trade  to  make  it  practical,  or  even  to  make  it  worth  while. 

Over  one  fifth  of  the  book  is  devoted  to  an  examination  of  statistics  of 
our  foreign  trade,  an  equal  portion  to  the  organization  and  technique  of 
import  and  export.  There  are  short  chapters  upon  transportation,  insur- 
ance, phases  of  financing,  balance  of  trade,  German  foreign  trade  organi- 
zation, and  the  foreign  trade  of  other  nations.  With  other  works  in  the 
same  class,  this  must  be  described  as  superficial,  though  it  furnishes  an 
interesting  survey  for  the  general  reader,  while  the  bibliography  at  the 
close  of  each  chapter  gives  direction  to  those  who  wish  to  go  further. 

H.  R.  T. 

Hay,  J.  H.  Investigation  of  the  costs  and  profits  involved  in  the  handling 
of  sugar.     Bull.  no.  3.     (St.  Paul:    State  Dept.  Agri.     1920.     Pp.  8.) 

Hay,  J.  H.  Investigation  of  production,  distribution  and  prices  of  bread. 
Bull.  no.  5.     (St.  Paul:   State  Dept.  Agri.     1920.     Pp.  7.) 

Meissner,  W.  Argentiniens  Handelsbeziehungen  zu  den  Vereinigten  Staaten 
von  Ameriha.     (Cothen:   Otto  Schulze.     1919.     Pp.  xiii,  363.     14  M.) 

Meyer,  E.,  Jr.  Financing  foreign  trade.  Address  by  invitation  of  a  com- 
mittee of  bankers  and  delegates  of  the  American  Bankers  Association  Con- 
vention, Washington,  D.  C.,  October  20,  1920.  (New  York:  Author,  820 
Fifth  Ave.     1920.     Pp.  17.) 

Netta,  G.  Die  Handelsbeziehungen  zwischen  Leipzig  und  Ost-  und  Sii- 
dosteuropa  bis  zum  V  erf  all  der  Warenmessen.  (Zurich:  Leeman.  1920. 
Pp.  149.) 

Notz,  W.  F.  and  Harvey,  R.  S.  American  foreign  trade.  (Indianapolis: 
Bobbs-Merrill.     1920.     Pp.  425.     $5.) 

Pepper,  C.  M.  American  foreign  trade.  The  United  States  as  a  world 
power  in  the  new  era  of  international  commerce.  (New  York:  Century 
Co.     1919.     Pp.  ix,  350.) 

Mr.  Pepper  evidently  does  not  aim  to  give  a  logical  and  comprehensive 
account  of  his  subject.  He  prefers  to  bring  into  strong  relief  various 
phases  of  our  foreign  trade  and  foreign  relations  in  a  way  that  will  gain 
the  attention  of  the  public.  The  chapters  upon  the  Farm  in  Foreign 
Trade,  Machinery  and  National  Efficiency,  and  Raw  Materials  are  fol- 
lowed by  five  chapters  upon  commercial  policy,  emphasizing  British  and 
American  policies.  The  second  half  of  the  book  takes  up  various  market 
areas  such  as  continental  Europe,  Russia,  the  Near  East,  and  South 
America,  discussing  the  market  possibilities  with  reference  to  the  re- 
sources, trade  development,  needs,  and  commercial  relations.  Although 
the  student  of  foreign  trade  and  commercial  policy  will  find  little  that  is 
new  to  him  in  this  book,  it  furnishes  much  that  would  be  useful  to  the 
citizen  in  passing  judgment  upon  many  problems  of  foreign  trade  policy 
which  are  now  awaiting  decision.  Mr.  Pepper's  long  experience  in  gov- 
ernment and  private  positions  has  well  qualified  him  to  give  a  broad- 
gauge  view,  so  desirable  in  a  work  of  this  sort.  H.  R.  T. 

Peterson,  F.  H.     Investigation  of  the  trade  practices  and  profits  involved 


1921]        Accounting,  Business  Methods,  and  the  Exchanges  115 

in  the  manufacture  and  sale  of  building  material.     Bull.  no.  9.     (St.  Paul: 
State  Dept.  Agri.     1920.     Pp.  31.) 

Slater,  J.  A.     Commodities  of  commerce.     (New  York:    Pitman.     1920. 
Pp.  160.    $2.50.) 

Essentials  of  trading  with  Latin  America.     (New  York:    Guaranty  Trust 
Co.     1920.     Pp.  28.) 

Trading  with   the  Near  East.     Present   conditions   and  future   prospects. 
(New  York:    Guaranty  Trust  Co.     1920.     Pp.  19.) 

Accounting,    Business    Methods,    Investments,    and    the 

Exchanges 
Personnel  Administration.     Its  Principles  and  Practice.     By  Ordway 
Tead  and  Henry  C.  Metcalf.     (New  York:   McGraw-Hill  Book 
Company.    1920.    Pp.  xii,  538.) 

The  imagination  and  energy  expended  in  the  field  of  personnel  admin- 
istration the  past  five  years  have  resulted  in  a  profusion  of  methods 
and  principles.  To  present  these  in  a  manner  both  comprehensive  and 
critical  was  a  task,  the  magnitude  of  which  only  the  experienced  and 
widely  versed  personnel  administrator  can  appreciate.  In  this  task  the 
authors  have  succeeded  so  well  that  it  will  be  unnecessary  to  repeat  it 
in  the  near  future.  Their  book  is  a  landmark  in  the  literature  of  per- 
sonnel administration. 

Historically,  the  volume  represents  a  crystallization  of  the  courses  in 
personnel  administration  which  the  authors  have  been  giving  for  the 
past  few  years.  Its  contents  are,  therefore,  more  systematically  pre- 
sented than  has  usually  been  the  case  in  this  field.  It  is  rich  in  specific 
examples  drawn  from  many  sources,  but  unlike  most  literature  of  in- 
dustrial relations,  the  examples  are  subordinated  to  the  principles 
which  the  authors  are  discussing,  and  are  not  described  simply  for  their 
own  sake.  The  comprehensive  references  given  at  the  end  of  each  sec- 
tion and  the  detailed  index  are  a  further  indication  of  the  painstaking 
care  with  which  the  entire  volume  has  been  prepared. 

The  general  arrangement  of  the  subject-matter  is  based  on  a  con- 
ception of  personnel  work  which,  with  slight  variations,  is  now  regarded 
as  standard.  The  activities  of  the  personnel  department  are  arranged 
under  six  headings :  employment  methods ;  health  and  safety ;  educa- 
tion; research;  employees'  service;  and  joint  control.  Many  of  the 
topics  discussed  are  of  a  controversial  nature;  for  example,  the  ques- 
tions of  fatigue,  length  of  the  working  day,  and  rest  periods.  In  such 
cases  the  authors  usually  arrive  at  conclusions  which  not  only  are 
sane  but  which  are  of  considerable  practical  value  to  the  personnel 


116  Reviews  and  New  Books  [March 

manager  who  is  looking  for  a  way  out  of  the  contradictions  which  have 
beset  him.  The  treatment  of  the  question  of  fatigue  is  typical.  In- 
stead of  becoming  involved  in  theoretical  experiments  and  statistical 
reports,  the  authors  suggest  the  practical  steps  by  which  necessary 
fatigue  may  be  reduced.  The  discussion  of  the  rating  scale  is  an  ob- 
vious exception  to  the  usual  procedure,  for  in  this  case  the  authors  ac- 
cept at  its  face  value  an  expedient  which  at  best  is  only  in  its  initial 
experimental  stage.  A  chapter  on  Arousing  Interest  in  Work  is  timely 
because  it  dissipates  a  prevalent  notion  that  interest  in  work  can  be 
aroused  by  any  one  device,  and  shows  that  interest  is  a  complex  factor 
which  can  be  enlisted  only  through  a  comprehensive  program  of  per- 
sonnel activities. 

Probably  the  strongest,  and  yet  in  some  ways  the  weakest,  section  of 
the  book,  is  that  dealing  with  job  analysis  and  job  specification.  It 
reveals  the  lack  of  a  practical  grasp  of  the  details  involved  in  job  an- 
alysis and  task  setting.  It  is  too  uncritical  in  its  acceptance  of  the 
dogma  which  scientific  management  has  developed  on  this  subject.  On 
the  other  hand,  it  displays  a  penetrating  grasp  of  the  problem  in  its 
broader  aspect  by  its  insistence  upon  the  participation  of  employees 
in  the  making  of  the  job  analysis. 

The  space  given  to  the  discussion  of  "joint  control,"  that  is,  shop 
committees,  factory  councils,  employees'  committees,  and  the  various 
plans  which  have  as  their  underlying  principle  the  participation  of  the 
workers  in  management,  shows  the  large  significance  which  the  authors 
attach  to  this  phase  of  personnel  administration.  The  subject  is  treated 
not  only  from  the  standpoint  of  joint  control  in  individual  industries 
but  from  the  point  of  view  of  national  joint  control  as  well.  It  may 
be  contended  that  in  this  respect  the  book  goes  beyond  the  scope  of 
personnel  administration  as  it  is  usually  understood.  On  the  other 
hand,  it  is  such  breadth  of  view  and  courage  of  conviction  which  help 
to  make  the  book  a  landmark  not  only  for  the  past  but  for  the  future. 

The  fundamental  belief  which  serves  as  the  unifying  thesis  of  the 
book  is  expressed  in  the  quotation :  "If  personality  is  central  in  life, 
then  it  is — or  should  be — central  in  industry.  .  .  .  The  department  of 
personnel  is,  indeed,  as  some  one  has  well  characterized  it,  the  depart- 
ment of  personality"  (p.  21).  Departments  of  personnel  and  indus- 
trial relations  are  regarded  today  rather  as  practical  adjuncts  to  the 
modern  business  organization,  useful  only  in  so  far  as  they  contribute 
to  the  success  of  the  particular  concern.  However,  the  more  compre- 
hensive viewpoint  from  which  the  authors  have  presented  the  subject 
increases  the  value  of  their  book  for  those  who  wish  to  understand  this 
field  in  its  widest  possible  significance. 

Henry  C.  Link. 


1921]        Accounting,  Business  Methods,  and  the  Exchanges  117 

Principles  of  Accounting.     By  A.  C.  Hodge  and  J.   O.  McKinsey. 
(Chicago:    University  of  Chicago  Press.     1920.     Pp.  xiv,  389. 
$3.00.) 
Accownts  in  Theory  and  Practice.    By  Earl  A.  Saliers.     (New  York: 
McGraw-Hill  Company.     1920.     Pp.  ix,  301.) 

The  emphasis  of  Principles  of  Accounting  is  placed  upon  the  use  of 
accounting  as  an  aid  to  the  business  executive.  Immediately  follow- 
ing the  first  two  chapters,  which  briefly  discuss  the  meaning  and  func- 
tion of  accounting  and  the  relationship  of  accounting  to  proprietor- 
ship, the  first  important  aspects  of  the  subject  presented  are  the  balance 
sheet  and  the  statement  of  profit  and  loss.  The  subsequent  arrange- 
ment of  topics  is  somewhat  novel  but  very  effective.  No  mention  is 
made  of  the  books  of  original  entry  until  after  the  consideration  of 
such  matters  as  the  account  as  a  means  of  classifying  information,  the 
construction  and  interpretation  of  accounts,  the  trial  balance,  the  ad- 
justing entries,  the  closing  entries.  The  need  for  a  record  other  than 
the  ledger  is  now  explained  and  the  various  typical  forms  of  the  books 
of  original  entry  are  described.  In  the  remaining  half  of  the  book  the 
topics  presented  include  in  the  order  given:  business  vouchers  and 
forms ;  business  practice  and  procedure — purchases  and  sales,  cash  and 
notes ;  books  of  original  entry — sales  and  purchases  records,  the  cash 
journal;  controlling  accounts;  construction  and  interpretation  of  ac- 
counts (five  chapters);  accruals  and  deferred  items;  adjusting  and 
closing  entries,  classification  of  accounts,  financial  reports;  graphical 
method  of  presenting  accounting  facts. 

The  author  of  Accounts  in  Theory  and  Practice  states  that  his  pur- 
pose is  to  afford  a  first  course  in  the  principles  of  accounts.  Although 
it  is  intended  primarily  as  a  first  semester  text  it  will  probably  prove 
useful  in  wider  fields.  He  is  planning  to  supplement  this  book  with  a 
second  volume  which  will  treat  of  the  more  complicated  aspects  of  gen- 
eral accounting  procedure  such  as  valuation,  ledger  analysis,  consolida- 
tions, branch  house  accounts,  and  realization  and  liquidation.  The 
book  is  divided  into  six  parts  containing  a  total  of  41  chapters  aver- 
aging about  seven  pages  a  chapter.  Part  I  devotes  about  85  pages 
to  the  fundamental  principles;  part  II  briefly  considers  partnership 
accounting;  part  III  has  to  do  with  expansion  of  accounting  records; 
part  IV  with  corporation  accounting;  part  V,  financial  statements; 
part  VI,  special  applications  of  principles.  In  part  I  the  author  ex- 
plains and  illustrates  very  effectively  the  functional  classification  of 
transactions  by  showing  a  specimen  ledger  with  two  divisions,  the  real 
accounts  and  the  nominal  accounts. 

The  authors  of  both  of  these  books  should  be  commended  for  having 
taken  the  pains  to  obtain  concrete  material  and  to  present  it  in  such 


118  Reviews  and  New  Books  [March 

a  way  that  the  student  not  only  can  grasp  the  principles  but  can  see 
their  bearing  upon  particular  problems.  Although  accounting  forms 
are  far  less  important  than  accounting  analysis  it  must  nevertheless  be 
borne  in  mind  that  if  at  the  end  of  a  course  a  student  is  unable  to  apply 
his  knowledge  so  as  to  design  a  simple  set  of  books  for  a  small  activity 
he  is  justified  in  questioning  the  immediate  value  of  the  course.  From 
the  point  of  view  of  this  particular  need  both  of  these  books  should 
prove  especially  helpful. 

Instead  of  following  the  old  plan  of  accompanying  the  text  with  one 
or  two  long  laboratory  sets  the  authors  in  both  cases  have  chosen  the 
more  effective  policy  for  their  purpose  of  including  an  abundant  num- 
ber of  short  and  well  chosen  exercises.  In  brief,  these  books  have  a 
common  feature  in  that  they  are  designed  primarily  to  meet  the  needs 
of  persons  who  wish  to  obtain  accounting  information  as  a  special  tool 
in  their  particular  professions,  but  who  do  not  expect  to  make  the  sub- 
ject their  life  work.  It  is  rather  difficult  to  summarize  the  relative 
merits  of  one  of  these  books  as  compared  with  the  other,  but  those 
teachers  who  have  at  their  disposal  more  than  one  semester  in  which 
to  present  general  accounting  may  prefer  Accounts  in  Theory  and 
Practice.  On  the  other  hand,  those  teachers  who  have  the  problem  of 
presenting  the  subject  in  a  single  term  will  probably  find  Principles 
of  Accounting  more  nearly  suited  to  their  needs. 

Martin  J.  Shugrue. 

Massachusetts  Institute  of  Technology. 

NEW    BOOKS 

Breed,  W.  D.  Cash  and  securities;  the  system  of  finance.  (New  York: 
Dixie  Business  Book  Shop.     1920.     Pp.  74.     $1.) 

Brisco,  N.  A.     Retail  salesmanship.     (New  York:    Ronald.     1920.     $2.) 

Carpenter,  C.  U.  Increasing  production,  decreasing  costs.  (New  York: 
Engg.  Mag.  Co.     1920.     Pp.  xiii,  432.) 

Chamberlain,  J.  A.  Commercial  law;  a  practical  manual  covering  the 
fundamental  principles  of  law  as  applied  to  business  in  general,  with  spe- 
cial reference  to  common  law  affecting  the  more  usual  commercial  trans- 
actions.    (Chicago:   Am.  Technical  Soc.     1920.     Pp.  316.) 

Cheney,  E.  J.  Memorandum  concerning  principles  and  methods  of  xvater 
power  valuations  approved  and  practiced  by  various  courts  and  commis- 
sions.    (New  York:    Author,  61  Broadway.     1920.     Pp.  27.) 

Costello,  L.  W.  J.  and  O'Sullivan,  R.  The  profiteering  act,  1919.  Re- 
issue with  addenda,  1920.     (London:    Stevens  &  Sons.     1920.     Pp.  75.) 

Douglas,  A.  W.  Economic  studies  of  states  for  merchandising.  (New 
York:    Ronald.     1920.     $2.) 

Frederick,  J.  G.     The  great  game  of  business:  its  rules,  its  fascination,  its 


1921]        Accounting,  Business  Methods,  and  the  Exchanges  119 

services   and   rewards.      (New    York:     Appleton.      1920.      Pp.    ix,    175. 
$1.50.) 

Herford,  R.  O.  and  Jenkins,  H.  G.     Outlines  of  industrial  administration. 
(London:    Pitman.     1920.     Pp.  ix,  122.     6s.) 

Jordan,  J.  P.  and  Harris,  G.  L.     Cost  accounting,  principles  and  practice. 
(New  York:    Ronald.     1920.     Pp.  xx,  529.     $3.) 

It  has  been  the  object  of  the  authors  to  outline  in  coherent  and  closely 
knit  order  the  essential  steps  in  cost  procedure  for  industrial  enterprises  in 
general  and  not  to  compile  an  encyclopaedic  handbook  of  the  subject. 
The  material  has  been  so  arranged  as  to  present  first  in  chapters  i  to 
xxvi  the  entire  technique  of  cost  accounting  in  unbroken  sequence. 
Among  the  points  discussed  in  these  chapters  are:  cost  components,  es- 
tablishing the  basis  of  cost,  methods  of  controlling  cost  records,  depart- 
mentalization, orders  and  symbols,  purchase  and  receiving  records,  trans- 
portation changes,  stock  record  accounting,  methods  of  pricing  requisi- 
tions, how  to  take  an  inventory,  accounting  for  labor  calculation  and  ap- 
plication of  departmental  burden  rates,  financial  statements,  prevailing 
types  of  cost  systems,  by-product  costs,  defective  work  losses.  Matters 
involving  what  may  be  termed  the  philosophy  of  the  subject  which  de- 
manded for  more  complete  understanding  a  perspective  of  the  records 
as  a  whole  are  taken  up  later  in  chapters  xxvii  to  xxxvii.  The  topics 
which  are  treated  in  this  second  part  include:  the  installation  of  a  cost 
system,  tool  records,  advantages  of  stock  records,  under-  and  over-ab- 
sorbed burden,  regulation  of  idle  equipment  delays,  advantages  and  dis- 
advantage of  different  methods  of  applying  burden,  interest  on  invested 
capital  as  a  manufacturing  cost,  mechanical  devices  as  aids  to  cost  ac- 
counting, graphic  production  control,  recent  developments  of  cost  ac- 
counting. As  a  special  aid  in  visualizing  the  technique  of  cost  pro- 
cedure a  chart  illustrating  the  successive  steps  has  been  prepared.  About 
45  selected  and  well  designed  forms  add  to  the  value  of  the  contents. 
Finally  there  is  an  appendix  which  contains  36  C.  P.  A.  cost  accounting 
problems  most  of  which  are  reasonably  explicit  and  worth  while  as  class 
room  data.  Although  in  recent  years  the  amount  of  good  literature  on 
cost  accounting  principles  and  methods  for  industries  in  general  has  been 
increasing,  the  reviewer  believes  this  book  has  contributed  substantially  in 
showing  how  cost  accounting  may  serve  more  fully  as  a  useful  managerial 
instrument  as  well  as  a  means  for  fixing  selling  prices.  M.  J.  S. 

Kelsey,  C,  editor.     Industrial  stability.     Annals,  vol.  XC.     (Philadelphia: 
Am.  Acad.  Pol.  &  Soc.  Sci.     1920.     Pp.  177.    $1.) 

Kirk,  J.  G.  and  Street,  J.  L.     Bookkeeping  for  modern  business.     (Phila- 
delphia:  Winston  Co.     1920.     Pp.  236.) 

Leiserson,  W.  R.     The  worker's  reaction  to  scientific  management.      (New 
York:    Engineering  Societies  Bldg.     1920.     Pp.  8.) 

Reprinted  from  Volume  V,  number  4  of  Bulletin  of  the  Taylor  Society; 
an  address  delivered  at  a  meeting  of  the  Taylor  Society  in  Rochester, 
N.  Y.,  May  7,  1920. 

Lincoln,  W.  G.    Business  men's  laws  of  California.     (Los  Angeles:    Kell- 
away-Ide  Co.     1920.     Pp.  392.) 


120  Reviews  and  New  Books  [March 

Martin,  H.  S.  The  New  York  Stock  Exchange.  A  discussion  of  the  busi- 
ness done;  its  relation  to  other  business,  to  investment,  speculation,  and 
gambling;  the  safeguards  provided  by  the  Exchange,  and  the  means  taken 
to  improve  the  character  of  speculation.  (New  York:  Author.  1919. 
Pp.  iv,  277.) 

Mead,  E.  S.  Corporation  finance.  Fourth  edition,  revised.  (New  York: 
Appleton.     1920.     Pp.  xiv,  477.     $3.) 

This  fourth  edition  possesses  all  the  merits  of  the  earlier  editions  of 
the  book  and  has  been  extended  in  some  essential  parts  to  make  it  cover 
more  completely  the  problems  of  business  finance.  Attention  is  given  to 
bank  borrowing  by  corporations,  the  question  being  one  of  commercial 
finance  as  distinguished  from  corporation  finance  proper  or  investment 
finance.  In  devoting  a  chapter  to  this  subject  the  author  has  recognized 
the  fact  that  the  student  of  corporations  is  as  much  concerned  with  the 
problems  of  current  financing  as  he  is  with  the  methods  and  practices 
of  permanent  financing.  In  extending  his  discussion  of  preferred 
stock  issues  and  their  protection,  Professor  Mead  has  taken  notice  of 
the  present  tendency  to  give  to  preferred  stocks  a  more  important  place 
in  the  field  of  investment.  He  also  devotes  a  little  space  to  a  discussion 
of  stocks  issued  without  par  value.  A  short  treatment  of  "blue  sky"  laws 
is  introduced  in  this  edition,  offering  at  least  a  suggestion  of  the  efforts 
that  have  been  made  to  protect  the  public  against  fraudulent  security  is- 
sues. The  chief  criticism  of  this  chapter  lies  in  what  is,  in  fact,  the  chief 
criticism  of  the  entire  book,  as  a  text  for  college  classes — its  brevitv  and 
incompleteness. 

Floyd  E.  Armstrong. 

Mechem,  F.  Pi.  Elements  of  the  law  of  partnership.  Second  edition.  (Chi- 
cago:  Callaghan  &  Co.     1920.     Pp.  xxvi,  501.) 

Morlev,  L.  H.  and  Kight,  A.  C.  under  the  direction  of  J.  C.  Dana.  2^00 
business  books  and  guide  to  business  literature.  (New  York:  H.  W. 
Wilson  Co.     1920.     Pp.  x,  456.     $5.) 

A  revised  edition  of  1600  Business  Books.  This  is  more  than  a  list 
for  it  analyzes  the  contents  of  books  and  periodicals  and  refers  titles  of 
chapters  and  subjects  to  their  appropriate  topical  headings,  numbering 
2,000.  The  volume  may  be  commended  as  one  of  the  most  useful  hand- 
books in  its  special  field. 

Naylor,  E.  H.  Trade  associations:  their  organization  and  management. 
(New  York:   Ronald.     1920.    $5.) 

Perkins,  E.  A.  Philippine  business  law.  (New  York:  Appleton.  1920. 
Pp.  xx,  492.) 

Roe,  E.  T.  Lessons  in  business;  a  complete  compendium  of  how  to  do  busi- 
ness by  the  latest  and  safest  methods.  (Toronto:  John  A.  Hertel  Co. 
1921.) 

Rcsenkampf,  A.  H.  Bookkeeping  theory  and  practice.  (New  York:  New 
York  University  Press.     1920.      Pp.  xi,  230.) 

The  material  is  that  used  in  a  course  in  bookkeeping  in  the  School  of 
Commerce,  Accounts,  and  Finance  at  New  York  University.  It  is  a  text 
to  serve  as  preparation  for  those  who  will  make  further  study  of  account- 


1921]        Accounting,  Business  Methods,  and  the  Exchanges  121 

ing  and  is  a  very  complete  treatment  of  elementary  bookkeeping.  It  is 
divided  into  three  parts:  lecture  notes;  statements  of  transactions,  con- 
sisting of  laboratory  exercises  and  instructions;  and  business  forms  and 
papers.  The  fundamentals  are  carefully  explained  and  clearly  defined. 
Most  of  the  questions  which  naturally  confront  the  beginner  are  made 
clear  at  the  outset.  Although  possibly  lacking  in  broadness,  the  book  is 
thorough  as  to  detail.  It  makes  plain  the  relation  between  the  bookkeepr 
ing  entries  and  the  actual  transactions  and  routine  which  give  rise  to  the 
entries.  However,  there  is  a  lack  of  emphasis  upon  the  relation  that  fi- 
nancial statements  bear  to  bookkeeping.  Especially  is  this  true  of  the 
treatment  of  closing  the  books.  The  definitions  and  explanations  of  con- 
trolling accounts  and  subsidiary  ledgers  are  simple  and  concise. 

M.  J.  S. 

Russell,  T.    Commercial  advertising.     (New  York:  Putnam.    1920.  $2.60.) 

Sullivan,  J.  J.  Pennsylvania  business  law.  (Philadelphia:  Business  Law 
Pub.  Co.     1920.     Pp.  748.) 

Trecartin,  White,  and  others.  The  way  to  great  production.  (Chicago: 
A.  W.  Shaw  Co.     1920.     Pp.  252.     $3.) 

Vardaman,  B.  Pi.,  editor.  Business  efficiency.  (Chicago:  Lincoln  Insti- 
stute.     1920.     Pp.  x,  390;  xi,  387.) 

Waite,  J.  B.  Patent  law.  (Princeton,  N.  J.:  Princeton  Univ.  Press. 
1920.     $5.) 

Accountants'  directory  and  who's  who.  (New  York:  Forty-fifth  St.  Press. 
1920.     $10.) 

Attention  value  of  advertisements.  (New  York:  Graduate  School  of  Busi- 
ness Administration  of  New  York  University.     1920.     Pp.  32.     50c.) 

Liberty  bonds;  a  handbook .  (New  York:  Higginson  &  Co.,  43  Exchange 
Place.     1920.     Pp.  20.) 

Merchants'  Association  of  New  York  yearbook,  1920.  (New  York:  The  As- 
sociation, 233  Broadway.     1920.     Pp.  334.) 

A  method  of  analysing  the  farm  business.  Farmers'  bull.  1139.  (Washing- 
ton:  Dept.  Agri.     1920.) 

New  York  dispensaries;  book  and  record  keeping.  (Reprinted  from  The 
Modern  Hospital,  July  and  August,  1920.) 

Operating  expenses  in  retail  shoe  stores  in  1919.  Bulletin  no.  20.  (Cam- 
bridge: Bureau  of  Business  Research,  Harvard  Univ.  1920.  Pp.  20.  $1.) 
An  analysis  of  reports  received  from  197  stores  for  the  year  1919,  lo- 
cated in  37  states,  Hawaii,  and  Canada.  Of  these,  130  had  furnished  re- 
ports previously  and  104  furnished  reports  for  both  1918  and  1919.  From 
the  reports  of  this  latter  group,  several  comparisons  have  been  worked 
out  to  indicate  changes  that  have  taken  place  during  the  last  year. 

Operating  expenses  in  retail  hardware  stores  in  1919.  Bulletin  no.  21. 
(Cambridge:  Bureau  of  Business  Research,  Harvard  Univ.  1920.  Pp. 
17.     $1.) 

The  second  annual  summary   for  retail  hardware  stores  is  here  pre- 
sented.    Reports  are  from  155  stores  in  35  states  foi  1919. 


122  Reviews  and  New  Books  [March 

Operating  expenses  in  retail  drug  stores  in  1919.  (Cambridge:  Bureau  of 
Business  Research,  Harvard  Univ.     1920.     Pp.  15.    $1.) 

A  study  of  operating  expenses  and  management  problems  in  the  retail 
drug  trade  was  begun  by  the  Harvard  Bureau  of  Business  Research  in 
1919.  To  assist  in  this  study,  a  standard  system  of  accounts  for  retail 
drug  stores  was  published  in  January,  1920.  The  reports  received  on 
the  standard  form  for  the  year  1919  are  summarized  in  this  bulletin. 

Proceedings  of  the  fifteenth  annual  convention  of  the  National  Association 
of  Comptrollers  and  Accounting  Officers.     (New  York.     1920.     Pp.  74.) 

Salesmanship j  the  standard  course  of  the  United  Y.  M.  C.  A.  schools.  Book 
I,  The  salesman  and  his  job.  (New  York:  Association  Press.  1920. 
Pp.  xiv,  194.) 

Labor  and  Labor  Organizations 

NEW    BOOKS 

Alden,  P.  and  others.  Labour  and  industry:  a  series  of  lectures.  (New 
York:    Longmans.     1920.     Pp.  viii,  284.    $5.) 

Beard,  M.  A  short  history  of  the  American  labor  movement.  (New  York: 
Harcourt,  Brace  and  Howe.     1920.     Pp.  174.) 

It  is  the  author's  intention  to  give  a  "brief  and  simple  story  of  the 
labor  movement  in  the  United  States  from  the  day  of  independence  to  the 
present  time" ;  one  that  shall  occupy  the  field  between  the  numerous 
special  studies  and  the  two-volume  History  of  Labor  in  the  United  States, 
prepared  by  Professor  Commons  and  his  associates.  In  laying  out  this 
field  for  herself  the  author  does  not  appear  to  recognize  the  writings  of 
Professor  Carlton,  as  covering  practically  the  same  subject. 

To  attempt  even  to  mention  all  of  the  important  topics  that  belong  to 
this  movement,  within  so  narrow  limits,  seems  rather  daring;  to  under- 
take to  discuss  them,  futile.  Moreover,  the  strongest  objection  must  lie 
against  what  the  book  does  not  contain.  These  omissions  were  of  course 
necessary  in  observing  a  170-page  limit,  yet  the  omissions  are  mainly 
of  subject-matter  and  not  of  topics. 

It  is  doubtful  if  a  book  of  this  character  will  serve  any  good  purpose. 
Because  of  its  brevity  it  fails  to  give  any  comprehensive  understanding 
of  the  labor  movement  "considered  as  a  state  of  mind"  (page  1)  or  of  even 
"the  outward  and  visible  signs  of  this  movement."  Such  an  outline  dis- 
cussion only  affords  a  reader  the  opportunity  to  read  into  the  outline  his 
own  views,  whatever  they  may  be. 

If  these  objections  are  laid  aside  and  the  actual  work  done  be  judged, 
the  book  speaks  well  for  the  author's  ability  to  condense,  without  leaving 
merely  abstract  and  highly  generalized  statements.  Generally  speaking, 
this  is  illustrated  throughout.  If  any  work  of  this  character  can  be  worth 
while,  this  book  will  accomplish  its  purpose.  George  G.  Groat. 

Beman,  L.  T.,  compiler.  Selected  articles  on  the  compulsory  arbitration 
and  compulsory  investigation  of  industrial  disputes.  Debaters'  handbook 
series.  Fourth  edition,  enlarged.  (New  York:  H.  W.  Wilson  Co.  1920. 
Pp.  lxxi,  303.     $1.25.) 


1921]  Labor  and  Labor  Organizations  123 

Bloomfield,  D.  Labor  maintenance ;  a  practical  handbook  of  employees' 
service  work.     (New  York:    Ronald  Press  Co.     1920.     Pp.  xvii,  530.) 

Budish,  J.  M.  and  Soule,  G.  The  new  unionism  in  the  clothing  industry. 
(New  York:    Harcourt,  Brace  &  Howe.     1920.     Pp.  viii,  344.) 

Carlton,  F.  T.  The  history  and  problems  of  organized  labor.  Revised 
edition.     (New  York:    Heath.     1920.     Pp.  xi,  559.) 

Frost,  S.     Labor  and  revolt.     (New  York:    Dutton.     1920.     Pp.  xv,  405. 

$4.) 

Goldmark,  J.  and  Hopkins,  M.  D.  Comparison  of  an  eight-hour  plant  and 
a  ten-hour  plant.  Studies  in  industrial  physiology;  fatigue  in  relation  to 
working  capacity,  no.  1.  Public  health  bulletin  no.  106.  (Washington: 
Supt.  Docs.     1920.     Pp.  213.) 

Gompers  and  Allen.  Debate  between  Samuel  Gompers  and  Henry  J.  Al- 
len.    (New  York:    Dutton.     1920.     Pp.  105.     $1.50.) 

Goodrich,  C.  L.  The  frontier  of  control:  a  study  of  British  workshop^ 
policies.  (New  York:  Harcourt,  Brace,  and  Howe.  1920.  Pp.  xvi, 
277.) 

Green,  F.  E.  A  history  of  the  English  agricultural  laborer,  1870-1920. 
(London:   King.     1920.    Pp.  356.) 

Hetherington,  H.  J.  W.  International  labour  legislation.  (London: 
Methuen.     1920.     Pp.  192.     6s.) 

This  is  mainly  a  descriptive  account,  with  critical  comment,  of  the 
structure  and  status  of  the  International  Labour  Conference  and  the  pro- 
ceedings of  its  Washington  session.  The  author  was  a  member  of  the 
secretariat  of  that  conference.  There  is  an  introductory  chapter  on  the 
need  for,  difficulties  in,  and  limitations  of  international  labor  legislation 
in  general  and  a  brief  chapter  of  conclusions  as  to  what  should  be  the 
composition  and  procedure  of  the  conference  and  the  extent  to  which  the 
delegates  should  be  bound  by  instructions  from  their  home  countries. 
Eighty  of  the  192  pages  are  given  over  to  appendices. 

Half  of  the  text  is  devoted  to  the  Washington  meeting.  Each  of  the 
matters  dealt  with  there  is  taken  up  topically  and  the  run  of  the  discus- 
sions summarized.  The  differences  in  interest  which  appeared  between 
countries,  frequently  reflecting  differences  in  economic  conditions  or 
stages  of  development,  and  the  cross-divisions  between  the  representatives 
of  the  employers  and  those  of  the  employees  are  thrown  into  relief  and 
the  whole  supplemented  by  critical  observations  which  are  by  no  means 
always  favorable.  This  part  of  the  book  is  an  interesting  and  valuable 
contribution.  D.  A.  McC. 

Johnson,  Young,  MacKenzie,  and  others.  The  management  and  the 
worker.     (Chicago:   A.  W.  Shaw  Co.     1920.     Pp.  228.     $3.) 

Kastel,  W.     Das  neue  Arbeitsrecht.     (Berlin:    Springer.     1920.     Pp.  xvi, 

323.) 
Macdonald,  J.  R.     The  policy  of  the  Labour  party.     New  library  of  social 

science.     (New  York:    Seltzer.     1920.     $2.) 
Martin   Saint-Leon,   E.     Syndicalisme   ouvrier  et  syndicalisms   agricole. 

(Paris:    Payot.     1920.     Pp.  160.) 


124  Reviews  and  Nerv  Books  [March 

Price,  Simpson,  Wolf,  and  others.  Working  conditions,  wages  and  profits. 
(Chicago:   A.  W.  Shaw  Co.     1920.     Pp.  254.     $3.) 

Ryan,  J.  A.  and  Husslein,  J.  The  church  and  labor.  (New  York:  Mac- 
millan.     1920.     Pp.  319.    $3.75.) 

This  volume  is  published  under  the  auspices  of  the  Department  of  So- 
cial Action  of  the  National  Catholic  Welfare  Council.  The  object  of  the 
editors  is  to  present  from  authoritative  sources  the  teachings  of  the  Ro- 
man Catholic  Church  on  the  subject  of  labor  relations.  The  book  is 
primarily  a  collection  of  documents,  with  comment  and  explanation  by  the 
editors.  There  is  a  brief  but  valuable  introduction  by  Dr.  Ryan,  followed 
by  a  chapter  by  Dr.  Husslein  expounding  the  views  of  Frederic  Ozanam 
and  the  teachings  of  Bishop  Ketteler,  with  liberal  extracts  from  their 
works.  This  chapter  is  homiletic  in  tone  and  strongly  condemnatory  of 
both  laissez-faire  and  socialism.  Two  papers  by  Dr.  Ryan  and  one  by 
Dr.  Husslein,  all  previously  printed,  complete  the  book. 

The  documentary  material  is  built  around  the  Encyclical  of  Pope  Leo 
XIII,  On  the  Condition  of  the  Working  Classes.  It  embraces  pronounce- 
ments from  the  last  three  popes,  four  cardinals,  and  the  hierarchies  of 
four  countries.  Dr.  Ryan  states  that  the  collection  includes  every  docu- 
ment of  practical  importance  issued  by  any  pope  or  bishop  on  these  sub- 
jects since  the  Industrial  Revolution.  The  American  documents  are  Cardi- 
nal Gibbons'  memorial  on  the  Knights  of  Labor,  the  reconstruction  pro- 
gram of  the  four  bishops  constituting  the  administrative  committee  of  the 
National  Catholic  Welfare  Council,  and  the  passages  on  industrial  rela- 
tions of  the  pastoral  issued  by  the  American  archbishops  and  bishops  in 
September,  1919.  The  main  points  emphasized  by  the  editors  in  the  con- 
tent of  these  documents  are  the  necessity  of  observing  religious  precepts  in 
industrial  relations,  the  limitations  of  private  property,  the  living  wage, 
the  right  of  workingmen  to  organize  and  the  necessity  of  state  regulation 
of  labor  conditions  when  voluntary  measures  are  inadequate. 

David  A.  McCabe. 

Ryan,  W.  P.  The  Irish  labor  movement;  from  the  txventies  to  our  own  day. 
(New  York:    Huebsch.     1920.     Pp.  295.     $2.) 

Snowden,  P.  Labour  and  national  finance.  (London:  Parsons.  1920. 
4s.  6d.) 

.     Wages  and  prices.     An  inquiry  into  the  wages  system  and  the 

relation  of  wages  and  prices.     (London:    The  Faith  Press.     1920.     Pp. 
124.) 

Stoker,  H.  The  industrial  courts  act,  1919,  and  conciliation  and  arbitra- 
tion in  industrial  disputes.     (London:  Stevens  and  Sons.     1920.     Pp.  56.) 

Thomas,  J.  H.     When  labour  rides.     (London:    Collins.     1920.     10s.) 

Whitley,  J.  H.  Works  committees  and  industrial  councils:  their  begin- 
nings and  possibilities.  (Manchester,  Eng.:  University  Press.  1920. 
Pp.  25.) 

Amalgamated  clothing  workers  of  America.  Report  of  the  general  executive 
board  to  the  fourth  biennial  convention,  Boston,  Mass.,  May  10-15,  1920. 
(New  York:   31  Union  Square.     1920.     Pp.  233,  lxiv.) 


1921]  Money,  Prices,  Credit,  and  Banking  125 

Changes  in  wages  during  and  since  the  war.    September,  191Ji.-M.arch,  1920. 
(Boston:   National  Industrial  Conference  Board.     1920.     Pp.  53.) 

Industrial  unrest  and  labour  policy.     Report  of  the  Industrial  Committee. 
(London:    National  Party.     1920.     9d.) 

Open  shop  versus  closed  shop.     (Austin,  Texas:    Univ.  of  Texas.      1920. 
Pp.  60.) 

Profitism,  slackism,  and  you.     A  constructive  study  of  the  labor  problem. 
(Seattle:   Chamber  of  Commerce.     1920.     Pp.  36.) 

Money,  Prices,  Credit,  and  Banking 

NEW    BOOKS 

Alexander,  J.  S.  Banking  and  its  relationship  to  domestic  business  and 
export  trade.     (New  York:   National  Bank  of  Commerce.    1920.   Pp.  14.) 

Bean,  R.  H.  Elements  of  trade  acceptance  practice.  (New  York:  Am. 
Acceptance  Council,  111  Broadway.     1920.     Pp.  16.     5c.) 

von  Beckerath,  H.  Die  Markvaluta.  (Jena:  Fischer.  1920.  Pp.  37. 
2.80  M.) 

Cannan,  E.  The  paper  pound  of  1797-1821.  A  reprint  of  the  Bullion  Re- 
port with  an  introduction.     (London:   King.     1919.     Pp.  xlix,  71.) 

The  editor's  scholarly  introduction  to  the  reprint  of  the  Bullion  Report 
gives  an  account  of  the  events  leading  to  the  suspension  of  specie  pay- 
ments, of  the  inconvertible  paper  money  regime,  and  of  resumption,  to- 
gether with  an  explanation  of  why  the  "great  evil"  did  not  grow  much 
greater  than  it  did.  Statistical  tables  elucidate  both  the  introduction  and 
the  report  itself.  C.  A.  P. 

Cassel,  G.  Weltwirtschaft  und  Geldverkehr  unter  besonderer  Beriicksichti- 
gung  des  Valutaproblems.  Das  neue  Reich,  Heft  7.  (Gotha:  F.  A. 
Perthes.     1920.     Pp.  25.     1  M.) 

Courcelle-Seneuil,  J.  G.  Les  operations  de  banque:  traite  theorique  et 
pratique.  Second  edition,  brought  down  to  date,  by  A.  Liesse.  (Paris: 
Alcan.     1920.     Pp.  xviii,  742.     25  fr.) 

Dufayel,  H.  Banque:  a  Vusage  du  personnel  des  etablissements  financiers 
et  des  banques  particulieres.  (Paris:  Dunod.  1920.  Pp.  lxix,  162, 
lxiii.) 

Fisher,  I.  Stabilizing  the  dollar.  (New  York:  Macmillan.  1920.  Pp. 
xlix,  305.     $3.50.) 

Stabilising  the  Dollar,  differs  from  the  author's  previous  publications 
on  the  same  subject  in  being  designed  to  make  a  distinctly  popular  ap- 
peal. The  main  body  of  the  work  is  devoted  to  a  consideration  of  (1)  the 
facts  relative  to  price  changes,  (2)  the  underlying  causes,  (3)  the  evils 
resulting,  and  (4)  the  remedy.  It  is  written  in  a  delightfully  clear  and 
convincing  fashion  and  should  go  far  towards  effecting  the  introduction 
of  a  stable  monetary  unit.  Opposition  to  stabilization  breaks  down  under 
the  great  force,  rigorous  logic,  and  trenchant  criticism  embodied  in  Pro- 
fessor Fisher's  presentation. 


126  Reviews  and  New  Boohs  [March 

Not  only  are  the  evils  to  be  corrected  and  the  advantages  to  be  gained 
set  forth  with  clearness  and  convincing  power,  but  the  author's  own  plan, 
briefly  outlined  in  the  main  body  of  the  text,  is  elaborated  and  defended 
in  supporting  appendixes  that  follow. 

One  query  in  the  mind  of  the  reviewer  the  author  leaves  unanswered. 
Inasmuch  as  Professor  Fisher's  plan  (which  is  here  assumed  to  be  fa- 
miliar to  readers  of  the  Review)  proposes  to  regulate  the  number  of 
monetary  units  through  a  regulation  of  the  weight  of  each,  might  not 
stabilization  be  attained  more  simply  and  directly  and  with  less  possible 
interference  with  international  trade  and  international  obligations  through 
a  regulation  of  the  reserves  of  federal  reserve  banks  and  consequent  regu- 
lation of  loans  and  deposits  of  member  banks  ?  Such  a  regulation  of  bank 
deposits,  which  now  constitute  the  bulk  of  our  purchasing  power,  might 
be  accomplished  through  a  substitution  of  gold  certificates  held  by  fed- 
eral reserve  banks  for  federal  reserve  notes  during  periods  of  rising 
prices  and  of  federal  reserve  notes  for  gold  certificates  during  periods  of 
falling  prices.  The  present  heavy  gold  holdings  of  the  federal  reserve 
banks  coupled  with  the  even  greater  amount  of  federal  reserve  notes  now 
outstanding  would  seem  to  favor  the  successful  operation  of  such  a  plan 
for  decades  to  come.  C.  A.  P. 

Fogg,   L.   A.     Bankers'   securities   against   advances.      (London:     Pitman. 
1920.     Pp.  123.     6d.) 

Greenwood,  W.  J.     Hoiv  to  make  money  in  foreign  exchange  and  foreign 
bonds.     (New  York:   Financial  Books  Co.     1920.     Pp.  vii,  129.    $2.) 

The  magic  formula  of  this  pamphlet  is  to  buy  foreign  exchange  or 
foreign  bonds  at  present  and  to  wait  until  exchange  returns  to  normal. 
Nothing  is  more  simple  except  possibly  purchasing  low  grade  stocks  be- 
low par  and  waiting  until  they  reach  par. 

Hare,  L.    Currency  and  prices.     (London:   King.     1920.     Pp.  74.     2s.  6d.) 

Hawtrey,  R.  G.     Currency  and  credit.     (London:    Longmans.     1919.     Pp. 
vii,  393.     $5.) 

A  careful  analytical  study  of  such  closely  related  topics  as  paper  money 
and  the  quantity  theory,  the  foreign  exchanges,  systems  of  note  issue, 
the  theory  of  banking,  financial  crises,  war  finance.  The  author  treats 
credit  as  the  primary  means  of  payment  and  money  as  subsidiary  in  an 
effort  to  set  forth  the  nature  and  causes  of  the  business  cycle,  and  finds 
the  instability  of  credit  traceable  not  so  much  to  the  banker  as  to  the 
trader  and  promoter.  The  distinctly  international  flavor  of  the  work 
accentuates  its  timely  character.  C.  A.  P. 

Holdsworth,  J.  T.     Money  and  banking.     New  edition,  revised.      (New 
York:    Appleton.     1920.     Pp.  xiv,  515.     $3.) 

Kale,  V.  G.     Currency  reform  in  India.     (Poona:    Author,  Ferguson  Col- 
lege.    1919.     Pp.  107.) 

King,  W.  I.    Building  material  prices  in  1921.     (New  York:   F.  W.  Dodge 
Co.,  119  West  40th  St.     1920.     Pp.  12.) 

Kirkbride,  Sterrett,  and  Willis.     The  modern  trust  company:  its  func- 
tions and  organisation.     An  outline  of  fiduciary  banking.     Fifth  edition, 


1921]  Money,  Prices,  Credit,  and  Banking  127 

enlarged  and  revised.     (New  York:    Macmillan.     1920.     Pp.  xviii,  549. 
$6.75.) 

Langston,  L.  H.  Practical  bank  operation.  (New  York:  Ronald.  1920. 
Two  vols.    $10.) 

Masterman,  J.  H.  B.  Clerical  incomes.  An  inquiry  into  the  cost  of  liv- 
ing among  the  parochial  clergy.  (London:  G.  Bell  and  Sons.  1920. 
Pp.  307.    6s.) 

Meyer,  E.,  Jr.  Financing  foreign  trade.  Address  by  invitation  of  a  com- 
mittee of  bankers  and  delegates  of  the  American  Bankers  Association  Con- 
vention.    (New  York:    Author,  820  Fifth  Ave.     1920.     Pp.  17.) 

Morehouse,  W.  R.  Bankers  guide  book.  (Los  Angeles:  Bankers  Service 
Co.     1920.) 

Morgan  and  Parker.  Banking  laws  of  New  York.  Chapter  2  of  consoli- 
dated laws,  chapter  396,  laws  of  191^,  with  notes,  annotations  and  refer- 
ences. Fifth  edition.  (New  York:  Banks  Law  Pub.  Co.  1920.  Pp. 
567.     $5.) 

Neustatter,  H.  Schwedische  wdhrend  des  Weltkrieges.  (Munich:  Drei 
Masken-Verlag.     1920.     Pp.  111.) 

Roberts,  G.  E.  Banking  fancies  and  the  facts.  An  answer  to  Frederic 
Howe's  outcry  that  Wall  Street  controls  the  banking  system  and  that  the 
money  octopus  has  the  country  in  its  clutches.  (New  York:  National  City 
Bank.     1920.     Pp.  7.) 

Sheldon,  H.  P.  The  practice  and  law  of  banking.  (London:  Macdonald 
&  Evans.     1920.     12s.  6d.) 

Shugrue,  M.  J.  Problems  in  foreign  exchange.  (New  York:  Appleton. 
1920.     Pp.  173.     $2.20.) 

Snell,  G.  B.  Currency  exchange  tables.  (Montreal:  Bank  of  Montreal. 
1920.) 

Steiner,  W.  H.  Some  aspects  of  banking  theory.  (New  York:  W.  D. 
Gray,  106  Seventh  Ave.     1920.     Pp.  158.     $1.75.) 

Subercaseaux.  Le  papier-monnaie.  (Paris:  Giard  &  Briere.  1920.  Pp. 
446.) 

Weston,  W.  J.  Dictionary  of  economic  and  banking  terms.  (London: 
Pitman.     1920.     Pp.  166.     5s.) 

A  bank  catechism.     (New  York:   Guaranty  Trust  Co.     1920.     Pp.  45.) 

Bankers  acceptances;  principles  .and  practice.  (New  York:  American  Ac- 
ceptance Council,  111  Broadway.     1920.     10c.) 

Changes  in  the  cost  of  living,  July,  191Jf-July,  1920.  Research  report  no. 
30.     (Boston:    National  Industrial  Conference  Board.     1920.     Pp.  28.) 

Joint  committee  on  cost  of  living:  interim  report  on  money  and  prices.  (Lon- 
don:  Cooperative  Prtg.  Soc,  Ltd.,  Tudor  St,     1920.) 

Maryland  Bankers'  Association:  proceedings  of  the  twenty-fifth  annual  con- 
vention.    May,  1920.     (Baltimore.     1920.     Pp.  128.) 


128  Reviews  and  New  Books  [March 

Questions  and  answers  on  the  federal  reserve  system.     (Richmond:   Federal 

Reserve  Bank  of  Richmond.     1920.     Pp.  vi,  101.) 
Standards  of  living.     A  compilation  of  budgetary  studies.     Revised  edition. 

(Washington:   Bureau  of  Applied  Economics.     1920.    Pp.  hi,  156.) 
A  survey  of  trade  acceptance  progress.      (New  York:    Irving  Nat.  Bank. 

1920.     Pp.   18.     1920.) 
Three  and  a  half  billion  dollar  floating  debt  of  Europe  to  private  creditors 

in  America;  the  basic  cause  of  bank  expansion  and  "tight  money"  in  the 

United   States.      London's    position.      (New    York:     Chase    Nat,    Bank. 

1920.     Pp.  32.) 

Thrift  and  savings.  Reports  and  addresses,  1920.  (New  York:  Am.  Bank- 
ers Assoc.     1920.     Pp.   12.) 

Public  Finance,  Taxation,  and  Tariff 

NEW    BOOKS 

Adams,  T.  S.  Needed  tax  reform  in  the  United  States.  (New  York:  Eve- 
ning Post.     1920.     Pp.  36.     25c.) 

Ashley,  P.  Modern  tariff  history:  Germany,  United  States,  France.  Third 
edition.     (New  York:    Dutton.     1920.     Pp.  x,  365.     $5.) 

This  edition  adds  a  chapter  on  the  United  States  tariff  of  1913  and 
statistics  for  the  years  1909-1913. 

Boudon,  R.  Les  finances  publiques  de  VAllemagne.  (Paris:  Dupont. 
1919.     Pp.  142.) 

Bullock,  C.  J.  Selected  readings  in  public  finance.  Second  edition. 
(Boston:   Ginn.     1920.     Pp.  x,  920.     $4.) 

This  second  edition  has  about  250  pages  more  material  than  the  first. 
Among  articles  now  included  are:  Our  increasing  public  expenditures,  by 
T.  E.  Lyons;  Methods  of  controlling  the  movement  of  public  expenditures, 
report  of  the  National  Tax  Association;  The  Swiss  federal  railways,  by 
A.  N.  Holcombe;  The  commercial  revenues  of  Frankfort,  by  Anna  Young- 
man;  Revenue  from  fees  in  Frankfort,  by  Anna  Youngman;  The  general 
property  tax  in  the  United  States,  by  C.  J.  Bullock;  The  taxation  of  prop- 
erty and  income  in  Massachusetts,  by  C.  J.  Bullock;  The  Wisconsin  in- 
come tax,  by  Thomas  S.  Adams;  The  federal  income  tax  of  1913,  by  C.  J. 
Bullock;  The  taxation  of  public  service  corporations,  report  of  the  Con- 
necticut Tax  Commission  of  1913;  The  taxation  of  public  service  corpora- 
tions, report  of  a  committee  of  the  National  Tax  Association;  State  and 
local  taxation  of  banks,  by  F.  R.  Fairchild;  State  inheritance  taxes  in  the 
United  States,  the  special  report  of  the  Board  of  Tax  Commissioners  of 
Rhode  Island;  A  national  inheritance  tax,  by  E.  R.  A.  Seligman. 

Chaveneau,  J.  Comment  payer  les  impots  nouveaux.  (Paris:  Hachette. 
1920.) 

Clabaugh,  W.  Income  and  profits  taxes;  a  series  of  lectures,  with  ques- 
tions.    (New  York:    Association  Press.     1920.     Pp.  334.) 

Clark,  A.  B.  An  outline  of  provincial  and  municipal  taxation  in  British 
Columbia,  Alberta,  and  Saskatchewan.  (Winnipeg:  University  of  Mani- 
toba.    1920.     Pp.  97.) 


1921]  Public  Finance,  Taxation,  and  Tariff  129 

Dalberg,  R.  Die  Kapitalertragsteuer  vom  29.  Mars  1920.  (Berlin:  Hey- 
manns.     1920.     Pp.  68.) 

Foeldes,  B.  Finanzwissenschaft.  (Jena:  Fischer.  1920.  Pp.  xiv,  686. 
33  M.) 

Haenel,  H.  G.  Fine  Kapital-Rentensteuer  im  Rahmen  der  Neuordnung 
der  Reichsfinanzen.     (Jena:    Fischer.     1920.     Pp.  76.     5  M.) 

Kahn,  O.  H.  Some  suggestions  on  tax  revision.  Address  delivered  before 
the  Massachusetts  Chamber  of  Commerce,  Boston,  October,  1920.  (New 
York:    Author,  52  William  St.     1920.     Pp.  75.) 

Kale,  V.  G.  India's  war  finance  and  post-war  problems.  (Poona:  Author, 
Fergusson  College.     1919.     Pp.153.) 

Lachapelle,  G.    Les  finances  britanniques.     (Paris:   Sirey.     1920.     16  frs.) 

Leland,  S.  E.  Taxation  in  Kentucky.  Studies  in  economics  and  sociology, 
no.  1.     (Lexington:   University  of  Kentucky.     1920.     Pp.  170.     $1.) 

Lord,  H.  W.  The  budget  system.  (Providence,  R.  I.:  Legislative  Refer- 
ence Bureau.     1920.     Typewritten.) 

Powell,  H.  M.  Supplement  to  "Taxation  of  corporations  and  personal  in- 
come in  New  York"  containing  a  commentary  on  all  important  matters 
affecting  the  taxation  of  persons  and  of  corporations  since  July  1,  1919. 
(New  York:    Clark  Boardman.     1920.     Pp.  401-681.     $2.50.) 

Ricci,  U.  Protezionisti  e  liberisti  italiani.  (Bari:  Laterza  e  Figli.  1920. 
Pp.  203.     6.50  1.) 

Schwarz,  O.  Deutsche  Finanzlage  und  JVeltwirtschaft.  (Berlin:  Mittler 
&  Sohn.     1920.     Pp.  27.) 

Webb,  S.  Grants  in  aid.  A  criticism  and  a  proposal.  Studies  in  economics 
and  political  science  no.  24  in  the  series  of  monographs  by  writers  con- 
nected with  the  London  School  of  Economics  and  Political  Science.  New 
edition.     (London:    Longmans.     1920.     Pp.  145.) 

International  revenue  laws  in  force  May  1,  1920,  with  appendix  containing 
laws  of  general  nature  and  miscellaneous  provisions  applicable  to  admin- 
istration of  internal-revenue  laws.  Compilation  of  1920.  Treasury  Dept. 
doc.  2843.     (Washington:    Supt.  Docs.     1920.     Pp.  1035.) 

Federal  estate  tax.  Law  and  regulations.  Containing  complete  text  of 
estate  tax  law,  title  IV  of  revenue  act  of  1918;  regulations  87  revised; 
forms  used;  and  other  supplementary  information.  (New  York:  Equit- 
able Trust  Company.     1920.     Pp.  213.) 

List  of  references  on  municipal  finance  and  taxation.  (Washington:  Li- 
brary of  Congress,  Division  of  Bibliography.     1920.     Pp.  25.) 

New  York  state  franchise  tax  on  business  corporations.  (New  York:  Guar- 
anty Trust  Co.     1920.) 

Papers  prepared  for  the  international  financial  conference.  (London:  Har- 
risons, 47  St.  Martin's  Lane.     1920.) 

Report  of  the  special  joint  committee  on  taxation  and  retrenchment.  Re- 
trenchment  section.      (Albany.     1920.     Pp.   155.) 

Deals   particularly   with   retrenchment  in   expenditures   by   cities   and 
counties. 


130  Reviews  and  New  Books  [March 

Population  and  Migration 

NEW    BOOKS 

Commons,  J.  R.  Races  and  immigrants  in  America.  Revised  edition. 
(New  York:    Macmillan.     1920.     $2.50.) 

Drachsler,  J.  Democracy  and  assimilation:  the  blending  of  immigrant 
heritages  in  America.  (New  York:  Macmillan.  1920.  Pp.  xii,  275. 
$3.) 

Mondaini,  M.  G.  La  colonisation  anglaise.  (Paris:  Editions  Bossard,  43 
rue  Madame.     1920.     Pp.  960.) 

Woofter,  T.  J.,  Jr.  Negro  migration:  changes  in  rural  organization  and 
population  of  the  cotton  belt.  (New  York:  W.  D.  Gray,  106  Seventh 
Ave.     1920.     Pp.  195.     $2.25.) 

Problems  of  population  and  parenthood.  Being  the  second  report  of  and 
the  chief  evidence  taken  by  the  National  Birth-rate  Commission,  1918- 
1920.     (New  York:    Dutton.     1920.     Pp.  clxvi,  423.) 

Social  Problems  and  Reforms 

Immigration  and  Americanization.  Selected  Readings.  Compiled  and 
edited  by  Philip  Davis.  (Boston:  Ginn  and  Company.  1920. 
Pp.  xii,  770.  $4.00.) 
As  the  editor  of  this  bulky  volume  of  "selected  readings"  notes,  much 
of  our  ante-bellum  literature  on  immigration  is  out  of  tune  with  the 
new  order.  For  years  before  the  war,  students  of  the  immigration  ques- 
tion, especially  those  who  were  in  personal,  helpful  contact  with  the  im- 
migrant, and  who  knew  sympathetically  and  intimately,  through  set- 
tlement and  charity  work  or  otherwise,  the  difficulties  and  injustices  to 
which  the  immigrant  was  subject  because  of  his  lack  of  knowledge  of 
American  ways  and  institutions,  urged  upon  a  heedless  public  the  need 
of  "assimilation."  With  the  war  came  the  militant  awakening  of  the 
national  consciousness,  unfortunately  assuming,  under  what  we  now 
recognize  and  confess  to  have  been  a  species  of  crowd  psychology  and 
fear  hysteria,  a  disposition  not  only  nationalistic  but  occasionally  jingo- 
istic in  the  extreme.  With  this  nationalistic  jingoism,  perfectly  natural 
and  to  be  expected  under  the  circumstances,  and  exhibiting  itself  pri- 
marity  in  hatred  of  German-speaking  communities  and  fear  of  the  for- 
eign-language press,  came  the  popular,  and  therefore  uncritical,  de- 
mand for  "Americanization,"  which  was  regarded  as  something  new  in 
the  way  of  recommended  social  processes.  Curiously — or  perhaps  not 
so  curiously,  to  the  objective  observer  of  employer-class  psychology — 
the  cry  for  "Americanization"  was  taken  up  most  loudly  by  precisely 
those  interests  and  organs  which  in  former  years  had  been  most  con- 
spicuously and  cynically  indifferent  to  any  other  aspect  of  immigration 
than  the  economic,  and  heedful  of  that  only  in  so  far  as  immigration 


1921]  Social  Problems  and  Reforms  131 

afforded  ample  supply  of  cheap  and  tractable  labor.  Such  far-away 
and  profitless  ideals  or  processes  as  assimilation  or  Americanization  had 
little  appeal  to  those  who,  personally  or  in  their  corporate  capacity, 
for  the  time  being  at  least,  could  afford  to  be  indifferent  to  the  charge 
of  organized  labor  that  manufacturing  and  mining  interests  were  break- 
ing down,  or  at  least  keeping  down,  the  American  workman's  wages  and 
standard  of  living  by  the  importation,  sometimes  in  violation  or  evasion 
of  the  contract  labor  laws,  first  of  French  Canadians,  and  then  of  suc- 
cessive races  from  South  and  East  Europe  and  West  Asia,  with  suc- 
cessively lower  standards  of  living,  denser  ignorance,  and  consecutively 
less  assimilability  to  American  conventions  and  ideals,  or  to  the  plead- 
ings of  scholars  and  publicists  who  saw  in  these  waves  of  successively 
lower  and  more  alien  standards  the  promise  of  intensified  class  con- 
flicts or  the  definite  development  of  an  industrial  caste  system  little  in 
accord  with  the  ideals  of  liberty  and  opportunity  upon  which  the  Fath- 
ers are  currently  said  to  have  founded  the  nation. 

When  the  psycho-economic  history  of  the  years  1917  to  1921  shall  be 
written  by  one  sufficiently  detached  in  time  and  sentiment,  this  sudden 
solicitude  on  the  part  of  the  ruling  interests  for  the  integrity  of  "Ameri- 
can" ideals  and  viewpoints  will  doubtless  be  properly  and  fairly  related 
to  the  fear  of  "radicalism"  and  the  popular  belief  that  "radicalism" 
and  "foreign-language"  are  synonymous  terms.  Be  that  as  it  may,  all 
classes  now  seem  to  be  in  accord,  nominally  at  least,  on  the  need  of  as- 
similation, or,  as  it  is  now  more  appealingly  called,  Americanization. 
Scores  of  Americanization  societies,  leagues,  and  committees  have  been 
formed,  government  and  private  agencies  have  drawn  up  dozens  of  pro- 
grams and  "aids,"  and  literally  thousands  of  tracts  and  pamphlets  have 
burdened  the  press.  Some  of  these  projects  have  been  conceived  in  a 
broad  and  liberal  spirit,  with  a  fairly  single  eye  to  the  welfare  of  the 
immigrant  and  of  America;  most  of  them,  perhaps,  are  less  edifying. 
As  the  months  have  gone  by,  with  their  successive  revelations  of  profi- 
teering on  the  part  of  some  erstwhile  "100  per  cent"  Americans,  steel 
strike  reports,  and  other  light  in  dark  places,  the  more  intelligent  and 
circumspect  public  has  begun  to  distinguish  between  Americanization 
"true  and  false,"  and  to  be  a  little  cautious  as  to  the  sources  of  its 
inspiration  and  critical  of  the  motives  of  those  who  would  identify 
"American"  with  blind  industrial  reactionism.  The  plain  truth  is,  of 
course,  that  the  cause  of  disinterested  and  really  patriotic  Americaniza- 
tion or  assimilation  has  been  greatly  injured  by  the  attitude  of  the  ma- 
jority of  employers  and  not  greatly  aided  by  the  uncritical,  headlong 
enthusiasm  of  some  of  its  superficial  friends. 

All  the  more  need,  therefore,  for  deliberate  study  and  consideration 
of  the  meaning  and  processes  of  Americanization,  of  the  immigration 


132  Reviews  and  New  Books  [March 

which  has  brought  the  problem  upon  us,  and  of  the  characteristics 
(actual,  not  imputed  by  nationalistic,  entrepreneural  fancy)  of  those 
who  are  to  be  Americanized. 

The  book  before  us  should  be  a  valuable  and  welcome  aid,  both  to  the 
theoretical  student,  and  to  those  engaged  in  the  difficult  tasks  of 
Americanization  itself.  The  first  425  pages  are  given  over  to  selections 
on  immigration  proper — history,  causes,  characteristics,  effects,  and 
legislation.  This  leaves  320  pages  for  Americanization — policies  and 
programs,  distribution,  education,  naturalization.  This  part  concludes 
with  an  enlightening,  not  to  say  entertaining,  chapter  setting  forth 
in  their  own  words  the  ideas  of  certain  prominent  public  men  and  of  a 
scholar  or  two,  as  to  what  "American"  and  "Americanization"  mean, 
or  at  any  rate  ought  to  mean. 

It  would  be  beside  the  point  to  criticize  the  editor's  selections  in  de- 
tail. One  excellent  point  is  that  they  are  chosen  with  view  to  an  un- 
derstanding of  the  immigrant  as  a  person.  The  editor  would  perhaps 
have  done  better  to  omit  much  of  the  historical  and  statistical  matter 
in  part  I  and  to  have  either  expanded  the  pages  on  Americanization  or, 
perhaps  still  better,  reduced  the  size  of  his  book. 

Viewed  from  both  theoretical  and  practical  points  of  view,  chapter 
XI,  on  Americanism  contains  the  kernel  of  the  whole  question,  offering, 
as  it  does,  opportunity  for  comparison  of  ideals  perhaps  similar  in  sub- 
stance but  certainly  widely  different  in  emphasis,  and  suggestive  of 
widely  varying  degrees  of  the  nationalistic  "complex."  The  editor  has 
here  done  good  service  in  bringing  together  in  close  proximity  the  mili- 
tant, "preparedness"  version  of  Americanism  held  by  Theodore  Roose- 
velt, the  idealism  of  President  Wilson,  and  the  trenchant  analysis  of  a 
scholar  like  Frances  A.  Kellor.  To  the  reviewer's  notion,  the  reprinting 
of  the  latter's  "What  is  Americanization"  alone  justifies  the  addition 
of  yet  another  volume  of  "readings"  or  "selections,"  a  type  of  construc- 
tive composition  now  become  surprisingly  common  in  spite  of  the  high 
cost  of  printing.  Both  the  publishers  and  the  editor  are  to  be  con- 
gratulated, the  publishers  in  their  choice  of  editor,  for  Mr.  Davis  knows 
from  personal  experience  what  it  is  to  be  an  immigrant  and  to  be 
"Americanized,"  and  the  editor  because  his  book  shows  exhaustive  read- 
ing, keen  appreciation  of  the  purpose  it  should  fulfill,  and  intelligent 
selection  of  material  to  that  end.  One  wishes,  however,  that  he  had 
set  out  the  Americanization  ideals  of  the  vested  interests  somewhat 
more  sharply,  and  that  he  had  devoted  a  very  necessary  chapter  to  the 
Americanization  of  the  American. 

A.  B.  Wolfe. 

University  of  Texas. 


1921]  Social  Problems  and  Reforms  133 

The  New  Industrial  Unrest:  Reasons  and  Remedies.  By  Ray  Standard 
Baker.  (New  York:  Doubleday  Page  and  Company.  1920.  Pp. 
231.    $2.00.) 

One  may  well  question  whether  there  is  a  new  industrial  unrest,  ex- 
cept in  the  sense  that  the  present  is  new  as  compared  with  the  past. 
There  is  nothing  essentially  new  in  the  fact  of  unrest  in  the  United 
States — this  book  deals  almost  exclusively  with  conditions  in  this  coun- 
try— and  this  unrest  manifests  itself  in  ways  that  have  been  familiar 
for  generations.  Even  the  magnitude  of  the  wave  of  unrest  that  has 
swept  over  the  country  is  not  comparatively  greater  than  in  the  seven- 
ties or  nineties  of  the  last  century. 

One  who  is  familiar  with  Mr.  Baker's  writings  need  not  be  told  that 
this  book  presents  a  clear  picture  of  the  conditions  it  describes  and  an 
adequate  analysis  of  the  underlying  causes.  The  book  is  built  around 
the  steel  strike  and  particularly  the  city  of  Gary  as  epitomizing  the 
1919  industrial  situation  so  far  as  reasons  for  unrest  are  concerned. 
Judge  Gary  typifies  the  ultra  conservative  or  reactionary  spirit  among 
employers  which  came  to  the  front  at  the  close  of  the  war  and  probably 
as  a  result  of  the  war.  On  the  other  side  are  the  heterogeneous  mass 
of  workers  of  many  races  and  tongues  in  the  steel  mills  who  had  been 
inspired  by  the  idealism  that  swept  over  this  country  during  the  war 
and  who  had  believed  that  a  new  era  of  democracy  and  goodwill  was 
really  dawning  on  the  world.  These  simple  folks  are  now  undergoing 
the  pains  of  disillusionment.  "They  had  seen  a  vision,  dreamed  a 
dream:  they  had  awakened.  It  was  snatched  away."  Men  were  being 
discharged  and  rumors  of  wage  reductions  were  current,  and  the  dreary 
mills,  the  long  hours,  and  the  crowding  and  congestion  in  lodgings  and 
homes  seemed  more  unbearable  than  ever.  Moreover  the  saloon  had  been 
taken  away  from  them  and  that  "great  deadener  of  human  trouble — and 
human  ambition — alcohol"  had  been  removed.  Here  was  a  fertile  field 
for  radical  ideas  and  fit  material  for  radical  leadership. 

The  struggle  between  these  two  opposing  forces  and  tendencies  was 
inevitable.  It  characterised  the  year  following  the  armistice.  It  was 
carried  on  under  conditions  which  favored  the  conservative  or  reaction- 
ary side.  The  "great  third  party,"  the  American  public,  was  also  un- 
dergoing a  process  of  disillusionment. 

The  remedies  proposed  by  the  author  are  not  particularly  new  or 
startling.  The  new  cooperative  methods  of  management  through  shop 
committees  and  industrial  councils,  will,  he  thinks,  gradually  replace 
the  old  militaristic  methods  in  which  industrial  peace  was  only  an  armed 
truce  between  organizations  of  employers  and  labor  unions,  and  the 
new  profession  of  the  labor  manager  will  supplant  that  autocracy  of 


134  Reviews  and  New  Books  [March 

management  which  at  its  worst  indulged  in  brute  force  and  intimidation 
and  at  its  best  in  a  benevolent  paternalism.  But  he  points  out  the 
danger  that  the  new  devices  may  fail  if  they  are  used  with  the  intent 
of  forestalling  the  organization  of  labor. 

These  methods  are  not  to  be  regarded  as  a  panacea.  To  an  impa- 
tient demand  for  a  solution  of  the  labor  problem  the  author  replies, 
"It  consists  in  the  attitude,  the  spirit,  which  one  maintains  toward  the 
labor  problem — an  adventurous,  inquiring,  experimental  attitude,  ever 
hospitable  toward  new  facts :  and  a  generous  and  democratic  spirit." 

This  book,  like  so  many  others  that  have  appeared  in  this  field  dur- 
ing the  past  two  or  three  years,  adds  little  to  our  knowledge  of  facts 
or  theories,  but  it  has  the  merit  of  being  both  accurate  and  fair  as  to 
its  matter  and  clear  and  convincing  in  form. 

Carroix  W.  Doten. 

Massachusetts  Institute  of  Technology. 

NEW    BOOKS 

Athearn,  W.  S.  The  Maiden  survey;  a  report  on  the  church  plants  of  a 
typical  city;  showing  the  use  of  the  interchurch  world  movement  score 
card  and  standards  for  rating  city  church  plants.  (New  York:  Inter- 
church World  Movement.     1920.) 

Benge,  E.  J.  Standard  practice  in  personnel  ivork.  (New  York:  H.  W. 
Wilson.      1921.     Pp.  286.     $3.) 

Beck,  J.  M.  The  passing  of  the  new  freedom.  (New  York:  Doran.  1920. 
Pp.  xi,  169.) 

Binder,  R.  M.  Health  and  social  progress.  (New  York:  Prentice-Hall. 
1920.     Pp.  300.     $3.) 

Bondam,  R.  Le  mal  social  et  ses  remedes.  (The  Hague:  Author,  175 
Van  Tlingelandstraat.     1920.     Pp.  xiii,  381.) 

The  author  has  French  conditions  in  mind  and  writes  largely  from  the 
French  standpoint.  However,  he  presents  facts  and  statistics  for  other 
countries  as  well.  For  example,  he  states  that  2  per  cent  of  the  popula- 
tion of  the  United  States  own  60  per  cent  of  the  wealth  and  that  65  per 
cent  own  only  5  per  cent.  Although  he  does  not  give  the  authority  for 
this  statement  he  generally  gives  credit  to  the  various  authors  whom  he 
quotes.  He  presents  the  causes  of  poverty  in  a  manner  usual  to  writers 
on  this  subject  and  places  considerable  emphasis  on  ignorance,  the  sub- 
jection of  the  masses,  and  the  tendency  toward  over-population  among 
them.  He  gives  considerable  weight  to  the  value  of  environment  as  a 
force  capable  of  suppressing  or  developing  the  individual.  He  would  im- 
prove conditions  by  promoting  an  educational  program  and  by  bringing 
about  the  physical  and  moral  improvement  of  the  people. 

The  remedy  is  an  evolutionary  process.  Less  stress  should  be  placed 
on  production  than  on  the  conservation  of  the  human  elements.  Through 
the  development  of  better  opportunities  for  all,  education  and  other  meth- 
ods of  promoting  "capillary  attraction"  that  proportion  of  the  population 


1921]  Social  Problems  and  Reforms  135 

which  constitutes  an  asset  to  society  is  constantly  increasing  at  the  ex- 
pense of  those  who  paralyze  or  resist  effort.  There  is  need  of  bringing 
about  a  measurable  redistribution  of  wealth.  Something  can  be  done  by 
placing  certain  limitations  on  the  right  of  inheritance.  The  public  debt 
also  presents  a  serious  problem  and  the  author  therefore  discusses  the 
possibility  of  shifting  part  of  the  burden  from  the  shoulders  of  the  poor 
and  of  abandoning  the  payment  of  part  of  the  debt  itself.  Misery  is  a 
pressing  problem  and  we  must  not  delude  ourselves  with  the  notion  that 
civilization  cannot  perish.  The  facts  of  history  are  too  clear  to  justify 
such  optimism.  Georgh  B.  Mangold. 

Chapin,  F.  S.  Field  work  and  social  research.  (New  York:  Century  Co. 
1920.     Pp.  224.     $1.75.) 

Comerford,  F.  The  new  world.  (New  York:  Appleton.  1920.  Pp.  364.) 
Europe,  stricken,  impoverished,  disappointed,  is  restless  and  receptive 
to  radical  ideas.  The  trend  toward  bolshevism  can  be  combatted  only 
by  truth  and  social  justice.  Intervention  in  Russia  has  failed.  Force 
only  increases  unrest.  Governments,  workingmen,  and  employers  should 
cooperate  in  building  the  new  world.  Property  rights  must  be  made 
safe  and  human  rights  must  be  made  secure.  G.  L.  A. 

Dealey,  J.  Q.  Sociology:  its  development  and  applications.  (New  York: 
Appleton.     1920.     Pp.  xv,  547.) 

Feld,  R.  C.    Humanizing  industry.     (New  York:  Dutton.     1920.    Pp.  390.) 

Fosdick,  R.  B.  Crime  in  America  and  the  police.  (New  York:  Century 
Co.     1920.     Pp.  57.) 

Fuller,  E.  The  Mexican  housing  problem  in  Los  Angeles.  (Los  Angeles: 
Univ.  Southern  California.     1920.     Pp.  11.     15c.) 

Gide,  C.  Les  institutions  de  progres  social.  Fifth  edition,  enlarged  and 
revised.     (Paris:   Tenin.     1920.     Pp.  vii,  612.) 

Harrison,  S.  M.  The  Springfield  survey;  a  study  of  social  conditions  in) 
an  American  city.  (New  York:  Russell  Sage  Foundation.  1920.  Pp. 
439.    $2.50.) 

Hartley,  C.  G.  Sex  education  and  national  health.  (London:  Fabian 
Soc.     1920.    6s.) 

Hericourt,  J.  The  social  diseases:  tuberculosis,  syphilis,  alcoholism,  ster- 
ility. Translated  and  with  final  chapter  by  Bernard  Miall.  (New 
York:    Dutton.     1920.     Pp.  10,  246.     $2.50.) 

Hicks,  F.  C.  The  new  world  order,  international  organization,  interna- 
tional law,  international  cooperation.  (Garden  City,  N.  Y. :  Doubleday, 
Page.     1920.     Pp.  496.) 

Hobson,  J.  A.  The  morals  of  economic  internationalism.  (Boston:  Hough- 
ton Mifflin.     1920.     Pp.  69.     $1.) 

Inge,  W.  R.  The  idea  of  progress.  (Oxford:  Clarendon  Press.  1920. 
Pp.  34.    2s.) 

Jeudwine,  J.  W.  Observations  on  English  criminal  law  and  procedure. 
(London:    King.     1920.     Pp.  99.     2s.  6d.) 


136  Reviews  and  New  Books  [March 

Kelly,  J.  W.  Training  industrial  workers.  (New  York:  Ronald.  1920. 
Pp.  xxi,  437.) 

Lapage,  C.  P.  F  eeblemindedness  in  children  of  school  age;  with  an  ap- 
pendix on  treatment  and  training,  by  Mary  Dendy.  Second  edition. 
(New  York:    Longmans.     1920.     Pp.  309.     $4.) 

McDougall,  W.  The  group  mind,  a  sketch  of  the  principles  of  collective 
psychology  with  some  attempt  to  apply  them  to  the  interpretation  of  na- 
tional life  and  character.  (Cambridge,  Eng. :  University  Press.  1920. 
Pp.  xvi,  304.     21s.) 

Mangold,  G.  B.  Social  reform  in  Missouri,  1820-1920.  (Columbia:  State 
Hist.  Soc.     1920.     Pp.  213.) 

Mason,  A.  L.  Guiding  principles  for  American  voters.  An  introduction  to 
the  study  of  elementary  Americanism.  (Indianapolis:  Bobbs-Merrill  Co. 
1920.     Pp.  287.) 

There  are  chapters  on  The  burden  of  taxes,  The  menace  of  socialism, 
Government  ownership  and  operation,  Organization  of  business  and  labor, 
and  Money,  deposits,  prices,  and  prosperity. 

Myers,  C.  S.     Mind  and  work.     (London:   Fabian  Soc.     1920.     6s.) 

Patrick,  G.  T.  W.  The  psychology  of  social  reconstruction.  (Boston: 
Houghton  Mifflin.     1920.     Pp.  ix,  273.     $2.) 

"Perhaps  one  of  the  most  distressing  signs  of  the  times  is  the  increase 
of  inefficiency — at  the  very  moment  when  we  have  laid  so  much  stress 
upon  efficiency.  .  .  .  With  our  increase  of  wealth  on  the  one  hand  and  on 
the  other  the  decrease  of  vitality  or  vital  efficiency,  oux*  glittering  civi- 
lization may  be  near  the  fate  of  other  civilizations  of  the  past."  There 
is  something  vexingly  paradoxical  about  the  phrases  "industrial  progress" 
and  "natural  culture,"  as  we  have  understood  them.  Economics  and 
psychology  in  their  recent  partnership  are  recognizing  the  fallacy  of 
many  of  our  existing  theories — that  of  capital,  that  the  route  to  efficiency 
is  by  the  adjustment  of  the  man  to  the  machine;  that  of  labor,  that  Utopia 
lies  in  shorter  hours  and  increased  pay,  or  in  equal  distribution  of  wealth. 
Under  the  guidance  of  Veblen,  Parker,  Mitchell,  and  Tead,  economics  is 
coming  to  regard  man  not  only  as  a  motor  mechanism,  not  only  as  an 
intellectual  mind,  but  also  as  a  human  being  motivated  by  a  powerful 
group  of  instincts.  We  can  have  true  efficiency,  true  civilization,  only 
when  the  whole  man  is  active,  when  we  find  useful  and  wholesome  outlets 
for  these  instinctive  forces. 

With  the  clearness,  sanity,  and  capacity  to  interest  which  characterize 
also  his  previous  volume,  The  Psychology  of  Relaxation,  Professor  Pat- 
rick discusses  the  psychological  factors  in  social  reconstruction,  the 
psychology  of  work,  our  centrifugal  society,  social  discipline,  and  the 
next  step  in  applied  science.  His  book  presents  such  an  admirable  in- 
terpretation of  the  psychology  of  Freud,  Adler,  and  Trotter,  as  applied 
to  war,  labor,  government,  and  morals,  that  it  cannot  fail  to  be  an  integral 
part  of  the  working  philosophy  of  all  its  readers. 

Charles  Leonard  Stone. 

Pohle,  L.    Die  Wohnungsfrage.     (Leipzig:   Goschen.     1920.     Pp.  140.) 


1921]  Social  Problems  and  Reforms  137 

Prince,  S.  H.  Catastrophe  and  social  change.  Based  upon  a  sociological 
study  of  the  Halifax  disaster.  Columbia  University  Studies  in  history, 
economics  and  public  law,  XCIV,  1.  (New  York:  Longmans.  1920. 
Pp.  151.) 

Redfern,  P.  The  consumer's  place  in  society.  (Manchester:  Cooperative 
Union.     1920.     Pp.  107.    2s.  6d.) 

Routzahn,  M.  S.  Traveling  publicity  campaigns :  educational  tours  of  rail- 
road trains  and  motor  vehicles.  (New  York:  Russell  Sage  Foundation. 
1920.     Pp.  xi,  151.     $1.50.) 

Ryan,  J.  A.  and  Husslein,  J.  C.  The  Church  and  labor.  Prepared  and 
edited  for  the  department  of  social  action  of  the  National  Catholic  Wel- 
fare Council.     (New  York:   Macmillan.     1920.     Pp.  305.     $3.75.) 

Sheffield,  A.  E.  The  social  case  history;  its  construction  and  content. 
(New  York:    Russell  Sage  Foundation.     1920.     Pp.  227.     $1.) 

Smyth,  W.  H.  Technocracy :  national  industrial  management.  (Berkeley, 
Calif.:   Sather  Gate  Bookshop.     1920.     Pp.40.) 

Thomas,  E.  Industry,  emotion  and  unrest.  (New  York:  Harcourt,  Brace, 
and  Howe.     1920.     Pp.  255.     $1.75.) 

Thompson,  F.  V.  The  schooling  of  the  immigrant.  (New  York:  Harper. 
1920.     $2.) 

American  foundations.  (New  York:  Russell  Sage  Foundation  Library. 
1920.     Pp.  11.) 

A  revised  edition  of  the  bibliography  prepared  in  1915  of  organizations 
for  social  welfare. 

The  child-welfare  special.  A  suggested  method  of  reaching  rural  communi- 
ties.    (Washington:    Children's  Bureau.     1920.     Pp.  19.) 

Children's  year.  A  brief  summary  of  work  done  and  suggestions  for  follow- 
up  work.     (Washington:    Children's  Bureau.     1920.     Pp.  20.) 

Complete  report  of  the  national  convention  of  the  Society  of  Industrial  En- 
gineers, held  in  Pittsburgh,  Nov.,  1920.  (Chicago:  G.  C.  Dent,  327  S. 
La  Salle  St.     1920.     $2.50.) 

Industrial  opportunities  and  training  for  women  and  girls.  Bulletin  of  the 
Women's  Bureau,  no.  12.     (Washington:    Supt.  Docs.     1920.     Pp.  48.) 

Investigation  of  the  housing  and  rental  situation  in  Minnesota.  (St.  Paul: 
State  Dept.  Agri.     1920.     Pp.  19.) 

Proceedings  of  the  1920  meeting  of  the  national  conference  of  catholic* 
charities.     (Washington:   Secretary,  324  Indiana  Ave.  N.  W.     1920.    $3.) 

Report  of  committee  on  methods  of  cooperation.  (New  York:  Federal 
Council  of  Churches,  105  East  22d  St.     1920.) 

A  study  of  rural  conditions  in  Ohio.  (Columbus:  Supt.  of  Public  Instruc- 
tion.    1920.     Pp.  175.) 

A  summary  of  juvenile-court  legislation  in  the  United  States.  (Washing- 
ton:   Children's  Bureau.     1920.     Pp.  110.) 


138  Reviews  and  New  Books  [March 

Twelfth  annual  report,  1919-1920.  (London:  Eugenics  Education  Society, 
11  Lincoln's  Inn  Fields.     1920.     Pp.  19.) 

Insurance  and  Pensions 

NEW    BOOKS 

Alexander,  W.  How  to  sell  insurance;  a  practical  guide  for  the  life  insur- 
ance salesman.     (New  York:    Spectator  Co.     1920.     Pp.  146.     $2.) 

Hoffman,  F.  L.  National  health  insurance  and  the  medical  profession. 
(Newark,  N.  J.:   Prudential  Ins.  Co.     1920.     Pp.  122.) 

Lengyel,  S.  Die  Bilanzen  der  V ersicherungs-TJ nternehmen.  Wine  Bilanz- 
lehre  und  eine  Bilanzanalyse.    (Berlin:   Mittler.     1920.   Pp.  160.    25  M.) 

Rumsey,  D.  A  new  standard  fire  insurance  policy  of  the  state  of  New 
York,  in  effect  January  1,  1918,  as  compared  with  the  original  standard 
policy.     (New  York:   ins.  Soc.     1920.     Pp.  30.) 

Schmittmann,  B.  Fiihrer  durch  die  deutsche  Sozialversicherung  in  ihrer 
Gestaltung  nach  dem  Kriege.  (Dusseldorf:  Schwann.  1920.  Pp.  xii, 
191.     10  M.) 

Deutscher  Verein  fur  Versicherungs-Wissenschaft  zu  Berlin.  (Berlin:  Mit- 
tler.    1920.     Pp.  12.) 

Hail  insurance  on  farm  crops  in  the  United  States.  Agricultural  Depart- 
ment bulletin  912.     (Washington:  Supt.  Docs.     1920.     10c.) 

System  of  compensation  for  injuries  to  workmen.  Report  of  the  depart- 
mental committee.     (London:    H.  M.  Stationery  Office.     1920.     Is.) 

Tentative  recommendations  of  the  pension  laws  commission.  (Milwaukee. 
1920.     Pp.  67.) 

Workmen's  compensation  law  of  the  state  of  Georgia,  effective  March  1, 
1921;  Louisiana,  with  amendments,  August  1920.  (New  York:  F.  R. 
Jones,  80  Maiden  Lane.     1920.     Pp.  36;  36.     50c.  each.) 

Workmen's  compensation  laws;  decisions  with  reference  to  negligence  and 
compensation  cases  annotated:  California,  Massachusetts,  New  Jersey, 
New  York,  Ohio,  Pennsylvania.     (Chicago:    Callaghan  &  Co.     1920.) 

Socialism  and  Co-operative  Enterprises 

NEW    BOOKS 

Burns,  C.  D.  Principles  of  revolution.  (London:  Allen  &  Unwin.  1920. 
5s.) 

Dietzel,  H.  Beitrage  zur  Geschichte  das  Sozialismus  und  Kommunismus. 
(Essen:    Baedeker.     1920.     Pp.  139.) 

Emmott,  Lord.  Nationalisation  of  industries:  a  criticism.  (London:  T. 
Fisher  Unwin.     1920.     Pp.  78.     3s.  6d.) 

Field,  G.  C.  Guild  socialism.  (London:  Wells,  Gardner,  Darton  &  Co. 
1920.     5s.) 

Flanagan,  J.  A.  Wholesale  cooperation  in  Scotland.  (Glasgow:  Coopera- 
tive Wholesale.     1920.     Pp.  xiv,  478.) 


1921]  Socialism  and  Cooperative  Enterprises  139 

Gide,  C.  Des  institutions  en  vue  de  la  transformation  ou  de  Vabolition  du 
salariat.  Twelve  lessons  given  in  May -June,  1919,  to  American  students. 
(Paris:   Marcel  Giard  &  Cie.     1920.     Pp.  111.) 

Hillquit,  M.  Present-day  socialism.  (New  York:  Rand  School  of  Social 
Science.     1920.     Pp.  84.     50c.) 

Hirsch,  M.  An  analysis  of  the  proposals  and  conceptions  of  socialism. 
(New  York:    Huebsch.     1920.     Pp.  59.     50c.) 

Kelsen,  H.  Sozialismus  und  Staat.  Eine  Untersuchung  der  politischen 
Theorie  des  Marxismus.     (Leipzig:    Hirschfeld.     1920.     Pp.  129.) 

Lange,  C.  L.  Histoire  de  Vinternationalisme.  I.  Jusqu'  a  la  paix  de  West- 
phalie  (16^8).  Publications  de  l'lnstitut  Nobel  Norvegien,  IV.  (Munich: 
Duncker  &  Humblot.     1920.     Pp.  517.     75  M.) 

Loria,  A.  Karl  Marx.  Authorized  translation  from  the  Italian  with  a  fore- 
word by  E.  &  C.  Paul.     (New  York:   Thomas  Seltzer.     1920.     Pp.  163.) 

McGowan,  R.  A.  Bolshevism  in  Russia  and  America.  (New  York:  Paul- 
ist  Press.     1920.     Pp.  45.     5c.) 

Mellor,  W.     Direct  action.     (London:    Leonard  Parsons,  Ltd.     1920.) 

Milhaud,  E.  The  march  towards  socialism.  (London:  Leonard  Parsons, 
Ltd.     1920.     8s.  6d.) 

Mitscherlich,  W.  Der  Nationalismus  Westeuropas.  (Leipzig:  Hirsch- 
feld.    1920.     31.20  M.) 

Money,  L.  C.  The  triumph  of  nationalisation.  (London:  Cassell.  1920. 
Pp.  276.     7s.  6d.) 

Nicholson,  J.  S.  The  revival  of  Marxism.  (London:  Murray.  1920. 
Pp.  145.) 

Odenbreit,  B.  Die  vergleichende  Wirtschaftstheorie  bet  Karl  Marx.  (Es- 
sen:   Baedeker.     1920.     Pp.  98.     5.20  M.) 

Pitt-Rivers,  G.  The  world  significance  of  the  Russian  revolution.  (Lon- 
don:  Basil  Blackwell.     1920.     2s.) 

Russell,  B.  Bolshevism:  practice  and  theory.  (New  York:  Harcourt, 
Brace  and  Howe.     1920.     Pp.  192.     $2.) 

San-Laville.     Socialisme  et  propriete.     (Paris:    Alcan.     1920.     6  fr.) 

Snowden,  Mrs.  P.  Through  Bolshevik  Russia.  (London:  Cassell.  1920. 
5s.) 

Stammler,  R.  Sozialismus  und  Christentum.  (Leipzig:  Felix  Meiner. 
1920.     25  M.) 

Todd,  A.  M.  Relation  of  public  ownership  to  democracy  and  social  justice. 
(Chicago:   Public  Ownership  League  of  America.     1920.     Pp.  29.     50c.) 

Tucker,  I.  St. J.  Now  it  must  be  done.  (Chicago:  Socialist  Party  of 
U.  S.     1920.     Pp.  37.) 

ton  Tyszka,  K.  Die  Sozialisierung  des  Wirtschaftslebens.  (Jena:  Fischer. 
1919.     Pp.  79.     3.50  M.) 


140  Reviews  and  New  Books  [March 

Walling,  W.  E.  Sovietism,  the  A  B  C  of  Russian  bolshevism  according 
to  the  bolshevists.     (New  York:  Dutton.     1920.     Pp.  220.     $2.) 

Quotations  from  bolshevist  writers,  particularly  Lenin  and  Gorky,  are 
used  by  Mr.  Walling  to  indict  bolshevism  in  the  words  of  its  own  apostles. 
The  idea  is  good,  but  with  equal  justice  it  would  be  possible  to  select 
other  quotations  from  the  same  writers  which  would  lead  to  other  con- 
clusions. 

In  the  latter  half  of  the  book  the  author  abandons  his  thesis  and  heaps 
bitter  denunciation  not  only  upon  American  radicals,  but  upon  the  liberal 
magazines  and  writers  who  have  been  less  severe  than  himself  in  their 
criticism  of  the  soviet  regime.  G.  L.  Arner. 

Wilbrandt,  R.  Sozialismus.  (Jenai  Eugen  Diederichs.  1919.  Pp.  338. 
15  M.) 

Wolff,  H.  H.  Cooperation  in  India.  (London:  W.  Thacker  &  Co.  1919. 
Pp.  352.) 

Zvorikine,  N.  La  revolution  et  le  bolchevisme  en  Russie.  (Paris:  Perrin. 
1920.     Pp.  xii,  310.) 

List  of  references  on  cooperative  stores.  (Washington:  Library  of  Con- 
gress.    1920.     Pp.  12,  typewritten.) 

A  political  guide  for  the  workers.  Socialist  party  campaign  book,  1920s 
prepared  by  the  department  of  labor  and  research,  Rand  School  of  Social 
Science.     (Chicago:    Socialist  Party.     1920.     Pp.  183.) 

Proceedings  of  the  judiciary  committee  of  the  assembly  of  the  state  of  New 
York  in  the  matter  of  the  investigation  as  to  the  qualifications  of  certain 
members  of  the  assembly.  Legislative  document  no.  5.  (Albany.  1920. 
Pp.  2807;  575,  53.) 

Thirteenth  annual  report  of  Pasadena's  municipal  lighting  works  depart- 
ment, 1919-1920.  How  your  dollars  have  been  spent.  (Pasadena:  Com- 
missioner of  Public  Works.     1920.     Pp.  31.) 

Thirty-fourth  report,  1919.  (London:  Labour  Co-partnership  Assoc.  1920. 
Pp.  47.) 

Report  of  annual  meeting,  1920.  (London:  Labour  Co-partnership  Assoc. 
1920.     Pp.  30.     6d.) 

Statistics  and  Its  Methods 
Profits,  Wages,  and  Prices.  By  David  Friday.  (New  York:  Har- 
court,  Brace,  and  Howe.  1920.  Pp.  iv,  256.) 
Professor  Friday  has  essayed  the  very  difficult  task  not  only  of  set- 
ting forth  the  chief  statistical  facts  concerning  the  distribution  of  the 
value  product  of  the  industries  of  the  United  States  among  the  differ- 
ent groups  of  productive  agents  and  the  changes  brought  about  in  this 
distribution  by  the  events  connected  with  the  great  war,  but  also  of 
appraising  the  merits,  demerits,  and  ultimate  social  results  of  present 
legal  and  social  arrangements  affecting  this  distribution.     Some  of  the 


1921]  Statistics  and  Its  Methods  141 

statistics  are  open  to  question :  the  record  on  page  15  shows  the  net  in- 
come of  corporations  for  the  years  1914  to  1917  to  be  larger  than  is 
actually  the  case,  the  error  arising  from  the  fact  that  the  total  of  "net 
corporate  income,"  as  recorded  in  the  reports  of  the  Commissioner  of 
Internal  Revenue,  includes  for  those  years  the  income  of  both  parent 
and  subsidiary  corporations,  since  each  corporation  was  compelled  by 
law  to  report  separately.  This  situation  resulted  often  in  compelling 
the  holding  company  to  pay  taxes  upon  virtually  the  same  income  upon 
which  a  subsidiary  corporation  had  already  been  taxed.  This  duplica- 
tion did  not  occur  in  the  earlier  years  under  the  excise  tax  law;  hence 
the  totals  of  income  for  the  earlier  and  later  years  are  incomparable. 
The  error  of  comparing  these  figures  did  not,  however,  originate  with 
Professor  Friday,  for  the  supposed  net  incomes  are  presented  without 
comment  as  a  continuous  column  in  the  official  government  report.  Un- 
fortunately, however,  this  error  affects  most  of  the  comparisons  of  cor- 
porate earnings  for  different  years  and  invalidates  to  a  degree  some 
of  the  conclusions  drawn. 

An  inaccuracy  of  less  importance  is  found  on  page  £7,  where  Profes- 
sor Friday  quotes  the  Agricultural  Department  figures  for  the  total 
value  of  farm  products,  without  noting  the  fact  that  since  the  value  of 
crops  fed  to  livestock  is  included  in  the  totals,  these  totals  represent 
gross  rather  than  net  values.  The  failure  to  call  attention  to  this 
peculiarity  of  the  data  is,  however,  a  matter  of  little  consequence,  for 
the  figures  are  used  only  for  a  comparison  of  the  different  years,  a  pur- 
pose for  which  they  are  presumably  perfectly  satisfactory. 

No  matter  how  painstaking  the  statistician,  oversights  of  the  kind 
just  mentioned  are  practically  inevitable  when  figures  are  dealt  with 
on  any  considerable  scale;  hence  they  cannot  justly  be  considered  to 
indicate  any  lack  of  care  on  the  part  of  the  investigator.  Any  adverse 
criticism  of  the  purely  statistical  part  of  Professor  Friday's  work  must 
rest  on  the  grounds  that  the  form  of  presentation  might  be  improved. 
The  reader  would  have  been  more  likely  to  obtain  the  correct  impres- 
sion from  the  facts  presented  if  all  values  had  been  reduced  to  equiva- 
lents of  some  base  year  by  dividing  by  a  price  index,  and  if  the  prin- 
cipal results  had  been  shown  graphically  as  well  as  in  tabular  form. 

But,  while  there  may  be  room  for  improvement  in  the  form  of  pre- 
sentation, it  is  nevertheless  true  that  the  book  is  one  of  the  most  valu- 
able compendiums  yet  published  covering  statistics  in  this  field.  It  sets 
forth  in  a  very  readable,  concise,  and  definite  style,  the  salient  facts 
concerning  profits,  wages,  and  prices ;  and  the  accuracy  of  most  of  the 
figures  and  of  the  immediate  conclusions  drawn  therefrom  apparently 
cannot  be  seriously  questioned.  On  the  other  hand,  it  seems  certain 
that  6ome  of  the  problems  might  have  been  further  clarified  by  a  more 


142  Reviews  and  New  Boohs  [March 

searching  analysis.  In  most  parts  of  the  book,  for  example,  the  fluc- 
tuations of  the  business  cycle  have  been  ignored  and  phenomena  are 
often  ascribed  to  purely  fortuitous  circumstances  when  the  true  ex- 
planation seems  to  be  that  they  were  the  perfectly  normal  results  of 
cyclical  influences. 

But  even  when  the  business  cycle  is  recognized  as  an  important 
characteristic  of  industry,  it  appears  that  insufficient  attention  has 
been  bestowed  upon  the  actual  shape  of  the  curve. 

In  chapter  V,  the  term  "capital"  is  used  interchangeably  in  several 
different  senses,  sometimes  meaning  "capital  goods,"  sometimes  loan- 
able funds,  and  sometimes  the  resources  of  an  enterprise.  This  con- 
fusion is  entangled  with  an  apparent  belief  that  individual  savings  are 
practically  identical  with  additions  to  national  wealth.  That  this  last 
assumption  is  not  true  is  evident  when  we  consider  the  great  increase  in 
private  saving  connected  with  financing  the  war,  which  saving,  however, 
has  certainly  not  resulted  in  any  equivalent  increase  in  national  wealth. 

This  analysis  of  the  data  seems  to  the  reviewer  to  be  coupled  oc- 
casionally with  a  tendency  to  base  conclusions  upon  insufficient  evidence. 
On  page  135,  for  example,  it  is  stated  that  the  increase  of  prices  since 
1919  is  ascribable  to  growing  inefficiency  of  labor,  but  only  vague  im- 
pressions of  employers  are  presented  as  evidence  that  the  productivity 
of  labor  in  general  has  fallen  off*  to  anything  like  the  supposed  extent 
of  40  per  cent.  The  whole  explanation  of  the  reason  for  the  rise  in 
prices  from  1914  to  1920  is  characterized  by  this  same  lack  of  evi- 
dence. Apparently,  we  are  furthermore  asked  to  accept  the  doubtful 
doctrine  that  the  price  level  is  dependent  upon  cost  of  production  and 
that  it  tends,  through  inertia,  to  continue  upon  any  plane  upon  which 
events  happen  to  place  it  (cf.  p.  140).  At  no  place  is  cognizance  taken 
of  the  important  truth  that  a  rise  of  prices  in  one  field,  by  using  up  the 
income  of  purchasers,  tends  to  produce  an  equal  fall  of  prices  in  some 
other  field.  Similarly,  sales  of  Liberty  bonds  by  the  holders  are  as- 
sumed to  be  equivalent  to  increased  national  demands  for  consumption 
goods,  the  fact  being  overlooked  that  purchasers  of  the  bonds  were 
probably  curtailing  consumption  at  the  same  time  and  to  the  same  ex- 
tent that  the  sellers  were  consuming  more  freely. 

In  defending  the  excess  profits  tax,  Professor  Friday  ignores  en- 
tirely the  important  question  as  to  whether  the  levying  of  any  kind  of 
taxes  upon  corporations  is  sound  economic  procedure.  In  dealing  with 
the  question  of  bettering  the  economic  condition  of  the  working  classes, 
he  almost  forgets  the  population  problem  which,  in  the  reviewer's  opin- 
ion, is  the  crux  of  the  whole  matter.  He  proposes  that  the  Government 
insure  to  all  entrepreneurs  a  minimum  return  on  their  investment,  but 
fails  to  mention  the  danger  of  thus  continuing  for  a  longer  time  than 


1921]  Statistics  and  Its  Methods  143 

necessary  the  operations  of  all  kinds  of  superfluous  or  unprofitable  en- 
terprises. 

The  general  impression  gained  from  an  examination  of  the  theories 
set  forth  is  that  they  are  brilliantly  suggestive  but  that  a  number  of 
them  can  only  be  established  by  the  presentation  of  more  complete  and 
convincing  arguments. 

As  a  handbook  of  facts,  the  volume  is  certainly  worthy  of  the  care- 
ful study  of  all  persons  interested  in  the  question  of  the  existing  di- 
vision of  the  industrial  product.  Most  of  the  leading  theses  of  the  book 
are  supported  by  such  masses  of  evidence  and  argument  that  the  reader 
is  virtually  compelled  to  accept  the  author's  conclusions.  He  dem- 
onstrates, for  example,  the  importance  of  the  outlook  for  business  en- 
terprise as  a  factor  affecting  interest  rates ;  the  necessity  of  allowing 
high  enough  rates  to  public  utilities  to  enable  them  to  secure  funds  for 
extensions  of  plant;  the  small  effect  that  the  excess  profits  tax  has  in 
discouraging  enterprise  and  the  absolute  impossibility  that  it  is  a  prime 
factor  in  causing  high  prices ;  and,  finally,  the  fact  that  labor  already 
receives  such  a  preponderant  share  in  the  value  product  of  the  great 
industrial  fields  of  manufacturing,  mining,  and  transportation,  that  the 
condition  of  the  laboring  class  can  at  best  be  but  slightly  improved  by 
any  possible  redistribution  of  the  present  product. 

Willford  I.  King. 

NEW    BOOKS 

Bowley,  A.  L.  The  change  in  the  distribution  of  the  national  income,  1880- 
1918.     (Oxford:    Oxford  University  Press.     1920.     Pp.  27.) 

.     Elements  of  statistics.     Fourth  edition.      (London:    King. 

1920.     Pp.  472.     24s.) 

Hesse,  A.  Ge-werbestatistih.  Third  edition,  revised.  (Jena:  Fischer. 
1920.     Pp.  xiii,  470.     18  M.) 

Kaufmann.  Theorie  und  Methoden  der  Statistik.  (Tubingen:  Mohr. 
1920.     Pp.  540.) 

Saitzew,  M.  Die  Motor enstatistik .  Ihre  Methoden  und  Ergebnisse.  Eine 
Studie  aus  dem  Gebiete  der  internationalen  JVirtschaftsstatistik.  (Zurich: 
Rascher  &  Cie.     1918.     Pp.  vii,  275.) 

Stamp,  J.  British  incomes  and  property:  the  application  of  official  sta- 
tistics to  economic  problems.  Second  edition.  (London:  King.  1920. 
15s.) 

Trench,  C.  S.  J.  and  Luty,  B.  E.  V.  Metal  statistics,  1920.  (New  York: 
American  Metal  Market  Co.     1920.     Pp.528.    $1.) 

Annuaire  international  de  statistique  agricole  1817  et  1918.  (Rome:  L'ln- 
stitut  International  d' Agriculture.     1920.     Pp.  747.     15  frs.) 

Municipal  statistics.  Report  of  cities  and  towns  having  a  population  of 
10,000  and  over.     (Ottawa:    Bureau  of  Statistics.     1920.     Pp.  57.) 


DOCUMENTS,  REPORTS,  AND  LEGISLATION 

Industries  and  Commerce 

The  Bureau  of  Foreign  and  Domestic  Commerce  has  recently  published 
the  following: 

Special  Agents  Series : 

No.  196,  Norway:  Commercial  and  Industrial  Handbook,  by  W.  A.  Beng- 
ston  (Washington,  1920,  pp.  58).  This  gives  a  description  of  va- 
rious phases  of  Norwegian  economic  life. 

No.  197,  Electrical  Goods  in  Spain,  by  P.  S.  Smith  (pp.  178),  which  con- 
tains chapters  on  general  features  of  the  Spanish  market,  central 
stations,  hydroelectric  plants,  electrification  of  steam  railways, 
and  telephones. 

No.   199,  Paraguay.    A  Commercial  Handbook,  by  W.  L.  Schurz  (pp.  195). 

No.  200,  Hides  and  Leather  in  France,  by  N.  Hertz  (pp.  159),  which  con- 
tains a  map  showing  cities  and  towns  of  interest  to  the  shoe  and 
leather  industry. 

No.  202,  Spanish  Finance  and  Trade,  by  A.  N.  Young  (pp.  199)  ;  this  is  of 
special  value  to  the  student  of  foreign  economic  conditions.  Part 
I  deals  with  the  monetary  and  banking  system;  part  II,  financing 
trade  with  Spain;  part  III,  investments;  part  IV,  public  finance. 

No.  203,  Textile  Markets  of  Brazil,  by  L.  S.  Garry  (pp.  43). 

No.  204,  Industrial  Machinery   in  France   and  Belgium,  by   C.   P.  Wood 
(PP.  61). 
Miscellaneous  Series: 

No.     87,  Import  and  Export  Schedules  of  Spain  (1920,  pp.  60). 

No.     92,  Stowage  of  Ship  Cargoes,  by  T.  R.  Taylor  (pp.  350). 

No.  106,  Trade  of  the  United  States  with  the  World,  1918-1919,  Part  I, 
Imports  (pp.  103). 

The  Federal  Trade  Commission  has  recently  published  a  report  on  Com- 
mercial Wheat,  Flour,  Milling  (Washington,  Sept.  15,  1920,  pp.  118),  a 
general  survey  of  the  production  and  consumption  of  wheat  flour  in  the 
United  States.  Chapter  2  deals  with  costs,  prices,  and  profits.  There  is 
an  interesting  map  showing  the  wheat  flour  production  and  distribution 
areas.  This  commission  has  also  made  a  report  on  Sugar  Supply  and  Prices 
(Nov.  15,  1920,  pp.  205). 

The  Senate  Select  Committee  on  Reconstruction  and  Production  has  sub- 
mitted its  preliminary  report,  December  14,  1920  (Report  No.  666,  66 
Cong.,  3  Sess.,  pp.  11).  This  committee,  it  is  understood,  will  present  sev- 
eral bills:  one  to  direct  long-term  deposits  of  national  banks  into  long-term 
uses  at  the  discretion  of  the  governors  of  the  Federal  Reserve  Board;  one 


1921]  Industries  and  Commerce  145 

to  authorize  the  establishment  of  a  home  loan  bank ;  one  to  amend  the  postal 
savings  law  to  pay  interest  quarterly;  and  one  to  get  monthly  figures  from 
the  coal  industry.  The  hearings  before  this  committee,  dealing  with  Coal 
and  Transportation,  have  been  printed  (Washington,  1921,  pp.  769). 

The  Report  of  the  Chief  of  the  Bureau  of  Markets  of  the  Department 
of  Agriculture  (Washington,  Oct.  9,  1920,  pp.  37)  gives  an  account  of  the 
investigations  which  have  been  made  during  the  past  year  and  those  now  in 
progress.  From  this  same  bureau  has  been  received  a  typewritten  copy  of 
History  of  the  Bureau  of  Markets,  by  Caroline  B.  Sherman  (pp.  11). 

The  subject  of  marketing  is  also  touched  upon  in  the  Report  of  the  Secre- 
tary of  Agriculture  for  1920  (pp.  72). 

Some  Extracts  from  the  Joint  Hearings  before  the  Committees  on  Agri- 
culture and  Forestry  on  S.  J.  Resolution  212,  directing  the  War  Finance 
Corporation  of  the  Federal  Reserve  Board  to  take  action  for  the  relief  of 
depression  in  the  agricultural  sections  of  the  country,  have  been  printed  as 
a  small  pamphlet  (Washington,  pp.  14). 

The  Tenth  Annual  Report,  1920,  of  the  Bureau  of  Mines  (Washington, 
pp.  149)  contains  interesting  data  with  regard  to  a  government  fuel  yard. 

The  United  States  Geological  Survey  has  printed  a  preliminary  sum- 
mary of  the  Mineral  Resources  of  the  United  States  in  1919  (Washington, 
1920,  pp.  128). 

The  Bureau  of  the  Census  has  distributed  the  final  bulletins  on  agricul- 
ture of  the  Fourteenth  Census  for  New  Hampshire  (pp.  21),  Vermont  (pp. 
18),  Rhode  Island  (pp.  14),  Delaware  (pp.  15);  and  a  bulletin  on  Num- 
ber of  Farms  by  States  and  Counties,  1920,  1910,  1900  (pp.  29). 

The  Department  of  Internal  Affairs  of  Pennsylvania  has  brought  to- 
gether in  a  single  volume  its  Report  on  the  Productive  Industries  of  Penn- 
sylvania for  1916-1919  (Harrisburg,  1920,  pp.  878). 

Bulletin  No.  11  of  the  State  Department  of  Agriculture  of  Minnesota 
discusses  Marketing  Problems  of  Minnesota  Farmers,  by  H.  J.  Hughes, 
Director  of  Markets  (St.  Paul,  Oct.  14,  1920,  pp.  23). 

The  Statistical  Report  of  the  California  State  Board  of  Agriculture  for 
1919  contains  a  summary  of  the  population  and  agricultural  production  of 
that  state  (Sacramento,  pp.  201). 

The  United  States  Tariff  Commission  has  issued  in  Tariff  Information 
Series,  No.  16,  Refined  Sugar:  Cost,  Prices,  and  Profits  (pp.  42)  illustrated 
by  charts;  No.  21,  Industrial  Readjustments  of  Certain  Mineral  Industries 
Affected  by  the  War  (pp.  320),  containing  many  maps  and  statistical  tables; 
also  a  substantial  volume  on  Statistics  of  Imports  and  Duties,  1908  to  1918 
Inclusive,  carefully  indexed  (Washington,  1920,  pp.  1096). 


146  Documents,  Reports,  and  Legislation  [March 

Public  Utilities 

There  have  been  received: 

Thirty-fourth  Annual  Report  of  the  Interstate  Commerce  Commission 
(Dec.  1,  1920,  pp.  205). 

Tenth  Annual  Report  of  the  Statistics  of  Express  Companies  in  the 
United  States,  1919,  published  by  the  Interstate  Commerce  Commission 
(Washington,  1920,  pp.  12). 

Seventh  Annual  Report  of  the  Public  Service  Commission  of  Massachus- 
etts, 1919,  Part  I  (Boston,  pp.  lv,  314). 

Eighth  Annual  Report  of  the  Public  Utilities  Commission  of  Rhode  Is- 
land, 1919  (Providence,  1920,  pp.  134). 

Labor 
The  federal  Bureau  of  Labor  Statistics  has  issued: 
No.  274,  Union  Scale  of  Wages  and  Hours  of  Labor,  May  15,  1919  (Wash- 
ington, Sept.,  1920,  pp.  281). 
No.  267,  Anthrax  as  an  Occupational  Disease,  by  J.  B.  Andrews    (July, 
1920,  pp.   186).     This   is   a  revision  of  Bulletin  205   originally 
published  in  1917. 
The  Women's  Bureau  of  the  United  States  Department  of  Labor  has  pre- 
pared  a  bulletin  on   The  New  Position  of   Women  in  American  Industry 
(Washington,  1920,  pp.  158).     Section  2  is  entitled  "Statistics  of  women's 
industrial  employment  during  and  after  the  war" ;  and  section  3,  "Results 
of  the  substitution  of  women  on  men's  work  during  and  after  the  war." 
There  are  a  number  of  illustrations. 

Labor  reports  that  have  been  received  are  as  follows: 

Second  Report  on  Wages  of  Women  Employed  in  Paper  Box  Factories  in 
Massachusetts  (Boston,  Mass.  Dept.  Labor,  1920,  pp.  53). 

Tenth  Annual  Report  on  Union  Scale  of  Wages  and  Hours  of  Labor  in 
Massachusetts,  1919  (Boston,  July,  1920,  pp.  146). 

Annual  Report  of  the  Industrial  Commission  of  New  York,  1919  (Albany, 
1920,  pp.  330). 

New  York  State  Industrial  Code,  1920  (Albany,  Indus.  Comm.,  pp.  48). 

Labor  Laws  of  the  Commonwealth  of  Virginia  (Richmond,  Comm.  of 
Labor,  1920,  pp.  129). 

Twenty-third  Annual  Report  of  the  Bureau  of  Labor  and  Industrial  Sta- 
tistics of  Virginia,  1920  (Richmond,  pp.  139). 

Labor  Laws  of  West  Virginia  (Charleston,  1920,  pp.  86). 

Eighth  Annual  Report  of  the  Commissioner  of  Commerce  and  Labor  of 
Georgia,  1919  (Atlanta,  1920,  pp.  89). 

Minimum  Wage  Act  of  Wisconsin  (Madison,  Indus.  Com.  of  Wis.,  pp.  23). 

General  Report  of  the  Minister  of  Public  Works  and  Labour  of  the  Prov- 
ince of  Quebec  (Quebec,  1920,  pp.  198). 


1921]  Public  Finance  147 

Money,  Prices,  Credit,  and  Banking 
The  Federal  Reserve  Board  has  prepared  a  new  compilation  of  Regula- 
tions, series  of  1920  (Oct.,  1920,  pp.  39). 

Attention  should  be  directed  to  the  monthly  bulletins  which  are  now  be- 
ing published  Sy  all  of  the  federal  reserve  banks.  These  contain  much 
fresh  material  of  economic  interest  in  the  respective  districts. 

The  Department  of  Foreign  Information  of  the  Bankers  Trust  Company, 
New  York,  in  its  bulletin  for  January  17,  1920,  presents  the  official,  de- 
tailed outline  of  the  international  credits  scheme  recommended  to  the  League 
of  Nations  by  the  Provisional  Economic  and  Financial  Committee  of  the 
Council  of  the  League. 

From  the  American  Acceptance  Council  have  been  received  a  number  of 
pamphlets:  American  Bankers  Acceptances  and  Foreign  Trade,  by  F.  I. 
Kent;  Practical  Problems  in  the  Development  of  Bankers  Acceptance;  Fed- 
eral Reserve  Board  Regulations  Relating  to  Acceptances  (Series  cf  1920); 
Bankers  Acceptances:  Principles  and  Practices,  Chapters  1  and  2;  Elements 
of  Trade  Acceptance  Practice,  by  R.  H.  Treman;  The  Banker  and  Trade 
Acceptances,  by  George  Woodruff  (New  York,  111  Broadway). 

Attention  should  also  be  called  to  the  Acceptance  Bulletin,  published  by 
this  organization.     It  appears  monthly  and  is  now  beginning  its  third  year. 

Recent  reports  dealing  with  banking  are  the  following: 

Thirteenth  Annual  Report  of  the  Bank  Commissioner  of  Rhode  Island, 
1920  (Providence,  pp.  229). 

Annual  Report  of  the  Superintendent  of  Banks  Relative  to  Savings  Banks, 
Trust  Companies,  etc.,  1919  (Albany,  1920,  pp.  752). 

Nineteenth  Annual  Report  of  the  Commissioner  of  Banking  of  West  Vir- 
ginia, 1919  (Charleston,  pp.  107). 

The  Banking  Law  of  the  State  of  Georgia  Effective  January  1,  1920  (T. 
R.  Bennett,  Supt.  of  Banks,  pp.  77). 

Proceedings  of  the  Forty-first  Annual  Meeting  of  the  Building  Association 
League  of  Illinois  (Chicago,  Am.  Bldg.  Assoc.  News  Co.,  1920,  pp.  147). 

Fifteenth  Annual  Report  of  the  Bureau  of  Banking  of  Idaho,  1919  (Boise, 
1920,  pp.  79). 

Public  Finance 

Recent  federal  reports  are: 

Annual  Report  of  the  Secretary  of  the  Treasury  on  the  State  of  the  Fi- 
nances, 1920  (Washington,  pp.  870).  This  contains  the  statement  of  Sec- 
retary Houston  and  Assistant  Secretary  Leffingwell  made  March  11,  1920, 
on  the  soldiers'  bonus  proposal. 


148  Documents,  Reports,  and  Legislation  [March 

Annual  Report  of  the  Commissioner  of  Internal  Revenue,  1920  (Wash- 
ington, pp.  230). 

Annual  Report  of  the  Director  of  the  Mint,  1920,  including  the  report  on 
the  production  of  the  precious  metals,  1919  (Washington,  1920,  pp.  309). 

The  Department  of  Foreign  Information  of  the  Bankers  Trust  Company 
has  prepared  a  leaflet  on  Income  Taxation  in  Great  Britain  and  the  United 
States,  illustrated  by  three  graphs. 

The  Continental  Insurance  Company,  New  York,  has  for  circulation  a 
pamphlet  on  British  and  American  Economic  and  Excess  Profits  Taxes  Com- 
pared, by  Professor  Carl  C.  Plehn  (New  York,  80  Maiden  Lane). 

The  National  Association  of  Credit  Men  has  prepared  a  pamphlet  on 
The  Undistributed  Earnings  Tax  (New  York,  41  Park  Row,  Dec,  1920, 
pp.  40). 

The  Old  Colony  Trust  Company,  Boston,  has  made  a  reprint  of  the  Mass- 
achusetts Income  Tax  Law. 

The  Irving  National  Bank  (New  York)  in  its  pamphlet  for  January, 
1921,  has  compiled  Practical  Questions  and  Answers  on  the  Federal  Tax 
Laws  (pp.  96). 

W.  B.  Hibbs  and  Company  has  prepared  a  series  of  circulars  on:  Bonds 
of  the  Kingdom  of  Italy;  Bonds  of  the  Government  of  the  Dominion  of 
Canada;  Bonds  of  the  Government  of  the  United  States  of  America;  Bonds 
of  the  Governments  of  the  French  Republic  and  the  Kingdom  of  Belgium; 
and  Bonds  of  the  Government  of  the  United  Kingdom  of  Great  Britain  and 
Ireland  (Washington,  Hibbs  Bldg.,  1920). 

The  following  volumes  have  been  received: 

Information  Relative  to  the  Assessment  and  Collection  of  Taxes,  Con- 
necticut, 1920  (Hartford,  pp.  48). 

Annual  Report  of  the  State  Tax  Commission  of  New  York,  1919  (Albany, 
1920,  pp.  514). 

Laxvs  Affecting  the  Taxation  of  the  Session  of  1920,  New  Jersey  (Tren- 
ton, State  Board  of  Taxation  and  Assessment  (pp.  39). 

Proceedings  of  the  Seventh  Biennial  Conference  Convention  of  the  Tax 
Commission  and  County  Assessors  of  the  State  of  Kansas,  held  February 
5-6,  1920  (Topeka,  pp.  78). 


PERIODICALS 

The  Review  is  indebted  to  Robert  F.  Foerster  for  abstracts  of  articles  in  Italian 
periodicals,  and  to  R.  S.  Saby  for  abstracts  of  articles  in  Danish  and  Swedish  peri- 
odicals. 

Theory 
(Abstracts  by  Walton  H.  Hamilton) 
Bell,  H.    High  wages:  their  cause  and  effect.    Contemp.  Rev.,  Dec,  1920.     Pp.  16. 
High  wages  are  dependent  upon  large  production  which  is  contingent  upon  a  great 
increase  in  capital.     This  must  be  secured  through  savings  without  interference 
with  "leisure  and  the  amenities  of  life." 

Bevan,  W.  L.  The  social  teaching  of  St.  Thomas  Aquinas.  Const.  Rev.,  Sept., 
1920.  Pp.  18.  A  review  of  Aquinas'  theories  of  property,  interest,  and  social 
justice.  One  was  entitled  to  "enough  to  keep  himself  in  good  standing  in  the  class 
to  which  he  belonged."  The  "Surplus"  was  to  be  devoted  to  the  common  good. 
"His  static  conception  of  society"  had  no  place  for  progress. 

Bowley,  A.  L.  The  theoretical  effects  of  rationing  upon  prices.  Econ.  Journ.,  Sept., 
1920.  Pp.  8.  A  mathematical  examination  of  various  cases  of  the  effects  upon 
prices  of  limitations  upon  demand  brought  about  by  compulsory  rationing. 

Booart,  E.  L.  Economic  organization  for  war.  Am.  Pol.  Sci.  Rev.,  Nov.,  1920. 
Pp.  20.  A  consideration  of  the  nature  of  the  problem  of  a  quick  adjustment  to 
a  single  military  end  of  an  industrial  system  organized  on  individualistic  principles. 

Carver,  T.  N.  Boss's  "Principles  of  Sociology."  Quart.  Journ.  Econ.,  Nov.,  1920. 
Pp.  16.    A  critically  appreciative  review. 

Coolet,  C.  H.,  Reflections  upon  the  sociology  of  Herbert  Spencer.  Am.  Journ. 
Soc,  Sept.,  1920.  Pp.  17.  Spencer  lacked  the  conception  of  a  "social  process" 
which  "absorbs  individuals  into  its  life,  conforming  them  to  its  requirements,  and 
at  the  same  time  developing  their  individuality."  On  the  contrary  his  individuals 
unite  into  a  differentiated  and  coordinated  society. 

Dickikson,  Z.  C.  Roche-Agussol's  psychologie  e"conomique  chez  les  Anglo- Americans. 
Quart.  Journ.  Econ.,  Nov.,  1920.  Pp.  5.  A  review  of  a  systematic  treatment  of 
marginal  economics  as  developed  in  England  and  America. 

Donlap,  K.  A  social  need  for  scientific  psychology.  Sci.  Mo.,  Dec,  1920.  Pp.  16. 
Our  badly  needed  social  psychology  is  being  very  imperfectly  made,  not  by  psy- 
chologists, but  "by  politicians  and  independent  thinkers,  like  Bertrand  Russell  and 
Bernard  Shaw." 

Edgewcrth,  F.  Y.  Professor  Cassel's  treatise.  Econ.  Journ.,  Sept.,  1921.  A  review 
of  Cassel's  Thecretische  Sozialokonomie  and  the  phenomena  of  which  it  treats  as 
"a  sort  of  scientific  poem." 

Higgins,  H.  B.  A  new  province  for  law  and  order.  III.  Harvard  Law  Rev.,  Oct., 
1920.  Pp.  32.  The  last  of  a  series  of  articles  upon  the  work  of  the  Australian 
Commonwealth  Court  of  Conciliation  and  Arbitration  in  reducing  industrial  rela- 
tions to  terms  of  a  legal  system. 

Hobson,  J.  A.  The  new  industrial  revolution.  Contemp.  Rev.,  Nov.,  1920.  Pp.  8. 
The  new  technique  can  give  us  abundance.  Its  utilization  will  entail  a  vast 
amount  of  monotonous  labor  and  under  the  dominance  of  business  enterprise  its 


150  Periodicals  [March 

product  cannot  be  disposed  of.     The  conditions  of  its  utilization  are  an  equitable 
distribution  of  the  incidence  of  monotonous  toil  and  a  chance  in  business  control. 

Little,  H.  The  economist  and  the  workshop.  Fortn.  Rev.,  Oct.,  1920.  Pp.  11.  To 
persuade  the  workman  to  increase  production  the  economist  must  show  quite  spe- 
cifically how  a  restriction  of  output  does  not  prolong  his  employment  or  he  must 
persuade  "the  masters"  to  guarantee  him  against  unemployment. 

Lloyd,  A.  H.  The  philosophy  of  Herbert  Spencer.  Sci.  Mo.,  Aug.,  1920.  Pp.  15. 
"Spencer's  philosophy  is  an  imprisoned  biology."  As  such  it  is  a  step  in  ad- 
vance of  the  eighteenth  century  "mechanicalism"  which  it  succeeded. 

Lyman,  E.  W.  The  ethics  of  the  wages  and  profits  system.  Intern.  Journ.  Ethics, 
Oct.,  1920.  Pp.  16.  A  criticism  of  the  ethical  implications  of  theories  of  wages 
and  profits  formulated  by  J.  B.  Clark  and  others. 

Macassey,  L.  The  national  wage  position.  Nineteenth  Cent.,  Nov.,  1920.  A  dis- 
cussion of  issues  involved  in  the  conflict  between  theories  of  wages  in  terms  of 
"competitive  value  of  labor"  and  "the  ability  of  the  industry  to  pay."  A  state- 
ment of  the  use  of  accountancy  as  an  instrument  in  wage  determination. 

Merbitt,  W.  G.  Social  control  and  industrial  strife.  Unpartizan  Rev.,  Jan.,  1921. 
Pp.  19.  A  plea  for  the  preservation  of  the  economic  harmonies  by  short  circuiting 
the  activities  of  union  leaders  during  strikes  by  the  use  of  the  injunction. 

Money,  L.  C.  The  misuse  of  ideas.  Contemp.  Rev.,  Aug.,  1920.  Pp.  9.  A  study 
of  the  development  and  utilization  of  technique.  "As  long  as  commercialism  is 
attached  to  manufacturing,  as  long  as  artistry  waits  upon  shop  keeping,  and  as 
long  as  captains  of  industry  must  be  hucksters  first  and  scientists  afterwards,  so 
long  the  common  affairs  of  the  world  will  remain  neglected  and  scorned  by  the 
world's  best  men." 

Money,  L.  C.  The  national  direction  of  industry.  Contemp.  Rev.,  Oct.,  1920.  Pp.  8. 
"In  war  we  got  what  we  wanted  by  the  national  organization  of  industry."  "In 
peace  we  resign  ourselves  to  the  ancient  scramble  which  devotes  itself  ...  to  in- 
dividual gain." 

Mumford,  L.  The  adolescence  of  reform.  Freeman,  Dec.  1,  1920.  Pp.  2.  The  hu- 
manization  of  industry,  hke  the  industrial  revolution,  will  come  from  the  indi- 
vidual efforts  of  many  men.    It  cannot  be  authoritatively  forced  by  the  state. 

Mumford,  L.  Sociology  and  its  prospects  in  Oreat  Britain.  Athenaeum,  Dec.  10, 
1920.  Pp.  2.  "The  task  of  sociology  is  to  make  social  action  depart  from  the 
technique  of  the  politician  and  approach  that  of  the  engineer." 

Niebuhr,  R.  The  church  and  the  industrial  crisis.  Biblical  World,  Nov.,  1920. 
Pp.  5.    An  appeal  for  a  place  for  "sacrifice"  among  business  motives. 

Robertson,  D.  H.  Mr.  Cole's  social  theories.  Econ.  Journ.,  Dec.,  1920.  Pp.  6.  A 
review  of  Chaos  and  Order  in  Industry.  Let  Mr.  Cole  "try  to  discover  why  people 
not  devoid  of  intelligence  or  faith  still  detect  signs  of  seaworthiness  in  the  old 
ship  Private  Enterprise."  Then  let  him  give  us  a  book  for  the  new  times  which 
is  what  The  Wealth  of  Nations  was  "for  the  bad  old  times  when  production  was 
for  profit  and  not  for  use." 

Rosenberg,  E.  J.  The  price  system  and  social  management.  Am.  Journ.  Soc,  Sept., 
1920.  Pp.  14.  The  direction  of  industry  towards  social  utility  must  be  a  matter 
of  purpose.  It  cannot  be  left  to  the  guidance  of  the  price  system.  Social  utility 
must  have  a  place  with  profits  in  determining  labor  management. 


1921]  Economic  History  151 

Watson,  F.  The  significance  of  leisure.  Contemp.  Rev.,  Aug.,  1920.  Pp.  8.  "More 
true  leisure  might  mean  a  higher  quality  of  work  all  round  if  it  were  work  of  the 
type  associated  with  thoughtfulness  and  reflection,  and  less  with  haste  and  speed." 

Wolfe,  A.  B.  Savers'  surplus  and  the  interest  rate.  Quart.  Journ.  Econ.,  Nov., 
1920.  Pp.  35.  A  study  of  the  sources  of  savings,  of  the  psychology  of  saving,  and 
of  the  magnitude  and  importance  of  the  saver's  surplus.  The  facts  suggest  scepti- 
cism about  any  theory  based  upon  "hedonistic  marginalism." 

Wolfe,  A.  B.  The  teaching  of  economics  again.  Journ.  Pol.  Econ.,  Nov.,  1920. 
Pp.  19.  A  plea  for  getting  down  to  the  essential  questions  of  what  economics 
is  all  about,  what  its  function  in  the  curriculum  is,  and  how  it  can  be  made  to 
serve  this  function.  A  criticism  of  the  discussion  of  teaching  economics  which 
moves  on  the  level  of  details  and  administrative  devices. 

Yealy,  F.  J.  A  flan  of  industrial  equity.  Catholic  World,  Dec,  1920.  Pp.  7. 
"The  way  to  greater  industrial  efficiency  is  the  way  of  industrial  democracy." 

The  control  of  industry.  New  Statesman,  Dec.  11,  1920.  Pp.  2.  A  discussion,  in 
terms  of  the  engineering  industry,  of  changes  in  control  necessary  to  secure  har- 
monious personal  relations  which  will  prevent  "a  steady  deterioration  of  produc- 
tive efficiency." 

The  problem  of  output.  New  Statesman,  Nov.  27,  1920.  Pp.  2.  A  review  of  the 
economic  theories  implicit  in  the  memorandum  of  the  Federation  of  British  In- 
dustries upon  Wages  and  Prices  and  the  reply  by  the  Joint  Labor  Committee  upon 
The  Cost  of  Living. 

The  right  to  work.  New  Statesman,  Dec.  4,  1920.  Pp.  3.  "Each  industry  so  far 
as  possible  should  carry  the  burden  of  its  own  unemployment."  "The  first  charge 
upon  every  industry  must  be  the  maintenance  of  a  reasonable  standard  of  life 
of  all  the  workers  necessary  for  its  conduct,  whether  constant  full  time  work  can 
be  found  for  them  or  not." 

Economic  History  (United  States) 
(Abstracts  by  Amelia  C.  Ford) 
Bahret,  J.  L.    Growth  of  New  York  and  suburbs  since  1790.    Sci.  Mo.,  Nov.,  1920. 
Pp.  15.     Presents  tables  and  maps  showing  population  changes,  discusses  the  ef- 
fect of  various  factors,  and  comments  on  the  plan  for  setting  New  York  off  as 
a  separate  state. 

Bogart,  E.  L.  Economic  organization  for  war.  Am.  Pol.  Sci.  Rev.,  Nov.,  1920. 
Pp.  20.  Traces  the  gradual  creation  of  government  machinery  to  cope  with  the 
economic  problems  presented  by  the  war;  considers  the  net  result  of  participation 
in  the  war  will  be  a  permanent  enlargement  of  the  functions  of  government. 

Calkins,  M.  C.  The  cutover  country.  Survey,  Nov.  27,  1920.  Pp.  5.  Tells  of  Wis- 
consin's recent  scientific  land  clearing  methods  by  means  of  which  a  man  becomes 
a  farmer  in  the  same  decade  in  which  he  was  a  pioneer. 

Cleland,  H.  F.  The  black  belt  of  Alabama.  Geog.  Rev.,  Dec,  1920.  Pp.  13.  De- 
scribes with  maps  and  pictures  the  physiography  of  the  black  belt,  and  points' 
out  the  geographical  influences  which  have  shaped  the  economic  and  social  char- 
acter of  this  region. 

Goodwin,  H.  D.    Shipbuilding  in  the  Pacific  Northwest.     Wash.  Hist.  Quart.,  July, 


152  Periodicals  [March 

1920.  A  bibliography  on  Northwest  shipbuilding  which  emphasizes  especially 
Lewis  and  Dryden's  Marine  History  of  the  Pacific  Northwest,  and  gives,  also,  a 
chronological  table  of  the  chief  coast-built  vessels  between  1788  and  1895. 

Gratz,  S.  Thomas  Rodney.  Pa.  Mag.  Hist.  &  Biog.,  July,  1919.  Pp.  20.  A  series 
of  letters  written  by  Rodney  which  contain  many  references  to  transportation 
facilities  and  other  economic  conditions  in  the  Ohio  valley  and  lower  Mississippi 
region,  as  observed  on  a  trip  through  there  in  1803-1804.  Continued  from  pre- 
vious issues. 

Hints,  F.  T.  The  revival  of  river  commerce,  particularly  on  the  Mississippi  River. 
Journ.  Engrs.  Club  of  St.  Louis,  July-Sept.,  1920.  Pp.  8.  Urges  the  importance 
of  our  inland  waterways  as  a  means  of  cheap  and  sufficient  transportation,  and 
the  continuation  by  private  interests  of  the  development  begun  by  the  govern- 
ment during  the  war. 

Jenks,  C.  L.     Following  the  westward  star.     Proc.  Miss.  Valley  Hist.  Rev.,  1918- 

1919.  Pp.  8.  Contains  selections  from  the  journals  of  two  pioneers,  father  and 
son,  that  give  an  insight  into  conditions  of  travel  from  Rhode  Island  to  Western 
Pennsylvania  in  1802,  and  from  Pennsylvania  to  Illinois  in  1836. 

Laskeh,  B.  Prosperity :  what  high  wages  and  steady  work  mean  to  Grand  Rapids. 
Survey,  Nov.  6,  1920.  Pp.  14.  Cites  many  examples  and  statistics  as  proof  that 
there  has  been  a  great  increase  in  wholesome  spending  by  all  classes  and  races, 
accompanied  by  an  increase  in  saving  and  provision  for  the  future  in  various 
forms.    Illustrated. 

Meriwether,  L.  A  century  of  labor  in  Missouri.  Miss.  Hist.  Rev.,  Oct.,  1920.  Pp. 
13.  Outlines  very  briefly  labor  conditions  in  the  state:  wages,  strikes,  labor  legis- 
lation, and  troubles  over  company  stores  of  the  mining  operators. 

Morison,  S.  E.  Letters  on  the  Northwest  fur  trade.  "Wash.  Hist.  Quart.,  July,  1920. 
Two  letters  from  a  ship  captain  in  the  fur  trade  to  his  owners  in  Boston,  telling 
of  merchandise  needed,  prices  of  goods  and  furs,  shortage  of  provisions,  sickness, 
medicines  required,  and  troubles  with  the  crew. 

Thompson,  J.  J.  A  chapter  in  Illinois  finances.  111.  Catholic  Hist.  Rev.^,  July,  1919. 
Pp.  8.  Tells  how  George  Rogers  Clark's  conquest  of  the  Northwest  was  financed 
by  Oliver  Pollock,  Francis  Vigo,  and  Father  Gibault,  and  of  the  losses  and  im- 
poverishment they  suffered  because  of  it. 

Viles,  J.  Missouri  in  1820.  Miss.  Hist.  Rev.,  Oct.,  1920.  Pp.  17.  Contains  some 
material  regarding  population,  slavery,  pioneer  farming,  early  industries,  and 
river  traffic. 

White,  E.  J.     A   century  of  transportation  in  Missouri.     Miss.   Hist.   Rev.,  Oct., 

1920.  Pp.  37.  A  chronological  summary  of  facts  as  to  early  mail  routes,  trails, 
caravan  and  river  travel,  railroads,  automobiles,  and  airplanes. 

Selections  from  the  correspondence  of  Colonel  Clement  Biddle.  Pa.  Mag.  Hist.  & 
Biog.,  July,  1919.  Pp.  10.  Letters  from  Tobias  Lear  contain  interesting  facts  as 
to  freight  charges  in  1790  on  packets  running  from  New  York  to  Philadelphia; 
told  in  connection  with  the  transfer  of  Washington's  furniture.  Continued  from 
previous  numbers. 


1921]  Agricultural  Economics  153 

Agricultural  Economics 
(Abstracts  by  A.  J.  Dadisman) 
Black,  J.  D.     The  division  of  farm  income  between  landlord  and  tenant.     Am.  As- 
soc. Agri.  Legis.  Bull.  6  (1920),  Apr.,  1920.    Pp.  16.    A  discussion  of  factors  de- 
termining land  rental. 

Boyd,  J.  E.  Collective  bargaining  in  agriculture.  Am.  Assoc.  Agri.  Legis.,  Bull.  6, 
(1920),  Apr.,  1920.  Pp.  13.  A  discussion  of  collective  bargaining  in  theory  and 
in  practice.     Discussions  follow. 

Carver,  T.  N.  The  necessity  for  the  organization  of  agricultural  interests.  Ann. 
Rpt.  Conn.  Sta.  Bd.  Agri.,  50  (1918),  Sept.,  1918.  Pp.  13.  A  discussion  of  or- 
ganization for  cooperation  and  its  application  to  marketing  farm  products. 

Cherington,  P.  T.  Statements  by  the  national  sheep  and  wool  bureau  of  America 
in  its  "truth  in  fabric"  propaganda  questioned.  Bull.  Nat.  Assoc.  Wool  Mfrs. 
July,  1920.  Pp.  14.  Facts  and  figures  are  presented  to  prove  inaccuracy  of 
statements  in  daily  and  trade  papers. 

Collett,  A.  The  nation's  wheat  supply.  Contemp.  Rev.,  July,  1920.  Pp.  8.  An 
argument  in  favor  of  England's  producing  more  of  her  wheat  supply. 

Crimi,  G.  N.  L'espropriazione  delle  terre  incolte  e  mal  coltivate  in  Sicilia.  Rif.  Soc, 
July-Aug.,  1920.    Pp.  8. 

Dixon,  H.  M.  and  Hawthorne,  H.  W.  Farm  profits.  U.  S.  Dept.  Agri.,  Bull. 
920  (1920),  Dec,  1920.  Pp.  56.  An  analysis  of  the  farm  business  of  185  farms 
in  Ohio,  Indiana,  and  Wisconsin,  from  survey  records  for  five  or  seven  years  of 
each  farm.    Twelve  tables,  and  nineteen  charts  are  given. 

Ely,  R.  T.,  Hibbard,  B.  H.,  and  Cox,  A.  B.  Credit  needs  of  settlers  in  upper  Wis- 
consin. Wis.  Agri.  Exp.  Sta.  Bull.  318  (1920),  Oct.,  1920.  Pp.  36.  Financial 
needs  of  pioneering  and  farm  development.  Farm  credit  and  how  it  may  be 
secured. 

Gillette,  J.  M.  The  improvement  of  the  rural  communication  system.  Quart. 
Journ.  U.  of  N.  Dak.,  Oct.,  1920.  Pp.  14.  An  argument  in  favor  of  a  system  of 
improved  roads. 

Green,  R.  M.  Cost  and  price  tendencies  on  the  farm.  Mo.  Sta.  Cir.  97  (1920), 
Aug.,  1920.  Pp.  8.  Corn,  wheat,  pork,  and  beef  are  considered,  from  1915  to 
1920.     Charts  and  tables  are  presented. 

Guild,  J.  B.  Variations  in  the  numbers  of  live  stock  and  in  the  production  of  meat 
in  the  United  Kingdom  during  the  war.  Journ.  Royal  Stat.  Soc,  July,  1920.  Pp. 
32.    A  statistical  study,  including  cattle,  sheep,  and  pigs. 

Hannan,  A.  J.  Land  settlement  of  ex-service  men  in  Australia,  Canada,  and  the 
United  States.  Journ.  Comp.  Legis.  &  Intern.  Law,  Oct.,  1920.  Pp.  13.  A  con- 
sideration of  legislation  proposed  and  that  enacted  in  the  three  countries. 

Hague,  F.    Immigrant  conditions  under  the  maple  leaf:  Soldier  settlements.     United 

Empire,  Oct.,  1920.     Pp.  4.     A  summary  of  soldier  land  settlement  legislation  in 

Canada. 
Hardy,  M.     Suggestions  towards  a  national  policy  for  agriculture.     Sociol.  Rev., 

Autumn,  1920.     Pp.  9.     A  plea  for  a  complete  agricultural  survey  as  a  basis  for 

developments. 


154  Periodicals  [March 

Hibbard,  B.  H.  and  Black,  J.  D.  Farm  leasing  systems  in  Wisconsin.  Wis.  Agri. 
Exp.  Sta.,  Research  Bull.  47,  Oct.,  1920.  Pp.  60.  A  discussion  of  the  facts  to 
consider  in  leasing  farms,  with  two  lease  contracts. 

Knight,  M.  M.  Peasant  cooperation  and  agrarian  reform  in  Boumania.  Pol.  Sci. 
Quart.,  Mar.,  1920.  Pp.  29.  The  evolution  of  rural  credit  and  cooperative  effort, 
and  reforms  initiated  since  the  war. 

Moorehouse,  L.  A.  and  Cooper,  M.  R.  The  cost  of  producing  cotton.  U.  S.  Dept. 
Agri.,  Bull.  896  (1920),  Nov.,  1920.  Pp.  59.  An  analysis  of  costs  and  methods 
of  growing  cotton,  from  842  survey  records,  for  1918.     Fifty-seven  tables. 

Nourse,  E.  G.  Harmonizing  the  interests  of  farm  producer  and  toum  consumer. 
Journ.  Pol.  Econ.,  Oct.,  1920.  Pp.  33.  City  and  country  interests  contrasted,  with 
suggestions  for  adjustment. 

Rocca,  G.  L'occupazione  dell  terre  "incolte"  da  parte  delle  associazioni  di  agricol- 
tori.  Rif.  Soc,  May-June,  1920.  Pp.  32.  Organized  peasant  occupation  of  un- 
cultivated lands  (inaccurately  so-called)  in  1919,  in  Italy,  statutory  action  by  the 
state  in  connection  therewith,  and  inferences  to  be  drawn  therefrom. 

Simpich,  F.  The  condition  of  agriculture  in  Germany.  Commerce  Repts.,  No.  77, 
Apr.,  1920.  Pp.  4.  Influence  of  the  war  on  acreage  and  yields  of  crops,  prices, 
exports  and  imports,  labor,  etc. 

Spencer,  D.  A.  Cooperative  wool  marketing.  Mo.  Sta.  Cir.  76,  Mar.,  1920.  Pp.  15. 
The  organization  and  various  steps  in  selling  wool  cooperatively  are  explained. 

Stewart,  G.  Can  the  farms  of  the  United  States  pay  for  themselves?  Journ.  Farm 
Econ.,  Oct.,  1920.  Pp.  17.  A  study  of  farmers'  savings  and  land  values  in 
twenty-one  states,  from  survey  data. 

Tayxor,  A.  E.  The  wheat  situation  at  home  and  abroad.  Sep.,  Proc.  Assoc.,  Land- 
Grant  Col,  Oct.,  1920.  Pp.  15.  The  world's  wheat  production,  factors  influencing 
prices,  and  utilization  of  the  crop. 

Weseen,  M.  H.  The  cooperative  movement  in  Nebraska.  Journ.  Pol.  Econ.,  June, 
1920.  Pp.  22.  A  survey  of  the  history  and  present  status  of  cooperative  activity 
among  farmers  in  Nebraska. 

Wester,  P.  J.  A  review  of  Philippine  agriculture  and  Philippine  trade  opportunities 
in  the  United  States.  Philippine  Agri.  Rev.,  13  (1920),  no.  1.  Pp.  20.  A  review 
of  agricultural  progress  in  the  Philippines  in  the  last  nine  years,  and  opportuni- 
ties for  agriculture  development  in  the  future.     Ten  plates. 

Willard,  J.  D.  Agriculture  and  prices.  Journ.  Farm  Econ.,  Apr.,  1920.  Pp.  13. 
Forces  and  factors  determining  price  levels,  with  application  to  the  milk  industry 
of  New  England. 

Willard,  R.  The  cost  of  producing  wheat  and  other  crops  in  North  Dakota  in  1919. 
N.  Dak.  Sta.  Bull.  142,  Sept.,  1920.  Pp.  20.  Cost  data  for  the  study  are  from 
surveys,  cost  accounts,  and  from  farmers  at  farmers'  meetings.  Detail  costs  are 
presented. 

Belgium  and  France:  The  food  supply  of  Belgium  and  of  the  invaded  regions  of 
France  during  the  war.  Intern.  Rev.  Agri.  Econ.,  July,  1920.  Pp.  15.  The  work 
of  the  Commission  for  Relief  in  Belgium  and  northern  France. 

Farm  tenancy  and  rural  credits.    111.  Legis.  Ref.  Bur.,  Constitutional  Conv.  Bull.  13, 


1921]  Railways  and  Transportation  155 

1919.  Pp.  44.    A  discussion  of  farm  tenure  in  Illinois  and  systems  of  rural  credit, 
including  first  mortgage  and  second  mortgage  systems,  and  short-time  credit. 

France:  The  grain  and  meat  supply  during  the  war.  Intern.  Rev.  Agri.  Econ., 
June,  1920.  Pp.  12.  A  summary  of  government  restrictions  on  the  use  of  grains 
and  meat  during  the  war. 

Germany:  Agricultural  cooperation  during  the  war.    Intern.  Rev.  Agri.  Econ.,  Aug., 

1920.  Pp.  14.    A  consideration  of  the  general  development  and  changed  activities 
of  agricultural  cooperative  societies  during  the  war. 

Germany:  Agricultural  credit  societies  during  the  war.  Intern.  Rev.  Agri.  Econ., 
Sept.,  1920.  Pp.  19.  A  review  of  the  development  and  activities  of  the  German 
agricultural  credit  societies.     Fourteen  tables. 

Japan:  The  food  supply  question  and  the  national  policy  of  home  production. 
Intern.  Rev.  Agri.  Econ.,  Aug.,  1920.  Pp.  11.  A  discussion  of  the  needs  of  addi- 
tional food  and  government  policy  for  meeting  the  needs. 

The  principles  of  cooperative  marketing  as  illustrated  by  California  experience. 
Intern.  Rev.  Agri.  Econ.,  June,  1920.  Pp.  11.  An  inquiry  into  the  reasons  for 
success  and  failure  in  cooperative  marketing. 

Railways  and  Transportation 

(Abstracts  by  Julius  H.  Parmelee) 
Acworth,  W*.  M.     The  financial  position  of  the  English  railways.     Ry.  Age,  Dec. 
IT,  1920.    Pp.  2. 

Allix,  G.    Sur  les  chemins  de  fer  franqais.    Rev.  Pol.  et  Pari.,  Nov.  10,  1920.    Pp.  17. 

Armstrong,  A.  H.  The  advantages  of  the  modern  electric  locomotive.  Gen.  Elec. 
Rev.,  Nov.,  1920.     Pp.  8.     Argument  for  electrification  of  railways. 

Atterbury,  W.  W.  The  railroad  labor  situation.  Ry.  Rev.,  Dec.  11,  1920.  Pp.  6. 
Opposes  closed  shop,  sympathetic  strikes,  restriction  on  production;  advocates 
steady  employment  at  good  wages,  a  voice  in  determining  working  rules  and 
regulations,  and  a  fair  share  of  profits  after  capital  is  rewarded. 

Balch,  C.  F.  Rehabilitating  our  railroad  organizations.  Ry.  Age,  Dec.  24,  1920. 
Pp.  3.    The  problem  of  morale. 

Beharrell,  G.  The  value  of  full  and  accurate  statistics.  Ry.  Gaz.  (London),  Sept., 
21,  1920.     Pp.  3.    As  shown  in  British  war  transportation  work  in  France. 

Bradford,  E.  A.  Dangerous  shoals  in  Shipping  Board's  rate-making  course.  An- 
nalist, Dec.  6,  1920.     Pp.  2. 

Cadoux,  G.  Quelle  est  la  situation  des  chemins  de  fer  de  la  Russie?  L'Econ.  Franc., 
Sept.  25,  1920.    Pp.  2. 

Ccyler,  T.  D.  Financial  situation  of  the  railroads  and  its  effect  on  improvement 
policies.  Engg.  News  Record,  Jan.  6,  1921.  Pp.  3.  Record  for  1920  furnishes 
basis  for  optimism  for  1921. 

Dunn,  S.  O.  The  figures  of  Mr.  McAdoo.  Nation's  Business,  Dec,  1920.  Pp.  2. 
Analysis  of  railway  operations,  March  1  to  September  1,  1920,  the  guaranty  period. 

Elliott,  H.  The  railroads  make  good.  Nation's  Business.  Jan.,  1921.  Pp.  2.  An- 
alysis of  railway  efficiency  in  1920,  by  chairman  of  Northern  Pacific  Railway. 


156  Periodicals  [March 

Esch,  J.  J.  The  Transportation  act  on  trial.  Savings  Bank  Mo.  Journ.,  Jan.,  1921. 
Pp.  8.    By  the  chairman  of  the  House  Committee  on  Interstate  Commerce. 

Flahaut,  F.  Les  moyens  de  transport  et  les  progres  de  la  civilisation.  Rev.  Trimes- 
trielle  Canadienne,  Sept.,  1920.     Pp.  11. 

Gennet,  C.  W.,  Jb.  The  rail  situation.  Ry.  Rev.,  Dec.  4,  1920.  Pp.  4.  Shortage 
of  rails  to  put  tracks  in  good  condition  amounts  to  10,000,000  tons. 

Gordon,  H.  H.  Traffic  as  a  science:  a  general  survey.  Mod.  Trans.  (London),  Nov. 
13,  1920.    Pp.  3. 

Gray,  C.  R.  A  new  era  in  railroad  operation.  Ry.  Journ.,  Dec,  1920.  Pp.  3.  A 
railway  man's  views  of  the  Transportation  act. 

Gutheim,  A.  G.  The  transportation  problem  in  the  coal  industry.  Ry.  Age,  Dec. 
31,  1920.     Pp.  4. 

Jennings,  H.  J.  Our  insolvent  railways.  Fortn.  Rev.,  Sept.,  1920.  Pp.  12.  The 
financial  situation  of  the  British  railways. 

Kruttschnitt,  J.  What  the  future  holds  in  store  for  the  railroads  of  the  United 
States.  Econ.  World,  Dec.  18,  1920.  Pp.  3.  Address  by  chairman  of  Southern 
Pacific  Company. 

Liesse,  A.  Le  futur  regime  des  chemins  de  fer  et  le  credit  de  VEtat.  L'Econ. 
Franc.,  Nov.  13,  1920.     Pp.  3. 

Markham,  C.  H.  The  coordination  of  rail  and  water  transport.  Ry.  Age,  Dec.  17, 
1920.    Pp.  4. 

Munn,  G.  G.  The  evolution  of  railroad  cooperation.  The  Chase,  July,  Aug.,  1920. 
Pp.  8,  8. 

de  Nouvion,  G.  Les  comptes  des  chemins  de  fer  de  VEtat  en  191S.  Journ.  des  Econ., 
Oct.,  1920.     Pp.  8. 

Parmelee,  J.  H.    Are  the  railroads  coming  back?     Coal  Rev.,  Oct.  27,  1920.     Pp.  4. 

Author's  answer  is  affirmative. 
.    Railway  maintenance  in  1920.    Engg.  News  Rec,  Jan.  6,  1921.    Pp.  4. 

Condition  of  railway  plant  and  equipment  improving. 

-.    Railway  revenues  and  expenses  in  1920.     Ry.  Age,  Jan.  7,  1921.     Pp. 


4.     Record-breaking  traffic,  revenues,  expenses,  wages,  and  taxes,  but  smallest  net 
income  in  over  thirty  years. 
.    Review  of  the  railway  year  1920.    Coal  Rev.,  Jan.  5,  1921.    Pp.  4. 


Parsons,  W.  B.    The  economic  aspect  of  terminals.    Ry.  Rev.,  Dec.  18,  1920.    Pp.  3. 

Payne,  J.  L.  Railway  developments  in  Canada  in  the  year  1920.  Ry.  Age,  Jan.  7, 
1921.     Pp.  3.     High  gross,  but  low  net  earnings. 

Peschaud,  M.  Le  futur  regime  des  chemins  de  fer.  Le  Monde  Econ.,  July  24,  31, 
Aug.  7,  14,  1920.     Pp.  2,  2,  3,  3. 

.     The  new  by-laws  of  the  French  railways.     Bull.  Intern.  Ry.  Assoc, 

Nov.,  1920.  Pp.  15.  Sketches  financial  relation  of  French  railways  to  govern- 
ment in  the  past,  and  analyzes  proposals  for  future. 

.     Present  condition  of  the  French  railways.     Ry,  Age,  Jan.   7,  1921. 


Pp.  3.     Reconstruction  retarded  by  large  operating  deficits. 


1921]  Railways  and  Transportation  157 

Plant,  L.  G.  The  locomotive  terminal  as  an  operating  factor.  Ry.  Age,  Nov.  19, 
26,  Dec.  3,  1920.     Pp.  3,  3,  4. 

Post,  G.  A.  Home  rule  for  the  railroads.  Nation's  Business,  Jan.,  1921.  Pp.  2. 
Creation  of  national  boards  of  railway  labor  adjustments  opposed. 

Price,  A.  Railway  operation  and  maintenance  under  divisional  organization.  Proc. 
Central  Ry.  Club,  May,  1920.     Pp.  7.     With  diagram. 

Pullen,  J.  The  Canadian  Express  Company's  history.  Can.  Ry.  &  Marine  World, 
Oct.,  1920.     Pp.  2.        | 

Rhu,  F.  Railway  valuation.  Ry.  Rev.,  Oct.  30,  Nov.  20,  27,  Dec.  11,  1920;  Jan. 
1,  8,  15,  1921.  Pp.  3,  5,  5,  4,  5,  6,  6.  Twelfth  to  seventeenth  articles  in  a  series 
abstracted  in  September  and  December  issues  of  this  Review. 

Shrapnell-Smith,  E.  S.  Economics  and  coordination  of  transport  by  road.  Mod. 
Trans.  (London),  Dec.  4,  1920.  Pp.  3.  Rail  and  highway  transportation  com- 
pared historically  and  statistically. 

Thayer,  R.  E.  English  railway  developments  during  1920.  Ry.  Age,  Jan.  7,  1921. 
Pp.  7.  Higher  rates  and  greater  traffic;  future  form  of  control  under  consider- 
ation. 

Thom,  A.   P.     The   reconstruction   of  railway    transportation.     Ry.   Age,  Oct.  29, 

1920.  Pp.  3. 

Villemin,  A.  La  crise  des  transports.  Bull,  de  la  Chambre  de  Commerce  de  Paris, 
Oct.  23,  1920.    Pp.  43.     Suggested  changes  in  French  railway  organization. 

von  Voelcker.  German  transportation  and  communication.  Annals,  Nov.,  1920. 
Pp.  11.     Prewar,  wartime,  and  future  phases  of  German  railway  situation. 

Walker,  H.  A.  On  the  question  of  slow-freight  traffic.  Bull.  Intern.  Ry.  Assoc, 
Nov.,  1920.     Pp.  12.    Deals  primarily  with  British  railways. 

Warfield,  S.  D.  Problems  of  transportation  yet  not  specifically  provided  for.  Mo. 
Bull.,  Nov.,  1920.     Pp.  8. 

Weirattcii.  Railway  transportation  in  Germany.  Annals,  Nov.,  1920.  Pp.  4.  Effect 
of  war  on  German  railway  mileage,  equipment,  and  operations. 

Whitenton,  W.  M.     The  present  railway  condition  in  Mexico.     Ry.  Age,  Jan.  7, 

1921.  Pp.  2.    Capital  and  equipment  needed. 

Willard,  D.  Transportation  act  as  solution  of  railroad  problem,  Ry.  Age,  Nov.  5, 
1920.    Pp.  3. 

Wollner,  W.  S.  Importance  of  the  human  element  in  railroading.  Ry.  Age,  Oct. 
22,  1920.    Pp.  4.    The  problem  of  morale. 

Yat-sen,  S.  A  Chinese  plan  for  Chinese  railway  development.  Far  East.  Rev.,  Oct., 
Nov.,  1920.     Pp.  4,  8.     Continuation  of  discussion  of  proposed  plan. 

Annual  report  of  Interstate  Commerce  Commission.  Ry.  Age,  Dec.  10,  17,  1920.  Pp. 
5,  4.    Digest  of  commission's  thirty-fourth  annual  report  to  Congress,  1920. 

Argentine  railway  progress.  Ry.  Gaz.  (London),  Dec.  24,  1920.  Pp.  3.  Marked 
recovery  in  1919-20. 

British  railways  and  the  war.  Ry.  Gaz.  (London),  Sept.  21,  1920.  Pp.  9.  War 
organization  and  operations  of  British  railways. 


158  Periodicals  [March 

China's  effort  to  recover  control  over  the  Chinese  Eastern  Railway.  Far  East  Rev., 
Nov.,  1920.    Pp.  2. 

Future  of  British  railways,  Ry.  Gaz.  (London),  Dec.  24,  1920.  Pp.  3.  Memorandum 
by  Federation  of  British  Industries. 

Increase  in  passenger  car  orders  continues.  Ry.  Age,  Jan.  7,  1921.  Pp.  3.  Equip- 
ment situation  improved  during  1920. 

I.  C.  C.  orders  increased  in  intrastate  rates.  Ry.  Age,  Nov.  26,  1920.  Pp.  4.  Digest 
of  decision  of  I.  C.  C.  overruling  rate  decision  of  N.  Y.  Public  Service  Commission. 

Locomotive  orders  show  increase  in  1920.  Ry.  Age,  Jan.  7,  1921.  Pp.  7.  Orders 
and  deliveries  below  average. 

The  Mediterranean  line  of  communication.  Ry.  Gaz.  (London),  Sept.  21,  1920.  Pp. 
7.    Overland  route  to  the  East,  developed  by  British  in  the  war. 

New  construction  conspicuous  by  its  absence.  Ry.  Age,  Jan.  7,  1921.  Pp.  7.  A 
new  low  record  in  railway  building  for   1920. 

The  next  step  toward  preventing  depressions.  Ry.  Age,  Jan.  7,  1921.  Pp.  6.  With 
diagrams  to  show  effect  of  railway  purchases  on  business  stability. 

Operation  of  British  and  United  States  railways  compared.  Ry.  Age,  Nov.  26, 
1920.    Pp.  3. 

Organization  and  work  of  the  transportation  directorate.  Ry.  Gaz.  (London),  Sept. 
21,  1920.  Pp.  6.  British  railway  management  in  the  war;  Directorate-General  of 
Military  Railways. 

The  Palestine  campaign.  Ry.  Gaz.  (London),  Sept.  21,  1920.  Pp.  10.  With  special 
reference  to  railway  construction  and  operation. 

Purchases  of  freight  cars  in  1920.  Ry.  Age,  Jan.  7,  1921.  Pp.  7.  Improvement 
over  1919,  but  below  normal. 

Railroad  Labor  Board's  report  on  wages  of  railroad  employees,  1920.  U.  S.  Mo. 
Labor  Rev.,  Nov.,  1920.  Pp.  7.  Rate  of  compensation  per  month,  excluding  offi- 
cials, has  increased  from  $77.93  in  1917  to  $141.28  in  1920  or  81.3  per  cent. 

Railroad  power  of  rehabilitation  returning.     Ry.  Age,  Jan.  7,  1921.     Pp.  4. 

Railways  in  the  great  war.  Central  Argentine  Ry.  Mag.,  Aug.,  Sept.,  Oct.,  1920. 
Pp.  3,  5,  4. 

The  railways  of  Mesopotamia.  Ry.  Gaz.  (London),  Sept.  21,  1920.  Pp.  12.  British 
operations  in  the  Bagdad  campaign. 

Resultats  obtenu  en  1919  sur  les  riseaux  des  cinq  compagnies  principales  des  chemins 
de  fer  francais.     Rev.  Gen.  des  Chemins  de  Fer,  Dec,  1920.     Pp.  4. 

Statistique  des  chemins  de  fer  et  tramways  Nterlandais  pour  Vannte  1918.  Bull, 
des  Transports  Intern,  par  Chemins  de  Fer,  Oct.,  1920.     Pp.  2. 

Transportation  conditions  during  the  year  1920.  Ry.  Age,  Jan.  7,  1921.  Pp.  6. 
Improvement  in  operating  efficiency. 

Commerce 

(Abstracts  by  Harry  R.  Tosdal) 
Alcock,  F.  J.     Past  and  present  trade  routes  to  the  Canadian  Northwest.     Geog. 
Rev.,  Aug.,   1920.     Pp.  27.     Traces   improvements   in   trade   routes  to   Canadian 
Northwest  from  the  time  of  the  Indian  hunter  to  the  present  day. 


1921]  Commerce  159 

Austin,  O.  P.  7*  our  foreign  trade  prosperity  fictitious?  1920  compared  with  1914. 
Americas,  Oct.,  1920.  Pp.  5.  Three-quarters  of  exports  and  imports  of  United 
States  can  be  expressed  in  pounds:  on  this  basis,  exports  in  1920  were  only  35  per 
cent  greater  than  in  1914,  while  stated  value  was  225  per  cent  higher;  imports 
increased  about  66  per  cent,  value  244  per  cent. 

B.  B.  Commerce  of  the  gold  coast.  Comm.  Mo.,  Nov.,  1920.  Pp.  5.  Statistical 
study  showing  that  since  1910  basis  of  foreign  trade  of  Gold  Coast  has  been  agri- 
culture, gold  taking  second  place. 

Birkett,  M.  S.  The  iron  and  steel  trades  during  the  war.  Journ.  Royal  Stat.  Soc, 
May,  1920.  Pp.  41.  Comprehensive  history  of  iron  and  steel  in  England,  France, 
and  the  United  States  during  the  war.  Suggests  means  of  enabling  England  to 
meet  foreign  competition. 

Bosanouet,  H.  The  race  for  the  Chinaman's  nightcap.  Econ.  Journ.,  Sept.,  1920. 
Pp.  13.  Says  that  world  seems  to  be  following  teachings  of  Fichte  and  other  Ger- 
man philosophers.  "It  is  the  imperative  need  for  a  real  international  harmony 
which  forms  the  strongest  argument  for  complete  freedom  of  trade  from  artificial 
restrictions  in  the  supposed  interests  of  industry." 

Broderick,  J.  A.  International  coal  trade.  Comm.  Mo.,  Oct.,  1920.  Pp.  10.  United 
States  and  United  Kingdom  are  the  only  countries  of  the  world  with  sufficient 
coal  to  operate  their  industries  at  capacity  during  present  winter.  World's  coal 
shortage  is  one  of  the  most  serious  results  of  wastefulness  of  war. 

Hammond,  M.  O.  Canada's  fast  growing  trade  with  the  United  States.  Mag.  of 
Wall  St.,  Nov.  27,  1920.  Pp.  2.  "War  bulge  hardly  lost,  despite  adverse  exchange 
rate."     Canada  fears  new  Republican  tariff  policy. 

Harrington,  W.  J.  Tariff  law  incongruities.  World's  Markets,  Nov.,  1920.  Pp.  4. 
Gives  examples  of  burdensome  technicalities  of  present  tariff  law. 

Jones,  E.  The  Webb-Pomerene  act.  Journ.  Pol.  Econ.,  Nov.,  1920.  Pp.  14.  Traces 
conditions  necessitating  passage  of  the  act,  progress  of  bill  through  Congress,  and 
describes  provisions.  In  conclusion  states  several  well  founded  objections  to  ex- 
port combinations  with  pessimistic  view  as  to  success  of  the  act  from  viewpoint 
of  public  welfare. 

Pilotti,  R.  II  credito  all'esportazione  e  i  sistemi  di  assicurazione  dei  crediti  com- 
merciali.     Riv.  del  Soc.  Comm.,  July-Aug.,  1920.     Pp.  17. 

T,  L.  C.  Zinc  trade  of  the  world.  Comm.  Mo.,  Nov.,  1920.  Pp.  5.  Because  of  the 
war,  United  States  has  become  leading  source  of  world's  zinc. 

Turpeau,  J.  La  stability  financiere  retablie  par  le  libre-e'change  (rapport  de  M. 
Yves  Guyot  a  la  conference  internationale  du  libre  ^change).  Le  Monde  Econ., 
Nov.  20,  1920.  Pp.  3.  The  more  trade  in  goods  and  services  is  facilitated,  the 
less  important  will  be  the  role  played  by  currency;  the  more  fluctuations  of  ex- 
change are  diminished,  the  greater  will  be  the  financial  stability  between  the  va- 
rious countries.  The  true  strength  of  the  banks  depends  on  their  commercial  loans 
and  discounts,  not  on  the  relation  of  their  metallic  reserve  to  their  issue  of  notes. 

Paten,  E.  Le  coton  en  1919-1920.  L'Econ.  Franc.,  Sept.  25,  1920.  Pp.  3.  Sta- 
tistical study  of  production  and  consumption  of  cotton  for  various  countries  over 
a  period  of  years,  and  prices  of  cotton  in  New  York  market  from  1888  to  1920. 

Vogel,  E.  H.      Leutsch-0  ester  reichs  Stellung  im  Weltverkehr  auf  Grand  des  Fried- 


160  Periodicals  [March 

ensvertrages.  Weltwirtsch.  Archiv,  Jan.,  1920.  Pp.  30.  German-Austrian  position 
in  world  trade  depends  entirely  upon  ability  to  conclude  stable  agreements  with 
neighboring  states  for  the  essential  quantities  of  fuel  and  foodstuffs.  Criticizes 
various  provisions  of  treaty. 

Wehberg,  H.  Verkehrsfreiheit  und  Vblkerbund.  Weltwirtsch.  Archiv,  Apr.,  1920. 
Pp.  13.  Discusses  various  proposals  to  restore  and  extend  international  traffic 
arrangements  and  trade  agreements  to  facilitate  commerce  with  reference  to  the 
League  of  Nations. 

Whitman,  P.  P.  American  trade  with  China,  past,  present  and  future.  Americas, 
Sept.,  1920.  Pp.  8.  Description  of  possibilities  of  Chinese  market.  United  States 
had  about  16.5  per  cent  of  world's  trade  with  China  in  1919;  necessary  to  create 
new  demands  there. 

Zingali,  G.  Gli  aspetti  economico-statistici  del  problema  della  came  congelata.  Rif. 
Soc,  July-Aug.,  1920.  Pp.  36.  How  the  importation  of  foreign  meats  into  Italy 
arose  during  the  war,  and  what  its  major  consequences  have  been. 

The  diamond  trade.  Comm.  Mo.,  Dec,  1920.  Pp.  4.  British  South  Africa  has  al- 
ways produced  about  four  fifths  of  world's  diamonds.  Diamond  market  is  most 
completely  controlled  of  all  commodity  markets. 

India  an  increasing  market  for  American-made  goods.  Americas,  Aug.,  1920.  Pp.  6. 
Inability  of  Great  Britain  to  supply  Indian  customers  and  elimination  of  Germany 
left  well  prepared  trade  field  open  to  attack  from  other  manufacturing  nations. 
Complications  in  respect  to  currency  make  necessary  expert  banking  assistance. 

Jute  manufactures.  Comm.  Mo.,  Oct.,  1920.  Pp.  7.  Gives  figures  of  India's  jute 
manufactures  and  imports. 

Near  eastern  trade  field  one  of  great  future  possibilities.  Americas,  Nov.,  1920. 
Pp.  8.  Brief  description  pointing  out  certain  Near  Eastern  market  characteristics 
and  needs. 

The  port  of  Baltimore.  World's  Markets,  Nov.,  1920.  Pp.  5.  Points  out  the  many 
advantages  of  Baltimore  as  a  port. 

Public  Utilities 

(Abstracts  by  Charles  S.  Morgan) 
Addinseix,  H.  M.     Utility  is  people's  business.     Rev.  Revs.,  Dec,  1920,  Aera,  Jan., 
1921.    Pp.  6,  6.     Argument  that  their  essential  nature  entitles  utilities  to  sympa- 
thetic support  of  the  public. 

Alwyn-Schmidt,  L.  W.  Lack  of  easily  accessible  information  on  financial  standing 
a  handicap  to  gas  industry  financing.  Am.  Gas  Engg.  Journ.,  Sept.  25,  1920. 
Pp.  3.    A  consideration  of  the  criteria  of  safe  and  profitable  investments. 

Blauvelt,  W.  S.  Satisfactory  service  at  low  rates.  Gas  Age,  Nov.  10,  1920.  Pp.  2. 
Novel  suggestion  is  made  that  public  acquire  ownership  of  gas  distribution  systems 
through  taxation  of  adjacent  land  and  that  the  regulation  of  the  gas  industry  be 
left  to  potential  competition. 

Dana,  E.  City  prosperity  and  the  trolley.  Aera,  Dec,  1920.  Pp.  6.  Argument 
that  street  railways,  if  they  are  to  be  of  maximum  usefulness,  must  be  treated 
as  possible  agencies  and  assisted  accordingly.  Brief  reference  to  experience  with 
public  subsidies  in  Massachusetts. 


1921]  Public  Utilities  161 

Davies,  H.  J.  Cost-of -service  accounting.  Elec.  Ry.  Journ.,  Oct.  16,  1920.  Pp.  5. 
Discussion  of  some  particulars  in  which  it  is  thought  the  Cleveland  service-at-cost 
franchise  could  be  improved. 

Elmes,  C.  F.  Utility  regulation  and  rate  of  return.  Elec.  Ry.  Journ.,  Oct.  16,  1920. 
Pp.  5.  Objection  is  registered  to  regulation  of  public  utilities  and  non-regula- 
tion of  other  industries;  consideration  of  effects  of  regulation  on  financial  and 
managerial  problems. 

Flint,  E.  M.  The  electric  railway  budget.  Elec.  Ry.  Journ.,  Dec.  25,  1920.  Pp.  2. 
Detailed  description  of  budget  system  in  use  on  Boston  Elevated  Railway. 

Gaul,  A.,  Jr.  Popular  utility  misconceptions.  Aera,  Jan.,  1921.  Pp.  4.  Discussion 
by  a  member  of  New  Jersey  commission  of  certain  aspects  of  utility  financing  and 
management,  particularly  the  holding  company,  which  the  public  finds  it  difficult 
to  understand. 

Graham,  G.  M.  The  motor  vehicle  as  an  ally.  Aera,  Nov.,  1920,  Elec.  Ry.  Journ., 
Oct.  16,  1920.  Pp.  9,  4.  Discussion  by  a  manufacturer  of  automobiles  of  the 
respective  spheres  of  electric  railway  and  motor  transportation. 

Jackson,  C.  D.  Strengthening  the  utilities.  Elec.  World,  Oct.  23,  1920.  Pp.  2. 
Discussion  by  chairman  of  Wisconsin  Railroad  Commission  of  some  principles 
which  should  guide  in  the  management  and  regulation  of  utilities. 

Jackson,  J.  F.  The  Boston  "L"  and  state  control.  Aera,  Jan.,  1921.  Pp.  7.  In- 
teresting account  by  chairman  of  board  of  public  trustees  of  the  history,  accom- 
plishments and  future  problems  of  this  important  experiment  in  public  manage- 
ment. 

Jackson,  W.  Zone  fares  for  street  railways.  Their  relation  to  housing  congestion 
and  company  finances.  Nat.  Munic.  Rev.,  Nov.,  1920.  Pp.  6.  Argument  that 
properly  developed  distance-fare  system  will  relieve,  not  create,  congestion,  and 
conduce  to  the  maximum  serviceability  of  street  railways. 

McNutt,  R.  S.  Bport  of  Committee  on  Utilities  to  League  of  Iowa  Municipalities. 
Am.  Munics.,  Nov.,  1920.  Pp.  2.  A  brief  review  of  some  of  the  arguments  often 
advanced  against  state  regulation. 

Mendes,  H.  E.  Financial  problems  confronting  utilities  during  reconstruction  period. 
Elec.  Ry.  Journ.,  Oct.  16,  1920,  Aera,  Nov.,  1920.  Pp.  2,  5.  No  specific  solution 
for  difficulties  of  electric  railway  industry  other  than  education  of  the  public  and 
economy. 

Nash,  L.  R.  Valuation  for  rate-making  purposes.  Stone  &  Webster  Journ.,  Dec, 
1920.  Pp.  19.  The  present  level  of  prices  is  held  to  be  relatively  permanent  and 
to  be  entitled  to  recognition  in  the  ascertainment  of  fair  value. 

— — .     The  renaissance  fare.     Stone  &  Webster  Journ.,  Oct.,  1920.     Pp.  6. 

The  ten-cent  fare  should  be  the  ultimate  objective  of  the  electric  railway  industry. 

Smith,  W.  M.  Adequate  service — sufficient  rates.  Gas  Age,  Oct.  25,  1920.  Pp.  6. 
A  general  survey  by  the  chairman  of  the  recently  created  Michigan  Public  Utili- 
ties Commission  of  the  problems  of  regulation. 

Warhen,  P.  B.  The  justice  of  current-cost  valuations.  Elec.  World,  Dec.  25,  1920. 
Pp.  2.  Argument  that  justice  to  investors  requires  correction  of  valuation  basis 
for  fluctuations  in  purchasing  power  of  money. 


162  Periodicals  [March 

Wilcox,  D.  F.  Effect  of  fare  increases  upon  street  railway  traffic  and  revenue. 
Nat.  Munic.  Rev.,  Oct.,  1920.  Pp.  3.  Extended  statistical  analysis  shows  that 
fares  cannot  be  increased  greatly  without  resulting  in  a  less  than  proportionate 
increase  in  revenues  and  in  serious  impairment  of  usefulness  of  street  railways. 

.      Service-at-cost    in    local    transportation.      Nat.    Munic.    Rev.,    Dec, 

1920.  Pp.  7.  A  critical  analysis,  from  public  viewpoint,  of  Federal  Electric 
Railways  Commission's  pronouncements  on  service-at-cost  as  a  remedial  form  of 
regulation. 

Working    capital    in    street    railway    valuation.      Ann.    Am.    Acad., 


Suppl.,  Nov.,  1920.  Pp.  24.  An  extended  analysis  of  recent  cases  involving  al- 
lowance for  working  capital.  Conclusion  is  reached  that  no  allowance  for  perma- 
nent working  capital  should  be  included  in  a  valuation  for  rate-making  purposes 
of  the  property  of  a  fully  developed,  self-sustaining  street  railway. 

Extent  of  the  constitutional  right  to  a  review  of  rate  orders  of  public  utility  com- 
missions. Law  Rev.,  Jan.,  1921.  Pp.  3.  A  review  of  recent  decisions  of  the 
United  States  Supreme  Court. 

Fare  trend  is  toward  ten  cents.  Aera,  Dec,  1920.  Pp.  13.  The  fares  charged  in 
cities  of  over  25,000,  herein  set  forth  in  detail,  are  generally  on  the  higher  levels 
and  are  said  not  to  have  caused  any  permanent  falling  off  in  the  riding  habit. 

How  the  zone  fare  has  made  good  at  San  Diego.     Elec  Ry.  Journ.,  Nov.  13,  1920. 

Jitneys  and  the  public  interest.  What  they  think  of  the  jitney.  Aera,  Dec,  1920. 
Pp.  23.  A  collection  of  pronouncements  by  public  officials  on  the  evils  of  jitney 
competition. 

Municipal  street  cars  fail  at  Seattle.  Pub.  Service,  Oct.,  1920.  Pp.  4.  Criticism  of 
results  obtained  by  Seattle's  municipally  owned  trolleys. 

New  York  utility  commission  at  work.  Elec.  Ry.  Journ.,  Nov.  13,  1920.  Pp.  8. 
Interesting  detailed  description  of  work  of  New  York  first  District  Public  Ser- 
vice Commission. 

Public  officials  on  service-at-cost.  Elec.  Ry.  Journ.,  Dec  4,  1920.  Pp.  4.  No 
unanimity  in  the  views  of  public  officials  on  service-at-cost,  as  here  set  forth. 

The  public  service  commission  of  the  Bay  State.  Elec.  Ry.  Journ.,  Dec.  25,  1920. 
Pp.  7.  Interesting  account  of  the  historical  development  of  Massachusetts  regu- 
latory machinery  and  of  the  activities  of  the  present  Department  of  Public 
Utilities. 

San  Francisco  finds  municipal  ownership  losing  venture.  Pub.  Service,  Oct.,  1920. 
Pp.  4.    Criticism  of  San  Francisco's  municipal  trolley  lines. 

Service-at-cost  agreements.  XI.  New  York  State  Railways  at  Rochester.  XII.  The 
Community  Traction  Company  of  Toledo,  Ohio.  Aera,  Dec,  1920,  Jan.,  1921. 
Pp.  5,  9.  Further  instalments  in  a  scries  of  detailed  uniform  analyses  of  service- 
at-cost  franchises. 

Street-railway  problems.  Am.  Pol.  Sci.  Rev.,  Nov.,  1920.  Pp.  9.  A  useful  suncy 
of  recent  developments. 

Transportation  for  Greater  New  York.  Elec.  Ry.  Journ.,  Nov.  27,  1920.  Pp.  11. 
Abstract  of  a  recent  discussion,  from  a  number  of  points  of  view,  of  New  York 
transportation  problem. 


1921]  Labor  and  Labor  Organization^  163 

Accounting 

(Abstracts  by  Martin  J.  Shugrue) 
Gillette,  H.  P.    Quantitative  analysis  of  all  factors  that  affect  average  prices  and  a 
formula  for  predicting   price  changes.     Engg.  &  Cont.,  Apr.   7,   1920.     Pp.  22. 
"The  level  of  commodity  prices  and  wages  will  not  descend  permanently  below 
one  and  three  fourths  times  the  pre-war  level  for  many  years  to  come." 

Hawkins,  L.  G.  Reconciling  depreciation  and  appraised  values  of  industrial  equip- 
ment. Engg.  Mag.,  Sept.,  1920.  Pp.  3.  Numerous  instances  that  have  arisen  in 
computing  federal  income  and  excess  profits  taxes  have  shown  wide  discrepancies 
between  the  book  values  of  industrial  equipment  and  the  appraised  values  ascer- 
tained by  an  engineering  survey. 

Hill,  J.  H.  Information  desired  by  a  banker.  Journ.  Account,  Nov.,  1920.  Pp.  5. 
How  a  banker  analyzes  a  credit  statement  and  what  information  the  statement 
should  contain. 

Jackson,  J.  H.  Neglected  commercial  discounts.  Journ.  Account.,  Nov.  8,  1920. 
The  element  of  discount  should  be  added  to  the  real  sales  or  purchases  to  de- 
termine the  net  sales  revenue  or  purchase  outgo  of  the  period. 

Konopak,  L.  T.  Factory  costs.  Journ.  Account.,  Nov.,  1920.  Pp.  9.  Describes  a 
cost  system  for  a  factory  manufacturing  transmissions. 

Mitchell,  P.  D.  Accounting  for  income  in  eleemosynary  institutions.  Journ.  Ac- 
count., Nov.,  1920.  Pp.  9.  Rising  costs  have  produced  serious  problems  of  ac- 
counting significance  in  the  case  of  institutions  whose  income  largely  arises  from 
long-term  investments. 

Paton,  \V.  A.  Interest  during  construction.  Journ.  Pol.  Econ.,  Oct.,  1920.  Pp.  16. 
The  viewpoints  of  the  economist  and  accountant  must  of  necessity  be  very  dif- 
ferent. There  are  important  reasons  why,  for  purposes  of  the  balance  sheet,  con- 
struction and  other  property  accounts  should  not  contain  interest  charges. 

Stackhouse,  G.  F.,  Jb.  Accounting  for  the  tungsten  industry.  Pace  Student,  Dec, 
1920.     Pp.  5. 

Wilcox,  D.  F.  Working  capital  in  street  railway  valuation.  Ann.  Am.  Acad.,  Nov., 
1920.  Pp.  24.  Street  railways  are  not  to  include  working  capital  as  a  part  of 
their  rate  base. 

Some  notes  on  the  negotiation  of  foreign  bills.  Bankers'  Mag.  (London),  Dec,  1920. 
Pp.  7.  The  consideration  of  the  subject  of  negotiation  of  bills  involves  several 
new  factors,  affecting  the  position  of  both  customer  and  banker,  which  do  not 
arise  in  the  case  of  collections. 

Suggestions  for  professional  conduct.  Pace  Student,  Dec,  1920.  Pp.  3.  Most  of 
the  leading  professional  accountancy  firms  have  codes  of  conduct  which  all  mem- 
bers of  their  staffs  are  required  to  observe.  One  of  the  most  comprehensive  is 
that  of  Haskins  &  Sells,  reproduced  in  this  article. 

Labor  and  Labor  Organizations 

(Abstracts  by  David  A.  McCabe) 
Brown,  J.    Industrial  courts  in  Australia.    Journ.  Comp.  Legis.,  Oct.,  1920.    Pp.  80. 
The  need  for  industrial  courts,  the  nature  of  the  problems  to  be  dealt  with  by 
them,  and  the  causes  of  the  failures  of  the  Australian  industrial  courts  in  cer- 
tain respects. 


164  Periodicals  [March 

Cantono,  A.  Le  organizzazioni  professionali  ed  i  corpi  consultivi  e  deliberative  del 
lavoro.  Rev.  Intern.,  Sept.-Oct.,  1920.  Pp.  11.  Discusses  a  method  of  developing 
and  rendering  effective  organizations  of  occupational  groups. 

Chenery,  W.  L.  Labor  and  cooperation.  Survey,  Oct.  9,  1920.  Pp.  2.  The  activi- 
ties of  unions  in  consumers'  cooperation  and  cooperative  credit. 

.     Peace  in  printing.     Survey,  Dec.  27,  1920.     P.   1.     The  attempt  to 

reach  adjustments  with  the  aid  of  scientific  experts. 

Emerson,  H.     The  bases  of  Emerson  incentive.     Indus.  Manag.,  Dec,  1920.     Pp.  4. 
A  defense  of  the  Emerson  system  of  payment  in  reply  to  "Comparison  of  wage 
incentive  systems,"  by  L.  V.  Estes  in  Industrial  Management  for  September. 

Estes,  L.  V.  Comparison  of  wage  incentive  systems.  Indus.  Manag.,  Sept.,  1920. 
Pp.  8.     Favors  the  100  per  cent  premium  plan  for  routine  work. 

Fairchild,  H.  P.  Will  the  wage  system  last?  Unpartizan  Rev.,  July-Sept.,  1920. 
Pp.  20.  Indications  are  that  it  will  not.  Failure  to  find  method  of  determining 
wages  that  are  demonstrably  equitable  and  the  desire  of  workers  for  share  in 
control  point  to  modification  of  the  system. 

Ferguson,  W.  B.  Production  methods  in  shipbuilding.  V.  How  incentive  systems 
increase  output.  Indus.  Manag.,  Dec,  1920.  Pp.  4.  Compares  results  obtained 
with  piece  work,  the  Halsey  premium  system,  and  the  100  per  cent  premium  plan. 

Francke,  E.  Die  erste  Allgemeine  Arbeitskonferenz  des  Friedensvertrags.  Welt- 
wirts.  Archiv,  July,  1920.  Pp.  14.  Descriptive  account  of  proceedings  of  inter- 
national labor  conference,  with  special  reference  to  Germany. 

-.    Die  Organisation  der  Arbeit  im  Friedensvertrag  und  im   Volker- 

bund.  Weltwirts.  Archiv,  Jan.,  1920.  Pp.  15.  Welcomes  the  labor  provisions  of 
the  treaty  and  advocates  German  and  Austrian  admission  to  the  international 
labor  conference. 

Fuller,  R.  G.  Child  labor  and  the  constitution.  Weekly  Rev.,  Sept.  29,  1920.  Pp.  2. 
Federal  constitution  should  be  so  amended  as  to  permit  the  adoption  of  an  ade- 
quate national  child  labor  law. 

Huels,  F.  W.  An  analysis  of  the  1919  accident  experience  of  the  Industrial  Com- 
mission of  Wisconsin.    Wis.  Safety  Rev.,  Nov.,  1920.     Pp.  5. 

Johnson,  E.  M.  The  48-hour  law  in  Massachusetts.  Survey,  Oct.  23,  1920.  Pp.  2. 
One  year  of  operation  shows  favorable  results. 

Keet,  A.  E.  Labor's  opportunity.  Forum,  Nov.,  1920.  Pp.  7.  Urges  cooperation 
with  employers. 

Laski,  H.  J.     The  British  coal  dispute.    Survey,  Oct.  23,  1920.     Pp.  2. 

Levi,  O.  Metodo  di  partecipazione  al  profitto  e  nuove  forme  di  salario.  L'Econo- 
mista,  July  25,  1920.    Pp.  4. 

Marsh,  E.  P.  Wage  adjustments  in  California  oil  fields.  Mo.  Labor  Rev.,  Oct., 
1920.  Pp.  15.  Account,  by  a  member  of  the  President's  Mediation  Commission, 
of  workings  of  the  agreement  made  by  the  commission  with  the  employers  and 
with  the  workers'  organization,  separately,  in  1917  and  since  renewed.  The  text 
of  the  agreement  for  1920-1921  is  included. 

Marshall,  L.  C.    Incentive  and  output:  a  statement  of  the  place  of  the  personnel 


1921]  Labor  and  Labor  Organizatio'ns  165 

manager  in  modern  industry.  Journ.  Pol.  Econ.,  Nov.,  1920.  Pp.  22.  The  per- 
sonnel manager  must  arouse  in  the  workers  the  "will  to  do."  Wage  systems  alone 
will  not  accomplish  it. 

Mayxander,  A.,  compiler.  Recent  collective  agreements  and  wage  awards  in  Ger- 
many.   Mo.  Labor  Rev.,  Oct.,  1920.     Pp.  11. 

Maylander,  A.,  compiler.  Woman  labor  in  Germany  during  the  war.  Mo.  Labor 
Rev.,  Nov.,  1920.    Pp.  15. 

Mehhitt,  \V.  G.  Social  control  of  industrial  strife.  Unpartizan  Rev.,  Jan.-Mar., 
1921.  Pp.  19.  Classifies  the  strikes,  which  should  be  considered  illegitimate  and 
suggests  measures  for  dealing  with  them. 

Moetexson,  C.  E.  Wages  of  women  employed  as  cleaners,  maids,  and  elevator  oper- 
ators in  buildings  and  theatres  in  the  District  of  Columbia.  Mo.  Labor  Rev., 
Nov.,  1920.    Pp.  7. 

Noyes,  C.  R.  The  economics  of  trade  unionism.  No.  Am.  Rev.,  Jan.,  1921.  Pp.  9. 
The  gains  of  organized  workers  are  made  at  the  expense  of  the  non-unionists  and 
the  public,  not  at  the  expense  of  the  employers. 

Osborn,  C.  Progress  in  the  factory.  Charity  Organ.  Rev.,  Nov.,  1920.  Pp.  11.  Com- 
ments on  the  report  of  the  chief  inspector  of  factories  for  1919. 

Sacco,  I.  M.  Razze,  nazioni,  stati  nel  congresso  internazionle  del  lavoro.  Riv. 
Intern.,  Aug.,  1920.  Pp.  5.  Author  attended  the  international  labor  conference 
at  Washington  and  records  his  reactions. 

Scanca,  G.  II  controllo  operaio  nelle  fabbriche.  Suppl.  Econ.  del  Giorn.  del  Tempo, 
Nov.  5,  1920.    Pp.  2. 

Seager,  H.  R.  The  present  industrial  situation  in  the  United  States.  Survey,  Jan. 
1,  1921.  Pp.  4.  Deals  chiefly  with  unemployment  and  the  closed  versus  the 
open  shop  issue. 

Slichter,  S.  H.  Industrial  morale.  Quart.  Journ.  Econ.,  Nov.,  1920.  Pp.  25.  Finds 
the  causes  of  low  morale  of  employees  in  prevalent  policies  of  employers  and, 
fundamentally,  in  exclusion  of  employees  from  participation  in  direction — and 
returns. 

Soule,  G.  Labor's  impending  battle.  New  Repub.,  Nov.  17,  1920.  Pp.  3.  The 
trade  unions  generally  will  face  the  employers  with  the  handicap  of  out-of-date 
policies;  progressive  leadership  is  needed  by  the  workers. 

Tawney,  R.  H.  The  British  coal  situation.  New  Repub.,  Nov.  10,  1920.  Pp.  3. 
The  miners'  demands  have  more  merit  than  the  proposals  of  the  government. 
The  present  organization  of  the  industry  has  been  irretrievably  discredited. 

Thomas,  C.  Seattle's  new  labor  policy.  Am.  Rev.  Rev.,  Nov.,  1920.  Pp.  5.  Highly 
favorable  account  of  the  policies  inaugurated  by  the  Labor  Relations  Committee 
of  the  Chamber  of  Commerce;  these  are  based  on  shop  representation  and  scien- 
tific management. 

Thomas,  E.  H.  C.  The  "shop  committee"  cure  for  industrial  unrest:  how  the  golden 
rule  works  in  a  Washington  lumber  mill.    Am.  Rev.  Rev.,  Oct.,  1920.    Pp.  4. 

Town,  J.  D.  Common  labor  responds  to  incentives.  Satisfactory  results  of  intro- 
ducing a  bonus  system  in  a  foundry.    Indus.  Manag.,  Dec,  1920.    Pp.  3. 


166  Periodicals  [March 

Vobse,  M.  H.  Derelicts  of  the  steel  strike.  Survey,  Dec.  4,  1920.  Pp.  4.  Accounts 
of  individual  cases.     Followed  by  the  steel  company's  reply. 

Watkins,  M.  W.  The  labor  situation  in  Detroit.  Journ.  Pol.  Econ.,  Dec,  1920. 
Pp.  13.  Deals  with  the  causes  of  the  lack  of  organization  among  employees,  the 
policies  of  the  employers,  the  conditions  of  labor  and  the  attitude  of  the  employees. 

Willis,  H.  E.  The  emancipation  of  labor.  Quart.  Journ.  U.  of  N.  Dak.,  Oct.,  1920. 
Pp.  18.     Favors  giving  labor  a  share  in  control  equal  to  that  of  capital. 

Wooften,  T.  J.,  Jr.    The  negro  and  industrial  peace.    Survey,  Dec.  18,  1920.    Pp.  2. 

Award  of  the  Anthracite  Coal  Commission  and  resultant  wage  rates.  Mo.  Labor 
Rev.,  Oct.,  1920.  Pp.  18.  Includes  full  text  of  the  majority  report  of  the  com- 
mission, a  summary  of  the  minority  report,  and  the  text  of  the  agreement  made 
between  the  operators  and  the  union  on  the  basis  of  the  majority  report. 

Controllo  operaio  sulle  industrie.  L'Economista,  1920.  A  series  of  articles  under  this 
head  (labor  control  of  industry)  and  similar  titles  growing  out  of  the  metallurgi- 
cal disturbance  of  August  and  September,  appeared  in  the  weekly  numbers  of  this 
journal  during  the  fall  of  1920. 

Employer's  man  or  unionist?  New  Statesman,  Sept.  18,  1920.  Pp.  2.  The  dispute 
between  the  Electrical  Trades  Union  and  the  Engineering  Employer's  Federation 
over  the  foremen. 

Engineers  on  hours.  Survey,  Oct.  30,  1920.  P.  1.  Testimony  of  engineers  in  favor 
of  the  eight-hour  day  as  against  the  twelve-hour  day. 

Investigation  shows  unrest  of  wage  earners.  Greater  New  York,  Oct.  4,  1920.  Pp.  2. 
Study  shows  high  rate  of  labor  turnover  in  New  York  City. 

Joint  industrial  councils  in  the  United  Kingdom.    Lab.  Gaz.  (Can.),  Oct.,  1920.    Pp. 

4.  A  general  review  of  what  has  been  accomplished.    Reprinted  from  the  Month's 
Work  of  the  Ministry  of  Labour,  Aug.,  1920. 

Labor  legislation  of  1920.    Am.  Lab.  Legis.  Rev.,  Sept.,  1920.     Pp.  37. 
League  of  Nations  second  international  labour  conference.     Lab.  Gaz.   (Can.),  Oct., 
1920.    Pp.  14. 

Legislation  relating  to  the  regulation  and  inspection  of  factories  in  Canada — a  com- 
parison of  the  various  provincial  laws  on  the  subject.  Lab.  Gaz.  (Can.),  Oct., 
1920.    Pp.  11. 

La  main-d'oeuvre  Urangbre  en  France.  L'Econ  Franc.,  Nov.  6,  1920.  Pp.  3.  The 
arrangements  made  for  recruiting  workmen  in  other  allied  countries,  and  the 
terms  of  agreements  made  with  the  Polish  and  Italian  governments  covering  the 
employment  of  their  nationals  in  France. 

New  wage  schedule  for  Navy  Yard  employees.    Mo.  Labor  Rev.,  Oct.,  1920.     Pp.  4. 
Protections  for  seamen:   draft   conventions   and  recommendations   adopted  by   the 

international  labor  conference  of  the  League  of  Nations  {Second  meeting).    Am. 

Lab.  Legis.  Rev.,  Sept.,  1920.    Pp.  6. 

Report  of  Federal  Electric  Railways  Commission.    Mo.  Labor  Rev.,  Oct.,  1920.     Pp. 

5.  Includes  full  text  of  the  section  of  the  report  dealing  with  labor  on  street 
railways. 

Self-government  in  the  building  industry  in  Great  Britain.  Mo.  Labor  Rev.,  Oct., 
1920.    Pp.  6.    Workings  of  the  plan.    Based  on  a  report  by  the  Garton  Foundation. 


1921]  Money,  Prices,  Credit,  and  Banking  167 

Some  factors  affecting  the  relation  between  hours  and  output  in  Great  Britain.  Mo. 
Labor  Rev.,  Oct.,  1920.  Pp.  4.  Summary  of  two  recent  reports  of  the  English 
Industrial  Fatigue  Research  Board. 

Three  shifts  in  steel.  Survey,  Dec.  11,  1920.  Pp.  2.  Favorable  testimony  of  engi- 
neers. 

Money,  Prices,  Credit,  and  Banking 
(Abstracts  by  C.  A.  Phillips) 
Anderson,  B.  M.,  Jr.    Europe's  floating  debt  of  three  and  a  half  billions  to  privat» 
creditors  in  America.     Econ.  World,  Oct.  9,  1920.     Pp.  2.    Contends  that  expan- 
sion in  American  bank  credit  during  1919  and  1920  was  traceable  in  large  measure 
to  the  extension  of  unfunded  credit  to  Europe. 

Austin,  O.  P.  World  debts  and  paper  currency  continue  to  increase.  Americas, 
Nov.,  1920.  Pp.  5.  Government  debts  created  during  the  second  year  of  peace 
were  confined  largely  to  Europe  and  especially  to  newly  created  states. 

Case,  J.  H.  A  study  of  the  federal  reserve  system  during  and  following  the  war 
period.  Comm.  &  Finan.  Chronicle,  Nov.  27,  1920.  Pp.  2.  A  clear  and  able 
presentation  of  the  part  played  by  the  federal  reserve  system  in  the  solution  of 
the  financial  and  credit  problems  arising  out  of  the  war. 

Copeland,  M.  T.  The  decline  in  prices  as  the  first  stage  of  the  return  to  a  sound 
basis  for  business.     Econ.  World,  Oct.  16,  1920.     Pp.  3. 

Duncan,  A.  E.  The  sale  of  open  accounts  receivable.  Bankers  Mag.  (Am.),  Nov., 
1920.  Pp.  7.  A  defense  of  the  non-notification  plan  of  assigning  accounts  receiv- 
able. 

Gephart,  W.  F.  Observations  on  the  price  situation  obtaining  in  the  United  States 
in  November,  1920.  Econ.  World,  Dee.  11,  1920.  Pp.  4.  An  illuminating  study 
in  relative  exchange  values  and  their  bearing  upon  the  business  outlook. 

Georghiu,  D.  J.  La  situation  monHaire  de  la  Roumaine.  Regime  sous  I'occupation 
ennemie  et  Hat  actuel.  Rev.  d'Econ.  Pol.,  Sept.-Oct.,  1920.  Pp.  12.  A  docu- 
mentary account. 

Gide,  Fisher,  Diehl,  Sherwell,  Rowe,  Berlink.  El  coeficiente  de  correccion  de  la 
moneda.     Rev.  Econ.  Argentina,  Mar.,  1920.     Pp.  6. 

Gilchrist,  W.  R.  War  finance:  a  comparison  and  criticism  of  the  methods  adopted 
by  the  allied  and  enemy  countries.  Scottish  Bankers  Mag.,  Oct.,  1920.  Pp.  20. 
A  succinct  and  critical  account  of  the  provision  of  credit  and  currency,  of  con- 
trol over  the  foreign  exchanges,  of  methods  of  taxation. 

Hammond,  M.  O.  Canada's  domestic  credit  situation  improving.  Mag.  of  Wall  St., 
Oct.  2,  1920.     Pp.  3.     Some  recent  developments  in  the  Canadian  banking  system. 

Herrick,  C.  Trust  department  in  national  banks.  Bankers  Mag.  (Am.),  Nov., 
1920.  Pp.  5.  The  tendency  toward  uniformity  in  the  services  rendered  by  various 
classes  of  banks  has  become  more  and  more  pronounced  under  the  operation  of 
the  Federal  Reserve  act. 

Jacobson,  M.  and  Goldenweiser,  E.  A.  Developments  in  the  banking  field  with  spe- 
cial reference  to  federal  reserve  matters.  Quart.  Pubs.  Am.  Stat.  Assoc,  Sept., 
1920.  Pp.  4.  Shifting  trade  conditions  combined  with  the  introduction  of  a  new 
exchange  and  currency  system  have  caused  an  exportation  of  silver  to  get  gold. 


168  Periodicals  [March 

Liesse,  A.  he  futur  emprunt  et  Vaccroissement  d'emission  de  la  banque  de  France. 
L'Econ.  Fran?.,  Aug.  14,  1920.     Pp.  3. 

Ottolenghi,  C.  Index-numbers  of  wholesale  prices  in  Italy  during  the  Great  War. 
Journ.  Royal  Stat.  Soc,  July,  1920.  Pp.  10.  The  construction  of  a  system  of 
index  numbers,  with  observations  on  the  variation  of  wholesale  prices  during  the 
war. 

Preston,  H.  H.  Federal  reserve  banks'  system  of  par  collection.  Journ.  Pol.  Econ., 
July,  1920.  Pp.  25.  The  development  of  the  system  of  par  collections  with  special 
reference  to  the  opposition  of  the  exchange-charging  banks. 

Raffalovich,  A.  L'enquete  monitaire  de  la  SociUe  des  Nations.  Journ.  des  Econ., 
Oct.,  1920.    Pp.  5. 

Rothkegel,  W.  Untersuchungen  uber  Bodenpreise,  Hdietpreise,  und  Bodenwer- 
schuldung.    Schmollers  Jahrb.,  44  Jahrgang,  3  Heft,  1920.     Pp.  36. 

Schmidt-Essen,  L.  Die  staatliche  Wahrungspolitik  im  System  der  Chartaltheorie. 
Weltwirtsch.  Archiv,  July,  1920.     Pp.  13. 

Shirras,  G.  F.  Some  effects  of  the  war  on  gold  and  silver.  Journ.  Royal  Stat.  Soc, 
July,  1920.  Pp.  35.  The  production  of  the  precious  metals  in  war  time,  fluctua- 
tions in  their  prices;  lessons  of  the  war  in  regard  to  gold  and  silver  currency. 

Stewart,  W.  W.  Prices  during  the  war.  Quart.  Pubs.  Am.  Stat.  Assoc,  Sept., 
1920.  Pp.  9.  An  account  of  the  inquiry  conducted  by  the  Price  Section  of  the 
War  Industries  Board. 

Szikxai.  Das  "kapitalistische"  und  das  "kommunistische"  Oeld.  Schmollers  Jahrb., 
44  Jahrgang,  3  Heft,  1920.     Pp.  18. 

Taussig,  Bowley,  Kindermann.     El  coeficiente  de  correction  de  la  moneda.     Rev. 

d'Econ.  Argentina,  Apr.,  1920.     Pp.  3. 
Van  Dorp,  E.  C.     Abnormal  deviations  in  international  exchanges.     Econ.  Journ., 

Sept.,  1920.    Pp.  4. 

Van  Nierop,  A.  S.  Das  Bankwesen  in  Niederlandisch-Westindien.  Weltwirtsch. 
Archiv,  Apr.,  1920.     Pp.  9. 

Bankers'  advances  and  deflation.  Bankers'  Mag.  (London),  Dec,  1920.  Pp.  9. 
British  inflation  as  reflected  in  bank  balance  sheets,  and  a  consideration  of  the 
effects  of  contraction. 

The  Edge  law.    What  shall  we  do  with  it?    Bankers  Mag.  (Am.),  Sept.,  1920.    Pp.  7. 

Die  Ergebnisse  der  schiveizerischen  Munzenquete  vom  25.  Februar  1920.  Zeitsschr. 
f.  schwiez.  Statistik,  56  Jahrgang,  Heft  2,  1920.     Pp.  20. 

Italy:  The  popular  banks.  Intern.  Rev.  Agri.  Econ.,  Mar.,  1920.  Pp.  6.  Their  num- 
ber, constituencies,  functions,  resources,  federations. 

Progress  of  banking  in  Great  Britain  and  Ireland  during  1919.  Bankers  Mag.  (Lon- 
don), Nov.,  1920.  Pp.  13.  The  combined  total  of  bank  capital  and  reserves  was 
no  larger  in  Great  Britain  in  1913  than  in  1902;  between  1913  and  1919  the  ratio 
of  capital  and  reserves  to  callable  liabilities  fell  from  11  per  cent  to  only  6  per  cent. 

Wholesale  prices  of  commodities  in  1919.  Journ.  Royal  Stat.  Soc,  July,  1920.  Pp. 
18.    The  rising  price  level  began  to  lose  momentum  at  the  end  of  1917. 


1921]  Insurance  and  Pensions  169 

Population  and  Migration 

(Abstracts  by  A.  B.  Wolfe) 
Bevan,  E.    Racial  equality  in  migration.     Intern.  Rev.,  Nov.,  1919.     Pp.  7.     Treats 
of  Asiatic  migration  and  frictions  resulting  therefrom.     The  white  race  probably 
must  recognize  the  need  of  the  yellow  races   for  more  territory,  or   ultimately 
"enter  upon  a  series  of  frightful  race  wars." 

Bonachea,  O.  Factores  que  han  influido  en  la  concentration  urbana  de  la  popla- 
ci&n  en  Cuba.  Rev.  Bimestre  Cubana,  June,  1920.  Pp.  9.  Classifies  the  factors 
into  religious,  defensive,  agricultural  and  industrial,  and  governmental.  Complains 
that  adequate  historico-statistical  data  are  lacking. 

Bourdon,  J.  and  Berillon,  A.  La  diminution  de  la  natality  en  Orande-Bretagne. 
Rev.  Intern,  de  Sociol.,  Sept.-Oct,  1920.  Pp.  11.  Non-statistical.  Deals  with  the 
probable  causes. 

Darwin,  L.  Some  birth  rate  problems.  Eugenics  Rev.,  Oct.,  1920.  Pp.  11.  Birth 
limitation  has  had  serious  dysgenesic  effects.  If  birth  control  is  necessary  to  pre- 
vent overpopulation,  measures  must  be  taken  to  see  that  classes  with  the  most 
desirable  qualities  do  not  eliminate  themselves. 

De  Greoio,  U.  E.  Esercito  ed  emigrazione.  I  cittadini  residents  all'est  ero  ed  it 
nuovo  ordinamento  militare.     Bollettino  della  Emigrazione,  July,  1920.     Pp.  16. 

Furth,  v.  H.  Bevolkerungsfragen  und  Nachkriegaufgaben  der  Bevolkerungspolitik. 
Archiv  f.  Sozialwis.,  July,  1920.  Pp.  13.  To  make  good  the  ravages  of  war  on  the 
population,  what  is  needed  is  not  a  higher  birth  rate  but  reduction  of  mortality 
and  better  social  care  for  the  health  of  those  children  who  are  born. 

Mansche,  R.  Die  Bewegung  der  Bevolkerung  und  die  Ergebnisse  der  Familiensta- 
tistik  im  Orossherzogtum  Luxemburg.  Zeitsch.  f.  Sozialwis.,  Aug.,  1920.  Pp.  32. 
A  detailed  demographic  discussion. 

Quelle,  O.  Die  Spanisch-portugiesische  Auswanderung.  Schmoller's  Jarhbuch, 
Jahrg.  44,  Heft  3.  Pp.  32.  The  sources,  ebb  and  flow,  destination,  causes,  and 
results  of  Spanish  and  Portuguese  emigration,  1873  to  1916. 

L«  mouvement  de  la  population  de  la  France  au  cours  de  VannSe  1919  dans  77  de- 
partements  (chiffres  provisoires).  L'Econ.  Franc.,  Sept.  4,  1920.  Pp.  3.  Con- 
tains a  detailed  table  showing  217,181  more  deaths  than  births  in  1919,  and  an 
excess  of  389,575  births  over  deaths  in  1918.  Births  in  1918  were  67  per  cent, 
marriages  71  per  cent,  deaths  134  per  cent  of  births,  marriages,  and  deaths,  re- 
spectively, in  1913. 

Proposals  to  ameliorate  evils  of  immigration.  Greater  New  York,  Nov.  22,  1920. 
Pp.  4.  Opposes  further  restrictive  legislation,  but  recommends  reforms  in  natural- 
ization, together  with  more  effective  measures  for  education,  etc.  Asks  for  a 
national  commission  to  consider  plans  for  the  distribution  of  immigrants.  Writ- 
ten largely  from  the  employers'  point  of  view. 


Insurance  and  Pensions 

(Abstracts  by  Henry  J.  Harris) 
Childs,  A.  E.     The  accomplishment  of  the  different  branches  of  casualty  insurance 
in  the  United  States  in  1919.    Econ.  World,  Oct.  23,  1920.    Pp.  3.    The  four  great 


170  Periodicals  [March 

divisions  of  insurance — life,  fire,  marine,  and  casualty,  have  all  shown  tremendous 
growth. 
Dick,  B.     The  romance  of  marine  insurance.     Econ.  World,  Nov.  27,  1920.     Pp.  3. 
History,  development  of  types  of  vessels,  salvage  operations,  calculation  of  rates. 

Dhapier,  W.  H.  Conditions  of  success  in  developing  an  insurance  business  in  South 
American  countries.  Econ.  World,  Dec.  4,  1920.  Conditions  of  doing  business, 
prospects,  etc.,  in  the  more  important  countries. 

Fiske,  H.  Life  insurance  investments :  what,  where  and  why?  Econ.  World,  Dec. 
11,  1920.  Pp.  3.  Controlling  principle  is  first  safety,  second  income.  Also  to  be 
considered  are  need  of  public,  needs  of  localities  where  policy-holders  reside, 
needs  of  government  bodies,  needs  of  policyholders  themselves. 

Flynn,  B.  D.  The  effect  of  the  war  upon  the  development  of  social  insurance  in 
this  country.  Proc.  Cas.  Act.  Stat.  Soc,  May  28,  1920.  Pp.  8.  Higher  wages  and 
improved  condition  of  workers  makes  social  insurance  unnecessary. 

Harris,  H.  J.  British  national  health  insurance  act  of  May,  1920.  Mo.  Labor  Rev., 
Sept.,  1920.     Pp.  11.     Provisions  of  act  and  summary  of  operations. 

Hoffman,  F.  L.  Some  problems  in  the  evolution  of  life  insurance.  Econ.  World, 
Nov.  27,  1920.  Pp.  3.  Discusses  objections  to  social  insurance,  great  importance 
of  investments,  health  conservation,  promotion  of  thrift,  woman's  activities  in  in- 
surance, lessons  of  the  war,  United  States  war  risk  system. 

Michael,  C.  E.  Why  the  employers  of  Virginia  rejected  monopolistic  state  fund 
workmen's  compensation  insurance.  Econ.  World,  Nov.  20,  1920.  Pp.  3.  Em- 
ployers stated  to  be  dissatisfied  with  results  obtained  by  other  state  funds. 

Michelbacher,  G.  F.  The  technique  of  rate  making  as  illustrated  by  the  1920 
national  revision  of  workmen's  compensation  rates.  Proc.  Cas.  Act  Stat.  Soc, 
May  28,  1920.     Pp.  49.     Detailed  description  of  methods  used  in  1920  revision. 

Mowbray,  A.  H.  The  actuarial  problems  of  the  1920  national  revision  of  work- 
men's compensation  insurance  rates  and  the  solutions  developed  by  the  actuarial 
committee  of  the  national  council.  Proc.  Cas.  Act.  Stat.  Soc,  May  28,  1920.  Pp. 
35.  Outstanding  features  were:  Change  in  method  of  combining  experience  and 
transplanting  the  selected  basic  pure  premiums  into  state  pure  premiums;  de- 
velopment of  statistical  projection  from  earlier  years  of  issue  to  conditions  of 
more  recent  date. 

Whitney,  A.  W.  The  various  systems  of  workmen's  compensation  insurance  from 
the  standpoint  of  cost,  service,  and  security.  Econ.  World,  Oct.  16,  1920.  Pp.  4. 
Not  desirable  for  the  state  to  enter  the  field.  Competitive  institutions  best  serve 
society  in  this  field. 

Williams,  F.  M.  Service,  security,  and  cost  under  different  systems  of  workmen* 
compensation.  Econ.  World,  Oct.  2,  1920.  Pp.  2.  Description  of  the  Connecticut 
system. 

The  new  unemployment  insurance  act  of  Great  Britain.  Econ.  World,  Oct.  30, 
1920.     Pp.  2.     Summary  of  provisions  of  act  of  August  9,  1920. 

New  York  City  employees'  retirement  system.  City  Record,  Nov.  5,  1920.  Pp.  7. 
Mortality  and  service  tables,  and  employees'  contribution  rates. 

Pension  system  for  Milwaukee  city  employees.    Library  Journ.,  Sept.  1,  1920.    Pp.  2. 


1921]  Pauperism,  Charities,  and  Relief  Measures  171 

Pauperism,  Charities,  and  Relief  Measures 

(Abstracts  by  George  B.  Mangold) 
Butleh,  E.  J.     Standards  of  child  placing  and  supervision.     Cath.  Charities   Rev., 
Nov.,  1920.    Pp.  6.    Describes  the  plan  followed  by  the  Catholic  Home  Bureau  of 
New  York  and,  in  some  detail,  the  standards  that  should  be  recognized  by  child 
placing  agencies. 

Cyprian,  E.  Charity  during  the  first  three  centuries  of  the  Christian  era.  Cath. 
Charities  Rev.,  Nov.,  1920.  Pp.  5.  The  subject-matter  of  this  article  depends  on 
the  writings  of  the  early  church  fathers.  It  appears  that  much  charitable  work 
was  carried  on  and  that  the  relation  between  Christianity  and  charity  was  very 
close.  Discrimination  in  relief  giving  became  a  matter  of  policy  about  the  third 
century. 

Feugere,  E.  L'assistance  publique  d  Paris.  L'Econ.  Franc.,  Oct.  30,  1920.  Pp.  3. 
A  brief  account  of  the  budget  of  public  philanthropy  in  Paris  for  the  year  1920. 
Comparisons  are  made  with  the  previous  year  and  the  more  important  items  are 
discussed  with  particular  reference  to  the  results  to  be  obtained. 

Jones,  L.  City  Mother's  Bureau  of  Los  Angeles.  Nat.  Munic.  Rev.,  Aug.,  1920. 
The  work  consists  primarily  in  dealing  with  boys  and  girls  in  danger  of  becoming 
delinquents,  by  using  informal  ways  and  endeavoring  in  each  case  to  map  out  a 
program  for  the  benefit  of  the  child.  Several  cities  have  followed  the  example  of 
Los  Angeles.  Other  cities,  however,  are  attempting  to  apply  the  city  mother  idea 
without  establishing  a  separate  bureau.  Office  machinery  is  less  important  than 
the  application  of  the  city  mother  idea. 

Kelso,  R.  W.  Endorsement  of  charities  by  chambers  of  commerce.  Nat.  Munic. 
Rev.,  Mar.,  1920.    Pp.  4. 

Waggaman,  M.  T.  Labor  colonies  for  the  feeble-minded.  Mo.  Labor  Rev.,  Sept., 
1920.  Pp.  8.  A  short  account  of  the  progress  that  has  been  made  in  employing 
high  grade  mental  defectives.  The  experiment  in  Massachusetts  has  been  par- 
ticularly successful.  In  the  girl's  colony  in  New  York  the  cost  of  maintenance 
has  been  reduced  about  two  thirds.  The  experience  of  several  states  indicates 
that  further  development  along  these  lines  is  possible. 

Administration  of  the  poor  law.  Charity  Organ.  Rev.,  Oct.,  1920.  Pp.  5.  Pauper- 
ism in  England  seems  to  have  declined.  The  proportion  of  persons  receiving  re- 
lief fell  from  26.7  per  thousand  of  the  population  in  1896  to  15  in  1920.  One 
effect  has  been  to  leave  vacant  a  number  of  poor  law  institutions.  A  considerable 
decrease  in  vagrancy  is  also  noted.  Many  children,  however,  remain  in  the  alms- 
houses and  the  administration  of  outdoor  relief  is  still  unsatisfactory. 


NOTES 
Since  December  1,  the  following  names  have  been  added  to  the  member- 
ship of  the  American  Economic  Association: 
Ash,  B.  F.,  Longlothe,  Pa. 

Babcock,  H.  E.,  103  Harvard  Place,  Ithaca,  N.  Y. 
Berridge,  William  A.,  Wadsworth  House,  Cambridge,  Mass. 
Bradford,  Ernest  S.,  12  Argyle  Ave.,  New  Rochelle,  N.  Y. 
Brooks,  R.  P.,  University  of  Georgia,  Athens,  Ga. 
Brown,  Dorothy  M.,  36  Paradise  Road,  Northampton,  Mass. 
Butler,  R.  V.  A.,  Box  214,  New  Brunswick,  N.  J. 
Coons,  A.  G.,  University  of  Pennsylvania,  Philadelphia,  Pa. 
Cunningham,  Wallace  M.,  University  of  Pennsylvania,  Philadelphia,  Pa. 
Cushing,  Morgan  B.,  4506  Walnut  St.,  Philadelphia,  Pa. 
Dye,  Earl  V.,  New  York  University,  New  York  City. 
Einzig,  Paul,  4  Bernard  St.,  Russell  Sq.,  London,  Eng. 
Eriksen,  J.,  Det  Norike   Arberderpartis,  Christiania,   Norway. 
Fuller,  George  M.,  Iowa  State  College,  Ames,  Iowa. 
Funkhouser,  Leonard  A.,  451  West  9th  St.,  Erie,  Pa. 
Gimbel,  L.  Richard,  9th  and  Market  Sts.,  Philadelphia,  Pa. 
Harbour,  Nina,  Vassar  College,  Poughkeepsie,  N.  Y. 
Hawkins,  George  W.,  Y.  M.  C.  A.,  Fairmont,  W.  Va. 
Hobson,  Asher,  Columbia  University,  New  York  City. 
Hoffman,  Wright,  University  of  Pennsylvania,  Philadelphia,  Pa. 
Huston,  S.  Arthur,  16  E.  Biddle  St.,  Baltimore,  Md. 
Journey,  R.  C,  Cornell  College,  Mt.  Vernon,  Iowa. 
Knight,  Paul  K.,  1814  Harris  Trust  Bldg.,  Chicago,  111. 
McDonough,  John  E.,  Dartmouth  College,  Hanover,  N.  H. 
Mackie,  Robert  M.,  State  University  of  Iowa,  Iowa  City,  Iowa. 
Maling,  Ernest  H.,  151  Pine  St.,  Portland,  Maine. 
Martin,  C.  C,  32  Burling  Slip,  New  York  City. 
Matthews,  W.  O.,  23  Scott  St.,  Toronto,  Ont.,  Canada. 
Monroe,  James,  830  Common  St.,  New  Orleans,  La. 
Nelson,  Milton  N.,  402  E.  Green  St.,  Champaign,  111. 
Palmer,  Gladys  L.,  Vassar  College,  Poughkeepsie,  N.  Y. 
Rene,  Pere  Lefever,  37  rue  Sourts  Neuve,  Anvers,  Belgium. 
Rorty,  M.  C,  195  Broadway,  New  York  City. 

Schluter,  William  C,  University  of  Pennsylvania,  Philadelphia,  Pa. 
Snyder,  Carl,  15  Nassau  St.,  New  York  City. 
Stone,  Raleigh  W.,  State  University  of  Iowa,  Iowa  City,  Iowa. 
Swart,  J.,  Colorado  College,  Colorado  Springs,  Colo. 
Wallin,  Z.  B.,  Ohio  State  University,  Columbus,  Ohio. 

Williams  College  announces  the  establishment  of  an  Institute  of  Politics. 
It  is  planned  to  bring  together  in  Williamstown  for  a  month  or  six  weeks 
each  summer  a  group  of  scholars  and  special  students  to  be  addressed  by 
experts.  There  will  be  round  table  discussions  and  facilities  for  research 
and  intensive  instruction.     The  first  session  will  open  July  28,  1921. 

In  the  spring  of  1920  John  D.  Rockefeller,  Jr.,  contributed  to  Bryn 
Mawr   College   the  sum  of  $100,000   toward  the  instruction  in   industrial 


1921]  Notes  173 

relations  under  the  Carola  Woerishoffer  Graduate  Department  of  Social 
Economy  and  Social  Research.  This  contribution,  together  with  an  addi- 
tional endowment  which  is  being  raised,  will  establish  the  Grace  H.  Dodge 
Foundation,  affording  training  in  industrial  relations  and  offering  ten  schol- 
arships and  fellowships  of  the  value  of  $300  and  $500  each,  and  will  also 
maintain  the  expenses  of  field  work  and  supervision  for  this  training.  In 
this  way,  the  work  which  was  undertaken  by  the  college  in  cooperation  with 
the  War  Council  of  the  National  Board  of  the  Young  Women's  Christian 
Association  has  been  made  permanent. 

A  School  for  Social  Service  Administration  has  been  established  at  the 
University  of  Chicago  under  the  direction  of  Professor  L.  C.  Marshall. 

Hart  Schaffner  &  Marx  prizes  have  been  awarded  as  follows:  Class  A, 
first  prize  $500  to  Frank  D.  Graham,  assistant  professor  of  economics  at 
Dartmouth  College,  for  a  study  on  "International  trade  of  the  United  States 
in  the  greenback  period";  Class  B,  second  prize  $200  to  the  following  un- 
dergraduates: H.  D.  Costigan,  of  Harvard  University,  for  a  study  on  "Na- 
tionalization of  collective  bargaining  in  the  men's  clothing  industry";  and 
C.  T.  Steward,  of  Indiana  University,  for  a  study  of  the  "Causes  of  the 
recent  rise  in  the  price  of  silver." 

In  order  to  stimulate  study  of  economic  problems,  the  Francis  D.  Pollak 
Foundation  for  Economic  Research  offers  three  prizes  for  the  best  essays 
submitted  in  1921:  $1,000  open  to  every  one  without  restriction;  $500  open 
to  college  undergraduates  in  the  United  States;  $500  open  to  high  school 
students.  An  essay  must  contain  not  more  than  10,000  words.  The  sub- 
jects are:  "The  part  that  money  plays  in  economic  theory";  "Causes  of  un- 
employment and  remedies";  "Conditions  which  determine  how  much  the 
consumer  gets  for  his  dollar."  Information  may  be  obtained  from  Dr.  Wil- 
liam T.  Foster,  Director,  Newton  58,  Mass. 

The  nineteenth  annual  convention  of  the  American  Institute  of  Banking 
will  be  held  at  Minneapolis,  July  19-22,  1921. 

At  the  recent  annual  meeting  of  the  American  Statistical  Association  the 
following  officers  were  elected:  Carroll  W.  Doten,  president;  Ernest  L. 
Bradford,  Louis  I.  Dublin,  William  M.  Stuart,  vice  presidents;  Raymond 
Pearl,  Warren  M.  Persons,  Malcolm  C.  Rorty,  counsellors;  Robert  E.  Chad- 
dock,  secretary-treasurer;  Horace  L.  Wheeler,  librarian;  and  William  F. 
Ogburn,  editor. 

There  has  been  deposited  in  the  University  of  Chicago  library  the  library 
of  the  late  Professor  Charles  R.  Henderson.    This  contains  over  6,000  items. 

The  National  Tax  Association  offers  early  volumes  of  its  Proceedings  at 
a  nominal  price  of  50  cents  each  or  30  cents  when  more  than  one  volume  is 


174  Notes  [March 

ordered.     Address  A.   E.   Holcomb,  Treasurer,   195  Broadway,  New  York 
City. 

D.  Appleton  and  Company  announce  for  immediate  publication  Economic 
Development  of  the  United  States,  by  Isaac  Lippincott. 

The  Ronald  Press  Company,  New  York,  has  begun  the  publication  of  a 
monthly  journal  entitled  Administration,  devoted  to  business  analysis  and 
control. 

The  Research  and  Statistical  Department  of  the  First  National  Bank  of 
St.  Louis  is  publishing  a  monthly  circular  entitled  Review  of  Business  and 
Financial  Conditions,  which  contains  suggestive  material. 

The  London  School  of  Economics  is  publishing  a  new  journal  entitled 
Economica.  This  will  appear  triennially  (7s.  6d.  per  year,  2s.  6d.  each)  un- 
der the  editorship  of  professors  Wallas,  Bowley,  and  Cannan. 

The  International  Institute  of  Agriculture  announces  that  the  Statistical 
Bulletin,  which  until  now  has  been  published  monthly,  will,  beginning  with 
January,  1921,  be  divided  into  three  sections  to  be  issued  at  different  in- 
tervals during  the  month. 

Instituts  Solvay  has  revived  publication  of  Revue  de  L'Institut  de  Soci- 
ologie,  a  journal  which  before  the  war  was  one  of  the  most  helpful  for  a 
record  of  current  literature.    Address:  Pare  Leopold,  Bruxelles. 

Appointments  and  Resignations 
Mr.  Benjamin  H.  Beckhart,  who  last  year  was  in  the  Federal  Reserve 
Bank  of  New  York,  is  now  instructor  in  economics  and  social  institutions 
in  Princeton  University. 

Professor  Holmes  Beckwith,  formerly  at  Colorado  College,  is  professor 
of  insurance  and  finance,  in  charge  of  those  departments,  in  the  School  of 
Business  Administration  at  Syracuse  University. 

Professor  R.  G.  Blakey,  of  the  University  of  Minnesota,  has  been  made 
president  of  the  Minnesota  State  Tax  Association. 

Professor  E.  L.  Bogart,  of  the  University  of  Illinois,  has  been  appointed 
a  member  of  a  Committee  on  Free  Zones  and  Free  Ports  of  the  Chamber  of 
Commerce  of  the  United  States  of  America.  Last  summer  he  was  chair- 
man of  a  United  States  Commission  on  Port  Congestion  in  Havana  ap- 
pointed to  cooperate  with  a  similar  commission  of  the  Cuban  government  to 
relieve  the  serious  shipping  situation  in  Havana  harbor. 

Miss  Gladys  Boone  has  been  elected  instructor  on  the  Grace  H.  Dodge 
Foundation  in  the  Carola  Woerishoffer  Graduate  Department  of  Social 
Economy  and  Social  Research,  Bryn  Mawr  College. 


1921]  Notes  175 

Professor  Ezra  Bowen,  formerly  associate  professor  in  the  College  of 
Business  Administration,  Lehigh  University,  has  been  appointed  professor 
and  head  of  the  department  of  economics  at  Lafayette  College. 

Mr.  Lloj^d  M.  Cosgrave  is  assistant  professor  of  economics  at  Carnegie 
Institute  of  Technology. 

Dr.  W.  W.  Cumberland,  who  is  on  leave  of  absence  from  the  University 
of  Minnesota,  has  joined  the  Department  of  State  as  assistant  foreign  trade 
adviser. 

Mr.  J.  Franklin  Ebersole,  of  the  University  of  Minnesota,  has  been  made 
assistant  federal  reserve  agent  for  the  ninth  district.  He  will  continue, 
however,  to  give  courses  in  finance  at  the  university. 

Mr.  H.  M.  Eliot,  formerly  at  the  Texas  Agricultural  College,  is  farm 
management  demonstrator  of  the  extension  service,  and  also  teaches  agri- 
cultural economics,  at  Michigan  Agricultural  College. 

Professor  F.  A.  Fetter,  of  Princeton  University,  is  chairman  of  the  Com- 
mittee on  Good  Citizenship,  of  the  State  Council,  which  is  undertaking  a 
large  program  of  active  work  for  child  welfare  in  New  Jersey. 

Mr.  M.  G.  Glaeser,  of  the  University  of  Wisconsin,  has  been  placed  in 
charge  of  an  investigation  by  a  committee  in  Milwaukee  known  as  the  Pub- 
lic Utilities  Acquisition  Committee  to  report  upon  a  future  plan  of  adjusting 
local  public  utility  relations. 

Dr.  Joseph  M.  Gillman  is  acting  head  of  the  department  of  economics  and 
sociology  at  the  University  of  Arkansas. 

Mr.  Ernest  S.  Griffith,  Rhodes  Scholar  from  New  York  State,  is  for  the 
present  year  instructor  in  economics  and  social  institutions  in  Princeton  Uni- 
versity. 

Miss  Olga  L.  Halsey  is  instructor  of  economics  and  sociology  at  Welles- 
ley  College. 

Mr.  Seymour  Harris  is  instructor  in  economics  and  social  institutions  in 
Princeton  University. 

Dr.  Augustus  W.  Hayes  is  instructor  in  sociology  in  the  School  of  Social 
Science  of  Tulane  University  and  assistant  in  rural  organization  in  the 
Gulf  Division  of  the  American  Red  Cross. 

Professor  E.  A.  Heilman,  of  Drake  University,  has  been  appointed  assis- 
tant professor  of  accounting  at  the  University  of  Minnesota. 

Professor  Stanley  E.  Howard,  of  Princeton  University,  assisted  by  Mr. 
C.  S.  Tippetts  and  Mr.  A.  F.  Lucas,  is  giving  a  course  in  the  elements  of 
accounting  to  a  group  of  employees  of  the  Guaranty  Trust  Company,  New 
York  City. 


176  Notes  [March 

Dr.  L.  B.  Krueger,  formerly  at  the  University  of  Wisconsin,  is  assistant 
professor  of  economics  at  Oberlin  College. 

Dr.  Louis  Levine,  formerly  at  the  University  of  Montana,  and  later  on 
the  staff  of  the  Nezv  York  World,  is  now  professor  of  economics  at  Beloit 
College  during  the  absence  of  Professor  A.  E.  Suffern. 

Mr.  Arthur  F.  Lucas,  recently  graduated  from  Bates  College,  is  instruc- 
tor in  economics  and  social  institutions  in  Princeton  University. 

Professor  George  B.  McClellan  has  resumed  his  duties  as  professor  of 
economic  history  in  Princeton  University,  after  a  leave  of  absence  covering 
the  period  of  the  war. 

Mr.  Eliot  G.  Mears,  on  leave  of  absence  from  the  United  States  Depart- 
mnet  of  Commerce,  is  acting  professor  of  economics  at  Leland  Stanford 
Junior  University  for  the  winter  and  spring  quarters. 

Mr.  J.  Ronald  Meiklejohn  has  been  appointed  instructor  in  economics  at 
Dartmouth  College  for  the  second  term. 

Dr.  Hermon  K.  Murphy,  formerly  at  Hamilton  College,  is  now  instructor 
in  economics  at  Carnegie  Institute  of  Technology. 

Professor  Howard  S.  Noble,  of  the  University  of  Minnesota,  has  been 
made  cost  accountant  for  the  Washburn-Crosby  Milling  Company  in  addi- 
tion to  his  duties  at  the  university. 

Mr.  James  W.  Ryan,  assistant  United  States  District  Attorney  for  Ad- 
miralty Litigation  in  the  eastern  and  southern  district  of  New  York  and  New 
Jersey,  with  the  Shipping  Board,  war,'  navy,  and  treasury  departments,  has 
been  appointed  special  lecturer  in  charter  parties  and  bills  of  lading  in 
New  York  University  School  of  Commerce,  Accounts,  and  Finance. 

Mr.  Donald  W.  Sawtelle,  of  the  department  of  agricultural  economics  at 
the  Massachusetts  Agricultural  College,  has  been  promoted  to  the  rank 
of  assistant  professor. 

Dr.  Charles  L.  Stewart  resigned  his  position  in  the  University  of  Ar- 
kansas the  first  of  the  year  to  become  associate  agricultural  economist  in  land 
economics  in  the  Office  of  Farm  Management  and  Farm  Economics  of  the 
United  States  Department  of  Agriculture.  The  Division  of  Land  Econom- 
ics, of  which  Dr.  L.  C.  Gray  is  in  charge,  is  projecting  a  number  of  studies 
in  land  tenure.  Dr.  Stewart  is  to  give  special  attention  to  farm  tenancy 
for  preliminary  reports  within  two  years. 

Mr.  C.  B.  Williams,  formerly  at  Iowa  State  College,  is  assistant  professor 
of  agricultural  economics  at  the  University  of  Kentucky. 

Senator  Luigi  Bodio,  for  many  years  secretary  of  the  International  In- 
stitute of  Statistics,  died  November  2,  1920. 


The 
American  Economic  Review 


VOL.  XI  JUNE,  1921  No.  2 

FEDERAL  RESERVE  POLICY 

The  acute  distress  and  the  economic  hardship  resulting  from  the 
business  and  price  recession  movements  of  the  past  eight  months,  which 
have  been  experienced  in  all  sections  of  the  country,  have  drawn  at- 
tention to  the  federal  reserve  system  to  a  degree  not  hitherto  experienced 
and  have  made  the  operations  and  methods  of  the  federal  reserve  banks 
a  matter  of  widespread  public  interest.  The  growing  appreciation  of 
the  fact  in  the  past  few  months,  even  in  sections  of  the  country  where 
a  strong  disposition  was  manifested  last  autumn  to  charge  the  federal 
reserve  system  with  responsibility  for  the  collapse  of  prices,  that  the 
recent  liquidation  movement  has,  in  the  main,  proceeded  from  world- 
wide economic  causes  and  is  incident  to  the  general  economic  readjust- 
ment made  necessary  by  the  profound  economic  disturbances  worked 
by  the  war,  has  done  much  to  clarify  the  atmosphere  and  to  make  the 
moment  favorable  for  a  review  and  discussion  of  federal  reserve  policy 
and  practice.  While  there  is  every  reason  to  believe  that  the  first  and 
worst  stage  of  the  post-war  economic  readjustment  is  near  its  close, 
there  is  enough  likelihood  of  further  periods  of  economic  difficulty  and 
strain  in  the  process  of  completing  the  general  readjustment  to  make 
it  a  matter  of  great  public  concern  to  consider  how  the  federal  reserve 
sj'stem  may  best  function  in  assisting  the  industry,  trade,  and  business 
of  the  country  through  such  further  periods  of  uncertainty  and  pres- 
sure as  may  occur. 

It  is  but  little  more  than  six  years  since  the  federal  reserve  system 
was  organized  and  began  operations  on  a  modest  scale.  In  that  brief 
period  of  time  it  has  had  to  meet  a  greater  variety  of  conditions  and 
problems  than  have  ever  confronted  any  system  of  reserve  banking. 
Since  the  armistice  it  has  had  to  cope  with  economic  and  financial  prob- 
lems of  unprecedented  magnitude  and  great  complexity.  It  has  ren- 
dered continuously  the  greatest  assistance  to  the  Treasury  in  making 
short-term  borrowings.  It  has  provided  the  credit  basis  for  financing 
our  enormous  exports  on  credit  to  Europe.  It  is  primarily  to  its 
steadying  and  moderating  influence  that  the  drop  in  prices  during  the 
past  eight  months  did  not  eventuate  in  a  complete  and  disastrous  col- 
lapse. All  of  these  things  have  been  accomplished  without  ever  for  a 
moment  putting  the  maintenance  of  the  gold  standard,  or  the  solidity 
and  integrity  of  our  credit  system,  in  jeopardy.     These  things  augur 


178  A.  C.  Miller  [June 

well  for  the  future  of  reserve  banking  in  the  United  States.  The  federal 
reserve  system  has  met  its  first  searching  tests  on  the  whole  with  re- 
markable success.  The  fact,  moreover,  that  in  the  heat  of  a  presi- 
dential campaign,  in  which  the  attitude  and  methods  of  the  federal 
reserve  system  were  frequently  the  subject  of  bitter  attack  in  sections 
of  the  country  which  felt  in  a  peculiarly  high  degree  the  impact  of  the 
price  recession  movement,  it  did  not  yield  to  sectional  or  political  pres- 
sure of  any  character,  has  done  much  to  set  at  rest  the  doubt,  often 
expressed  at  the  inception  of  the  system,  as  to  whether  any  system  of 
reserve  banking  under  governmental  supervision  could  be  fully  success- 
ful in  the  United  States  because  of  "politics." 

A  great  banking  system  is  not,  however,  to  be  regarded  as  a  ready- 
made  contrivance.  The  legislator  can  frequently  foresee  much,  and  the 
law  can  do  much,  to  make  provision  for  future  contingencies  and  es- 
tablish safeguards  against  future  temptations,  but  when  all  is  done  that 
can  wisely  be  done  by  legislative  prescription  and  legislative  safeguards, 
it  still  remains  true  that  a  great  banking  system  must  be  largely  the 
result  of  growth  and  development  in  the  course  of  shaping  its  poli- 
cies, devising  methods,  promoting  practices,  and  adapting  its  opera- 
tions to  the  exigencies  of  differing  situations  as  they  arise.  Such  is 
peculiarly  the  case  at  the  present  time.  The  federal  reserve  system 
must  learn  its  ways  and  get  its  gait  in  a  world  more  profoundly  dis- 
turbed financially,  economically,  socially,  and  politically  than  ever  be- 
fore. Severe,  therefore,  as  are  the  tests  which  the  system  has  already 
had  to  meet,  the  developmental  stage  may  not  yet  be  said  to  be  over. 
Traditional  methods  of  reserve  banking,  developed  in  the  experience  of 
Europe,  cannot  be  mechanically  adopted  in  the  administration  of  the 
federal  reserve  system.  Much  pioneer  work  in  blazing  new  paths  must 
therefore  needs  be  done  by  those  who  are  guiding  its  development,  and 
they  will  need  all  the  help  they  can  get  from  enlightened  discussion  and 
large-minded  consideration  of  their  problems.  Recalling  Bagehot's 
penetrating  observation  that  "the  abstract  thinking  of  the  world  is 
never  to  be  expected  from  persons  in  high  places,"1  and  recalling  also 

i  Reference:  Lombard  Street,  by  Walter  Bagehot,  p.  179.  The  whole  passage  with 
reference  to  the  early  management  of  the  reserve  of  the  Bank  of  England  is  worth 
quoting:  "...  the  directors  of  the  Bank  of  England  were  neither  acquainted  with 
right  principles,  nor  were  they  protected  by  a  judicious  routine.  They  could  not  be  ex- 
pected themselves  to  discover  such  principles.  The  abstract  thinking  of  the  world 
is  never  to  be  expected  from  persons  in  high  places;  the  administration  of  first-rate 
current  transactions  is  a  most  engrossing  business,  and  those  charged  with  them  are 
usually  but  little  inclined  to  think  on  points  of  theory,  even  when  such  thinking  most 
nearly  concerns  those  transactions.  No  doubt  when  men's  own  fortunes  are  at 
stikc,  the  instinct  of  the  trader  does  somehow  anticipate  the  conclusions  of  the  closet. 
But  a  board  has  no  instincts  when  it  is  not  getting  an  income  for  its  members,  and 
when  it  is  only  discharging  a  duty  of  office." 


1921]  Federal  Reserve  Policy  179 

how  much  the  development  of  the  English  banking  system  in  the  nine- 
teenth century  owed  to  scientific  economic  discussion,  it  is  much  to  be 
desired  that  American  economists  who  are  interested  in  problems  of 
credit  and  banking,  or  in  the  bearing  of  credit  administration  upon 
economic  conditions,  should  give  close  thought  to  federal  reserve  prob- 
lems. It  is  for  this  reason  that  Dr.  O.  M.  W.  Sprague's  notable  exami- 
nation of  the  discount  policy  of  the  federal  reserve  banks2  is  particu- 
larly welcome.  His  paper  serves  well  as  a  point  of  departure  for  (1) 
a  review  of  federal  reserve  policy  in  the  past  and  (2)  a  consideration 
of  factors  and  difficulties  that  will  have  to  be  reckoned  with  in  adjusting 
the  methods  and  operations  of  the  federal  reserve  banks  in  the  future 
to  new  conditions  and  altered  circumstances. 

I 

Leaving  out  of  consideration  many  minor,  but  by  no  means  un- 
important, features  of  federal  reserve  policy  in  order  to  concentrate 
attention  upon  more  fundamental  aspects,  it  may  be  said  that  the 
three  chief  elements  of  the  policy  of  a  central  bank  or  system  of  reserve- 
holding  institutions  are  best  disclosed  in  connection  with  the  attitude 
adopted  toward:  (1)  gold;  (2)  currency;  (3)  credit. 

While  thus  separately  enumerated,  however,  the  policies  pursued 
with  respect  to  gold,  currency,  and  credit  by  the  federal  reserve  banks 
are  not  to  be  regarded  as  separate  and  unrelated  policies,  but  as  closely 
complementary  and  integral  parts  of  federal  reserve  policy.  It  would 
perhaps  be  nearer  the  truth  to  say  that  the  policy  pursued  with  respect 
to  gold  and  the  policy  pursued  with  respect  to  currency  are  elements 
in  the  policy  pursued  with  respect  to  credit,  the  regulation  of  the  flow 
and  volume  of  credit  being  in  the  last  analysis  the  primary  function  of 
the  federal  reserve  banks.  Whatever  policy  the  federal  reserve  system 
may  pursue  with  respect  to  either  gold  or  currency  must  take  its  color 
and  occasion  from  the  policy  pursued  with  respect  to  credit,  and  such 
has  been  the  case  in  the  past. 

1.  Gold  policy.  The  first  phase  of  the  federal  reserve  system's  policy 
with  reference  to  gold  was  developed  in  connection  with  the  heavy  in- 
flux of  gold  which  set  in  toward  our  shores  soon  after  the  beginning  of 
the  European  war,  and  which  up  to  the  end  of  the  year  1916  added 
approximately  1200  millions  of  dollars  to  our  national  monetary  stock. 
The  federal  reserve  banks  at  this  time  not  being  possessed  of  any  ready 
or  adequate  method  of  impounding  this  redundant  gold,  the  Federal 
Reserve  Board  recommended  in  1916  an  amendment  to  our  banking 
statute  giving  the  board  the  power  to  raise  the  reserve  requirements  of 

2  In  the  American  Economic  Review  for  March,  1921,  p.  16. 


180  A.  C.  Miller  [June 

member  banks.  The  object  sought  was  to  prevent,  when  and  as  it 
seemed  desirable,  the  new  gold  which  was  accumulating  in  the  vault  re- 
serves of  member  banks  from  becoming  the  basis  of  an  undesirable  ex- 
pansion of  credit.  It  will  be  recalled  that  at  this  time  the  federal  re- 
serve banks  were  operating  under  the  terms  of  the  Federal  Reserve 
act  as  originally  enacted,  the  required  reserves  of  member  banks  being 
carried  partly  with  reserve  banks  as  balances,  partly  in  the  vaults  of 
member  banks,  the  remainder  at  the  option  of  the  member  banks  being 
carried  either  in  their  own  vaults  or  with  the  reserve  banks.  It  was 
hoped  that  a  sufficient  number  of  the  leading  member  banks  would  ap- 
preciate the  need  of  cooperation  with  the  board's  purposes  in  preventing 
the  abnormal  increase  in  our  gold  supply  from  providing  a  basis  of  in- 
flation, to  secure  Lheir  support  for  this  amendment.  This  amendment 
failed,  but  in  September,  1916,  the  Federal  Reserve  act  was  amended 
so  as  to  permit  member  banks,  at  their  option,  to  carry  the  whole  of 
their  required  reserves  as  balances  with  the  federal  reserve  banks.  The 
object  of  this  amendment  was  to  concentrate  a  larger  portion  of  the 
actual  gold  reserves  of  member  banks  in  the  hands  of  the  federal  re- 
serve banks.  In  brief,  these  first  phases  of  the  federal  reserve  system's 
gold  policy  developed  out  of  its  credit  policy  as  a  method  of  restrain- 
ing undue  and  unnecessary  expansion  of  credit  at  a  time  when  the  re- 
serve banks  had  not  yet  attained  a  position  where  they  could  exercise 
any  effective  control  over  the  course  of  the  country's  credit  operations 
by  discount  rates. 

The  table  on  the  opposite  page,  which  sets  forth  changes  in  the  lead- 
ing items  of  the  federal  reserve  banks'  condition,  shows  the  changes  in 
the  system's  gold  position  to  the  end  of  March,  1921. 

The  next  phase  of  the  federal  reserve  system's  gold  policy  came  with 
our  entry  into  the  war  in  1917.  The  note  issue  provisions  of  the  Fed- 
eral Reserve  act  were  then  liberalized  so  as  to  permit  the  direct  issue 
of  the  federal  reserve  notes  against  gold  as  collateral  security,  the 
gold  thus  held  as  security  in  the  Federal  Reserve  Agent's  Department 
being  counted  as  reserve  required  against  federal  reserve  notes ;  and  the 
provisions  concerning  member  banks'  reserves  were  changed,  first  by 
reducing  their  required  reserves,  and  second  by  requiring  that  their 
reserves  should  all  be  carried  as  cash  balances  with  federal  reserve 
banks.  The  object  of  these  changes  was  to  enable  the  federal  reserve 
system  to  strengthen  itself  against  the  credit  demands  which  it  was 
foreseen  the  war  into  which  we  were  entering  would  occasion.  The 
policy,  in  brief,  was  to  impound  as  much  of  the  stock  of  monetary  gold 
in  the  country  as  possible  in  the  federal  reserve  system,  where  it  would 
supply,  as  circumstances  made  it  necessary,  an  adequate  gold  basis  for 
an  enlarged  issue  of  federal  reserve  notes  and  reserve  deposit  credit  in 


1921] 


Federal  Reserve  Policy 


181 


In  millions  of 

dollars 

Gold 

Total 

Net 

reserves 

cash 

Net 

imports 

General 

of 

reserves 

deposits 

Reserve 

Date 

(+)  or 

stock 

federal 

federal 

and 

ratio 

exports 

of  gold 

reserve 

reserve 

note 

(a) 

(-)  of 

in  U.  S. 

banks 

banks 

liabilities 

gold 

(a) 

(a) 

(a) 

— 

1,835 

228 

262 

252 

104.2 

End  of  March,  1917 

— 

3,089 

938 

947 

1,065 

89.0 

"     "     May,  1919 

— 

3,092 

2,188 

2,255 

4,350 

51.8 

"     "     March,   1920 

— 

2,662 

1,935 

2,057 

4,821 

42.7 

"     "     March,   1921      , 

— 

3,001 

2,222 

2,437 

4,585 

53.1 

Changes  for  period: 

Nov.  1,  1914,  to  end  of 

March,    1917 

+1,189 

-(-1,254 

-|-    710 

4-    685 

4-    813 

—  15.2 

End  of  March,  1917,  to 

end  of  May,  1919 

29 

+       3 

-f-1,250 

4-1,308 

4-3,285 

—  37.2 

End   of   May,    1919,  to 

end  of  March,  1920 

—    401 

—     430 

—    253 

—    198 

-f-    471 

—    9.1 

End  of  March,  1920,  to 

end  of  March,  1921 

-f-    376 

-f      339 

-(-    287 

4-    380 

—   236 

4-  10.4 

(a)  Bank  figures  relate  to  the  last  Friday  of  the  month,  except  those  of  March, 
1921,  which  are  as  of  March  31 ;  deposit  liabilities  and  reserve  percentages  have  been 
figured  on  a  uniform  basis  throughout  the  table. 

connection  with  the  vast  loan  and  financial  operations  of  the  war. 
Here  again  the  gold  policy  of  the  federal  reserve  system  is  to  be  inter- 
preted in  the  light  of  its  attitude  toward  credit  conditions  and  needs. 
Just  as  in  the  first  phase  of  its  gold  policy  its  objective  was  to  restrain 
credit  expansion  at  a  time  when  such  expansion  was  not  necessary,  so 
now  its  objective  was  to  provide  an  ampler  base  for  credit  expansion 
in  view  of  the  changed  situation  and  its  credit  requirements. 

The  next  important  phase  of  the  gold  policy  of  the  federal  reserve 
system  came  in  1919  with  the  lifting  of  the  embargo  on  the  exportation 
of  gold  in  June  of  that  year  on  the  recommendation  of  the  Federal 
Reserve  Board.  The  embargo  on  gold  was  not  originally  imposed  at 
the  instance  of  the  Federal  Reserve  Board,  although  the  board  was 
charged  with  the  responsibility  of  administering  it.  When  one  form 
after  another  of  the  various  controls  which  had  been  set  up  over  in- 
dustry, trade,  transportation,  fuel,  etc.,  began  to  fall  away  in  1919, 
the  Federal  Reserve  Board  recommended  a  lifting  of  the  gold  embargo, 
although  the  federal  reserve  system  was  still  confronted  with  the  credit 
problems  of  the  Treasury  and  had  not  yet,  on  account  of  the  Treasury 
financing,  regained  a  normal  control  of  its  discount  operations  and  its 
discount  policy.  At  a  time  when  it  was  virtually  helpless  to  influence 
the  course  of  the  money  market  by  the  adjustment  of  discount  rates  to 
actual  conditions,  it  sought  to  exercise  what  influence  it  could  over 
the  expansion  of  banking  credit  in  the  year   1919  by  permitting  the 


182  A.  C.  Miller  [June 

exportation  of  gold,  and  thus  exposing  the  gold  reserve  of  the  federal 
reserve  system  to  depletion  by  foreign  drains.  The  loss  of  gold  from 
the  country  thus  occasioned  to  the  end  of  the  year  1919  amounted  to 
322  millions  of  dollars.  The  loss  occasioned  to  the  federal  reserve  sys- 
tem amounted  to  125  millions  of  dollars,  and  helped  to  bring  nearer  the 
day  when  the  federal  reserve  banks  must  be  permitted  to  resume  their 
normal  relation  to  the  money  market  and  to  exercise  a  control  through 
discount  rates.  Thus  again  it  appears  that  the  gold  policy  of  the 
Federal  Reserve  Board  was  a  reflection  of  its  attitude  toward  credit 
conditions,  although  an  important  consideration  in  the  lifting  of  the 
gold  embargo  was,  also,  the  desire  to  maintain  and  upbuild  American 
financial  prestige  by  restoring  to  the  American  market  the  character  of 
a  free  gold  market. 

2.  Currency  policy.  There  was  little  occasion,  during  the  first  years 
of  the  federal  reserve  system,  for  the  Federal  Reserve  Board  to  de- 
velop a  currency  policy.  According  to  the  original  conception  of  the 
Federal  Reserve  act,  and  in  view,  further,  of  the  fact  that  at  the  time 
of  the  organization  of  the  new  system  the  country  was  supplied  with  a 
large  volume  of  currency  in  the  form  of  national  bank  notes,  the  fed- 
eral reserve  note  was  regarded  as  a  means  of  satisfying  seasonal  or 
emergency  requirements  for  additional  circulation.  When  the  great 
gold  influx  set  in,  in  1915,  the  federal  reserve  system  pursued  the  policy 
of  issuing  federal  reserve  notes  in  exchange  for  gold,  and  the  federal 
reserve  note,  up  to  the  time  of  our  entry  into  the  war  in  1917,  was  in 
effect  a  gold  certificate.  The  object  sought  in  this  policy,  especially  in 
view  of  the  extraordinary  character  of  the  shifting  of  the  world's  stock 
of  monetary  gold  then  in  progress  as  an  incident  of  the  war,  was  to 
treat  the  reserve  banks  as  repositories  of  gold  against  the  day  when  it 
seemed  reasonable  to  expect  that  the  largest  portion  of  our  new  acqui- 
sitions of  gold  would  flow  back  to  Europe,  and  was  also  in  furtherance 
of  the  early  credit  policy  of  the  board,  already  described.  Under  the 
terms  of  the  Federal  Reserve  act,  federal  reserve  notes  were  not  avail- 
able as  legal  reserve  money  to  member  banks.  One  of  the  practical 
effects,  therefore,  of  the  issue  of  federal  reserve  notes  in  exchange  for 
gold  was  the  withdrawal  of  this  gold  from  ordinary  banking  use,  par- 
ticularly from  member  bank  reserves,  where  its  accumulation  was  al- 
ready beginning  to  work  an  undue  expansion  of  credit.  In  brief,  cur- 
rency policy  was  developed  upon  lines  paralleling  the  federal  reserve 
system's  credit  policy,  which,  as  already  stated,  was  aimed,  at  this 
time,  at  a  control  of  credit  expansion,  the  situation  not  yet  having 
developed  to  a  point  where  the  traditional  method  of  the  control  of  ex- 
pansion by  means  of  discount  rates  could  be  made  effective. 

During  the  period  between  the  end  of  November,  1914,  and  the  end 


1921]  Federal  Reserve  Policy  183 

of  March,  1917,  net  imports  of  gold  into  the  United  States  amounted 
to  1189  millions  of  dollars,  while  the  increase  in  the  gold  held  by  the 
reserve  banks  and  the  reserve  agents  was  about  710  millions.  The  dif- 
ference between  these  two  amounts  represents  additions  to  the  gold 
holdings  of  national,  non-national,  and  private  banks,  to  gold  held  ear- 
marked for  foreign  account,  and  to  gold  in  circulation.  It  appears, 
therefore,  that  even  before  the  entry  of  the  United  States  into  the  war, 
the  larger  part  of  the  gold  coming  into  this  country  found  its  way  into 
the  federal  reserve  banks  and  was  impounded  there. 

After  we  entered  the  war  and  the  Federal  Reserve  act  was  liberalized 
in  its  note  issue  provision,  the  board  systematically  continued  the 
policy,  already  noted  in  connection  with  the  discussion  of  its  gold 
policy,  of  impounding  gold  in  exchange  for  federal  reserve  notes.  It 
was  expected  that  the  gold  thus  acquired  would  be  needed  in  the  process 
of  providing  the  credit  facilities  necessary  for  financing  the  war  and 
in  taking  care  of  the  extraordinary  requirements  of  business  occasioned 
by  the  war. 

It  was  of  course  recognized  that  the  degree  of  credit  assistance  that 
the  federal  reserve  banks  might  be  called  upon  to  extend  to  their  mem- 
ber banks  in  the  process  of  floating  the  government's  war  loans  might 
easily  reach  the  point  of  producing  a  considerable  inflation  of  credit. 
But  the  theory  upon  which  the  board  proceeded  with  respect  to  the 
issue  of  federal  reserve  notes  was  that  the  currency,  as  such,  would  not 
promote  inflation,  and  that  restriction  of  note  issues  by  federal  reserve 
banks  in  response  to  the  requirements  of  the  community  was  not  there- 
fore advisable  or  necessary.  On  more  than  one  occasion,  as  the  volume 
of  federal  reserve  notes  in  circulation  showed  substantial  increase,  the 
board  stated  its  view  that  the  increased  issues  were  occasioned  by  the 
rise  of  prices,  and  that  in  due  course,  as  prices  ceased  to  rise  or  showed 
a  tendency  to  fall,  the  federal  reserve  note  currency  which  was  found 
to  be  in  excess  of  the  country's  requirements  would  return  to  the  banks. 
The  board's  view  was  most  succinctly  stated  in  its  letter  of  August  8, 
1919,  to  the  chairman  of  the  Senate  Committee  on  Banking  and  Cur- 
rency : 

Federal  Reserve  notes  are  not  legal  tender,  nor  do  they  count  as  reserve 
money  for  member  banks.  They  are  issued  only  as  a  need  for  them  devel- 
ops, and  as  they  become  redundant  in  any  locality  they  are  returned  to  the 
Treasury  at  Washington,  or  to  a  Federal  Reserve  Bank  for  redemption. 
Thus,  there  cannot  at  any  time  be  more  Federal  Reserve  notes  in  circulation 
than  the  needs  of  the  country  at  the  present  level  of  prices  require,  and  as 
the  need  abates  the  volume  of  notes  outstanding  will  be  correspondingly 
reduced  through  redemption.3 

a  Federal  Reserve  BuHctin,  Aug.,  1919,  p.  701. 


184  A.  C.  Miller  [June 

How  far  the  currency  theory  thus  stated  has  been  borne  out  by  re- 
cent changes  in  the  volume  of  federal  reserve  notes  in  circulation  can 
now  be  determined.  Federal  reserve  notes  attained  their  maximum 
amount  for  the  year  1919  on  December  26,  when  they  stood  at  $3,057,- 
646,000.  With  the  advent  of  the  year  1920,  a  return  flow  of  federal 
reserve  notes  set  in.  This  movement,  however,  was  short  lived.  Be- 
tween December  26,  1919,  and  January  23,  1920,  federal  reserve  note 
circulation  was  reduced  by  $213,419,000.  Thereafter  there  was  a 
steady  increase  in  the  volume  of  federal  reserve  notes  issued  and  in 
circulation,  attaining  the  amount  of  $3,404,931,000  on  December  23, 
1920,  when  a  return  flow  of  substantial  dimensions  set  in  which  is  still 
in  process.  The  drop  from  the  high  point  in  December,  1919,  to  the 
low  point  of  1920,  was  $213,419,000 ;  and  from  the  high  point  of  1920 
to  April  15,  1921,  is  $536,404,000. 

The  two  movements  just  referred  to  indicate  not  only  changes  in  the 
volume  of  currency  owing  to  seasonal  needs,  but  also  a  connection  be- 
tween the  volume  of  credit  and  the  volume  of  currency,  thus  lending 
much  support  to  the  board's  theory  that  the  expansion  of  the  currency 
is  a  consequence  of  the  expansion  of  credit  and  the  rise  of  prices,  and 
that  the  expansion  of  the  currency  is  not  therefore  to  be  regarded  as 
a  causal  factor  in  price  movements : 

The  increased  volume  of  Federal  Reserve  notes  in  circulation  during  the 
past  three  years,  in  so  far  as  it  is  not  the  result  of  direct  exchanges  for  gold 
and  gold  certificates  which  have  been  withdrawn  from  circulation,  is  the  ef- 
fect of  advancing  wages  and  prices,  and  not  their  cause.4 

Whether  this  view  (with  all  it  implies)  of  the  relation  of  currency 
to  credit  and  prices,  which,  it  must  be  admitted,  has  the  sanction  of 
high  authority  in  our  own  and  other  countries  and  considerable  sup- 
port from  banking  and  currency  experience  under  normal  conditions, 
can  safely  be  taken  as  an  invariable  principle  of  reserve  bank  action 
in  the  future  will  be  considered  later  in  this  paper. 

3.  Credit  policy.  Credit  policy  was  only  of  theoretical  moment  in 
the  first  years  of  the  federal  reserve  system.  Easy  credit  conditions 
in  the  United  States,  because  of  the  redustion  of  member  bank  reserve 
requirements  and  the  great  influx  of  gold,  made  reserve  bank  credit 
policy  and  discount  rates  of  little  actual  consequence  until  the  late 
autumn  of  1916.  Then,  for  the  first  time,  did  a  credit  situation  de- 
velop which  gave  to  the  rates  of  some  of  the  federal  reserve  banks  a 
degree  of  effectiveness.  The  increasing  pressure  for  credit  funds,  which 
would  have  developed  in  the  year  1917  even  if  the  United  States  had 
not  entered  the  war,  would  undoubtedly  have  led  to  the  development 
of  an  effective  discount  policy  by  the  federal  reserve  system — a  policy 

*  Federal  Reserve  Bulletin,  Aug.,  1919,  p.  702. 


1921]  Federal  Reserve  Policy  185 

in  which  main  reliance  would  have  been  put  upon  rates,  and  under 
which  reserve  bank  rates  would  have  been  adjusted  to  market  conditions 
so  as  to  keep  them,  in  the  larger  financial  centers  at  least,  at  or  above 
the  ordinary  commercial  rate;  all  of  this  in  accordance  with  well  recog- 
nized principles  of  reserve  bank  practice.  With  the  entry  of  the  United 
States  into  the  war,  the  outlook  was  changed,  and  the  federal  reserve 
system  was  confronted  with  large  and  difficult  problems  of  credit  grow- 
ing out  of  the  loan  policy  and  loan  operations  of  the  Treasury.  From 
that  time  forth  to  the  beginning  of  the  year  1920,  the  discount  policy 
of  the  federal  reserve  system  was  shaped  not  in  accordance  with  money 
market  conditions — not  with  the  idea  of  using  reserve  bank  rates  as  an 
instrument  of  effective  control  of  the  money  market — but  with  the 
primary  purpose  of  assisting  the  Treasury  in  the  flotation  of  its  great 
bond  issues  and  its  short-term  certificate  issues.  In  brief,  the  discount 
policy  of  the  federal  reserve  system  was  treated  as  an  element  of  the 
Treasury's  loan  policy,  the  federal  reserve  system  virtually  ceasing  to 
exercise,  for  the  time  being,  its  normal  function  of  regulating  credit. 
The  position  of  the  Federal  Reserve  Board  with  respect  to  the  bearing 
of  Treasury  policy  upon  the  federal  reserve  system  has  been  explained 
in  its  several  annual  reports,6  and  recently  was  succinctly  stated  by  the 
governor  of  the  Federal  Reserve  Board  at  the  joint  hearings  held  before 
the  Senate  and  House  committees  on  agriculture  on  December  3,  1920 :6 

The  Federal  Reserve  Board  adopted  a  policy  in  order  to  assist  in  the  war 
financing  which  was  economically  unsound.  I  say  this  frankly.  Congress 
authorized  certain  loans.  It  authorized  the  Secretary  of  the  Treasury  to 
determine  the  rates  at  which  the  loans  should  be  issued.  The  Secretary  of 
the  Treasury  asked  the  advice  of  experts  and  then  fixed  the  rates  of  inter- 
est to  be  borne  by  the  several  issues  of  bonds,  notes,  and  certificates.  Dur- 
ing the  time  we  were  actually  at  war,  something  like  $18,000,000,000  of 
bonds  were  sold  to  the  people,  an  amount  certainly  in  excess  of  the  normal 
investment  power  of  the  American  people  in  such  a  short  time,  and  the  only 
way  in  which  those  loans  could  be  financed  was  through  the  instrumentality 
of  the  banks.  The  only  way  the  banks  could  undertake  to  do  it  was  to  get 
some  assistance  from  the  Federal  Reserve  Banks  and  at  a  low  rate.  The 
low  rate  of  interest  borne  by  these  bonds  was  fixed  with  a  view  of  holding 
down  the  expenses  of  the  Government  as  far  as  possible.  Anyway,  that  is 
something  the  Federal  Reserve  Board  has  no  responsibility  for.  In  order 
to  make  possible  the  floating  of  these  bonds  we  fixed  a  rate  less  than  their 
coupon  rate.  Some  member  banks  announced  that  for  a  period  of  six 
months  there  would  be  a  rate  of  4^  per  cent  on  notes  secured  by  Government 
obligations.  The  result  was  there  was  no  loss  to  subscribing  banks  pending 
the  distribution  of  the  bonds  to  the  public.     There  were  successive  bond 

<s  See  Report  for  1920,  pp.  11-15;  for  1919,  pp.  67-73;  and  for  1918,  pp.  1-5  and 
85-87. 

8  Pages  62  and  63  of  the  hearings  entitled  "Reviving  the  Activities  of  the  War 
Finance  Corporation." 


186  A.  C.  Miller  [June 

issues.     The  principal  reason  why  discount  rates  were  not  increased  earlier 
than  they  were  in  1919  was  on  account  of  Treasury  financing. 

This  may  be  taken  as  the  official  statement  of  the  Federal  Reserve 
Board  with  respect  to  the  discount  policy  followed  by  the  federal  re- 
serve banks  to  the  end  of  the  year  1919. 

It  is  clear  that  the  point  at  which  the  loan  policy  of  the  Treasury 
affected  the  federal  reserve  banks  was  the  money  rate.  Discount  rates 
were  maintained  at  artificially  low  levels  from  shortly  after  the  begin- 
ning of  the  war  in  1917  until  the  end  of  the  year  1919.  The  particular 
device  which  was  employed  in  aid  of  the  Treasury's  loan  policy,  as  is 
well  known,  was  the  establishment  and  maintenance  of  (1)  preferential 
rates  on  bond  and  certificate  secured  paper,  as  compared  with  com- 
mercial paper,  and  (2)  a  differential  in  favor  of  the  rate  on  such  bond 
and  certificate  secured  paper  as  compared  with  the  interest  rate  borne 
by  the  bonds  and  certificates.  The  immense  credit  resources  of  the 
federal  reserve  system  were  thus  availed  of  by  the  Treasury  during 
this  period  to  make  and  maintain  an  artificial  money  market.  In  effect, 
the  power  of  the  Federal  Reserve  Board  as  the  ultimate  regulator  of 
the  discount  policy  of  the  federal  reserve  banks  was  put  in  commission, 
and  rates  were  fixed,  not  "with  a  view  of  accommodating  commerce  and 
business,"7  in  accordance  with  normal  principles,  but  with  a  view  to 
accommodating  the  financial  program  of  the  Treasury  in  accordance 
with  emergency  principles. 

Whether  the  Treasury's  loan  policy  and  methods  of  short-term  bor- 
rowing were  well  conceived  is  not  here  in  question.  Indeed,  the  time 
has  not  yet  come  for  passing  judgment  upon  the  policies  of  the  Treas- 
ury in  connection  with  the  financial  conduct  of  the  war.  It  is,  how- 
ever, possible  to  speak  of  that  feature  of  Treasury  policy  which  most 
vitally  affected  the  federal  reserve  banks.  The  wisdom  and  the  ne- 
cessity of  the  device  of  an  artificial  money  rate,  carried  to  the  point 
that  it  was  by  the  maintenance  of  a  differential  rate  upon  so-called  war 
loan  paper,  may  be  questioned.  In  the  light  of  subsequent  develop- 
ments, it  may  be  questioned  whether  it  was  not  a  costly  device  to  the 
country.  While  the  bad  economic  consequences  of  artificially  low  dis- 
count rates  were  minimized  during  the  war  by  the  many  various  con- 
trols over  the  economic  activities  of  the  people  that  were  then  set  up, 
a  precedent  was  established  which  it  was  found  difficult  to  set  aside 
after  the  war. 

The  controls  which  were  set  up  during  the  war  on  production,  trade, 
and  consumption — such  as  the  War  Industries  Board,  War  Trade 
Board,  Food  Administration,  Fuel  Administration,  Railway  Adminis- 
tration, Shipping  Board,  Capital  Issues  Committee,  New  York  Money 

7  The  language  of  the  Federal  Reserve  act,  section  14,  paragraph  D. 


1921]  Federal  Reserve  Policy  187 

Committee,  had  very  important  financial  consequences.  Their  bearing 
upon  the  credit  situation  and  upon  the  credit  problem  of  the  federal 
reserve  banks  was  especially  important.  They  acted  in  effect,  though 
that  was  not  their  intended  purpose,  as  a  control  of  credit  expansion 
at  the  source  by  limiting  the  occasion  for  the  use  of  credit  and  by  con- 
fining its  use  to  such  purposes  as  were  deemed  essential  to  the  prosecu- 
tion of  the  war.8 

But  with  the  close  of  the  war — that  is,  with  the  cessation  of  hos- 
tilities following  the  armistice — these  various  controls  were  soon  lifted : 
"The  moment  we  knew  the  armistice  to  have  been  signed  we  took  the 
harness  off."9  It  was  very  generally  expected  that  business  and  in- 
dustry, if  freed  from  restraint,  would  soon  effect  their  return  to  a 
normal  condition.  Early  in  the  year  1919,  however,  industrial  stagna- 
tion and  unemployment  were  in  evidence,  and  a  fresh  survey  and  diag- 
nosis of  the  economic  situation  was  made  by  the  Industrial  Board10  set 
up  under  the  auspices  of  the  Department  of  Commerce  for  assisting 
the  readjustment  of  industry  and  trade  to  a  more  stable  basis.  Its 
main  effort  was  directed  to  bringing  about  revision  of  prices  and 
stabilization  of  the  expected  fall  of  prices.  Events  soon  showed  that 
the  policy  of  "price  stabilization"  was  based  on  a  faulty  economic 
diagnosis.  It  was  not  many  months  after  the  close  of  the  war  that 
prices  began  to  rise.  The  main  impulse  came  from  the  release  of  buy- 
ing power  which  had  been  in  restraint  during  the  war.  A  seller's 
market  began  to  develop  in  the  spring  of  1919.  The  consumer  de- 
manded goods ;  price  was  a  secondary  consideration.  Dealers,  both 
wholesale  and  retail,  were  bidding  against  one  another  for  such  sup- 
plies as  there  were,  and  manufacturers  were  bidding  against  one  an- 
other for  raw  materials  and  labor.  The  rapid  rise  of  prices  induced 
buying  for  speculation,  and  speculation  in  its  turn  accelerated  the  rise 
of  prices.  Inflation  was  becoming  cumulative  and  systemic  in  its 
effects,  and  pervading  the  whole  body  economic.  This  is  the  explana- 
tion of  a  phenomenon  which  has  puzzled  so  many  people.  During  the 
war,  expansion  of  credit  was  restrained  from  working  its  full  economic 
effects  in  the  form  of  price  inflation  and  speculation.  After  the  war  it 
was  let  loose  when  the  various  controls  above  enumerated  were  lifted 
and  the  huge  volume  of  credit  created  during  the  war  was  permitted 
to  diffuse  itself. 

8  Federal  Reserve  Bulletin,  October,  1918,  pp.  922-924.  If  these  various  controls 
which  were  in  effective  operation  in  the  last  months  of  the  war  had  been  made 
equally  effective  early  in  the  war,  it  is  probable  that  a  better  financial  and  credit 
situation  would  have  been  maintained  throughout  the  war;  in  brief,  that  there  would 
have  been  less  inflation  of  credit  and  prices  than  in  fact  developed. 

9  From  President  Wilson's  address  to  Congress,  delivered  December  2,   1918. 
to  Federal  Reserve  Bulletin,  Mar.,  1919,  p.  246. 


188  A.  C.  Miller  [June 

The  credit  and  business  situation  which  developed  in  the  United 
States  in  1919  was  one  that  needed  restraint.  A  seller's  market  usually 
needs  credit  restraint  before  it  passes  the  limit  of  safety,  just  as  a 
buyer's  market  usually  needs  the  help  of  credit  support.  It  would 
have  been  of  the  greatest  advantage  to  the  country  if  such  restraint11 
had  been  exercised  by  the  federal  reserve  system  in  the  year  1919,  and 
the  development  of  the  runaway  and  speculative  markets,  which  de- 
veloped in  the  second  half  of  the  year,  been  measurably  prevented. 
The  federal  reserve  system  was  the  one  important  agency  of  control 
left  to  the  country  after  the  various  war  controls  had  disappeared. 
All  the  more  important  was  it,  therefore,  that  it  should  be  in  a  position 
to  function  as  effectively  as  possible.  Its  burden  and  responsibility, 
even  under  the  most  favorable  view  of  the  situation,  were  undeniably 
large,  and  would  have  imposed  a  severe  test  upon  the  system.  In  the 
light  of  what  transpired  in  the  year  1920,  as  is  now  a  matter  of  uni- 
versal knowledge,  there  is  every  reason  to  believe  that  if  the  federal 
reserve  system  had  functioned  as  effectively  in  1919  in  regulating  credit 
as  it  did  in  1920  in  retarding  and  eventually  arresting  expansion,  it 
would  have  rendered  an  inestimable  service  to  the  country  and  would 
have  prevented  many  of  the  unhealthful  developments  in  business  and 
credit  from  gaining  the  headway  which  made  action  of  so  drastic  a 
character  as  that  which  was  taken  in  1920  necessary.  How  much  of 
the  business  distress  and  economic  hardship  experienced  by  the  country 
during  the  past  year  would  have  been  avoided,  had  the  federal  reserve 
system  been  in  a  position  to  pursue  a  discount  policy  in  the  second 
half  of  the  year  1919  such  as  the  trend  of  developments  clearly  indi- 
cated to  be  necessary,  cannot  of  course  be  determined.  Much  of  the 
hardship  suffered  by  the  country  in  1920  might,  however,  have  been 

ii  The  month  of  September  was  the  time  to  have  gotten  control.  The  public  debt 
reached  its  maximum  at  the  end  of  August,  and  a  great  reduction  of  the  floating 
debt  occurred  in  September.  Total  war  loan  paper  for  the  twelve  federal  reserve 
banks  dropped  from  $1,635,233,000  on  September  5,  1919,  to  $1,383,896,000  on  Sep- 
tember 19,  following  the  redemption  of  certificates  on  September  15  of  $431,910,000. 
The  rise  was  then  rapid,  reaching  $1,771,028,000  on  November  7.  The  movement  of 
total  bills  discounted  paralleled  the  variations  in  war  loan  paper  closely.  On  Sep- 
tember 5,  total  bills  discounted  for  member  banks  were  $1,847,418,000.  They  fell  to 
$1,645,881,000  on  September  19,  and  rose  to  $2,189,489,000  on  November  7.  The  ex- 
pansion of  the  loan  account  of  the  federal  reserve  banks  during  the  seven  weeks  from 
September  19  to  November  7  amounted  to  over  $500,000,000. 

For  the  Federal  Reserve  Bank  of  New  York,  total  war  loan  paper  dropped  from 
$672,070,000  on  September  5,  1919,  to  $483,053,000  on  September  19.  It  then  rose  to 
$795,212,000  on  November  7.  On  September  5,  total  bills  discounted  amounted  to 
$724,861,000,  falling  to  $528,592,000  on  September  19,  and  rising  to  $904,351,000  on 
November  7.  The  expansion  in  total  bills  discounted  in  the  seven  weeks  from  Sep- 
tember 19  to  November  7  amounted  to  approximately  $375,000,000. 


1921]  Federal  Reserve  Policy  189 

avoided  by  the  adoption  in  1919  of  an  effective  precautionary  policy 
of  credit  control.  That  such  a  precautionary  discount  policy  would 
have  been  adopted  by  the  federal  reserve  system,  had  it  felt  free  to  act, 
will  not  be  doubted  by  any  one  acquainted  with  the  attitude  of  the 
Federal  Reserve  Board  and  the  federal  reserve  banks  at  this  time. 
As  early  as  June,  1919,  after  the  close  of  the  Victory  Liberty  Loan 
campaign,  which,  it  will  be  remembered,  was  announced  to  be  the  last 
of  the  war  loans,  the  Federal  Reserve  Board  expressed  its  concern  over 
the  unhealthful  tendencies  which  were  in  process.  Counsel  and  warn- 
ings of  similar  purport  were  subsequently  repeated.  The  necessity  of 
restraint  upon  the  borrowings  of  member  banks  for  speculative  pur- 
poses by  other  means  than  advances  in  discount  rates12  was  pointed 
out,  and  such  restraint  was  urged.  Here  and  there,  for  a  while,  there 
were  some  slight  evidences  that  the  situation  was  being  controlled,  but 
no  large  results  were  achieved,  and  speculative  tendencies  of  a  danger- 
ous character  and  large  dimensions,  involving  speculation  in  land  and 
commodities  as  well  as  in  securities,  gained  increasing  momentum 
through  the  autumn  of  1919.  "Direct  action,"  so-called,  as  a  method 
of  credit  control  was  not  succeeding.13  The  expansion  of  credit  and 
the  rise  of  prices  went  on  apace.  Speculation  flourished.  It  could  no 
longer  be  doubted  that  the  federal  reserve  system  must  undertake  the 
regulation  of  credit  by  means  of  discount  rates.  A  beginning  was 
made  by  the  slight  advance  in  discount  rates  on  war  loan  paper  on 
December  11,  1919,  with  every  expectation  and  intention  on  the  part 
of  the  federal  reserve  system  of  assuming  full  control  of  its  discount 
policy  with  the  advent  of  the  year  1920. 

All  this  is  said  dispassionately  and  objectively,  by  way  of  explanation 
of  a  critical  period  in  the  history  of  federal  reserve  policy.  The  Treas- 
ury, as  well  as  the  federal  reserve  system,  had  its  difficulties.  While 
the  war,  in  a  fighting  sense,  was  over  with  the  advent  of  the  year  1919, 
it  was  not  over  in  a  financial  sense.  The  Treasury  was  still  confronted 
with  vast  financial  obligations.  The  financial  precedent  established 
during  the  war  carried  over  into  the  year  1919.  Reserve  bank  policy 
continued  to  be  subordinated  to  Treasury  policy,  and  discount  rates 
throughout  the  year  1919  were  maintained  at  artificially  low  levels. 

12  "The  Federal  Reserve  Board  is  concerned  over  the  existing  tendency  towards  ex- 
cessive speculation,  and  while  ordinarily  this  could  be  corrected  by  an  advance  in  dis- 
count rates  at  the  Federal  Reserve  Banks,  it  is  not  practicable  to  apply  this  check 
at  this  time  because  of  Government  financing."  (From  a  letter  sent  by  the  Federal 
Reserve  Board  to  the  chairmen  of  the  federal  reserve  banks,  June  10,  1919.) 

13  "These  warnings,  however,  were  only  a  transitory  expedient  and  were  given  only 
momentary  attention  by  many  banks.  The  Board  was  prepared,  as  soon  as  Treasury 
exigencies  permitted,  to  resort  to  the  well-known  method  of  advancing  the  rate  of 
discount."     Annual  Report  for  1920,  p.  12. 


190  A.  C.  Miller  [June 

The  device  of  an  artificial  discount  rate  provided  too  comfortable  an 
expedient  alike  to  the  Treasury  and  to  the  banks  of  the  country,  which 
were  still  burdened  with  commitments  made  under  the  "borrow  and 
buy"  Liberty  Loan  slogan,  to  be  easily  relinquished.  Thus  was  the 
federal  reserve  system  controlled  in  the  matter  of  its  discount  policy 
at  the  very  time  when  the  interest  of  the  country  at  large  required 
that  it  should  be  free  of  control  in  order  that  it  itself  might  control. 

With  the  year  192014  the  federal  reserve  banks  entered  upon  the 
exercise  of  their  function  of  regulating  credit  in  accordance  with  busi- 
ness and  economic  indications,  and,  under  circumstances  of  extraordi- 
nary difficulty  and  for  the  first  time  since  the  outbreak  of  the  war,  un- 
dertook to  develop  a  policy  of  credit  control  by  means  of  discount 
rates.  About  the  same  time  the  Treasury  adopted  the  policy  of  ad- 
justing the  interest  rate  on  its  short-term  borrowings  to  the  state  of 
the  money  market.  It  is  not  for  the  Federal  Reserve  Board  to  esti- 
mate the  wisdom  of  the  credit  policy  pursued  by  it  in  the  year  1920. 
It  may,  however,  with  propriety  speak  of  the  attitude  which  led  to  that 
policy.  There  was  nothing  "hesitant"15  in  the  policy  adopted  by  the 
board  at  this  time.  Rates  were  advanced  as  follows  in  January,  1920 : 
commercial  paper  rate,  from  4%  per  cent  at  ten  banks  and  5  per  cent 
at  two  banks  to  6  per  cent  at  all  banks ;  certificate  of  indebtedness 
rate,  from  4*4  per  cent  to  4^4  per  cent  according  to  the  rate  borne  by 
the  certificate  to  4%  per  cent  on  all  classes  of  certificates ;  liberty  bond 
rate,  from  4%  per  cent  at  ten  banks  and  5  per  cent  at  two  banks  to 
5^2  Per  cent  ftt  all  banks.  Such  marked  advances  of  rate  do  not  be- 
tray "hesitation";  they  evidence  conviction.16  This  first  advance  in 
rates  not  proving  effective,  further  advances  were  made  in  the  early 
summer — the  commercial  rate  at  the  largest  federal  reserve  banks  be- 
ing advanced  from  6  per  cent  to  7  per  cent,  rates  on  certificates  from 
4%  per  cent  to  5^  per  cent  at  seven  banks,  and  from  5  per  cent  to 
6  per  cent  at  five  banks,  according  to  the  rate  borne  by  the  certificate, 
and  rates  on  liberty  bonds  from  5^2  per  cent  to  6  per  cent  at  six 
banks,  and  to  5%  per  cent  at  one  bank,  the  rate  being  left  unchanged 
at  the  remaining  five  banks. 

The  reserve  ratio  for  the  federal  reserve  system  as  a  whole  on  Janu- 
ary 2,  1920,  was  43.7  per  cent  as  compared  with  50.8  per  cent  on 

14  "Fortunately  the  condition  of  the  Treasury  is  such  that  the  Board  can  now  feel 
free  to  inaugurate  discount  policies  adjusted  to  peace-time  conditions  and  needs." 
Annual  Report   for   1919,   p.   69. 

is  The  terra  used  by  Mr.  Sprague  in  the  article  already  cited,  page  24. 

io  "It  was  the  Board's  conviction,  however,  at  the  close  of  the  year  (1919)  that  a 
substantial  advance  in  all  discount  rates  was  necessary  and  that  it  should  not  be 
long  delayed."     Annual  Report  for  1919,  p.  4. 


1921]  Federal  Reserve  Policy  191 

July  3,  1919.  It  declined  to  42.8  per  cent  on  July  2,  1920.  The 
board's  action  in  raising  rates  was  therefore  clearly  supported  by  the 
reserve  position  of  the  banks.  But  there  is  nothing  in  the  action  taken 
then  or  at  any  time  later  in  the  year  to  justify  the  statement  that  the 
board's  discount  policy  in  1920  was  not  "the  expression  of  a  voluntary 
policy."17  The  board's  attitude  is  clearly  indicated  in  its  annual  re- 
port for  1919 :  "The  expansion  of  credit  set  in  motion  by  the  war 
must  be  checked.  Credit  must  be  brought  under  effective  control  and 
its  flow  be  once  more  regulated  and  governed  with  careful  regard  to 
the  economic  welfare  of  the  country  and  the  needs  of  its  producing  in- 
dustries."18 The  action  taken  by  the  federal  reserve  banks  in  1920 
was  taken  not  primarily  to  protect  their  reserves  but  to  control  the 
rate  of  expansion  of  credit.  It  should  be  distinctly  noted  in  review- 
ing the  situation  of  the  reserve  banks  during  the  years  1919  and  1920 
that  the  reserve  ratio  of  the  federal  reserve  system  was  declining,  not 
because  reserves  were  being  depleted  through  loss  of  gold,  but  primarily 
because  the  credit  facilities  of  the  system  were  being  too  freely  drawn 
upon  by  the  banks  of  the  country  and  the  liabilities  of  the  reserve  banks 
in  the  form  of  deposits  and  notes  mounting  at  a  steady  and  startling 
rate.  The  decline  of  the  reserve  ratio  reflected  quite  accurately  the 
credit  expansion  which  was  in  process.19  The  solicitude  of  the  board 
arose  not  because  of  loss  of  gold — for  the  total  gold  holdings  of  the 
reserve  system  showed  little  variation  (amounting  on  January  3,  1919, 
to  $2,091,194,000;  on  July  3,  1919,  to  $2,128,946,000;  on  January 
2,  1920,  to  $2,062,615,000;  on  July  2,  1920,  to  $1,971,696,000;  and 
on  December  31,  1920,  to  $2,059,333,000),  but  because  of  the  un- 
healthful  credit  situation  which  had  been  developing  since  the  summer 

17  "It  is,  however,  by  no  means  certain  that  the  Reserve  Board  would  have  taken 
measures  to  restrain  credit  during  the  course  of  the  winter  and  spring  of  this  year 
[1920]  if  the  power  of  the  reserve  banks  to  extend  credit  within  the  limits  of  legal 
reserve  requirements  had  not  been  nearly  exhausted.  The  successive  advances  in  dis- 
count rates  made  during  the  first  half  of  the  year  were  not  then  entirely  the  expres- 
sion of  a  voluntary  policy.  It  was  a  policy  which  in  large  measure  was  enforced  by 
the  reserve  position  of  the  banks."     (Sprague,  article  cited,  p.  23.) 

is  Annual  Report  for  1919,  p.  71. 

19  Studies  made  by  the  Statistical  Division  of  the  Federal  Reserve  Board  indicate 
that  for  the  larger  part  of  the  year  1920  the  reserve  ratio  has  fluctuated  in  close 
accord  with  changes  in  note  and  deposit  liabilities.  As  between  notes  and  deposits, 
the  indications  are  that  for  shorter  periods  of  time  changes  in  the  ratio  follow 
fluctuations  in  deposits,  while  for  longer  periods  of  time  the  decisive  influence  on 
the  ratio  is  exercised  by  changes  in  the  volume  of  notes.  An  effort  has  been  made  to 
devise  an  "index  of  divergence,"  or  formula  for  estimating  the  relative  effects  of 
changes  in  liabilities  and  of  changes  in  reserves  on  the  movement  of  the  reserve  ratio. 
See  paper  by  E.  A.  Goldenweiser,  "Index  of  Divergence,"  in  the  forthcoming  Septem- 
ber number   of  the   American  Statistical  Review. 


192  A.  C.  Miller  [June 

of  1919,  and  which  threatened  to  culminate  in  disaster  unless  subjected 
to  control.  While  this  condition  was  reflected  in  the  decline  of  the 
reserve  ratio,  the  board's  discount  policy  was  directed  toward  improv- 
ing the  reserve  position  of  the  federal  reserve  banks  not  by  increasing 
their  reserves  but  by  checking  the  constant  expansion  of  their  liabili- 
ties and  by  setting  in  operation  forces  which  would  make  for  a  healthier 
credit  situation.  It  raised  rates  to  protect  the  reserve  banks  against 
abuse  of  their  credit  facilities,  and  to  protect  the  community  and  the 
general  business  and  economic  situation  against  the  consequences  of 
such  abuse. 

Whether  the  federal  reserve  system  would  have  had  the  support  of 
public  opinion  to  the  extent  it  had  during  the  past  year,  had  the  bad 
situation  which  the  Federal  Reserve  Board  was  undertaking  to  improve 
not  been  unmistakably  reflected  in  the  reserve  position  of  the  banks, 
may  well  be  doubted: 

As  a  guide  to  discount  policy,  it  must  be  admitted  the  reserve  ratio  has  cer- 
tain conspicuous  advantages.  It  is  definite  and  obvious.  Public  opinion  may 
be  expected  to  support  the  always  unwelcome  policy  of  credit  restraint  when 
that  policy  is  enforced  by  a  depleted  reserve.  It  is  unhappily  very  doubtful 
whether  the  public  would  have  been  reconciled  to  the  advance  in  rates  made 
last  spring  if  the  reserve  banks  had  had,  let  us  say,  a  reserve  ratio  of  55 
per  cent,  and  yet,  all  other  things  being  the  same,  an  advance  in  rates  would 
have  been  no  less  desirable.20 

It  is  this  consideration,  thus  well  stated,  which  has  given  to  the 
bank  reserve  ratio  in  the  past  its  authoritative  position  as  a  credit  and 
banking  indicator.  It  is  this  same  consideration  which  will  assure  it  a 
position  of  almost  equal  importance  in  the  future.  Tradition,  it  must 
never  be  forgotten,  has  much  to  do  with  matters  of  banking  and  credit 
practice.  The  popular  tradition  that  the  reserve  ratio  is  the  index 
of  changes  in  the  credit  situation  will  therefore  be  slow  to  disappear. 
Particularly  will  this  be  true  in  the  United  States,  where  long  adherence 
to  the  principle  of  legislatively  prescribed  minimum  banking  reserves 
has  much  of  the  sanctity  of  a  first  principle.  The  proposals  often 
made  in  recent  months  to  abandon  the  reserve  ratio  as  an  indicator  of 
discount  policy  and  to  base  discount  policy  hereafter  on  the  observed 
effects  of  credit  on  prices,21  have,  therefore,  the  character  of  academic 
proposals,  even  in  present  circumstances,  which,  it  must  candidly  be 
admitted,  are  less  favorable  than  was  ordinarily  true  in  the  past  to 
quick  responsiveness  on  the  part  of  the  reserve  ratio  to  changing  busi- 
ness, credit,  and  price  conditions.  As  an  abstract  proposition,  the 
proposal   to   substitute   a  price  indicator   for   the   reserve  ratio   as   a 

20  Spraguc,  article  cited,  p.  27. 
2i  Ibid.,  p.  28. 


1921]  Federal  Reserve  Policy  193 

guide  to  discount  policy  has  much  economic  merit.  The  rigors  of  the 
recent  price  readjustment  process  through  which  the  United  States,  in 
common  with  the  rest  of  the  commercial  world,  has  been  passing,  have 
emphasized  the  value  of  price  stability.  Price  disturbances  not  origi- 
nating from  inevitable  natural  causes  are  bad  and  costly  alike  to  pro- 
ducer and  consumer.  It  is  not  surprising,  therefore,  in  view  of  the 
trying  experiences  of  recent  years,  that  effort  should  be  made,  in  re- 
viewing the  working  of  present-day  credit  and  banking  machinery,  to 
find  some  guide  to  credit  policy  that  will  give  to  the  community  greater 
protection  against  unsettling  changes  in  the  price  level.  Recent  Ameri- 
can experience,  it  may  also  be  admitted,  has  demonstrated  that  good 
banking  administration  in  times  of  economic  disorder,  at  least,  pre- 
sents more  than  a  problem  of  merely  maintaining  the  reserve  ratio,  in 
a  conventional  or  perfunctory  sense. 

Without  entering  upon  the  discussion  of  controverted  questions  of 
economic  theory  touching  the  relation  of  changes  in  prices  to  changes 
in  the  volume  of  credit,  it  may  be  assumed  that  the  retardation  of  the 
flow  of  credit  in  times  of  expansion,  and  the  acceleration  of  the  flow 
of  credit  in  times  of  business  recovery  following  a  period  of  depression, 
have  an  appreciable  bearing  on  price  movements.  As  a  theoretical 
proposition,  therefore,  it  is  entirely  conceivable  that  the  discount  policy 
of  the  federal  reserve  system  might  be  governed  by  indications  of  im- 
pending price  changes,  with  a  view  of  mitigating  their  cyclical  fluctua- 
tions. While  such  an  undertaking  would  raise  some  new  and  difficult 
problems  of  credit  administration,  no  doubt  in  time  the  technique  of  a 
plan  of  credit  regulation  based  on  price  indices  could  be  worked  out 
and  made  administratively  practicable  if  public  sentiment  demanded. 
But  there  is  now  no  warrant  in  the  statute  under  which  the  federal 
reserve  banks  are  organized  for  undertaking  to  regulate  their  credit 
operations  on  any  such  basis.  The  economic  logic  of  the  Federal  Re- 
serve act  is  clearly  predicated  upon  the  theory  that  the  federal  reserve 
banks  shall  be  operated  with  regard  to  reserve  ratios,  and  "rates  be 
fixed  with  a  view  of  accommodating  commerce  and  business."  It  would 
imply  a  very  latitudinarian  construction  of  the  term  "accommodating 
commerce  and  business"  for  the  Federal  Reserve  Board  and  the  federal 
reserve  banks  to  adopt  the  "observed  effects  of  credit  on  prices"  as 
their  rule  of  action  in  the  future.  There  is  not,  however,  the  slightest 
reason  for  supposing  that  such  a  procedure  on  the  part  of  the  federal 
reserve  banks  would  be  viewed  with  public  approval.  Quite  the  con- 
trary. Public  sentiment  in  the  United  States  is,  and  always  has  been, 
highly  sensitive  in  matters  of  credit  control,  and  precisely,  among  other 
reasons,  because  of  the  bearing  that  such  control  has,  or  is  believed  to 
have  upon  the  movement  of  prices. 


194  A.  C.  Miller  [June 

The  popular  dread  of  "contraction,"  based,  as  it  is,  upon  the  popular 
assumption  of  a  close,  immediate,  causal  connection  between  contrac- 
tion and  falling  prices,  has  seldom,  if  ever,  been  appealed  to  in  vain  in 
the  United  States  in  times  of  economic  pressure.  There  is  not  the 
slightest  warrant  in  either  the  remote  or  recent  economic  history  of  the 
United  States  for  supposing  that  the  American  public  would  sanction 
or  tolerate  a  discount  policy  on  the  part  of  the  federal  reserve  system 
avowedly  based  upon  price  indexes,  even  if  it  were  clear  that  such  a 
practice  were  otherwise  advisable.  It  would  be  regarded  as  tanta- 
mount to  the  setting  up  of  a  credit  and  price  despotism.  This  fear  of 
contraction  and  its  consequences  is  one  of  the  most  persistent  phases  of 
American  popular  economics ;  practically  viewed,  it  has  the  force  of  an 
instinct  and  is  the  explanation  of  many,  if  not  most,  of  the  otherwise 
puzzling  vagaries  of  American  financial  history.  One  of  its  earliest  and 
most  energetic  manifestations,  it  is  well  to  recall,  was  the  bitter  hos- 
tility aroused  against  the  Second  Bank  of  the  United  States  because  of 
the  financial  pressure  experienced  in  1833-1834,  alleged  to  have  been 
due  to  the  sinister  purposes  and  Czarist  methods  of  the  great  banking 
institution  against  which  Andrew  Jackson  was  successfully  arraying 
the  forces  of  public  sentiment  in  many  sections  of  the  country.  Later 
manifestations  of  the  same  feeling  abound  in  the  decades  following  the 
Civil  War,  when  the  nation  was  confronted  with  the  problem  of  cor- 
recting currency  disorders  resulting  from  the  Civil  War.  Recent 
events,  in  the  autumn  of  1920,  have  given  evidence  of  the  persistence 
of  a  similar  strain  of  sentiment. 

The  problem  of  credit  and  currency  regulation  in  a  country  as  vast 
as  the  United  States,  and  as  complicated  in  its  economic  organization 
with  different  sections  of  the  country  in  different  stages  of  economic 
development  and  maturity,  presents  a  very  difficult  problem  even  under 
normal  conditions.22  This,  among  other  things,  is  the  explanation  and 
justification  of  the  use  of  the  regional  principle  in  determining  the 
structure  of  our  system  of  reserve  banking,  as  against  the  principle  of 
a  single  central  institution,  nation-wide  in  the  scope  of  its  operation 
and  control — the  regional  principle  permitting  of  a  closer  adaptation 
of  credit  policy  to  regional  or  local  conditions.  The  discount  or  credit 
policy  of  a  reserve  bank,  whether  organized  on  the  regional  or  the  cen- 
tral principle,  must  always  be  the  expression  of  a  judgment  as  to  when 
a  situation  has  arisen  in  business,  industry,  or  credit  which  indicates 
the  desirability  of  action  on  the  part  of  reserve  holding  and  credit  and 
currency  regulating  institutions.     That  judgment  must  be  a  live  judg- 

22  See  Sprague,  article  cited,  pp.  26-27:  "There  is  no  such  general  market  rate  of 
discount  as  in  England.  Consequently,  the  Bank  of  England  practice  of  a  discount 
rate  slightly  ahovc  the  market  rate  cannot  have  so  pervasive  an  influence." 


1921]  Federal  Reserve  Policy  195 

nient,  not  a  mechanical  judgment.  A  great  variety  of  factors  enter 
into  the  determination  of  appropriate  discount  policy.  Among  these 
may  be  mentioned  the  state  of  business,  industry,  and  trade  (both  do- 
mestic and  foreign),  the  state  of  money  markets  (both  domestic  and 
foreign),  international  gold  movements,  seasonal  conditions  and  needs, 
accidental  economic  disturbances,  sometimes  political  conditions  and 
the  international  situation,  the  stage  of  the  business  cycle,  price  move- 
ments,23 and  the  state  of  banking  reserves.  No  one  of  these  by  itself 
can  be  conclusive  of  action  to  be  taken.  Each  has  its  own  value  and 
significance;  and  competent  judgment  on  the  part  of  reserve  institu- 
tions depends  in  great  measure  upon  the  skill  and  capacity  developed 
to  give  to  each  of  these  several  factors  its  due  weight  in  any  given  set 
of  circumstances  in  determining  the  matter  of  credit  policy.  But  when 
all  this  is  said,  it  may  yet  be  added  that  ordinarily  there  is  no  one 
indicator  which  is  more  suggestive  of  the  occasion  of  considering  ac- 
tion on  the  part  of  a  reserve  bank  than  a  change  in  its  reserve  ratio.24 

II 

Viewing  the  matter  practically,  the  problem  of  developing  a  more 
satisfactory  technique  under  the  federal  reserve  system,  and  one 
adapted  to  American  conditions,  is  not  that  of  finding  a  substitute  for 
the  reserve  ratio  as  a  guide  to  credit  policy,  but  rather  that  of  finding 
how  to  make  our  reserve  ratio  a  more  sensitive  and  immediate  indicator 
of  changing  conditions  in  the  credit  situation  than  it  now  is.  The 
problem,  it  must  be  admitted,  has  its  very  considerable  difficulties;  and 
these  difficulties  would  be  many,  even  under  normal  conditions.  But 
the  problem  has  been  immensely  aggravated  by  the  disorganization  of 
the  whole  mechanism  of  monetary  standards  and  international  credit 
and  price  relationships,  and  the  artificial  redistribution  of  the  world's 
stock  of  monetary  gold,  which  have  resulted  from  the  war.  It  would 
also  deserve  careful  study,  if  space  permitted,  whether  the  changes 
made  in  the  structure  and  safeguards  of  the  federal  reserve  system  by 
the  amendments  made  in  June,  1917,  as  a  part  of  the  financial  prepara- 
tion for  war,  are  not  destined  to  operate  prejudicially  to  the  best  func- 
tioning of  the  reserve  banks  as  credit  regulators.  For  the  effect  of  the 
1917  amendments  has  been  to  make  the  reserve  ratio  of  the  federal 
reserve  banks  more  sluggish  in  its  responsiveness  to  changing  conditions 

23  "While  the  Federal  Reserve  Board  will  always  be  mindful  of  the  interdependence 
of  credit  and  industry  and  of  the  influence  exerted  on  prices  by  the  general  volume 
of  credit,  the  Board  nevertheless  can  not  assume  to  be  an  arbiter  of  industry  or 
prices."    Annual  Report  for  1919,  p.  73. 

24  Sprague,  article  cited,  p.  27:  "There  is  no  substitute  for  the  reserve  ratio  which 
possesses  its  peculiar  virtues  of  simplicity  and  deflniteness." 


196  A.  C.  Miller  [June 

than  it  was  under  the  original  provisions  of  the  reserve  act.  But  even 
under  the  provisions  of  the  reserve  act  as  originally  enacted,  the  reserve 
ratio  of  our  reserve  banks  was  probably  a  less  sensitive  indicator  than 
that  of  the  Bank  of  England,  the  institution  which  served  as  a  general 
model  after  which  our  federal  reserve  system  was  patterned,  and  the 
institution  whose  methods  of  operation  were  believed  to  supply  the  best 
model  in  shaping  the  discount  practices  of  our  system. 

The  essential  principle  upon  which  the  Bank  of  England  is  organ- 
ized, as  I  see  the  matter,  is  unfettered  discretion  on  the  part  of  the 
bank  in  the  matter  of  credit  issue,  combined  with  rigid  restriction  in 
the  matter  of  note  issue.  This  is  the  net  outcome  of  the  legislation  of 
1844,  which  specified  no  required  reserve  against  deposits  of  the  Bank 
of  England,  but  a  reserve  of  100  per  cent  against  all  new  issues  of 
notes.  j  .,■  ■  j  4k\i 

In  practice,  how  does  this  system  work?  In  a  word,  it  has  worked 
to  make  the  state  of  the  banking  reserve  of  the  Bank  of  England  a 
very  sensitive  and  immediate  indicator,  and  therefore  a  very  satisfac- 
tory guide  to  changes  in  discount  policy.  Under  the  English  banking 
system  as  it  operated  before  the  war,  any  undue  expansion  of  business 
and  credit  would,  in  swift  course,  make  itself  felt  in  the  form  of  a  de- 
mand for  more  than  the  usual  volume  of  cash  at  the  Bank  of  England. 
The  Bank  of  England  having  no  power  to  issue  fiduciary  notes  to  meet 
such  demand,  its  cash — consisting  of  gold  or  Bank  of  England  notes 
covered  by  gold — would  be  the  source  from  which  the  demand  would  be 
met.  The  depletion  of  its  reserve  thus  resulting  from  an  undue  credit 
expansion  would  quickly  indicate  the  need  of  action  on  the  part  of  the 
bank  to  protect  its  reserve  by  raising  its  discount  rate,  and  thus,  by 
a  process  which  had  become  almost  automatic  in  its  character  during 
the  course  of  the  forty  years  preceding  the  war,  undue  and  unhealthful 
expansion  of  credit  would  be  brought  under  control  before  it  gained 
too  much  headway.  All  the  more  was  this  the  case  because  an  undue 
expansion  of  credit  usually  brought  with  it  a  gold  export  demand,  for 
it  is  particularly  to  be  noted  that  the  rigid  adherence  to  the  practices 
of  an  effective  gold  standard  and  of  a  free  gold  market  contributed 
greatly  to  the  success  of  the  English  system  of  credit  control.  Under 
the  English  system,  credit  expansion  usually  gave  rise  to  an  external 
as  well  as  an  internal  drain  upon  the  cash  holdings  of  the  Bank  of 
England.  The  combined  effect  of  the  two  was  to  elevate  the  impor- 
tance of  the  bank's  reserve  as  a  barometer  of  the  credit  situation  almost 
to  the  position  of  being  an  instrument  of  precision. 

England,  like  the  United  States,  in  contrast  to  the  countries  of  the 
non-English-speaking  world,  is  habituated  to  the  use  of  bank  credit 
in  the  form  of  the  deposit  account  rather  than  of  the  bank  note.     Her 


1921]  Federal  Reserve  Policy  197 

example  is,  therefore,  of  particular  value  for  us.  It  has  sometimes 
been  argued,  from  the  fact  that  the  United  States  is  a  check-using 
country,  that  regulation  of  the  currency  is  a  negligible  matter  in  the 
technique  of  banking  control  in  the  United  States,  supposing,  of  course, 
that  care  is  always  taken  to  make  sure  that  all  notes  which  are  issued 
are  fully  protected  by  collateral  security  of  indubitable  character  and 
value.  In  opposition  to  this  view,  I  believe  that  regulation  of  bank- 
note currency,  even  in  check-using  countries,  is  at  times  a  matter  of 
first  importance.  I  believe  this  to  be  measurably  true,  even  under  nor- 
mal conditions  when  the  commercial  world  or  the  major  portion  of  it  is 
operating  under  an  effective  gold  standard  and  there  is  much  gold 
or  gold  currency  in  actual  everyday  use  and  bank  notes  are  convertible 
into  gold,  and  principally  for  the  reason  that  an  increase  in  deposit 
credit  invariably  occasions,  in  due  course,  an  increase  in  the  demand 
for  currency.  Even  check-using  countries,  like  England  and  the  United 
States,  cannot  do  business  without  the  use  of  a  considerable  proportion 
of  hand-to-hand  currency,  the  proportion  of  currency  to  credit  in  the 
United  States  being  about  one  dollar  of  currency  to  five  or  six  dollars 
of  credit.  The  conditions  upon  which  the  community  can  get  additional 
supplies  of  currency  are  therefore  an  important  factor  in  credit  regu- 
lation. The  regulation  of  currency  becomes,  in  fact,  a  method  of 
regulating  the  flow  and  volume  of  credit.  Important  as  it  is  that  addi- 
tional supplies  of  currency  should  be  forthcoming  on  ready  terms  in 
certain  circumstances,  e.g.,  in  times  of  seasonal  or  emergency  need, 
it  is  equally  important  at  other  times,  when  an  undesirable  credit  or 
business  situation  is  developing,  that  the  conditions  should  not  be  easy. 
In  general,  it  may  be  stated  that  the  easier  the  conditions  (that  is,  in 
terms  of  the  effect  on  the  reserve  percentage)  upon  which  banks  of  is- 
sue can  furnish  additional  supplies  of  currency,  the  greater  will  be 
their  difficulty,  especially  at  times  when  their  reserve  ratio  runs  high, 
of  regulating  or  controlling  the  volume  of  credit.  It  is,  therefore,  of 
first  importance,  under  any  system  of  reserve  banking  which  undertakes 
to  govern  credit  by  primary  reference  to  the  reserve  ratio,  that  the 
reserve  ratio  should  fall  or  rise  in  quick  and  close  reaction  to  changes 
in  the  volume  of  credit. 

The  matter  is,  in  last  analysis,  largely  one  of  psychology.  The 
banker,  no  less  the  central  banker  than  the  ordinary  commercial  banker, 
looks  at  the  reserve  ratio  as  a  gauge  of  the  credit  situation.  So  does 
the  general  community.  Why  this  should  be  so  need  not  here  be  an- 
alyzed. It  is  sufficient  to  emphasize  the  fact,  and  to  point  to  one  of 
its  important  implications  in  connection  with  our  scheme  of  federal 
reserve  banking:  A  bank-note  currency  when  it  has  little  of  the  qual- 
ity of  a  fiduciary  note  is  more  calculated  to  bring  alike  to  the  bankers' 


198  A.  C.  Miller  [June 

and  the  community's  attention  the  fact  and  the  meaning  of  credit  ex- 
pansion than  when  it  has  much  of  the  fiduciary  quality.  This  is  a  fair 
deduction  from  the  forty  years  of  English  banking  experience  before 
the  war.  It  is  also  the  explanation  of  British  determination  since  the 
war  not  to  change  the  character  of  the  Bank  of  England  note  as,  in 
effect,  a  gold  certificate,  although  such  change  has  frequently  been 
proposed  in  recent  years  :25 

We  are  of  opinion  that  the  principle  of  the  act  of  1844,  which  has 
upon  the  whole  been  fully  justified  by  experience,  should  be  maintained, 
namely,  that  there  should  be  a  fixed  fiduciary  issue  beyond  which,  subject  to 
emergency  arrangements  which  we  recommend  below,  notes  should  only  be 
issued  in  exchange  for  gold.  .  .  .  We  think  that  the  stringent  principles  of  the 
act  have  often  had  the  effect  of  preventing  dangerous  developments  and  the 
fact  that  they  have  had  to  be  temporarily  suspended  on  certain  rare  and 
exceptional  occasions  (and  those  limited  to  the  earlier  years  of  the  act's 
operation  when  experience  of  working  the  system  was  still  immature)  does 
not,  in  our  opinion,  invalidate  this  conclusion.26 

No  doubt  it  would  be  possible  for  the  Bank  of  England,  with  the  help  of 
the  joint  stock  banks,  without  any  legal  restriction  on  the  note  issue,  to 
keep  the  rate  of  discount  sufficiently  high  to  check  loans,  keep  down  prices, 
and  stop  the  demand  for  further  notes.  But  it  is  very  undesirable  to  place 
the  whole  responsibility  upon  the  discretion  of  the  banks,  subject  as  they 
will  be  to  very  great  pressure  in  a  matter  of  this  kind.  If  they  know  that 
they  can  get  notes  freely,  the  temptation  to  adopt  a  lax  loan  policy  will  be 
very  great.  In  order,  therefore,  to  ensure  that  this  is  not  done,  and  the  gold 
standard  thereby  endangered,  it  is,  in  our  judgment,  imperative  that  the 
issue  of  fiduciary  notes  shall  be,  as  soon  as  practicable,  once  more  limited 
by  law,  and  that  the  present  arrangements  under  which  deposits  at  the  Bank 
of  England  may  be  exchanged  for  legal  tender  currency  without  affecting 
the  reserve  of  the  banking  department  shall  be  terminated  at  the  earliest 
possible  moment.  Additional  demands  for  legal  tender  currency  otherwise 
than  in  exchange  for  gold  should  be  met  from  the  reserves  of  the  Bank  of 
England  and  not  by  the  treasury,  so  that  the  necessary  checks  upon  an  undue 
issue  may  be  brought  regularly  into  play.27 

Whenever  before  the  war  the  bank's  reserves  were  being  depleted,  the  rate 
of  discount  was  raised.  This,  as  we  have  already  explained,  by  reacting  upon 
the  rates  for  money  generally,  acted  as  a  check  which  operated  in  two  ways. 
On  the  one  hand,  raised  money  rates  tended  directly  to  attract  gold  to  this 
country  or  to  keep  gold  here  that  might  have  left.  On  the  other  hand,  by 
lessening  the  demands  for  loans  for  business  purposes,  they  tended  to  check 
expenditures  and  so  to  lower  prices  in  this  country,  with  the  result  that  im- 
ports were  discouraged  and  exports  encouraged,  and  the  exchanges  thereby 
turned  in  our  favor.     Unless  this  twofold  check  is  kept  in  working  order  the 

25  From  the  report  of  the  British  Committee  on  Currency  and  Foreign  Exchange 
(frequently  called  the  Cunliffe  report)  reprinted  in  the  Federal  Reserve  Bulletin, 
Dec.,  1918,  pp.  1178-1192. 

26  Federal  Reserve  Bulletin,  Dec,  1918,  p.  1187. 

27  Ibid.,  pp.  1184-1185. 


1921]  Federal  Reserve  Policy  199 

whole  currency  system  will  be  imperiled.     To  maintain  the  connection  be- 
tween a  gold  drain  and  a  rise  in  the  rate  of  discount  is  essential.28 

An  examination  of  our  own  experience  during  the  past  three  years 
does  much  to  confirm  the  wisdom  and  the  correctness  of  the  conclusion 
of  the  Cunliffe  report.  The  machinery  and  safeguards  set  up  in  the 
reserve  act  as  originally  enacted  also  bear  evidence  of  wholesome  ap- 
preciation by  the  framers  of  the  act  of  the  danger  of  laxity  in  the  ad- 
ministration of  credit  under  a  system  of  elastic  note  issue.  The  power 
to  issue  notes  was  separated  from  the  power  to  make  discounts.  The 
latter  was  given  to  the  federal  reserve  banks,  subject  to  certain  review 
by  the  Federal  Reserve  Board ;  the  former  was  exclusively  vested  in 
the  Federal  Reserve  Board.  It  was  not  alone  for  the  safety  and  pro- 
tection of  the  noteholder,  but  also  for  the  protection  of  the  general 
community  against  the  consequences  of  excessive  or  ill  regulated  issues 
of  credit  and  currency  that  this  arrangement  was  made.  It  was  per- 
ceived that  the  power  to  regulate  the  currency  carries  with  it  an  in- 
direct but  considerable  power  to  regulate  credit;  for  power  over  cur- 
rency is,  in  effect,  and,  within  limits,  power  over  reserves ;  and  power 
over  reserves  is  power  over  credit.  Close  attention,  therefore,  should 
be  given  by  students  who  are  interested  in  the  development  of  methods 
and  practices  of  reserve  banking  in  the  United  States  to  the  bearing  of 
currency  issue  and  regulation  upon  credit  control.  Much  more  im- 
portance, I  believe,  attaches  to  the  function  of  currency  regulation 
than  is  ordinarily  recognized  by  economists  in  the  United  States.  By 
increasing  or  diminishing  the  fiduciary  element  in  the  federal  reserve 
note,  or — stating  the  proposition  in  terms  of  gold — by  diminishing  or 
increasing  the  gold  element  in  the  note,  the  Federal  Reserve  Board  has 
the  power  to  protect  the  reserves  of  the  federal  reserve  banks  against. 
or  to  expose  them  to,  depletion  and  thus  to  affect  their  reserve  ratios, 
and  thereby  make  their  ratios  more  faithful  economic  indicators,  both 
to  the  banks  and  to  the  public,  of  the  credit  situation  and  outlook. 
Regulation  of  federal  reserve  note  issue,  if  wisely  conceived  and  com- 
petently administered,  is  capable  of  use  as  a  preventive  measure  against 
an  undesirable  expansion  of  credit  in  its  earlier  and  more  insidious 
stages  by  making  the  supplying  of  currency  by  reserve  banks  eat  into 
their  reserve  more  rapidly,  thereby  making  their  reserve  ratio  a  more 
trustworthy  reliance  than  it  now  is  as  a  guide  to  credit  policy. 

The  line  of  reasoning  pursued  above  may  seem  to  overlook  or  run 
counter  to  the  well  established  theory  that  a  truly  convertible  bank 
note  currency,  such  as  is  the  federal  reserve  note,  is  self-regulating, 
and  cannot,  except  temporarily,  be  issued  in  excess.     Our  federal  re- 

28  Federal  Reserve  Bulletin,  Dec,  1918,  p.  1183. 


200  A.  C.  Miller  [June 

serve  note  is,  no  doubt,  self-regulating  in  the  sense  that  its  volume 
adjusts  itself  to  the  volume  of  circulating  deposit  credit  and  the  level 
of  prices.  It  is  not,  however,  by  this  test  alone,  or  by  this  test  pri- 
marily, that  the  self-regulating  quality  of  a  convertible  currency  is  to 
be  tested,  more  especially  in  view  of  the  widespread  derangements  in 
the  machinery  of  monetary  standards  and  international  exchanges 
which  exist  at  this  time  and  which  promise  to  continue  for  a  very  con- 
siderable period  of  time.  The  theory  that  a  convertible  bank  note  cur- 
rency is  self-regulating  and  supplies  its  own  corrective  against  over- 
expansion  was  in  the  nature  of  a  corollary  of  the  gold  standard  when 
the  monetary  and  banking  practices  associated  with  the  gold  standard 
were  in  effect  in  a  considerable  number  of  countries.  It  was  on  such 
assumptions,  and  under  the  monetary  conditions  that  existed  in  Europe 
before  the  war,  that  gold  reserves29  and  convertible  bank  note  issues  of 
the  several  leading  countries  had  a  very  definite  and  important  signifi- 
cance as  economic  and  credit  regulators,  more  particularly  as  devices 
for  setting  in  operation  deterrent  or  corrective  forces  against  credit 
expansion  and  price  inflation.  The  theory  of  the  self-adjusting  char- 
acter of  a  convertible  bank  note  currency  undoubtedly  has  much  val- 
idity in  normal  circumstances — in  such  circumstances  as  existed  prior 
to  1914.  When  the  commercial  world,  or  a  sufficiently  large  number 
of  the  leading  commercial  countries,  are  operating  on  a  gold  basis,  and 
prices  in  these  countries  are  gold  prices,  the  international  flow  of  gold 
undoubtedly  does  much  to  act  as  a  deterrent  to  excessive  credit  and 
currency  expansion  in  gold  standard  countries.  Currency  and  credit 
expansion,  and  rising  prices,  in  such  circumstances,  bring  about  an  un- 
favorable balance  of  trade,  raise  the  foreign  exchanges,  and  set  in 
motion  an  outflow  of  gold  and  a  return  flow  of  bank  notes  for  redemp- 
tion in  gold  to  meet  the  foreign  drain.  All  of  this  may  be  freely  ad- 
mitted; but  the  conditions  which  the  theory  of  the  self-controlling 
character  of  a  convertible  bank  note  currency  assumes,  do  not  now 
exist  because  the  conditions  requisite  to  the  functioning  of  an  effective 
gold  standard  do  not  exist.  The  theory  of  bank  note  convertibility  as 
29  Looking  at  the  matter  of  reserves  from  the  economic  point  of  view,  the  adjust- 
ment of  the  volume  of  a  country's  credit  and  banking  currency  to  what  is  necessary 
to  maintain  prices  at  their  proper  economic  level  may  be  described  as  the  most  im- 
portant function  of  a  nation's  banking  reserve.  The  gold  of  the  world  and  the  new 
gold  as  it  comes  from  the  mines  is  constantly  in  process  of  distribution  and  redis- 
tribution. It  is  thus  that  the  international  price  level  is  maintained  or  rectified  in 
accordance  with  underlying  conditions  governing  the  equation  of  international  demand 
and  supply  of  the  different  countries.  As  such,  the  gold  reserve  is  an  economic 
regulator  of  the  very  first  importance.  It  is  a  method  of  testing  the  character  and 
volume  of  a  country's  credit  and  currency  and  so  keeping  it  from  getting  out  of  linr 
with  economic  requirements,  particularly  in  relation  to  world  conditions.  (American 
Economic  Review,  Supplement,  vol.  IX,  no.  1,  p.  142,  article  entitled  "After-War 
Readjustment:    Liberating  Gold.") 


1921] 


Federal  Reserve  Policy 


201 


a  protection  against  over-expansion  therefore  breaks  down.  The 
larger  portion  of  the  commercial  world  is  not  now  on  a  gold  basis, 
though  the  United  States  is.  No  one  country,  however  important,  can, 
by  itself  alone  and  for  itself  alone,  maintain  an  effective  gold  standard. 
The  monetary  history  of  the  United  States  in  recent  years  conclusively 
establishes  this  proposition.  The  gold  movements  involving  the  United 
States  in  recent  years  have  been  predominantly  one  way  movements. 
We  hold  a  disproportionate  part  of  the  world's  stock  of  monetary  gold, 
and  are  adding  to  our  holdings — a  new  gold  movement  of  large  di- 
mension and  portentous  significance  having  recently  set  in.30  Converti- 
bility as  a  protective  device  has  little  meaning  in  such  a  situation.  The 
self-regulating  quality  of  our  bank  note  currency  has  therefore  been 
in  abeyance,  and  has  offered,  and  could  offer,  no  protection,  or  at  any 
rate  no  adequate  protection,  against  the  insidious  process  of  gold- 
credit  inflation. 

Lacking  the  agency  of  two-way  gold  flows,  in  proper  relationship, 
we  must  find  and  set  up  some  other  agency,  at  least  so  long  as  present 
abnormal  conditions  continue,  for  regulating  our  currency — and  that 

so  Between  October  15,  1920,  and  April  15,  1921  (the  latest  date  for  which  figures 
are  available)  the  federal  reserve  banks  have  increased  their  gold  holdings  by  the 
amount  of  $294,778,000.  The  great  bulk  of  this,  aggregating  $251,608,000,  represents 
accessions  since  December  10,  1920.  This  is  mainly  new  gold  from  the  South  African 
mines,  bought  in  the  London  market  for  American  account  because  of  the  premium 
on  the  dollar,  and  because  of  the  further  fact  that  the  United  States  is  a  free  gold 
market.  The  increase  thus  occasioned  in  the  reserves  of  the  federal  reserve  banks 
has  had  a  pronounced  effect  upon  the  rise  of  their  reserve  ratio. 

Between  October  15,  1920,  and  April  15,  1921,  the  reserve  ratio  of  the  twelve  banks 
combined  increased  31  per  cent,  and  that  of  the  New  York  Federal  Reserve  Bank 
increased  44  per  cent,  as  the  tabulation  below  shows.  A  careful  calculation  indicates 
that  the  31  per  cent  increase  for  the  twelve  banks  combined  is  attributable  to  the 
three  factors  involved  in  the  following  proportions:  Decline  in  federal  reserve  note 
circulation,  11  per  cent;  decline  in  deposits,  4  per  cent;  and  increase  in  reserves,  16 
per  cent.  For  the  New  York  bank  the  ratio  shows  a  rise  of  44  per  cent,  distributed 
as  follows:  Decline  in  federal  reserve  note  circulation,  9  per  cent;  decline  in  deposits, 
6  per  cent,  and   increase   in   reserves  29   per   cent. 


Item 

Twelve   banks   combined 

Federal   reserve   bank   of 
New  York 

October   15 

April    15 

October    15 

April    15 

Note    Liabilities . . . 
Deposit    Liabilities 
Deposit    and    note 
liabilities     com- 
bined     

Reserve   ratio 

$3,353,271,000 
1,915,731,000 

5,269,002,000 

2,154,911,000 

40.9 

$2,868,527,000 
1,754,943,000 

4,633,470,000 

2,485,077,000 

53.7 

$875,737,000 
764,466,000 

1,640,203,000 

607,460,000 

37.0 

$762,173,000  . 
680,283,000 

1,443,456,000 

767,474,000 

53.2 

202  A.  C.  Miller  [June 

means  primarily  for  determining  its  volume  in  accordance  with  chang- 
ing conditions  and  requirements — if  a  good  credit  situation  is  to  be 
reestablished  and  maintained  in  the  United  States,  and  the  likelihood 
of  the  repetition  of  costly  alternations  of  feverish  activity  and  painful 
recession  in  business  is  to  be  reduced,  or  at  any  rate  the  violence  of 
such  alternations  to  be  mitigated.  The  agency  I  am  proposing  for 
this  purpose  is  the  adoption  and  the  development  by  the  federal  reserve 
system  of  a  currency  policy  and  a  gold  policy  designed  to  operate 
upon  the  reserve  ratios  of  the  several  banks  so  as  to  make  those  ratios 
a  better  index  of  the  credit  situation  and  a  better  guide  to  credit 
policy.  I  use  the  term  "credit  policy"  rather  than  "discount  policy" 
because  the  former  is  a  broader  conception  and  because  the  latter  im- 
plies pretty  exclusive  reliance  upon  changes  of  discount  rate  as  the  in- 
strument of  credit  control.  The  maintenance  of  good  credit  conditions 
appears  to  me  to  make  the  problem  of  credit  administration  one  of 
credit  regulation  rather  than  one  of  credit  control.  Prevention,  rather 
than  control,  should  be  the  objective  of  a  competent  credit  policy  in 
the  United  States.  This  is  not  to  say  that  changes  of  discount  rate 
have  no  place  in  credit  policy.  They  have,  indeed,  a  very  important 
place,  but  credit  policy  does  not  place  exclusive  reliance  on  rates ;  be- 
cause regulation,  not  control,  is  its  purpose.  It  aims  to  deal  with 
tendencies  or  situations  in  the  making,  rather  than  to  await  their  de- 
velopment before  acting.  While  credit  policy  uses  the  rate  as  an  in- 
strument, it  does  not  make  the  rate  its  only  reliance,  and  when  it  uses 
the  rate,  uses  it  in  time  so  as  to  prevent  the  necessity  of  resort  to  ex- 
treme and  punitive  levels.  Having  regard  to  the  practical  and  tra- 
ditional importance  of  the  reserve  ratio  as  the  conventional  credit 
and  banking  indicator,  credit  policy  administers  currency  and  gold 
so  as  to  support  its  purpose  by  acting  on  the  banking  reserve  and  check- 
ing the  development  of  lax  loan  policy  tendencies  on  the  part  of  either 
reserve  banks  or  member  banks.  Thus  are  gold  policy  and  currency 
policy  not  only  complementary  to  one  another  but  also  inseparable 
elements  in  a  comprehensive  credit  policy. 

It  would  lengthen  this  paper  unduly,  even  were  this  the  proper  place 
and  occasion,  to  describe  the  modus  procendendi  which  would  be  neces- 
sary in  order  to  give  effect  to  the  ideas  which  have  been  set  forth  on 
federal  reserve  policy  for  the  future.  The  discussion  has  concerned 
itself  with  matters  of  experience,  with  matters  of  theory,  and  with 
questions  of  principle  and  of  policy,  rather  than  with  a  program  of 
action.  The  revision  of  our  reserve  bank  practice,  and  the  recasting 
of  reserve  bank  accounting  which  would  be  necessary  under  a  plan  de- 
signed to  give  effect  to  the  principles  suggested,  would  not,  however, 
present  a  difficult  problem. 


1921]  Federal  Reserve  Policy  203 

The  main  change  in  the  published  weekly  statement  of  the  federal 
reserve  banks  that  would  be  necessary  would  be  to  report  the  specific 
note  reserve,  held  by  the  Federal  Reserve  Agent,  and  the  specific  de- 
posit reserve,  held  by  the  bank.  The  existing  practice31  of  stating  the 
reserve  position  theoretically  in  the  form  of  a  ratio  derived  from  a 
comparison  of  total  reserves  with  combined  note  and  deposit  liabilities 
should  be  discontinued,  or,  if  continued,  be  given  merely  for  purposes 
of  theoretical  comparison,  by  the  federal  reserve  system,  and  a  form 
of  statement  should  be  set  up  which  would  show  the  reserves  actually 
held  against  deposits  and  notes  respectively  and  separately,  as  the  law 
contemplates.3" 

The  existing  gold  holdings  of  the  reserve  banks  should  be  reappor- 
tioned between  the  deposit  reserve  and  the  note  reserve.  To  the  de- 
posit reserve  might  be  allocated  an  amount  of  reserve  money  equiva- 
lent, say,  to  45  per  cent33  of  their  deposit  liabilities  as  of  the  date 
when  the  new  form  of  accounting  would  become  effective.34  To  the 
note  reserve  should  be  allocated  all  the  remaining  reserve,  and,  as  the 
law  requires,  be  in  the  form  of  gold.35 

The  reserve  thus  allocated  to  the  deposit  reserve  should  be  regarded 
as  the  working  reserve  of  the  banking  or  discount  department  of  the 
federal  reserve  bank.  The  banks  should  be  expected  to  conduct  their 
discount  operations  on  the  basis  of  this  reserve.  Until  conditions  justi- 
fied, the  amount  of  this  reserve  should  not  be  changed.     Fresh  acces- 

3i  The  April  15  statement  of  the  twelve  federal  reserve  banks  stated  the  reserve 
position  for  the  banks  combined  as  follows: 

Ratio  of  total  reserves  to  deposit  and  federal  reserve  note  liabilities 
combined     53.7  per  cent 

Ratio  of  gold  reserves  to  federal  reserve  notes  in  circulation  after  set- 
ting aside  35  per  cent  against  deposit  liabilities 65.2  per  cent 

The  actual  allocation  of  reserve  moneys  on  that  date  showed,  however,  that  an  amount 
of  gold  equal  to  52.0  per  cent  of  notes  in  circulation  was  held  by  the  Federal  Reserve 
Agent  or  in  the  gold  redemption  fund,  and  that  an  amount  of  gold  and  lawful 
money  equal  to  56.5  per  cent  of  their  deposits  was  held  by,  or  for  account  of,  the 
banks. 

32  "Every  federal  reserve  bank  shall  maintain  reserves  in  gold  or  lawful  money  of 
not  less  than  thirty-five  per  centum  against  its  deposits  and  reserves  in  gold  of  not 
less  than  forty  per  centum  against  its  federal  reserve  notes  in  actual  circulation." 
Federal  Reserve  Act,  Section  16. 

33  This  would  provide  a  potential  basis  for  an  expansion  of  over  $500,000,000  of 
reserve  bank  credit  before  the  deposit  ratio  would  reach  the  legal  minimum  of 
35  per  cent. 

s*  A  reserve  of  45  per  cent  represents  the  approximate  reserve  ratio  against  the 
combined  note  and  deposit  liabilities  of  the  twelve  banks  at  the  beginning  of  the  year 
1921,  when  the  gold  influx  began. 

35  The  apportionment  above  proposed  would  result,  on  the  basis  of  the  April  15 
statement,  in  the  shifting  of  about  $200,000,000  of  the  gold  now  held  in  the  banking 


204  A.  C.  Miller  [June 

sions  of  gold  received  by  the  banking  department  should  be  transferred 
to  the  note  reserve  by  way  of  substitution  for  other  collateral  held  by 
the  Federal  Reserve  Agent,  or  in  exchange  for  federal  reserve  notes. 
Withdrawals  of  gold  from  federal  reserve  banks  for  foreign  shipment 
should,  for  the  present  at  least,  be  taken  out  of  the  note  reserve  by  the 
presentation  of  federal  reserve  notes  for  redemption  in  gold  or  by  the 
substitution  of  commercial  collateral  for  gold  in  the  security  held  by 
the  Federal  Reserve  Agent.  The  deposit  reserve  held  by  the  banking  de- 
partment would  thus  be  fairly  constant  in  amount;  the  note  reserve, 
on  the  other  hand,  would  be  variable  in  amount,  fluctuating  mainly  in 
accordance  with  changes  in  the  international  flow  of  gold,  increasing 
when  an  influx  was  in  process  and  decreasing  when  an  outflow  was  in 
process. 

While  the  deposit  reserve  under  the  arrangement  proposed  above 
would  be  constant,  the  deposit  reserve  ratio  would  not  be  constant,  but 
would  fluctuate.  Any  expansion  of  the  loan  account  of  the  federal  re- 
serve banks  would  quickly  reflect  itself  in  the  diminution  of  the  reserve 
ratio  below  45  per  cent ;  any  diminution  of  their  loan  account  would 
quickly  reflect  itself  in  an  increase  of  the  reserve  ratio  above  45  per 
cent.  In  brief,  fluctuations  in  the  reserve  ratio  would  reflect  quickly 
and  accurately  changes  in  the  volume  of  the  reserve  banks'  discounts. 

From  time  to  time  the  situation  of  the  reserve  banks  as  a  whole,  and 
of  the  several  reserve  banks  individually,  should  be  reviewed  in  the  light 
of  current  credit  conditions  and  needs  in  order  to  determine  whether 
any  reapportionment  of  reserves  should  be  made;  whether,  e.g.,  any 
given  bank  should  enlarge  its  deposit  reserve  at  the  expense  of  its  note 
reserve.  The  modus  operandi  for  effecting  such  enlargement  would  be 
for  the  bank  in  question  to  substitute  commercial  paper  for  gold  as  the 
collateral  security  pledged  with  the  Reserve  Agent  for  notes  issued  to 
the  bank,  the  gold  thus  released  being  covered  into  the  deposit  reserve. 
So  far  as  the  bank's  reserve  position  was  concerned,  this  would  be 
tantamount  to  the  transfer  of  a  certain  amount  of  gold  from  the  note 
reserve  to  the  deposit  reserve  in  order  to  give  the  bank  an  enlarged 
basis  of  lending. 

As  a  result,  the  reserve  ratios  of  the  federal  reserve  banks  would 
have  a  meaning  not  now  possessed  by  them.  As  the  banking  and  busi- 
ness community  came  to  be  educated  to  the  new  method  of  stating  the 
position  of  the  reserve  banks,  primary  attention  would  be  paid  to  the 
movements  of  the  deposit  reserve  ratio;  that  ratio  would  be  the  imme- 
diate gauge  of  the  banking  and  credit  situation.  As  credit  expansion 
was  in  process,  that  reserve  ratio  would  decline  much  more  rapidly  than 

department  to  the  Federal  Reserve  Agent's  department,  and  give  a  reserve  ratio 
against  notes  of  59.1  per  cent. 


I 


1921]  Federal  Reserve  Policy  205 

it  now  does.  It  would  be  a  faithful  indicator  of  what  was  going  on.  It 
would  rise  only  in  reaction  to  a  decline  in  the  rate  of  expansion  or  as 
liquidation  was  in  process.  Moreover,  as  the  community  came  to  ap- 
preciate the  significance  of  changes  in  the  deposit  ratio,  that  ratio 
would  come  to  be  regarded  with  heightened  interest  because  of  the  evi- 
dent bearing,  in  the  logic  of  reserve  banking,  of  changes  in  the  reserve 
ratio  upon  credit  and  discount  policy.  And  thus  would  the  problem 
of  credit  administration  also  be  simplified  and  its  solution  be  aided  by 
anticipatory  action,  both  on  the  part  of  the  banks  and  on  the  part  of 
the  borrowing  community. 

The  note  reserve  ratio,  under  the  scheme  of  operation  here  under 
consideration,  would  have  real  significance  as  indicating  the  extent  of 
the  gold  cover  against  federal  reserve  notes.  Fluctuations  in  the  note 
reserve  ratio  would  indicate  the  increase  or  decrease  of  federal 
reserve  notes  outstanding,  movements  of  gold  into  and  out  of  the 
federal  reserve  system,  and  reapportionment  of  existing  gold  holdings 
between  the  deposit  reserve  and  the  note  reserve.  In  times  like  the 
present,  when  a  heavy  flow  of  gold  toward  our  shores  is  in  process,  the 
effect  of  the  proposed  plan  would  be  to  give,  or  rather  to  restore,  to  the 
federal  reserve  note  more  of  the  character  of  a  gold  certificate,  which  it 
had  in  the  first  years  of  the  system,  and  to  set  up,  under  the  guardian- 
ship of  the  Federal  Reserve  Board,  a  super-reserve.  When  gold  was 
accumulating36  in  the  hands  of  the  Federal  Reserve  banks,  the  banks 
would  substitute  gold  for  other  collateral  pledged  with  the  Federal  Re- 
serve Agent  as  security  against  outstanding  issues  of  notes,  new  issues 
of  federal  reserve  notes  being  made  only  in  exchange  for  gold  until 
conditions  arose  which  justified  the  issue  of  notes  against  commercial 
collateral.37 

Thus  would  the  new  accessions  of  gold  brought  to  us  purely  because 
of  the  derangements  of  international  exchanges  be  kept  in  storage,  as  a 
note  and  super-reserve.  There  this  gold  would  be  held  against  the  day 
when  it  will,  in  part,  have  to  be  returned  to  Europe  in  the  process  of 
restoring  the  gold  standard  there — an  undertaking  in  which  we,  hardly 
less  than  Europe,  have  both  an  interest  and  an  obligation ;  and  in  the 
meantime  it  would  be  where  it  could  be  drawn  into  the  banking  or  de- 

86  Similarly,  when  silver  and  legal  tenders  are  accumulating,  as  has  recently  been 
the  case  (on  April  15  the  federal  reserve  banks  held  $198,198,000  of  silver  and  legal 
tender  notes,  the  Federal  Reserve  Bank  of  New  York  holding  $130,428,000  of  this 
amount),  the  reserve  banks  should  pay  them  out  in  supplying  the  demand  of  member 
banks  for  currency. 

87  Supposing  the  reserve  statement  for  the  federal  reserve  system  were  revised  so 
as  to  report  the  deposit  reserve  and  note  reserve  separately,  the  following  example 
shows  what  effect  a  transfer  of  $200,000,000  from  the  deposit  reserve  to  the  note 


206  A.  C.  Miller  [June 

posit  reserve,  whenever  circumstances  justified  its  use  to  raise  or  re- 
store the  deposit  reserve  ratio  at  the  expense  of  the  note  reserve  ratio. 
Thus  would  these  ratios  attain  a  significance  and  value  as  indicators 
and  guides  not  now  possessed  by  the  federal  reserve  reserve  ratio,  and 
gold  policy,  currency  policy,  and  credit  policy  become  constituent  and 
compensating  elements  in  a  balanced  scheme  of  federal  reserve  policy, 
whose  primary  purpose  should  be  to  promote  and  maintain  a  healthy 
condition  of  business  and  industry  by  regulating  the  flow  and  volume 
of  credit  with  regard  to  the  trend  of  business  and  the  volume  of 
production. 

A.  C.  Millee. 
Federal  Reserve  Board,  Washington,  D.  C. 

reserve  would  have  on  the  respective  reserve  ratios  on  the  basis  of  the  actual  alloca- 
tion of  reserves  as  of  April  15,  1921: 

Before  transfer  of  After  transfer  of 

$200,000,000  to  $200,000,00  to 

note  reserve  note  reserve 

Note  reserve    $1,493,001,000  $1,693,001,000 

(i.e.,  gold  with   Federal   Reserve   Agent 
and  in  bank's  redemption  fund) 

Deposit    reserve    992,076,000  792,076,000 

(i.e.,  all  other  cash  reserves) 

Federal  reserve  notes  in  circulation 2,868,527,000  2,868,527,000 

Total  deposits   1,754,943,000  1,754,943,000 

Ratio: 

Reserve  against  notes   52.0  59.0 

deposits    56.5  45.1 


MARKETING  OF  AGRICULTURAL  PRODUCTS1 
I.     The  Marketing  Problem 

Public  interest  in  marketing. — No  agricultural  problem  is  being 
discussed  more  widely  today  than  marketing.  True,  much  of  the  dis- 
cussion sheds  more  heat  than  light  on  the  problem.  It  seems  to  be  the 
open  season  for  middlemen.  Perhaps  the  North  Dakota  farmer  voiced 
the  popular  feeling  when  he  recently  said,  "Damn  these  middlemen ! 
I  wish  I  was  one !" 

A  prominent  granger  in  a  northern  state  declares  the  present  mid- 
dleman system  is  "inefficient,  bunglesome,  wasteful  and  costly." 

A  successful  middleman  replies,  "The  present  system  of  farming  is 
inefficient,  bunglesome,  wasteful,  and  costly."  Continuing  his  criti- 
cism of  the  farmer,  he  points  out  that  a  very  ordinary  farmer  now 
raises  54  bushels  of  corn  per  acre,  but  the  average  for  all  American 
farmers  is  only  27  bushels  per  acre,  or  50  per  cent  efficiency ;  that  a 
good  farmer  grows  28  bushels  of  wheat  per  acre,  but  the  American 
farmer  on  the  average  is  getting  but  14  bushels;  that  the  scientific  and 
up-to-date  cotton  farmer  is  making  500  pounds  of  cotton  per  acre, 
but  the  average  cotton  farmer  in  the  United  States  is  getting  only  180 
pounds  to  the  acre,  or  36  per  cent  efficiency.  The  middleman  con- 
tinues his  criticism  by  saying  that  only  a  small  per  cent  of  the  crop  is 
No.  1  corn  or  No.  1  wheat  or  good  middling  cotton.  In  short,  the 
average  farmer  is  not  efficient  as  to  either  quality  or  quantity  of  pro- 
duct. And  further,  says  the  middleman  to  his  critics,  the  farmer  is 
needlessly  reducing  his  crop  yield  by  growing  harmful  weeds,  the  yield 
being  reduced  10  per  cent  in  corn,  9  per  cent  in  tame  hay,  8  per  cent 
in  potatoes,  13  per  cent  in  spring  wheat,  7  per  cent  in  winter  wheat, 
and  27  per  cent  in  pasture.  Or,  briefly,  the  preventable  leak  from  this 
one  source  runs  well  over  a  billion  dollars  a  year.2  A  perfect  marketing 
system  waits  on  a  perfect  production  system.  Poor  production  means 
poor  marketing. 

So  the  debate  goes  on.  Nothing  is  gained  by  scolding.  Reproach 
is  good,  but  it  must  be  self-reproach.  The  question  is,  what  are  the 
preventable  leaks  in  marketing  to  which  the  farmer,  particularly  the 
organized  farmer,  may  well  give  attention? 

First,  we  may  inquire,  what  would  constitute  an  ideal  marketing  sys- 
tem? An  ideal  market  for  agricultural  products  would  exist,  for  in- 
stance, if  exactly  one  fifty-second  part  of  the  yearly  crop  were  pro- 
duced each  week,  marketed  each  week,  and  consumed  each  week,  and  if 

i  This  paper  was  read  at  the  Thirty-third  Annual  Meeting  of  the  American  Eco- 
nomic Association,  held  in  Atlantic  City,  December  29,  1920. 

2  Yearbook  of  the  United  States  Department  of  Agriculture,  1917,  p.  205. 


208  James  E.  Boyle  [June 

the  quantity  and  quality  were  always  the  same,  and  the  demand  re- 
mained constant,  and  the  price  remained  the  same,  and  if  each  buyer 
paid  cash.  There  would  then  be  no  credit  problem,  no  storage  prob- 
lem, no  grading  problem,  and,  most  significant  of  all,  no  price  prob- 
lem. Contrast  this  ideal  situation  with  the  real  situation.  Using  wheat 
as  a  typical  crop,  we  know  that  the  world's  eaters  of  the  wheaten  loaf 
need,  on  the  average,  three  and  a  half  billion  bushels  of  wheat  per  year. 
And,  oddly  enough,  this  was  actually  the  world's  crop  in  1914.  But 
the  year  before  that  and  the  year  after  that  the  crop  was  half  a  billion 
bushels  larger.  And  one  year  later,  in  1916,  the  world's  crop  was  a 
billion  bushels  short  of  the  1915  crop.  Weather,  insect  pests,  plant 
diseases — factors  beyond  the  control  of  man — control  the  supply  and 
the  quality.  Unlike  a  factory,  the  output  of  the  farm  cannot  be  con- 
trolled within  definite  limits. 

In  brief,  the  supply  of  the  crop  fluctuates  widely  from  year  to  year. 
The  quality  changes  likewise.  Thus  the  large  corn  crop  of  1917  was 
of  such  poor  quality  (owing  to  high  moisture  content)  that  literally 
hundreds  of  millions  of  bushels  were  wholly  unmerchantable. 

Viewing  the  whole  situation  from  the  economic  standpoint  we  may 
say  that  these  farm  commodities  are  produced  for  the  consumers,  but 
are  not  produced  at  the  right  time,  or  the  right  place,  or  of  the  right 
quality,  or  in  the  right  quantity  to  meet  his  daily  consumptive  require- 
ments. Hence  our  present  middleman  system  to  overcome  these  four 
maladjustments  in  production  and  consumption:  (1)  time,  (2)  place, 
(3)  quantity,  (4)  quality. 

Supply  is  never  constant,  as  indicated  above  in  the  case  of  the  typi- 
cal crop,  wheat.  The  actual  physical  supply  coming  to  market  is  not 
constant.  The  psychological  supply — that  is,  the  estimate  of  the  crop, 
the  carryover,  the  amount  in  farmers'  hands,  etc. — likewise  changes 
from  day  to  day,  from  hour  to  hour,  with  new  information. 

Demand  is  never  constant.  Consumers  buy  according  to  their  de- 
sires, whims,  fancies,  caprices,  and  tastes.  Consumption  is  not  ration- 
al and  cannot  be.  Consumption  of  staples,  like  bread  and  meat, 
fluctuate  widely  from  week  to  week,  month  to  month,  season  to  season. 
So  also  with  all  other  farm  products.  It  is  a  very  grievous  mistake  to 
assume  that  supply  or  demand  is  constant,  for  the  market  teaches 
otherwise. 

The  middleman's  duty  is  to  coordinate  supply  and  demand,  over- 
come the  four  maladjustments  between  production  and  consumption. 
He  assumes  therefore  two  risks:  (1)  price  fluctuations,  due  to  changes 
in  supply  or  demand;  (2)  perishability,  particularly  in  fruits  and 
vegetables.  The  loss  here  is  40  per  cent  in  the  more  perishable 
products. 


1921]  Marketing  of  Agricultural  Products  209 

Marketing  is  sometimes  narrowly  defined  as  the  changing  of  owner- 
ship of  goods.  This  is  merchandising  and  is  only  one  step,  the  final 
step,  in  marketing.  Marketing  is  a  far  more  complex  thing  than  that. 
Marketing  begins  with  the  production  of  a  marketable  product  and 
continues  till  the  product  is  in  the  consumer's  home.  Marketing  con- 
sists of  five  separate  but  related  steps:  namely  (1)  production,  (2) 
storage,  (3)  transportation,  (4)  credit,  (5)  merchandising.  A  "so- 
lution of  the  marketing  problem,"  is,  therefore,  a  solution  of  five  sepa- 
rate problems.  They  are  bound  up  together,  and  all  must  be  con- 
sidered if  more  efficiency  is  to  be  introduced  into  our  middleman  system. 

II.     The  Solution 

A  problem  once  clearly  stated  is  half  solved.  If,  therefore,  we  have 
stated  the  marketing  problem  correctly,  its  solution  has  been  sug- 
gested. The  five  steps  in  the  marketing  problem  are  now  considered  in 
turn. 

1.  Production. — Recent  market  reports  dealing  with  the  fall  in  the 
price  of  cotton  spoke  of  market  gluts  of  low-grade  cotton  which  caused 
stagnation  in  domestic  and  foreign  markets ;  the  hope  was  expressed 
that  the  poor-grade  stuff  could  be  worked  off  in  Europe.  The  hay 
market  in  the  ten  leading  markets  of  the  country  tells  the  same  story — - 
market  gluts  of  low-grade  hay,  and  a  scarcity  of  No.  1  hay.  The  first 
problem  for  the  farmer  therefore,  is,  not  how  to  increase  the  crop 
yields,  but  how  to  produce  more  of  the  better  grades,  less  of  the  poorer 
grades.  "Limitation  of  output"  is  a  two-edged  sword,  now  being  played 
with  by  cotton  farmers  and  wheat  farmers.  The  labor  unions  have 
already  used  and  abused  this  weapon  and  caused  public  odium  to  at- 
tach to  the  term.  The  farmer  ought  to  limit  the  output  in  the  sense 
that  he  keep  the  poorer  stuff  at  home  and  put  the  better  stuff  on  the 
market.  He  would  realize  more  for  his  crop  by  this  legitimate  form 
of  limitation  of  output.  This  would  likewise  eliminate  some  of  the 
preventable  leaks  in  marketing.  For  by  glutting  the  market  with 
poor-grade  stuff  the  farmer  spoils  his  own  market  and  does  not  benefit 
the  consumer.  Here  then  is  the  first  problem  in  marketing,  the  first 
step  is  production  for  market. 

Grading. — Grading  is  the  second  step  in  production.  Grains  and 
cotton  are  coming  to  be  sold  largely  on  grades.  But  even  in  these 
commodities  the  buyer  at  the  country  station  is  commonly  too  lax  in 
adhering  strictly  to  the  federal  standards.  This  fails  to  bring  home 
to  the  grower  the  relation  between  low  grade  and  low  price  or  good 
grade  and  good  price.  Most  farm  commodities  have  no  federal  grades 
or  state  grades  or  any  other  kind  of  grades.  Here  lies  the  first  field 
for   cooperative   marketing  by    farmers,    that    they    may    put   on   the 


210  James  E.  Boyle  [June 

market  a  better  product,  graded  and  standardized.  Most  of  the  large, 
successful  cooperatives  in  the  United  States  (such  as  the  California 
examples,  the  Warren  County,  Kentucky,  Strawberry  Growers,  the 
Eastern  Shore  of  Virginia  Produce  Exchange,  and  so  on)  establish 
their  own  respective  grades,  and  stand  back  of  this  grade.  In  other 
words,  they  imitate  manufacturers  of  successful  articles — have  a  brand 
and  guarantee  its  integrity.  When  a  good  article,  graded  and  stand- 
ardized, is  ready  for  market,  the  marketing  problem  is  half  solved.  In 
no  other  way  can  sales  f.o.b.  be  made.  As  long  as  ungraded  stuff  is 
sent  to  the  city  market,  just  so  long  will  it  be  necessary  to  have  com- 
mission merchants  handle  it,  and  handle  it,  moreover,  on  a  wide  margin. 
The  commission  merchant  system  is  a  poor  system  made  necessary  by 
poor  production.  For,  as  said  before,  poor  production  means  poor 
marketing.     Good  production  means  good  (cheap)  marketing. 

Summarizing,  it  may  be  said  that  the  first  step  in  marketing  is  pro- 
ducing a  better  product  and  putting  on  the  market  a  graded,  stand- 
ardized product. 

#.  Storage. — Since  most  farm  crops  are  produced  only  in  the  sum- 
mer but  are  consumed  during  a  large  part  of  the  year,  these  crops 
must  be  stored  somewhere  by  somebody.  Here  the  middleman  enters, 
to  begin  one  of  his  services.  Most  storage  is  now  owned  wholly  by 
middlemen,  by  wholesalers,  retailers,  or  others.  Control  of  storage 
gives  certain  strategic  power.  Cold  storage,  dry  storage,  warm  stor- 
age, and  the  various  other  kinds  of  storage  are  being  furnished  to  the 
trade  to  meet  the  requirements  of  the  present  middleman  system.  But 
if  the  whole  marketing  system  is  to  be  dealt  with  constructively,  if 
farmers  are  to  go  the  whole  way  in  dealing  with  the  marketing  of  their 
products,  they  must  take  hold  of  the  storage  question.  In  some  sec- 
tions this  means  construction  at  railway  stations  of  local  storage  ware- 
houses for  potatoes,  for  hay,  and  for  various  other  crops.  Here  the 
grading  takes  place.  With  many  commodities  farmers  ought  to  go 
into  the  terminal  market  and  own  storage — enough  storage  at  least  to 
learn  the  storage  business  from  the  inside.  Thus  the  Canadian  Grain 
Growers,  some  20,000  strong,  own  terminal  grain  warehouses  and 
hospital  elevators  where  they  do  their  own  drying,  mixing,  and  condi- 
tioning, thus  learning  all  the  ways  of  the  trade.  Storage  owned  by 
farmers  would  tend  to  equalize  the  flow  of  the  commodities  to  market. 
Standard  warehouses,  under  the  United  States  Warehouse  act,  furnish 
warehouse  receipts  for  graded  commodities  which  in  turn  are  strictly 
first-class  liquid  securities  in  securing  credit. 

An  interesting  example  of  the  foregoing  marketing  principles  was 
recently  afforded  by  the  hearings  before  the  House  Committee  on  In- 
terstate Commerce.     A  farmer  from  Minnesota  showed  how  a  scarcity 


1921]  Marketing  of  Agricultural  Products  211 

of  terminal  grain  warehouses  at  the  seaboard  caused  a  fall  in  potato 
prices  in  Minnesota,  and  also  a  drying  up  of  credit  to  the  potato 
farmers.  It  was  a  concrete  and  striking  example  of  how  closely  linked 
together  these  five  marketing  functions  are.  First,  the  scarcity  of 
grain  storage  at  the  seaboard  caused  a  tremendous  backing  up  of 
freight  cars  loaded  with  export  grain.  In  other  words,  freight  cars 
were  used  for  storage,  not  for  transportation,  and  thus  one  derange- 
ment begot  other  derangements.  Storing  grain  in  cars  caused  a  short- 
age of  cars  in  Minnesota,  particularly  in  those  counties  having  one 
thousand  or  more  carloads  of  potatoes  ready  for  market  all  at  once, 
and  with  freezing  weather  approaching  or  at  hand.  Buyers  refused 
to  buy  at  any  price,  unless  cars  were  on  hand.  Banks  refused  to  loan 
on  such  an  erratic  market,  with  danger  of  a  freeze  and  a  loss  of  the 
product.  Here  clearly  was  a  "marketing  problem"  that  extended  from 
the  Minnesota  farm  to  the  Atlantic  seaboard,  and  involved  each  of 
the  five  steps  in  marketing. 

Summarizing,  farmers  should  consider  storage  as  part  of  their 
marketing  program,  and  in  case  they  are  not  adequately  served  they 
should  devise  ways  and  means  of  owning  and  operating  more  of  their 
own  storage. 

3.  Trans  port  atian. — Most  farm  crops  are  produced  many  miles 
from  the  place  where  they  are  consumed.  Hence,  comes  transportation 
to  give  them  "place  utility."  Transportation  is  the  most  expensive 
link  in  the  marketing  chain  from  the  time  the  product  leaves  the  farm 
till  it  reaches  the  retailer's  hands.  Government  investigations  have 
shown  that  the  haul  of  cotton  or  wheat  from  the  farm  to  the  local 
station,  over  the  country  road,  actually  costs  more  than  the  haul  from 
the  Atlantic  seaboard  to  Liverpool.  The  "big  leak"  in  transportation, 
in  other  words,  is  due  to  bad  country  roads.  This  leak  will  never  be 
cured  by  scolding  the  middleman.  It  will  be  cured  by  cooperation  in 
the  widest  sense  of  the  term — cooperation  of  all  the  various  interests, 
rural,  urban,  local,  state,  and  national  until  good  roads  are  secured 
for  the  average  farmer.  The  question  of  developing  rural  motor  ex- 
press lines  is  one  for  the  farmer  to  face  and  solve.  Transportation  by 
rail  is  so  vital  in  its  social  significance  as  to  be  compared  with  the 
arteries  in  the  human  body.  Problems  in  rail  transportation,  such  as 
car  shortages  and  rates,  being  interstate  or  national  in  character,  are, 
of  course,  beyond  the  reach  of  any  one  farmer  although  they  affect  his 
welfare  most  intimately.  Farmers  may  well,  therefore,  when  they 
mobilize  themselves  for  better  marketing,  devote  a  goodly  share  of 
their  attention  to  this  step  in  the  marketing  problem.  The  "voice"  of 
the  farmer  may  well  be  heard  in  this  vital  matter. 

^.  Credit. — Most  farm  crops  are  paid  for  in  cash  when   taken  by 


212  James  E.  Boyle  [June 

the  dealer.  But  in  most  cases  it  is  a  matter  of  weeks  or  even  months 
before  these  goods  are  passed  on  to  the  final  consumer  and  paid  for  by 
him.  To  bridge  this  time-gap  between  producer  and  consumer — since 
there  is  not  half  enough  money  in  the  country  to  carry  the  goods — 
credit  must  be  furnished.  As  the  marketing  structure  is  now  organ- 
ized the  "middleman''  is  usually  the  person  who  performs  the  banking 
function  of  furnishing  the  credit.  He  borrows  at  wholesale  from  city 
banks.  While  it  is  doubtless  true  that  the  average  farmer  gets  all  the 
credit  he  is  entitled  to  from  his  local  bank,  yet  there  is  a  preventable 
leak  here  in  the  marketing  process.  That  is,  credit  to  move  the  crop 
can  be  furnished  the  farmers  more  easily,  more  readily,  and  more 
cheaply — provided  the  preceding  steps  have  been  taken — if  the  goods 
are  graded;  if  the  goods  are  in  a  warehouse,  insured,  and  represented 
by  a  warehouse  receipt.  Under  the  federal  reserve  system,  there  is  the 
form  of  credit  paper  known  as  the  trade  acceptance  which  requires  the 
creation  of  no  new  credit  machinery,  but  is  now  available  for  farmers 
individually  and  collectively.  This  form  of  credit  should  have  a  very 
large  and  rapid  development.  After  developing  to  their  full  limit  the 
trade  acceptance  and  the  warehouse  receipt  the  farmer  will  find  that 
he  is  in  as  good  a  position  to  obtain  short-time  credit  as  is  any  other 
borrower. 

The  farmer  should  be  educated  to  the  new  view  of  credit :  that  it  is 
a  tool  to  be  used  by  the  prosperous  and  not  a  mere  "debt"  or  badge 
of  non-prosperity.  He  should  be  taught  that  somebody  has  to  furnish 
credit  to  market  his  crops  and  must  be  paid  for  furnishing  this  credit; 
that  wholesale  credit  is  cheaper  than  retail  credit ;  that  modern  bank- 
ing machinery  exists  to  furnish  more  and  cheaper  credit  to  the  farmers 
(organized  or  unorganized)  who  have  successfully  taken  the  first  two 
steps  in  marketing.  When  these  means  of  credit  are  exhausted  it  will 
be  time  to  talk  of  creating  new  agencies  for  securing  credit  for  financing 
the  marketing  process. 

5.  Merchandising. — The  last  step  in  marketing  is  the  actual  sale  of 
the  goods,  the  changing  of  ownership.  The  price  problem  is  a  knotty 
one.  But  we  know  that  supply  and  demand  do  determine  general  prices. 
At  least  they  mark  out  a  sort  of  prize  ring,  and  within  this  ring  the 
buyer  and  seller  "fight  out"  the  price  by  the  bargaining  process.  Of 
course  the  more  powerful  bargainer  has  some  advantage  over  the 
weaker.  A  seller  pressed  by  poverty,  ignorance,  or  weakness  is  at  a 
disadvantage.  Conversely,  a  seller  who  has  knowledge,  or  waiting 
power,  or  skill,  may  have  the  advantage.  Here  is  where  the  argument 
comes  in  for  cooperative  selling  organizations  among  farmers.  They 
are  mobilized;  they  have  power;  they  have  a  voice  in  marketing.  Col- 
lectively   they   secure   ami   use  market   information.     Thus,   the  potato 


i\vi\  |  Marketing  of  Agricultural  Vroduoti  818 

farmers  in  the  Eastern  Shore  of  Virginia  Produce  Exchange  m|*«-h<I 
$80,000  a  >  «-ii  i  for  telegrams.  '  1 '  1 » < -  y  are  justified  in  doing  thUi  for 
Hi.  \  have  for  sale  a  better  product,  graded,  standardized.  They  would 
mil  hi'  justified  in  tin .  expenditure  if  they  did  nol  have  such  a  producl 
for  siil..    Being  mobilized,  8,000  strong,  they  are  powerful  bargainers, 

uilliin    Mm-    limits    of    the    law    of   .supply     ami    demand. 

Coat  <>!  production,     A  word  must  be  said  aboul  the  cos!  of  produc 

lion    and    its    illation    l<.    selling    price   or    \alm-.       Value    (price)    depends 

upon  two  factors  utility  and  scarcity.  Cosi  of  production  governs 
supply,  or  the  scarcity  factor.     Utility  governs  the  demand,  and  )nt* 

m>  direi  I  relation  to  COSl  of  production.  Hence  cost  of  production  IS 
not    the  Correct    basis  of  price,  Lit    is   only   one  important    element    in   it. 

\n\    piic.-  fixed  bj   collective  bargaining,  collective  selling,  or  other 

«i   e,    must     actually     relied    supply    and    demand,    or    it     will    not.    stay 

fixed.     For  it   will  lead  either  to  n  surplus  (which  the  consumer  re 
fusi     to  take  except  at   pine  concessions)  or  a  shortage  (leading  the 
consumers  t  o  l » ■  < I  up  t  lie  price ) . 

.1  AMI  S    K.     lto>  I   I  . 
(  'ill  II,  II     I  '  III.  ,  I  Sit  Jl. 


CRITERIA  OF  MARKETING  EFFICIENCY1 

Two  points  of  view  must  be  kept  in  mind  in  an  attempt  to  analyze 
marketing  efficiency.  Such  analysis  may  be  directed  from  the  point  of 
view  of  the  individual  entrepreneur,  or  of  particular  classes  of  business 
men.  This  is  commonly  called  the  private  point  of  view.  Such  investi- 
gations as  those  which  have  been  carried  on  by  the  Bureaus  of  Business 
Research  of  Harvard  and  Northwestern  universities  are  of  this  kind, 
as  are  most  of  the  efforts  of  the  United  States  Bureau  of  Markets, 
and  of  the  Bureaus  of  Commercial  Research  maintained  by  some  large 
business  and  trade  organizations.  Other  analyses  are  carried  out  by 
investigators  who  are  not  interested  in  increasing  the  profits  of  indi- 
vidual firms  or  of  particular  classes  of  private  business  organization. 
They  take  what,  for  the  lack  of  a  better  term,  we  may  call  the  social 
or  public  point  of  view.  Their  aim  is  to  study  the  social  significance 
of  marketing.  In  so  far  as  they  have  any  definite  aim  in  mind  other 
than  the  scientific  search  for  truth,  it  is  to  determine  how  marketing 
can  be  carried  on  in  such  a  way  as  to  improve  the  economic  status  of 
the  community  as  a  whole.  To  such,  marketing  appears  as  a  great 
mechanism  for  bringing  goods  from  producer  to  consumer.  This 
mechanism  functions  imperfectly  at  times  and  involves  expensive  pro- 
cesses. Consequently,  it  is  worth  study  in  order  to  determine  whether 
it  can  be  made  to  function  more  effectively  and  more  economically. 

The  specific  lines  of  research  and  even  the  immediate  aims  of  those 
who  take  this  latter  point  of  view  frequently,  perhaps  usually,  coincide 
with  those  who  are  interested  only  as  individuals,  or  as  the  representa- 
tives of  a  large  class  of  enterprisers.  But  whereas  those  with  the  indi- 
vidual perspective  are  interested  because  they  seek  a  means  to  increase 
individual  profits,  these  latter  are  interested  in  individual  success  only 
in  so  far  as  it  tends  to  the  development  of  a  more  effective  and  a  more 
economical  distributive  organization.  This  point  of  view  is  chiefly  in 
mind  in  the  following  discussion.  In  the  last  analysis,  this  brings  those 
of  us  who  are  individualistic  in  tendency  to  the  point  of  view  of  the 
consumer.  For  the  social  end  of  marketing,  as  of  production,  is  to 
gratify  the  wants  of  consumers  as  effectively  and  as  economically  as 
possible.  And  so,  it  is  from  the  point  of  view  of  the  investigator  who 
sees  marketing  through  the  consumer's  eyes  that  the  criteria  of  market- 
ing efficiency  are  now  approached. 

What,  then,  are  the  criteria  for  determining  the  efficiency  of  our 
market  organization,  and  of  the  particular  institutions  of  which  it  is 
composed?    First  among  these  must  be  considered  the  effectiveness  with 

iThis  paper  was  read  at  the  Thirty-third  Annual  Meeting  of  the  American  Eco- 
nomic Association,  held  in   Atlantic  City,  December  29,   1920. 


1921]  Criteria  of  Marketing  Efficiency  215 

which  the  distributive  service  is  rendered;  then,  the  cost  at  which  this 
service  is  performed,  understanding  cost  to  include  actual  money  ex- 
penses plus  whatever  profits  are  made  by  those  engaged  in  marketing, 
whether  they  be  producer,  consumer,  middleman,  or  functional  agency. 
And,  finally,  there  must  be  considered  the  effect  which  this  cost  and 
these  methods  of  performing  this  service  have  upon  production  and 
consumption.  In  other  words,  to  determine  the  efficiency  of  our  market 
organization  we  must  answer  such  questions  as  these:  Does  the  scheme 
meet  our  needs?  Do  we  pay  more  for  the  performance  of  this  service, 
even  though  it  is  well  done,  than  we  should?  What  effect  does  our  sys- 
tem of  market  distribution  have  upon  production  and  consumption? 
If  the  system  is  effective  but  costly,  it  is  inefficient.  So  is  it  inefficient 
when  it  is  cheap  but  ineffective.  And  even  though  the  mechanism  as 
devised  results  in  the  effective  and  economical  distribution  of  commodi- 
ties, it  is  not  efficient  if  it  exercises  an  unfavorable  influence  on  either 
production  or  consumption. 

It  is  evident  that  the  first  two  criteria,  service  and  cost,  must  usu- 
ally be  studied  as  one  problem,  although  the  emphasis  of  a  particular 
investigation  may  be  upon  service,  or  upon  the  actual  money  cost,  or 
on  the  trade  or  speculative  profits  involved  in  the  performance  of  the 
service.  The  last  criterion,  the  effect  of  the  market  organization  upon 
production  and  consumption,  involves  some  most  interesting  and  il- 
lusive considerations.  Considerations  which  the  business  man  and  the 
economist  learned  to  appreciate  only  when  the  great  war  magnified 
their  difficulty  and  increased  the  need  for  their  immediate  solution.  The 
price  fixers  in  particular  had  these  problems  before  them. 

Most  of  the  problems  we  meet,  perhaps  all  of  them,  raise  broad  ques- 
tions of  technical  efficiency.  One  group  of  problems  centers  about  the 
purely  mechanical  elements  involved  in  transportation  and  storage. 
Among  these  are  problems  concerning  the  effectiveness  of  the  facili- 
ties for  shipping  and  warehousing,  and  concerning  the  mechanical  equip- 
ment and  physical  layout  of  our  markets.  The  difficulties  caused  by 
poor  country  roads,  limited  railway  facilities,  congested  terminals,  and 
ill-planned  wholesale  market  areas  raise  such  problems.  One  of  the 
greatest  problems  we  have  to  face  in  the  market  for  agricultural 
products  is  found  just  here.  How  can  we  retain  the  advantages  de- 
rived from  concentrating  at  these  central  markets  the  forces  of  de- 
mand and  supply  which  operate  over  a  wide  area,  and  at  the  same  time 
eliminate  the  disadvantages  of  the  physical  congestion  of  the  market 
plants  which  arises  from  the  resulting  tendency  to  force  an  enormous 
supply  of  actual  goods  through  these  markets. 

Another  group  of  problems  concerns  the  methods  by  which  title  to 
goods  is  transferred  from  producer  to  consumer.     Here  are  raised  a 


216  Fred  E.  Clark  [June 

host  of  questions  of  the  most  vital  importance.  Among  them  are  those 
which  relate  to  the  efficacy  of  our  market  news  service,  upon  which  we 
depend  to  keep  demand  and  supply  in  equilibrium ;  those  which  relate 
to  the  adequacy  of  our  price  system  to  properly  correlate  the  various 
factors  in  production  and  marketing;  those  which  relate  to  the  legal 
protection  of  the  parties  to  an  exchange;  those  which  relate  to  the 
great  costs  involved  in  our  modern  methods  of  buying  and  selling,  in- 
cluding the  costs  of  standardization,  inspection  and  grading  when 
these  are  present,  the  increased  costs  of  bargaining  when  they  are  ab- 
sent, and  the  enormous  costs  of  demand  creation ;  and  here,  likewise, 
center  the  problems  which  arise  from  the  presence  of  market  risks  and 
the  necessity  for  market  finance. 

These  two  groups  of  problems  concerning  the  technical  efficiency  of 
our  market  machinery,  one  arising  out  of  what  may  be  called  the 
purely  mechanical  efficiency  of  the  plant,  the  other  arising  out  of  what 
may  be  called  the  trade  efficiency  of  the  system  of  bargaining,  are  the 
problems  which  bear  directly  on  those  criteria  of  efficiency  which  are 
based  on  service  and  cost. 

More  difficult  of  analysis  but  no  less  important  is  that  group  of 
problems  which  relates  to  the  reaction  of  the  existing  market  institu- 
tions, mechanical  and  trade,  upon  production  and  consumption.  This 
group  includes  the  question  of  the  effect  of  the  use  of  standard  grades, 
when  it  results  in  improved  products  and  increased  stability  of  income 
to  producers.  And  here  may  be  considered  the  effect  upon  production 
which  occurs  when  the  market  organization  secures  to  the  producer 
what  he  considers  to  be  a  "just  share"  of  the  final  selling  price  of  his 
produce.  Here  is  raised  the  whole  gamut  of  questions  concerning  the 
results  on  production  and  consumption  of  market  competition  and  of 
the  effects  of  particular  railway  rate  structures,  basing  points,  postage 
stamp  rates,  commodity  rates,  rates  based  upon  a  compromise  between 
value  of  the  product,  weight,  distance,  and  the  competition  of  other 
carriers  and  of  outside  markets.  Here,  likewise  can  be  considered  the 
effect  of  our  finance  and  warehouse  methods  upon  the  production  of 
perishable  and  seasonable  commodities,  as  well  as  the  reactions  to  large 
market  areas  which  have  increased  the  growth  of  large-scale  and  spe- 
cialized production. 

Turning  to  consumption,  we  find  for  investigation  the  tendency  for 
modern  distributive  methods  to  make  available  to  consumers  a  large 
variety  of  commodities  and  the  tendency  of  modern  selling  methods  to 
create  in  the  mind  of  the  consumer  a  demand  for  variety,  quality,  ser- 
vice, style,  and  seasonable  goods. 

Most  of  the  criticism  of  modern  marketing  is  really  pointed  directly 
or  indirectly  at  our  competitive  regime  as  it  now  functions.     Even  the 


1921]  Criteria  of  Marketing  Efficiency  217 

important  problems  of  the  physical  efficiency  of  transportation,  and 
of  the  physical  congestion  of  central  market  areas,  are  very  closely 
bound  up  with  the  conditions  of  competition  in  a  regime  of  private 
property.  Most  of  the  proposed  remedies  and  reforms,  which  are  of 
more  than  particular  application,  propose  to  eliminate  our  present 
competitive  system,  or  they  involve  proposals  leading  to  an  increase  in 
existing  forms  of  control  on  the  part  of  the  government,  or  to  an  in- 
troduction or  enlargement  of  the  control  exercised  by  producers  and 
consumers  through  some  form  of  cooperation  or  combination  among 
the  members  of  these  classes. 

For  example,  it  has  been  shown  that  demand  and  supply  are  not 
properly  related.  As  a  consequence  there  occur  what  we  popularly 
call  periods  of  over  and  under  production.  These  may  occur  in  many 
lines  at  a  single  time  and  result  in  a  general  paralysis  of  business,  or 
they  may  be  found  with  particular  products  or  in  particular  markets, 
as  when  there  is  a  larger  supply  of  apples  than  the  market  demands  or 
wjien  there  is  an  excess  supply  of  perishable  fruit  dumped  into  a  par- 
ticular market  on  a  Saturday  afternoon.  It  is  contended,  likewise, 
that  the  system  is  so  developed  that  often  the  physically  best  or  physi- 
cally nearest  producing  areas  are  kept  from  supplying  their  logical 
markets,  because  no  adequate  means  of  contact  are  established  or  be- 
cause transportation  rates  are  constructed  with  a  view  to  bringing  dis- 
tant areas  into  a  more  favorable  competitive  relationship.  Again,  con- 
sumers are  so  played  upon  by  the  competitive  efforts  of  merchandisers 
that  they  are  held  to  have  developed  extravagant  and  unwise  demands. 
It  is  further  contended,  and  often  proved,  that  of  a  given  price  at  a 
given  time  the  producer  (and  in  particular  the  farmer)  gets  too  small 
a  share.  Or  it  is  held,  conversely,  that  with  the  producer  receiving  a 
particular  price  the  consumer  is  forced  to  pay  more  than  he  should, 
or  again  that  the  producer  may  have  goods  to  sell  and  the  consumer 
desire  to  purchase  them  but  the  market  machinery  fails  to  bring  about 
an  exchange. 

Two  causes  are,  of  course,  given  for  the  large  spread  between  pro- 
ducer and  consumer,  inefficiency  of  method  and  the  opportunity  for 
withholding  too  large  a  margin  of  profit  by  the  various  intermediaries 
involved.  Either,  when  true,  may  be  caused  by  the  failure  of  our  com- 
petitive regime  to  develop  good  methods  and  to  keep  prices  down  to 
a  necessary  margin  of  profit. 

Other  wastes,  which  in  some  cases  can  be  placed  at  the  door  of  the 
competitive  regime,  but  which  more  often  perhaps  are  due  to  a  failure 
to  develop  effective  and  economical  mechanical  equipment,  are  those 
involved  when  it  does  not  pay  producers  to  harvest  and  market  prod- 
ucts, when  products  deteriorate  en  route  to  market  or  after  reaching  it, 


218  Fred  E.  Clark  [June 

and  when  products  occasionally  are  allowed  to  perish,  even  when  they 
have  gone  well  on  their  way  to  the  final  consumer,  because  it  does  not 
pa^  those  who  hold  them  to  carry  them  further. 

It  is  evident  from  these  illustrations  that  the  criticisms  now  leveled 
at  the  market  organization  hit  at  the  heart  of  our  competitive  regime, 
— the  effectiveness  of  our  price  system.  Economists  in  general  hold 
that  economic  progress  is  greater  under  a  regime  of  competition  than 
it  is  conceivable  it  could  be  under  any  other  known  or  proposed. 
Briefly,  they  hold  that  the  best  men  and  the  best  processes  and  poli- 
cies evolve,  and  that  goods  and  services  that  are  wanted  are  produced 
most  effectively  and  most  economically.  As  applied  to  marketing  this 
means  that  the  most  efficient  firms  will  survive,  that  the  best  channels 
of  distribution  and  the  best  methods  of  selling  will  prevail,  and  that 
commodities  in  amount,  kind,  and  quality  demanded  will  be  placed 
upon  the  market.  Finally,  as  regards  price  and  cost,  competition  will 
reduce  price  to  costs,  including  a  reasonable  (socially  necessary)  profit, 
but  keep  it  up  to  a  point  which  will  insure  the  required  production. 
This  ideal  comes  very  far  from  being  realized,  particularly  when  condi- 
tions are  changing  so  rapidly  that  attempted  solutions  of  problems  of 
production  and  marketing  are  often  out  of  date  when  they  are  evolved. 
In  consequence,  the  process  of  selection  when  working  through  price  is 
for  times  like  the  present  slow  and  expensive.  For  competition  is 
slow  to  weed  out  the  inefficient  producers  and  distributers,  and  their 
methods.  But  the  advocates  of  the  existing  system,  while  recognizing 
this,  hold  that  it  is  the  best  scheme  of  production  and  distribution  which 
has  been  devised,  and  argue  that  many  of  the  proposed  remedies,  such 
as  socialism,  the  use  of  combinations  tending  toward  control  of  par- 
ticular kinds  of  production,  whether  by  manufacturers  or  by  agricul- 
turalists, and  even  by  consumers,  will  bring  evils  greater  than  are 
these  wastes  of  competition. 

We  have,  however,  long  since  reached  a  point  where  a  large  group 
of  investigators  take  it  for  granted  that  the  competitive  regime  im- 
puted to  the  classical  economist's  mind  is  and  must  be  supplemented 
or  abandoned.  We  have  not  yet  reached  a  point  where  the  schemes  for 
abandonment  as  a  practical  program  need  seriously  be  considered. 
But  there  is,  perhaps,  a  dominant  feeling  today  that,  while  we  may  de- 
pend upon  competition  to  maintain  and  increase  private  efficiency, 
that  is  the  efficiency  of  the  individual  entrepreneurship,  something 
more  is  necessary  to  bring  about  a  proper  correlation  between  indi- 
vidual activities,  particularly  between  the  efforts  of  producers  or 
consumers  of  specific  products,  and  so  to  promote  general  efficiency. 
As  an  eminent  investigator  put  it  some  time  ago,  "effort  within  indi- 


1921]  Criteria  of  Marketing  Efficiency  219 

vidual  or  industrial  units  is  carefully  planned,  between  them  it  is  plan- 
less."1 

Two  types  of  activity  are  suggested  and  in  use:  governmental  as- 
sistance, such  as  is  rendered  through  the  crop  estimates,  and  private 
cooperation  as  expressed  in  the  combination  movement  and  in  con- 
sumer and  producer  cooperation.     Both  of  these  can  avail  to: 

1.  Improve  market  news. 

2.  Limit  or  increase  production,  as  the  condition  of  the  market 
demands. 

3.  Improve  the  physical  efficiency  of  central  markets. 

4.  Improve  transportation  rates  and  efficiency. 

5.  Increase  the  standardization  and  the  grading  of  products. 

6.  Bring  about  the  elimination  of  unnecessary  middlemen. 

7.  Control  excessive  profits. 

In  any  criticism  which  may  be  made  the  investigator  must  be  care- 
ful to  balance  properly  the  service  rendered  against  the  cost.  Too  often 
the  former  is  forgotten.  If  the  consumer  demands  great  service  he 
must  pay.  Criticism  should  be  leveled  at  him  rather  than  at  those  who 
render  the  service  or  at  the  market  system.  That  is,  the  consumer 
should  be  criticized  unless  the  very  activities  of  those  who  render  the 
service,  or  of  others  back  of  them,  tend  to  increase  the  demands  of  the 
consumer  for  service.  And  even  then  the  critic  must  be  certain  that 
the  service  itself  is  a  bad  thing  or  less  desirable  than  something  which 
has  to  be  foregone,  or  that  it  is  inefficiently  performed  or  allows  undue 
profits  to  be  accumulated. 

If  there  is  a  wide  spread  in  price  between  producer  and  ultimate  con- 
sumer, if  fifty  per  cent  or  more  of  the  final  price  of  an  article  is  the 
marketing  cost,  this  does  not  necessarily  indicate  either  inefficiency  or 
excessive  profits.  On  closer  examination  it  may  be  found  that  neither 
of  these  things  is  present,  that  the  service  is  actually  costly,  even 
though  it  is  well  performed.  Or  it  may  be  found  that  what  is  done 
warrants  an  investigation  not  of  the  market  but  of  human  desires,  or 
of  modern  large-scale  methods  of  production  and  demand  creation  or 
of  the  nature  and  effects  of  modern  railway  rate  structures.  It  is 
evident  that  the  relative  cost  of  marketing  most  commodities  has  been 
on  the  increase  of  late  and  that  relatively  more  individuals  and  more 
capital  are  so  engaged.  In  so  far  as  this  is  a  result  of  modern  condi- 
tions in  production  and  consumption,  our  investigation  should  start 
there.  But  in  so  far  as  our  modern  distributive  system  has  reacted  to 
bring  about  these  conditions  in  production  and  consumption  we  return 
whence  we  started,  and  our  field  is  the  market  organization. 

Any  investigation  of  market  efficiency  should  start  with  certain  things 

i  W.  C.  Mitchell,  Business  Cycles. 


220  Fred  E.  Clark  [June 

clearly  in  mind.  Just  so  long  as  we  have  large-scale  production  and 
specialized  producing  units  and  production  areas,  just  so  long  as 
consumers  congregate  in  small  areas  far  removed  from  the  source  of 
the  products  which  they  demand,  and  just  so  long  as  we  possess  wants 
which  can  be  gratified  only  with  products  from  remote  sources,  or 
products  perishable  physically  or  commercially,  just  so  long  we  must 
have  large  markets  and  so,  a  large  market  organization.  And  the 
larger  our  producers  become,  the  more  we  develop  specialized  produc- 
tion and  production  areas,  the  more  our  consumers  congregate  and  the 
more  numerous  their  desires  become,  the  more  important,  and  probably 
the  more  costly,  the  market  machinery  will  be.  That  is,  we  must  recog- 
nize for  example  that  the  benefits  of  specialization  in  production  are 
in  part  offset  by  the  increased  costs  of  distribution.  And  this  refers 
not  merely  to  the  cost  of  physical  storage  and  delivery,  but  to  the  in- 
creased cost  of  financing,  to  the  increased  cost  of  the  greater  market 
risks  which  must  be  borne,  and  to  the  increased  sales  effort  which  the 
large  producer  feels  that  he  must  make  in  order  to  minimize  these 
market  risks.  We  soon  reach  in  some  industries  a  point  where  the  in- 
creased costs  of  distribution — particularly  transportation — offset  any 
advantages  of  large-scale  production.  It  may  be  that  society  will  some 
day  reach  a  point  where  it  must  consciously  balance  against  such  in- 
creased costs  of  marketing  not  only  the  advantages  of  large-scale  pro- 
duction, but  the  advantages  of  further  specialization  by  producing 
areas,  and  the  pleasure  the  consumer  derives  from  variety  and  service, 
just  as  individual  consumers  are  constantly  doing. 

Fred  E.  Claek. 
North wes t em  Uinwers ity. 


FARMERS'  CO-OPERATIVE  ASSOCIATIONS:  THEIR 
LEGAL  AND  LEGISLATIVE  ASPECTS1 

No  attempt  has  been  made  in  this  paper  to  touch  upon  all  the  sub- 
ject-matter which  could  logically  demand  treatment  under  the  title 
assigned.  Rather  is  the  discussion  confined  to  existing  and  proposed 
legislation  which  tends  to  define  the  status  of  farmers'  cooperative  as- 
sociations under  the  anti-trust  laws  of  the  United  States. 

Within  recent  years  there  have  been  numerous  attempts  by  modi- 
fication of  the  federal  anti-trust  laws  to  differentiate  farmers'  co- 
operative organizations  from  other  forms  of  business  enterprises. 

Legislation  to  this  end  may  be  said  to  have  had  its  beginning  with 
the  passage  in  1914  of  Section  6  of  the  Clayton  amendment  of  the  fed- 
eral anti-trust  laws.  In  this  amendment  Congress  undertook  to  give 
farmers'  non-stock,  non-profit  cooperative  associations  a  definite  and 
somewhat  distinct  position  in  their  relation  to  the  provisions  of  exist- 
ing legislation. 

Section  6  of  the  Clayton  amendment  provides: 

That  the  labor  of  the  human  being  is  not  a  commodity  or  article  of  com- 
merce. Nothing  contained  in  the  anti-trust  laws  shall  be  construed  to  for- 
bid the  existence  and  operation  of  labor,  agricultural,  or  horticultural  or- 
ganizations, instituted  for  the  purposes  of  mutual  help,  and  not  having  capi- 
tal stock  or  conducted  for  profit,  or  to  forbid  or  restrain  individual  mem- 
bers of  such  organizations  from  lawfully  carrying  out  the  legitimate  objects 
thereof;  nor  shall  such  organizations,  or  the  members  thereof,  be  held  or 
construed  to  be  illegal  combinations  or  conspiracies  in  restraint  of  trade, 
under  the  anti-trust  laws. 

Congress  undoubtedly  intended  by  the  above  provisions  to  permit 
farmers'  companies  to  operate  without  regard  to  federal  legislation 
prohibiting  "monopolies"  and  without  regard  to  the  committing  of  acts 
in  "restraint  of  trade"  providing  such  companies  were  (a)  composed 
entirely  of  farmers,  (b)  organized  without  capital  stock,  and  (c)  oper- 
ated for  the  mutual  benefit  of  their  members  and  not  for  profit.2 

Regardless  of  the  intent  there  is  grave  question  as  to  whether  the 
amendment  gives  cooperative  associations  any  privileges  not  already 
enjoyed  before  its  passage.  Many  attorneys  who  have  given  much 
thought  and  study  to  the  meaning  of  the  above  amendment  openly 
confess  that  in  the  absence  of  a  court  decision  they  do  not  know  what 
its    logical    interpretation    should    be.      Others    hold    that    under    the 

i  This  paper  was  read  at  the  Thirty-third  Annual  Meeting  of  the  American  Eco- 
nomic Association,  held  in  Atlantic  City,  December  29,  1920. 

2  A  non-profit  association  is  understood  to  be  one  which  distributes  the  net  pro- 
ceeds of  its  operations  to  members  in  proportion  to  the  amount  of  patronage  which 
each  member  contributes  during  a  specific  time. 


222  Asher  Hobson  [June 

amendment  the  mere  act  of  organizing  for  purposes  of  collective  bar- 
gaining shall  not  be  construed  to  be  in  violation  of  the  federal  anti- 
trust laws ;  but  should  such  an  organization  restrain  trade  through 
subsequent  action,  it  is  liable  to  prosecution  under  the  provisions  of 
the  anti-trust  laws.  In  accordance  with  this  interpretation,  the  farmers 
are  free  to  organize  for  collective  bargaining.  The  mere  act  of  or- 
ganizing shall  not  be  construed  to  be  in  restraint  of  trade.  But  the 
actions  of  such  an  organization  are  in  no  wise  immune  from  the  pro- 
visions of  the  anti-trust  law. 

Although  the  office  of  the  Solicitor  of  the  United  States  Department 
of  Agriculture  has  not  attempted  to  give  an  official  interpretation,  it 
has  based  its  instructions  to  the  field  organizers  of  the  Bureau  of 
Markets  upon  the  opinion  that  the  acts  of  the  cooperative  associations 
are  not  immune  from  federal  anti-trust  laws  even  though  these  asso- 
ciations be  organized  on  a  non-stock,  non-profit  basis. 

The  Federal  Trade  Commission  seems  to  have  taken  this  point  of 
view  also  in  its  recommendations  to  the  Department  of  Justice  con- 
cerning the  reorganization  of  the  California  Associated  Raisin  Com- 
pany. 

In  this  report  the  Federal  Trade  Commission  states  in  part:  "But 
the  conduct  of  the  Raisin  Company's  business  should  be  modified,  as 
well  as  its  organic  structure.  Some  of  its  methods  have  been  and  would, 
unless  changed,  continue  to  be  in  violation  of  the  Clayton  law  even  after 
the  company  is  readjusted  in  form  to  the  requirements  of  Section  6."3 

Regardless  of  the  intent  of  Congress  in  passing  Section  6  of  the 
Clayton  amendment,  it  can  safely  be  said  that  the  amendment  has 
tended  to  make  the  status  of  farmers'  organizations  more  indefinite  and 
more  uncertain  rather  than  clarifying  their  legal  position. 

Furthermore,  the  Clayton  amendment  has  serious  objections  from 
an  economic  standpoint.  It  prescribes  organizations  without  capital 
stock.  This  form  of  organization  is  not  easily  applied  to  all  types  of 
farmers'  cooperative  associations.  Many  states  do  not  have  laws  which 
provide  for  this  form  of  organization.  Furthermore,  since  a  large  ma- 
jority of  existing  associations  are  organized  on  a  stock  basis,  the  uni- 
versal adoption  of  the  provision  of  Section  6  would  necessitate  a  re- 
organization of  a  large  majority  of  the  existing  fanners'  cooperative 
marketing  companies — an  almost  impossible  task  even  though  it  were 
found  desirable.  To  many  associations,  reorganization  would  mean  the 
termination  of  their  existence. 

Another  indication  that  Congress  favored  at  least  partial  exemption 
for  farmers  in  their  efforts  to  bargain  collectively  is  shown  by  the  re- 
striction placed  upon  the  appropriations  of  the  Department  of  Justice. 

3  Report  of  Federal  Trade  Commission  to  Attorney  General,  dated  June  8,  1920. 


1921]  Farmers'1  Cooperative  Associations  223 

Beginning  with  the  fiscal  year  1914  and  continuing  down  to  date,  the 
following  provision  has  been  inserted  in  the  appropriation  for  the  en- 
forcement of  the  anti-trust  laws:  "Provided  further,  That  no  part  of 
this  appropriation  shall  be  expended  for  the  prosecution  of  producers 
of  farm  products  and  associations  of  farmers  who  cooperate  and  or- 
ganize in  an  effort  to  and  for  the  purpose  to  obtain  and  maintain  a 
fair  and  reasonable  price  for  their  products."  The  effect  of  the  above 
provision  depends  largely  upon  the  construction  of  the  undefined  term 
"fair  price." 

The  next  attempt  to  define  the  status  of  farmers'  cooperative  asso- 
ciations under  the  provisions  of  the  anti-trust  laws  was  that  of  total 
exemption.  The  so-called  Capper-Hersman  bills  of  the  last  session  of 
the  Congress  are  a  good  example  of  the  efforts  along  this  line.4 

These  bills  proposed  unmistakably  to  exempt  farmers'  organizations 
from  the  provisions  of  the  anti-trust  laws.  As  was  to  be  expected, 
these  and  similar  proposals  expired  in  the  hands  of  the  committees. 

The  next  important  development  along  this  line  and  one  which  gives 
more  promise  of  success  is  contained  in  the  Capper-Volstead  bills,5 
which  have  been  passed  by  both  houses  and  are  now  (December  29, 
1920)  in  the  hands  of  a  joint  conference  committee. 

The  provisions  of  this  proposed  legislation  arc  substantially  as  fol- 
lows : 

1.  Associations,  in  order  to  come  under  its  provisions,  shall  be  made 
up  exclusively  of  farmers. 

2.  Associations  shall  be  organized  for  mutual  help  and  not  for  profit. 

3.  The  Federal  Trade  Commission  shall  hold  investigations  if  it  has 
any  reason  to  believe  that  the  association  restrains  trade  or  lessens 
competition  to  such  an  extent  that  it  "unduly  enhances  the  price"  of 
any  agricultural  product. 

4.  If  after  holding  hearings  the  Federal  Trade  Commission  shall 
have  reason  to  believe  that  the  association  restrains  trade  or  lessens 
competition  to  such  an  extent  "that  the  price  of  agricultural  product 
is  unduly  enhanced,"  the  commission  shall  issue  an  order  directing  the 
association  to  cease  and  desist  from  such  actions  as  are  found  ob- 
jectionable. 

5.  If  the  association  neglects  or  fails  to  obey  the  order  of  the  Fed- 
eral Trade  Commission  within  30  days,  the  commission  shall  refer  the 
matter  to  the  Attorney  General  for  action. 

It  is  reasonable  to  suppose  that  the  above  legislation,  if  passed  with- 
out modification,  will  accomplish  the  following  ends: 

1.  Farmers'  buying  and  selling  organizations  will  be  relieved  from 

*H.  R.  7783,  66  Cong.,  1  Sess.;  S.  845,  66  Cong.,  1  Sess. 
s  H.  R.  13931,  66  Cong.,  2  Sess. ;  S.  4344,  66  Cong.,  2  Sess. 


224  Asher  Hobson  [June 

undue  and  harassing  litigation  under  the  anti-trust  laws  by  placing  a 
scientific,  investigational  commission  between  the  farmers'  organiza- 
tion and  the  federal  courts. 

2.  The  legality  of  acts  of  farmers'  cooperation  marketing  associa- 
tions under  the  anti-trust  laws  shall  be  measured  by  their  effect  upon 
the  public  welfare  rather  than  by  the  long  accepted,  but  wholly  inade- 
quate and  ineffective,  standard  of  "competition  versus  monopoly." 

It  may  be  contended  that  the  act  gives  farmers,  through  their  or- 
ganizations, advantages  not  enjoyed  by  other  industries,  hence  it  is 
class  legislation.  In  order  to  pass  upon  this  opinion  it  is  necessary  to 
note  some  of  the  characteristics  which  differentiate  farming  from  other 
types  of  business.  The  ordinary  business  corporation  is  an  institution 
for  collective  bargaining.  By  means  of  this  form  of  organization  indi- 
viduals may  associate  themselves  for  the  purpose  of  collectively  buying, 
selling,  and  manufacturing.  It  is  essentially  a  form  of  pooling  of  in- 
terests, and  who  can  say  this  is  not  an  effective  means  of  combination. 
If  it  be  a  good  collective  bargaining  institution,  one  may  ask  why  do 
not  farmers  take  advantage  of  this  form  of  association  rather  than 
demand  special  legislation.  Their  inability  to  take  advantage  of 
the  general  corporation  form  of  organization  brings  out  one  of  the  es- 
sential characteristics  which  differentiate  farming  from  other  industries. 

The  farm  as  a  business,  and  the  farm  as  a  home,  are  part  of  the 
same  unit  and  seemingly  inseparable.  Farming  is  a  family  industry. 
From  all  indications  it  will  remain  so  for  some  time  to  come.  Many 
have  been  the  attempts  to  apply  factory  types  of  management  and 
centralized  control  to  agricultural  production.  It  is  safe  to  say,  how- 
ever, that  only  a  small  fraction  of  one  per  cent  of  the  agricultural 
products  grown  in  the  United  States  are  produced  on  farms  which 
are  under  corporate  management.  American  agriculture  has  shown 
little  inclination  to  change  its  habits  to  an  extent  that  will  permit  the 
paying  of  a  going  rate  of  wages  for  those  employed  in  it,  plus  the  cur- 
rent rate  of  interest  on  capital  invested  in  land  and  equipment,  and 
leave  a  surplus  for  the  rewards  of  management. 

Economists  specializing  in  agricultural  problems  will  agree  that  at 
least  one  fourth  of  the  farmers  of  the  United  States  receive  no  money 
compensation  for  their  labor  and  managerial  ability  after  subtracting 
from  the  total  farm  income  the  running  expenses  and  interest  at  5  per 
cent  on  land  and  equipment. 

If  farmers  were  to  take  advantage  of  the  usual  corporate  form  of 
organization  it  would  be  necessary  that  their  farms  be  owned  by  the 
corporations ;  but  since  the  farm  is  an  inseparable  part  of  the  home 
and  cannot  well  be  operated  as  a  separate  unit,  one  at  once  sees  the 
impracticability  of  such  a  scheme  for  pooling  of  interests.     As  Rep- 


1921]  Farmers'  Cooperative  Associations  225 

resentative  Volstead  says,  "It  is  no  answer  that  farmers  may  acquire 
the  status  and  secure  the  rights  of  a  business  corporation  by  deeding 
their  farms  to  a  corporation.  That  is  neither  desirable  nor  practical 
from  any  standpoint."6 

It  must  be  granted  that  business  corporations  have  many  privileges 
in  the  way  of  collective  bargaining  which  are  not  enjoyed  by  the  indi- 
vidual or  the  cooperative  organization. 

The  writer  is  firmly  of  the  belief  that  centralization  of  most  in- 
dustrial interests  tends  toward  substantial  economies.  Because  of  this 
fact  legislation  is  ineffective  to  check  unified  action  and  to  bring  about 
so-called  free  competition.  If  this  be  the  case,  how  shall  the  farmer  be 
put  on  an  equal  footing  with  those  with  whom  he  deals  in  the  sale  of 
his  products?  Centralization  of  his  marketing  interests  through  co- 
operation has  offered  the  only  hope.  But  it  has  been  found  that  co- 
operation will  not  serve  the  purpose  if  it  is  placed  in  the  same  legal 
category  as  the  mammoth  business  corporation.  Experience  has  shown 
that  this  equal  treatment  of  unequals  brings  about  injustice. 

The  large  business  corporation  which  is  an  appreciable  influencing 
factor  in  the  control  of  its  field  has  little,  or  nothing,  in  common  with 
the  great  majority  of  cooperative  concerns.  The  cooperative  form  of 
organization  is  an  organization  of  limitations.  Cooperative  laws  as  a 
usual  thing  limit  the  dividends,  prescribe  the  disposition  of  the  surplus, 
specify  the  maximum  amount  of  stock  which  may  be  held  by  any  one 
member,  and  dictate  the  manner  of  voting,  together  with  the  process 
of  electing  the  board  of  directors  as  well  as  the  general  form  of  man- 
agement and  control.  All  the  limitations  are  necessary.  They  are 
inherent  characteristics  of  cooperation.  But  because  of  the  very  na- 
ture of  the  form  of  organization,  the  business  of  a  cooperative  com- 
pany tends  to  be  everybody's  business.  It  is  public,  consequently  one 
can  readily  see  why  it  is  that  a  cooperative  organization  is  more  liable 
to  prosecution  under  the  anti-trust  laws  than  is  a  concern  whose  busi- 
ness transactions  cannot  be  correctly  ascertained  even  by  the  aid  of 
grand  jury  proceeding. 

In  the  writer's  estimation,  the  above  provisions,  if  enacted  into  law, 
would  grant  to  farmers'  marketing  associations  no  privileges  not  al- 
ready enjoyed  by  business  corporations.  This  legislation  merely  tends 
to  grant  to  cooperative  organizations  some  of  the  privileges  of  the  busi- 
ness organization.  It  has  been  likened  to  a  handicap  which  has  been 
placed  on  one  of  the  participants  in  a  race  of  unequals.  That  com- 
parison, however,  is  hardly  an  apt  illustration.  Rather  is  it  an  at- 
tempt to  equalize  the  conditions  of  a  race  in  which  two  vastly  different 
types  of  participants  run  over  two  courses  which  have  little  in  common. 

It  would  not  be  well  to  close  this  discussion  without  briefly  discussing 

«  H.  R.  Report  No.  939,  66  Cong.,  2  Sess. 


226  Asher  Hobson  [June 

the  probable  effects  of  this  legislation  upon  the  welfare  of  the  consumer. 
The  proposal  very  wisely  states  that  the  cooperative  organizations 
under  its  jurisdiction  shall  not  "unduly  enhance  prices."  They  may 
combine  or  even  restrain  trade,  for  the  purpose  of  effecting  economies, 
but  they  must  not  arbitrarily  control  price. 

One  who  is  acquainted  with  the  wide  diversity  of  the  conditions  in 
the  various  agricultural  sections,  together  with  the  great  numbers  of 
people  engaged  in  the  industry,  has  little  fear  of  agricultural  monopo- 
lies. On  the  other  hand,  if  there  is  a  possibility  of  monopolistic  power 
it  is  to  the  consumer's  interest  that  the  actions  of  these  organizations 
be  supervised  as  is  provided  for  in  the  bill. 

It  should  be  noted  that  this  bill  as  described  marks  a  definite  recog- 
nition of  supervised  monopolies.  It  recognizes  the  economic  truth  that 
there  are  good  monopolies  as  well  as  bad  monopolies,  the  same  as  there 
is  good  competition  as  well  as  bad  competition.  Both  monopoly  and 
competition  may  be  good  or  bad  depending  upon  their  effect  upon  the 
public  welfare. 

The  bill  under  discussion  attempts  to  put  the  farmers  more  nearly 
on  a  par  with  the  corporations  with  which  they  have  to  deal  in  order 
that  they  may  secure  a  fair  price  for  their  products.  As  a  guarantee 
to  other  classes  that  a  fair  price  is  all  that  is  desired,  the  bill  contains 
provisions  for  the  investigation  of  complaints  which  may  be  made 
against  associations  under  this  act  in  case  these  organizations  seem  to 
be  exacting  an  unfair  price. 

The  Volstead  bill  passed  the  House  on  May  81,  1920,  and  the  Senate 
on  December  15,  1920.  The  bill  is  now  in  the  hands  of  a  joint  confer- 
ence committee.  The  following  "rider"  which  is  intended  to  defeat  the 
whole  purpose  of  the  bill  was  attached  in  the  Senate:  "Nothing  herein 
contained  shall  be  deemed  to  authorize  the  creation  of,  or  attempt  to 
create,  a  monopoly,  or  to  exempt  any  association  organized  hereunder 
from  any  proceedings  instituted  under  the  Act  entitled  'An  Act  to 
supplement  existing  laws  against  unlawful  restraints  and  monopolies, 
and  for  other  purposes,'  approved  October  15,  1914,  on  account  of 
unfair  methods  of  competition  in  commerce." 

There  is  strong  reason  to  believe  that  this  amendment-rider  will  be 
eliminated  before  the  passage  of  the  act.  If  it  should  stand,  however, 
cooperative  organizations  will  have  the  same  legal  status  under  the 
federal  anti-trust  laws  as  was  the  case  before  the  enactment  of  the 
Clayton  amendment.  An  exception  to  this  is  that  the  pending  legis- 
lation, with  the  above  amendment,  creates  machinery  for  more  rigid 
supervision  and  for  closer  investigation  of  cooperative  actions — a  pro- 
posal to  treat  a  serious  burn  with  more  fire. 

ASHER   HOBSON. 

Colu  m b ia  Univers ity. 


GRAIN  STANDARDIZATION1 

With  the  development  of  the  American  grain  industry  in  the  middle 
of  the  nineteenth  century  and  the  creation  of  a  large  marketable  sur- 
plus of  grain,  the  need  for  a  more  efficient  method  of  trade  than  sale  by 
sample  or  by  the  presentation  of  the  grain  became  imperative.  The 
construction  of  storage  capacity  to  be  used  by  different  owners  of 
grain,  the  purchase  and  sale  of  large  volumes  of  grain  where  the  per- 
sonal relations  of  buyer  and  seller  were  lost,  and  the  fulfilment  of  con- 
tracts that  extend  over  a  period  of  time,  called  for  a  new  trade  lan- 
guage that  might  serve  as  a  common  basis  for  comparing  values  and 
for  providing  a  more  satisfactory  method  of  establishing  market  price. 

The  pioneer  work  in  developing  the  inspection  and  grading  of  grain 
fell  to  the  grain  exchanges  which  were  empowered  to  provide  rules  and 
regulations  that  govern  the  dealings  between  their  respective  members, 
who  were  solicitous  for  having  a  more  economical  distributing  system, 
if  for  no  other  reason  than  private  gain.  The  principal  reason  for 
exchange  rather  than  private  inspection  was  the  early  recognition  of 
the  necessity  for  impartial  inspection  if  the  new  language  were  to  be- 
come articulate.  The  first  grain  inspector  at  Minneapolis  was  em- 
ployed by  the  Millers'  Federation  but  the  Minneapolis  Chamber  of 
Commerce,  shortly  after  its  organization,  assumed  full  control  of  the 
inspection  and  grading  service.  At  Boston  and  Philadelphia,  during 
the  early  history  of  inspection,  the  grain  exchanges  established  the 
grade  standards  and  appointed  the  chief  inspector  who  assumed  full 
responsibility  for  the  collection  of  inspection  fees  and  for  the  finances 
of  the  inspection  department;  but  this  financial  arrangement  has 
been  discontinued  and  the  exchange  inspection  departments  are  now 
fully  responsible  for  the  inspection  service  because  the  temptation 
to  manipulate  the  standards  to  the  profit  of  the  chief  inspector  was 
considered  too  great. 

It  is  reasonable  to  suppose  that  the  control  of  inspection  has  been 
more  impartial  when  administered  by  the  middleman  organization  where 
the  competing  interests  of  buyers  and  sellers  meet  than  if  the  control 
had  been  exercised  by  a  producers'  or  a  consumers'  organization.  On 
the  other  hand,  exchange  inspection  has  not  been  entirely  free  from 
trade  influence.  The  occasional  change,  or  attempt  to  change  the 
standards  during  a  period  of  market  manipulation,  and  the  occasional 
lowering  of  the  standards  to  suit  the  convenience  of  the  selling  inter- 
ests when  the  quality  of  the  crop  is  poor  have  nevertheless  exerted  an 
influence  out  of  proportion  to  their  frequency  to  destroy  the  confidence 

i  This  paper  was  read  at  the  Thirty-third  Annual  Meeting  of  the  American  Eco- 
nomic Association,  held  in  Atlantic  City,  December  29,  1920. 


228  H.  Bruce  Price  [June 

of  interested  dealers  in  the  reliability  of  the  means  by  which  they  esti- 
mate quality  and  hence  determine  the  price  to  be  paid.  A  market  risk 
is  thereby  created  that  must  be  compensated  for  in  a  wider  spread  in 
the  price  between  the  producer  of  grain  and  the  consumer.  The  dis- 
trust of  exchange  inspection,  moreover,  that  is  engendered  among  pro- 
ducers by  these  methods  and  the  omission  of  producer  representation 
in  the  exchange  control  is  largely  responsible  for  the  movement  for  po- 
litical inspection  in  the  principal  grain-producing  sections  and  for  the 
adoption  of  state  inspection  and  federal  control. 

The  broadening  of  the  control  of  inspection,  however,  sacrifices  the 
advantages  of  the  non-political  character  of  exchange  inspection.  The 
personnel  of  the  grain  committees  that  control  exchange  inspection 
changes  slowly  and  the  inspector  who  is  capable  and  efficient  may 
therefore  expect  a  long  tenure  of  office.  This  attracts  capable  men  to 
n  profession  that  demands  the  skill  which  comes  from  long  experience 
and  it  breeds  an  efficiency  that  cannot  be  so  readily  obtained  if  an  in- 
spector's term  of  office  depends  upon  the  fortunes  of  political  parties. 
On  the  other  hand,  the  exchange  inspection  departments  have  not  met 
the  usual  test  of  greater  initiative  and  progress  that  is  usually  ascribed 
to  private  endeavor,  due  to  the  security  from  political  favoritism.  The 
state  inspection  departments  and  federal  supervision  have  rather  been 
the  leaders  in  adopting  new  methods  and  equipment  for  grading  while 
the  exchanges  have  generally  adhered  to  the  older  types. 

The  principle  of  uniform  standards  of  grading  is  also  important  to 
an  efficient  inspection  system.  Three  types  of  problems  are  involved 
here:  first,  uniform  inspection  of  the  grain  arriving  at  and  leaving  a 
market ;  second,  uniform  grading  between  different  markets ;  and,  third, 
uniform  grading  over  a  period  of  time;  but  inasmuch  as  the  absence 
or  presence  of  uniformity  affects  the  market  price  in  much  the  same 
way  under  all  circumstances,  the  different  aspects  of  uniformity  involve 
similar  problems  of  price  economics.  By  creating  confusion  rather 
than  clarity  in  the  meaning  of  grade  terminology,  the  stabilization  of 
the  means  through  which  supply  and  demand  are  expressed  is  lost, 
fluctuations  in  the  market  price  are  encouraged,  and  the  attendant  risks 
increase  the  cost  of  marketing.  In  a  dynamic  industry  absolute  rigidity 
of  standards  is  impracticable,  since  new  types  of  grain  and  new  market 
conditions  may  make  it  desirable  to  change  grade  requirements  from 
time  to  time;  but  such  changes,  whether  effected  by  changes  in  grade 
descriptions  or  in  method  of  application,  should  be  preceded  by  suffi- 
cient notice  to  obviate  any  disturbance  to  the  contractual  relations  of 
which  the  standards  form  the  basis.  Due  to  a  difference  in  classifica- 
tion and  in  interpretation,  the  American  decentralized  inspection  sys- 
tem that  existed  prior  to  the  adoption  of  federal  supervision  and  fed- 


1921]  Grain  Standardization  229 

eral  standards  offers  a  good  illustration  of  the  effects  of  variations  in 
the  grades  between  the  different  markets.  The  chairman  of  the  legis- 
lative grain  committee  of  the  National  Grain  Dealers'  Association 
testifying  before  a  congressional  committee  in  19142  estimated  that 
in  American  grain  markets  there  were  about  two  hundred  grades  or 
variations  in  grading  oats,  sixty  grades  or  variations  in  grading  corn, 
and  thirty  grades  or  variations  in  grading  rye.  An  improper  under- 
standing of  the  function  of  grades  also  too  often  caused  the  standards 
to  fluctuate  between  competing  markets.  Large  quantities  of  spring 
wheat  of  the  1915  crop,  for  example,  that  would  normally  have  been 
marketed  at  Minneapolis  were  shipped  to  Chicago  where,  due  to  the 
unusual  demand  for  spring  wheat  to  be  mixed  with  the  winter  wheat 
of  poor  quality,  shippers  secured  better  grades  and  better  prices.  Com- 
petition between  the  two  principal  wheat  markets  was  therefore  reduced 
to  a  basis  of  both  grades  and  prices  which  tended  to  lower  the  stan- 
dards, to  add  confusion  to  the  trade,  and  to  pervert  the  purpose  of 
standardization.  To  avert  the  inconveniences  and  losses  attending  simi- 
lar situations,  the  National  Grain  Dealers'  Association  adopted  uni- 
form grades  for  the  principal  grains  in  1909,  but  six  years'  experience 
demonstrated  the  futility  of  its  efforts  in  the  absence  of  a  central 
official  organization  with  authority  to  compel  the  general  adoption  and 
uniform  application  of  the  standards. 

Another  type  of  confusion  may  come  from  the  misuse  of  the  grades 
by  individual  dealers.  The  practice  of  mixing  a  cheaper  with  a  dearer 
grain,  adding  weed  seeds  to  light  barley,  barley  or  even  water  to  oats, 
or  rye  to  wheat,  to  the  detriment  of  the  value  of  the  grain  for  which 
the  mixture  is  sold,  is  encouraged  when  the  grades  are  not  clearly 
defined,  and  the  per  cent  of  foreign  material  permitted  in  the  different 
grades  is  not  specifically  stated.  The  evolution  of  standards  to  pro- 
vide more  definite,  even  mathematical  grade  requirements,  discourages 
this  practice  by  giving  to  the  grain  that  carries  an  excess  of  harm- 
ful or  valueless  material  a  lower  grade.  This  tendency  to  more  tech- 
nical grades  may  be  criticized  as  increasing  the  difficulty  of  grading  and 
sometimes  delaying  the  movement  of  grain  through  the  controversies 
that  develop  as  a  result  of  the  technical  points  of  grading.  Yet,  the 
prevention  of  adulteration  through  the  inspection  system  is  preferable 
to  the  regulation  under  the  Pure  Food  and  Drugs  act  which  creates 
many  uncertainties  in  the  shipping  of  mixed  grains.  Moreover,  to  con- 
tend that  competition  will  eliminate  the  misuse  of  the  mixing  privilege 
when  the  basis  of  competition  is  violated  is  fallacious  reasoning. 

2  Hearings  before  the  Committee  on  Agriculture,  House  of  Representatives,  Sixty- 
third  Congress,  on  H.  R.  14,493,  a  Bill  Providing  for  the  Uniform  Grading  of 
Grain  and  for  Other  Purposes  (1914),  p.  60. 


230  H.  Bruce  Price  [June 

Of  the  exaggerated  criticisms  of  grain  inspection,  two  are  offered  for 
consideration.  The  first  concerns  the  prevalent  belief  that  the  stan- 
dard of  grading  the  receipts  and  the  shipments  at  the  important  mar- 
kets varies  to  the  advantage  of  the  predominant  grain  interests.  The 
tendency  among  inspectors  to  give  to  the  grain  the  benefit  of  any 
doubt  regarding  the  grade  does  create  the  possibility  of  more  liberal 
inspection  of  shipments  than  of  receipts  at  the  primary  markets  since 
much  of  the  grain  leaving  the  market  has  passed  through  the  terminal 
elevators  where  it  is  mixed  to  meet  the  minimum  requirements  of  the 
desired  grade,  whereas  the  grain  arriving  has  not  been  so  scientifically 
mixed  at  the  country  markets  and  thus  represents  a  greater  range  of 
quality  within  a  given  grade.  Careful  analysis  of  the  reinspections  and 
appeals  at  a  market  whose  inspection  has  been  subjected  to  much  criti- 
cism, however,  reveals  no  conscious  variation  in  the  standards  by  the 
inspection  department.  Moreover,  since  this  criticism  of  the  "in"  and 
"out"  inspection  at  any  given  market  invariably  comes  from  producers 
and  dealers  who  are  located  outside  of  the  market  and  not  from  the 
dealers  within  the  market,  its  origin  doubtless  lies  in  the  suspicions  that 
are  aroused  by  the  possibilities  of  manipulation  of  the  standards,  rather 
than  in  actual  manipulations. 

Another  popular  misconception  is  the  belief  that  the  price  of  grain 
bears  no  relation  to  the  value  of  the  dockage  or  foreign  materials  that 
it  contains.  Studies  conducted  at  Minneapolis  in  1916  by  C.  H.  Bailey 
and  the  writer  show  that  the  foreign  materials  that  are  difficult  to  clean 
from  wheat  and  which  injure  the  baking  quality  of  the  flour  depress 
the  price  of  the  grain  in  proportion  as  the  foreign  material  is  detri- 
mental to  the  flour.  Where  the  foreign  material  has  a  commercial 
value  and  can  be  readily  separated  from  the  grain,  a  small  amount  of 
dockage  that  does  not  pay  for  the  cost  of  cleaning  also  depresses  the 
price  of  the  grain,  but  the  grain  that  contains  a  large  amount  of  the 
valuable  separable  foreign  materials  commands  a  premium  which  in- 
creases with  an  increase  in  the  quantity  and  value  of  the  dockage.  The 
data  obtained  in  this  study  further  show  that  a  loss  is  sometimes  in- 
curred on  the  grain  with  light  dockage  while  a  good  profit  is  realized 
on  the  wheat  containing  heavy  foreign  material.  Taking  into  con- 
sideration, however,  the  cost  of  cleaning  the  grain,  the  loss  of  grain, 
during  the  cleaning  process,  and  the  loss  due  to  an  occasional  erron- 
eous determination  of  the  dockage  by  the  inspection  department,  it  is 
not  probable  that  the  grain  dealers  have  realized  the  large  profits  that 
are  so  often  ascribed  to  the  foreign  material. 

H.  Bruce  Price. 
Yale  University. 


STABILIZATION  OF  PRICES1 

Two  main  methods  of  price  making  may  be  noticed :  cash  and  specu- 
lative. The  cash  sales  are  of  two  classes :  those  made  by  producers  to 
consumers  and  those  made  to  distributors  widely  scattered  over  the 
territory  and  hence  so  close  to  consumers  as  to  be  able  to  handle  the 
goods  with  relatively  little  speculative  risk.  Of  the  first  class  of  cash 
sales,  we  have  as  the  best  instances  such  as  are  made  around  every 
village  by  producers  to  consumers.  These  sales  need  not  concern  us 
although  their  prices  may  be  anything  but  stable.  They  are  unor- 
ganized. However,  the  parties  concerned  do  not  make  much  trouble 
and  hence  are  left  to  look  out  for  themselves. 

Of  the  second  class  of  cash  sales  one  of  the  best  instances  is  the 
California  Fruit  Grower's  Exchange.  Here  we  have  organized  cash 
selling  to  distributors  who  make  a  quick  turnover.  The  California 
Fruit  Grower's  Exchange  does  not  speculate,  but  on  the  basis  of 
minute  information  feeds  the  market  geographically,  as  it  were.  Chron- 
ologically it  has  less  control  over  the  situation.  The  real  advantage  to 
the  producer  of  the  California  citrus  marketing  method  is  the  elimi- 
nation of  expense  between  himself  and  the  consumer  in  the  way  of 
middleman  charges  on  the  fruit,  and  in  an  ability  to  take  advantage  of 
the  best  market  which  the  country  as  a  whole  affords. 

It  is  within  the  speculative  market  that  we  must  concern  ourselves 
most.  Of  this  there  are  two  main  varieties.  The  one  is  exemplified  by 
the  middleman  who  purchases  at  his  own  risk  goods  not  immediately 
wanted  by  the  consumer,  perhaps  not  in  the  form  ultimately  wanted, 
but  which  the  producer  nevertheless  wishes  to  sell.  This  is  the  case 
with  cotton,  grain,  and  meat  animals.  The  other  type  of  speculative 
sale  is  much  more  closely  related  to  the  cash  sale.  It  is  illustrated  by 
the  raisin  market.  The  crop  is  produced  during  one  season  of  the 
year.  It  is  prepared  for  us  by  the  producers,  but  unlike  wheat  and 
cotton  it  is  held  by  the  producers  until  the  trade  demands  it  for  almost 
immediate  consumption.  Here  we  have  the  calculated  price.  It  must 
not  be  inferred  that  speculative  price  is  not  a  calculated  price,  or  that 
a  calculated  price  involves  no  speculation.  The  speculator  is  calcu- 
lating to  the  best  of  his  ability.  The  difference  lies  in  the  degree  of 
speculation  involved  as  contrasted  with  ascertainable  facts  and  prob- 
able results.  The  wheat  speculator  has  the  world  as  his  field.  Crops 
are  being  harvested  during  every  month  of  the  year  and,  since  specu- 
lating is  a  nervous  business  in  the  face  of  unknown  contingencies,  every 
influence  likely  to  change  either  demand  or  supply  results  in  a  move- 

i  This  paper  was  read  at  the  Thirty-third  Annual  Meeting  of  the  American  Eco- 
nomic Association,  held  in  Atlantic  City,  December  39,  1920. 


232  B.  H.  Hibbard  [June 

ment  which  may  easily  carry  the  price  illogically  above  or  below  a 
normal.  The  speculators  are  not  of  one  mind  and,  information  being 
of  an  unmeasured  sort,  it  is  not  strange  that  the  oscillations  are  nearly 
always  appreciable  and  frequently  violent.  In  the  case  of  the  calcu- 
lated price,  which  thus  far  has  obtained  in  goods  of  a  fairly  durable 
kind,  and  moreover  goods  for  which  the  demand  is  distinctly  elastic,  it 
has  been  found  possible  for  the  producers  to  become  strong  instead  of 
weak  bargainers,  and  to  suggest  prices,  which  for  the  time  may  look 
like  fixing  prices.  The  walnut  and  raisin  growers  show  perhaps  as 
sound  skill  and  ability  as  any  producers'  group  in  this  respect.  They 
are  sometimes  charged  with  an  exercise  of  monopoly  power.  The  usual 
explanation  of  monopoly  includes  the  statement  that  it  literally  means 
"to  sell  alone."  Do  these  growers  enjoy  that  power?  The  limits  of 
this  paper  permit  no  discussion  of  the  controverted  point,  yet  it  must 
be  admitted  that  their  position  in  the  selling  field  suggests  a  certain 
degree  of  loneliness,  even  though  they  are  embarrassed  by  more  com- 
pany than  Mr.  Rockefeller  is  reputed  to  tolerate.  The  real  question  is 
whether  or  not  they  serve  a  useful  purpose  in  the  economy  of  society 
rather  than  whether  they  are  or  are  not  monopolies.  They  do  not 
seem  to  be  monopolies  of  a  sinister  or  predatory  nature  since  they  open 
their  doors  to  new  members  each  year,  and  hence  do  not  limit  supply. 

What  these  companies  actually  do  is  to  sell,  either  for  immediate  or 
future  delivery,  commodities  which  in  their  opinions  are  going  to  be 
wanted  at  a  price  calculated  by  them  on  the  basis  of  complete  infor- 
mation concerning  supply,  and  an  estimate,  based  on  current  and  past 
facts  relating  to  demand.  This  is  a  price  involving  a  degree  of  specu- 
lation, and  the  speculative  risk  is  borne  by  the  producers.  The  price 
thus  arrived  at  is  relatively  stable.  The  goods  are  of  such  a  character 
that  it  is  possible  to  finance  the  farmer  through  advances  obtained  by 
loans.  Risks,  and  other  expenses,  are  reduced  to  a  minimum  and  the 
producer  feels,  one  time  with  another,  that  he  is  getting  what  his  goods 
are  worth.  Under  all  ordinary  circumstances  sales  will  be  made  at 
different  prices  but  this  is  of  no  importance  to  the  individual  producer 
since  the  sales  are  pooled. 

Interesting  as  are  those  cases  of  calculated  prices,  and  superior 
though  they  may  be  to  the  competitive  middleman  speculation  with  its 
more  variable  price  curves,  it  must  be  admitted  that  the  latter  are 
more  prevalent.  Hence  after  noticing  the  excellent  workings  of  the 
cooperative  companies  which  do  one  of  two  things,  viz.,  either  feed  the 
market  daily  on  a  cash  basis,  or  anticipate  its  needs  and  do  the  same 
thing  by  weeks  or  months,  it  must  be  admitted  that  the  welfare  of  the 
great  majority  of  the  farmers  hinges  more  critically  on  the  speculative 
markets,  organized  in  the  form  of  cotton  or  grain  exchanges,  or  cen- 


1921]  Stabilization  of  Prices 

tered  in  such  cash  buying  on  relatively  short-time  speculation  as  char- 
acterizes the  purchase  of  meat  animals  for  fresh  meat  to  be  sold  within 
a  few  days  or  weeks. 

It  is  a  curious  fact  that  when  prices  are  rising  rapidly,  as  they  did 
in  1918  and  1919,  no  one  attributes  the  rise  to  the  action  of  specu- 
lators, although  they  are  probably  bidding  high  in  view  of  chances  of 
still  higher  levels.  When,  however,  the  case  is  reversed  and  prices  go 
downward,  from  one  end  of  the  country  to  the  other  comes  the  accusa- 
tion against  the  speculator  of  crooked  dealing.  He  is  charged  with 
the  whole  blame  of  lower  prices,  as  in  the  case  of  wheat  during  the 
last  few  months  of  1920,  and  at  once  comes  the  old  outcry  against  the 
"gambler,"  the  "manipulator,"  or  more  mildly  the  "parasite." 

Our  discussion  today  centers  on  the  question  of  stabilization,  and 
this  may  pertain  to  stability  with  respect  to  sales  within  a  few  hours, 
a  few  days,  or  spreading  into  seasons,  as  from  fall  to  spring.  It  has 
been  said  repeatedly  that  the  unholy  manipulators  of  the  grain  pits 
hold  prices  down  while  farmers  are  selling  with  the  well  matured  and 
oft  repeated  plan  of  putting  them  up  in  the  spring.  If  this  is  such  a 
foregone  conclusion,  the  remedy  is  obvious.  Those  who  have  wheat 
should  hold  it  till  spring  and  so  get  the  desired  price  along  with  the 
speculators.  In  other  words  the  cure  is  counter-speculation.  But  if 
this  is  a  fair  statement  of  the  unfair  situation,  why  does  not  some 
other  professional  speculator  take  the  opposite  course  from  that  of  the 
crowd  and  buy  "long"  with  as  much  spirit  as  the  "bears"  manifest  in 
selling  short,  thus  narrowing  the  probable  margin  of  gain?  In  other 
words,  what  reason  is  there  to  believe  that  the  professional  speculators 
all  prefer  to  make  their  money  by  selling  short  until  the  very  bottom 
price  is  reached,  after  which,  in  a  rising  market,  they  must  buy  back 
every  bushel  they  have  sold  short  and  presumably  enough  more  to  net 
them  a  fortune  due  to  the  upturn.  It  must  be  left  to  those  who  have 
faith  that  it  can  be  done  to  show  the  method  of  procedure.  To  those 
of  a  skeptical  turn  of  mind  the  required  formulas  are  wanting.  To  be- 
gin with,  the  statistics  available  show  that  the  price  of  wheat  in  May 
is  usually  but  four  or  five  cents  above  the  December  price,  and  even 
should  we  double  that  amount  to  conform  to  the  present  high  figure  it 
would  hardly  look  attractive  to  the  outsider. 

Future  trading  has  been  condemned  by  every  farmers'  organization 
of  note  from  the  Grange  of  1870  to  the  Federation  of  Farm  Bureaus 
of  1920.  It  is  condemned  by  the  majority  of  unorganized  consumers 
without  doubt.  Few  careful,  and  presumably  unprejudiced,  students 
of  marketing  have  arrived  at  a  like  conclusion.  The  preponderance  of 
evidence  goes  to  show  that  organized  speculation  is  a  steadying  influ- 
ence in   the  marketing  world.     Nowhere  else  does   the  producer  have 


234  B.  H.  Hibbard  [June 

such  full  information  as  to  the  value  of  wheat  as  in  the  United  States 
and  Canada ;  nowhere  else  does  he  get  as  large  a  proportion  of  the 
price  paid  for  grain  by  the  miller  or  similar  manufacturer.  Even  so, 
the  market  is  far  from  perfect  and  the  question  is  how  to  improve  it 
by  way  of  taking  out  the  ups  and  downs,  smoothing  the  curve.  The 
desirability  of  doing  so  is  beyond  question.  The  difficulty  is  to  find 
the  means  of  carrying  out  the  program. 

The  remedies  proposed  may  be  reduced  to  three  main  kinds.  First, 
there  is  the  ownership  of  the  entire  marketing  machinery  from  pro- 
ducer to  consumer  either  by  voluntary  cooperation  or  state  aid  as 
proposed  by  the  Nonpartisan  League.  Second,  there  is  the  coopera- 
tive action  on  the  part  of  large  groups  such  as  the  United  Farmers  of 
Canada,  who  take  the  farmers'  grain  at  a  price  which  the  market  at 
the  time  seems  to  justify,  handle  it  from  country  station  to  the  central 
market,  to  the  mill,  or  to  a  foreign  port,  and  return  to  the  group  the 
pro  rata  returns  from  the  transaction.  This  results  in  better  prices, 
and  in  a  measure,  more  stable  prices,  but  does  not  eliminate  fluctuations 
primarily.  Pooling  plays  a  relatively  small  role  in  this  operation  since 
it  does  not  apply  to  the  first  payment  for  the  produce,  but  only  to 
subsequent  additions  in  the  form  of  trade  dividends.  The  best  instance 
of  substantially  the  same  plan  is  that  of  the  California  Fruit  Growers' 
Exchange  in  the  operation  of  which  the  ups  and  downs  are  equalized 
fairly  well  by  the  pooling  process,  extending  by  grades  over  the  sales 
of  each  week  to  each  shipper.  Third,  the  control  through  virtual 
ownership  of  the  produce,  as  in  the  case  of  the  walnut  and  raisin  grow- 
ers. Here  pooling  may  be  extended  at  will  over  the  season,  and  the 
marketing  process  be  thus  unified. 

In  the  great  cotton  and  grain  markets  the  latter  two  methods  are 
contending  in  the  minds  of  reformers  for  the  first  place.  Shall  the 
market  be  accepted  much  as  it  is  and  through  the  elimination  of  ex- 
pense the  highest  price,  which  skill  and  forethought  can  accomplish, 
be  obtained,  or  shall  a  new  market  be  created  outside  of  and  indepen- 
dent of  the  present  boards  of  trade?  With  livestock  the  same  princi- 
ples apply,  but  with  much  more  difficulty.  If  mere  stability  of  prices 
over  short  periods  is  the  desideratum  it  can  no  doubt  be  obtained  by 
cooperative  organizations  of  producers  into  strong  marketing  com- 
panies which  shall  handle  the  produce  whether  wheat,  cattle,  or  potatoes, 
and  by  a  pooling  process  take  the  kinks  out  of  prices. 

If  the  long  seasonal  swings  of  prices  are  looked  upon  as  the  main 
manifestation  of  evil,  pooling  will  prove  an  inadequate  weapon  and  a 
more  drastic  remedy  must  be  sought.  Here  the  feeding  of  the  market 
will  be  required.  In  the  case  of  several  commodities  already  mentioned 
it  can  be  done.     It  can  be  done  without  question  with  cheese;  in  fact  a 


1921]  Stabilization  of  Prices  235 

great  start  has  been  made  in  that  direction.  It  should  apply  to  but- 
ter with  no  insuperable  difficulties.  How  then  about  wheat  and  live- 
stock? In  the  case  of  wheat,  which  would  be  almost  infinitely  easier 
than  livestock  to  handle  in  this  way,  it  must  be  admitted  that  the  pro- 
posals up  to  date  are  not  very  impressive.  It  takes  no  more  words  to 
propose  the  unification  of  wheat  marketing  than  of  raisin  marketing, 
but  to  put  it  into  practice  requires  the  cooperation  of  a  hundred  times 
as  many  farmers.  The  work  of  the  organization  after  it  is  once  formed 
will  require  a  world  knowledge,  and  the  operation  by  those  in  charge 
will  be  subjected  to  a  scrutiny  and  a  comparison  such  as  to  give  one 
pause.  The  first  thing  which  interested  parties  would  propose,  no 
doubt,  would  be  a  cutting  loose  from  the  world  market  by  a  tariff  wall. 
That  an  organization  of  wheat  growers  for  the  marketing  of  wheat 
could  be  formed  with  enough  coherence  and  with  sufficient  size  to  com- 
pel attention  is  probably  not  an  impossibility.  It  must  not  be  forgot- 
ten, however,  that  there  are  a  million  and  a  half  wheat  growers  in  the 
United  States  and  that  wheat  will  grow  on  many  farms  not  now  pro- 
ducing it,  and  that  it  is  but  four  months  from  seed  time  to  harvest. 
Whether  or  not  a  group  of  wheat  growers  can  sit  back  and  wait  for 
millers  to  come  to  their  terms  may  well  be  doubted,  unless,  indeed,  the 
terms  are  entirely  reasonable  as  viewed  by  the  buyers.  To  sit  on 
100,000,000  bushels  of  wheat  and  make  that  the  controlling  factor  in 
the  wheat  market  for  the  year  is  easily  done  in  imagination  at  a  farm- 
ers' meeting  but  the  seat  may  not  prove  to  be  so  secure  in  the  actual 
market.  Unless  a  tariff  wall  of  sufficient  height  be  erected  to  furnish 
very  real  protection,  our  Canadian  friends  will  part  with  some  of  their 
wheat  at  about  the  going  world  figure  and  any  premium  demanded  by 
the  farmer  company  over  the  world  market  price  will  hardly  be  col- 
lectable. 

To  eliminate  the  difficulties  of  instability  of  prices  it  would  seem  that 
a  farmers'  company  big  enough  to  be  able  to  employ  the  best  of  market- 
ing experts  with  information  pertaining  to  the  field  of  its  operations, 
able  and  ready  to  take  advantage  of  the  existing  market  facilities,  to 
sell  wheat,  for  example,  in  American  or  European  ports ;  to  deal  with 
millers  or  speculators  or  order  buyers,  as  our  big  grain  firms  now  deal ; 
to  be  able  to  store  grain  for  those  who  want  to  take  a  chance  on  future 
markets,  advancing  money  borrowed  on  the  strength  of  warehouse  re- 
ceipts to  the  grower  speculator;  commanding  the  situation  as  a  dealer 
in  wheat;  pooling  sales;  and  returning  to  the  grower  the  price  re- 
ceived minus  expenses — such  a  company  could  act  as  a  stabilizing  force 
and  incidentally  get  all  that  the  market,  a  competitive  market,  will 
afford  for  its  clients. 

It  should  be  remembered  that  the  supply  of  agricultural  produce 


236  B.  H.  Hibbard  [June 

must  of  necessity  be  projected  in  advance,  a  matter  of  months  or  years. 
It  cannot  be  put  up  and  down  from  week  to  week  by  employing  more 
men  and  capital,  as  is  the  case  with  coal.  Few  problems  present  greater 
difficulties.  Even  so,  a  widespread  network  of  cooperative  companies 
with  unified  intelligence  can  no  doubt,  when  necessity  compels  it,  feed 
produce,  cotton,  grain,  and  livestock  into  a  market  somewhat  in  pro- 
portion to  demand — a  demand  about  which  the  main  facts  are  known. 

This  is  what  is  being  done,  in  part,  in  the  city  milk  markets.  The 
producers  are  taking  care  of  the  surplus  and  pooling  the  sales.  Bj> 
this  means  surpluses  are  bound  to  be  reduced,  since  every  monthly 
statement  to  the  producers  is  testimony  on  the  wisdom  of  producing  for 
a  market  according  to  its  demands. 

It  may  be  playing  an  inferior  role  to  suggest  that  we  had  best  make 
haste  somewhat  slowly  in  the  matter  of  stabilization  of  prices,  but  it 
would  seem  the  part  of  wisdom  and  safety  to  use  the  machine  we  have, 
even  in  spite  of  some  defects,  rather  than  to  scrap  it  before  its  suc- 
cessor has  reached  the  blue-print  stage. 

Pooling  has  worked  admirably  in  the  sale  of  such  unlike  products  as 
wool  and  cheese;  and,  although  it  will  not  be  an  easy  matter  to  apply 
the  principle  to  cotton,  grain,  and  livestock,  who  shall  say  it  cannot  be 
done.  Certain  prophetic  utterances  concerning  aerial  navigation  fol- 
lowing the  experiments  of  Darius  Green  contributed  to  the  amuse- 
ments of  the  period,  but  did  not  deter  the  Wright  brothers.  It  would 
be  just  as  logical  to  complain  about  the  erratic  rising  and  falling  of 
a  gauge  in  a  tank  into  which  unknown  and  unanticipated  quantities  of 
liquid  were  being  promiscuously  poured,  blaming  the  gauge  for  not 
keeping  at  the  same  level,  as  to  complain  about  the  middlemen  on  the 
score  of  unsteady  prices.  We  keep  them  all  guessing.  It  is  time  for 
the  producers  to  begin  to  regulate  the  supply  flow  for  the  season  before 
complaining  further  about  instability  of  prices.  The  world  has  out- 
grown the  conditions  under  which  unscientific,  blind  competition  among 
producers  can  bring  prosperity  to  themselves,  or  to  the  larger  public. 
Unregulated  competition  with  its  psychological  tendencies  to  extreme 
action  and  reaction  requires  a  balance  wheel  of  regulation.  Supply  and 
demand  will  still  operate,  but  the}r  must  be  made  to  operate  according 
to  rule  instead  of  as  outlaws. 

B.  H.  Hibbard. 

University  of  Wisconsin. 


THE  COLLECTIVE  LABOR  CONTRACT 

The  practice  of  precision  in  the  use  of  terminology,  always  a  virtue, 
is  positively  a  necessity  in  the  discussion  of  so  controversial  a  subject 
as  the  labor  problem.  The  phrase  "collective  labor  contract"  desig- 
nates the  subject  of  this  paper  as  precisely,  within  the  limits  of  estab- 
lished usage,  as  our  language  permits.  Did  it  not  come  so  perilously 
near  being  a  barbarism,  the  longer  phrase  "collective  labor-products 
contract"  might  be  employed,  as  it  would  describe  the  subject  of  dis- 
course quite  accurately.  Were  this  paper  written  in  French  or  in  Ger- 
man, the  accurate  terms  would  be  contrat  collectif  aVouvrage  or  Grup- 
pen-Werkvertrag  respectively.  To  these  terms  would  correspond  the 
English  phrase  "collective  job  contract."  For  the  present  at  least  this 
would  probably  be  misunderstood ;  although  in  France  the  phrase  con- 
trat d'owvrage  and  in  Germany  the  word  W erkvertrag  are  well  estab- 
lished, both  in  common  speech  and  in  the  precise  language  of  the 
statutes. 

If  precise  terminology  is  one  of  the  great  needs  of  today  in  the  dis- 
cussion of  industrial  relations,  an  even  greater  need  exists  for  the 
proper  orientation  of  thought  and  practice  with  respect  to  the  problem. 
However  accelerated  its  progress  may  be,  industry  will  reach  its  ulti- 
mate status  by  next  steps  and  not  by  leaps  and  bounds.  On  the  other 
hand,  those  who  would  wisely  guide  its  next  steps  should  orient  them- 
selves by  what  is  ultimately  possible.  That  alone  is  ordered  progress 
toward  a  goal;  all  else  is  drifting.  In  the  taking  of  such  orientation, 
only  two  methods  are  logically  possible:  the  control  will  be  either  the 
outer  control  of  matter  of  fact;  or  it  will  be  the  inner  control  of 
thought.  Starting  from  the  present  situation  in  industrial  relations — 
to  those  most  immediately  concerned  in  it  admittedly  somewhat  of  a 
quandary — we  may,  pursuing  the  method  of  trial  and  error,  take  a 
step  in  this  direction  or  that  and  then  inquire  whether  it  has  so  altered 
the  situation  for  us  as  to  leave  it  more  satisfying.  Or  we  may  pro- 
ceed from  some  project  of  industrial  relations  that  squares  with  the 
logic  of  thought  or  is  kin  to  the  heart's  desire,  and  endeavor  to  find 
some  way  of  approach  to  it  from  actuality. 

The  latter  of  these  two  procedures  would  certainly  be  an  under- 
taking of  "reconstruction"  and  as  such  would  probably  be  fought  as 
radicalism  or  "sovietism,"  since  it  seems  to  be  taken  for  granted  that, 
whatever  some  European  countries  may  have  to  undergo  by  way  of 
reconstruction,  in  this  country  there  is  to  be  at  most  "readjustment." 
Even  a  "next  step,"  though  in  itself  both  reasonable  and  beneficial,  if 
it  should  be  felt  that,  with  possible  further  steps,  it  might  fall  upon  a 
road  leading  to  a  changed  order  of  society,  is  likely  to  be  halted.     The 


238  Theodore  M.  Ave-Lallemant  [June 

fate  which,  as  a  temporary  adversity  at  least,  has  overtaken  the  sys- 
tem of  joint  control  of  industry  in  the  Boston  and  New  York  clothing 
trade  markets  may  serve  as  an  example  of  both  forms  of  resistance. 

Choosing  the  other  course  for  its  orientation,  the  discussion  of  in- 
dustrial relations  has  been  rapidly  descending  during  the  later  months 
of  1920,  to  the  plane  of  immediate  demands.  Almost  the  only  one 
who,  so  far,  has  undertaken  to  survey  the  situation  with  an  eye  of 
greater  vision  has  been  Mr.  Herbert  Hoover,  notably  in  his  presi- 
dential address  before  the  American  Engineering  Council  of  the  Fed- 
erated Engineering  Societies,  in  Washington,  November  19,  1920.  Ac- 
cepting the  development  of  great  voluntary  associations  to  represent 
economic  groups  as  an  accomplished  fact  of  industrial  and  social  evo- 
lution, he  insists  that  these  economic  groups  can  be  brought  to  live  in 
peace,  without  compulsory  arbitration  or  other  forms  of  coercion  and 
repression.  Going  still  further,  he  declares  that  "these  organizations, 
if  our  society  is  to  go  forward  instead  of  backward,  should  be  consid- 
ered as  the  fortunate  development  of  influential  groups  through  which 
skill  and  mutual  consideration  can  be  assembled  for  cooperation  in  the 
solution  of  these  questions"  which,  in  the  prevalence  of  waste  and  in  the 
necessity  for  a  positive  increase  of  production,  are  now  so  urgently 
pressing.  By  this  reasoning,  he  is  brought  to  a  conception  of  collec- 
tive bargaining  that  comprehends  a  great  deal  more  than  the  determi- 
nation of  wages,  hours  of  labor,  and  working  conditions,  a  conception 
that  is  in  essential  accord  with  the  thought  of  the  best  minds  every- 
where in  the  western  industrial  world. 

To  realize  the  potentialities  of  this  conception,  Mr.  Hoover  proposes, 
as  a  working  program,  the  adoption  of  the  recommendations  of  the 
Second  Industrial  Conference  called  by  the  President.  This  program 
is  predicated  on  the  basis  of  the  assumption  that  collective  bargaining 
had  been  "agreed  upon  in  principle  by  all  sections  of  the  community." 
Unfortunately,  this  asumption  is  hardly  justified  by  the  facts;  for  the 
employers'  group  at  the  First  Industrial  Conference  not  only  did  not 
accept  collective  bargaining  in  principle  but  expressly  denied  that  there 
exists  a  "right  to  bargain  collectively."  Members  of  the  group  indi- 
vidually and  the  group  as  a  whole  did,  to  be  sure,  assert  that  the  em- 
ployers denied  neither  "the  right  to  organize"  nor  the  "right  to  bar- 
gain collectively";  but  they  added  the  significant  reservation,  "as  we 
understand  collective  bargaining."  The  sense  of  that  understanding 
of  collective  bargaining  was  interpreted  by  Mr.  Frederick  P.  Fish,  as 
leader  of  the  group,  when  he  drew  a  distinction  between  the  two  rights 
in  question — a  distinction  which  throughout  the  discussion  of  the  sub- 
ject of  collective  bargaining  dominated  the  position  taken  by  the  em- 
ployers' group.     The  distinction  drawn  was  substantially  this :     The 


1921]  The  Collective  Labor  Contract  239 

right  to  associate,  the  right  to  organize,  is  a  statutory  right ;  the  right 
to  bargain  collectively  is  not  a  statutory  right,  merely  a  contractual 
right,  established  only  by  agreement  with  the  employers.1 

The  consequences  of  this  position  are  easy  enough  to  see.  Being 
only  a  contractual  right,  dependent  upon  the  meeting  of  wills,  the 
wage-earners'  "right  to  bargain  collectively"  is  limited  by  the  em- 
ployer's right  to  freedom  of  contract,  is  subject  to  his  willingness  to 
deal  with  wage-earners  collectively.  The  likelihood  of  the  universal 
application  of  collective  bargaining  is,  therefore,  slight.  In  fact,  the 
employers'  group  at  the  First  Industrial  Conference  insisted  (and  em- 
ployers that  support  the  open  shop  movement  of  today,  described  as 
a  movement  for  "the  American  plan  of  employment  relations,"  simi- 
larly insist)  that  collective  bargaining  is  not  necessary  in  most  in- 
dustrial establishments.  As  they  argued,  approximately  98  per  cent 
of  the  manufacturing  establishments  of  this  country  employ  less  than 
250  men,  and  95  per  cent  less  than  100  men.  In  such  plants,  they 
said,  "there  would  be  the  opportunity  for  personal  contact,  contact 
between  man  and  man,  which  Avould  lead  the  workman  and  employer 
to  understand  each  other's  needs  and  the  way  in  which  things  should 
be  organized  and  related  in  order  to  get  the  best  results."2  Mr.  L.  F. 
Loree,  another  member  of  the  employers'  group,  even  went  so  far  as 
to  say  that  "personal  contact  was  easily  maintained  in  an  establishment 
under  1000."3  The  group  agreed,  however,  that  under  modern  condi- 
tions and  with  establishments  beyond  a  certain  size,  such  personal  con- 
tact is  impossible  and  declared  itself  ready  to  recommend  the  shop 
committee  plan  of  employees'  representation  to  the  employers  of  the 
country  as  "a  most  promising  plan  for  improving  employment  rela- 
tions."4 On  the  other  hand,  it  would  not  permit  the  introduction  of 
any  phraseology  into  any  resolution  which,  if  adopted  by  the  con- 
ference, might  possibly  be  understood  as  being  a  recommendation,  by 
the  conference,  of  collective  bargaining  with  trade  and  labor  unions. 
Of  course,  it  was  conceded  that  "the  employer  has  a  perfect  right  to 
agree  with  his  workmen  that  they  shall  be  represented  by  anyone,  and 
under  those  conditions  to  meet  any  representatives  that  they  may 
choose."5  That  concession,  however,  is  no  more  than  an  obvious  corol- 
lary to  the  major  contention,  namely,  that  the  right  of  collective  bar- 
gaining is  a  contractual  and  not  a  statutory  right. 

In  stating  the  grounds  upon  which  it  would  recommend  the  shop 

1  See  page  161  of  the  Proceedings  of  the  Conference. 

2  Mr.  Fish,  ibid.,  p.  157. 
zlbid.,  p.  196. 

*Ibid.,  p.  245. 

s  Mr.    Fish,   ibid,,    p.    185. 


240  Theodore  M.  Ave-Lattemant  [June 

committee  type  of  collective  bargaining  to  employers,  the  employers' 
group  also  gave  an  interpretation  of  its  understanding  of  the  function 
and  the  purpose  of  collective  bargaining,  where,  "by  agreement  with 
the  employer,"  it  might  be  instituted.  In  the  words  of  its  long  state- 
ment :e 

The  entire  spirit  of  the  shop-council  plan  which  the  employers'  group  be- 
lieves should  be  fostered  and  promoted  resides  in  the  principle  that  the 
employers  and  employees  of  an  individual  establishment  should  meet  to 
settle  their  employment  relations  as  nearly  as  possible  on  the  basis  that 
formerly  prevailed  when  establishments  were  small  and  the  employees  and 
employer  knew  each  other  so  intimately  that  they  could  negotiate  and  dis- 
cuss employment  relations  face  to  face. 

Mr.  John  D.  Rockefeller,  Jr.,  also  held  that  the  best  way  to  the 
improvement  of  industrial  relations  lay  in  "the  resumption  of  per- 
sonal relationship  between  employer  and  employee  or  the  nearest  pos- 
sible approach  thereto,"  and  contended  that  "some  form  of  representa- 
tion in  industry  is  essential  in  order  to  make  personal  relations  possible 
under  modern  industrial  conditions."7  Mr.  Frederick  P.  Fish,  in  his 
address  on  "Industrial  unrest  and  the  remedy"  before  the  1919  annual 
meeting  of  the  American  Society  of  Mechanical  Engineers,  again  em- 
phasized the  same  understanding  of  the  function  and  the  purpose  of 
employees'  representation.  The  Second  Industrial  Conference,  in  the 
first  paragraph  of  the  fourth  section  of  its  report,  expounded  a  simi- 
lar conception,  declaring:  "While  the  relations  between  employers 
and  employees  are  primarily  a  human  problem,  the  relationship  in  its 
legal  aspects  is  one  of  contract."  Finally,  the  same  philosophy  was 
written  into  the  national  platform  of  the  Republican  party: 

We  recognize  the  justice  of  collective  bargaining  as  a  means  of  promoting 
good  will,  establishing  closer  and  more  harmonious  relations  between  em- 
ployer and  employees  and  realizing  the  true  end  of  industrial  justice. 

Perhaps  it  may  serve  a  useful  purpose  to  remind  these  business  men 
moralists  of  a  characteristic  and  forceful  passage  that  occurs  in  Wil- 
liam Graham  Sumner's  essay  on  Strikes  and  Industrial  Organization: 

Turning  to  the  moral  relation  of  the  subject,  we  are  constantly  exhorted 
to  do  something  to  improve  relations  of  employer  and  employee.  I  submit 
that  the  relation  in  life  which  has  the  least  bad  feeling  or  personal  bitter- 
ness in  it  is  the  pure  business  relation,  the  relation  of  contract,  because  it 
is  a  relation  of  bargain  and  consent  and  equivalence.  Where  is  there  so 
much  dissension  and  bitterness  as  in  family  matters,  where  people  try  to 
act  by  sentiment  and  affection  ?  The  way  to  improve  the  relation  of  em- 
ployer and  employee  is  not  to  get  sentiment  into  it,  but  to  get  sentiment  out 

of  it. 

fl  Proceedings,  p.  243. 
7  Jbid.,  p.  68. 


1921]  The  Collective  Labor  Contract  241 

Indeed,  so  long  as  those  who  occupy  commanding  positions  in  our 
industrial  societ}r  persist  in  their  sentimentalism,  reading  sentiment 
into  a  relationship  which,  in  the  very  next  breath  they  declare  to  be 
a  contractual  relationship,  "a  relation  of  bargain  and  consent  and 
equivalence,"  there  is  little  prospect  of  any  improvement  in  the  rela- 
tions between  emplo}rers  and  employed.  An  obstacle  of  no  less  mag- 
nitude is  the  seeming  unreadiness  of  our  industrial  leaders  to  see 
straight  the  facts  of  industrial  evolution.  Regretfully,  they  look  back 
to  the  period  when  all  shops  were  small  and  tell  us  that  if  only  the 
managers  of  present-day  large  shops  would  conduct  their  establish- 
ments as  the  owners  of  small  shops  conducted  theirs,  and  still  do  con- 
duct them,  all  the  ills  and  troubles  attendant  upon  the  growth  of  the 
former  would  be  remedied.     If  only  grown  men  could  be  boys  again ! 

Concerning  the  relation  between  employers  and  employed  in  its  legal 
aspects,  and  concerning  the  relation  of  these  aspects  to  the  dominant 
facts  of  industrial  evolution,  these  same  men  offer  us  an  interpretation 
that  is  both  unhistorical  and  doctrinaire.  For  not  only  do  they  read 
the  contractual  relation  between  employers  and  employed  in  the  terms 
of  their  eighteenth  century  politico-legal  ideology,  they  also  subsume 
the  facts  of  industrial  history  under  the  concepts  of  that  doctrine. 

What  we  need,  therefore,  is  to  do  what  Sumner  urged — to  exorcise 
sentimentalism.  That  for  one  thing.  For  the  other  thing,  we  need 
a  realistic  acceptance  of  the  facts  of  industrial  history  as  they  actu- 
ally happened  instead  of  a  pragmatic  construction  of  the  record  to 
suit  the  exigencies  of  contemporary  battles  of  conflicting  interests. 

Where  will  such  realism  lead  us?  As  to  a  point  of  departure,  back 
to  Adam  Smith  and  to  the  manner  of  his  approach  to  the  problems  of 
industrial  society  in  the  famous  first  chapter  of  the  Wealth  of  Nations. 
So  far  at  least,  one  must  agree  with  Professor  Walton  H.  Hamilton's 
call8  "back  to  Adam  Smith."  On  the  other  hand,  we  cannot  accept 
today  the  conclusions  drawn  by  some  of  Smith's  followers  and  we  must 
see  clearly  that  certain  inadequacies  in  Smith's  introductory  chapter 
on  the  division  of  labor  have,  in  fact,  become  the  foundation  of  sub- 
sequent misreading  of  industrial  history  and  industrial  organization.9 

s  "Since  Smith,  economics  has  wandered  far  from  the  division  of  labor  as  a  point 
of  departure.  This  is  but  saying  that  it  has  at  least  partially  lost  sight  of  its  es- 
sential problem  of  explaining  the  organization  of  industrial  society,  or  of  describ- 
ing 'the  economic  order.'  Yet,  because  of  machine  technique,  the  division  of  labor 
has  become  more  important  than  it  was  in  Smith's  time."  "The  Place  of  Value 
Theory  in  Economics,"  Journ.  Pol.  Econ.,  vol.  26  (Mar.,  1918),  p.  231,  n.  1. 

»  The  most  obvious  phenomenon  in  the  entire  structure  of  the  economic  acquisitive 
community  is  the  division  of  labor.  The  fact  of  the  division  of  labor  is  more  ob- 
vious than  the  fact  of  the  acquisitive  community  itself,  and  therefore  was  observed 


242  Theodore  M.  Ave-Lallemant  [June 

In  following  the  call  "back  to  Adam  Smith,"  we  must,  therefore, 
take  full  account  of  the  criticism  of  Smith's  account  of  the  division  of 
labor  which  was  initiated  by  Wakefield,  who,  in  his  edition  of  the  Wealth 
of  Nations,  "reduced  the  division  of  labor  or  separation  of  employ- 
ments to  its  proper  place  as  only  a  part  of  the  cooperation  which  in- 
creases the  productiveness  of  labor,"10  when  he  wrote:11 

All  writers  on  political  economy  from  Adam  Smith  downwards,  while 
treating  of  the  "causes  of  improvements  in  the  productive  powers  of  labor," 
have  overlooked  a  principle  of  first-rate  importance.  This  principle  is,  that 
all  improvements  in  the  productive  powers  of  labor,  including  division  of 
employments,  depend  upon  cooperation. 

How  far  must  we  go  in  the  consideration  given  to  cooperation  as  an 
economic  principle?  Shall  we  go  only  as  far  as  Biicher  does  in  his 
lecture  on  Arbeit  svereimgung  und  Arbeitgcmeinschaft?12 

Without  doubt  the  real  reason  for  the  formation  of  the  concept  of  the 
union  of  labor  and  for  its  long  retention  in  the  literature  of  the  science  is 
the  vague  feeling  that  there  must  be  an  economic  principle  forming  the 
counterpart  of  division  of  labor.  Cooperation  it  cannot  be,  for  that  is 
identical  with  certain  forms  of  division  of  labor,  its  "other  side."  What 
then  is  this  principle? 

Biicher  answers  his  own  question  in  a  way  that  leaves  practically 
the  whole  field  of  modern  industrial  society  to  be  governed  by  the  prin- 
ciple of  the  division  of  labor,  though  he  himself,  in  a  lecture  written 
before  the  one  quoted  above,  but  retained  unaltered  in  the  latest  edition 
of  his  series  of  lectures,  had  criticized  other  economists13  for  explain- 
ing our  industrial  society  almost  wholly  by  that  single  principle.  Or 
shall  we  follow  the  analysis  Wakefield  has  given  us,  perhaps  carrying 
it  somewhat  beyond  the  point  where  he  has  left  it? 

before  the  latter;  it  was  not  until  later  that  it  was  recognized  that  the  division  of 
labor  which  had  been  noted  was  only  the  expression  of  a  great  cooperative  com- 
munity of  all  those  who  share  in  the  labor.  The  division  of  labor  fell  in  particu- 
larly well  with  the  trend  of  thought  of  the  classical  masters,  for  it  adapted  itself 
to  their  theory  of  labor  and  to  their  individualistic  conceptions,  both  of  which  put 
the  individual  working  person  into  the  foreground  of  the  theoretical  inquiry.  Adam 
Smith,  from  his  point  of  view,  could  not  open  his  work  on  the  Wealth  of  Nations 
more  fittingly  than  with  reflections  upon  the  extraordinary  effects  of  the  division  of 
labor,  of  which  he  says  that  it,  more  than  any  other  cause,  had  contributed  to  im- 
provements in  the  productive  powers  of  labor.  Friedrich  von  Wieser.  In  his 
Theorie  der  Gesellschaftlichcn  Wirtschaft,  Erstes  Buch.  A  III,  p.  342  f.  Bd.  I, 
Handbitch  der  Sozialokonomik  (1914). 

io  Edwin  Cannan,  Theories  of  Production  and  Distribution,  p.  50. 

n  In  his  note  to  the  first  chapter  of  the  Wealth  of  Nations,  p.  26. 

12  In  his  Entstehung  der  Volkswirtschaft:   Vortrage  und  Aufsatze,  Erste  Samm- 
lung,  12  u.  13.  Aufl.,  p.  269  (1919).    English  translation  by  S.  Morley  Wickett,  p.  250. 

13  Ibid.,  p.  324. 


1921]  The  Collective  Labor  Contract  243 

There  is,  I  believe,  a  fundamental  difference  between  Bucher's  analy- 
sis and  Wakefield's  analysis.14  This  difference  does  not  result,  chiefly, 
from  the  greater  comprehensiveness  of  Bucher's  treatment;  it  con- 
sists, rather,  in  a  difference  of  point  of  view.  Bucher's  emphasis  is 
largely  upon  the  distinction  of  stages  in  the  evolution  of  economic 
life,  a  scientific  problem  in  which  Professor  Bucher  is  much  interested. 
Adam  Smith  was  similarly  interested,  and  one  of  the  reasons  for  his 
interest  was  the  practical  intent  of  bringing  about  a  change  in  the  eco- 
nomic life  of  his  own  time  and  country.  But  the  dominant  point  of 
view  in  the  famous  first  chapter  of  the  Wealth  of  Nations  is  the  point 
of  view  of  what  we  should  today  describe  as  "job  analysis."  That  too 
is  the  point  of  view  that  dominates  the  first  part  of  Wakefield's  note, 
and  there  is  in  his  correction  of  Smith's  job  analysis  much  that  is  valid 
not  only  as  against  Smith  but  even  more  so  as  against  Bucher. 

Wakefield,  first  of  all,  makes  the  point  that  the  term  "division  of 
labor"  has  commonly  been  used — as  it  was  used  by  Adam  Smith — "as 
a  most  improper  term."  Throughout  the  text  of  his  edition  of  the 
Wealth  of  Nations  he,  therefore,  inserted  the  word  "employments,"  in 
brackets,  after  the  word  "labor,"  contending  that  what  is  divided  is 
not  "the  muscular  exertion"  expended  in  "the  operation,  work,  or  busi- 
ness which  is  performed  by  labor"  but  this  "operation,  work,  or  busi- 
ness" itself.  Adam  Smith,  he  declares,  had  confounded  division  of 
labor  with  division  of  employments.  Recalling  that  Smith  had  said 
that  "the  woolen  coat,  for  example  ...  is  the  produce  of  the  joint 
labor  of  a  great  multitude  of  workmen,"  he  remarks :  "here,  then,  labor 
is  said  to  be  united,  as  in  fact  it  is  whenever  employments  are  divided" ; 
and  he  adds :  "Division  of  employments,  with  all  its  great  results,  de- 
pends altogether  on  combination  of  labor,  or  cooperation."  Bucher, 
on  the  other  hand,  says  that  die  Kooperation  is  "identical"  with  "cer- 
tain forms  of  the  division  of  labor" ;  for  instance,  as  he  adds  in  a 
footnote,  with  what  he  calls  "division  of  production"  (Produktions- 
teilung)  and  "subdivision  of  labor"  (Arbeitszerlegung),  but  not  with 
division  of  employments. 

Further  analyzing  this  principle  upon  which  so  much  depends, 
Wakefield  finds  that: 

Cooperation  appears  to  be  of  two  kinds:  first,  such  cooperation  as  takes 
place  when  several  persons  help  each  other  in  the  same  employment;  second, 
such  cooperation  as  takes  place  when  several  persons  help  each  other  in 
different  employments.  These  may  be  termed  simple  cooperation,  and 
complex  cooperation.     It  will  be  seen  presently  that  until  men  help  each 

14  Bucher  does  not  mention  Wakefield's  note.  He  refers,  however,  to  a  distinc- 
tion made  by  French  writers  (he  instances  Cauwes)  between  "simple  cooperation" 
and  "complex  cooperation,"  a  distinction  that  appears  in  Wakefield's  note. 


244  Theodore  M.  Ave-Lallemant  [June 

other  in  simple  operation,  they  cannot  help  each  other  in  operations  which 
consist  of  several  parts. 

As  examples,  of  simple  cooperation,  Wakefield  then  names  a  number 
of  operations,  not  all  equally  simple,  of  which  we  may  mention  the 
simplest,  such  as  several  persons  helping  each  other  in  lifting  heavy 
weights,  felling  trees,  pulling  ropes  on  board  ship,  or  rowing  large 
boats.  In  Biicher's  classification,  this  is  represented  by  the  subdivision 
Arbeit shaufung  (still  further  subdivided)  under  Arbeitsgemeinschaft, 
which  takes  place  when,  in  the  quantitative  disproportion  between  the 
work  to  be  done  and  the  labor  power  of  the  individual,  the  task  is 
greater  than  a  single  man  can  accomplish.  This  simple  cooperation, 
Wakefield  says,  "is  the  first  step  in  social  betterment";  and  he  con- 
tinues : 

What  is  true  of  two  bodies  of  men  applies  to  any  number  of  bodies,  how- 
ever great  the  difference  in  their  occupations ;  and  thus  we  perceive  that  the 
division  of  employments,  the  power  of  exchanging,  and  the  possession  of 
capital  are  all  dependent  on  the  combination  of  labor  in  simple  operations. 

Such  combination  of  labor  in  simple  operations  having  been  learned, 
men  become  able  to  help  each  other  in  "operations  which  consist  of 
several  parts."  The  division  of  employments  depends  upon  coopera- 
tion. Its  first  stage  is  the  division  of  production;  the  second  stage  is 
what  Biicher  calls  "subdivision  of  labor"  (Arbeitszerlegung),  what 
Wakefield  would  describe  as  the  division  of  an  operation  into  several 
parts.  When  one  person  undertakes  to  do  one  part  and  another  per- 
forms the  other,  we  have  "complex  cooperation,"  "however  great  the 
difference  of  their  occupations."  We  arrive  at  what  Biicher  describes 
as  "specialization  or  division  of  trades." 

Before  proceeding  to  the  practical  conclusions  which  may  be  drawn 
from  this  principle  of  cooperation,  it  seems  right  to  Wakefield  to  note 
an  important  distinction  between  simple  and  complex  cooperation.  Of 
the  former,  one  is  always  conscious  at  the  time  of  practicing  it;  it  is  ob- 
vious to  the  most  ignorant  and  vulgar  eye.  Of  the  latter,  but  a  very  few  of 
the  first  minds  who  practice  it  are  in  any  degree  conscious.  The  cause  of 
this  distinction  is  easily  seen.  When  several  men  are  employed  in  lifting 
the  same  weight,  or  pulling  the  same  rope,  at  the  same  time,  and  in  the  same 
place,  there  can  be  no  sort  of  doubt  that  they  cooperate  with  each  other; 
the  fact  is  impressed  on  the  mind  by  the  mere  sense  of  sight;  but  when 
several  men,  or  bodies  of  men,  are  employed  at  different  times  and  places, 
and  in  different  pursuits,  their  cooperation  with  each  other,  though  it  may 
be  quite  as  certain,  is  not  so  readily  perceived  as  in  the  other  case;  in  order 
to  perceive  it,  a  complex  operation  of  the  mind  is  required.  And  here, 
perhaps,  we  may  discover  the  occasion  of  Adam  Smith's  error  in  confounding 
division  of  labor  witli  division  of  employments,  which  are  really  incompatible 
with  one  another. 

Beyond     this  point  Wakefield  has  not  carried  his  job  analysis,  for 


1921]  The  Collective  Labor  Contract  245 

he  then  proceeded  to  the  "practical  conclusions"  that  he  wished  to 
draw;  and  these  practical  conclusions  lean  upon  that  larger  economic 
organization  with  which  he,  no  less  than  Adam  Smith  (and,  after  all, 
Biicher  too),  was  primarily  concerned.  Smith  was  not  primarily  in- 
terested in  job  analysis,  though  the  first  chapter  of  his  work  is  a  fine 
example  of  it;  he  was  interested  primarily  in  political  economy,  in  the 
wealth  of  nations. 

And  for  Biicher,  the  division  of  employments  that  he  sees  beginning 
in  the  Middle  Ages,  and  the  displacement  of  labor  (Arbeitsverschie- 
bimg)  by  mechanical  inventions  that  began  in  the  seventeenth  century, 
predominate  in  modern  industrial  society.  What  Wakefield  described 
as  a  form  of  "simple  cooperation"  he  describes  as  Arbeitsgemeinschaft, 
of  which  he  distinguishes  three  main  classes:  (1)  social  labor  (Gescll- 
schaftsarbeit;  gesellige  Arbeit)  ;  (2)  labor  aggregation  (Arbeitshau- 
fung)  ;  (3)  joint  labor  ( Arbeit sverbindung) ,  i.e.,  work  in  squads,  gangs, 
sets.  All  these,  he  finds,  "play  their  chief  role  during  primitive  stages 
of  development  and  in  the  lower  strata  of  a  developed  economic  com- 
munity." So  there  is  little  room,  in  Biicher's  system,  for  die  Koopera- 
tion;  and  it  is  not  surprising  that  he  reduces  it  to  identity  with  "cer- 
tain forms  of  the  division  of  labor,"  and  these,  so  far  as  he  specifies, 
the  more  primitive  forms  of  the  latter.  The  explanation  is,  of  course, 
easy  to  see:  the  ensemble  effect  in  the  operations  of  productive  labor 
which,  in  the  early  stages  of  industrial  development,  is  produced  by  di- 
rect cooperation  of  the  laborers,  in  the  later  stages  of  development  is 
a  superinduced  effect,  brought  about  through  the  entrepreneur.  That 
is  to  say,  in  their  preoccupation  with  the  functions  of  the  entrepre- 
neur, many  economists  seem  to  see  only  the  most  complex  phases  of 
what  Wakefield  described  as  "complex  cooperation."  Consequently  job 
analysis — toward  which  Adam  Smith  had  made  such  a  splendid  be- 
ginning, incidentally  perhaps — has  suffered  neglect.  Of  late,  thanks 
to  the  attention  which  scientific  management  is  gradually  beginning  to 
receive  from  some  economists,  there  promises  to  be  a  return  to  Adam 
Smith's  point  of  departure.  The  contribution  by  Gottl.  von  Ottilien- 
feld  to  the  Handbuch  der  Sozialokonomik15  is  so  far,  perhaps,  the  most 
striking  example  of  that  movement  in  a  work  on  economics.  On  the 
ether  hand,  when  Professor  Henry  Clay,  whose  book,  after  a  methodo- 
logical introduction,  opens  with  a  chapter  on  division  of  labor,  says 
that  "the  latest  economy  in  business  organization,  the  so-called  scien- 
tific management,  is  a  conscious  application  of"  division  of  labor,  he  is 
only  half  right.  The  scientific  managers,  to  be  sure,  speak  of  "func- 
tional  foremanship"  and  Frederick  W.  Taylor  distinguished  between 

is  Wirtsrhaft  und  Technik,  Erstes  Buch,  B  and  v. 


246  Theodore  M.  Ave-Lallemant  [June 

"planning"  and  "execution."  On  the  other  hand,  under  the  system  of 
planning,  scheduling,  and  routing  production  hi  a  modern  shop  under 
scientific  management,  every  step  in  the  process  of  production  must  be 
closely  adjusted  to  every  other.  There  must  be  coordination,  and  that, 
coordination  is  not  purely  an  ordering  ab  extra,  in  which  the  worker 
is  wholly  passive.  We  have  it  on  the  word  of  Taylor  himself,  that 
the  effect  and  aim  of  scientific  management,  however  minute  the  sub- 
division of  operations  it  may  entail,  is  not  to  eliminate  all  brain  work 
on  the  part  of  the  workmen.  Quite  the  contrary.  The  coordination 
called  for  is,  in  other  words,  cooperation,  which  is  wholly  a  mental 
function. 

The  time  will  come — and  there  are  indications  that  we  are  rapidly 
approaching  it — when  production  engineers  will  see  quite  clearly  that 
the  division  of  labor  or  separation  of  employments  is  only  "a  part  of 
the  cooperation  which  increases  the  productiveness  of  labor."  When 
they  do,  we  shall  have  a  survey  of  employments  for  the  purpose  of 
noting  the  various  ways  in  which  cooperation  of  different  degrees  of 
simplicity  or  complexity  is  exemplified  therein.  Then,  knowing  the 
natural  organization  of  work,  we  shall  provide,  as  the  economic  cor- 
relate of  its  technological  organization,  the  proper  form  of  remuner- 
ation for  productive  labor. 

If,  then,  cooperation  is  the  more  basic  fact  in  industrial  organiza- 
tion, on  its  technological  side,  the  division  of  labor  and  the  separation 
of  employments  depending  upon  it,  one  would  think  that  consequently 
the  economic  organization  of  industry — which  includes  the  remunera- 
tion of  productive  labor — would  likewise  be  primarily  determined  by  the 
fact  of  cooperation  and  only  secondarily  by  division  of  labor  and  sepa- 
ration of  employments.  Historically  this  has  not  been  the  case  except 
in  a  limited  way.  And  today,  when  every  one  that  will  can  see  that 
since  1880  or  thereabouts  we  have  been  passing  through  another  in- 
dustrial revolution  which  is  bringing  about  ever  greater  integration  in 
our  industrial  organization,  we  are  asked  to  consent  to  a  still  greater 
separation  of  the  method  of  remunerating  productive  workers  from  the 
rightfully  controlling  facts  of  the  natural  organization  of  their  work. 

In  the  remuneration  of  productive  laborers  that  "help  each  other  in 
the  same  employment,"  involving  only  "simple  cooperation,  we  have 
not  only  made  little  progress  toward  rational  methods,  but  on  the 
contrary  we  have  positively  retrogressed.  It  is  in  this  field  that 
Thomas  Brassey,  in  his  day,  set  an  example  which  today  seems  almost 
forgotten.      His  biographers,  Sir  Arthur  Helps16  and  H.  H.  Page,17 

i«Sir  Arthur  Helps,  Thomas  Brassey  (1873). 

i?  H.  H.  Page,  "Thomas  Brassey;  the  Organizer  of  Labour,"  in  his  Golden  Lives 
(2d  edition  1873). 


1921]  The  Collective  Labor  Contract  247 

both  relate  that  the  great  English  contractor  early  saw  the  necessity 
of  developing,  for  his  great  operations,  the  system  of  sub-letting  parts 
of  the  work  to  sub-contractors.  On  the  other  hand,  "in  every  way  he 
would  promote  the  'butty-gang'  system — by  means  of  which  a  certain 
piece  of  work  was  let  out  to  some  ten  or  fifteen  men,  among  whom  the 
proceeds  were  divided  equally,  with  something  extra  for  the  head  man 
in  charge."18  This  butty-gang  system  as  it  was  operated  under 
Brassey,  was,  of  course,  not  the  same  as  the  system  that  is  known  by 
that  name  and  still  practiced  in  some  British  coal  mines ;  for  that  is 
simply  a  system  of  sub-contracting,  like  the  contract  system  that 
seems  to  be  favored  by   some  coal  mine  operators   in   this   country.19 

What  Brassey  favored  was  rather  more  like  the  collective  con- 
tract system  used  by  the  Italian  bracchianti  and  other  laborers  organ- 
ized in  Societa  di  Lavoro  under  the  permissive  statute  of  1889.  The 
same  system  of  organizing  work  and  organizing  the  distribution  of 
the  social  income  from  productive  labor  has  been  employed  in  occupa- 
tions where  the  cooperation  is  of  the  nature  of  "complex  cooperation." 
Wherever,  in  fact,  men  have  worked  in  gangs,  squads,  or  sets,  there  has 
been  a  tendency  for  them  to  seek  their  remuneration  in  groups.  That 
tendency  has  been  greatest,  naturally,  where  it  is  difficult,  if  not  im- 
possible, to  determine  accurately  the  specific  contribution  of  each  in- 
dividual worker  to  the  product.  Where  the  pay  of  such  gangs  or 
squads  takes  the  form  of  payment  by  results,  the  work  may  be  de- 
scribed as  "job  piece-work";  the  pay  becomes  a  group  piece-rate.  The 
contract  of  employment  of  each  member  of  the  gang  may  be  based  upon 
individual  bargaining;  or  its  terms  may  be  stipulated  in  a  trade  agree- 
ment and  fixed  in  the  individual  contract  accordingly ;  or  each  gang 
or  squad  may  hire  out  as  a  contracting  fellowship.  Howsoever  the 
management  may  apportion  the  total  pay  of  the  gang,  its  members 
can  and  do  exercise  considerable  free  control  over  the  actual  apportion- 
ment and  have  been  known  to  pool  their  wages  and  to  make  a  redistribu- 
tion according  to  an  agreed  schedule  of  their  own.  Even  in  this  coun- 
try, among  riveting  gangs  in  the  shipyards,  the  riveter  and  the  holdcr- 
on,  though  not  paid  equally  on  the  company's  books,  may  divide  their 
joint  quota  of  the  total  weekly  earnings  of  the  gang  on  a  fifty-fifty 
basis.  This  goes  to  show  that,  however  "individual"  the  contract  may 
be  for  the  employer,  the  workmen,  knowing  the  cooperative  nature  of 
their  work,  are  likely  to  look  upon  themselves  as  a  contracting  fellow- 
ship. 

Where  the  operation  consists  of  several  parts  which  are  so  far  sep- 

is  H.  H.  Page,  op.  cit.,  p.  143. 

i»  See  Coal  Age,  several  letters  reporting  active  efforts,  during  the  latter  half 
of  last  year. 


248  Theodore  M.  Ave-Lallemant  [June 

arable  that  a  separation  of  employment  takes  place,  the  situation  is 
somewhat  different.  Whether  the  workers  are  paid  by  time  or  by  re- 
sult, their  employers  emphasize  that  each  of  them  is  hired  under  an 
individual  contract  of  employment.  The  workers  are  less  conscious  of 
being  engaged  in  a  joint  labor  than  would  be  the  case  if  their  cooper- 
ation were  more  direct  and  "simple."  Consequently,  where  they  take 
any  common  action,  this  action  is  likely  to  stop  at  "collective  bar- 
gaining," whereas  gangs  and  squads  of  men  have  always  tended  to  act 
in  greater  unison,  that  is  as  contract  fellowships.  Now  the  difference 
between  a  "collective  bargain"  and  a  "collective  labor  contract,"  in 
law  as  well  as  in  practice,  is  that  the  former  merely  stipulates  the 
terms  of  individual  contracts — as  many  contracts  as  there  are  workers 
in  any  way  affected  by  the  bargain ;  while  the  collective  labor  contract 
is  itself  a  contract,  namely  one  contract  for  all  the  workers  cooper- 
ating. The  collective  labor  contract,  in  other  words,  is  the  economic 
correlate  of  the  organization  of  work,  technically,  as  cooperative.  With 
the  work  of  the  world's  industries  becoming  more  and  more  cooperative, 
scientific  management  consciously  bringing  about  more  and  more  co- 
ordination, is  it  not  surprising  that  there  are  relatively  so  few  collective 
labor  contracts? 

The  answer  is  easy  enough.  What  has  determined  the  manner  of 
remunerating  workers  for  their  labor  has  not  been  the  organization  of 
their  work  but — Jiorribile  dictu! — what  Rodbertus  called  "social  cate- 
gories" and  Karl  Marx  "historical  categories." 

However,  the  facts  are  forcing  some  recognition.  Even  under  a 
system  of  individual  contracts  of  employment  a  "group  bonus"  has 
been  found  an  advantage,20  and  such  bonus  is  nothing  less  than  a  dis- 
tinct remuneration  for  that  portion  of  his  specific  productivity  im- 
putable to  each  man  on  the  score  of  his  "cooperation."  Many  other 
"efficiency  bonuses,"  while  not  explicitly  denominated  "group  bonus" 
systems,  in  reality  depend  upon  "cooperation" ;  and  cooperation,  by 
definition,  is  operation  in  a  group. 

Further  progress  in  this  direction  will  depend  upon  overcoming  that 

20  Mr.  J.  D.  Town,  writing  of  an  experience  in  the  foundry  of  the  Electric  Steel 
Company,  Chicago,  says  of  a  crane  crew,  which  had  been  offered  a  group  bonus: 
"They  understood  that  if  any  one  man  in  the  crew  was  cause  of  a  penalty  being 
given,  not  only  this  man,  but  the  other  five,  must  stand  the  loss  of  bonus,  and  on 
this  account  the  crew  who  previously  would  not  cooperate,  met  privately  and  agreed 
that  any  man  whom  the  other  five  thought  was  not  giving  his  best  service,  would 
be  told  about  it  and  if  no  improvement  was  shown,  the  management  would  be 
asked  to  dismiss  him.  This  agreement  was  bound  by  general  hand-shaking  and 
from  that  time  on  the  crew  could  never  be  accused  of  lacking  cooperation."  "Com- 
mon Lahor  Responds  to  Incentives:  Satisfactory  Results  of  Introducing  a  Bonus 
System  in  a  Foundry,"  Industrial  Management,  vol.  60   (Dec,  1920),  p.  424. 


1921]  The  Collective  Labor  Contract  249 

"dislike  of  exactness"  which,  Herbert  Spencer  said,  long  stood  as  an 
obstacle  to  the  full  passage  from  a  system  of  status  to  a  system  of  con- 
tract. Spencer,  who  has  been  much  chided  for  what  he  has  said  of 
"free  labor  and  contract,"  did  not,  I  think,  make  enough  of  this  point. 
For  him  the  distinctive  mark  of  unfree  labor  is  that  its  status  is  de- 
fined upon  a  basis  of  "coerced  labor  and  assigned  sustenance."  He  saw 
clearly  enough  that  "  a  wage-earner,  while  he  voluntarily  agrees  to 
give  so  much  work  for  so  much  pay,  does  not,  during  performance  of 
his  work,  act  in  a  purely  voluntary  way" ;  and  he  pointed  out  that 
absence  of  purely  voluntary  action  is  due  to  the  consciousness,  on  the 
part  of  the  worker,  of  being  under  the  supervision  of  an  overlooker. 
In  advocating,  for  this  and  other  reasons,  a  collective  labor  contract, 
Herbert  Spencer  emphasized  that  under  such  arrangement  the  work- 
er's activity  "becomes  entirely  voluntary."  Now,  important  as  it  is 
that  the  worker's  activity  be  voluntary,  it  is  vastly  more  important  to 
see  that  it  is  not  and  cannot  be  "purely  voluntary"  because  of  the 
quantitative  indeterminatcness  of  the  task  which  the  worker  undertakes 
when  he  agrees,  however  voluntarily  or  involuntarily,  "to  give  so  much 
work  for  so  much  pay."  Under  the  free-labor-and-wage  system,  the 
time-wage  a  worker  receives  is  a  determinate  quantity ;  the  task  which 
he  must  perform  is  an  indeterminate  quantity,  becoming  determinate 
only  as  the  work  proceeds.  It  is  this  indeterminateness  of  his  task 
which  is  the  cause  of  the  "servant's"  status  as  servant  in  the  master- 
and-servant  relationship.  In  law  what  makes  him  a  servant  is  the  fact 
that,  in  the  method  of  doing  the  work  to  which  he  is  assigned,  he  is 
subject  to  the  order  of  his  employer;  a  worker  who  is  not  so  subject  to 
the  employer's  order  and  responsible  only  for  the  result  of  his  effort, 
subject  to  inspection  and  acceptance  by  the  purchaser  of  the  product 
of  that  effort,  is  not  a  servant  but  an  independent  contractor.  Many 
classes  of  workers  have,  by  opinion  of  the  courts,  been  declared  to  be 
such  independent  contractors.  But  the  court  does  not  go  behind  the 
fact  of  the  worker's  independence  of  the  employer's  order  to  the  eco- 
nomic fact  that,  as  such  independent  contractor,  he  undertakes  a  quan- 
titatively determinate  task  for  a  definite  sum  of  money.  It  is  this 
economic  fact  that  makes  the  employer  willing  to  vacate  his  control 
over  the  worker's  method  of  accomplishing  his  task.  He  does  not  de- 
sire supervision ;  inspection  of  the  product  delivered  is  all  he  requires 
and  all  he  retains.  Inspection,  however,  is  sufficient  only  because  the 
agreement  between  him  and  the  worker  covers  a  determinate  "quid" 
for  a  determinate  "quod."  To  put  it  briefly,  I  would  amend  Herbert 
Spencer's  reasoning,  and,  instead  of  saying  that  any  "dislike  of  exact- 
ness" prevents  the  ready  acceptance  of  contractual  relations,  would 
say  that  the  knowledge — or  the  fear — of  the  non-existence  of  exactness 


250  Theodore  M.  Ave-Lallemant  [June 

is  the  real  obstacle.  The  ordinary  labor  contract,  in  fact,  is  nothing 
but  a  pseudo-contract — whatever  the  courts  may  hold — where  it  is 
based  upon  the  worker's  "time"  or  effort,  on  the  one  hand,  and  a  fixed 
time-wage  on  the  other,  the  reason  being  the  inexactness  inseparable 
from  the  worker's  "time"  or  effort  as  a  consideration.  Moreover,  all 
the  time-study  men  together  may  work  from  now  till  doomsday  and 
yet  they  will  never  achieve  exactness  sufficient  to  make  a  worker's 
"time"  a  proper  basis  for  a  contractual  relationship. 

It  has  been  pointed  out  that  wherever  a  piece  rate  is  introduced  the 
workers  show  an  inclination  to  demand  that  they  be  paid  as  a  group  if 
they  clearly  recognize  the  jointness  of  their  labor.  What  is  the  ex- 
planation? The  answer  may  be  put  as  follows:  contract  depends  or 
should  depend  upon  exactness  in  the  specification  of  the  terms  of  ex- 
change. But  there  is  a  limit  to  exactness ;  for  there  are  intangible 
things  in  this  world,  and  one  of  these  is  "cooperation."  By  contract, 
we  may  bind  ourselves  to  give  an  exact  quantity  of  one  thing  in  ex- 
change for  another;  out  of  this  exactness  of  equivalent  exchange  re- 
sults the  obligation  under  a  contract.  But  a  contract  can  never  cover 
intangible  values ;  with  such  values  we  part  only  upon  the  basis,  not 
of  contract,  but  of  loyalty.  And  right  here  is  where  the  ways  of  social 
theory  part.  At  the  end  of  the  road  of  one  course  lies  contractual 
relationship.  At  the  end  of  the  road  of  the  other  course  lies — not 
"status"  but  cooperation.  The  one  results  in  an  obligation;  that  ob- 
ligation is  terminated  only  by  performance.  The  other  results  in  an 
agreement  of  a  different  sort,  an  agreement  that  outlasts  any  given 
performance.  The  performances  done  under  it  are  "common  acts  in 
collaboration"21  (Gesamtakte,  a  German  word  Leon  Duguit  borrows 
to  define  his  own  meaning).  The  values  with  which  the  group  that 
acts  in  collaboration  is  concerned  are  that  fringe  of  intangible,  but  real, 
values  that  surrounds  the  definable  body  of  every  act.  The  definable 
body  of  an  act  to  be  performed  can  become  the  subject  of  contract; 
the  rendering  of  intangible  values  remains  subject  to  loyalty22  and  the 

21  L£on  Duquit,  in  his  Le  Droit  Social,  le  Droit  Individuel  et  I'Etat,  second  edi- 
tion, Paris,  1911,  translated  into  English  by  Frida  and  Harold  Laski  under  the 
title  Law  in  the  Modem  State,  1920.  See  there  page  113.  Also  L£on  Duguit,  "Col- 
lective Acts  as  Distinguished  from  Contracts,"  Yale  Law  Journal,  vol.  27  (April, 
1918),  753-68.  Also,  for  historical  treatment,  Dr.  W.  Silberschmidt,  "Gewerk- 
schaft,  Gesellschaft,  Juristische  Person"  in  Archiv  fur  Rechts-  und  Wirtschafts- 
philosophie,  vol.  XI,  no.  4,  and  vol.  XII,  nos.  1  and  2  (July,  1918-Jan.,  1919). 

22  On  the  historical  relation  between  a  relationship  based  on  loyalty  and  the 
labor  contract  in  Germanic  law  see  Otto  von  Gierke's  contribution  to  the  Fest- 
schrift fiir  Heinrich  Brunner  (1914)  on  "Die  Wurzeln  des  Dienstvcrtrags."  Also 
Roscoc  Pound,  "A  Feudal  Principle  in  Modern  Law,"  International  Journal  of 
Ethics,  vol.  25  (Oct.,  1914),  p.  1-28. 


1921]  The  Collective  Labor  Contract  251 

whole  record  of  human  history  is  proof  that  free  groups — be  they 
small  groups  of  only  two  persons,  as  in  the  monogamous  family,  or 
groups  of  many  members,  such  as  a  collective  contract  fellowship  would 
be — are  bound  to  be — set  up  to  become  the  beneficiaries  as  well  as  the 
guardians  of  that  loyalty  and  of  the  intangible  values  rendered. 

It  will  easily  be  seen,  now,  where  mere  "collective  bargaining"  differs 
from  the  action  of  the  members  within  the  collaborating  fellowship. 
Collective  bargaining  seeks  no  more  than  to  stipulate  the  terms  of  in- 
dividual contracts  of  employment  with  respect  to  the  exchange  of 
what  shall  be  regarded  as  fair  equivalents.  Fair  equivalence  under  a 
time  wage  may  be  achieved,  but  to  say  that  it  can  be  determined  by 
contract  is  an  absurdity.  This  is  the  real  explanation  of  the  failure  of 
collective  bargaining  to  find  universal  application.  Pass  from  time- 
wage  to  payment  by  results  and  apply  collective  bargaining  with  re- 
spect to  the  terms  of  the  bargain,  and  you  have  set  your  foot  upon  the 
road  that  leads  to  collective  contract.  The  intangible  value  of  co- 
operation remains,  and  it  is  not  subject  to  contract  and  will  be  ren- 
dered only  to  a  fellowship.  We  may  contract  with  an  alien ;  we  give 
our  loyalty  only  to  our  own,  our  fellows.  But — and  that  is  the  point 
for  employers  to  see — the  contracting  group,  which  can  command  the 
loyalty  of  its  fellows,  can  afford  to  give  better  value  when  it  makes  a 
contract  than  the  equivalent  of  what  would  be  the  sum  of  all  the  values 
given  by  its  members,  severally,  were  they  to  make  individual  contracts 
in  severalty.  It  can  afford  to  give  better  value  because  it  can  put  into 
play,  can  release  because  it  can  hold,  the  loyalties  of  men.  It  can  af- 
ford to  give  better  value  because  it  can  tap  the  "vital  reserves"  of 
men  so  well  described  by  William  James  in  his  address  on  The  Energies 
of  Men. 

Theodore  M.  Ave-Lallemant. 

Nexv  York  City. 


THE  INDUSTRIAL  SITUATION  IN  GREAT  BRITAIN :   FROM 
THE  ARMISTICE  TO  THE  BEGINNING  OF  1921 

The  world  war  demanded  of  Great  Britain  every  ounce  of  economic 
and  military  force  she  possessed.  Since  its  close  in  November,  1918, 
the  government  has  had  to  grapple  with  an  uninterrupted  succession  of 
political  difficulties;  one  of  which,  at  least,  Ireland,  has  been  of  the 
most  serious  nature.  Her  post-war  industrial  problem  has  not  been 
the  simple  one  of  converting  productive  equipment  from  production  for 
war  consumption  to  production  for  peace.  A  great  army  had  to  be  re- 
absorbed into  industrial  life.  Without  breathing  time,  many  of  her 
important  industries  have  been  forced  to  recognize  and  attempt  to 
satisfy  the  clearly  formulated  demand  of  the  organized  workers  for  a 
new  industrial  status  and  new  powers  of  control.  There  have  been  at 
least  three  serious  strikes,  one  on  the  railways,  one  in  the  coal  mines, 
one  in  the  steel  industry. 

The  major  industries,  always  export  industries,  have  been  producing 
for  sale  in  a  world  a  large  part  of  which  is  economically  disrupted  and 
struggling.  Certain  sources  of  raw  material  have  been  practically 
closed,  as  in  the  case  of  Russia.  Some  of  the  most  profitable  pre-war 
markets,  badly  as  they  needed  the  products  of  British  industry,  have 
not  been  able  to  purchase  these  products,  as  in  the  case  of  Germany. 
The  wide  price  fluctuation — in  part,  the  result  of  the  breakdown  of 
European  monetary  systems — has  made  trade  unusually  hazardous ; 
the  wide  fluctuation  of  the  foreign  exchanges  is  another  cause  of  un- 
certainty and  risk.  These  are  but  some  of  the  difficulties  British  in- 
dustry and  the  British  exchequer  have  been  compelled  to  reckon  with 
since  the  end  of  the  war.    The  present  situation  is  compounded  of  them. 

Production  since  the  armistice. 

The  best  approach  to  a  general  study  of  the  British  industrial  po- 
sition since  the  armistice  is  through  a  study  of  the  figures  of  production 
as  compared  with  pre-war  production. 

We  may  first  turn  to  agriculture  to  see  whether  the  war  with  its 
emphasis  on  national  self-sufficiency  has  led  to  any  permanent  change 
in  the  agricultural  position. 

It  is  plain  that  there  has  been  no  radical  change.  Under  the  guar- 
anteed price  there  was  some  extension  of  wheat  acreage.  This  has 
fallen  since  1918  and  will,  it  is  likely,  be  no  greater  than  the  pre- 
war acreage  by  1922.  British  economic  and  political  policy  will  con- 
tinue to  be  built  around  the  facts  of  food  importation. 


1921] 


Tlie  Industrial  Situation  in  Great  Britam 

British   Production   and   Imports   of   Breadstuffs 
(thousands  of  hundredweights) 


253 


Year 

Production 

Imports 

Total 

1913.... 

.!         22,000 

122,000 

144,000 

1914.... 

25,726 

113,980 

139,706 

27,769 

89,150 

113,919 

1916 

31,626 

109,967 

141,593 

1917.... 

19,948 

105,775 

125,723 

1918.... 

20,947 

80,910 

101,857 

1919.... 

27,021 

88,948 

115,699 

1920.... 

.j         21,000 

116,000 

137,000 

Coal. 

It  is  a  commonplace  of  economic  history  that  the  coal  supply  of 
Great  Britain  has  been  the  cornerstone  of  British  industry.  The  coal 
mines  not  only  supply  the  power  for  her  industries  and  fuel  for  her 
navy,  but  coal  is  also  an  exceedingly  valuable  export  cargo.  There- 
fore figures  of  coal  production  are  of  the  utmost  interest. 

Production  and  Exports  of  Coal 
(millions  of  tons) 


Year 

Production 

Foreign 

bunkers                 Exports               Retained 

(average) 
1909-1913.. 

1911 

1915 

1916 

1917 

1918 

1919 

1920 

287 
266 
253 
256 
248 
228 
230 
2291 

21 
19 
14 
13 
10 
9 
12 
14 

73 
59 
43 

38 
35 
32 
35 

25 

193 

188 
196 
205 
203 
187 
182 
190 

i  Calculation  of  loss  entailed  by  coal  strike  14  million  tons. 

Production  during  the  first  ten  weeks  of  this  year  was  not  higher 
than  the  1920  level.  It  has  fallen  off  greatly  since  before  the  war. 
This  is  more  strikingly  shown  by  the  figures  of  individual  output. 

Average  Output  per   Man 
Year  Tons 

1894-1898    286 

1909-1913    257 

1918   208 

1919   193 

1920    185 

The  causes  of  this  decrease  in  output  are  controversial.  As  com- 
pared with  much  earlier  figures,  it  must  be  attributed  in  no  small 
measure  to  the  exhaustion  of  the  more  easily  worked  veins  and  of  those 
nearer  the  surface.     Depreciation  of  coal  mine  equipment,  especially 


254. 


Herbert  Feis 


[June 


since  1914,  and  the  run-down  condition  of  the  coal  transport  equip- 
ment are  important  factors  also.  Some  part  of  it  may  be  attributed 
to  the  reduction  of  the  working  day  in  1912  and  again  in  1919.  Dur- 
ing the  last  few  years  the  temper  of  the  miners  has,  no  doubt,  played 
a  most  important  part.  The  great  majority  of  them  desire  some  form 
of  nationalization.  They  desire  to  reduce  present  mine  profits  as 
much  as  possible.  On  the  other  hand,  the  miners  claim  that  the  oper- 
ators are  deliberately  curtailing  production  to  maintain  prices.  Until 
some  agreement  is  reached  between  the  coal  miners  and  the  government 
as  to  policy,  which  will  satisfy  the  miners  that  increased  production 
will  not  mean  increased  profits,  the  outlook  for  production  greater 
than  at  present  will  remain  bad.  Among  future  possibilities  that  of  an- 
other strike  is  far  from  inconceivable.  It  will  be  noticed  that  the  re- 
duction in  total  production  has  been  accompanied  by  a  more  than  pro- 
portionate reduction  of  exports ;  though  the  value  of  coal  exports  was 
higher  in  1920  than  in  1913.  The  decrease  in  coal  exports  to  the 
largest  importing  countries  is  as  follows : 

Decrease  in  Coal  Exports 
(thousands  of  tons) 


Country 

1913                       1920 

5,998 
4,563 
8,952 

92 

1,372 

13 

12,776                    11,691 
9,647                       2.905 

Italy    

6,892 

556 

Steel  and  iron. 

As  in  all  belligerent  countries,  the  steel  and  iron  producing  plants 
were  extended  and  improved  during  the  war.  The  post-war  produc- 
tion of  Great  Britain,  as  compared  with  1913,  has  been  as  follows: 


Post- War  Production  of  Steel 
(thousands 

AND    I 

of  ton 

ron  in  Great  Britain 

Year 

Pig  iron 

Steel    ingots    and 
castings 

1913 
1918 
1919. 
1920 

10,260 
9,086 
7,398 
8,000 

7,664 
9,530 
7,894 
9,055 

It  may  be  remarked  that  1913  was  the  record  pre-war  year.  The 
course  of  events  since  the  armistice  is  revealed  more  clearly  by  the 
quarterly  averages  of  production. 

It  will  be  seen  that  1920  steel  production  was  greater  than  the  pre- 


1921] 


The  Lndustrial  Situation  in  Great  Britain 


255 


Quarterly  Averages  of  Production  of  Iron  and  Steel 
(thousands  of  tons) 


Quarter 

Pig   iron 

Steel 

1919 

First    

659 

737 

Second    .... 

658 

685 

Third    

581 

603 

Fourth   .... 

568 

607 

First    

670 

798 

Second    

712 

828 

Third    

743 

79*4 

Fourth    

537 

598 

war  production.  The  June,  1920,  production  of  pig  iron,  752  tons, 
and  the  September,  1920,  production  of  steel,  884  tons,  are  records 
for  the  industry.  Nevertheless,  the  immediate  outlook  for  the  industry 
is  one  which  discourages  easy  optimism.  The  falling  off  in  October 
and  November  was  partly  the  result  of  the  general  depression  and 
partly  a  consequence  of  the  coal  strike.  The  month  of  February,  1921, 
showed  a  very  grave  falling  off,  to  the  lowest  point  since  the  war  ended. 
It  should  be  remembered,  however,  that  before  the  war,  profits  in  the 
steel  and  iron  industry  frequently  averaged  70  per  cent.  This  is  hardly 
the  mark  of  a  declining  industry ;  and  the  physical  capacity  of  the  in- 
dustry is  now  greater  than  it  was  in  1913. 


Steel  and  iron-using  industries. 

No  statistics  of  production  are  available  for  most  branches  of  the 
engineering  industry ;  in  general  the  volume  of  exports  for  1920  was 
well  behind  that  of  1913.  The  question  of  time  payment  has  been  a 
much  debated  one  throughout  the  year.  The  figures  of  exports  in 
thousands  of  tons  are  as  follows : 

Year  Steel  and  Iron  Machinery  Locomotives 

Manufactures  thereof 
1913  5,000  747  58 

1920  3,250  426  39 

Far  more  complete  figures  are  available  for  the  shipbuilding  industry. 
The  British  construction  of  new  ships  was  greater  in  1920  than  be- 
fore the  war,  though  British  supremacy  in  the  world's  shipbuilding  was 
not  as  decided.  In  1913  the  United  Kingdom  turned  out  58  per  cent 
of  the  world's  merchant  shipping;  in  1919,  only  22.7  per  cent;  in  1920, 
35  percent.  '       f  ~*fW% 

The  rise  in  construction  came  to  a  halt  in  the  last  quarter  of  1920; 
likewise  the  amount  of  new  tonnage  commenced  fell.  It  is  estimated, 
that  at  the  end  of  1920  there  was  8  million  more  tons  of  merchant 


256 


Herbert  Feis 


[June 


Total  Merchant  Shipping  Launched  in  the  United  Kingdom 
Year  Thousand  tons 

1913  1,900 

1914  1,700 

1918  1,325 

1919  1,625 

1920  2,005 

Record  of  Tonnage  under  Construction 
(thousands  of  tons) 


Tonnage    under 

New    tonnage 

Date 

construction 

commenced 

2,000 

1,722 

1916 

1,540 

"                  1918 

1,805 

1919 

2,524 

2,994 

604 

3,394 

708 

June,               "    

3,578 

587 

3,731 

593 

3,708 

506 

shipping  in  the  world  than  in  1913.  That  fact  makes  confident  predic- 
tion for  the  near  future  impossible.  Due  to  the  present  depression,  it 
is  likely  that  the  construction  for  1921  will  be  considerably  below  that 
of  1920. 


Textile  industries. 

The  textile  industries,  along  with  the  boot  and  shoe  and  clothing  in- 
dustries, have  felt  the  depression  most  severely.  The  Master's  Federa- 
tion in  the  cotton  industry,  by  ballot,  have  been  restricting  production 
to  three  days  a  week  in  the  Egyptian  section  and  to  four  days  a  week  in 
the  American  section.  The  industry  was,  of  course,  thoroughly  busy 
during  the  war.  The  fall  in  the  price  of  raw  cotton  and  the  break  in 
Far  Eastern  exchange  had  a  decided  effect  upon  its  exports ;  towards 
the  end  of  1920,  50  per  cent  of  the  looms  were  idle,  and  unemployment 
was  rampant.  Nevertheless,  the  year  1920  as  a  whole  showed  exports 
in  considerable  excess  of  1918  and  1919. 

Exports  of  Cotton  Piece  Goods  and  Cotton  Yarn 
(000  omitted  throughout) 


Cotton  piece  goods 

Cotton  yarns 

Year 

Yards 

Value 

Pounds 

Value 

1913 

1919. 
1920 

7,075,252 
3,523,660 
4,436,557   (sq.  yds.) 

£97,775 
179,073 
315,733 

210,099 
162,616 
147,542 

£15,006 
33,908 

47,825 

The  exports  of  the  cotton  industry  in  1920  formed  26  per  cent  of  the 


1921] 


The  Industrial  Situation  m  Great  Britain 


257 


total  of  British  exports  in  value.  The  volume  of  exports  to  the  United 
States  was  the  greatest  in  the  history  of  the  industry;  the  exports  to 
the  Far  East  were  much  behind  pre-war  shipments. 

In  the  woolen  industry  the  end  of  the  year  was  most  disappointing, 
being  marked  by  considerable  losses.  Raw  wool  prices  fell  to  less  than 
half  those  of  March.  This  fall  in  price,  however,  was  expected  to  lead 
to  a  growth  of  orders  in  1921. 

Exports  of  Woolen  Cloth  and  Yarns 


Year 


Woolen   tissues 
(million  yards) 


Worsted  tissues 
(million  yards) 


Woolen,    worsted,    al- 
paca, and  mohair 
yarns   (million 
pounds) 


1913 

105.8 

62.4 

67.1 

1919 

131.1 

33.7 

26.0 

1920 

187.2  (sq.  yds.) 

77.3  (sq.  yds.) 

28.8 

The  value  of  the  1920  exports  of  woolen  cloth  was  five  times  their 
value  in  1913.  The  Continent,  particularly  Germany,  was  an  impor- 
tant customer  for  woolen  and  worsted  yarns  before  the  war.  That  is 
the  chief  explanation  of  the  decrease  in  the  volume  exported. 


Miscellaneous  industries. 

The  volume  of  export  for  certain  important  miscellaneous  industries, 
for  which  figures  are  available,  is  as  follows: 

Volume  of  Exports 


Year 


Pottery   industry 
(pounds) 


TJoots   and   shoes 

(dozen  pairs) i 


Cement    industry 
(cwts.) 


1913. 
1919. 
1920. 


3,744,870 
3,740,754 


1,584,000 

650,000 

1,141,000 


747,736 
385,526 
620,411 


1  First  eleven  months  of  the  year. 

On  the  basis  of  the  figures  of  production  so  far  considered — and  their 
trend  is  the  same  as  that  revealed  by  the  figures  of  foreign  trade — few 
absolutely  safe  generalizations  can  be  made.  Industrial  activity  seems 
to  have  been  greatest  and  recovery  most  direct  in  these  industries  upon 
which  war  placed  a  great  pressure — the  steel  and  iron,  shipbuilding, 
and  textile  industries.  They  too,  however,  have  been  affected  by  the 
depression  which  set  in  at  the  end  of  1920  and  still  holds  at  the  pres- 
ent. The  discouragement  of  that  period  can  be  attributed,  in  no  small 
measure,  to  the  continued  industrial  uncertainty  on  the  Continent  and 
to  the  fall  in  Far  Eastern  exchange.  But  the  depression  in  England 
was,  above  all,  the  mark  of  the  beginning  of  an  attempt  at  deflation 
and    readjustment    that    occurred    almost    simultaneously    in    Great 


258  Herbert  Feis  [June 

Britain,  Japan,  the  United  States,  and  other  countries.  The  reaction 
was  sharp  but  possibly  salutary  to  British  industry.  The  fall  in  the 
price  of  raw  materials  and  foodstuffs  should  lead  to  a  fall  in  the  ex- 
penses of  production  and  to  renewed  purchasing  if  political  events 
turn  out  favorably.  The  official  obstacles  to  trade  with  Russia  have 
now  been  removed.  On  the  other  hand,  British  industry  must  look  for- 
ward to  a  more  strenuous  competition  in  world  markets  on  the  part  of 
France  and  Germany  than  at  present. 

The  physical  capacity  of  British  industry  to  produce  as  much  in 
1921  as  in  1913  few  doubt;  though  except  in  the  early  months  of  1920 
the  machinery  of  production  has  never  been  set  at  full  speed  ahead. 
The  volume  of  production  in  most  industries  was  below  that  of  1913. 
It  has  been  argued  in  some  quarters  that  this  is  an  indication  of  a  per- 
manent lowering  of  the  level  of  production.  The  situation  in  the  coal 
industry  has  been  reviewed.  The  general  manager  of  the  Caledonian 
Railroad  has  stated  that,  though  the  volume  of  traffic  carried  in  1920 
was  smaller  than  in  1913  (367  million  tons  in  1913,  330  million  tons 
in  1920),  30  per  cent  more  railway  employees  were  needed.  Lord  Weir 
has  been  loud  in  his  charges  of  restriction  of  output  in  the  engineering 
industries. 

It  is  impossible  to  disentangle  clearly  the  causes  of  the  falling  off  in 
the  level  of  production — even  where  such  a  falling  off  is  evident.  Lack 
of  markets  has  certainly  been  the  chief  factor  in  the  decrease  in  pro- 
duction during  the  last  six  months.  Much  is  heard  of  the  run-down  con- 
dition of  the  railroads.  Much  short  time  was  worked  as  a  matter  of 
deliberate  policy  during  the  depression. 

Hours  of  labor  have  been  shortened  in  many  industries  since  1913, 
with  results  impossible  to  trace.  The  growth  of  rings  and  agreements 
to  regulate  price  and  production  has  gone  on  steadily.  The  attitude  of 
the  workers  in  the  matter  of  production  is,  finally,  of  consequence. 
Questions  of  employment  and  industrial  control,  even  political  ques- 
tions, color  that.  Large  numbers  of  the  workers  are  alienated  from 
the  system  under  which  they  work.  The  cooperation  of  the  trade  unions 
will  be  essential  to  industrial  recovery ;  the  realm  of  practical  compro- 
mise is  being  constantly  explored.  At  a  later  point  in  this  article  the 
labor  situation  will  be  further  considered. 

Exports,  imports,  and  the  trade  balance. 

From  the  facts  of  production  we  may  now  turn  to  those  of  foreign 
trade.  First,  it  is  interesting  to  observe  the  trend  of  capital  invest- 
ment as  compared  with  the  pre-war  trend.  The  figures  of  new  capital 
issues  published  by  the  London  Joint  City  and  Midland  Bank  are  as 
follows : 


1921] 


Tlie  Industrial  Situation  m  Great  Britain 


259 


New  Capital  Issues 
(thousands  of  pounds) 


Per   cent 

Date 

Home 

Abroad 

Total 

abroad 

1913    

44,600 

40,267 

187,700 

330,600 

197,500 
25,063 
49,900 
53,200 

242,100 

65,330 

237,600 

383,800 

82 

1918    

39 

1919    

21 

1920   Total 

15 

"      Quarter: 

First    . . 

127,000 

20,000 

147,000 

4 

Second  . 

88,000 

6,000 

94,000 

7 

Third  .. 

63,200 

10,000 

73,200 

14 

Fourth. . 

52,400 

17,200 

69,600 

25 

The  figures  indicate  a  marked  turning  away  from  foreign  investment, 
which,  however,  is  probably  only  temporary.  When  allowance  is  made 
for  the  inflation  of  values  it  will  be  seen  that  there  was  in  1920  con- 
siderably less  investment  than  in  1913.  These  figures  are  not  an  alto- 
gether reliable  guide,  however,  as  the  use  of  stock  dividends  has  been 
increasing.  Finally,  the  falling  off  of  investment  toward  the  end  of 
1920  is  to  be  noticed. 

The  shipping  entrances  and  clearances  into  the  ports  of  the  United 
Kingdom  are  a  good  index  of  the  volume  of  foreign  trade. 

Shipping  Entrances  and  Clearances  into  the  Ports  of  the  United  Kingdom 

(thousands  of  tons) 


Quarter 

Entered  with    cargo 

Cleared  with    cargo 

1913                       1920 

1913 

1920 

10,877 
12,256 
13,296 
12,634 

7,955 

8,902 

10,199 

9,461 

15,752 
17,143 
17,487 
17,436 

9,517 

8,689 
9,321 
9,062 

49,063 

36,517 

67,818 

36,589 

The  traffic  for  1913  was  greater  than  that  of  1920.  In  that  year, 
the  excess  of  outgoing  tonnage  was  marked.  In  1913,  entrances  rep- 
resented only  72  per  cent  of  clearances;  in  1920,  they  almost  balanced. 
This  change  was  due  largely  to  reduction  of  coal  exports. 

Only  the  most  important  figures  of  the  balance  of  merchandise  ex- 
ports and  imports  can  be  given.  The  following  figures  give  the  course 
of  recent  events : 

Merchandise   Balance 
(millions  of  pounds) 


Year 

Imports 

Reexports 

Net  imports 

Exports 
(British   goods) 

Excess 
imports 

1913.... 
1918.... 
1919.... 
1920.... 

769 
1316 
1632 
1936 

110 

31 

165 

222 

659 
1285 
1467 
1714 

525 

501 

798 

1336 

134 

784 
669 
378 

260 


Herbert  Feis 


[June 


The  steady  increase  in  the  volume  of  exports  of  British  goods  is  to 
be  noted ;  also  the  steady  reduction  in  the  excess  of  imports.  The 
present  position  shows  a  marked  improvement  over  1918,  accomplished 
under  most  difficult  circumstances.  Some  allowance  must  be  made,  it 
is  true,  for  changes  of  value  since  1918.  The  present  situation  is 
more  clearly  revealed  by  the  following  tables  which  express  the  foreign 
trade  of  1920  in  terms  of  the  pre-war  values  of  1913.  For  better 
understanding,  commodities  are  divided  into  three  classes:  (1)  food, 
drink,  and  tobacco;  (2)  raw  materials  and  articles  mainly  unmanu- 
factured; (3)  articles  mainly  manufactured. 

Foreign  Trade  of  1920  in  Terms  of  1913  Values 
{'millions  of  pounds) 


Exports 

United 

Commodities 

Imports 

retained 

Kingdom 

production 

1913 

1920 

1913 

1920 

I.  Food,  drink,  tobacco,  etc.. 

279 

241 

34 

19 

II.  Raw     materials,     etc,     of 

206 

195 

66 

32 

which: 

A    Coal    

61 
12 

53 

8 

51 

17 

1 

III.  Articles   wholly  or   mainly 

manufactured,   of   which: 

172 

144 

414 

316 

A.  Iron,   steel,    and   manu- 

16 

7 

55 

40 

B.  Non-ferrous  metals  and 

manufactures    thereof. . 

211 

18 

121 

15 

C.  Hardware,   cutlery,    etc. 

5 

3 

7 

5 

6 

6 

34 

23 

E.  Cotton  yarn  and  manu- 

7 

1 

126 

87 

F.  Woolen      and      worsted 

yarns  and  manufactures 

9 

4 

36 

34 

5 

22 

26 

23 

657 

580 

514 

367 

These  figures  show  that,  calculated  on  the  basis  of  1913  values,  the 
imports  retained  were  12  per  cent  less  in  1920  than  in  1913  and  the 
exports  of  United  Kingdom  products  were  about  36  per  cent  less. 
During  the  first  two  months  of  1921,  moreover,  a  very  substantial  fall- 
ing off  in  the  overseas  trade,  as  compared  with  1920  took  place,  due 
to  the  continuance  and  development  of  the  trade  depression.  The  re- 
covery of  the  1913  position  is  as  yet  not  implied  in  the  course  of  events. 
The  difference  in  coal  exports  is  an  important  element  in  the  situation. 

There  has  been  a  tendency  since  the  armistice  for  foreign  trade  to 
swing  back  to  pre-war  channels — a  greatly  obstructed  tendency,  it  is 
true.  The  near  markets,  with  the  exception  of  Russia,  Germany  and 
her  allies,  have  been  receiving  a  much  larger  share  of  British  exports 


1921] 


The  Industrial  Situation  vn  Great  Britain 


261 


than  in  1913.     The  proportion  has  been  falling,  however.     The  follow- 
ing figures  of  percentages  of  exports  give  the  drift. 

Percentages  of  Exports  to  Different  Markets 


k-_.  a 

Third 

Fourth 

First 

Second 

Markets 

Year    ending 

quarter 

quarter 

quarter 

quarter 

1913 

1919 

1919 

1920 

1920 

1.  Central  and 

West    Europe: 

a.  Neutrals    .... 

9.7 

20.5 

18.1 

16.2 

13.5 

8.6 

3.0 

2.5 

1.8 

2.0 

c.  Allied,  exclud- 

ing Russia. . . . 

11.1 

28.3 

23.5 

22.8 

17.4 

2.  European 

Fringe,     South 

and    Southeast 

5.7 

8.3 

11.9 

9.9 

9.4 

3.  India  and  Ceylon 

1*4.9 

8.6 

10.7 

12.4 

14.5 

9.7 

7.1 

8.3 

7.7 

10.7 

5.  Australasia    ... 

8.7 

3.8 

3.8 

4.5 

6.0 

7.0 

4.5 

5.0 

6.4 

6.9 

7.  United    States.. 

5.6 

4.9 

5.1 

7.1 

6.2 

8.  South    America. 

11.3 

6.6 

6.5 

7.5 

8.4 

One  outstanding  feature  of  the  situation  is  the  heavy  buying  from 
and  light  selling  to  the  United  States.  The  resumption  of  trade  with 
Germany  has  been  tardy.     Russian  trade  has  been  at  an  end. 

It  is  possible  to  calculate  with  considerable  accuracy  the  trade  bal- 
ance for  the  United  Kingdom  in  1920.  The  excess  of  merchandise 
imports  was  378  million  pounds.  Taking  the  official  calculations  for 
the  other  items,  as  given  in  the  Board  of  Trade  Journal  in  January, 
1921,  the  balance  is  as  follows: 

Million  pounds 

Coin    and    bullion    excess    exports    43 

Net  income  from  investments 120 

Shipping  earnings 340 

Banking,  insurance,  and  other  sources 40 


Excess  merchandise  imports 


543 

378 


General   balance    165 

It  must  be  remembered  that  Great  Britain  paid  no  interest  on  her 
American  debt,  nor  received  any  on  her  external  loans.  This  is  the 
first  time  since  1913  that  a  favorable  balance  has  been  established. 


The  exchanges. 

Having  these  data  before  us  there  is  no  need  of  going  into  detail  in 
regard  to  the  foreign  exchanges.  The  dollar-pound  exchange  rates 
stand  by  themselves;  they  reflect  not  only  the  English  situation,  but 
also  the  adverse  balance  of  the  whole  continent.  The  discount  on  the 
pound  rose  to  its  highest  point  (33  per  cent)  in  November,  1920,  but 


262 


Herbert  Feis 


[June 


has  sunk  to  21  per  cent  in  February,  1921.  The  neutral  exchanges 
have  moved  irregularly,  somewhat  in  favor  of  Great  Britain.  The 
currencies  of  the  European,  allied,  and  enemy  countries  have  steadily 
declined  in  terms  of  the  pound.  The  following  figures  give  the  situ- 
ation : 

Foreign  Currencies  in  Terms  of  the  Pound 


Countries 


Par 


Nov.   11, 
1918 


I.  Neutral: 
Amsterdam    . . . .  | 

Madrid    

Berne   

Christiania 

Stockholm    

Copenhagen    .... 
Buenos    Ayres... 

II.  A  1  1  i  e  d    and 
enemy : 

France     

Italy    

Belgium    

Athens    

Germany    

Vienna    

III.  Far    Eastern: 

Madras    

Yokohoma    .... 


12  Fl. 

25  p. 

2.5  fr. 

18  Kr. 

18  Kr. 

18  Kr. 

47  d. 


!25  fr. 

\m  i. 

25  fr. 
!25  ch. 
!20  M. 

24  Kr. 

2s 

2s  y2d 


10 

22  c. 

22  c. 

16 

16 

16 

58 


22  c. 
22  c. 
22  c. 
22  c. 
43  Pf. 
02 


11.46 
25.03 
22.03 
25.65 
17.90 
25.35 


Dec.  31, 
1919 


10.13 
19.68 
21.12 
19.80 
18.60 
17.60 
62.50 


41.09 
50.12 
40.40 
25.62 

187. 

655. 


2/4 
2/8  y4 


Aug.  20, 
1920 


Teb.   11, 
1921 


10.38 
26.10 
21.15 
24.10 
17.50 
24.50 


50.48 
74.20 
47.90 
31.40 
151. 


1- 

2/7 


11.34 
27.65 
22.40 
21.37 
17.44 
20.76 
49.50 


54.55 

106.25 

51.50 

54.25 

230. 


1/4 
2/3 


i  The  pound  in  terms  of   foreign  currency. 

The  financial  situation. 

Within  the  scope  of  this  study  it  is  not  possible  to  review  the  British 
financial  situation  adequately.  It  is  necessary,  however,  to  glance  at 
certain  aspects  of  it  in  order  to  estimate  the  industrial  situation :  first 
and  foremost,  the  balance  of  income  and  expenditure. 

The  income  and  expenditures  for  the  financial  }'ear  1919-1920  were 
as  follows  (in  million  pounds)  : 

Revenue    1,339 

Expenditure    1,665 


Deficit    326 

The  estimates  for  the  financial  year  1920-1921  were  as  follows: 

Revenue    1,418 

Expenditure   1,184 


Estimated  balance 234 

Several  features  of  these  estimates  deserve  comment.  First,  the 
revenue  includes  311  million  of  special  receipts,  as  from  the  sale  of 
supplies.  Second,  the  expenditure  includes  345  million  of  debt  charges. 
Third,  up  to  the  present  the  estimates  have  been  reasonably  well  sub- 
stantiated. A  summary  of  the  year's  finance,  from  April  1,  1920,  to 
March  19,  1921,  shows  in  millions  of  pounds: 


1921] 


The  Industrial  Situation  in  Great  Britain 


Total  spent   1086      Raised  by  revenue   1330 

December,  in  balances  . .  7     Net  repayment  251 


Total   1079 


Total     1079 


For  the  first  time  since  1913  the  income  in  1920  equaled  the  expendi- 
ture. The  total  national  debt  rose  from  711  millions  on  August  1, 
1914,  to  8,079  millions  in  December,  1919.  It  has  been  reduced  since 
by  about  200  millions,  standing  at  7,817  millions  on  January  15,  1921. 
The  floating  debt,  however,  has  continued  to  increase;  it  stood  at  1,464 
millions  at  the  time  of  the  armistice,  fell  to  1,279  millions,  and  on 
January  15,  1921,  stood  at  1,570  millions.  Great  Britain  is  in  a  posi- 
tion to  tackle,  though  only  in  a  small  way,  the  task  of  debt  reduction. 
Progress  in  that  direction  will  depend,  of  course,  upon  a  continuance 
of  heavy  taxation.  The  question  of  interest  on  foreign  loans  is  as  yet 
unsettled.  Some  reduction  in  expenditure  is  to  be  expected,  beginning 
with  1922,  but  unforseeable  demands  on  the  treasury  may  always  arise. 
The  discussion  of  deflation  has  centered  largely  on  the  currency 
note  issues.  The  Bank  act  of  1844  was  not  suspended  during  the  war. 
But  the  circulating  currency  was  swelled  by  the  issue  of  notes  and  cer- 
tificates, under  the  Currency  and  Banknote  act  of  1914.  This  new 
form  of  currency  is  in  one  pound  and  ten  shilling  denominations.  It 
figures  in  the  same  way  as  Bank  of  England  notes  on  the  balance  sheet 
of  the  Bank  of  England.  It  is  counted  as  part  of  the  reserve  of  other 
banking  institutions,  and  has  thus  made  possible  an  increase  of  loan  and 
deposit  currency.  The  treasury  holds  28.5  millions  in  gold  as  special 
reserve  against  this  currency  note  issue.  The  note  circulation  in  the 
United  Kingdom  is  as  follows  (in  millions  of  pounds)  : 


Dec,    1913 

Dec,    1918 

Dec,    1919 

Nov.,    1920  Jan.  12,  1921 

Bank    of    England 

notes    29.6 

Currency  notes  and 

certificates    . . .         

79.2 
323. 

87.4 
356. 

128.4 
355. 

129.8 
350. 

The  volume  of  currency  notes  has  not  increased  during  the  past  year. 
Any  policy  of  deflation  must  be  most  carefully  mapped  out  because 
of  its  possible  effect  upon  industrial  activity.  The  first  step — a  bal- 
ance of  revenue  and  expenditure  and  a  consequent  stoppage  of  gov- 
ernment borrowing — seems  to  have  been  successfully  accomplished. 
It  will  only  be  possible  to  hold  that  balance,  however,  if  the  many  diffi- 
culties of  foreign  and  domestic  politics  are  surmounted  without  too 
great  strain.  Prices  have  begun  to  decline.  That  should  make  it  pos- 
sible to  lay  down  a  consistent  treasury  policy,  provided  the  present 
depression  does  not  become  more  serious,  due  to  upsetting  political  or 
economic  events.     The  estimate  made  by  Professor  Davis  last  fall  still 


264 


Herbert  Feis 


[June 


applies.  He  wrote:  "On  the  whole,  the  British  are  succeeding  moder- 
ately in  checking  credit  and  currency  expansion,  and  in  reducing  the 
public  debt  and  are  in  a  position  to  take  advantage  of  favorable  op- 
portunities for  moderate  contraction,  but  the  situation  is  still  critical."1 

Prices. 

The  movement  of  wholesale  prices,  has  been  as  follows: 

Wholesale  Prices1 


Cereals 

Other 

Miscel- 

End of 

and  meats 

foods 

Textiles 

Minerals 

laneous 

Total 

Nov.,  1918.. 

100 

100 

100 

100 

100 

100 

Mar.,  1919.. 

100 

100 

81 

94 

93 

92 

Sept.,   "  .. 

108 

104 

107 

116 

97 

106 

Mar.,  1920.. 

117 

116 

161 

138 

123 

m 

Sept.,   "  .. 

117 

119 

128 

145 

110 

123 

Nov.,   "  . . 

115 

111 

89 

139 

96 

106 

Dec.,   "  .. 

104 

103 

69 

134 

92 

95 

Feb.,  1921.. 

91 

90 

56 

116 

82 

83 

i  The  Economist  index  number. 

The  cost  of  living  index  number  of  the  Labor  Gazette  gives  the  per- 
centage increase  over  1914.  It  includes  food,  clothing,  fuel,  light, 
rent,  etc. 

January,      1920—125 

April,  "   —132 

July,  "    —152 

November,     "   — 176 

December,     "    —169 

January,     1921—165 

Februarv,      "   — 151 

March    *        "    —141 

The  index  number  of  wholesale  prices  indicates  a  decided  decline 
since  May,  1920,  especially  in  textile  and  secondary  food  products. 
The  cost  of  living  figure  rose  up  to  November,  1920;  but  a  decline 
seems  to  have  definitely  begun.  It  is  oh  this  figure  that  the  wage- 
earners  have  centered  their  interest. 

The  labor  situation. 

The  course  of  industrial  recovery  will  be  gravely  affected  by  the 
outcome  of  the  labor  difficulties  that  are  pressing  for  attention. 

From  the  armistice  until  the  autumn  of  1920,  employment  was  stead- 
ier than  before  the  war.  Wages  in  general  kept  advancing  in  accord- 
ance with  the  rise  in  the  cost  of  living.  Three  serious  strikes  occurred 
after  the  armistice:  the  railway  strike  and  the  moulders'  strike  over 
wages,  the  coal  strike,  in  reality  as  an  incident  in  the  revolt  of  the 
miners  against  private  profit  in  the  coal  industry.  The  question  of 
unemployment  is  now  at  the  forefront.     With  the  depression,  the  pro- 

i  The  Revieio  of  Economic  Statistics,  August,  1920,  p.  229. 


1921]  The  Industrial  Situation  in  Great  Britain  265 

test  against  unemployment  became  clamorous.  The  figures  of  unem- 
ployment in  the  organized  trades  reporting  to  the  Registrar  are  as 
follows :    They  apply  to  a  membership  of  about  a  million  and  a  half. 

Per  cent  Per  cent 

Year  unemployed  Year  unemployed 

1913     2.1  J;in.,    1920 2.9 

1914    2.3  May,     "    1.1 

1915     2.1  Sept.,     "    2.2 

1916     0.4  Oct.,      "    5.31 

1917     0.6  Nov.,     "    3.7 

1918     0.8  Dec,      "    6.0 

Jan.,   1919 2.4  Jan.,   1921 6.9 

May,     "    2.1  Feb.,      "    8.5 

Sept.,     "    1.6 

i  Coal  industry  not  included. 

These  last  months,  besides,  have  been  marked  by  a  wide  extension  of 
short-time  work.  In  February  the  percentage  of  unemployed  was 
greater  than  at  any  date  since  the  winter  of  1908-1909.  The  new  Un- 
employment Insurance  act  greatly  extended  the  sphere  of  insurance; 
it  now  applies  to  12  million  workers,  it  is  estimated.  The  weekly  pay- 
ment for  men  was  increased  to  15  shillings  (6  shilling  pre-war  values). 
The  Labor  Report  on  Unemjrtoyment  contains  a  demand  for  40  shill- 
ings for  married  men  and  25  shillings  for  single  men.  Unemployment 
has  risen  to  the  dimensions  of  a  calamity;  it  is  by  no  means  certain  it 
will  not  increase. 

It  is  at  this  time  too  that  the  first  organized  effort  to  effect  a  gen- 
eral wage  reduction  has  started.  The  employers'  association  contend 
for  a  reduction  on  two  grounds.  First,  because  the  cost  of  living  has 
shown  signs  of  a  decline.  Second,  on  the  ground  that  a  radical  reduc- 
tion in  expenses  is  essential  to  meet  the  competition  of  the  Continent — 
to  get  orders  to  keep  industry  going.  So  far,  the  leaders  of  organized 
labor  have  opposed  these  contentions.  The  following  statement  by  the 
Rt.  Hon.  J.  R.  Clynes,  M.P.,  is  representative  of  the  attitude  of  the 
more  moderate  elements  in  the  trade  union  movement.     He  said: 

I  do  not  hesitate  to  say  that  Labor  will  reject  any  proposal  for  a  gen- 
eral reduction  in  wages  with  the  object  of  securing  a  reduction  in  prices. 
Wage  reductions  may  be  reached  in  certain  individual  cases  by  mutual  agree- 
ment between  representatives  of  the  workers  and  employers  but  as  a  matter 
of  general  policy,  organizations  acting  either  through  national  bodies  or 
through  responsible  executives  will  not  agree  to  reduction.  .  .  .  Much  could 
be  said  for  a  joint  movement  to  reduce  profits,  high  salaries  and  high 
wages  at  the  same  time. 

He  suggests  the  joint  industrial  councils,  with  full  command  of  the 
facts,  as  the  best  agents  for  any  such  policy. 

There  can  be  little  doubt  that  up  to  the  end  of  1920  industrial  profits 
were  high.     The  weekly  profit  and  loss  account  of  the  Economist  for 


9,66  Herbert  Feis  [June 

over  three  hundred  large  enterprises,  showed  an  average  increase  of 
profits  in  1920  over  1919  of  32.6  per  cent.  These  figures,  however, 
do  not  reflect  the  severe  depression;  and  the  taxation  of  industrial 
profits  has  been  very  heavy. 

English  labor  will  fight  before  it  will  accept  a  reduction  of  its  stan- 
dard of  living  to  the  pre-war  standard.  Throughout  its  ranks  there  is 
a  conviction  that  the  pre-war  distribution  of  wealth  was  unjust;  to  en- 
force that  conviction  its  policy  will  probably  be  opportunistic.  In  the 
coal  mines  and  on  the  railways,  any  negotiations  for  reduction  would 
probably  resolve  themselves  into  demands  for  some  form  of  state  con- 
trol. A  continuance  through  the  summer  of  the  present  depression  with 
its  accompanying  unemployment  will  impel  wage  reduction,  in  order 
to  make  further  reduction  of  export  prices  possible.  In  that  event, 
unless  the  employers  deal  with  the  trade  unions  with  great  candor  and 
fairness,  and  accept  a  reduction  of  profits,  serious  industrial  conflicts 
would  almost  certainly  arise.  If  the  depression  ends — and  the  settle- 
ment of  the  indemnity  question  will  be  a  factor  of  no  mean  importance 
in  determining  whether  it  does  end — the  necessity  for  immediate  wage 
reduction  will  be  avoided.  If  then,  in  the  succeeding  months,  the  cost 
of  living  continues  to  fall,  wage  adjustment  downward  will  be  far  more 
easily  accomplished  than  otherwise.  The  fact  that  the  cost  of  living 
has  fallen  decidedly  during  the  first  months  of  1921  is  the  single  really 
encouraging  factor  in  the  situation ;  for  few  doubt  that  ultimately  the 
war  level  of  money  wages  must  be  reduced. 

Behind  this  phase  of  the  question  of  wage  reduction  stand  the  treas- 
ury problems.  The  treasury  stands  ready  to  avail  itself  of  any  ad- 
vantageous opportunity  to  reduce  the  floating  debt  and  the  currency 
note  circulation.  But,  even  with  a  favorable  fiscal  balance,  it  is  not 
likely  to  take  the  initiative  in  deflation.  The  price  declines  will  have  to 
come  either  through  an  increase  in  the  productiveness  of  industry  or 
from  a  fall  in  the  price  of  imported  foodstuffs  and  raw  materials ;  or 
from  the  force  of  foreign  competition  with  a  decrease  in  profits  or 
wages  or  both.  The  signs  point  to  some  price  decline  due  to  these  fac- 
tors— indeed,  it  has  already  begun.  How  far  it  will  go,  whether  it  will 
be  sporadic  or  regular,  it  is  impossible  to  predict.  The  agreement  and 
cooperation  of  the  trade  unions  in  the  policy  of  deflation  will  be  es- 
sential for  it  is  not  likely  that  prices  will  fall  sufficiently  to  enable  the 
treasury  to  establish  a  gold  standard,  unless  wages  are  eventually  re- 
duced. And  since  the  question  of  wage  reduction  is  such  a  thorny  one, 
and  the  question  of  unemployment  is  so  acute,  the  present  government 
will  find  its  march  back  to  the  gold  standard  no  easy  one.  It  is  con- 
ceivable that  it  will  have  to  await  the  accession  of  a  labor  government. 
But  here  it  is  necessary  to  rein  in  speculation. 


1921]  TJie  Industrial  Situation  in  Great  Britain  267 

Since  this  article  was  written,  the  government  has  acted  upon  its 
decision  to  end  the  financial  control  of  the  coal  industry.  The  coal 
miners  have  gone  on  strike.  Up  to  the  present,  negotiation  between  the 
government,  the  owners,  and  the  miners  has  not  succeeded  in  bringing 
about  an  agreement  upon  two  issues :  first,  the  miners  have  demanded 
that  wages  be  determined  on  a  national  basis,  that  is,  that  there  should 
be  a  national  scale  of  wages,  such  as  is  now  in  existence;  second,  that 
the  profits  of  coal  mining  throughout  the  country  should  be  put  into 
one  national  pool ;  by  means  of  which  the  poorer  mines  should  be  en- 
abled to  pay  the  general  scale  of  wages,  and  some  standard  scheme  of 
profits  could  be  enforced.  The  demands  of  the  miners  are  not 
prompted  primarily  by  the  desire  to  advance  any  general  program  of 
industrial  change.  The  question  of  nationalization  is  at  present  in  the 
background.  The  miners'  stand  is,  in  reality,  against  extensive  profit 
making  in  the  coal  industry. 

Failing  some  agreement  (probably  compromise)  with  a  short  time 
a  strike  by  the  railwaymen  and  transport  workers — the  other  members 
of  the  Triple  Alliance — may  follow.  A  strike  of  the  Triple  Alliance 
would  shortly  bring  about  a  tie-up  in  British  industry ;  the  government 
could  do  more  than  perform  emergency  services.  By  such  a  strike  all 
parties  would  stand  to  suffer  more  than  they  can  hope  to  secure  in  the 
way  of  immediate  gain  from  victory.  The  issue,  however,  is  not  con- 
ceived of  in  terms  of  immediate  gain.  The  strike  may  take  place.  If 
it  does,  the  smallest  possible  effect  will  be  to  set  back  British  industrial 
recovery  some  weeks  or  months;  its  conceivable  consequences  are  vastly 
greater. 

Unexpected  purposes  and  forces  are  likely  to  come  to  light  in  times 
of  crisis;  and  original  aims  undergo  transformation.  But  the  habit  of 
the  great  majority  of  the  English  people  to  seek  out  facts,  and  to  guide 
their  actions  by  facts,  along  with  a  deep  underlying  feeling,  which 
exists  despite  all,  that  the  sudden  wreck  of  the  present  industrial  struc- 
ture is  not  to  be  thought  of — these  may  be  expected  to  produce  a 
compromise.2 

Herbert  Feis. 

Harvard  University. 

2  Practically  all  the  statistics  quoted  in  this  article  are  taken  from  files  of  The 
London  Times,  Board  of  Trade  Journal,  Economist,  Statist,  Labour  Gazette,  or 
Statistical  Publications  of  the  Supreme  Economic  Council. 


REVIEWS  AND  NEW  BOOKS 

General  Works,  Theory  and  Its  History 
The  Place  of  Science  in  Modern  Civilization  and  Other  Essays.     By 
Thorstein  Veblen.     (New  York:    B.  W.  Huebsch.     1919.     Pp. 
509.     $3.00.) 

From  twelve  to  twenty-eight  years  have  elapsed  since  the  initial  ap- 
pearance in  various  learned  periodicals  of  the  essays  by  Mr.  Veblen 
which  are  now  assembled  in  The  Place  of  Science  in  Modem  Civiliza- 
tion. In  the  interval  they  have  been  thumbed  over  by  graduate  stu- 
dents, used  for  dialectic  by  professed  economists,  escaped  the  attention 
of  the  lay  Veblen  cult,  and  left  their  mark  upon  the  development  of 
the  "science."  An  appraisal  of  the  volume  should,  therefore,  be  some- 
thing else  than  an  impressionistic  opinion  by  the  reviewer  about  a  book 
hot  from  the  press.  It  should  be  a  re-review  of  reviews,  free  from  the 
taint  of  "opinion,"  and  limited  to  a  record  of  the  "facts."  But,  even 
at  this  late  date,  so  objective  and  colorless  an  appreciation  of  Mr. 
Veblen's  contributions  is  impossible.  The  time  was  when  they  were  far 
beyond  the  outer  fringe  of  economic  speculation.  The  time  is  when 
they  are  intimately  associated  with  many  daring  quests  which  have 
overridden  the  older  restraints  upon  theory.  And  intimacy  is  as  great 
a  bar  to  correct  judgment  as  remoteness. 

The  essays  which  make  up  this  volume,  despite  the  range  in  time 
and  place  that  marked  their  original  publication,  fall  into  an  easy  se- 
quence. The  first  of  three  groups  into  which  they  fall  is  concerned 
with  the  meaning  and  the  development  of  "the  scientific  point  of  view" 
and  its  place  in  modern  culture.  The  last  is  given  to  a  discussion  of 
the  "blonde  race"  and  the  incidence  of  its  ethnic  endowment  upon 
"Aryan"  culture.  Between  the  two,  running  from  page  56  to  page  456, 
and  comprising  four  fifths  of  this  book,  are  a  group  of  studies  upon 
the  nature,  scope,  limitations,  and  implications  of  economic  theory. 
Since  the  first  of  these  inquires  into  whether  economics  is  an  evolu- 
tionary science,  the  essays  which  give  the  volume  its  title  may  be  re- 
garded as  a  formal  introduction  to  the  discussion  of  economic  theory. 
And  since,  back  of  both  "science"  and  "economics,"  Mr.  Veblen  looks 
for  "cultural  antecedents,"  the  study  of  the  nature  of  the  civilization  of 
the  "dolicho  blonde"  is  not  out  of  place.  Thus,  despite  variety  in 
subject-matter,  the  volume  has  unity.  Its  importance,  however,  lies  in 
the  ventures  into  economic  criticism  which  make  up  its  bulk  and  escape 
mention  in  its  title. 

If  Mr.  Veblen's  vehicle  had  been  a  formal  treatise  his  strictures  upon 
accepted  economic  theory  would  have  formed  a  single  articulate  study. 
The  series  of  separate  essays  which  he  has  used  instead  has  the  ad- 


1921]  General  Works,  Theory,  and  Its  History  269 

vantage  of  enabling  him  to  get  at  his  subject  from  many  different 
angles.  It  also  imparts  a  suggestiveness  which  a  more  formal  dis- 
cussion would  have  lacked.  It  allows  a  searching  analysis  of  the  pre- 
conceptions of  classical  theory  in  general;  a  specific  appraisal  of  the 
theory  of  marginal  utility;  a  lucid  discussion  of  the  nature  of  capital 
and  of  forms  of  employment;  and  a  penetrating  examination  of  the 
systems  of  economics  which  bear  the  names  of  J.  B.  Clark,  Gustav 
Schmoller,  and  Karl  Marx.  The  burden  of  this  criticism  is  to  show 
that  reputable  theory  moves  "in  terms  alien  to  the  evolutionist's  habit 
of  thought" ;  that  it  assumes  a  "hedonistic  conception  of  man"  as  "a 
lightning  calculator  of  pleasures  and  pains,  who  oscillates  like  a  homo- 
geneous globule  of  desire  of  happiness  under  the  influence  of  stimuli 
that  shift  him  about  the  area,  but  leave  him  inert" ;  and  that  it  takes 
for  granted  "a  benign  order  of  nature"  and  "a  meliorative  trend  in 
the  course  of  events."  It  discloses  the  small  province  of  value  theory 
which  utility  and  productivity  theorists  have  so  meticulously  cultivated ; 
shows  that  Austrian  and  Clarkian  economics  are  variants  of  the  same 
general  doctrine;  and  reveals  both  as  refinements  and  sublimations  of 
a  system  of  thought  which  is  essentially  Ricardian.  It  refuses  to  find 
in  the  implications  of  a  system  of  value  proof  that  each  gets  "what 
he  produces"  and  that  the  prevailing  economic  order  is  natural  and 
moral. 

The  great  merit  of  such  a  critique  lies  in  its  constructive  value.  The 
argument,  in  spite  of  its  multiform  appearance,  has  coherence,  per- 
tinency, and  purpose;  and  all  because  Mr.  Veblen  has  his  theory  about 
what  economic  theory  should  be  about.  He  insists  that  the  complex 
of  activities  which  make  up  our  industrial  life  forms  a  continuous  pro- 
cess; that  the  economic  order  is  peopled  with  real  human  beings,  who 
have  their  varied  characteristics  and  such  differences  one  from  an- 
other that  the  question  of  personal  selection  for  economic  place  is  an 
important  one;  that  men  are  born  into  communities,  with  their  set 
ways  of  doing  things,  and  that  they  are  moulded  by  these  arrange- 
ments; that  economics  might  well  concern  itself  with  discovering  the 
nature  of  such  of  these  arrangements  as  are  pertinent  to  the  problem 
of  wealth;  and  that  the  goodness  or  badness,  efficiency  or  inefficiency, 
of  these  schemes  of  life,  instead  of  being  taken  for  granted,  are  to  be 
tested  by  definite  standards  and  in  the  light  of  determined  facts. 

The  nature  of  these  suggestions  can  best  be  shown  by  an  illustration 
which  the  reviewer  will  present  in  non-Veblenian  terms.  In  one  of  the 
essays  a  careful  distinction  is  made  between  industry  and  business.  It 
is  through  industry  that  goods  and  services  are  fashioned  and  fur- 
nished; it  is  through  business,  at  least  at  present,  that  the  many  and 
varied  tasks  of  industry  are  organized.     Industry  is  permanent  and 


270  Reviews  and  New  Books  [June 

indispensable.  It  exists  upon  the  oasis,  the  manor,  the  frontier,  the 
urban  center.  It  will  exist  under  any  scheme  of  economic  organization. 
If  every  act  of  production,  of  exchange,  and  of  consumption  were  in 
response  to  the  orders  of  an  industrial  autocrat,  there  would  still  be 
industry.  Business,  on  the  contrary,  is  only  one  of  several  schemes 
for  the  integration  of  industrial  tasks  into  a  system.  It  has  almost 
no  place  on  the  manor  and  the  frontier.  It  would  not  exist  in  a  system 
organized  by  an  autocratic  despot.  Even  today  its  domain  is  not  com- 
plete; it  exerts  little  influence  over  the  activities  of  the  housewife  and 
the  conduct  of  the  affairs  of  the  family.  It  consists  of  a  scheme  of  in- 
stitutions which  include  the  pecuniary  calculus,  the  system  of  prices, 
the  right  to  buy  and  sell,  and  the  market.  Most  problems  of  the  day 
involve  the  question  of  the  success  of  business  in  organizing  the  indus- 
trial system.  Most  remedial  measures  include,  in  mild  or  drastic  form, 
restrictions  upon  or  substitutes  for  the  various  devices  which  make  up 
the  business  control  of  industry.  The  distinction  is  essential  to  a 
correct  formulation  of  the  problem  of  an  appraisal  of  the  prevailing 
scheme  of  economic  arrangements. 

To  these  critical-constructive  studies  a  significant  place  must  be 
given.  The  literature  of  economics  has  always  been  rich  in  the  type  of 
criticism  that  projects  doctrines  upon  the  same  intellectual  plane,  ana- 
lyzes them  minutely,  and  by  comparative  devices  tries  to  reduce  the 
whole  truth  to  detailed  formulation.  It  has  been  poor  indeed  in  criti- 
cism that  associates  the  general  characteristics  of  bodies  of  doctrine 
with  the  specific  problems  which  led  to  their  formulation  and  with  the 
systems  of  thought  which  they  embody.  Mr.  Veblen  did  not  bring  the 
latter  type  of  criticism  into  economics.  But  with  its  aid  he  has  given 
the  whole  body  of  classical  economic  theory  a  meaning  which  it  did  not 
before  possess  and  has  clearly  revealed  its  limitations.  Moreover,  he 
is  preeminent  in  its  use.  It  is  significant  that,  though  many  have  fol- 
lowed him,  none  of  the  later  critics  have  discovered  important  leads 
which  are  not  at  least  suggested  in  these  essays.  Some  are  sure  that 
this  critical  work  has  demolished  the  older  formulations  and  prepared 
the  way  for  a  "scientific"  economics.  Others  insist  that  it  has  merely 
opened  a  new  domain  to  economic  theory  by  showing  the  "limitations" 
of  the  older  doctrines.  Still  others  maintain  that  its  only  effect  has 
been  to  strip  from  the  older  theory  implications  of  statement  that 
were  no  essential  part  of  it.  It  would  be  futile  to  set  down  the  right 
answer  to  his  question  of  constructive  influence  without  making  an  ex- 
haustive survey  of  Mr.  Veblen's  doctrines.  And  that  cannot  be  at- 
tempted here.  It  seems  certain,  however,  that  even  in  this  volume  Mr. 
Veblen  has  done  constructive  work  of  great  importance  by  pointing  the 


1921]  General  Works,  Theory,  and  Its  History  271 

way  to  an  examination  and  appraisal  of  the  specific  institutions  which 
make  up  the  prevailing  economic  order. 

The  difficulty  of  a  current  appraisal  of  Mr.  Veblen's  economics  re- 
mains. But  the  nature  of  the  difficulty  has  radically  changed.  The 
danger  of  ignoring  him  because  he  is  far  in  advance  of  the  scrimmage 
line  is  gone.  The  present  danger  is  that  his  work  will  be  appraised  in 
terms  that  are  indefinite  and  cosmic.  There  is  already  a  tendency  to 
make  him  responsible  for  all  that  is  new  in  economics ;  and  in  history 
and  politics  and  psychology  as  well.  This  danger  was  recently  voiced 
by  a  distinguished  English  economist  who  gave  an  account  of  a  meet- 
ing with  Mr.  Veblen  in  terms  of  a  pilgrimage  to  a  great  American  in- 
tellectual deity.  And  the  movement  has  reached  the  laity.  In  this 
season's  most  "significant"  novel  the  heroine  who  fights  the  smugness 
of  the  small  town  with  affectation  reads  Veblen.  This  situation  has 
been  abetted  by  The  Leisure  Class,  Imperial  Germany,  and  The  Nature 
of  Peace,  which  have  been  read  by  the  laity.  Their  glib  phrases  have 
convinced  many  of  their  readers  that  they  have  understood  Veblen. 
For  that  reason  The  Place  of  Science  in  Modern  Civilization  is  most 
welcome.  It  presupposes  a  specific  acquaintance  with  economic  theory. 
It  is  addressed  to  the  professional  economist.  And  it  enables  the  cosmic 
judgments  of  Veblen's  place  in  economics  to  be  reduced  to  finite  terms. 

Walton  H.  Hamilton. 

Amherst  College. 

Introduction  to  the  Principles  of  Sociology.     By  Grove  Samuel  Dow. 

(Waco,  Texas:    Baylor  University  Press.     1920.     Pp.  505.) 
Sociology :   Its   Development   and  Applications.      By   James   Quayle 
Dealey.     (New  York:    D.  Appleton  and  Company.     1920.     Pp. 
xv,  547.     $3.00.) 
Socud  Theory.    By  G.  D.  H.  Cole.     (New  York:   Frederick  A.  Stokes 

Company.     1920.     Pp.  220.     $1.50.) 
The  History  of  Social  Development.     By  F.  Mueller-Lyer.     Trans- 
lated by  Elizabeth  Coote  Lake  and  H.  A.  Lake.      (London: 
George  Allen  and  Unwin,  Ltd.  1920.    Pp.  362.) 
The  promise  of  the  preface  of  Professor  Dow's  work  that  the  book 
will  take  up  "in  a  related  fashion"  the  "different  specific  phases"  of 
the  subject  hitherto  presented  by  sociologists  is  hardly  fulfilled.     There 
is  a  large  amount  of  helpful  discussion  and  elucidation  of  various  social 
problems,  and  consideration   of  historical  and  developmental   factors, 
but  very  little  clear-cut  exposition  of  the  relation  between  cause  and 
effect,  law  and  principle,  in  the  broad  reaches  of  the  subject,  and  no 
marked  sense  of  order  or  relationship. 

After  a  brief  introductory  chapter  on  the  nature  of  sociology,  there 


272  Reviews  and  New  Books  [June 

follows  a  section  on  population.  Then  comes  a  study  of  the  evolution 
of  social  institutions,  an  analysis  of  society,  and  a  section  on  social 
maladjustment  which  includes  a  discussion  of  some  of  the  commonly 
recognized  "social  problems."  The  book  closes  with  a  very  brief  chap- 
ter on  progress  in  which  there  is  confessedly  no  attempt  at  "theorizing" 
about  social  progress  but  merely  "the  aim  ...  to  show  that  society 
is  advancing." 

A  great  variety  of  topics  is  gathered  together  between  the  two  covers, 
and,  as  already  intimated,  the  discussions  of  these  topics  are  interesting 
and  often  illuminating.  One  who  knows  nothing  of  the  field  of  sociol- 
ogy would  acquire  a  deal  of  useful  information  by  reading  this  book, 
and  in  the  hands  of  a  competent  teacher  it  might  prove  a  useful  text- 
book for  a  class  which  had  to  cover  the  entire  field  in  a  term  or  two. 

Unfortunately  the  book  is  marred  by  some  inaccuracies,  and  some 
minor  qualities  of  an  irritating  nature.  Thus  the  author  repeatedly 
states  that  "we  know  that  man  originated  in  or  near  what  is  now  Asia 
Minor."  Alas  for  the  highly  endowed  scientific  expedition  which  has 
just  been  organized  to  search  for  the  earliest  relics  of  man  on  the  high 
central  plateau  of  Asia!  Again,  on  page  44  he  says,  "while  we  can  ex- 
pect the  population  of  the  earth  steadily  to  become  denser  there  is  as 
yet  under  ordinary  circumstances  no  immediate  danger  of  starvation — 
at  least  not  in  the  next  few  decades."  What  of  China  and  India?  And 
what  of  a  conception  of  sociology  which  is  willing  to  threw  the  whole 
Malthusian  theory  into  the  discard  because  its  worst  predictions  may 
not  be  verified  for  "the  next  few  decades?"  It  is  also  a  quaint  notion 
of  the  sources  of  sociological  fact  which  leads  an  author  to  say,  in 
speaking  of  our  uncertainty  as  to  whether  the  human  species  originated 
in  a  single  pair  or  not:  "The  Bible  itself  is  not  clear  in  regard  to 
this — at  least  our  interpretation  of  the  Bible  does  not  clear  up  the  mat- 
ter." The  proof-reading  is  bad,  and  there  is  found  the  unpleasant 
practice  of  using  paragraph  headings  as  an  integral  part  of  the  text. 
Also,  the  arbitrary  selection  of  a  certain  number  of  words  for  phonetic 
spelling,  while  the  great  majority  are  left  unchanged — as  "enuf"  and 
"nation,"  "brot"  and  "taught."' 

Professor  Dealey's  book  is  an  enlargement  and  revision  of  his  earlier 
Sociology.  It  follows  the  historical  method,  and  the  subject-matter  is 
arranged  in  an  orderly  and  logical  way.  One  may  be  excused  for  long- 
ing for  the  time  when  writers  on  sociology  will  be  emancipated  from 
the  feeling  that  they  are  under  the  obligation  of  including  in  their 
work  long  discussions  of  the  nature  of  sociology  and  its  relation  to  the 
other  sciences,  and  may  use  the  time  saved  from  teaching  what  sociology 
is  for  the  teaching  of  sociology.     Be  that  as  it  may,  Professor  Dealey's 


1921]  General  Works,  Theory,  and  Its  History  273 

treatment  of  this  phase  of  his  subject  is  clear,  sensible,  and  construc- 
tive, and  shows  an  excellent  knowledge  of  the  field.  There  follows  a 
study  of  the  development  of  society  and  its  institutions,  again  showing 
penetration  and  wide  research.  The  next  section  is  on  social  progress, 
and  takes  up  the  most  prominent  social  evils,  and  the  possibilities  of 
their  correction.  This  new  edition  will  preserve  for  many  years  the  hon- 
ored place  held  by  the  author's  earlier  book. 

Social  Theory  is  a  brief  and  helpful  examination  into  "the  structure 
of  the  half-organized  and  half-conscious  community  of  which  we  form 
a  part."  The  author  avows  his  indebtedness  to  R.  M.  Maclver,  the 
influence  of  whose  book  on  Community  is  evident  throughout  the  pages 
of  the  present  volume.  One  of  the  most  valuable  features  of  Mr.  Cole's 
work  is  his  emphasis  on  the  need  of  an  authoritative  technical  vocabu- 
lary in  the  field  of  sociology,  and  his  effort  to  introduce  and  establish 
certain  basic  terms  and  their  definitions.  Of  course  no  one  man  can 
do  this,  and  it  is  exceedingly  hard  to  see  how  it  ever  is  to  be  done.  But 
certain  it  is  that  it  must  be  done,  before  sociology  can  take  its  ap- 
propriate place  among  the  sciences. 

Mr.  Cole  approaches  his  subject  from  the  ethical  point  of  view,  he 
is  concerned  "with  'ought'  rather  than  with  'is,'  with  questions  of 
right  rather  than  of  fact."  But  this  does  not  blind  him  to  the  neces- 
sity of  recognizing  facts  as  the  starting  point  of  study,  and  his  book  is 
by  no  means  visionary  or  vainly  idealistic.  He  lays  great  stress  on  the 
importance  of  government  and  the  state,  and  arrives  at  the  final  con- 
clusion that  the  "most  essential  conditions  of  successful  association 
[are]  the  principles  of  democratic  functional  organization  and  demo- 
cratic representation  according  to  function."  He  finds  the  existing 
social  order  lacking  in  these  respects,  and  puts  great  faith  in  some- 
what radical  working-class  movements  as  the  agencies  for  introducing 
a  more  stable  structure. 

The  conviction  that  anything  really  new  in  sociological  fact  is  a 
rarity  in  most  books  on  social  theory  is  illustrated  by  Dr.  Miiller- 
Lyer's  book.  All  that  is  novel  is  the  method  of  approach  and  the 
scheme  of  arrangement  of  more  or  less  familiar  material.  The  volume 
in  question  is  a  study  of  social  development  by  the  "phaseological" 
method,  that  is,  various  aspects  of  society  are  considered  historically, 
and  traced  through  the  various  stages  or  phases  through  which  they 
have  been  brought  to  their  present  state.  The  first  part  takes  up  cul- 
ture itself,  its  character,  origin,  and  classification.  Then  follow  in  suc- 
cession studies  of  the  evolution  of  food,  tools,  clothing,  and  dwellings — 
the  material  elements  of  culture.     Next  comes  the  evolution  of  labor 


274  Reviews  and  New  Books  [June 

in  the  broad  sense.  The  last  three  sections  deal  with  the  causes  of 
progress,  economic  and  general,  a  summary  of  the  culture  stages,  and 
a  closing  discussion  of  culture  and  happiness. 

All  of  this  is  exceedingly  interesting  and  stimulating.  Here  we  have 
a  case  where  the  arrangement  and  presentation  of  material  is  itself 
so  ingenious  and  constructive  that  the  result  is  a  genuine  contribution 
to  the  subject.  On  the  basis  of  this  solidly  constructed  foundation  the 
author  is  enabled  to  erect  certain  conclusions  as  to  the  relation  between 
culture  and  happiness,  two  of  the  most  significant  of  which  are  that 
thoughtless  procreation  on  the  part  of  human  individuals  has  now  be- 
come actually  immoral,  and  that  the  development  of  culture  which  has 
been  largely  unconscious  in  the  past  must  now  become  deliberate, 
purposeful,  and  conscious. 

Henry  Pratt  Fairchild. 

New  York  University. 

Elementary  Economics.  By  Thomas  Nixon  Carver.  (Boston:  Ginn 
and  Company.     1920.     Pp.  viii,  400.     $1.72.) 

The  author's  earlier  book,  Principles  of  Political  Economy,  was  re- 
viewed in  the  December,  1919,  issue  of  this  Review,  pages  796-797. 
The  general  content  and  philosophy  of  the  two  books  are  equivalent. 
The  present  volume  is  briefer  and  somewhat  simplified  in  statement, 
having  in  view  a  younger  constituency.  Lists  of  questions,  evidently 
very  carefully  considered,  are  appended  to  each  chapter  and  a  con- 
siderable number  of  interesting  and  instructive  illustrations  are  fur- 
nished in  the  chapters  on  production.  The  aim  of  the  book  is  to  pro- 
mote national  welfare.  It  will  afford  genuine  pleasure  to  any  sincere 
student  of  economic  problems  with  painful  experience  of  the  char- 
acter of  recent  books  proffered  by  critics  of  existing  economic  condi- 
tions and  would-be  guides  to  economic  welfare  to  read  the  mature  and 
reasoned  arguments  of  this  text.  There  is  sufficient  criticism  of  exist- 
ing institutions  and  customs  joined  always  with  positive  contructive 
suggestions.  No  youthful  student  of  economics  could  fail  to  profit 
from  intimate  acquaintance  with  a  book  of  such  evident  and  earnest 
sincerity  and  zeal  for  the  truth,  for  right  thinking,  and  right  living. 
These  are  qualities  which  all  past  students  of  Professor  Carver's  expect 
to  find  in  every  welcome  volume  from  his  pen.  There  is  a  homely  and 
wholesome  philosophy  emphasizing  moral  qualities  which  "there  is  a 
tendency  to  underestimate  in  this  age  of  great  mental  achievements, 
especially  in  the  fields  of  physical  science  and  mechanical  inventions." 
The  insistence  on  the  importance  of  thrift,  sobriety,  and  honesty  may 
remind  the  reader  of  the  doctrines  of  Franklin. 

Professor  Carver's  general  philosophy  is  well  known  and  the  book 


1921]  General  Works,  Theory,  and  Its  History  275 

under  review  is  a  restatement  of  familiar  doctrines.  No  general  criti- 
cism will  be  attempted.  The  reviewer  knows  no  better  text  for  high 
school  use.  For  straight  thinking,  sound  learning,  skill  in  exposition, 
sturdy  belief  in  liberty  and  democracy,  and  sanity  of  statement  and 
belief,  it  has  no  rival.  A  dip  in  this  philosophy  after  immersion  in 
current  economic  criticisms  and  complaints  is  as  refreshing  as  a 
plunge  in  clear,  cool  waters  under  an  unclouded  sky.  Yet  he  finds  him- 
self burdened  with  a  suggestion  and  a  couple  of  questions.  Would  it 
not  be  desirable  to  include  an  enlarged  statement  of  the  concrete  facts 
of  inequality?  It  is  not  alone  the  inequalities  of  wealth  and  income 
but  the  varying  qualities  of  individuals,  groups,  and  races  that  need 
emphasis.  This  in  view  of  the  applicability  of  such  knowledge  to  the 
"balancing  up"  program.  Suppose  the  next  generation  of  high  school 
students  were  to  be  taught  these  doctrines  and  to  come  out  filled  with 
ardent  reforming  zeal,  as  might  logically  happen.  Would  it  not  be 
well  that  they  temper  their  zeal  with  discretion  born  of  knowledge  of 
the  exact  characteristics  and  economic  condition  of  our  hundred  mil- 
lions of  population?  Such  a  tremendous  fact  as  the  moral,  mental,  and 
economic  status  of  our  millions  of  negroes  might  serve  to  inform  their 
zeal  and  furnish  direction  to  their  attacks. 

Similar  questionings  arise  in  connection  with  the  final  paragraph  of 
the  text,  "Poverty  easily  curable  under  freedom."  It  declares :  "We 
need  not  have  poverty  among  us  a  generation  longer  than  we  want  it. 
By  setting  to  work  deliberately  to  balance  our  population,  causing 
ignorance  and  lack  of  skill  to  disappear  and  causing  technical  training 
and  constructive  talent  to  increase,  we  can,  in  a  short  space  of  time, 
make  low  wages  and  poverty  a  thing  of  the  past."  Would  it  be  so 
simple  and  so  rapid?  The  central  question  of  hereditary  abilities  is 
admittedly  unsolved.  "There  is  no  doubt  whatever,  that  men  of  aver- 
age natural  ability  may  be  greatly  improved  by  education  and  training, 
nor  is  there  any  reasonable  doubt  that  some  are  capable  of  being 
trained  much  more  highly  than  others  because  of  a  difference  in  natural 
ability."  Passing  that,  how  shall  such  Herculean  feats  of  education 
be  consummated?  We  are  not  blessed  with  fairy  wands  to  endow  our 
students  with  sweet  reasonableness  and  teachableness  (see  p.  35).  Nor 
yet  equipped  with  such  superabundance  of  teaching  talent  or  genius 
that  we  may  hope  to  overrule  in  a  single  generation  the  deadly  weight 
of  bad  example,  vicious  or  misleading  ideals,  and  ingrained  early  habits 
of  thought  and  character  necessarily  resultant  from  the  overlapping 
of  generations.  However  earnestly  we  set  to  work  we  cannot  expect 
to  deal  with  a  generation  absolutely  plastic,  and  untrammelled  with 
earlier  traditions  and  disturbing  influences.  The  conclusion  seems  in- 
evitable that  our  ardent  youths  are  doomed  to  disappointment  as  early 


276  Reviews  and  New  Books  [June 

as  it  will  be  severe  if  they  tackle  this  problem  with  hope  of  a  quick 
and  complete  victory.  It  might  be  better  to  send  them  to  the  conflict 
with  a  clear-eyed  vision  of  the  inherent  complexities  and  enormous  di- 
mensions of  the  contest  before  them  and  with  anticipations  of  a  lengthy 
struggle. 

A  final  question  may  be  raised  as  to  the  underlying  philosophy  of 
the  book.  It  aims  at  national  welfare  and  it  finds  such  welfare  in  a 
program  which  insures  that  our  nation  shall  be  selected  to  expand  in 
wealth,  numbers,  and  power  and  ultimately  possess  the  earth.  It  is 
a  stern  philosophy  which  admits  no  mitigation  or  cessation  of  inter- 
national rivalry  nor  of  the  pressure  of  populations.  It  finds  that 
"victory  must  ultimately  go  to  the  race  or  nation  with  the  most  effi- 
cient standard  of  living,"  and  calls  for  "preparedness  for  this  ulti- 
mate and  decisive  conflict"  through  "study  of  the  standards  of  living 
and  the  adoption  of  such  standards  and  habits  as  increase  productive 
efficiency  to  the  maximum  and  reduce  the  cost  of  living  to  the  lowest 
point  which  is  consistent  with  maximum  productivity"  (p.  350).  How 
far  this  might  carry  us  is  suggested  in  the  discussion  of  the  control  of 
consumption. 

By  an  authoritative  standardization  of  wearing  apparel,  food,  and 
other  forms  of  consumption  we  should  tend  to  eliminate  this  worst  form 
of  competition.  That  would  involve,  of  course,  the  organization  of  society 
on  a  semi-military  basis,  though  the  object  need  not  be  military  conflict. 
It  would  mean  the  prescribing  of  a  satisfactory  uniform  for  all  mem- 
bers of  the  community  and  also  of  a  uniform  diet  or  ration.  Houses,  fur- 
niture, and  other  consumable  goods  would  also  have  to  be  standardized  and 
prescribed  by  government  regulations  (p.  344). 

May  one  not  fairly  question  the  sufficiency  of  such  a  philosophy  as 
the  governing  ideal  of  our  nation.  After  successful  appropriation  of 
the  earth,  what  next?  Competition  by  groups  each  reducing  consump- 
tion, exalting  production,  and  piling  up  ever  greater  strength  for  fur- 
ther competition?  i 

Should  we  teach  in  New  England  the  supreme  importance  of  adopt- 
ing an  efficient  standard  of  living  to  the  end  that,  through  trade  rivalry 
we  may  ultimately  possess  these  United  States?  If  national  welfare, 
why  not  state  welfare?  After  all,  is  the  danger  of  our  extinction 
through  international  trade  rivalry  so  pressing,  the  continuance  of  the 
extraordinary  nineteenth  century  expansion  of  population  so  certain, 
that  we  must  teach  our  youths  that  their  lives  are  dedicated  to  their 
nation's  expansion,  that  the  sum  total  of  duty  and  of  life  is  to  work? 
Are  we  to  eliminate  from  education  all  that  does  not  further  trade 
rivalry?  Like  the  race  of  armaments  this  is  only  necessary  if  the 
preaching    of   competition   prevails.      These   questions    are   set    down, 


1921]  General  Works,  Theory,  and  Its  History  277 

one  may  be  permitted  to  add,  by  one  who  is  and  has  always  been  an 
admirer  of  Professor  Carver.  This  is  an  admirable  text.  But  the 
reviewer  cannot  follow  this  philosophy  and  would  not  teach  this  doc- 
trine. He  has  faith  to  believe,  despite  recent  events  and  personal  ex- 
periences, that  the  world  is  on  the  threshold  of  better  things  and  that 
means  will  be  found  to  control  trade  (or  warlike)  rivalry  and  "balance 
up"  populations  with  territories,  competition  with  cooperation,  and 
even  things  of  this  earth  with  things  of  the  mind  and  spirit.  He  pro- 
poses so  to  teach. 

Charles  E.  Persons. 
Boston  University. 

NEW    BOOKS 

Ansiaux,  M.     Traite  d'economie  politique.     (Paris:    Giard.     1920.     Pp.388. 
20  fr.) 

Buer,   M.    C.      Economics   for   beginners.      (London:      Routledge.      1921. 
4s.  6d.) 

Conrad,    J.      Volkswirtschaftspolitik.      Eighth    edition.      (Jena:      Fischer. 

1920.  48  M.) 

Diehl  and  Mombert.     Wert  und  Preis.     (Karlsruhe:    Braun.     1920.     Two 
vols.     12  M.  each.) 

Jentsch,    C.      Volkswirtschaftslehre,    Grundbegriffe    mid    Grundsiitze    der 
Volhstvirtschaft.     Sixth  edition.     (Leipzig:    Grunow.     1920.     11  M.) 

Journe,  M.     Principes  d'economie  politique.     (Paris:    Alcan.      1921.     Pp. 
490.) 

Kidd,  B.     Social  evolution.     New,  revised  edition.     (New  York:    Putnam. 

1921.  Pp.  ix,  404.     $2.50.) 

Laing,  G.  A.     An  introduction   to  economics.     (New  York:     Gregg  Pub. 
Co.     1920.     Pp.  454.     $1.20.) 

The  preface  states  that  the  author  of  this  text  "has  had  constantly  in 
mind  the  demands  of  secondary  schools  for  a  textbook  that  lays  stress  upon 
the  discussion  of  economic  principles  with  special  reference  to  American 
conditions."  Accordingly  the  book  has  the  usual  apparatus  of  chapter 
and  paragraph  headings  and  summary  conclusion  to  important  chapters. 
It  omits  what  has  come  to  be  a  familiar  feature  of  such  texts:  aids  to  the 
student  in  the  form  of  questions,  problems,  and  exercises.  The  author 
attempts  to  compress  into  brief  compass  the  subject-matter  of  the  ordinary 
economics  course.  He  has  emphasized  the  "failure  of  competition"  and 
the  growth  of  monopoly  control.  There  is  an  extended  discussion  of 
financial  matters.  Six  chapters  out  of  thirty,  and  about  a  fifth  of  the 
text's  pages,  are  devoted  to  the  discussion  of  money  and  banking.  The 
treatment  of  distribution  on  the  other  hand  is  extremely  brief.  Interest, 
rent  and  profits  are  handled  in  a  single  chapter  of  twelve  pages.  More 
extended  treatment  is  given  the  subject  of  wages,  and  labor  questions  in 
general,  but  one  searches  in  vain  for  a  positive  statement  of  wage  doc- 
trine. The  author  admits  no  population  difficulty  and  includes  no  dis- 
cussion of  Malthusian  theories. 


278  Reviews  and  New  Books  [June 

The  author's  own  solution  of  the  "task  of  so  reconstructing  society 
that  the  evils  of  which  we  are  conscious  shall  be  things  of  the  past"  is 
nowhere  clearly  stated.  He  has  been  much  impressed  by  the  achievements 
of  government  control  during  the  recent  years  of  war  and  one  gathers  that 
he  favors  this  method  of  reconstruction.  He  has  written  a  readable  book 
supporting  the  current  criticisms  of  our  economic  society  and  without 
balancing  such  criticism  with  constructive  plans  for  reform,  or  with  an 
adequate  statement  of  the  difficulties  to  be  overcome  in  such  attempts  at 
reconstruction.  The  best  part  of  the  text  is  the  treatment  of  money  and 
banking.  Its  worst  feature  is  that  it  is  better  fitted  to  instil  discontent 
than  to  point  out  the  path  of  reform.  This  criticism  is  offered  with  the 
thought  in  mind  that  the  text  is  intended  for  the  training  of  ingenuous 
youth.  C  E.  P. 

de  Legrand,  G.  Le  precis  d'eeonomie  sociale.  (Bruxelles:  Dewit.  1920. 
Pp.  226.) 

Mukerjee,  R.  Principles  of  comparative  economics.  Lectures  delivered  at 
the  University  of  the  Punjab  and  the  University  of  Calcutta.  (London: 
King.     1921.) 

Narain,  B.  Essays  on  Indian  economic  problems.  (Lahore,  India:  Sana- 
tan  Dharina  College.     1921.) 

Nogara,  B.  Traite  elementaire  d'eeonomie  politique.  (Paris:  Giard. 
30  fr.) 

Obst,  G.  Volkswirtschaftslehre.  Sammlung  kaufmannischer  Unterrichts- 
werke,  18.  Second  edition.  (Stuttgart:  C.  C.  Poeschel.  1920.  Pp. 
xii,  343.) 

Oswalt,  H.  Vortrage  iiber  wirtschaftliche  Grundbegriffe.  (Jena:  Fischer. 
1920.     19  M.) 

Pigou,  A.  C.  The  economics  of  welfare.  (New  York:  Macmillan.  1921. 
Pp.  xxxvi,  976.     $12.) 

Roberts,  G.  E.  The  equilibrium  in  industry.  Address  as  President  of  the 
American  Statistical  Association,  Annual  Meeting,  Atlantic  City,  Decem- 
ber, 1920.     (New  York:    National  City  Bank.     1920.     Pp.  15.) 

Schwarz,  O.  G.  Grundriss  der  Nationalbkonomie.  (Berlin:  C.  Heymanns. 
Pp.  144.) 

Spann,  O.  Die  Haupttheorien  der  Volkswirtschaftslehre  auf  dogmenge- 
schichtlicher  Grundlage.     (Leipzig:     Quelle  &  Meyer.     1920.     3.50  M.) 

Stillich,  O.  Einfiihrung  in  der  Nationalbkonomie.  (Wiirzburg:  Kabitzsch 
&  Monnich.     1920.    4  M.) 

Stolzmann,  R.  Grundziige  einer  Philosophic  der  Volkswirtschaft.  (Jena: 
Fischer.     1920.     Pp.  vii,  225.    28  M.) 

Tyszka,  K.  von.  Volkswirtschaftliche  Theorien:  Merkantilismus,  Indi- 
vidualismus,  Sozialismxis ,  Bolschewismus,  Imperialismus.  (Jena:  Fischer. 
1920.     Pp.  vi,  136.     11  M.) 

Wilbrandt,  R.  Oekonomie.  Ideen  zu  einer  Philosophic  und  Socialogie  der 
Wirtschaft.     (Tubingen:     Mohr.     1920.     Pp.  viii,  152.     18  M.) 


1921]  Economic  History  and  Geography  279 

Economic  History  and  Geography 

NEW    BOOKS 

Below,  G.  v.  Probleme  der  TVirtschaftsgeschichte.  (Tubingen:  Mohr. 
1920.     36  M.) 

Bogart  and  Thompson.  The  industrial  state,  1870-1893.  Centennial  his- 
tory of  Illinois,  vol.  IV.  (Springfield:  Illinois  Centennial  Commission. 
1920.     Pp.  553.) 

Bothe,  F.  Frankfurt's  wirtschaftlieh-soziale  Entzvicklung  vor  dem  drei- 
zigjahrigen.  Kriege  und  der  Fettmilchauf  stand.  (Frankfurt:  Baer. 
1920.     60  M.) 

Botsford,  G.  W.  and  J.  B.  A  brief  history  of  the  world,  with  especial 
reference  to  social  and  economic  conditions.  Revised  edition.  (New 
York:    Macmillan.     Pp.  xv,  554.) 

Brodnitz,  G.  Das  System  des  Wirtschaftskrieges.  (Tubingen:  Mohr. 
1920.     20  M.) 

Bruce,  A.  A.  The  Non-Partisan  League.  Citizen's  library  series.  (New 
York:    Macmillan.     1920.) 

Burch,  H.  R.  American  economic  life  in  its  civic  and  social  aspects.  (New 
York:     Macmillan.     1921.     $1.72.) 

Burger,  O.  Chile.  Als  Land  der  Verheissung  und  Erfiillung  fiir  deutsche 
Auswanderer.  Eine  Landes-  und  Wirtschaftskunde.  (Leipzig:  Dieter- 
ich.     1920.     Pp.  viii,  272.     21  M.) 

Cabiati,  A.  Problemi  commcrciali  e  finanziari  dell'Italia.  (Milan:  Treves 
Fratelli.     1920.     4  1.) 

Chart,  D.  A.  An  economic  history  of  Ireland.  (London:  Unwin.  1920. 
5s.) 

Cheyney,  E.  P.  An  introduction  to  the  industrial  and  social  history  of  Eng- 
land. Revised  edition.  (New  York:  Macmillan.  1920.  Pp.  xiii,  386.) 
The  last  two  chapters  of  the  old  edition,  covering  the  period  since  the 
Industrial  Revolution  of  the  eighteenth  century  have  been  recast  in  four, 
and  have  been  extended  down  to  the  period  of  Guild  Socialism  and  Whitley 
Councils,  adding  some  fifty  pages  to  the  book.  The  book  has  long  been 
recognized  as  an  excellent  manual,  accurate  in  matters  of  fact,  well  pro- 
portioned, clear  and  interesting.  The  revision  has  distinctly  enhanced  its 
usefulness.  C.  D. 

Clay,  A.  T.  Babylonian  business  transactions  of  the  first  millennium,  B.C. 
Part  I  of  Babylonian  records  in  the  library  of  J.  Pierpont  Morgan.  (New 
York:   Yale  Univ.  Press.     1921.     $4.) 

Dingle,  E.  J.  The  new  atlas  and  commercial  gazetteer  of  China.  (New 
York:    Dutton.     1921.     $160.) 

Fisk,  H.  E.  The  Dominion  of  Canada;  its  growth  and  achievement.  (New 
York:   Bankers  Trust  Company.     1921.     Pp.  174.) 

Flegel,  K.  Die  wirtschaftliche  Bedeutung  der  Montanindustrie  Russlands 
und  Polens  und  ihre  Wechselbeziehungen  zu  Deutschland.  (Leipzig: 
Teubner.     1921.     Pp.  viii,  101.     5  M.) 


280  Reviews  and  New  Books  [June 

Goldschmidt,  A.  Die  Wirtschaftsorganisation  Sowjet-Russlands.  (Ber- 
lin:    Rowohlt.     1920.     Pp.  307.) 

Hammond  and  Jenks.  Great  American  issues.  (New  York:  Scribner. 
1921.) 

Hauser,  H.  Travailleurs  et  marchands  dans  Vancienne  France.  (Paris: 
Alcan.     1920.) 

Van  Houtte,  H.  L'histoire  economique  de  la  Belgique  a  la  fin  de  I'ancien 
regime.     (Gand:  Van  Rysselberghe  &  Roinbaut.     1920.    Pp.  588.) 

Iwasaki,  U.  The  working  forces  in  Japanese  politics.  A  brief  account  of 
political  conflicts,  1867-1920.  Columbia  University  studies  in  history, 
economics,  and  public  law,  vol.  XXVII,  no.  1.  (New  York:  Longmans. 
1921.     Pp.  141.) 

Johnston,  T.  The  history  of  the  working  classes  in  Scotland.  (Glasgow: 
Forward  Pub.  Co.     1920.     Pp.  408.) 

Jusserand,  J.  J.  The  economic  situation  in  France.  (New  York:  Jean  de 
Sieyes,  2  Rector  St.     1921.     Pp.  5.) 

Kirkaldy,  A.  W.  Industry  and  finance;  supplementary  volume;  being  the 
results  of  inquiries  arranged  by  the  section  of  economic  science  and  sta- 
tistics of  the  British  Association,  during  the  years  of  1918  and  1919. 
(New  York:   Pitman.     1921.     $2.10.) 

van  der  Kloot  Meyburg,  W.  De  economische  ontwikkeling  van  een  Zuid- 
hollandisch  dorp  (Oudshoorn)  tot  in  den  aanvang  der  twintigste  eeuw. 
(The  Haag:    Nijhoff.     1920.     5  Fl.) 

Knowles,  L.  C.  A.  The  industrial  and  commercial  revolutions  in  Great 
Britain  during  the  nineteenth  century.  (London:  Routledge.  1921. 
6s.  6d.) 

Koppers,  W.  Die  Anfange  des  menschlichen  Gemeinschaftslebens  im 
Speigel  der  neuern  Vblkerkunde.  (Miinchen-Gladbach:  Volksverein- 
Verlag.     1921.     Pp.  192.     7  M.) 

Lingley,  C.  R.  Since  the  Civil  War.  The  United  States,  edited  by  Max 
Farrand,  vol.  III.     (New  York:    Century  Co.     1920.     Pp.  635.) 

Contains  the  following  chapters :  Economic  foundations  of  the  new 
era;  Transportation  and  its  control;  Industry  and  laissez  faire;  The 
rise  of  the  wage  earner;  Monetary  and  financial  problems;  Economic  and 
political  tendencies  since  1896. 

Lippincott,  I.     Economic  development  of  the  United  States.     (New  York: 
Appleton.     1921.     Pp.  691.     $3.50.) 
To  be  reviewed. 

Luttig,  J.  C.  Journal  of  a  fur-trading  expedition  on  the  upper  Missouri 
1812-18 IS.  Edited  by  S.  M.  Drumm.'  (St.  Louis:  Mo.  Hist.  Soc.  1920. 
Pp.  192.) 

McKnight,  W.  A.  Ireland  and  the  Ulster  legend;  or,  the  truth  about  Ul- 
ster.    (London:     King.     1921.     Pp.  96.     2s.) 

Contains  economic  material  in  regard  to  population,  agricultural  hold- 
ings, and  taxation. 


1921]  Economic  History  and  Geography  281 

Marshall,  L.  C.  and  Lyon,  L.  S.  Our  economic  organization.  (New  York: 
Macmillan.     1921.     $1.88.) 

Meissner,  K.  Die  Entwicklung  der  japanischen  Eisenindustrie  wdhrend 
des  Krieges.     (Hanover:    Hahn.     1920.     7  M.) 

Nearing,  S.     The  American  empire.     (New  York:     Rand  School  of  Social 
Science.     1921.    Pp.266.    Paper  50c,  cloth  $1.) 
A  socialist  interpretation. 

Nicoli,  P.  La  scuola  del  popolo  in  Italia  e  i  suoi  immediati  problemi. 
(Bologna:    Nicola  Zanichelli.     1920.    Pp.124.    3.50  1.) 

Nies,  J.  B.  and  Keiser,  C.  E.  Historical  religious  and  economic  texts  and 
antiquities.     (New  Haven:    Yale  Univ.  Press.     1920.     $10.) 

Noyes,  P.  B.  While  Europe  waits  for  peace.  (New  York:  Macmillan. 
1921.) 

Nutter,  G.  R.  The  Boston  Chamber  of  Commerce  and  the  future  of  New 
England.     (Boston.     1921.) 

Pettigrew,  R.  F.  The  course  of  empire.  (New  York:  Boni  &  Liveright. 
1921.) 

Pfohl,  E.  Wirtschafts-Atlas  des  tschecho-slowakischen  Staates.  (Reichen- 
berg:    Stiepel.     1920.    218  Kr.) 

Ransome,  A.    The  crisis  in  Russia.     (New  York:    Huebsch.     1921.   $1.50.) 

Rees,  J.  F.  A  social  and  industrial  history  of  England,  1815-1918,  (New 
York:   Dutton.     1921.     Pp.  197.     $2.) 

Sartorius  von  Walterhausen,  A.  Deutsche  Wirtschaftsgechichte,  1815- 
1914.     (Jena:     Fischer.     1920.     Pp.  x,  598.     50  M.) 

Schrepfer,  K.  Das  Handwerk  in  der  neuen  JVirtschaft.  (Munich:  Duncker 
&  Humblot.     1920.     Pp.  132.) 

Southard,  A.  E.  Eritrea.  A  Red  Sea  Italian  colony  of  increasing  inter- 
est to  American  commerce.  Special  consular  reports,  82.  (Washington: 
Bureau  of  Foreign  and  Domestic  Commerce.     1921.     Pp.   167.) 

Springer,  L.  Some  aspects  of  financial  and.  commercial  after-war  condi- 
tions.    (London:     King.     1921.     Pp.  118.     5s.) 

Squire,  G.  C.  A  history  of  the  Chartist  movement.  (London:  Constable. 
1920.     Pp.  316.) 

Vera  Estanol,  J.  Carranza  and  his  bolshevik  regime.  (Los  Angeles: 
Wayside  Press.     1920.     Pp.  viii.  247.) 

Vissering,  G.  International  economic  and  financial  problems.  (London: 
Macmillan.     1920.     Pp.  107.) 

.     Problimes  inter  nationaux  economiques  et  financiers.     (Paris: 

■      Giard  &  Briere.     1920.    Pp.116.) 

Woolf,  L.  Economic  imperialism.  Handbooks  of  international  relations, 
edited  by  G.  L.  Dickinson.  (New  York:  Harcourt,  Brace  &  Howe. 
1920.    Pp.  111.    $1.) 

Zahnbrecher.     Die  Wirtschafts-  und  Sozialpolitik  der  bayerischen  Folks- 


282  Reviews  and  New  Books  [June 

partei  im  buyer.     Landtag  1919-1920.     (Munich:    Bayer.     1920.     8  M.) 

Zimand,  S.  Modern  social  movements.  (New  York:  H.  W.  Wilson.  1921. 
$1.80.) 

Economic  survey  of  certain  countries  specially  affected  by  the  rear  at  the 
close  of  the  year  1919.  (London:  H.  M.  Stationery  Office.  1920.  Pp. 
118.) 

Economisch-historisch  jaarboeJc.  Bijdragen  tot  de  economische  geschiedenis 
van  Nederland.     (The  Haag:    Nijhoff.     1920.     9.60  fl.) 

Information  respecting  the  Russian  soviet  system  and  its  propaganda  in 
North  America.     (Ottawa:    Dept.  Labour.     1920.       Pp.  18.) 

Was  Jcann  Deutschland  leisten?     (Berlin:     Hobbing.     1920.     Pp.  16L) 

Agriculture,  Mining,  Forestry,  and  Fisheries 

The  World's  Food  Resources.  By  J.  Russeli,  Smith.  (New  York: 
Henry  Holt  and  Company.  1919.  Pp.  634.) 
The  reviewer  took  up  this  book  in  the  hope  that  the  author,  who  is 
professor  of  economic  geography  in  Columbia  University  and  was  offi- 
cially connected  with  the  War  Trade  Board  during  the  war,  would,  out 
of  the  war-time  interest  in  food  supply  problems,  throw  new  light  on 
the  world's  ability  to  feed  its  rapidly  increasing  population.  This 
hope  was  by  no  means  in  vain,  but  the  reviewer  found  his  main  object 
in  reading  the  book  falling  into  the  background  behind  the  absorbing 
interest  of  the  pages  which  the  author  devotes  to  the  geography,  and 
the  productive  technique  of  the  various  actual  and  possible  food  re- 
sources, from  our  staple  and  conventional  wheat,  beef,  and  potatoes  to 
dehydrated  vegetables,  Mexican  peppers,  Corsican  acorns,  Manchurian 
millet  (twelve  feet  high!),  esoteric  tropical  fruits,  and  the  (presumably) 
edible  pteropods  "floating  about  in  unnumbered  billions  waiting  for 
some  constructive  servant  of  humanity  to  tell  us  .  .  .  conservative 
landsmen  how  good  they  are  and  how  to  use  them."  Transmuting  into 
an  organic  whole  technical  and  statistical  data  which  must  have  been 
laboriously  collected  from  a  thousand  official  sources,  and  enlivening 
the  whole  by  the  results  of  travel,  observation,  and  imagination,  the 
author  has  crowded  into  five  hundred  octavo  pages  a  mass  of  encyclo- 
pedic information  which  he  presents  in  a  style  so  rapidly  flowing  that 
one  takes  a  sort  of  joy  ride  through  the  exposition,  arriving  one  scarce- 
ly knows  where  or  how,  but  with  the  pleasant  sensation  of  having  had 
an  interesting  and  enjoyable  trip.  All  of  which  is  a  tribute  to  the 
popular  readability  of  a  book  on  a  dry  subject  which  most  people  avoid 
as  likely  to  be  statistical,  and  is  not  at  all  necessarily  an  indication 
that  the  book  is  lacking  in  scientific  quality.  True,  it  lacks  the  show 
of  serried  ranks  of  statistical   tables   (maps   and  graphs   serving   the 


1921}  Agriculture,  Mining,  Forestry,  and  Fisheries  283 

author's  purpose  sufficiently),  but  one  may  go  to  the  sources  for  these 
things  if  one  thinks  they  will  throw  any  considerable  light  on  the  future, 
which  must  after  all  be  largely  a  matter  of  conjectural  projection. 

In  the  concluding  hundred  pages,  the  book  comes  to  the  point  of 
specific  interest  to  the  population  theorist — the  ultimate  food  supply, 
its  sources,  and  the  social  and  political  conditions  which  must  exist 
for  its  production  and  distribution  to  the  oncoming  billions  whose  pro- 
spective advent  strikes  no  terror  in  the  optimistic  author  and  arouses  no 
note  of  protest  from  him.  Had  he  simply  set  forth  in  a  matter-of-fact 
and  not  (as  seems  sometimes  the  case)  an  overly-enthusiastic  estimate 
of  future  resources,  one  might  review  the  book  from  the  standpoint  of 
factual  exposition  and  let  it  go  at  that.  But  in  these  last  pages,  and 
here  and  there  throughout,  are  implications  and  viewpoints  which  can- 
not, in  the  reviewer's  opinion,  but  make  the  book,  with  all  its  valuable 
call  to  efficient  agriculture,  organized  marketing,  and  the  rational  so- 
cializing of  production,  a  dangerous  one  in  the  hands  of  the  uncritical 
popular  reader  too  ready  to  turn  a  deaf  ear  to  Malthusian  warnings 
and  still  unappreciative  and  unfearful  of  the  untoward  results  likely  to 
flow  from  redundant  multiplication. 

The  point  of  view  of  the  main  portion  of  the  book  seems  to  be  a  frank 
acceptance  of  the  "scientific,"  matter-of-fact  mechanicalism  of  the 
machine  era,  except  in  the  concluding  chapters  where  a  point  of  ideal- 
ism with  regard  to  the  necessary  social  organization  brings  in  sugges- 
tions which,  carried  out  in  practice,  would  lead  to  socialism,  or  at 
least  to  a  much  greater  amount  and  efficiency  of  social  control  over 
productive  and  distributive  processes  than  anything  contemplated  in 
the  present  era.  Expansion  of  the  earth's  population  into  the  scores 
of  billions  is  apparently  looked  for  and  approved.  There  is  no  ques- 
tion raised  as  to  the  value  of  individual  life  under  such  density,  the 
type  of  culture  that  could  survive,  or  the  effect  of  such  multiplication 
on  democracy.  One  gathers  from  the  discussion  of  the  control  of  the 
tropics,  however,  that  democracy  would  go  by  the  board.  There  is 
nothing  but  admiration  for  those  peoples  whose  unrestrained  multipli- 
cation has  brought  them  to  the  "ultimate  garden  stage"  of  agriculture, 
and  no  question  as  to  what  happens  to  the  human  spirit,  or  becomes  of 
the  things  that  are  supposed  (erroneously  perhaps)  to  make  life  worth 
living,  among  those  peoples  in  which  the  unprivileged  masses  spend  all 
their  waking  time  transplanting  rice  plants  in  noisome  quagmires  or 
laboriously  portering  soil  and  compost  up  to  narrow  hillside  terraces 
held  in  position  by  masonry  retaining  walls.  The  temperate  zone, 
brought  as  yet  in  only  a  few  scattered  spots  to  the  garden  stage,  still 
holds  boundless  possibilities  for  increase  in  food  production.  There  is 
no  denying  that  the  author  makes  out  his  case  here — but  only  on  an 


284  Reviews  and  New  Books  [June 

engineering  and  technical  basis.  The  economic  aspect  of  the  matter,  in- 
volving the  law  of  diminishing  returns  and  increase  in  labor  cost,  does 
not  much  occupy  his  attention  or  deter  his  enthusiasm,  although  he 
does  incidentally  find  satisfaction  in  the  machine  methods  of  rice  pro- 
duction in  the  United  States  in  contrast  to  the  Oriental  mode,  and  in- 
dulges in  some  speculations  as  to  the  possible  applications  of  electricity 
to  agriculture. 

The  future  boundless  food  resources,  however,  will  be  found  in  the 
tropics.  The  only  prerequisites  to  subsisting  the  manufacturing  tem- 
perate zones  off  of  tropical  agricultural  production  are  a  teeming 
tropic  native  population  and  political  and  economic  control  of  those 
prolific  regions  by  the  ruling,  ascendant  white  man.  That  this  would 
mean,  as  it  has  meant,  forced  labor,  and  a  master-and-servant  relation 
between  races,  the  author  does  not  seek  to  disguise.  The  British,  we 
are  told,  "took  possession  of  Bagdad  in  March,  1917,  and  immediately 
set  the  natives  to  work  on  canal  digging."  Phenomenal  profits  to  be 
gleaned  in  cocoanut  plantations  operated  with  attractively  low  paid 
labor  in  the  South  Seas  are  noted.  One  wishes,  however,  that  the  author 
had  read  recently  Robert  Louis  Stevenson,  or  that  delightful  yet 
sombre  book  of  Frederick  O'Brien's,  White  Shadows  in  the  South  Seas, 
for  a  more  sympathetic  conception  of  what  white  commercial  exploita- 
tion has  meant  to  these  islands. 

The  white  man,  it  is  admitted,  cannot  stand  the  tropical  climate. 
Tropic  population  must  continue  to  consist  almost  entirely  of  accli- 
mated native  black,  brown,  and  yellow  races.  "Left  to  their  own  de- 
sires, these  men  .  .  .  have  never  yet  developed  even  a  second-rate  power 
or  civilization  and  have  fallen  an  easy  prey  to  colonizing  [  ?]  European 
powers.  .  .  .  Apparently  thus  only  will  these  untouched  continents 
yield  unlimited  amounts  of  rice  and  rubber  .  .  .  and  a  host  of  tropical 
products  which  we  can  buy  with  our  northern  goods"  (p.  593).  Con- 
trary to  the  fears  of  such  writers  as  C.  H.  Pearson  (whose  interesting 
book,  National  Life  and  Character  is  not,  however,  cited),  "the  white 
races  .  .  .  have  nothing  to  fear  from  three  or  five  or  ten  billions  of 
black,  brown,  or  yellow  people  in  the  torrid  zone.  They  would  be  non- 
militant  agriculturists,  carrying  out  as  now  the  instructions  of  white 
men"  (p.  594).  Thus,  in  a  paragraph,  are  set  at  rest  Japanese  imperi- 
alistic ambitions,  the  yellow  peril,  and  political  insurgency  in  India,  to 
say  nothing  of  our  own  equivocal  position  in  Haiti.  And  thus  we  are 
led  blandly  and  almost  seductively  into  a  comfortable  acquiescence  in 
forced  labor,  probable  peonage,  and  tropical  exploitation,  with  the  old, 
stock  excuse  of  aggression  that  these  people  are  lazy  and  shiftless 
"when  left  to  their  own  desires"  and  that  in  spite  of  their  non-militant 
character  they  always  suffer,  in  the  absence  of  Dutch  East  India  Com- 


1921]  Agriculture,  Mining,  Forestry,  and  Fisheries  285 

panies  and  French  colonial  troops,  "wars,  murders,  piracies,  slavery  and 
pestilences."  These  unfortunately  backward  peoples  might  answer 
with  a  tu  quoque  to  New  York  state  whose  automobiles  killed  1400  peo- 
ple last  year,  or  to  the  city  where  a  crime  wave  of  unusual  proportions 
is  now  raging  within  call  of  Columbia  University,  or  to  England  whose 
coal  mines  alone  kill  an  average  of  1200  men  a  year  and  injure  50,000 
more  so  that  they  are  incapacitated  for  from  one  to  three  months.  It 
is  a  curious  fact  also  that  the  Marquesans  and  the  Hawaiians  suffered 
no  pestilences  until  white  traders  brought  them  the  boon  of  tubercu- 
losis and  syphilis,  which  have  rendered  them  nearly  extinct  races,  or 
that  the  plague,  cholera,  and  yellow  fever,  against  which  the  western 
world  is  compelled  to  maintain  an  expensive  and  rigid  quarantine  sys- 
tem, reap  their  grandest  harvests  in  just  those  regions  where  agricul- 
ture has  reached  the  garden  stage  and  population  the  saturation  point. 
Having  once  touched  upon  the  philosophy  of  the  population  ques- 
tion, it  is  to  be  regretted  that  the  author  did  not  look  at  the  other 
side  of  the  equation,  population  =  food  supply.  Had  he  done  so,  he 
need  not  have  said  less  about  increasing  food,  but  he  probably  would 
have  found  space  to  say  something  about  the  possible  desirability  of  a 
rationally  limited  birth  rate.  That  he  has  not  done  this  is  perhaps  due 
to  the  fact  that  he  unconsciously  holds  to  the  class,  and  to  the  race- 
superiority,  viewpoint. 

Yet  that  he  is  far  from  acquiescent  in  the  present,  planless,  selfish, 
profit-motivated  organization  of  society  is  evident.  "If  this  war  will 
teach  us  anything  it  will  teach  us  to  draw  the  contrast  between  profits 
and  service,  business  and  living"  (p.  573).  And  so  we  are  given  strik- 
ing illustration  in  some  of  the  most  suggestive  of  these  pages  of  the 
criminal  inefficiency  and  costliness  of  our  unorganized  marketing.  The 
unlocking  of  the  gates  to  a  bountiful  food  supply  laid  down  at  our 
doors  without  waste  and  at  reasonable  cost  awaits  the  advent  of  a  so- 
ciety which  can  plan  for  its  organic  needs  organically  and  not  leave 
them  to  the  tender  mercies  of  scheming  commission  merchants,  tenant 
farmers  skinning  the  land,  and  suchlike  undesirable  citizens.  Whether 
such  organization  and  collective  intelligence  can  be  had  short  of  so- 
cialism, or  whether  socialism  itself  as  popularly  understood  could  com- 
pass the  task,  the  author  does  not  inform  us. 

The  discussion  of  the  sources  and  future  supply  of  fertilizers  is  frag- 
mentary and  unsatisfactory.  Insufficient  attention  is  given  to  the 
problem  of  "permanent"  agriculture.  And  the  treatment  of  future 
sources  of  power  seems  in  places  fantastic.  The  limits  to  mechanical 
and  material  progress,  a  point  so  admirably  brought  out  by  Julius 
Wolf  in  his  Die  Volkswirtschaft  der  Gegenwart  wnd  Zukunft,  1912,  is 
entirely  overlooked. 


286  Reviews  and  New  Books  [June 

In  short,  in  spite  of  its  interesting  quality,  its  command  of  facts, 
and  its  undoubtable  utility  both  as  a  readable  book  and  a  work  of 
reference,  the  book  is,  from  economic  and  ethical  standpoints,  deficient. 

A.  B.  Wolfe. 

University  of  Texas. 

NEW    BOOKS 

Aereboe,  F.  Allgemeine  landwirtschaftliche  Betriebslehre.  (Berlin: 
Parey.     1920.     48  M.) 

Battle^  J.  R.  The  handbook  of  industrial  oil  engineering.  (Philadelphia: 
Lippincott.     1920.     Pp.  viii,  1131.) 

Brown,  R.  N.  R.  The  principles  of  economic  geography.  (New  York: 
Pitman.      1921.     Pp.  xv,  208.     $4.) 

Curr,  A.  L.  Commercial  geography.  An  intermediate  textbook.  Second 
edition.     (New  York:    Macmillan.     1921.     Pp.  viii,  440.    $2.40.) 

Cushing,  S.  W.  and  Huntington,  E.  Principles  of  human  geography. 
(New  York:   Wiley.     1921.     Pp.  430.    $3.50.) 

Delaisi,  F.    Le  petrole.     (Paris:    Payot.     1921.     Pp.156.) 

Finlay,  J.  R.  The  cost  of  mining.  Third  edition,  revised  and  enlarged. 
(New  York:    McGraw-Hill.     1920.     Pp.  xi,  532.     $6.) 

Fippin,  E.  O.    Rural  New  York.     (New  York:    Macmillan.     1921.    $2.50.) 

Fisher,  C.  B.  The  Farmers'  Union.  Studies  in  economics  and  sociology, 
no.  2.     (Lexington:     Univ.  of  Kentucky.     1920.     $1.) 

Goodman,  R.  B.  The  price  of  lumber.  An  address  delivered  at  Yale  Uni- 
versity, January,  1921,  under  the  auspices  of  the  School  of  Forestry. 
Lumber  industry  series,  no.  1.  (New  Haven:  Yale  Univ.  School  of 
Forestry.     1921.     Pp.  29.) 

Green,  R.  M.  Cost  and  price  tendencies  on  the  farm.  Missouri  Station 
cir.  97.     (Columbia.     1920.     Pp.  8.) 

Grunewald,  H.  Die  Kohle  als  Grundlage  unseres  Wirtschaftlebens.  (Ber- 
lin:   Zentralverlag.     1920.     1.40  M.) 

Hodges,  F.  Nationalization  of  the  mines.  (New  York:  Seltzer.  1921. 
Pp.  xii,  169.    $1.75.) 

I.anzoni,  P.  Geografia  economica  commerciale  universale.  Vol.  I.  (Mi- 
lano:     Hoepli:     1920.     6.50  1.) 

Laur,  E.  Die  Einfuhrung  in  die  Wirtschaftslehre  des  Landbaus.  (Berlin: 
Parey.     1920.     32  M.) 

Legendre,  R.  Alimentation  et  ravitaillement.  (Paris:  Masson.  1920. 
Pp.  327.) 

McLeish,  J.  The  production  of  iron  and  steel  in  Canada  during  the  calen- 
dar year,  1919.     (Ottawa:    Mines  Branch.     1920.     Pp.45.) 

Mammen,  F.  Die  Produktionskosten  in  der  Landwirtschaft.  (Dresden: 
(ilobus.     1920.     3  M.) 


1921]  Agriculture,  Mining,  Forestry,  and  Fisheries  287 

Pearse,  A.  W.  The  world's  meat  future.  Second  edition.  (New  York: 
Dutton.     1921.     Pp.  xvi,  335.     $8.) 

Pietsch,  M.  Die  Wolle.  Schafwolle  und  andere  tierische  Wollen.  (Leip- 
zig:    Bitterling.     1920.     8.40  M.) 

Ross,  V.  The  evolution  of  the  oil  industry.  (Garden  City:  Doubleday. 
1920.     Pp.  xvi,  178.     $1.50.) 

This  book  is  not  designed  as  a  scientific  treatise.  Its  purpose  is  to  give 
in  interesting  and  readable  form  the  origin  and  growth  of  the  petroleum 
industry,  including  an  understandable  discussion  of  the  present  position 
of  the  industry  and  the  policy  that  should  be  pursued  if  the  United 
States  is  to  maintain  its  present  position  in  the  industry.  In  the  respects 
named  above  the  volume  abundantly  fulfills  its  mission.  Mr.  Ross  in- 
cludes chapters  on  Petroleum  in  History  and  Legend,  What  is  Petroleum? 
The  Dawn  of  America's  Petroleum  Industry,  and  Petroleum  as  a  World 
Industry.  There  are  interesting  chapters  on  such  technical  problems  as 
the  composition  of  petroleum,  locating  the  sources,  methods  of  drilling, 
processes  of  refining,  uses  of  the  by-products,  and  methods  of  transporta- 
tion. 

The  last  chapter  is  devoted  to  Petroleum  in  the  Future.  The  author 
is  of  the  opinion  that  the  petroleum  companies  "should  be  encouraged  by 
all  the  power  and  influence  their  government  can  exert  to  acquire  foreign 
sources  of  supply  wherever  available."  He  points  out  that  this  is  a  most 
vital  question  for  the  United  States  because  if  our  supply  is  to  be  main- 
tained at  the  present  level  for  an  extended  period  the  American  oil  indus- 
try must  look  abroad  for  reserves.  The  need  for  this  policy  is  the  more 
apparent  because  the  American  reserves  have  been  heavily  drawn  upon 
and  our  supplies  will  be  exhausted  long  before  those  of  other  parts  of 
the  world  which  as  yet  have  been  but  little  exploited.  The  United  States 
will  be  seriously  handicapped  if  its  ships  abroad  are  eventually  compelled 
to  rely  on  foreign  companies  for  fuel.  It  is  already  the  policy  of  some 
foreign  properties  to  restrict  the  acquisition  of  oil  properties  to  their  own 
citizens.  This  policy  would  largely  exclude  capitalists  of  the  United 
States  from  the  development  of  foreign  resources  unless  diplomatic  pres- 
sure is  used  to  secure  more  favorable  treatment.  In  this  connection  the 
author  says:  "It  must  be  plain  to  the  most  inexperienced  reader  that  in 
the  case  of  Asiatic  and  East-European  fields,  however,  American  oil  in- 
terests are  powerless  to  achieve  influence  and  obtain  due  recognition  with- 
out the  diplomatic  assistance  and  cooperation  of  their  home  government. 
This  cooperation  is  necessary,  if  they  are  to  secure  equal  rights  under 
international  law  that  will  serve  not  merely  as  a  check  upon  any  possible 
unfair  discrimination,  but  enable  them  to  secure  workable  international 
agreements."  Without  government  cooperation,  "the  future  is  fraught 
with  hazard  to  an  industry  that  stands  as  a  monument  to  American  organ- 
izing genius."  Isaac  Lippincott. 

Shepperson,  A.  B.  Cotton  facts.  Revised  by  C.  W.  Shepperson-Bull. 
(New  York:    Shepperson  Pub.  Co.     1920.    Pp.  lxxiv,  162.) 

Spence,  H.  S.  Phosphate  in  Canada.  (Ottawa:  Mines  Branch.  1920. 
Pp.  146.) 

Teele,  R.  P.  The  western  farmer's  water  right.  Bull.  No.  913.  (Washing- 
ton:    United  States  Dept.  of  Agriculture.     1920.     Pp.  14.) 


288  Reviews  and  New  Boohs  [June 

Thieme,  E.  Der  wirtschaftliche  Aufbau  der  Hanauer  Edelmetallindustrie. 
Erganzungsheft  der  Zeitschrift  fur  die  gesamte  Staatswissenschaft,  LIII. 
(Tubingen:     Laupp.     1920.     Pp.  ix,  144.) 

Wygodzinski,  W.  Agrarwesen  und  Agrarpolitik.  (Berlin:  Verein  wissen- 
schaftl.     Verleger.     1920.     2.10  M.) 

Agricidtural  almanac  for  1920.  Farmers  bull.  1202.  (Washington:  Dept. 
Agri.     1921.) 

Annual  report  on  the  mineral  production  of  Canada  during  the  calendar 
year  1918.     (Ottawa:     Mines  Branch.     1919.     Pp.82.) 

Cotton  production  and  distribution,  season  1919-1920.  Bull.  145.  (Wash- 
ington:    Census  Bureau.     1921.     15c.) 

The  farm  loan  contract.  Farmers  bull.  1164,  reprint.  _  (Washington:  Dept. 
Agri.     1921.     5c.) 

Livestock  and  animal  products  statistics,  1909-1919.  (Ottawa:  Dominion 
Bureau  of  Statistics.     1921.     Pp.  131.) 

Milk  production.  Interim  report  of  Agricultural  Costings  Committee.  (Lon- 
don:    H.  M.  Stationery  Office.     2d.) 

Tenth  Annual  report  by  the  Director  of  the  Bureau  of  Mines.  (Washing- 
ton:    Dept.  of  the  Interior,  Bureau  of  Mines.     1920.     Pp.  149.) 

World  atlas  of  commercial  geology.  Part  I.  Distribution  of  mineral  pro- 
duction.    (Washington:     U.  S.  Geol.  Survey.     1921.     Pp.  72.     $2.) 

Manufacturing  Industry 

Central  Electric  Light  and  Power  Stations  with  Summary  of  the  Elec- 
trical Industries,  1917.  Prepared  under  the  direct  supervision  of 
Edmund  E.  Lincoln.  (Washington:  Bureau  of  the  Census. 
1920.    Pp.  184.) 

To  the  economist  this  report  is  of  great  significance.  It  is  impor- 
tant because  it  is  the  first  thoroughly  comprehensive  statistical  study 
of  the  local  utility  industries — particularly  that  of  furnishing  electric 
energy — ever  made  by  a  trained  economist.  It  also  has  far  greater 
importance  than  the  ordinary  statistical  census  report  because  of  the 
sidelights  it  throws  on  fundamental  questions  of  economics.  Dr. 
Lincoln's  previous  writings  and  the  poise  and  absence  of  bias  in  his 
point  of  view  toward  utilities  inspire  the  reader  with  great  confidence 
in  the  permanent  value  of  the  report. 

Already  the  Census  Bureau  has  published  three  separate  reports  cov- 
ering the  utility  industries,  those  of  1902,  1907,  and  1912,  so  that 
comparisons  of  certain  important  figures  are  available  for  a  consider- 
able period  of  time. 

One  of  the  most  interesting  and  instructive  of  these  comparisons  is 
that  between  the  electric  light  and  power  central  stations  on  the  one 
hand  and  the  electric  railroads  on  the  other.     It  appears,  for  illustra- 


1921]  Manufacturing  Industry  289 

tion  (Table  1),  that  in  the  decade  from  1907  to  1917  the  number  of 
central  light  and  power  stations  increased  over  one  third  (39  per  cent), 
while  the  electric  railways  have  increased  only  one  twentieth  (5  per 
cent)  ;  the  total  capitalization  of  the  former  has  trebled  from  one 
billion  dollars  to  three  billion  dollars,  while  the  capitalization  of  the 
trolley  lines  has  increased  less  than  40  per  cent.  Or,  looking  at  the 
matter  in  another  way,  in  1902  there  was  nearly  five  times  as  much 
capital  invested  in  the  electric  railways  as  compared  with  the  lighting 
and  power  properties,  whereas  in  1917  there  was  not  twice  as  much. 
Nor  is  the  explanation  far  to  seek.  In  the  five  years  from  1912  to 
1917  the  net  receipts  of  the  central  stations  rose  from  sixty-seven  mil- 
lion dollars  to  one  hundred  million  dollars,  whereas  those  of  the  trolley 
lines  actually  decreased  from  eighty-eight  millions  to  eighty-one  mil- 
lions of  dollars.  In  both  1912  and  1917  the  central  stations  were 
making  about  the  same  percentage  of  net  profit,  3.1  per  cent,  on  their 
capitalization  and,  although  a  considerable  proportion  of  this  capitali- 
zation was  represented  by  common  stock  unjustified  by  material  in- 
vestment, there  is  no  reason  to  assume  that  the  proportion  was  greater 
in  one  year  than  in  another.  We  may  therefore  assume  that  for  the 
central  station  industry  as  a  whole,  in  spite  of  the  increase  in  invested 
capital  of  about  50  per  cent  and  in  spite  of  the  remarkable  increase  in 
technical  efficiency  and  the  widening  use  of  electric  energy,  the  rate  of 
return  on  the  investment  has  remained  relatively  and  absolutely  con- 
stant. Two  observations  are  pertinent.  The  economies  resulting  from 
improved  technique  have  been  handed  on  undiminished  to  the  public  in 
the  form  of  retarded  rate  increases.  And  furthermore  the  industry  as 
a  whole  has  reached  a  kind  of  point  of  equilibrium  where  there  is  neither 
increased  nor  decreased  return  on  additions  to  the  total  capital  in- 
vestment. But  the  trolley  lines  show  a  far  different  situation.  In  1912 
they  returned  2.1  per  cent  on  the  total  capitalization;  in  1917,  1.4 
per  cent — only  two  thirds  as  much. 

It  is  impractical,  within  the  space  of  a  periodical  review,  to  give 
even  a  cursory  summary  of  the  statistics  presented  in  this  report.  Two 
matters,  however,  seem  so  important  to  the  student  of  economics  that 
they  call  for  at  least  passing  notice.  They  are  concerned  with  the 
result  shown  by  municipal  ownership  and  operation  as  compared  with 
private  ownership  and  operation ;  and  also  the  relative  economies  in  the 
ultimate  cost  of  electricity  delivered  to  the  consumer  of  small  as  com- 
pared with  large  generating  plants. 

The  statistics  covering  municipal  plants,  though  exhaustive,  are  not 
as  significant  as  those  of  the  privately  owned  plants ;  nor  are  they  as 
instructive,  for  the  municipal  plants  do  little  power  business.  (The  in- 
come from  power  customers  is  five  times  as  great  as  that  derived  from 


290  Reviews  and  New  Books  [June 

lighting  customers  for  private  plants  and  about  the  same  for  municipal 
plants.  Table  85.)  Their  equipment  is  small — an  average  of  only 
319  k.w.  capacity,  whereas  that  of  the  private  companies  is  nearly 
2,500  k.w.  (Table  42).  Stations  of  less  than  500  k.w.  could  not,  it 
would  seem  to  the  reviewer,  pretend  to  do  much  of  any  power  business 
or  even  an  economical  lighting  business ;  yet  there  are,  apparently, 
many  municipal  plants  with  less  than  100  k.w.  generating  capacity. 
This  difference  shows  itself  in  relative  growth,  for,  as  Dr.  Lincoln  puts 
it,  "the  rate  of  increase  in  the  revenues  of  commercial  plants  has  been 
more  than  nine  times  as  rapid  as  the  growth  in  number  of  stations, 
while  for  municipal  plants  it  has  been  little  more  than  twice  as  rapid" 
(p.  115).  It  shows  itself  also  in  the  rates.  "The  average  power  rate 
[from  which  upwards  of  five  sixths  of  the  revenue  of  commercial  plants 
is  derived]  charged  by  municipal  stations,  1.08  cents  is  50  per  cent 
higher  than  the  average  reported  by  commercial  plants"  (p.  119).  In 
fact,  if  one  compares  the  statistics  of  private  and  municipal  plants, 
page  after  page,  table  by  table,  the  general  impression  grows  that 
municipal  plants  in  spite  of  inadequate  depreciation  charges,  the  total 
absence  of  taxes,  and  high  managerial  salaries,  are  giving  the  public  a 
poorer  service  at  a  higher  cost  than  private  plants. 

Few  problems  connected  with  what  one  might  call  production  eco- 
nomics are  more  significant  than  that  of  the  relative  economies,  per 
unit  of  product,  of  the  large  as  compared  with  the  small  plant.  It 
has  been  presumed  by  engineers,  bankers,  and  the  public  that  the 
larger  the  central  station,  the  cheaper  will  be  the  cost  of  producing 
electric  energy.  And  this  economy  is  not  only  at  the  switchboard  but 
also  at  the  consumer's  meter  after  adequate  distribution  expenses  are 
allocated  to  the  output.  Theoretical  considerations  and  practical  ex- 
periments have  seemed  to  justify  this  presumption,  yet  no  attempts 
have  been  made  to  prove  it  by  a  comparison  of  actual  costs  gathered 
and  arrayed  according  to  some  simple  plan.  Such  a  comparison,  how- 
ever, is  possible  by  a  careful  inspection  of  the  table  of  comparative 
costs  appended  to  the  report  (ch.  10,  pp.  126  and  following)  covering 
groups  of  selected  central  stations  ranging  from  less  than  200,000  to 
more  than  200,000,000  k.w.h.  annual  capacity.  Considering  for  brev- 
ity coal  fuel  steam  plants  only,  it  appears  that  the  costs  of  producing 
electricity,  per  unit  of  output,  declined  steadily  as  the  plants  increased 
in  size  up  to  those  of  a  capacity  of  from  10,000,000  k.w.h.  to  20,000,- 
000  k.w.h.  At  this  range  they  stood  at  2.16  cents  per  k.w.h.  From 
this  point  throughout  all  the  ranges  of  plants  of  higher  capacity  the 
costs  per  k.w.h.  remained  at  approximately  the  same  figure.  The  aver- 
age costs  of  the  nine  stations  of  over  200,000,000  k.w.h.  were  more 
than    those    for    the    stations    between    100,000,000    and    200,000,000 


1921]  Transportation  and  Communication  291 

k.w.h.  It  would  appear,  therefore,  that  the  costs  of  producing  elec- 
tricity declined  steadily  and  uninterruptedly  as  the  size  of  the  struc- 
ture increased,  until  a  point  of  about  15,000,000  k.w.h.  annual  ca- 
pacity was  reached.  Beyond  this  point  the  costs  remained  relatively 
constant.  In  other  words,  in  all  plants  above  this  size  there  was  a 
kind  of  equilibrium  between  the  economies  of  large-scale  production  and 
the  wastes  of  large-scale  production.  All  economies  of  production  can 
be  obtained  in  a  medium  size  plant  that  can  be  obtained  in  a  giant  plant. 
And,  while  this  conclusion  may  run  counter  to  some  of  the  accredited 
notions  of  engineers,  it  is  quite  in  harmony  with  the  economics  of  pro- 
duction of  other  branches  of  industry. 

There  are  many  sections  of  the  report  which  throw  illuminating  side- 
lights upon  the  public  utility  industry  at  the  present  time,  but  none 
that  has  a  more  vital  significance  to  the  public  issues  involved  than  a 
little  paragraph  at  the  end  of  page  119.  It  is  a  kind  of  summary  of 
the  plight  into  which  the  rising  costs  of  commodities  and  the  inelasticity 
of  rates  have  thrown  the  utilities  of  the  country.  "A  large  number  of 
plants  were  operated  at  a  loss  in  1917.  The  total  number  was  1,164, 
of  which  761  were  commercial  and  403  municipal.  In  other  words,  18 
per  cent  of  all  the  commercial  stations  and  17.4  per  cent  of  the  munici- 
pal stations,  after  the  estimated  value  of  free  service  have  been  allowed 
for,  were  operated  at  a  deficit  during  the  year." 

Arthur  S.  Dewing. 

Harvard  University. 

NEW    BOOKS 

Hazard,  B.  E.  Organization  of  the  boot  and  shoe  industry  in  Massachu- 
setts before  1875.     (Cambridge:     Harvard  Univ.  Press.     1921.) 

Respondek,  G.  Weltwirtschaftlicher  Stand  und  Aufgaben  der  Elektro- 
industrie.     (Berlin:    Springer.     1920.    Pp.  iv,  142.) 

Wheelwright,  W.  B.  From  paper-mill  to  pressroom.  (Menasha,  Wis.: 
George  Banta  Pub.  Co.     1920.     Pp.  102.) 

A  handbook  of  the  Canadian  pulp  and  paper  industry.  (Montreal:  Cana- 
dian Pulp  and  Paper  Assoc.     1920.     Pp.  115.) 

The  meat  packing  industry  in  America.  (Chicago:  Swift  &  Co.  1920. 
Pp.  83.) 

Standard  cotton-mill  practice  and  equipment,  with  classified  buyer's  index. 
(Boston:     National  Association  of   Cotton  Manufacturers.      1920.      Pp. 


247.) 


Transportation  and  Communication 


NEW    BOOKS 

Bradlee,  F.  B.  C.  History  of  the  Boston  and  Maine  Railroad;  with  its 
tributary  institutions.  (Salem,  Mass.:  Essex  Institute.  1921.  Pp.  84. 
$2.) 


292  Reviews  and  New  Books  [June 

Drury,  W.  The  significance  of  transport  in  the  production  of  wealth. 
(London:     Francis  Hodgson.     1921.     Is.) 

Goff,  G.  D.  A  simple  plan  to  establish  the  basic  principles  controlling  the 
establishment  of  ship  values  of  United  States  Shipping  Board  vessels. 
A  discussion  and  resolutions  offered  on  January  5,  19£1,  to  the  U.  S. 
Shipping  Board.     (New  York:     Martin  J.  Gillen.     1921.     Pp.   16.) 

Ives,  P.  W.  The  Pere  Marquette  Railroad  Company.  (Lansing:  Michigan 
Historical  Commission.     1919.) 

The  author  traces  the  growth  of  the  Pere  Marquette  through  what  he 
calls  the  "period  of  construction"  (1857-1900),  the  "period  of  exploita- 
tion" (1900-1906),  the  "period  of  financial  difficulties"  (1906-1908),  the 
"period  of  financial  collapse  and  physical  deterioration"  (1900-1912), 
and  the  "period  of  rehabilitation"  (1912-1917).  Most  of  the  component 
lines  of  the  Pere  Marquette  were  lumber  roads  and  their  fortunes  were 
subject  to  the  ups  and  downs  of  the  lumber  business.  The  roads  failed 
to  realize  the  expectation  that  profitable  traffic  in  agricultural  products 
would  develop  when  the  forests  had  been  cleared  because  settlers  were 
attracted  to  more  desirable  land  elsewhere  rather  than  to  the  areas  tribu- 
tary to  the  Pere  Marquette.  As  a  result  there  was  little  prospect  of  pay- 
ing traffic.  Because  of  this  condition  the  road  was  led  into  another  line 
of  development,  namely,  the  quest  for  freight  by  obtaining  through  con- 
nections with  Buffalo  and  Chicago.  Thus  the  Pere  Marquette  was  led 
to  a  policy  of  combination  with  other  roads  and  this  brought  in  its  train 
the  customary  evils  of  high  finance.  The  author  comes  to  the  conclusion 
that  it  would  be  a  mistake  to  restore  the  Pere  Marquette  to  its  old  posi- 
ion  as  a  local  road  for  the  reason  that  many  miles  along  the  Pere  Mar- 
quette are  unproductive  at  the  present  and  must  remain  so  for  many  years 
to  come.  That  the  road  may  meet  its  obligations  it  is  thus  necessary 
that  it  draw  upon  the  traffic  of  a  much  wider  area  than  that  immediately 
tributary  to  the  original  lines.  As  to  the  financial  history  of  the  road,  the 
author  is  of  the  opinion  that  many  of  its  misfortunes  were  due  to  un- 
scrupulous management,  and  that  the  remedy  for  conditions  of  this  kind 
is  federal  control  of  the  issues  of  railway  securities.  Dr.  Ives  has  little 
faith  in  investigations  by  other  bodies  than  those  that  have  become  thor- 
oughly conversant  with  railway  matters.  Investigations  by  committees 
of  state  legislatures  are  thus  subject  to  criticism.  A  considerable  por- 
tion of  the  volume  is  given  up  to  maps  and  charts  which  show  the  shifting 
financial  condition  of  the  roads.  Isaac  Lippincott. 

Krafft,  H.  F.  Sea  power  in  American  history.  (New  York:  Century. 
1920.     Pp.  xxii,  372.) 

Mackay,  C.  H.  International  cable  communication.  (New  York:  Com- 
mercial Cable-Postal  Telegraph  System.      1921.     Pp.  24.) 

Mattox,  W.  C.     Building  the  emergency  fleet.     (Cleveland,  Ohio:     Penton 

Pub.  Co.     1921.     Pp.  xix,  279.     $5.) 
Rush,  T.  E.     The  port  of  New  York.     (Garden  City:     Doubleday.     1920. 

Pp.  xiv,  861.     $3.50.) 

The  book  is  the  product  of  the  "experience  and  studies  of  a  Surveyor  of 

Customs  of  the  Port."     The  first  nine  chapters  deal  with  the  history  and 


1921]  Trade,  Commerce,  and  Commercial  Crises  293 

development  of  the  port.  Emphasis  is  placed  upon  the  fact  that  neither 
those  directly  connected  with  the  Port  of  New  York  nor  the  country  at 
large  appreciate  the  significance  of  the  Port  of  New  York  as  a  link  in  the 
chain  of  world  commerce.  During  the  recent  war  the  Port  of  New  York 
lost  steadily  to  other  ports  because  it  could  not  take  care  of  the  business 
both  in  and  out  of  that  port.  The  author  urges  (ch.  17)  the  establishment 
of  "free-from-customs-zones"  in  ports.  In  a  chapter  on  Port  Improve- 
ments Still  Needed  he  shows  that  there  is  a  need  for  cooperation  on  the 
part  of  the  local,  state,  and  federal  governments  in  order  to  insure  suffi- 
cient port  facilities  and  their  efficient  use.  C.  O.  Ruggles. 

Smith,  W.  The  history  of  the  post  office  in  British  North  America,  1689- 
1870.     (New  York:     Macmillan.      1921.     Pp.  ix,  356.     $8.) 

Thomas,  J.  H.  The  red  light  on  the  railways.  (London:  Cassell.  1920. 
2s.  6d.) 

Annual  statement  of  navigation  and  shipping  of  the  United  Kingdom  for 
1918,  with  comparative  tables  for  1914  to  1918.  (London:  King.  1921. 
3s.   6d.) 

Comparative  railway  statistics,  United  States  and  foreign  countries.  Mis- 
cellaneous series,  no.  35.  (Washington:  Bureau  of  Railway  Economics. 
1920.     Pp.  66.) 

List  of  publications  pertaining  to  government  ownership  of  raihvays.  A  sup- 
plement to  bulletin  no.  62,  covering  period  between  January  1917  and 
February  1921.     (Washington:     Bureau  of  Railway  Economics.     1921.) 

Railway  statistics  of  the  United  States  of  America  for  the  year  ended  De- 
cember, 1919.  Compared  with  the  official  reports  for  1918  and  recent 
statistics  of  foreign  railways.  Seventeenth  year.  (Chicago:  Bureau  of 
Railway  News  and  Statistics.     1921.     Pp.  148.) 

St.  Louis  transit  system;  present  and  future.  H.  Bartholomew,  engineer. 
(St.  Louis:    City  Plan  Commission.     1921.     Pp.36.) 

Trade,  Commerce,  and  Commercial  Crises 
Elements  of  Marketing.    By  Paul  T.  Cherington.     (New  York:   The 

Macmillan  Company.     1920.     Pp.  xii,  238.     $2.10.) 
Marketing,  its  Problems  and  Methods.   By  C.  S.  Duncan.    (New  York: 

D.  Appleton  and  Company.  1920.  Pp.  xv,  500.  $3.50.) 
The  appearance  of  these  two  volumes  reflects  the  growing  interest 
in  marketing  as  a  field  for  research  and  systematic  study.  In  general 
they  represent  a  very  real  contrast  in  breadth  of  treatment  and  point 
of  view.  Mr.  Duncan  has  sought  to  write  a  textbook.  Mr.  Chering- 
ton begins  his  preface  with  the  statement  that  he  has  not  written  a 
book  for  beginners.  He  therefore  does  not  present  those  details  of 
experience  and  practice  which  the  scope  of  Mr.  Duncan's  accepted  task 
has  necessarily  included.  The  Elements  of  Marketing  is  a  brief  state- 
ment of  clean-cut  principles  deduced  from  consideration  of  the  market- 
ing functions.     This  approach,  an  analysis  already  made  familiar  in 


294  Reviews  and  New  Books  [June 

Mr.  Shaw's  Some  Problems  in  Market  Distribution,  and  in  Mr.  Weld's 
The  Marketing  of  Farm  Products,  has  confined  the  treatment  to  an 
outline.  The  need  for  the  "more  accurate"  and  "real"  data  which  will 
fill  in  that  outline  is  reiterated  in  the  course  of  the  development  of 
principles.  Mr.  Duncan,  on  the  other  hand,  presents  the  more  complete 
story  which  the  beginner  requires.  His  discussion  proceeds  from  an- 
alysis of  the  commodity,  through  analysis  of  the  market,  to  analysis  of 
the  trade  organization.  Of  necessity,  therefore,  he  has  included  not  a 
little  data  generally  familiar,  or  gathered  from  government  reports  and 
other  secondary  sources.  His  greatest  contribution  is  that  of  organiz- 
ing a  wide  variety  of  scattered  material  into  a  logically  developed 
summary. 

Any  classification  of  marketing  functions  must  be  more  or  less  arbi- 
trary. Not  a  little  depends  upon  emphasis.  The  important  thing  is 
that,  having  made  a  classification  and  demonstrated  the  logic  of  its 
use,  the  outline  shall  offer  a  working  basis  for  discussion.  This  Mr. 
Cherington's  classification  affords.  An  introductory  chapter  explain- 
ing the  complex  nature  of  the  marketing  service  and  reducing  this  ser- 
vice into  its  elements  "the  marketing  functions,"  is  followed  by  sepa- 
rate chapters  devoted  to  their  more  detailed  consideration :  Merchan- 
dising functions — assembly,  grading,  storing,  transporting;  auxiliary 
functions — financing,  assuming  risk,  sales  functions.  It  might  seem 
more  logical  to  call  financing  and  assuming  risk,  the  "ownership"  func- 
tions, utilizing  the  more  general  term  "auxiliary"  to  cover  the  ill  defined 
group  of  problems  included  by  Mr.  Cherington  under  "sales  functions." 
These  are  concerned  with  sales  equipment,  sales  personnel,  and  rela- 
tions with  the  public,  which,  indeed,  hardly  seem  of  equal  value  with 
the  marketing  functions,  strictly  considered.  Mr.  Duncan's  treatment 
testifies  to  the  soundness  of  this  functional  analysis.  His  chapter  head- 
ings frequently  correspond  to  those  of  Mr.  Cherington.  One  of  his 
function  chapters,  indeed,  that  on  financing,  is  much  superior  to  Mr. 
Cherington's  treatment  of  the  same  subject,  largely  because  it  develops 
the  routine  which  relates  finance,  transportation,  and  storage.  Mr. 
Cherington's  treatment  in  terms  of  functions  alone  suffers  because  it 
tends  to  isolate  each  function  and  to  hide  that  close  relationship  which 
Mr.  Duncan  has  here  disclosed.  A  comparison  of  the  chapters  on 
transportation,  on  the  other  hand,  illustrates  the  advantages  of  Mr. 
Cherington's  method.  He  limits  discussion  to  a  few  elements  of  the 
transportation  service  whereas  Mr.  Duncan  touches  a  variety  of  topics, 
some  of  them  superficially. 

Although  recognition  of  the  incidence  of  standardization  on  market- 
ing governs  the  argument  of  both  writers,  there  is  no  statement  in  terms 
of  general   principle.      Neither  volume  contains   that   emphasis   which 


1921]  Trade,  Commerce,  and  Commercial  Crises  295 

would  give  adequate  recognition  to  the  pervasiveness  of  standardization 
in  the  present-day  marketing  process.  Instead,  "grading"  or  "identi- 
fication"— the  one  a  method  of  standardizing,  the  other  an  attainable 
result — receive  the  formal  treatment.  Only  incidently  is  the  broad 
general  principle  introduced.  But  grading,  or  what  Mr.  Shaw  and 
Mr.  Weld  have  called  "assorting"  or  "rearrangement,"  is  in  practice 
the  application  of  the  principle  of  standardization  to  the  work  of 
marketing.  Not  grades,  but  standards,  are  important.  In  the  market- 
ing of  farm  products,  these  are  attained  by  grading;  and  the  larger 
issue  is  obscured  in  Mr.  Cherington's  discussions  because  his  illustra- 
tions are  taken  from  the  marketing  of  farm  or  ranch  products:  grain, 
cotton,  fruit,  wool.  But  even  the  work  of  weighing  or  measuring  in  a 
retail  store  is  the  application  of  generally  recognized  standards  of 
count,  weight,  or  measure  to  goods  of  standardized  quality  or  goods 
open  to  inspection.  Indeed,  sale  under  brand  (identification),  to  which 
both  volumes  devote  considerable  attention,  is  dependent  upon  confi- 
dence in  the  maintenance  of  standards.  For  farm  products,  to  be  sure, 
this  is  largely  attained  by  establishing  grades;  and  doubtless  the  suc- 
cess of  the  cooperative  organizations  in  the  use  of  general  advertising 
has  unduly  emphasized  the  grading  phase.  But  the  tendency  toward 
standardization  is  not  limited  to  agricultural  marketing,  nor  are  its 
economies  effective  in  that  field  alone.  Almost  universally  (whether  the 
goods  are  of  Mr.  Cherington's  class  A,  goods  for  manufacture,  Class 
B,  equipment,  or  Class  C,  goods  for  retail  consumption,  or  are  grouped 
under  Mr.  Duncan's  "raw  materials  and  food  products"  or  "manu- 
factured articles")  the  end  sought  is  a  standardized  product.  The 
machine  process,  operating  with  modern  cutting  tools  and  measuring 
devices,  with  written  instructions  and  close  inspection,  creates  products 
which  are  substantial  duplicates.  One  screw  is  like  another  screw,  one 
bolt  like  another  bolt ;  one  printing  press,  lathe,  one  motor  like  an- 
other; one  yard  of  tire  fabric  or  of  sheeting  like  another;  one  pound 
of  sugar  or  one  cracker  like  another.  The  marketing  economy  which 
accrues  in  handling  graded  farm  products  is  identical  for  all  standard- 
ized goods ;  tests  by  experts  can  be  concentrated  in  a  single  link  of  the 
marketing  chain.  Thereafter,  sale  by  sample,  by  specification  (de- 
scription), or  by  brand  (symbol)  is  substituted  for  the  clumsy  and 
expensive  process  of  sale  only  after  inspection. 

Both  volumes  close  with  discussion  of  the  costs  of  marketing  and  of 
the  problems  of  eliminating  middlemen.  Both  recognize  that  the  elimi- 
nation of  middlemen  does  not  necessarily  mean  a  lessening  in  the  cost 
of  marketing.  The  marketing  functions  must  be  performed,  and  attack 
must  rather  be  made  upon  uneconomical  methods  of  performing  those 
functions.     The  presence  of  the  middleman  is  to  be  accounted  for  only 


296  Reviews  and  New  Books  [June 

on  the  basis  of  service.  Does  not  the  presence  of  the  jobber  in  a 
marketing  chain  mean,  for  example,  that  the  function  of  assembly  is  an 
important  part  of  the  marketing  problem?  Where  there  are  a  large 
number  of  small  producers  specializing  on  a  few  products,  but  where 
a  complete  retail  stock  includes  a  wide  variety  of  products,  the  jobber 
economizes  the  efforts  of  producers  to  reach  retailers  and  of  retailers 
to  reach  back  to  producers.  In  general,  it  is  only  when  the  retailer 
furnishes  the  outlet  for  large  volume  that  the  producer  can  afford  to 
take  on  the  administrative  work  of  selling  direct;  and  only  when  the 
producer  is  sufficiently  large  to  support  a  service  of  convenience  to  the 
retailer  equal  to  that  of  the  jobber  that  the  retailer  can  afford  to  deal 
direct.  Here,  as  elsewhere  in  business,  there  must  be  a  balancing  of 
factors. 

This  variability  of  governing  conditions  must  be  recognized  in  a 
book  which  treats  of  business  detail.  Of  necessity  the  business  man  is 
intimately  concerned  with  the  forces  which  govern  the  "short  run" 
routine,  just  as  he  is  interested  in  the  forces  which  can  be  seen  to 
operate  only  in  the  "long  run."  The  essential  difference  between  the 
book  on  the  principles  of  economics  and  the  book  on  business  practice 
lies  here.  To  be  sure,  it  is  never  easy  to  draw  the  line  between  need- 
less repetition,  or  the  mentioning  of  the  obvious,  and  artificial  simpli- 
fication of  problems  that  are  intricate.  That  these  two  books,  written 
from  such  divergent  points  of  view,  should  have  treated  so  complex 
a  problem  without  muddying  the  discussions  by  involved  digressions 
or  evading  the  difficulties  with  those  comforting  phrases  "by  and  large" 
and  "other  things  being  equal,"  promises  that  they  will  interest  not  a 
few  readers  in  the  business  classes.  Nevertheless,  it  is  probable  that 
both  books  will  find  their  largest  use  in  business  schools  and  in  col- 
leges. Especially  will  Marketing,  its  Problems  and  Methods  be  wel- 
comed where  course  offerings  are  limited  to  subjects  for  which  texts 
are  available,  or  where  ordinarily  satisfactory  library  facilities  have 
been  thought  inadequate  because  of  the  newness  of  the  material  and  its 
scattered  condition.  The  availability  of  the  Elements  of  Marketing 
will,  on  the  other  hand,  be  limited  very  largely  to  those  institutions  lo- 
cated close  to  large  business  centers  which  afford  laboratory  facilities 
for  intensive  field  study.  Its  most  stimulating  use  will  be  in  connection 
with  the  study  of  such  problems  as  are  contained  in  Professor  Cope- 
land's  volume. 

Homer  B.  Vanderblue. 

Denver  Civic  and  Commercial  Association. 


1921]  Trade,  Commerce,  and  Commercial  Crises  297 

NEW    BOOKS 

Collins,  J.  H.  Straight  business  in  South  America.  (New  York:  Apple- 
ton.     1920.     Pp.  ix,  305.     $2.50.) 

Material  published  earlier  in  the  Philadelphia  Public  Ledger  and  other 
journals  is  here  brought  together,  still  retaining  its  popular  style.  Mr. 
Collins  first  of  all  gives  pertinent  observations  as  to  South  America:  geog- 
raphy, climate,  and  population.  In  a  series  of  short  chapters  upon  the  tools 
of  the  trade,  he  takes  up  banking,  investments,  distributive  organization, 
and  advertising.  The  remaining  chapters  discuss  such  topics  as  American 
good  will  in  South  America,  preparation  for  South  American  trade,  oppor- 
tunities for  the  young  man  in  South  America.  As  a  whole,  the  volume  is 
interesting  and  helpful.  Mr.  Collins'  observations  are  generally  keen,  sane, 
and  well  judged.  He  has  not  come  back  with  ideas  that  a  development  of 
our  trade  with  South  America  is  to  be  accomplished  over  night  by  any 
magic,  but  realizes  that  mutually  satisfactory  exchange  of  services  and  com- 
modities is  the  only  basis  upon  which  a  lasting  commerce  can  be  built. 

H.  R.  T. 

Douglas,  A.  W.  Merchandising  studies  of  the  states,  their  resources  and 
development.     (New  York:     Ronald.     1920.     Pp.  178.) 

The  reader  who  enjoyed  Mr.  Douglas'  Merchandising  will  be  very 
much  disappointed  in  the  present  volume.  It  is  not  a  book  on  merchan- 
dising at  all,  except  as  its  comments  on  the  history,  climate,  scenery,  re- 
sources, and  society  of  eight  American  states  may  be  interpreted  as  illus- 
trating conditions  governing  the  attack  on  markets  which  are  assumed  to 
be  typical.  Anecdotes,  literary  and  historical  references,  some  optimistic 
prophecy,  and  not  a  little  of  the  shrewd  philosophy  which  makes  Mr. 
Douglas'  earlier  volume  so  readable,  are  scattered  through  the  text. 

Homer  B.  Vanderblue. 

Eldridge,  F.  B.     Trading  with  Asia.     (New  York:    Appleton.     1921.) 

Erdman,  H.  E.  The  marketing  of  whole  milk.  (New  York:  Macmillan. 
1921.     $4.) 

von  Hentig,  H.  Ueber  den  Zusammenhang  von  kosmischen,  biologischen 
und  sozialen  Krisen.     (Tubingen:    Mohr.     1920.     10  M.) 

Hermberg,  P.  Der  Kampf  um  den  Weltmarkt.  Handelsstatisches  Material 
herausgegeben  vom  Institut  fiir  Weltwirtschaft  und  Seeverkehr  an  der 
Universitat  Kiel.     (Jena:    Fischer.     1920.    Pp.135.) 

von  Hirschfeld,  G.  Das  Problem  der  deutschen  Handels  und  Wirtschafts- 
interessen  in  SUd-Amerika.     (Berlin:     Simion.     1920.     3  M.) 

Kidd,  H.  C.    Foreign  trade.     (New  York:     Prentice-Hall.     1921.) 

Lambert,  H.  Pax  economica.  La  liberte  des  echanges  inter nationaux, 
fondement  necessaire  et  suffisant  de  la  paix  universelle  et  permanente. 
(Paris:   Alcan.     1921.    9  fr.) 

Lamprey,  L.  Masters  of  the  guild.  (New  York:  Stokes.  1921.  Pp. 
240.     $2.25.) 

Larice,  R.  Storia  del  commercia.  Third  edition.  (Milano:  Hoepli.  1920. 
7.50   fr.) 


298  Reviews  and  New  Books  [June 

Laut,  A.  C.  The  fur  trade  of  America.  (New  York:  Macmillan.  1921. 
Pp.  xv,  341.     $6.) 

Mollat,  G.  Volkswirtschaftliches  Quellenbuch.  Eine  Einfuhring  in  der 
Geschichte,  der  Theorie  und  den  Praxis  von  Handel,  Industrie  und 
Ferkehr.     (Osterwieck:    Ziekfeld.     1920.     15  M.) 

Morse,  H.  B.  The  trade  and  administration  of  China.  Third  edition  re- 
vised.    (New  York:     Longmans.     1921.     Pp.  xvi,  505.     $9.) 

Mossdorf,  O.  Die  Forderung  des  japanischcn  Aussenhandels  im  JVeltkriege. 
(Berlin:     Curtius.     1920.     3.50  M.) 

Munger,  T.  L.  Detroit  and  world-trade j  a  survey  of  the  city's  present  and 
potential  foreign  trade  and  seaboard  traffic,  and  the  facilities  there- 
for, with  special  reference  to  the  proposed  St.  Lawrence  deep  waterway 
to  the  sea.     (Detroit:     Board  of  Commerce.      1920.     Pp.   117.) 

Porter,  E.  H.  Constructive  economic  policies.  Cooperation  arid  prices. 
Needs  of  present  day  marketing.  Problems  of  food  distribution.  (Al- 
bany: N.  Y.  State  Dept.  of  Farms  and  Markets.  1921.  Pp.  17,  16,  16, 
13.) 

Roorbach,  G.  B.,  editor.  The  international  trade  situation.  (Philadelphia: 
Am.  Acad.  Pol.  &  Soc.  Sci.     1921.     Pp.  viii,  227.     $1.) 

Sax,  E.  Land  und  Wasserstrassen,  Post,  Telegraph,  Telephon.  Die  Ver- 
kehrsmittel  in  Volks-  und  Staatswirtschaft,  vol.  II.  (Berlin:  Springer. 
1919.     Pp.  ix,  533.) 

Schmidt.  Internationaler  Zahlungsverkehr  und  Wechselverkehr.  Der 
Zahlungsverkehr,  vol.  2.      (Leipzig:     Glockner.     1919.     Pp.  x,  406.) 

Willms,  M.  Zur  Frage  der  Rohstoffversorgung  der  deutschen  Jute-Indus- 
trie. Probleme  der  Weltwirtschaft,  34.  (Jena:  Fischer.  1920.  Pp.77. 
12  M.) 

Annual  statement  of  trade  of  the  United  Kingdom  with  foreign  countries  and 
British  possessions  in  1919,  compared  with  the  four  preceding  years. 
(London;    King.     1921.     Vol.  I,  pp.  945,  10s;  vol.  II,  pp.  1093,  6s.) 

Kelly's  directory  of  merchants,  manufacturers  and  shippers  of  the  xcorld. 
A  guide  to  the  export  and  import  shipping  and  manufacturing  industries. 
Vols.  I  and  II.  34th  edition.  (London:  Kelly's  Directories,  Ltd.  1920. 
Pp.  eclxxii,  3235;  exxi,  1800.     50s.) 

Markets  of  the  xcorld;  a  series  of  economic  maps  and  statistical  abstracts  of 
the  principal  countries  of  the  world.  (Boston:  First  National  Bank. 
1920.) 

Sixty-second  annual  report,  for  the  year  1919-1920,  Neiv  York  State  Cham- 
ber of  Commerce.     (Albany.     1920.     Pp.  81.) 

Accounting,    Business    Methods,    Investments,   and    the 

Exchanges] 

How  to  Manage  Men.     The  Principles  of  Employing  Labor.    By  E.  H. 
Fish.     (New  York:   The  Engineering  Magazine  Company.     1920. 
Pp.  xii,  337.) 
A  great  deal  of  attention  has  been  directed  during  the  past  five  years 


1921]       Accounting,  Business  Methods,  and  the  Exchanges  299 

to  personnel  administration.  A  variety  of  methods  and  principles  have 
been  tried  out.  Various  articles  and  conferences  have  emphasized  the 
necessity  of  establishing  employment  departments  and  of  formulating 
practical  employment  policies.  Mr.  Fish's  book  is  an  attempt  to  em- 
phasize both  the  science  and  the  art  of  handling  personnel  and  to  bring 
together  and  codify,  as  it  were,  the  best  practices  and  principles  in  the 
employing  and  managing  of  labor.  While  the  volume  does  not  mark 
an  epoch  in  the  history  of  employment  management,  yet  it  adds  much 
to  the  accumulating  literature  on  this  subject. 

The  book  is  divided  into  four  parts.  Part  I  sets  forth  the  need  for 
a  general  policy  on  the  part  of  the  management  in  working  out  labor 
relations,  the  standards  for  selecting  and  training  employment  man- 
agers, the  machinery  for  hiring  the  workers,  the  rating  of  labor  turn- 
over, and  the  principles  by  which  to  judge  the  work  of  the  employment 
department.  Part  II  deals  with  the  problems  of  the  employment  man- 
ager, such  as  development  of  the  labor  supply,  selection,  placement, 
follow-up,  attendance  and  transfer  of  employees,  employment  of  the 
office  force,  employment  of  women,  minors  and  cripples,  and  the  rela- 
tion of  safety  engineering  to  employment.  Part  III  is  concerned  with 
the  promotion  of  industrial  relations,  the  rights  and  duties  of  labor, 
hours,  the  operation  of  a  commissary  department,  housing,  sanitation, 
recreation,  and  reasons  for  labor  turnover.  Part  IV  takes  up  the  sub- 
ject of  industrial  education. 

The  purpose  of  the  volume,  so  we  are  told  in  the  preface,  is  "to  help 
its  readers  to  think,  and  to  think  clearly,  on  the  whole  matter  of  the 
relations  between  workers  and  employers."  The  point  of  view  from 
which  the  author  writes  is  that  of  the  management.  What  he  has  to 
say  is  especially  for  general  managers,  employment  supervisors,  super- 
intendents, and  foremen.  While  these  are  the  special  classes  to  which 
this  work  will  appeal,  yet  it  will  be  worthy  of  the  attention  of  the  gen- 
eral reader,  the  social  worker,  the  industrial  educator,  and  the  student 
of  personnel  problems  in  general. 

There  are  some  defects  in  treatment  as,  for  example,  too  much  exhor- 
tation, repetition  and  overlapping,  and  the  inclusion  of  certain  chap- 
ters that  are  too  popular  for  a  book  on  principles.  The  book  is  not 
scientific.  It  brings  forth  very  little  that  is  new.  It  is  not  a  text- 
book on  employment  management  in  spite  of  its  subtitle,  "The  princi- 
ples of  employing  labor."  While  the  whole  field  of  employment  prob- 
lems is  covered,  and  while  the  author  usually  reaches  valid  conclusions, 
\et  his  treatise  lacks  the  scientific  spirit.  There  are  no  citations  of 
authority,  no  footnotes  and  no  bibliographies.  There  is  no  attempt 
to  present  a  theory  of  employment  management,  other  than  merely 
emphasizing  the  overworked  human  factor  in  industry.     He  makes  no 


300  Reviews  and  New  Books  [June 

distinction  between  the  personnel  department  and  the  employment  de- 
partment, in  spite  of  the  fact  that  in  many  plants  the  latter  has  to  do 
only  with  the  hiring  of  employees.  While  he  means  by  employment 
management  the  entire  administration  of  personnel  and  not  simply  the 
selection  of  the  working  force,  yet  he  does  not  put  forth  any  under- 
lying philosophy  upon  which  to  evaluate  such  management.  He  does 
not  maintain,  as  he  might  safely  have  done,  that  personnel  administra- 
tion is  a  major  function  of  staff  organization,  and  that  perhaps  only 
upon  such  grounds  can  it  justify  its  existence  in  industrial  organiza- 
tion. 

In  the  main,  the  volume  is  an  excellent,  more  or  less  compendious, 
handbook  for  managers,  superintendents  and  foremen.  It  is  certainly 
worth  being  consulted  by  every  industrial  plant  that  has  or  is  planning 
to  have  a  personnel  department.  It  is  attractively  printed,  is  ar- 
ranged in  short  chapters,  and  will  be  valuable  for  collateral  reading  in 
a  course  in  employment  management.  Some  of  the  best  chapters  are 
those  on  Rating  Labor  Turnover,  Developing  the  Labor  Supply,  Col- 
lective Bargaining,  Follow-up  in  the  Shop,  The  Employment  of  the 
Office  Force,  Safety  Engineering  as  Related  to  Employment,  and  The 
Rights  and  Duties  of  Labor. 

Walter  J.  Matherly. 

The  University  of  North  Carolina. 

NEW    BOOKS 

Armstrong,  G.  S.  Essentials  of  industrial  costing.  (New  York:  Apple- 
ton.     1921.) 

Ball,  J.  S.  Farm  inventories.  Farmers'  bull.  1182.  (Washington:  Dept. 
Agri.     1920.     Pp.  31.) 

Basset,  W.  R.  Putting  a  business  in  balance.  The  organization  of  modern 
business,  no.  10.  (New  York:  Miller,  Franklin,  Basset  &  Co.  1921. 
Pp.    16.) 

Bennett,  G.  W.  Accounting,  principles  and  practice,  vol.  I.  (New  York: 
Biddle  Business  Publications.     1920.     Pp.  xli,  430.) 

Bernhardt,  J.  Government  control  of  the  sugar  industry  in  the  United 
States.  An  account  of  the  work  of  the  United  States  food  administration 
and  the  United  States  Sugar  Equalization  Board,  Inc.  (New  York: 
Macmillan.     1920.     Pp.  272.) 

An  article  which  appeared  in  the  August,  1919,  number  of  the  Quarterly 
Journal  of  Economics,  has  been  expanded  into  this  complete  history  of  the 
control  of  the  sugar  industry,  1917-1920.  It  is  an  extremely  well  written 
and  complete  narrative,  explaining  in  essential  detail  the  machinery  de- 
vised to  solve  a  most  difficult  problem — that  of  increasing  the  sugar  sup- 
ply while  keeping  down  the  price.  The  important  agreements,  the  certifi- 
cate of  incorporation  of  the  United  States  Sugar  Equalization  Board,  its 
by-laws,  etc.,  are  found  in  the  appendix.  There  is  also  a  section  of  statis- 
tical tables,  and  an  index.  Homer  B.  Vanderblue. 


1921]       Accounting,  Business  Methods,  and  the  Exchanges  301 

Bigelow,  C.  M.  Management  in  the  woodworking  industry.  (New  York: 
Engg.  Mag.      1920.     Pp.  300.     $5.) 

Blanchard,  F.  L.  Essentials  of  advertising.  (New  York:  McGraw-Hill. 
1920.     Pp.  322.     $3.) 

Bonbright,  J.  C.  Railroad  capitalization.  A  study  of  the  principles  of 
regulation  of  railroad  securities.  Columbia  University  studies  in  history, 
economics,  and  public  law,  vol.  XCV,  no.  1.  (New  York:  Longmans. 
1920.     Pp.  206.     $2.) 

Boyle,  J.  E.  Speculation  and  the  Chicago  Board  of  Trade.  (New  York: 
Macmillan.     1920.     Pp.  277.     $2.50.) 

The  history  of  the  Chicago  grain  market,  its  organization,  and  its  oper- 
ations are  treated.  Emphasis  is  placed  upon  the  constructive  service  of 
the  Board  of  Trade  in  the  establishment  and  enforcement  of  fair  grading 
rules  and  practices,  and  in  the  campaigns  against  bucket-shops  and  mo- 
nopolistic combinations  of  carriers  and  terminal  elevators.  The  discussion 
is  expository  rather  than  critical,  but  stiff  reasoning  is  not  avoided.  The 
market  operations  of  speculation,  future  trading  and  hedging  are  ex- 
plained with  fullness  and  lucidity.  The  chapter  on  price-making  forces 
is  especially  timely  in  view  of  the  recent  slump  of  the  grain  market.  Va- 
rious appendices  contain  statistical  tables,  excerpts  from  government  re- 
ports, reproductions  of  grain  trade  documents,  and  an  excellent  biblio- 
graphy. Homer   B.   Vanderblue. 

Cannons,  H.  G.  T.  Bibliography  of  industrial  efficiency  and  factory  man- 
agement; books,  magazine  articles;  with  many  annotations  and  indexes  of 
authors  and  of  subjects.  (New  York:  Dutton.  1921.  Pp.  viii,  168. 
$5.) 

Carthage,  P.  I.  Retail  organization  and  accounting  control.  (New  York: 
Appleton.     1920.     Pp.  349.     $3.) 

Chellew,  H.  Human  and  industrial  efficiency.  (New  York:  Putnam. 
1920.     Pp.  xviii,  149.     $2.) 

Conyngton,  H.  R.    Financing  an  enterprise.     (New  York:    Ronald.    1921.) 

Crowell,  J.  F.  Government  war  contracts.  Preliminary  economic  studies 
of  the  war,  no.  25.  Carnegie  Endowment  for  International  Peace.  (New 
York:    Oxford  Univ.  Press.     1920.     Pp.  xiv,  857.    $1.) 

Dewing,  A.  S.  The  financial  policy  of  corporations.  Five  vols.  I,  Cor- 
porate securities,  (p.  154);  II,  Promotion,  (pp.  173);  III,  The  adminis- 
tration of  income,  (pp.  164);  IV,  Expansion,  (pp.  234);  V,  Failure  and 
reorganization,  (pp.  228).     (New  York:    Ronald.     1920.) 

Eaves,  L.  Training  for  store  service.  Report  of  investigations  made  in  the 
research  department  of  the  Women's  Educational  and  Industrial  Union. 
(Boston:     Badger.     1920.     Pp.  143.     $2.) 

Esquerre,  P.  J.  Practical  accounting  problems:  theory,  discussion,  solu- 
tions.    (New  York:     Ronald.     1921.) 

Hoover,  S.  R.  Bookkeeping  and  accounting  practice;  the  Hoover  system  of 
modern  bookkeeping.     (Chicago:    A.  W.  Shaw.     1920.     Pp.  301.) 


302  Reviews  and  New  Books  [June 

Jones,  E.  D.  Industrial  leadership  and  executive  ability.  (New  York: 
Engg.  Mag.     1920.     Pp.  275.     $2.) 

Jordan,  H.  W.  Debentures:  the  purpose  they  serve,  and  how  they  are 
issued.     (London:    Jordan  &  Sons.     1920.     Is.  6d.) 

Knapp,  G.  O.  and  Mason,  B.  B.  A  classification  of  ledger  accounts  for 
creameries.  Agricultural  Dept.  bull.  865,  reprint.  (Washington:  Supt. 
Doc.     1920.     10c.) 

Lawson,  F.  M.  Industrial  control.  (London:  Pitman.  1920.  Pp.  130. 
$3.40.) 

Leigh,  R.  The  human  side  of  retail  selling.  (New  York:  Appleton. 
1921.     Pp.  xxi,  228.     $2.) 

The  Human  Side  of  Retail  Selling  might  appropriately  have  been 
called  "A  Primer  in  Retail  Saleszoomenship."  Its  discussions  are  based 
upon  the  hypothesis  that  all  salespersons  are  feminine  and  most  of  the 
customers  are  women.  Although  its  application  may  not  be  limited  to  the 
problems  of  the  sales  employee  of  a  department  store,  it  is  evident  that  the 
book  is  primarily  addressed  to  those  engaged  in  a  sales  capacity  in  such  a 
store.  The  presentation  of  the  material  is  simple,  direct,  and  well  or- 
ganized. Generalities  are  few.  Concrete  problems  are  discussed.  Defin- 
ite suggestions  for  solving  them  are  given.  The  author  has  no  fear  of  the 
positive,  even  though  retail  selling  involves  that  highly  variable  factor, 
the  human  element.  It  is  believed  that  this  work  will  admirably  perform 
two  functions:  it  will  furnish  the  retail  store  executive  with  pointed  ma- 
terial for  instructional  work  among  his  sales  people;  and  it  will  tend  to 
impress  upon  the  retail  salesperson  the  importance  of  her  position,  its 
dignity,  and  its  responsibilities.  It  will  go  far  toward  convincing  the 
"girl  behind  the  counter"  that  hers  is  not  the  work  that  can  be  performed 
satisfactorily  by  just  anyone  who  happens  to  have  nothing  better  to  do. 
The  book  is  an  exposition  of  retail  selling  as  a  profession  instead  of  as 
the  mere  occupation  of  "clerk."  The  point  of  view  is  distinctly  commer- 
cial— how  to  sell  more.  The  reviewer,  for  one,  has  hoped  that  successful 
salesmanship  would  come  to  be  looked  upon  as  ability  to  influence  the  buyer 
in  wise  choice  which  in  many  cases  means  advice  against  buying  rather 
than  solely  the  ability  to  overcome  the  customer's  resistance  to  purchase. 

Two  of  the  five  parts  deal  with  secondary  considerations,  personal  hy- 
giene and  sales  routine.  This  together  with  the  elementary  character  of 
the  remaining  three  parts  causes  one  to  question  the  suitability  of  the  book 
for  use  in  college  and  university  classes.  Whatever  the  shortcomings  of  the 
author's  efforts,  this  is  a  work  that  will  fulfill  the  expectations  of  those 
demanding  the  "practical"  between  bookcovers.  Asher  Hobson. 

Mailhoit.    Modern  adviser  to  grocers.     (Boston:     International  Publishers. 

1921.) 
Martin,  C.  C.     Export  packing.     (New  York:     Johnston  Export  Pub.  Co. 

370  Seventh  Ave.     Pp.  723.     $10.) 

Meyer,  H.  H.  B.  List  of  references  on  scientific  management  as  the  basis 
of  efficiency  with  special  reference  to  the  government  service.  (Washing- 
ton:    Government  Printing  Office.     1920.     Pp.22.) 


1921]       Accounting,  Business  Methods,  and  the  Exchanges  303 

Morris,  J.  V.  L.  Employee  training.  (New  York:  McGraw-Hill.  1921. 
Pp.  311.     $3.) 

Nussbaum,  A.  Das  neue  deutsche  Wirtschaftsrecht.  (Berlin:  Springer. 
1920.     10  M.) 

O'Shea,  P.  E.  Employees'  magazines  for  factories,  offices,  and  business 
organizations.     (New  York:     Wilson.     1920.     Pp.  122.) 

Pezeu,  P.  Les  hommes  qu'il  nous  faut  pour  organiser  la  production. 
(Paris:     Payot.     1920.     Pp.350.) 

Poley,  A.  P.  The  history,  law,  and  practice  of  the  stock  exchange.  (Lon- 
don:    Pitman.     Pp.  xiv,  368.     7s.  6d.) 

Pratt,  S.  S.  The  work  of  Wall  Street.  An  account  of  the  functions,  meth- 
ods and  history  of  the  New  York  money  and  stock  markets.  Third  edition. 
(New  York:    Appleton.     1921.     Pp.  xiv,  447.     $3.50.) 

Raymond,  C.  H.  Modern  busi?iess  writing;  a  study  of  the  principles  under- 
lying effective  advertisements  and  business  letters.  (New  York:  Cen- 
tury.    1921.     Pp.  476.     $2.40.) 

Regan,  J.  M.  Financing  a  business.  (Chicago:  LaSalle  Exten.  Univ. 
1920.     Pp.  xv,  360.) 

Rollins,  M.  Blue  sky  laws.  Revised  edition,  by  S.  Spring.  (Boston: 
Financial  Pub.  Co.     1919.     Pp.  454.) 

Schaub,  L.  F.  and  Isaacs,  N.  The  law  in  business  problems.  (New  York: 
Macmillan.     1921.) 

Simpson,  K.  The  capitalization  of  goodwill.  Johns  Hopkins  University 
studies  in  political  science,  series  XXXIX,  no.  1.  (Baltimore:  Johns 
Hopkins  Press.     1921.     Pp.  101.) 

Sweet,  H.  N.  Industrial  accounting  as  an  aid  to  management.  (New  York: 
National  Assoc,  of  Cost  Accountants.     1921.) 

Thompson,  C.  B.  Methods  americaines  d'etablissement  des  prix  de  revient 
en  usines.     (Paris:     Payot.     1920.    Pp.127.) 

Wera,  E.  Human  engineering ;  a  study  of  the  management  of  human  forces 
in  industry.     (New  York:     Appleton.     Pp.  378.'  $3.50.) 

Burroughs  elementary  bookkeeping  course.  (Detroit:  Burroughs  Adding 
Machine  Co.     1920.     Pp.  141.) 

The  causes  of  high  building  costs  in  Cleveland.     (Cleveland:     Chamber  of 

Commerce.     1920.     Pp.  39.) 
Handling  men.    Course  in  modern  production  methods,  vol.  II.     (New  York: 

Business  Training  Corporation.     1920.     Pp.  152.) 
Investors  and  traders  guide.     (New  York:    Jones  &  Baker.     1920.     Pp.  64.) 
Modern  filing,  and  how  to  fie;  a  textbook  on  office  system.     Third  edition. 

(Rochester,  N.  Y.:   Yawman  &  Erbe  Mfg.  Co.     1920.     Pp.  100.) 
Operating  expenses  in  retail  jewelry  stores  in  1919.     (Cambridge:     Bureau 

of  Business  Research,  Harvard  Univ.     1920.     Pp.  26.     $1.) 
Organization.    Course  in  modern  production  methods,  vol.  III.     (New  York: 

Business  Training  Corporation.     1920.     Pp.   147.) 


304  Reviews  and  New  Books  [June 

The  practical  application  of  the  principles  of  industrial  engineering.  Com- 
plete report  of  the  proceedings  of  the  spring  national  convention,  Phila- 
delphia, March,  1920.  (Chicago:  Society  of  Industrial  Engineers. 
1920.     Pp.  302.) 

The  problem  of  depreciated  investment  securities.  (New  York:  J.  H.  Oli- 
phant  &  Co.     1920.     Pp.  32.) 

Railroad  securities;  a  course  of  study  issued  by  the  Education  Committee, 
Investment  Bankers  Association.  (New  York:  The  Association.  1921. 
$1.75.) 

Regulations  for  tobacco  warehouses  under  the  United  States  Warehouse  act 
of  August  11, 1916,  as  amended  July  21^,  1919.  Circ.  no.  154.  (Washing- 
ton:    Dept.  Agri.     1920.     Pp.  33.) 

Salesmanship;  the  standard  course  of  the  United  Y.  M.  C.  A.  schools.  Book 
II,  The  salesman  and  his  goods.  Book  III,  The  salesman  and  his  cus- 
tomer. Book  IV,  The  salesman  and  his  sale.  (New  York:  Association 
Press.     1920.     Pp.  201;  202;  202.) 

Securities  prices  as  of  March  1,  1913.  (New  York:  Standard  Statistics 
Co.     1920.     Pp.  202.     $6.) 

The  wholesale  grocery  business  in  January  1921.  Bull.  no.  24.  (Cambridge: 
Bureau  of  Business  Research,  Harvard  Univ.     1921.     Pp.  12.     $1.) 

Capital  and  Capitalistic  Organization 

NEW    BOOKS 

Brownell,  E.  E.  Report  on  the  electric  railways  of  Milwaukee,  Wisconsin, 
and  other  public  utility  companies  for  the  city  of  Milwaukee,  with  histori- 
cal references  on  street  railways  and  electrolysis,  together  with  report  on 
a  report  made  by  the  National  Bureau  of  Standards,  November  26,  1918, 
of  electrolytic  conditions  in  Milwaukee  for  the  Railroad  Commission  of 
Wisconsin.    Second  edition.       (Philadelphia:    Author.     1920.     Pp.  362.) 

Budge,  C.    Der  Kapitalprofit.     (Jena:    Fischer.     1920.     Pp.  xii,  155.) 

Dechesne,  L.  L'economie  syndicate.  (Liege:  Wyckmans.  1920.  Pp. 
70.) 

Gay,  E.  J.  Minority  report  on  Colder  coal  bill.  (Washington:  Nat.  Coal 
Assoc.     1921.) 

Woolley,  G.  I.  Outline  of  the  law  of  trusts  prepared  especially  for  stu- 
dents of  New  York  law.  Third  edition.  (Brooklyn:  Author.  1921. 
Pp.  94.) 

Delaware  corporations;  a  digest  of  the  decisions  and  the  law.  (Dover: 
U.  S.  Corporation  Co.     1920.    Pp.  86.) 

Labor  and  Labor  Organizations 

NEW    BOOKS 

Beman,  L.  T.,  compiler.  Selected  articles  on  the  compulsory  arbitration  and 
compulsory  investigation  of  industrial  disputes.  Debaters'  handbook  ser- 
ies. Fourth  edition,  enlarged.  (New  York:  H.  W.  Wilson  Co.  1920. 
Pp.  lxi,  303.     $1.25.) 


1921]  Labor  and  Labor  Organizations  305 

Contains  briefs,  bibliographies,  and  extracts  on  compulsory  arbitration 
and  compulsory  investigation,  which  are  separately  treated.  The  editor 
calls  attention  to  the  fact  that  compulsory  arbitration  as  adopted  in  Kan- 
sas and  New  Zealand  is  a  very  different  thing  from  compulsory  arbitra- 
tion as  known  in  Colorado  and  Canada.  The  original  edition  of  this 
volume  was  published  in  1911,  but  much  supplementary  matter  has  been 
added. 

Bing,  A.  M.  War-time  strikes  and  their  adjustment.  (New  York:  Dutton. 
1921.     Pp.  329.     $2.50.) 

Black,  F.  R.  Should  trade  unions  and  employers'  associations  be  made 
legally  responsible?  (New  York:  Nat.  Indus.  Conf.  Board,  10  E.  39th 
St.     1921.     Pp.  35.     75c.) 

Commons,  J.  R.    Industrial  government.     (New  York:     Macmillan.     1921.) 

Commons,  J.  R.  Trade  unionism  and  labor  problems.  Second  series. 
(Boston:     Ginn.     1921.     Pp.  823.     $4.) 

Commons,  J.  R.  and  Andrews,.  J.  B.  The  principles  of  labor  legislation. 
(New  York:    Harper.     1920.     Pp.  xii,  559.     $2.75.) 

The  first  edition  of  this  book  was  published  in  January,  1916,  and  was 
noticed  in  this  Review,  vol.  VI,  pp.  654-658.  In  the  five  years  which 
have  elapsed  the  book  has  become  a  standard  authority.  The  revised  and 
enlarged  edition,  dated  June,  1920,  which  has  now  appeared,  will,  there- 
fore, be  welcomed  by  all  students  and  teachers  of  the  subject.  In  their 
revision  the  authors  have  left  untouched  the  original  statement  of  princi- 
ples and  have  devoted  themselves  to  bringing  up  to  date  the  facts  as  to 
labor  legislation.  As  the  authors  note  in  their  preface,  much  new  and 
much  amendatory  labor  legislation  has  been  enacted  since  the  first  edi- 
tion was  issued,  and  the  revision  greatly  increases  the  value  of  the 
work.  G.  E.  B. 

Cooke,  M.  L.,  Gompers,  S.  and  Miller,  F.  J.  Labor,  management,  and 
production.  (Philadelphia:  Am.  Acad.  Pol.  &  Soc.  Sci.  1921.  Pp.  xv, 
173.     $1.) 

Drake,  B.  Women  in  trade  unions.  (London:  Labour  Research  Dcpt. 
1921.     Pp.  237.     8s.  6d.) 

Frost,  S.  Labor  and  revolt.  (New  York:  Dutton.  1920.  Pp.  xv,  405. 
$4.) 

This  is  a  graphic  but  not  scientific  story  of  "Red"  designs  and  artifices 
to  mislead  organized  labor  into  furthering  the  aims  of  the  revolutionists. 
The  author  devotes  himself  to  exposing  covert  aims,  to  pointing  out  the 
sources  of  danger  and  to  urging  fair  treatment  for  labor.  He  believes 
that  the  majority  of  the  organized  workers  are  fair-minded  and  patriotic 
and  that  they  have  been  given  legitimate  cause  for  complaint.  That  offers 
the  revolutionist  his  chance,  and  although  there  are  good  grounds  for  hope, 
we  cannot  afford  to  be  complacent  or  inactive.  In  any  event,  he  holds, 
labor  is  to  have  great  power  in  the  future  and  it  is  going  to  be  a  big 
task  to  educate  labor  up  to  the  just  and  wise  exercise  of  it.  The  book  gives 
the  impression  of  exaggeration  and  lack  of  discrimination.  It  contains 
many  facts  which  are  beyond  question  and  of  intrinsic  importance,  but 


306  Reviews  and  New  Books  [June 

much  of  what  is  offered  as  evidence  is  of  doubtful  value  and  many  of  the 
conclusions  are  not  warranted  in   their   present   form   of   statement. 

D.  A.  McC. 

Kumpmann,  K.  Die  Arbeitslosigkeit  und  ihre  Bekampfung.  (Tubingen: 
Mohr.     1920.     26  M.) 

Lauck,  W.  J.  and  Watts,  C.  S.  The  industrial  code.  (New  York:  Funk 
&  Wagnalls.     1921.     $2.)      . 

Lyons,  V.  A.  Wages  and  empire.  (New  York:  Longmans.  1921.  Pp.  96. 
$1.75.) 

Miller,  D.  H.  International  relations  of  labor.  Lectures  delivered  be- 
fore the  summer  school  of  theology  of  Harvard  University,  June,  1920. 
(York:     Knopf.     1920.     Pp.  77.     $1.50.) 

Moon,  P.  T.  The  labor  problem  and  social  Catholic  movement  in  France. 
(New  York:    Macmillan.     1921.) 

Morris,  J.  V.  L.  Employee  training.  (New  York:  McGraw-Hill.  1921. 
$3.) 

Ryan,  J.  A.  Capital  and  labor.  (Washington:  Nat.  Catholic  Welfare 
Council,  1321  Mass.  Ave.     1921.     Pp.  30.     5c.) 

Tead,  O.  The  labor  audit.  A  method  of  industrial  investigation.  (New 
York:    Bureau  of  Industrial  Research.     1921.     Pp.  74.) 

.     Building  guilds  in  Great  Britain.     Story  of  an  experiment  in 

industrial  reorganization.     (New  York:    Journ.  Am.  Inst,  of  Architects. 
1921.     Pp.   25.) 

Teasdale,  E.  The  open  shop  versus  the  closed  shop.  (Seattle:  Raymer's 
Old  Book  Shop.     1921.     Pp.  16.    25c.) 

Thomas,  E.  Industry,  emotion  and  unrest.  (New  York:  Harcourt,  Brace 
&  Howe.     1920.     Pp.  255.) 

Walker,  C.  R.,  Jr.  National  councils  in  the  printing  trades.  (Washing- 
ton:    Monthly  Labor  Rev.     1921.     50c.) 

Watkins,  G.  S.  Labor  problems  and  labor  administration  in  the  United 
States  during  the  xvorld  war.  Two  vols.  (Urbana:  LTniv.  Illinois. 
1920.     Pp.  247.) 

Webster,  G.  W.  A  physiological  basis  for  the  shorter  working  day  for 
women.     (Washington:     Women's  Bureau.     1921.     Pp.  20.) 

Willis,  W.  A.  Trade  boards,  a  practical  guide  to  the  operation  of  the 
Trade  Boards  act.     (London:     Nisbet  Co.     1920.     Pp.112.     4s.  6d.) 

Agenda  for  the  fifty-second  annual  trades-union  congress  (Great  Britain). 
(London:     1921.     Pp.  59.) 

Annual  report  of  the  industrial  commission  for  the  twelve  months  ended 
June  SO,  1919.     (Albany:     Dept.  Labor.     1921.     Pp.330.) 

Executive  and  technical  women  in  industry;  survey  of  factories,  1919-1920. 
(New  York:    Y.  W.  C.  A.     1921.    Pp.  19.) 

The  factory  council.     (New  York:    U.  S.  Rubber  Co.     1921.     Pp.  14.) 


1921]  Labor  and  Labor  Organizations  307 

Joint  councils  in  industry.     (Ottawa:     Dept.  Labor.     1921.     Pp.  20.) 

Health  service  in  industry.  Research  report  no.  34.  (New  York:  Nat. 
Indus.  Conf.  Board.     1921.     Pp.  60.) 

Industrial  fatigue:  boot  and  shoe  industry;  iron  and  steel  industry.  Re- 
ports of  the  Industrial  Fatigue  Board.  (London:  King.  1921.  Is.  6d. ; 
3s.) 

List  of  references  on  the  Kansas  Court  of  Industrial  Relations.  (Wash- 
ington:    Library  of  the  Dept.  of  Labor.     1921.     Pp.   10.     Typewritten.) 

Problems  of  labor  and  industry  in  Germany.  Special  report  no.  15.  (New 
York:     Nat.  Indus.  Conf.  Board.     1920.     Pp.  65.    $1.) 

The  opportunity  and  responsibility  of  the  engineer.  (New  York:  Am. 
Soc.  of  Mechanical  Engineers.     1921.     Pp.  16.) 

Practical  experience  with  the  work  week  of  forty-eight  hours  or  less.  Re- 
search report  no.  32.  (New  York:  Nat.  Indus.  Conf.  Board.  1921. 
Pp.  88.) 

Preliminary  notes  on  the  boot  and  shoe  industry.  Industrial  Fatigue  Re- 
search Board,  Great  Britain.  (London:  H.  M.  Stationery  Office.  1920. 
Pp.  32.) 

Railroad  wage  hearings,  1920.  Statements  made  by  the  Association  of  Rail- 
xcay  Executives,  conference  committee  of  managers,  before  the  United 
States  Railroad  Labor  Board.  (Chicago:  Assoc.  Ry.  Executives.  1920. 
Pp.  256.) 

Report  of  chief  inspector  of  factories  and  workshops  for  1919.  (London: 
H.  M.  Stationery  Office.     1921.     Is.  6d.) 

Report  of  the  Royal  Commission  of  Inquiry  into  the  proposed  reduction  of 
the  standard  working  week  from  4$  to  44  hours.  (Sydney:  New  South 
Wales  Industrial  Gazette.     1921.     Pp.  56.     Is.) 

Report  of  the  twentieth  annual  conference  of  the  Labour  party,  Scarbor- 
ough, 1920.  (London:  Labour  Party,  33  Eccleston  Sq.  1921.  Pp. 
223.     Is.) 

A  study  of  output  during  the  winter  months;  silk  weaving.  Reports  of 
Industrial  Fatigue  Board.      (London:    H.  M.  Stationer)'  Office.      1921.) 

Fifty-second  annual  report  of  the  Trade  Union  Congress.  (London:  32 
Eccleston  Sq.     1921.     Pp.  432.) 

Trade  unions  in  Soviet  Russia.  (New  York:  Rand  School  of  Social  Science. 
1921.     Pp.  91.) 

Contains  the  following  chapters:  Third  general  congress  of  Russian 
trade  unions,  March,  1902,  summary  of  proceedings;  Lenin's  speech  at 
the  third  congress ;  The  all  Russia  metal  workers  union,  by  A.  Ourevitch ; 
The  all  Russian  agricultural  workers  union. 

Transport  workers,  wages  and  conditions  of  employment  of  dock  labour, 
court  of  inquiry.  Vol.  I,  Report  and  minutes  of  evidence.  Vol.  II,  Ap- 
pendices, documents,  and  indexes.  (London:  H.  M.  Stationery  Office. 
1921.     6s.;  3s.) 

Two-shift  system.     Employment  of  women  and  children.     Report  of  Home 


308  Reviews  and  New  Books  [June 

Office    Committee   with    evidence.      (London:      H.    M.    Stationery    Office. 
1921.     2s.  8d.) 

Money,  Prices,  Credit,  and  Banking 

Argentine  international  Trade  under  Inconvertible  Paper  Money  1880- 
1900.  By  John  Henry  Williams.  Harvard  Economic  Studies. 
(Cambridge:  Harvard  University  Press.  1920.  Pp.  xiv,  282. 
$3.50.) 

This  book  is  largely  the  outgrowth  of  an  investigation  made  by  the 
author  in  1917  and  1918.  After  a  preliminary  discussion  of  principles, 
it  takes  up  such  topics  as  Argentine  monetary  history  from  1881  to 
1885,  the  national  banking  system,  the  interrelation  of  borrowings  and 
paper  money  from  1885  to  1890,  the  period  of  the  Baring  panic,  paper 
money  and  prices  (including  wages)  in  relation  to  the  export  and 
import  trade,  etc. 

In  his  discussion  of  principles  the  author  points  out,  rightly,  that 
in  the  case  of  a  country  on  an  inconvertible  paper  standard,  "an  influx 
of  gold  into  the  country  would  not  raise  the  price  level,  nor  an  outflow 
of  gold  lower  it,  as  would  be  the  tendency  in  a  gold-standard  country. 
Gold  movements  would  not,  therefore,  affect  exports  and  imports  in 
the  same  way,  or  by  the  same  means,  as  they  would  in  a  gold-using 
country"  (p.  21).  He  then  goes  on  to  say:  "Gold  cannot,  to  be  sure, 
enter  into  circulation,  but  gold  coming  to  the  country  would  have  quite 
as  much  effect  upon  the  value  of  money  as  if  it  had  done  so.  Only,  it 
would  be  the  opposite  effect :  it  would  not  cheapen  money  and  raise  the 
price  level;  but  would  cause  money  to  appreciate  and  the  price  level 
to  fall.  It  would  do  so  by  increasing  the  supply  of  gold,  and  thus 
cheapening  gold  in  terms  of  paper."  And  elsewhere  (p.  173)  the 
author  says :  "In  spite  of  this  diametrical  opposition  of  the  price 
changes,  however,  the  same  result  as  regards  foreign  trade  ensues  as 
would  occur  in  gold  countries.  With  a  favorable  balance  of  payments, 
caused  by  new  borrowings,  the  imports  of  the  borrowing  country  are 
increased,  and  the  exports  discouraged;  and  with  an  'unfavorable' 
change  in  the  balance  of  payments  the  contrary  set  of  shifts  occurs. 
Imports  diminish  and  exports  increase." 

It  is,  indeed,  clear  enough  that  gold  coming  into  a  paper-standard 
country  tends  to  make  gold  cheaper  in  terms  of  paper,  to  reduce  the 
premium  on  gold,  to  raise  the  value  of  the  paper  money  in  terms  of 
gold.  But  it  is  not  so  clear  that  the  inflow  of  gold  will  raise  the  value 
of  the  paper  in  terms  of  goods-in-general,  i.e.,  cause  "the  price  level  to 
fall."  There  is  no  less  paper  money  in  the  country  than  before.  There 
are  no  more  goods  than  before.  There  may  be  fewer  goods  if  the  in- 
flow of  gold  is  in  settlement  of  an  export  of  goods.     There  is,  conse- 


1921]  Money,  Prices,  Credit,  and  Banking  309 

quently,  nothing  in  such  an  inflow  of  gold  to  make  the  price  level  fall, 
unless  it  can  be  shown  that  the  inflow  of  gold  operates  to  decrease 
credit  or  to  disincline  people  to  expenditure.  It  is,  of  course,  entirely 
conceivable  that  a  falling  gold  premium  might  cause  some  hoarding  of 
the  paper  money  by  raising  the  hope  of  redemption  and  might  so 
operate  to  reduce  expenditures  and  to  lower  prices,  but  this  is  rather 
a  possibility  than  a  certainty.  And,  at  any  rate,  it  needs  to  be  proved 
and  explained  for  the  specific  case  of  Argentina  between  1880  and  1900 
rather  than  assumed. 

More  than  this  may  be  said.  For  if,  as  the  author  asserts,  an  in- 
flow of  gold  tends  to  reduce  the  general  price  level  in  terms  of  the 
paper  money ;  and  if,  as  some  unwary  reader  may  infer  and  as  the 
author  does  not  deny,  the  general  price  level  falls  just  as  fast  and  far 
as  the  gold  premium,  then  the  author  can  hardly  be  right  in  asserting 
that  "with  a  favorable  balance  of  payments  .  .  .  imports  .  .  .  are  in- 
creased, and  .  .  .  exports  discouraged,"  and  vice  versa  with  an  un- 
favorable balance.  Gold,  indeed,  tends  to  increase  in  purchasing  pow- 
er in  the  countries  from  which  it  is  flowing.  But  when  these  countries 
are  all  of  Western  Europe  and  the  outflow  is  only  to  Argentina  the 
effect  on  European  prices  would  scarcely  be  pronounced.  The  in- 
flowing gold,  however,  will  buy  less  in  the  paper-money  country  to  which 
it  goes.  For  the  increase  of  the  gold  tends  to  make  it  less  valuable  in 
terms  of  paper  money  and  able  to  buy  less  of  the  paper  money ;  while 
paper  money  prices  in  such  a  country  may  not  decline  appreciably  if 
at  all  and  are  unlikely  to  decline  as  rapidly  as  the  premium  on  gold 
unless  there  is  some  other  influence  than  gold  importation  operating 
upon  them.  Paper  money  will  buy  more  gold.  It  therefore  becomes 
more  profitable  than  before  to  buy  gold  at  home  for  the  purpose  of 
buying  goods  abroad  with  this  gold.  A  previous  excess  of  exports,  by 
causing  gold  to  flow  in  and  to  become  cheaper,  makes  importation 
profitable.  But  if  prices  should  decline  with  the  inflow  of  gold  as  fast 
and  as  far  as  the  gold  premium,  such  a  small  country  might  export  in 
excess  of  imports,  and  receive  a  yearly  balance  in  gold  almost  indefi- 
nitely. There  would  then  be  no  tendency  for  exports  to  decline  or 
imports  to  increase  unless  and  until  prices  in  the  other  countries  with 
which  the  paper-money   country  traded  were  appreciably  affected. 

On  the  matter  of  the  causation  of  a  premium  on  gold,  the  reviewer 
is  constrained  to  the  opinion  that  the  effect  of  the  over-issue  of  paper 
money  is  greatly  underrated.  Thus,  the  author  refers  to  depreciation 
in  1884-85  (p.  104)  as  being  due  "quite  as  much  to  the  collapse  of 
borrowing  as  to  over-issue  of  paper  money."  A  few  pages  farther  on 
(p.  112)  he  says:  "When  one  considers  the  events  of  1884  .  .  .  when 
an  unfavorable  balance  of  payments  forced  the  suspension  of  specie 


310  Reviews  and  New  Books  [June 

payments,  there  having  been  no  increase  whatever  in  the  quantity  of 
paper  in  circulation;  and  notes,  besides,  that  in  the  four  subsequent 
years,  1885-1888,  when  the  balance  of  payments  was  increasingly  fa- 
vorable to  Argentine,  the  gold  premium  scarcely  rose  at  all,  in  spite 
of  an  increase  of  about  68,000,000  pesos  in  the  paper  money  circula- 
tion, the  conclusion  appears  warranted  that  the  balance  of  payments, 
dominated  as  it  was  by  borrowings  of  foreign  capital,  exercised  a 
dominant  effect  upon  the  gold  premium."  And  again,  referring  to  the 
years  1888-91  (pp.  136-137),  the  author  expresses  the  opinion  "that 
the  chief  reason  for  the  depreciation  of  paper  money  .  .  .  was  the 
cessation  of  borrowings,  which  brought  a  deficit  in  the  balance  of  pay- 
ments .  .  .  and  created  a  demand  for  gold  for  export." 

It  is  reasonably  obvious  that  in  a  country  rapidly  growing  in  popu- 
lation and  industry,  paper  money  may  be  increased  considerably  in 
volume  without  there  resulting  any  depreciation  of  such  paper  relative 
to  gold,  i.e.,  without  an  increase  of  the  premium  on  gold,  and  without 
there  being  any  increase  of  prices.  The  only  effect  may  be  to  prevent 
a  fall  in  the  premium  on  gold  and  in  prices  which  would  otherwise  take 
place.  To  minimize  the  effect  of  such  paper  money,  then,  because  dur- 
ing the  period  of  progressive  trade  activity  the  premium  on  gold  does 
not  rise  or  does  not  rise  in  proportion  to  the  increased  volume  of 
paper  money,  is  to  make  the  subject  unduly  simple  and  the  statistical 
evidence  misleading. 

Again,  it  is  pointed  out  (p.  147)  that  in  1894  an  increase  of  the 
gold  premium  was  contemporaneous  with  an  actual  (though  small)  de- 
crease of  paper  money.  This,  however,  does  not  indicate  that  the 
volume  of  currency  is  not  a  cause  of  the  premium  or  even  that  it  is  not 
the  main  cause.  The  premium  might  well  rise,  despite  some  decrease  of 
money,  not  only  because  previous  excessive  issues  had  finally  weakened 
confidence  but  also  and  even  with  confidence,  as  such,  unaffected,  be- 
cause of  credit  curtailment,  business  depression,  and  falling  prices  in 
the  rest  of  the  world.  The  excessive  issues  of  paper  money  might  be 
the  main  reason  for  the  high  premium  on  gold  just  because  the  paper 
was  more  redundant,  relative  to  an  appreciating  foreign  currency  based 
on  gold,  after  it  (the  paper  money)  had  somewhat  decreased,  than  be- 
fore. There  is  no  intention  to  minimize,  in  this  review,  the  significance 
of  temporary  conditions  purely  as  such,  and  especially  the  balance  due 
to  borrowing  and  interest  paying  on  the  up  and  down  fluctuations  of 
a  gold  premium  in  a  paper-standard  country ;  but  the  facts  which  the 
author  presents  are  not  sufficiently  complete  to  justify  drawing  the 
conclusion  he  appears  to  draw  regarding  the  relative  unimportance 
of  over-issue. 

One  other  contention  of  the  author  requires  our  very  careful  con- 


1921]  Money,  Prices,  Credit,  and  Banking  311 

sideration.  He  very  definitely  expresses  the  opinion  (p.  174)  that  "a 
depreciating  paper  currency"  tends  "to  encourage  exports  and  dimin- 
ish imports."  It  stimulates  exports,  in  the  author's  view,  because  the 
producer  for  export,  receiving  a  price  abroad  in  terms  of  gold,  can 
translate  that  price  into  a  high  domestic  paper-money  price,  while 
certain  expenses  of  production,  such  as  wages  and  rent,  do  not  rise 
with  corresponding  rapidity. 

But  why  should  a  rise  of  prices  more  rapid  than  a  rise  in  costs  stimu- 
late exports  as  such?  If  domestic  prices  rise  faster  than  costs  may  it 
not  be  profitable  to  sell  goods  at  home  rather  than  to  export  them? 
Surely  depreciation  of  money,  in  and  of  itself,  does  not  encourage  ex- 
ports, except  as  inflation  tends  to  make  business  in  general  active.  This 
may  be  all  the  author  means,  but,  if  so,  the  problem  is  incompletely 
analyzed.  The  fact  is  that  the  special  encouragement  of  exports  as 
compared  with  sales  at  home  is  not  dependent  upon  depreciation  as 
such  nor  upon  rise  of  selling  prices  more  rapid  than  rise  of  costs  but 
upon  a  rise  in  the  premium  on  gold  more  rapid  than  the  rise  m  the  do- 
mestic prices  of  the  exported  goods.  If  the  premium  on  gold  rises  more 
rapidly  than  prices  of  goods  at  home  and  if  foreign  prices  do  not  fall, 
then,  indeed,  sale  of  goods  abroad  is  more  profitable  than  sale  in  the 
domestic  market.  But  who  shall  say  that  a  period  of  further  inflation 
in  a  paper-standard  country  would  necessarily  cause  an  increase  in  the 
premium  on  gold  first  and  a  rise  in  prices  afterwards?  Is  not  the  se- 
quence even  more  likely,  in  the  ordinary  case,  to  be  the  other  way  about? 
The  author  contends,  in  his  book,  that  the  high  premium  on  gold  seemed 
largely  correlated  with  the  net  obligations  which  Argentina  had  to 
meet  abroad,  and  the  resulting  demand  for  gold  for  the  purchase  of 
exchange  or  for  shipment  to  settle  these  obligations.  But  why  should 
the  first  effect  of  a  further  inflation  of  a  paper  money  already  depre- 
ciated be  to  increase  the  obligations  to  foreign  countries  and  cause  a 
greater  demand  for  gold  in  settlement?  Is  not  the  first  effect  likely 
to  be  a  tendency  for  domestic  prices  to  rise,  the  second  effect  a  tendency 
for  people  to  endeavor  to  escape  these  rising  prices  by  purchasing 
abroad,  and  the  third  effect  a  rise  in  the  premium  on  gold?  If  this  is 
the  sequence,  then  the  inflation,  for  a  while  at  least,  contrary  to  the 
author's  assertion,  may  make  importation  of  goods  relatively  profit- 
able until  the  gold  premium  rises  about  as  far  as  domestic  prices.  And 
until  the  gold  premium  so  rises,  exportation  may  be  less  profitable  than 
selling  at  home. 

What,  then,  becomes  of  the  author's  inductive  verification?  The 
author  attempts  to  show  that  there  was  some  tendency  for  Argentine 
exports  to  be  larger  when  the  gold  premium  was  high,  although  he  ad- 
mits that  because  "other  things"  were  not  "equal"  the  correlation  is 


312  Reviews  and  New  Books  [June 

slight  (p.  235).  But  he  apparently  shows  a  high  degree  of  correla- 
tion between  diminished  imports  and  a  high  premium  on  gold  (p.  253). 
The  trouble  is  that  the  evidence  presented,  like  much  of  the  "inductive 
verification"  of  economics,  is  equally  consistent  with  another  theory. 
It  may  be  true  that  during  the  period  of  the  highest  premium  on  gold, 
exports  were  slightly  increased  and  imports  considerably  decreased. 
But  this  was  not  due  to  inflation,  as  the  author  asserts,  nor  was  it  due 
to  the  high  premium  on  gold.  Rather  was  it  probably  due  to  the  fact 
that  Argentina  had  reached  the  point  where  her  annual  obligations  for 
interest  payable  abroad  exceeded  new  borrowings.  Exports  would  tend 
to  exceed  imports  in  such  circumstances  equally  for  a  gold-standard 
country  where  there  was  no  premium.  The  gold  premium  would  serve, 
in  the  case  of  a  paper-standard  country,  to  encourage  exports  and 
discourage  imports  only  because  the  tendency  would  be,  in  that  special 
kind  of  situation,  for  the  gold  premium  to  rise  faster  than  domestic 
prices.  Mere  inflation  might  raise  home  prices  first  and  so  encourage 
buying  abroad  until  this  buying  abroad  increased  the  gold  premium. 
But  an  excess  of  obligations  in  the  form  of  interest  on  past  borrowings 
would  cause  a  demand  for  gold  and  a  rise  in  the  premium  faster  than 
and  in  excess  of  any  rise  of  prices.  This  is  not  to  say  that  previous  or 
contemporary  over-issue  of  paper  may  not  be  a  fundamental  factor 
in  both  the  high  general  level  of  prices  and  the  high  gold  premium. 
But  granted  the  inconvertible  paper  money,  the  necessity  of  paying 
interest  abroad,  taken  by  itself,  tends  to  raise  the  premium  and  does 
not  directly  tend  to  increase  the  price  level.1  Under  these  circum- 
stances, exportation  may  be  encouraged  and  importation  discouraged. 
Surely,  however,  to  say  this  is  very  different  from  saying  even  that  a 
high  premium  on  gold,  as  such,  encourages  exports  and  discourages  im- 
ports ;  and  it  is  still  more  different  from  saying  that  inflation  or  de- 
preciation has  such  effects.  To  state,  as  does  the  author,  that  a  de- 
preciating currency  acts  to  the  exporter  "like  a  bounty,"  the  reviewer 
believes  to  be  incorrect  unless  the  author  means  merely  to  assert  that 
producers  for  export  share  in  the  general  stimulus  to  business  which 
inflation  sometimes  occasions.  But  to  preface  the  statement  by  the 
assertion  (p.  174)  that  the  depreciating  currency  "operates  like  a 
protective  duty"  is  to  be  guilty  of  inconsistency.  For  while  a  pro- 
tective duty  may  so  restrict  imports  that  exports  are  temporarily  in 
excess,  it  in  no  case  actually  increases  exports  or  acts  as  bounty  upon 
them,  as  the  author  declares  that  depreciating  paper  money  does. 
The  reviewer  has  been  at  some  pains  to  examine  carefully  these  few 

1  The  tendency  to  encouragement  of  exports  and  discouragement  of  Imports,  by 
affecting  the  volume  of  goods  in  the  country,  may  somewhat  affect  prices.  Also,  the 
rise  of  the  premium  may  conceivably  affect  confidence  and  hoarding. 


1921]  Money,  Prices,  Credit,  and  Banking  313 

theoretical  contentions  not  only  because  they  seem  to  be  such  impor- 
tant parts  of  this  book  but  also  because  of  a  sense  of  their  great  impor- 
tance in  any  discussion  of  the  economics  of  international  trade  and 
finance.  The  study  before  us  is  valuable  as  a  detailed  and  painstaking 
account  of  most  interesting  occurrences.  It  is  in  places  suggestive 
and  is  not  without  value  as  evidence  regarding  cause  and  effect  rela- 
tionships. But  the  comment  which  the  reviewer  feels  compelled  to 
make  is  that  we  are  unlikely  to  get  very  far  in  the  inductive  verification 
of  economic  theories  when  the  theories  themselves  are  not  clearly  con- 
ceived in  their  sometimes  intricate  but  nevertheless  significant  ramifica- 
tions. 

Harry  Gunnison  Brown. 
University  of  Missouri. 

Bank  Credit:  A  Study  of  the  Principles  and  Factors  Underlying  Ad- 
vances Made  by  Banks  to  Borrowers.  By  Chester  Arthur 
Phillips.  (New  York:  The  Macmillan  Company.  1920.  Pp. 
xiv,  374.) 

The  aim  of  this  book  is  to  give  the  student  of  banking  an  under- 
standing of  both  its  theoretical  and  practical  aspects.  The  author  ap- 
proaches the  subject  from  the  point  of  view  of  the  bank  statement. 
After  a  brief  introduction  in  which  he  discusses  the  nature  of  bank 
credit,  which  he  defines  as  "credit  extended  by  banks  to  borrowers" 
(p.  1),  he  shows  how  a  bank  statement  is  gradually  built  up  in  the 
course  of  the  development  of  a  bank's  business  and  then  discusses  the 
relation  between  the  different  items.  In  this  part  of  his  exposition, 
which  he  entitles  Quantitative  Aspects  of  Bank  Credit,  he  introduces 
a  chapter  on  what  he  calls  The  Philosophy  of  Bank  Credit  in  which 
the  theory  of  the  subject  and  the  principal  formulas  he  employs  are 
developed. 

Professor  Phillips'  contribution  to  this  part  of  the  subject  is  his 
criticism  of  the  statement  frequently  made  that  an  addition  to  a  bank's 
reserves  enables  it  to  expand  its  loans  to  several  times  the  amount  of 
such  addition;  for  example,  if  the  reserve  percentage  is  25,  to  four 
times  the  amount,  if  it  is  10,  to  ten  times  the  amount,  etc.  On  the  con- 
trary, Professor  Phillips  claims  that  the  amount  of  loan  expansion  that 
can  safely  be  made  by  the  bank  receiving  the  addition  to  its  reserve  is 
only  a  little  in  excess  of  such  addition.  He  admits,  however,  that  the 
proposition  he  is  criticizing  is  correct  if  applied  to  all  the  banks  of  a 
system. 

The  basis  of  his  argument  is  the  claim  that  the  new  loans  made  by 
a  bank  in  consequence  of  an  addition  to  its  reserve  creates  against  it- 


314  Reviews  and  New  Books  [June 

self  adverse  clearing-house  balances  of  such  magnitude  as  to  take  away 
from  it  most  of  the  cash  received.     As  he  puts  it  (p.  40)  : 

The  sudden  acquisition  of  a  substantial  amount  of  reserve  by  a  representa- 
tive individual  bank,  other  things  remaining  the  same,  tends  to  cause  that 
bank  to  become  out  of  tune  with  the  banks  in  the  system  as  a  whole.  As  the 
individual  bank  increases  its  loans  in  order  to  reestablish  its  normal  reserve- 
deposits  ratio,  reserve  is  lost  to  other  banks  and  the  new  reserve,  split  into 
small  fragments,  becomes  dispersed  among  the  banks  of  the  system.  Through 
the  process  of  dispersion  it  comes  to  constitute  the  basis  of  a  manifold  loan 
expansion. 

Professor  Phillips  traces  this  process  of  dispersion;  works  out  formu- 
las for  the  determination  of  the  amount  of  loan  expansion ;  and  gives  a 
detailed  analysis  of  the  interrelations  of  loans,  deposits,  and  reserves. 

Professor  Phillips  anticipates  (in  a  manner  not  completely  satisfy- 
ing) the  criticism  certain  to  be  made  to  his  contention:  namely,  "that 
the  new  loans  would  result  in  no  loss  of  cash  by  the  lending  bank  be- 
cause checks  drawn  upon  the  lending  bank  by  its  depositor-borrowers 
against  the  deposited  proceeds  of  the  new  loans  would  be  offset  by  the 
deposit  in  the  lending  bank  of  a  corresponding  amount  of  checks — re- 
ceived by  its  customers  in  the  course  of  business — drawn  upon  other 
banks  in  consequence  of  loans  made  by  those  other  banks  to  their  de- 
positor-borrowers" (p.  74).  His  answer  is:  "If  all  banks  were  ex- 
panding their  loans  at  the  same  rate  in  connection  with  simultaneous 
additions  to  their  reserves,  the  contention  would  be  valid.  But  addi- 
tions to  the  reserves  of  a  banking  system,  except  in  the  most  extra- 
ordinary case,  are  made,  at  any  given  time,  not  by  the  deposit  of  cash 
simultaneously  in  all  the  banks  of  a  system  but  by  the  deposit  of  funds 
in  only  a  small  proportion  of  the  banks,  whence  they  are  scattered 
throughout  the  system"  (p.  74). 

The  weakness  of  this  reply  consists  in  the  fact  that,  in  order  to 
make  the  criticism  valid,  it  is  not  necessary  that  additions  be  made 
simultaneously  to  the  reserves  of  all  the  banks  in  the  system  but  only 
to  those  with  which  the  individual  bank  under  consideration  is  doing 
business  and  that  the  expansion  of  the  loans  of  the  other  banks  in  the 
system  is  not  solely  conditioned  upon  an  addition  to  their  reserves. 
There  is  usually,  nearly  always  in  fact,  a  fair  margin  of  surplus  re- 
serves which  may  serve  as  protection  for  additional  loans,  and  such 
additional  loans  may  be>  indeed  are  likely  to  be,  stimulated  by  the  busi- 
ness which  caused  the  loan  expansion  in  the  individual  bank  whose 
operations  are  primarily  under  consideration. 

In  the  judgment  of  the  reviewer,  Professor  Phillips  greatly  exag- 
gerates the  amount  of  adverse  clearing  house  balances  likely  to  be  oc- 
casioned by  an  expansion  of  loans  and  of  what  he  calls  "derivative  de- 
posits" because  he  fails  to  connect  such  expansion  with  the  business 


1921]  Money,  Prices,  Credit,  and  Banking  315 

processes  which  underly  them.  The  bookkeeping  function  of  com- 
mercial banks  is  primary  and  fundamental  and  the  amount  of  offsetting 
of  credits  on  the  books  of  a  particular  bank  depends  much  more  upon 
the  character  of  the  business  of  the  bank's  customers  than  it  does  upon 
the  amount  and  sources  of  its  reserves. 

The  second  part  of  the  book,  entitled  Qualitative  Aspects  of  Bank 
Credit,  includes  a  chapter  in  which  are  traced  the  changes  since  the 
Civil  War  in  "the  form  of  the  bank  borrower's  obligation,  the  de- 
velopment of  the  note  brokerage  business,  the  rise  of  the  bank  credit 
department,  the  rise  and  expansion  of  the  new  business  department, 
and  the  establishment  and  operation  of  the  Federal  Reserve  system" 
(p.  123).  This  is  followed  by  chapters  in  which  is  presented  a  "de- 
tailed analysis  of  the  factors  underlying  and  affecting  the  quality  or 
soundness  of  bank  advances"  (p.  123).  This  part  of  the  exposition 
centers  about  the  typical  credit  statement  of  a  borrower  to  his  bank, 
and  is  based  upon  information  derived  from  "correspondence  and  in- 
terviews with  bankers  and  note  brokers"  and  from  "the  Proceedings 
of  the  American  Bankers  Association,  proceedings  of  the  various  state 
bankers  associations,  reports  of  the  Comptroller  of  the  Currency  and 
banking  periodicals."  Professor  Phillips  has  rendered  a  valuable  ser- 
vice by  digesting  this  material  and  rendering  it  available  to  students 
and  bankers. 

An  appendix  containing  carefully  thought  out  questions,  exercises 
and  problems  and  another  containing  forms  of  borrowers'  statements 
recommended  by  the  American  Bankers  Association  and  the  report  of 
its  committee  on  credit  forms  adds  to  the  usefulness  of  the  book  as 
a  guide  to  students  and  a  handbook  for  bankers. 

William  A.  Scott. 

University  of  Wisconsin. 

NEW   BOOKS 

Bagshaw,  J.  F.  G.  Practical  banking.  With  chapters  on  currency  by  C.  F. 
Hannaford,  and  bank  bookkeeping  by  W.  H.  Peard.  (London:  King. 
1921.     6s.) 

Barker,  J.  R.  K.  Inconvertible  paper  money.  (Cape-Town:  Townshend, 
Taylor  &  Snastall.     1920.     Pp.27.) 

Barral,  J.  L'etalon  monetaire  de  la  Societe  des  Nations  ou  la  mesure 
naturelle  des  valeurs  et  des  prix.     (Nice:    Imp.  de  l'Eelaireur.     1920.) 

Bean,  R.  H.  Elements  of  trade  acceptance  practice.  (New  York:  Ameri- 
can Acceptance  Council.     1921.     Pp.16.) 

Chessa,  F.  Costo  economico  e  finanziario  delta  guerra.  (Roma:  Athenaeum. 
1920.     Pp.  139.) 

Coeylas,  R.  and  de  Tomaz,  R.  Problemes  d'apres-guerre.  (Paris:  Giard. 
1920.     Pp.  278.) 


SI 6  Reviews  and  New  Books  [June 

Cohn,  A.  W.    Kann  das  Geld  abgeschaft  werden?     (Jena:     Fischer.     1920. 
Pp.  139.) 

Courcelle-Seneuil,  J.  G.     Les  operations  de  banque,  traite  theorique  et 
pratique.     Eleventh  edition.     (Paris:     Alcan.     1920.     Pp.  742.     25  fr.) 

The  new  edition  of  this  well  known  treatise  contains  summary  accounts 
by  Professor  Liesse  of  the  banking  experience  of  various  countries  during 
the  war.  The  discussion  of  monetary  and  banking  principles  has  not  been 
changed.  O.  M.  W.  S. 

Diehl,  K.  and  Mombert,  P.     Zur  Lehre  vom  Geld.     (Karlsruhe:     Braun. 
1920.     12  M.) 

von  Dungern,  F.     Die  Entwertung  des  deutschen  Geldes  im  internation- 
alen  Verhehr.     (Berlin:     Sack.     1920.     3  M.) 

Elster,   K.     Die  Seele   des   Geldes.      (Jena:     Fischer.      1920.      Pp.   370. 
38  M.) 

Fisher,  E.  D.    A  study  of  prices.     (Detroit:    Bank  of  Detroit.     1920.     Pp. 
16.) 

Fisher,  I.     The  present  chaos  in  monetary  standards  and  how  to  deal  with  it. 
(New  Haven:    The  author.     1921.     Pp.  32.) 

Hahn,  L.  A.     Volkswirtschaftliche  Theorie  des  Bankkredits.     (Tubingen: 
Mohr.     1920.     16  M.) 

Hamlin,  C.  S.     Index-digest  of  the  Federal  Reserve  Bulletin,  1915-1920. 
(Washington:    P'ederal  Reserve  Board.     1921.     $2.) 

Hare,  L.    Currency  and  prices.     (London:    King.     1920.    Pp.74.    2s.  6d.) 
"I  would  fix  the  value  of  the  currency  unit  upon  as  many  items  of  goods 
and  services  as  possible  and  not  only  upon  gold ;  then  I  would  apply  statis- 
tics of  prices  to  a  use  to  which  they  have  not  yet  been  directly  put,  to 
construct  a  valometer." 

Hauptmann,  M.   Le  role  de  Vetalon  monetaire  dans  la  crise  actuelle.    (Lou- 
vain:     Imp.  Ceuterick.     1921.) 

Kaulla,  Pi.     Die  Grundlagen  des  Geldwerts.     (Stuttgart:     Deutsche  Ver- 
lagsanstalt.    1920.    Pp.  96.) 

Kawashima,  S.     The  abolition  of  money.     (Tokyo:     The  Niyu-sha.     1921.) 

Kerschagl,  R.     Die  JVahrungstrennung  in  den  Nationalstaaten.     (Vienna: 
Manz.     1920.     Pp.  56.) 

Kniffen,  W.  H.     The  business  man  and  his  bank.     (New  York:   McGraw- 
Hill.     1920.     Pp.  xii,  278.) 

The  purpose  of  this  book  is  to  explain  the  bank  as  it  appears  "to  the 
man  who  stands  before  the  counter  screen."  The  approach  from  the  cus- 
tomer's point  of  view  leads  to  chapters  on  the  choice  of  a  bank,  how  to 
endorse  a  check,  how  to  protect  a  check  against  forgery,  the  methods  of 
check  collection,  and  how  to  read  a  bank  statement.  The  book  is  evidently 
intended  for  those  who  are  opening  an  account  for  the  first  time,  and  its 
usefulness  is  limited  to  that  purpose.  W.  W.  S. 

Koehler,  G.     The  passing  of  the  gold  reserve.     (Washington:     Importers 
First  Aid  Service.      1920.     Pp.  87.) 


1921]  Money,  Prices,  Credit,  and  Banking  317 

The  author  has  reached  the  conclusion  that  the  gold  reserve  is  not 
worth  the  cost  of  maintenance.  He  proposes,  therefore,  that  the  free 
coinage  of  gold  be  discontinued,  and  that  legal  tender  treasury  notes,  un- 
supported by  a  gold  reserve,  be  issued  to  meet  all  domestic  currency  needs. 
The  quantity  of  these  notes  is  to  be  limited  to  the  fiscal  requirements  of 
the  government  and  their  value  maintained  by  their  use  in  tax  payments. 
The  gold  of  the  country  may  then  become  a  fund  for  settling  adverse  trade 
balances.  This,  in  outline,  is  the  familiar  argument  of  greenbackism. 
While  it  shows  no  acquaintance  with  the  functions  to  be  performed  by  a 
monetary  system  resting  upon  a  gold  reserve,  it  does  come  near  describing 
the  currency  systems  actually  prevailing  in  the  leading  commercial  coun- 
tries of  the  world  today.  W.  W.  S. 

Kuczynski,    R.      Schulden,    Steuern    und    Valuta.      (Berlin:     Engelmann. 

1920.     3  M.) 
Kuhrt,  J.  W.    A  counting  house  dictionary.     (New  York:    Dutton.  1921.) 

Langston,  L.  H.  and  Whitney,  N.  R.  Banking  practice.  (New  York: 
Ronald.  1921.) 

Lanzillo,  A.  Lo  stato  e  la  crisi  monataria  e  sociale  post-bellica.  (Milano: 
Treves  Fratelli.     1920.     4  L.) 

Lawrence,  F.  W.  P.  Why  prices  rise  and  fall.  (New  York:  Oxford  Univ. 
Press.     1921.     Pp.  64.    $1.) 

Layton,  W.  T.  An  introduction  to  the  study  of  prices.  (New  York:  Mac- 
millan.     1920.) 

Litman,  S.  Prices  and  price  control  in  Great  Britain  and  the  United 
States  during  the  world  war.  Carnegie  Endowment  for  International 
Peace.  Preliminary  Economic  Studies  of  the  War,  no.  10.  (New  York: 
Oxford  Univ.  Press.     1920.     Pp.  ix,  331.) 

Perhaps  there  is  no  subject  connected  with  the  great  war  which  attracts 
attention  so  universal  and  so  enduring  as  the  subject  of  prices  and  the 
cost  of  living.  This  monograph  of  Professor  Litman's  gathers  the  perti- 
nent facts  into  a  statement  that  makes  convenient  a  comparison  between 
the  experiences  of  Great  Britain  and  the  United  States. 

The  author's  chief  concern  has  been  the  assembling  and  organization  of 
the  data  to  be  found  in  official  documents  and  other  contemporary  publica- 
tions. He  lets  actors  in  the  great  drama  speak  for  themselves  and  avoids 
any  extended  exposition  or  comment.  The  work  abounds  with  footnote 
references  which  make  it  possible  for  the  reader  to  expand  the  study  as  he 
may  wish  to  do.  Topics  which  have  common  application  to  American  and 
British  experience  have  been  discussed  in  connection  with  the  study  of 
British  prices  and  are  not  repeated  in  part  II.  Among  these  topics  are 
profiteering,  inflation,  and  industrial  unrest.  In  other  respects  the  two 
countries  are  treated  separately.  The  reader  is  reminded  that  this  is  a 
preliminary  study  and  confessedly  incomplete.  Much  remains  to  be  said 
on  the  theoretical  aspects  of  price  control,  also  on  the  effect  of  government 
purchase  on  civilian  consumption  and  the  shift  of  demand  as  the  result  of 
patriotic  appeal. 

The  author  has  been  careful  to  present  both  sides  of  disputed  questions 
like  the  causes  and  effects  of  inflation,  the  effect  of  profiteering  on  prices. 


518  Reviews  and  New  Books  [June 

In  doing  this,  however,  he  has  not  left  the  reader  in  the  dark  regarding  his 
own  opinion.  He  evidently  regards  the  inflation  of  credit  as  very  impor- 
tant, while  profiteering  is  thought  to  have  had  little,  if  any,  effect  on  the 
general  level.  Murray  S.  Wildman. 

Loewv,  A.  Mathematik  des  Geld-  und  Zahlungsverkehrs.  (Leipzig:  Teub- 
ner.     1921.    Pp.  viii,  273.     11  M.) 

Lotz,  W.  Das  Papiergeld  unter  besonderer  Beriicksichtigung  der  heutigen 
deutschen  Valutafrage.  Volkswirtschaftliche  Zeitfragen,  no.  311-12. 
(Berlin:     Simion.     1920.     Pp.  56.     6  M.) 

Luttke,  H.     Valuta  und  Weltwdhrung.     (Berlin:     Vobach.     1921.     Pp.  31. 

2.50  M.) 
Mathewson,  P.    Acceptances,  trade  and  bankers'.     (New  York:     Appleton. 

1921.     Pp.  xiv,  372.) 

Meyer,  H.  JVesen  und  Lehre  der  Geldkrises.  (Ziirich:  Bopp.  1920. 
12  M.) 

Miller,  J.  O.  High  prices  and  the  quantity  theory.  (London:  Sifton. 
Praed.     1920.     Pp.  86.) 

von  zur  Muhlen,  L.  Die  Oelschiefer  des  europaischen  Russlands.  Ost- 
europa-Institut,  Quellen  und  Studien,  vol.  Ill,  no.  4.  (Leipzig:  Teubner. 
1920.     Pp.  31.) 

Obst,  G.  JVechsel-  und  Scheckkunde.  (Stuttgart:  Poeschel.  1920.  Pp. 
x,  144.     9  M.) 

.    Das  Bankgeschaft.    (Stuttgart:     Poeschel.    1920.   62.50  M.) 

Pohle,  L.  Geldentwertung,  Valutafrage  und  JVahrungsreform.  (Leipzig: 
Deichert.     1920.    Pp.  56.    3  M.) 

Shirras,  G.  F.  Some  effects  of  the  war  on  gold  and  silver.  (London: 
Royal  Statistical  Society,  9  Adelphi  Terrace.     1920.     Pp.  56.) 

Singer,  R.     Das  Geld  als  Zeichen.     (Jena:     Fischer.     1920.     Pp.  vi,  20G.) 

Snell,  G.  B.  Currency  exchange  tables.  (Montreal:  Thomas  V.  Bell. 
1920.      Pp.   43.) 

The  compilation  was  made  by  the  head  office  staff  of  the  Bank  of  Mon- 
treal. The  tables  run  from  1/64  per  cent  to  1  per  cent  advancing  by 
sixty-fourths  and  from  1  1/32  per  cent  to  10  per  cent  advancing  by  five 
thirty-seconds.  There  are  also  tables  showing  the  relation  between 
premium  on  United  States  funds  in  Canada  and  the  discount  on  Canadian 
funds  in  the  United  States,  1/16  per  cent  to  24  per  cent  advancing  by 
sixteenths. 
St.  Clair,  O.  The  physiology  of  credit  and  money.  (London:  King. 
1919.     Pp.  170.) 

This  is  a  rambling  argument  about  the  circulation  of  money,  the  rela- 
tion of  credit  to  prices,  and  the  connection  between  circulating  capital  and 
income.  Mechanical  analogies,  illustrated  by  diagrams,  are  used  as  sub- 
stitutes for  causal  analysis.  The  chief  point  in  the  author's  theory  of 
price  determination  is  the  importance  assigned  to  retail  market,  "where  the 
values  of  goods  are  ultimately  determined."     Since  the  retail  market  is  a 


1921]  Money,  Prices,  Credit,  and  Banking  319 

cash  market,  the  argument  is  that  credit  can  affect  prices  only  indirectly ; 
credit  cannot  raise  prices,  though  it  may  prevent  them   from  failing. 

w.  w.  s. 

Steiner,  F.  G.  Die  Banken  und  der  Wiederaufbau  der  Volkswirtschaft. 
(Vienna:    Manz-Verlag.     1920.     Pp.  93.     3  M.) 

Steiner,  W.  H.  Some  aspects  of  banking  theory.  (New  York:  W.  D. 
Gray,  106  Seventh  Ave.     1920.     Pp.  158.) 

This  is  an  attempt  to  present  in  concise  form  the  fundamentals  of  the 
institution  of  banking,  considered  as  a  "specialized  technique  in  the  sup- 
ply of  capital."  The  method  of  treatment  is  so  abstract,  even  for  a 
statement  which  aims  at  theoretical  formulation,  as  to  leave  the  argument 
greatly  rarefied.  This  absence  of  concrete  data  limits  the  usefulness  of 
the  book  as  an  introductory  explanation  of  banking  processes.  The  ef- 
fort to  get  below  the  psychological  and  pecuniary  level  to  what  the  author 
regards  as  the  real  phenomena  of  credit  results  in  a  type  of  theory  the 
main  purpose  of  which  appears  to  be  the  arrangement  of  concepts  into  a 
logical  system.  It  is  primarily  a  search  for  a  body  of  banking  principles 
and  only  secondarily  a  consideration  of  the  effectiveness  of  banking  poli- 
cies. 

When  so  human  an  affair  as  banking  is  reduced  to  logical  ultimates  the 
danger  is  that  the  thought  may  be  carried  out  of  touch  with  those  practi- 
cal problems  of  credit  control  which  give  meaning  to  banking  theory.  A 
definition  of  banking  is  quoted  from  Willis  which  implies  this  approach 
to  theory  from  the  viewpoint  of  actual  problems, — problems  of  "measur- 
ing and  testing  credit  and  determining  its  apportionment."  In  this  con- 
ception the  institution  of  banking  has  definite  administrative  functions  to 
perform,  and  the  task  for  the  theorist  is,  in  view  of  these  functions,  to  de- 
termine the  effectiveness  of  the  banking  policies  actually  pursued.  It  if 
the  absence  of  this  sense  of  something  to  be  done  and  tbe  testing  of  its 
accomplishment  which  keeps  Mr.  Steiner's  presentation  of  banking  prin- 
ciples from  being  a  realistic  theory  of  banking.  Walter  W.  Stewart. 

Stuart,  G.  M.  V.  Inleiding  tot  de  leer  der  waardevastheid  van  het  geld. 
(The  Haag:   Nijhoff.     1919.     Pp.  188.) 

Supino,  C.     La  carta  moneta  in  Italia.     (Bologna:     Zanichelli.  1921.) 

Suss,  G.  Das  Geldwesen  im  besctzten  Frankreich.  (Miinchen:  Drei 
Masten-Verlag.     1920.     Pp.  181.) 

Valois,  G.  La  monnaie  saine  tuera  la  vie  cliere.  (Paris:  Nouvelle  Li- 
brairie  Nationale.     1920.     Pp.  120.) 

Vissering,  G.  Muntwezen  en  circulatiebanken  in  Nederlandsch  Indie. 
(Amsterdam:     De  Bussy.     1920.     10  Fl.) 

White,  B.     The  currency  of  the  great  war.     (London:     Waterlow.     1921. 

10s.) 
Willis,  H.  P.     Principles  of  banking.     (New  York:     Harper.     1921.) 
Bank  and  public  holidays  throughout  the  world.      (New  York:     Guaranty 

Trust  Co.     1921.     Pp.   160.) 

Changes  in  the  cost  of  living,  July,  lOlJ-Novcmber,  1020.  Research  report 
no.  33.     (New  York:     Nat.  Indus.  Conf.  Board.     1920.     Pp.  29.) 


Reviews  and  New  Books  [June 

La  circulation  fiduciaire  et  le  marche  monetaire  en  Italie  pendant  et  apres  la 
guerre.     (Roma:     Banque  d'ltalie.     1920.) 

Proceedings  of  the  Arizona  Bankers'  Association,  vol.  XIV,  seventeenth  an- 
nual session.     (Prescott:   Morris  Goldwater,  Secretary.     1920.     Pp.  133.) 

Proceedings  of  the  ninth  annual  convention  of  the  Investment  Bankers  As- 
sociation of  America.  (Chicago:  Frederick  A.  Fenton,  Secretary,  111 
West  Monroe  Street.     1920.     Pp.  285.) 

Contains:  Report  of  the  committees  on  public  service  securities,  pp. 
116-131;  Present  public  utility  problems,  by  C.  D.  Jackson,  pp.  132-145; 
Report  of  the  industrial  securities  committee,  pp.  153-166;  Report  of  the 
municipal  securities  committee,  pp.  167-173;  Report  of  the  committee  on 
railroad  securities,  pp.  177-188;  Report  of  the  committee  on  syndicate 
agreements,  pp.  189-205;  "Transportation  act,  1920,"  in  its  relation  to 
railway  securities,  by  Robert  Walker,  pp.  223-237. 

Standards  of  living:  a  compilation  of  budgetary  studies.  (Washington: 
Bureau  of  Applied  Economics.     1920.     Pp.  iv,  156.) 

This  volume  is  a  revised  expansion  of  the  previous  compilations  of 
studies  of  living  costs  made  by  the  Bureau  of  Applied  Economics  in  1918 
and  1919.  It  contains  summaries  or  abstracts  of  the  nineteen  most  im- 
portant attempts  to  fix  the  family  budget.  The  first  article  is  the  1920 
"quantity  budget"  of  the  United  States  Bureau  of  Labor  Satistics ;  the 
pioneer  money  budgets  of  Chapin  and  Moore  are  in  the  later  pages. 

The  compilation  is  so  well  done  that  the  serious  student  can  obtain  a 
comprehensive  understanding  of  the  principles  and  the  methods  of  the 
various  budgetary  investigations.  It  makes  it  comparatively  easy  for  a 
social  worker  in  any  city  to  determine  the  cost  of  living  in  his  community. 
Indeed,  the  book  is  an  invaluable  tool  for  any  one  interested  in  standards 
of  living  and  living  costs.  F.  H.  S. 

Survey  of  cost  of  living  in  Waterbury,  March  1919-March,  1920.  (Water- 
bury:     Chamber  of  Commerce.     1920.     Pp.  24.) 

Tate's  modern  cambist.  Twenty-sixth  edition.  Edited  by  H.  T.  Easton. 
(London:     Wilson.      1921.) 

Trust  companies  of  the  United  States.  1920  edition.  (New  York:  U.  S. 
Mortgage  &  Trust  Co.     1920.     Pp.  xxxix,  619.) 

As  usual  contains  complete  returns,  maintaining  the  high  standard  of  the 
series. 

Public  Finance,  Taxation,  and  Tariff 
Tax  Procedure,  1921.  By  Robert  M.  Montgomery.  (New  York: 
Ronald  Press  Company.  1921.)  Vol.  I,  Federal  Income  Tax 
Procedure,  1921.  (Pp.  xii,  1,206.  $8.00.)  Vol.  II,  Federal  Ex- 
cess Profits  Tax  Procedure,  1921.  (Pp.  vi,  594,  $4;  Volumes  I 
and  II  together  $10.)  Vol.  Ill,  New  York  State  Income  Tax  Pro- 
cedure, 1921  (Including  Corporation  Franchise  Tax).  (Pp.  ix, 
682.  $5.00.) 
Of  the  making  of  income  tax  rulings  there  is  no  end.     Hence  there 


1921]  Public  Finance,  Taxation,  and  Tariff  321 

is  no  end  to  the  making  of  books  to  guide  the  perplexed  taxpayer. 
During  1920  there  were  more  new  rulings  and  regulations  than  were 
made  in  any  previous  year.  The  government  itself  came,  very  tardily 
it  would  seem,  to  the  rescue  with  a  series  of  "bulletins,"  and  cumulative 
"digests"  of  income  tax  rulings,  which  already  run  into  huge  bulk.  The 
bulletins  cover:  Treasury  Decisions,  Opinions  of  the  Attorney  Gener- 
al, Solicitor's  Law  Opinions,  Solicitor's  Memoranda,  Solicitor's  Opin- 
ions, Committee  on  Appeals  Recommendatio'ns,  Committee  on  Appeals 
Memoranda,  Office  Decisions,  and  Court  Decisions.  The  income  tax 
rulings,  we  are  officially  instructed  on  the  covers  of  the  bulletins,  "con- 
stitute a  source  of  information  from  which  taxpayers  and  their  coun- 
sel may  obtain  the  best  available  indication  of  the  trend  and  tendency 
(the  italics  are  mine)  of  official  opinion  in  the  administration  of  the 
income  and  profits  tax  provisions  of  the  Revenue  act."  But  the  offi- 
cers of  the  Bureau  of  Internal  Revenue,  and  perforce  the  taxpayers, 
are  warned  that  the  "rulings  should  be  used  merely  as  aids  in  studying 
the  law."  (Italics  mine.)  All  of  which  is  cited  to  show  that  there  is 
still  use,  possibly  more  use  than  ever,  for  private  enterprise  to  pre- 
pare for  the  taxpayer  an  intelligent  interpretation  of  the  force,  mean- 
ing, and  application  of  the  so-called  rulings  as  well  as  of  the  law.  The 
government  will  not  state  "thus  and  so  is  the  law,"  so  the  taxpayer 
must  get  the  best  advice  he  can.  Hence  no  apology  need  be  offered  for 
a  new  edition  of  this  authoritative  guide. 

The  greatest  difficulty  with  the  rulings  is  that  they  are,  of  necessity 
no  doubt,  confined  to  the  narrow  point  immediately  before  the  depart- 
ment in  each  instance  and  seldom  establish  a  principle  of  general  ap- 
plicability ;  hence,  since  "there  can  be  no  assurance  that  any  new  case 
is  identical  with  the  reported  case"  (a  warning  printed  on  all  the  bul- 
letins), the  taxpayer  has  "no  assurance"  of  anything  until  his  own  case 
has  been  settled — and  even  then  not  until  the  statute  of  limitation  has 
run. 

The  new  edition  adds  to  the  old  all  the  new  rulings.  It  gives  them 
the  same  kind  of  careful,  helpful  comment  and  criticism  that  was  found 
in  the  earlier  editions.  Differences  of  opinion  have  arisen  during  the 
year  between  the  department  and  the  courts,  and  court  decisions  have 
been  rendered  which  are  not  wholly  consistent  one  with  another  so  that 
attorneys  are  now  reduced  to  discussing,  as  Professor  T.  R.  Powell 
recently  expressed  it,  "the  best  psychological  evidence  of  what  the 
Supreme  Court  will  decide."  The  accountant,  however,  cannot  enter 
into  the  psychological  realm  and  our  author  devotes  himself  strictly 
to  telling  the  taxpayer  what  he  must  do  in  the  premises,  and  what  he 
may  expect  if  he  doesn't  do  it,  as  well  as  what  will  happen  when  he 
does,  and  how  he  may  protect  his  rights  so  as  to  take  advantage  of  any 


322  Reviews  and  New  Books  [June 

future  favorable  ruling.  It  short,  he  gives  that  practical  advice  which 
the  taxpayer  wants  to  have. 

It  is  difficult  in  the  extreme  to  pick  out  for  the  purposes  of  this  re- 
view the  most  important  new  things  in  the  book  and  we  doubt  whether 
after  we  have  made  a  few  selections  others  will  agree  with  us  as  to  their 
importance. 

There  is,  of  course,  no  doubt  about  the  widespread  interest  in  the 
so-called  stock  dividend  decision  (March  8,  1920)  although  it  is 
fiscally  of  little  importance.  This  is  now  accepted  law  and  is  fairly 
well  known.  Our  author  refrains  from  criticism  and  contents  himself 
with  showing  how  the  taxpayer  may  comply  with  the  law.  The  regu- 
lations even  yet  do  not  properly  interpret  that  decision  and  our  author 
points  out  wherein  the  regulation  "must  eventually  conform"  to  the 
law.  Thus,  for  example,  he  says :  "It  is  clear  that  the  recipient  of 
a  stock  dividend  when  being  taxed  on  the  proceeds  thereof  is  entitled 
to  the  benefit  of  the  normal  tax  which  the  corporation  has  already  paid 
on  the  earnings  since  March  1,  1913." 

Perhaps  we  may  not  go  altogether  astray  in  selecting  the  already 
famous  Brewster  case,  which  was  decided  by  the  United  States  Dis- 
trict Court  of  Connecticut,  December  16,  1920.  Despite  the  short- 
ness of  the  time  he  had,  our  author  makes  comment  on  this  case  in  no 
less  than  four  appropriate  places  in  his  book.  In  this  decision  a  cour- 
ageous judge  adopts  the  common  man's,  or  every  day,  idea  of  income 
as  being  a  recurrent  series  of  payments  more  or  less  regular  in  char- 
acter, and  holds  that  Congress  has  no  power  to  extend  the  definition 
to  cover  "gains"  and  "profits"  from  the  sale  of  capital  assets  which 
have  appreciated  while  being  held  as  capital  investments.  To  the  econo- 
mist, as  to  the  layman,  there  is  much  of  plain  common  sense  about 
this  decision.  To  the  lawyer  it  will  remain,  until  the  Supreme  Court 
speaks,  a  puzzle  Avhether  the  sixteenth  amendment  gave  Congress  power 
to  tax  both  income  and  "gains,"  "profits,"  etc.,  accruing  on  the  capi- 
tal side  of  the  ledger.  Our  author  does  not  seem  pleased  with  the  de- 
cision in  the  Brewster  case,  although  he  refrains  from  direct  comment. 
But  to  the  reviewer  it  appears  that  the  decision  is  right  as  to  the 
meaning  of  income;  that  if  it  be  held  to  be  desirable  to  tax  capital  in- 
crement values  they  should  not  be  taxed  under  the  false  name  of  in- 
come but  as  taxable  items  under  some  other  tax,  provided  the  six- 
teenth amendment  removed  the  apportionment  restrictions  from  such 
n  tax ;  that  the  matter  is  badly  complicated  by  the  statutory  permis- 
sion to  deduct  business  capital  losses,  depreciation,  and  obsolescence 
from  income;  and,  finally,  that  it  would  be  much  better  if  the  correction 
of  the  matter  could  be  made  by  Congress  instead  of  the  courts,  because 
a  court  decision  would  wipe  out  so  large  a  part  of  the  war  revenues 


1921]  Public  Finance,  Taxation,  and  Tariff  323 

collected  and  spent  and  which  for  the  most  part  may  well  be  considered 
part  of  by-gone  history.  In  short,  may  we  not  hope  that  even  if  the 
Supreme  Court  reverses  the  decision  of  Judge  Thomas,  Congress  will 
revise  the  law  so  as  to  define  income  as  that  wise  judge  sees  it.  After 
all  is  said  and  done,  can  there  be  any  increment  of  value  in  capital 
(save  by  addition  from  savings)  which  is  not  the  result  of  an  increase 
in  income  current  or  anticipated?  Is  not  income  the  cause  of  capital 
value,  and  can  an  effect  be  at  the  same  time  the  cause?1 

Another  interesting  new  item  is  the  opinion  of  the  Attorney  General 
on  community  income,  which  as  to  residents  of  those  states  having  com- 
munity property  laws,  permits  husband  and  wife  to  divide  their  income 
tax  returns,  each  being  taxable  on  one  half  of  the  joint  personal  and 
property  earnings  save  and  except  that  from  pre-marital  separate  hold- 
ings. It  is  obvious  that  this  lowers  the  taxes  payable  by  lessening 
that  part  of  the  income  subject  to  the  surtax  rates.  Our  author  fore- 
casts that  this  privilege  will  be  extended  to  residents  of  other  states, 
cither  by  an  amendment  to  the  statute  or  by  the  general  adoption  by 
taxpayers  of  expedients  already  available,  such  as  taking  wives  into 
partnership.  He  very  justly  remarks  that  the  privileges  and  benefits 
resulting  from  living  in  California  and  in  the  other  states  having  the 
community  property  law  are  already  so  great  that  it  is  hardly  neces- 
sary to  enhance  them  by  a  special  advantage  under  the  income  tax. 
Possibly  the  ladies  of  eastern  states  may  also  be  relieved  of  some  of 
their  disabilities  by  this  very  gallant  ruling  of  the  late  Attorney  Gen- 
eral. One  thing  is  certain  and  that  is  that  the  ruling  is  in  line  with  the 
better  thought  as  to  the  application  of  the  income  tax  to  family  in- 
comes. Surely  there  is  reason  in  abating  the  present  surtaxes  as  far 
as  family  income  is  concerned.  We  have  to  refrain  for  lack  of  space 
from  discussing  other  new  features  of  the  income  tax  law  so  ably  pre- 
sented by  our  author. 

The  excess  profits  tax  is  still  with  us,  despite  the  fact  that  our 
author  was  rash  (he  says  "optimistic")  enough  in  his  1920  edition  to 
prophesy  its  repeal  during  1920.  The  tax  is  covered  in  a  volume  of 
nearly  600  pages.  The  new  rulings  he  has  to  discuss  are  numerous. 
We  still  lack  a  Supreme  Court  decision  as  to  what  is  invested  capital 
and  many  of  the  novel  ideas  on  which  the  tax  is  based  are  undefined. 
The  new  rulings  are  so  highly  technical  and  involved  that  we  cannot 
comment  on  them  without  unduly  extending  this  review. 

There  are  pending  in  the  Supreme  Court  many  vital  questions  as  to 
income  and   excess   profits   taxes.      The  new   Congress   is   expected   to 

iThe  above  was  written  before  the  decision  of  the  Supreme  Court  reversing  the 
Brewster  case  was  handed  down.     See  comment  below. 


324  Reviews  and  New  Books  [June 

take  up  seriously  a  revision  of  the  law.  One  very  grave  difficulty 
confronts  the  Supreme  Court  in  deciding  points  of  law  as  to  both  the 
income  tax  and  the  excess  profits  tax  and  that  is  that  these  taxes  were 
both  established  as  war  taxes,  were  enforced  to  raise  money  as  quickly 
as  possible,  and  interpreted  and  administered  by  the  department  far 
more  for  sake  of  revenue  than  in  the  desire  to  establish  rules  which 
should  in  the  long  run  do  justice  and  work  equity.  To  reverse  these 
rulings  now  will  mean  reimbursement  of  large  sums  which  the  govern- 
ment can  ill  spare,  not  to  upset  the  rulings  means  a  perpetuation  of 
serious  inequalities  and  wrongs.  The  dilemma  is  exceedingly  unpleas- 
ant. An  early  revision  of  the  law  by  Congress  might  relieve  the  court 
to  a  large  extent  of  the  embarrassment  of  the  second  horn  of  the 
dilemma. 

Since  the  above  was  written  and  just  before  going  to  press,  the  news 
dispatches  report  that  the  Supreme  Court  has  ruled  that  Congress  has 
the  power  to  tax  profits  of  all  kinds  and  that  the  provisions  of  the  in- 
come tax  law  covering  profits  not  of  the  nature  of  income  are  consti- 
tutional. It  remains  now  for  Congress  to  amend  the  law  correcting 
the  double  taxation  which  arises  from  the  taxation  of  the  increment 
in  investment  property  values  caused  by  an  increase  in  the  taxed  in- 
come therefrom.  The  validity  of  the  war  taxes  has  been  sustained, 
but  that  they  are  valid  is  not  a  good  reason  for  continuing  unjust 
taxes  in  times  of  peace. 

The  third  volume  in  the  above  series  has  also  arrived  just  in  time  for 
a  brief  mention.  It  begins  with  a  brief  review  of  state  income  taxes 
and  then  takes  up  in  detail  the  New  York  income  tax  and  the  corpora- 
tion franchise  tax.  The  New  York  income  tax,  it  will  be  remembered, 
is  modelled  on  the  federal  income  tax.  The  main  difference  is  that  it  is 
a  personal  income  tax.  Corporations  are  covered  by  the  franchise  tax 
on  net  receipts  under  a  separate  law.  Business  earnings  are  reported 
by  the  ultimate  recipient  and  not  by  the  firm.  Then  there  are  the 
necessary  differences  arising  from  the  fact  that  it  is  a  state  tax.  Thus 
incomes,  salaries,  and  interest  from  federal  sources  are  exempt  and 
those  from  state  sources  are  taxed.  The  taxation  of  non-residents  re- 
ceiving incomes  from  or  earning  income  in  New  York  involves  differ- 
ences. New  Yorkers  were  not  content  to  have  a  resident  of  so  foreign 
a  country  as  New  Jersey  or  Connecticut  come  over,  work  in  New  York, 
and  carry  home  his  earnings,  without  paying  a  New  York  tax.  That 
such  an  individual  might  be  quite  adequately  taxed  at  home  was  not 
sufficient  unless  he  be  taxed  by  an  income  tax  of  equal  amount.  Out 
of  this  principal  difference  many  little  ones  arise,  none  of  very  great 
importance. 


1921]  Public  Finance,  Taxation,  and  Tariff 

The  third  volume  is  complete  in  itself  and  should  there  be  a  person 
who  has  to  pay  the  New  York  tax  and  no  federal  tax  he  would  find 
all  he  needs  in  this  volume.  But  since  every  one  does  pay  a  federal  tax 
the  book  is  arranged  on  the  assumption  that  having  already  made  up 
his  federal  tax  return  the  taxpayer  now  wishes  instruction  as  to  how 
to  adjust  the  figures  so  as  to  fit  the  New  York  return.  In  addition  to 
the  general  discussion  of  each  provision  of  the  law,  there  are  forms 
enabling  the  taxpayer  to  set  forth  side  by  side  the  figures  for  the  fed- 
eral and  those  for  the  state  return.  Some  important  court  decisions 
are  reprinted  in  full  as  is  the  New  York  statute  itself.  The  book  is 
thus  very  complete,  indeed. 

Carl  C.  Plehn. 

University  of  California. 

Introduction  to  Public  Finance.  By  Carl  C.  Plehn.  (New  York: 
The  Macmillan  Company.     1920.     Pp.  xix,  446.) 

This  is  the  fourth  edition  of  a  very  widely  used  elementary  text- 
book, in  fact  the  only  one  in  this  field  of  recent  enough  date  and  suffi- 
cient scope  to  be  used  as  the  foundation  of  a  course  in  public  finance. 
For  this  reason  its  appearance  will  be  welcomed  by  all  teachers  of  that 
subject.  But  it  must  be  said  that  a  course  in  which  this  was  the  only 
text,  or  in  which  the  teacher  did  not  take  great  pains  to  check  up  and 
supplement  the  information  therein  contained,  would  be  highly  un- 
satisfactory. 

The  necessary  criticisms  are  of  two  sorts :  criticisms  of  the  book  and 
criticisms  of  the  revision.  Taking  the  second  first,  we  find  numerous 
evidences  of  carelessness  in  bringing  statements  of  fact  down  to  date. 
I  mention  only  a  few:  on  page  44  it  is  stated  that  the  abuse  of  the 
pension  system  ceased  about  1900,  although  the  Sherwood  act  dates 
only  from  1913 ;  on  page  48  there  is  a  statement  which  implies  that 
the  United  States  has  not  had  a  protective  tariff  since  1909;  the  de- 
scription of  the  British  income  tax  in  the  chapter  on  tax  systems  takes 
no  account  of  the  reforms  of  1909;  on  page  145  it  is  stated  that  the 
proportion  of  United  States  federal  income  yielded  by  import  duties  is 
now  slightly  less  than  one  half  the  total.  Some  of  the  revisions  made 
are  not  incorporated  in  the  text  but  added  as  appendices,  formal  or 
otherwise;  for  example,  the  chapter  on  the  growth  of  public  debts 
stands  as  in  the  previous  edition,  even  as  to  the  tables  of  statistics. 
On  the  other  hand,  two  new  and  helpful  chapters  are  added  on  the 
growth  of  public  expenditures  and  on  the  war  and  excess  profits  taxes, 
and  the  chapter  on  the  financial  administration  of  wars  is  completely 
revised  and  modernized.  In  general  it  may  be  said  that  the  theoretical 
part  of  the  work  has  been  more  carefully  gone  over  than  the  descrip- 


326  Reviews  and  New  Books  [June 

tive.  The  author's  views  have  suffered  little  change  since  1909,  ex- 
cept that  he  has  more  faith  now  in  the  property  tax,  but  he  has 
omitted  some  theoretical  discussion  for  lack  of  space. 

Professor  Plehn,  as  is  well  known,  uses  a  threefold  classification  of 
revenues,  based  not  so  much  on  the  way  the  money  is  raised  as  on  the 
nature  of  the  benefit  conferred  on  the  citizen  in  return  for  his  contri- 
bution. The  term  "tax"  is  limited  to  compulsory  contributions  "to 
defray  expenses  incurred  in  conferring  a  common  benefit  upon  the  resi- 
dents of  the  State,"  whereas  "fees"  are  compulsory  contributions  to 
defray  expenses  of  governmental  action  which  "confers  a  special  bene- 
fit, or  one  that  is  arbitrarily  so  regarded."  Is  not  this  attempt  to 
distinguish  different  methods  of  raising  money  not  according  to  any 
incident  of  its  collection,  but  according  to  the  justification  for  spend- 
ing it  or  the  way  it  is  to  be  spent,  an  error  of  the  same  sort  as  that 
made  by  economists  who  declare  that  receipts  are  not  income  if  used 
to  increase  one's  investments  and  not  expended  on  current  enjoyments? 
How  can  one  trace  the  actual  sums  received  so  as  to  be  sure  that  they 
are  not  expended  in  more  than  one  way?  Is  it  not  possible  for  differ- 
ent states,  or  individuals,  receiving  income  in  identical  fashions,  to 
spend  them  differently  without  altering  the  nature  of  the  income? 
Granting  that  it  is  proper  to  raise  larger  sums  from  some  citizens 
than  from  others  on  account  of  benefits  received  from  the  state,  there 
are  many  ways  of  raising  those  sums  and  it  would  be  misleading  to 
classify  them  all  together  because  the  benefits  are  similar.  Likewise 
it  is  undesirable  to  split  up  a  payment,  as  Professor  Plehn  does,  if  it 
exceeds  the  cost  of  the  service,  and  call  it  both  a  fee  and  a  tax.  Would 
he  also  designate  as  a  tax  the  excess  over  cost  of  a  government  mo- 
nopoly price?  Presumably  not,  as  he  says  that  such  prices  are  "con- 
tractual" or  "commercial,"  whereas  taxes  are  "compulsory." 

The  sections  describing  recent  war  financing,  both  American  and 
foreign,  are  useful  and  well  written.  The  historical  sections  of  the 
previous  edition  had  a  good  reputation,  and  the  new  parts  deserve  it 
as  well.  Perhaps  some  of  the  criticism  of  the  present  revenue  act  is 
beyond  the  grasp  of  an  elementary  student,  but  that  is  of  slight  con- 
sequence. One  criticism  is,  however,  beyond  the  reviewer's  grasp.  By 
this  I  mean  the  statement  on  page  307  that  the  setting  forth  of  high 
rates  for  1919  and  lower  rates  for  1920  and  subsequent  years  discour- 
aged production,  because  producers  waited  for  the  lower  rates.  It 
must  be  remembered  that  the  revenue  act  was  not  passed  until  1919, 
and  that  the  income  on  which  the  1919  rates  were  collected  had  been 
already  acquired,  during  the  year  1918.  The  statement  of  rates  for 
subsequent  years  might  be  expected  to  have  the  opposite  effect,  since 
it  implied  that  the  taxes  would  not  be  repealed  for  some  years. 


1921]  Public  Finance,  Taxation,  and  Tariff  327 

There  are  some  other  theoretical  points  that  invite  comment,  al- 
though possibly  they  are  merely  cases  of  carelessness  in  expression. 
One  example  is  the  discussion  of  the  incidence  of  the  excess  profits  tax 
on  page  305.  "If,  as  is  certainly  likely  to  be  the  case,  the  rapid  rise 
in  prices  curtailed  purchases  and  lessened  the  volume  of  business  "in 
physical,  not  in  money,  measure,  it  might  be  possible  for  the  company 
to  shift  the  tax  in  part  if  not  wholly  to  the  consumer."  Why  is  it 
easier  to  shift  a  tax  if  rising  prices  curtail  demand?  Is  it  not  the 
fear  of  a  lessened  demand  that  often  causes  sellers  to  refrain  from  at- 
tempting to  add  taxes  to  their  selling  prices?  The  really  interesting 
question  in  this  connection  is  why  the  rising  prices  during  the  war 
did  not  cut  down  demand  more  than  they  did. 

It  is  unfortunate  that  such  a  book  as  this,  in  its  fourth  edition  after 
twenty  years  of  useful  existence,  should  contain  so  many  defects  ap- 
parently due  to  mere  haste.  These  would  be  less  important  if  it  were 
a  treatise  for  advanced  students,  in  which  the  author's  wide  knowledge 
and  good  judgment  would  overshadow  them,  but  in  an  elementary  text 
they  mean  a  needless  burden  on  the  teacher. 

Rufus  S.  Tucker. 

Harvard  University. 

NEW   BOOKS 

Bogart,  E.  L.  War  costs  and  their  financing.  (New  York:  Appleton. 
1920.) 

Bowlev,  A.  L.  The  change  in  the  distribution  of  the  national  income,  1880- 
1913.     (Oxford:     Clarendon  Press.     1920.     Pp.  27.) 

Brauer,  K.  Die  Neuordung  der  deutschcn  Finanzwirtschaft  und  das  neue 
Reichssteucrsystem.  Finanz-  und  volkswirtschaftlichen  Zeitfragen,  67. 
(Stuttgart:     Enke.     1920.) 

Brown,  H.  G.  The  taxation  of  unearned  incomes.  (Columbia:  Missouri 
Book  Co.     1920.     Pp.  124.) 

Brown,  J.  R.  The  farmer  and  the  single  tax.  (New  York:  Single  Tax 
Club,  47  West  42d  St.      1920.) 

Burns,  E.  Modern  finance.  (New  York:  Oxford  Press.  1921.  Pp.  64. 
$1.) 

Chessa,  F.  Costo  economico  e  costo  finanziario  delta  guerra.  (Rome: 
Athenaeum.      1920.      3.50   1.) 

Dalberg,  R.  Fmanzgesundung  aus  Wahrungsnot.  (Berlin:  Heymanns. 
1920.     Pp.  viii,  103.) 

Decke,  E.     Die  neuen  Reichssteuern.     (Leipzig:   Teubner.    1920.    Pp.113.) 

Emery,  G.  F.  Income  tax  acts  as  they  affect  the  public.  (London:  Stev- 
ens &  Sons.      1921.     21s.) 

Gault,  J.  Excess  profits  duty  and  corporation  profits  tax.  (London:  Ef- 
fingham Wilson  and  Stevens  &  Sons.     1920.) 


328  Reviews  and  New  Books  [June 

Jorgensen,  E.  O.  One  hundred  reasons  for  the  single  tax.  (Chicago:  The 
Chicago  Single  Tax  Club.     1920.     $1.25.) 

Lolini,  E.  L'attivita  finanziaria  nella  dottrina  e  nella  realta.  (Rome: 
Athenaeum.     1920.     Pp.  497.) 

McCaleb,  W.  F.    Public  finances  of  Mexico.     (New  York:   Harper.    1920.) 

Mason,  D.  T.  Timber  appraisal.  (Chicago:  Nat.  Lumber  Mfrs.  Assoc. 
1921.     Pp.  3.) 

Moye,  M.  Precis  elementaire  de  legislation  financiere.  (Paris:  Tessin. 
1921.     Pp.  xii,  422.) 

Pannetier,  C.    Les  successions  et  le  fisc.     (Paris:    Sirey.     1921.     12  fr.) 

Pi ist,  C.  Les  finances  de  guerre  de  I'Allemagne.  (Paris:  Payot.  1921. 
Pp.  xiv,  294.     15  fr.) 

Stamp,  J.  The  fundamental  principles  of  taxation  in  the  light  of  modern 
developments.     (London:     Macmillan.     1921.) 

Thornton,  A.  B.  The  nation's  financial  outlook.  (London:  King.  1921. 
Pp.  x,  137.     2s.  6d.) 

Villard,  R.  Le  Reichsnotopfer  ou  le  prelevemcnt  exceptionnel  sur  le  capital 
en  Allcmagne.     (Paris:     Pichon.     1920.     Pp.  131.) 

Woodwobth,  L.  D.  Panaceas  for  present  tax  burdens.  (New  York:  Am. 
Bankers  Assoc.     1921.     Pp.  3.) 

Administration  and  condition  of  Egypt  and  the  Soudan.  Reports  of  H.  M. 
High  Commissioner  for  the  years  1912-1919.  (London:  King.  1920 
Is.  6d.) 

The  facts  about  tonnage  tax.  (Hibbing,  Minn.:  Minn.  Fair  Tax  Assoc. 
1920.     Pp.  39.) 

Hicih  cost  of  elections  in  Chicarjo  and  Coolc  county.  (Chicago:  Chicago 
Bureau  of  Public  Efficiency.     1921.     Pp.  24.) 

Kelly's  customs  tariffs  of  the  world  1920.  (London:  Kelly's  Directories 
Ltd.     1920.     Pp.  xv,  1224.     8s.) 

National  expenditure.  Third  renort  of  committee,  session  nf  1920,  with  evi- 
dence and  appendices.     (London:     H.  M.  Stationery  Office.     1921.     2s.) 

Notions  elementaires  sur  les  impots  directs.  Recueil  de  conferences  faites 
aux  surnumeraires  de  premiere  annee.  (Paris:  Imprimerie  Nat.  1921. 
Pp.  x,  584.) 

Proceedings  of  the  Brussels  international  financial  conference.  (London: 
Harrison  &  Sons.     Three  vols.;  2s.  6d.  each.) 

Stomp  tares  on  documents ;  except  on   issue,  sales,  and  transfers  of  certifi- 
cates of  sfoclr  and  sales  of  products  for  future  delivery:  imnnscd  by  titlr 
XT   nf   the    Revenue    act    of    1918.      (Washington:      Supt.    Docs.      192T 
Vp.    63.) 

Statistics    of   income,    compiled    from    the    returns    of    1^1  S.       (Wnshinsrton  j 

Commissioner   of   Internal    Revenue.      1920.      Pp.    15.) 
Proceedings   of   the   second    national    industrial   fax    conference,    October    ?? 


1921]  Population  and  Migration  329 

and  23,  1920.     (New  York:     Nat.  Indus.  Conf.  Board.     1921.     Pp.  196. 
$1.50.) 

Report  of  the  tax  committee  of  the  National  Industrial  Conference  Board 
on  federal  tax  problem.  (New  York:  Nat.  Indus.  Conf.  Board.  1921. 
Pp.   58.     75c.) 

Taxation  of  inheritances  in  Virginia.  (Richmond:  State  Tax  Board.  1921. 
Pp.  34.) 

Tax  on  personal  income,  state  of  New  York.  (New  York:  Guaranty 
Trust  Co.     1921.     Pp.  80.) 

Undistributed  earnings  tax.  A  plan  to  tax  the  current  year's  earnings  to/ 
corporations,  not  distributed.  (New  York:  National  Association  of 
Credit  Men,  41   Park  Row.     1921.     Pp.  40.) 

Population  and  Migration 

The  Italian  Emigration  of  Our  Times.  By  Robert  F.  Foerster. 
(Cambridge:  Harvard  University  Press.  1919.  Pp.  xx,  558. 
$2.50.) 

In  presenting  this  study  of  Italian  emigration  Professor  Foerster 
has  rendered  a  notable  contribution  to  sociology,  particularly  to  those 
portions  of  it  which  deal  with  population  and  migratory  movements. 
The  book  is  eminently  a  product  of  high  scholarship.  The  author  has 
utilized  a  vast  amount  of  material  much  of  which  is  unfamiliar  to  the 
average  American  student  and  which  must  have  required  an  immense 
amount  of  labor  in  analyzing  and  digesting. 

Most  studies  of  immigration  written  by  American  authors  approach 
the  problem  directly  from  the  point  of  view  of  the  United  States.  Pro- 
fessor Foerster  has  adopted  the  Italian  outlook,  and  presents  the 
phenomenon  of  emigration  as  an  integral  feature  of  Italian  national 
life.  The  first  book,  comprising  two  chapters,  is  a  statistical  study  of 
the  volume  and  directions  of  the  outgoing  currents  and  the  correspond- 
ing features  of  the  reverse  flow.  The  next  book  deals  with  the  causes 
of  emigration.  Here  are  considered  the  factors,  physical,  racial,  and 
historical,  which  in  recent  years  have  turned  the  faces  of  so  many 
hundreds  of  thousands  of  Italians  toward  foreign  lands.  Significant 
differences  are  pointed  out  between  the  conditions  of  North  and  South 
Italy. 

Book  III  takes  up  the  history  and  outstanding  characteristics  of 
the  Italian  settlements  in  various  foreign  lands,  chief  among  which  are 
France,  Germany,  Argentine,  Brazil,  and  the  United  States.  In  this 
section  is  accumulated  an  imposing  mass  of  data,  which  are  of  value 
not  only  in  portraying  the  experiences  of  the  Italians  as  a  group  but 
also  in  furnishing  the  kind  of  reliable  inductive  material  upon  which 
Ihe  generalizations  of  immigration  must  be  based.     It  is  exceedingly 


330  Reviews  and  New  Books  [June 

interesting  to  see  the  way  in  which  the  basic  characteristics  of  the 
Italians  reveal  themselves  in  modified  aspects  according  to  the  different 
social  and  economic  conditions  of  the  lands  in  which  they  cast  their  lot. 

Book  IV  takes  up  the  problems  of  Italy's  place  among  the  nations 
of  the  world  in  the  light  of  the  traits  of  the  Italians  as  emigrants,  and 
the  reactions  of  emigration  upon  Italy.  The  last  two  chapters  are 
concerned  with  the  practical  aspects  of  the  matter,  and  questions  of 
policy  and  control. 

There  can  be  no  question  that  from  the  professorial  group  of  stu- 
dents of  immigration  this  book  will  receive  the  warm  welcome  it  de- 
serves. From  the  point  of  view  of  making  its  invaluable  contents  more 
attractive  to  "the  average  citizen"  it  is  too  bad  that  the  introductory 
portion  is  of  such  a  highly  detailed  and  elaborate  statistical  char- 
acter. While  the  subject-matter  is  of  the  highest  importance  and 
shows  remarkable  care  and  diligence  of  study,  it  would  have  been  pos- 
sible to  rearrange  the  material  in  a  manner  not  seriously  less  logical 
which  would  have  made  it  a  much  more  appealing  document. 

Another  possible  criticism  is  the  preponderating  emphasis  which  is 
laid  upon  the  economic  aspects  of  the  movement.  It  is  true  that  immi- 
gration is  today  primarily  an  economic  phenomenon,  and  the  economic 
considerations  are  fundamental.  Yet  once  undertaken,  immigration 
affects  more  or  less  profoundly  every  life  interest,  and  many  of  the 
most  important  effects  develop  in  the  non-economic  interests  of  life. 
In  Professor  Foerster's  book  there  are  occasional  glimpses  into  the 
political,  marital,  recreational,  religious,  and  other  social  aspects  of 
the  life  of  Italian  immigrants ;  but  they  are  scarcely  more  than  enough 
to  whet  the  reader's  appetite  in  a  tantalizing  way.  A  fuller  discus- 
sion of  some  of  these  matters  might  have  been  substituted  for  the 
rather  extended  catalogs  of  the  occupational  activities  of  Italians  in 
various  lands. 

With  reference  to  the  ground  it  covers  the  book  will  doubtless  long 
remain  the  standard.  An  impressive  amount  of  work  has  been  done  so 
thoroughly  that  it  will  never  need  to  be  done  again. 

Henry  Pratt  Fairchild. 

New  York  University. 

NEW   BOOKS 

n'AuDiFFRET.      La   depopulation.      (Paris:      Revue   Contemporaine.      1921. 
Pp.  107.) 

DubliNj   L.    I.      The   reduction   in   mortality   among   colored  policyholders. 
(New  York:    Metropolitan  Life  Ins.  Co.  '  1920.     Pp.7.) 

Eisler,  G.     Our  immigrants  of  foreign  tongues  in   their  old  homes  and  in 
America;  a  selected  list  for  the  study  of  the  many  races  in  the  popula- 


1921]  Social  Problems  and  Reforms  331 

Hon   of  Buffalo.      A    bibliography.      (Buffalo,    N.    Y.:      Public    Library. 
1921.     Pp.  10.) 

Kellor,  F.  A.  Immigration  and  the  future.  (New  York:  Doran.  1921. 
Pp.  276.     $2.50.) 

Lascaux,  R.  La  production  et  la  population.  (Paris:  Payot.  1921. 
Pp.  335.     9   fr.) 

von  Liszt,  E.  Der  Einfluss  der  Krieges  auf  die  soziale  Schichtung  der 
Wiener  Bevblkerung.     (Vienna:     Braumiiller.     1919.     4  M.) 

Present-day  immigration  with  special  reference  to  the  Japanese.  Annals 
of  the  Academy  of  Political  and  Social  Science,  vol.  XCIII,  no.  182. 
(Philadelphia:     The  Academy.     1921.     Pp.  232.     $1.) 

The  report  of  the  commissioner  of  immigration.     (Washington.     1921.) 

Statistics  relative  to  Japanese  immigration  and  the  Japanese  in  California. 
Revised  Jan.,  1920.  (San  Francisco:  Japanese  Association  of  America. 
444  Bush  St.     1920.     5s.) 

Social  Problems  and  Reforms 

NEW   BOOKS 

Alston,  L.  How  it  all  fits  together.  A  novice's  introduction  to  the  game  of 
life.     (New  York:     Dutton.     1920.       Pp.  158.) 

Bamford,  E.  F.  Social  aspects  of  the  fishing  industry  at  Los  Angeles  harbor. 
(Los  Angeles:     Univ.  California.     1921.     20c.) 

Burnham,  A.  C.  The  community  health  problem.  (New  York:  Mac- 
millan.      1921.      Pp.    149.     $1.50.) 

Chafee,  Z.,  Jr.  Freedom  of  speech.  (New  York:  Harcourt,  Brace  & 
Howe.     1920.     Pp.  vii,  431.) 

Cherrington,  E.  H.  The  evolution  of  prohibition  in  the  United  States  of 
America;  a  chronological  history  of  the  liquor  problem  and  the  temperance 
reform  in  the  United  States  from  the  earliest  settlements  to  the  consum- 
mation of  national  prohibition.  (Westville,  O. :  Am.  Issue  Press.  1920. 
Pp.   384.) 

Clarke,  J.  J.  The  housing  problem;  its  history,  growth,  legislation  and 
procedure.     (New  York:    Pitman.     1921.     Pp.  544.     $7.50.) 

Dickinson,  G.  L.  Causes  of  international  war.  Handbooks  on  interna- 
tional relations,  edited  by  G.  L.  Dickinson.  (New  York:  Harcourt,  Brace 
&  Howe.     1920.     Pp.  108.     $1.) 

Ellinger,  A.  Sozialisierung  des  Bau-  und  Wohnungswesens.  (Hamburg: 
Paeplow.     1920.     5  M.) 

Gollancz,  V.  Industrial  ideals.  World  of  today  series,  no.  5.  (New 
York:     Oxford  Univ.  Press.     1921.     Pp.  64.     $1.) 

Gooch,  G.  P.  Nationalism.  Handbooks  on  international  relations,  edited 
by  G.  L.  Dickinson.  (New  York:  Harcourt,  Brace  &  Howe;  London: 
Swarthmore  Press.     1920.     Pp.  127.     $1.) 


332  Reviews  and  New  Books  [June 

Hammond,  J.  H.  and  Jenks,  J.  W.  Great  American  issues,  political,  so- 
cial, economic  (a  constructive  study).  (New  York:  Scribners.  1921. 
Pp.  266.     $2.) 

Hansen,  M.  L.  Welfare  campaigns  in  Iowa.  (Iowa  City:  State  Hist. 
Soc.  of  Iowa.     1921.     Pp.  320.     $2.) 

Hill,  D.  S.  Introduction  to  vocational  education.  A  statement  of  facts 
and  principles  related  to  the  vocational  aspects  of  education  below  college 
grade.     (New  York:    Macinillan.     1920.    Pp.  483.) 

Howe,  F.  C.  Revolution  and  democracy.  (New  York:  Huebsch.  1921. 
Pp.  234.     $2.) 

Hoyt,  F.  C.    Quicksands  of  youth.    (New  York:    Scribners.    1921.    $1.75.) 
The  author  is  the  presiding  justice  of  the  children's  court  in  New  York. 

Hyde,  R.  R.    The  boy  in  industry  and  leisure.    (London:    Bell.    1921.   6s.) 

Hyndman,  H.  M.  The  evolution  of  revolution.  (New  York:  Boni  & 
Liveright.     1921.     Pp.  406.) 

Ireland,  A.  Democracy  and  the  human  equation.  (New  York:  Dutton. 
1921.     Pp.  251.     $3.) 

A  thoughtful  study  of  the  controlling  factors  which  determine  the  de- 
velopment of  popular  government  in  the  United  States.  Examines  fac- 
tors in  political  determinism,  as  heredity  and  environment  in  determining 
human  qualities;  the  working  out  of  the  representative  principle;  and  the 
complexity  of  new  tasks  imposed  upon  the  government.  "What  is  now 
needed  is  that  the  special  knowledge  of  the  biologist,  of  the  psychologist,, 
of  the  sociologist,  and  of  the  political  scientist  should  be  coordinated  in 
an  exhaustive  enquiry  into  the  form  and  function  of  Government." 

Knowles,  M.     Industrial   housing.      (New   York:     McGraw-Hill.      1920. 

Pp.  408.) 
Lara,  J.     The  underpaid  white  collar  class.     (New  York:     The  S.  A.  Pub. 

Co.    $1.50.) 

Lefebvre,  C.  La  famille  en  France  dans  le  droit  et  dans  les  moeurs.  (Paris: 
Giard  &  Cie.     1920.    Pp.  222.) 

Twelve  lectures  given  in  May  and  June,  1919,  to  American  students. 

McConnell,  F.  J.  Church  finance  and  social  ethics.  (New  York:  Mac- 
millan.      1920.     Pp.  130.     $1.55.) 

Miller,  E.  A.  The  history  of  educational  legislation  in  Ohio  from  1803  to 
1850.     (Chicago:     Chicago  Univ.     1920.     Pp.  248.     $2.) 

Murphy,  Wood  and  Ackerman.  The  housing  famine.  How  to  end  it.  A 
triangular  debate.     (New  York:    Dutton.     1921.     Pp.  xvi,  246.) 

Reed,  A.  Y.  Junior  wage  earners.  (New  York:  Macmillan.  1920. 
Pp.  171.) 

Rushmore,  E.  M.  Social  workers'  guide  to  the  serial  publications  of  repre- 
sentative social  agencies.  (New  York:  Russell  Sage  Foundation.  1921. 
Pp.  174.) 

Speek,  P.  A.  A  stake  in  the  land.  Americanization  studies.  (New  York: 
Harper.     1921.     Pp.  xxix,  266.) 


1921]  Insurance  and  Pensions  333 

Stocks,  J.  L.  Patriotism  and  the  super-state.  Handbooks  on  international 
relations,  edited  by  G.  L.  Dickinson.  (New  York:  Harcourt,  Brace  & 
Howe.     1921.     Pp.  121.     $1.) 

Veiller,  L.  A  model  housing  law.  Revised  edition.  (New  York:  Rus- 
sell Sage  Foundation.     1920.     Pp.  430.) 

Executive  and  technical  women  in  industry.     Survey   of  factories,  1919- 

1920.  (New  York:    Y.  W.  C.  A.     1920.    Pp.  19.) 

Health  letters.  Framingham  monograph  no.  8.  (Framingham,  Mass.: 
Community  Health  Station.     1921.    Pp.  84.) 

Housing  companies.  (Washington:  Civic  Development  Dept.,  U.  S.  Cham- 
ber of  Commerce.     1921.) 

Proceedings  of  the  international  conference  of  women  physicians.  (New 
York:    The  Woman's  Press.     1921.    $3  a  set;  75c  a  volume.) 

The  report  is  published  in  six  volumes:  I,  General  problems  of  health 
(pp.  287);  II,  Industrial  health  (pp.  144);  III,  The  health  of  the  child 
(pp.  164);  IV,  Moral  codes  and  personality  (pp.  166);  V,  Adaptation  of 
the  individual  to  life  (pp.  206)  ;  VI,  Conservation  of  health  of  women  in 
marriage  (pp.  183). 

Second  annual  report  of  the  director  of  the  Women's  Bureau  for  the  fiscal 
year  ended  June  SO,  1920.     (Washington:     Supt.  Does.     1920.     Pp.12.) 

Sixth  annual  report  of  the  City  Planning  Board  for  the  year  ending  Janu- 
ary 81,  1920.     (Boston:   City  Hall.     1921.     Pp.52.) 

The  social  task  of  the  church  as  set  forth  by  the  Lambeth  conference  of  1920. 
(New  York:  Dept.  Christian  Social  Service,  281  Fourth  Ave.  1921. 
Pp.  28.) 

A   syllabus   in  industrial   relations.      (Bloomington,   Ind. :      Indiana   Univ. 

1921.  Pp.  16.) 

Toledo  children  who  leave  school  for  work.  (Toledo,  Ohio:  Consumers' 
League.     1921.     Pp.  31.) 

United  States  Steel  Corporation.  (New  York:  Bureau  of  Safety,  Sanita- 
tion and  Welfare.     1921.) 

Insurance  and  Pensions 

Public  Health  and  Insurance.  By  Sir  Arthur  Newsholme.  (Balti- 
more: The  Johns  Hopkins  Press.  1920.  Pp.  xiv,  270.  $2.50.) 
The  lectures  compiled  in  this  book  were  delivered  by  Dr.  Newsholme 
in  the  United  States  during  the  academic  year  of  1919  and  1920. 
They  deal  primarily  with  the  development  of  public  health  work  in 
England  and  include  a  discussion  of  legislation,  health  insurance,  and 
the  increasing  socialization  of  medical  practice.  Special  consideration 
is  given  to  the  problems  of  tuberculosis  and  child  welfare.  There  is  no 
more  repetition  than  is  to  be  expected  in  a  compilation  of  addresses 
given  at  different  places  upon  various  aspects  of  the  same  broad  sub- 
ject.    The  language  for  the  most  part  is  clear,  the  style  is  pleasing, 


334  Reviews  and  New  Books  [June 

and  the  book  is  so  richly  supplied  with  historical  and  statistical  facts 
that  the  interest  is  well  sustained  throughout. 

Beginning  with  the  period  following  the  work  of  Smith,  Malthus, 
and  Mill,  when  a  policy  of  non-interference  was  adopted  by  the  gov- 
ernment, Dr.  Newsholme  traces  the  reaction  which  began  with  the  legis- 
lation of  1802  to  improve  the  conditions  of  pauper  children  in  textile 
factories  and  shows  how  the  subsequent  factory  acts  together  with 
more  recent  legislation,  reorganizing  and  establishing  public  health 
authorities  and  creating  sickness  insurance  for  industrial  workers, 
have  set  up  an  elaborate  health  system  for  the  country.  Statistical 
comparison  of  the  death  rates  between  1870  and  1880  with  the  rates 
from  1910  to  1912  show  the  elimination  of  typhus  fever,  the  reduction 
of  typhoid  fever  and  other  diseases,  and  in  general  indicate  that  im- 
provements in  sanitation,  hygiene,  and  medicine  have  saved  four  mil- 
lion lives  in  the  thirty-two  years  between  1881  and  1912,  and  that  the 
expectation  of  life  was  prolonged  by  a  little  more  than  ten  years. 

The  author  holds  that  it  has  been  a  fundamental  error  to  maintain 
an  organization  for  medical  relief  under  the  central  poor  law  distinct 
and  apart  from  the  health  authorities.  At  the  present  time,  98  per 
cent  of  the  total  population  relieved  under  the  poor  law  are  sick,  in- 
firm, aged,  or  children,  and  it  is  maintained  that  one  central  medical 
service  which  would  include  all  three  activities  would  be  more  effective 
than  are  the  poor  law  authorities,  the  school  health  authorities,  and 
the  public  health  authorities  acting  separately.  It  would  certainly  be 
an  advantage  to  have  the  medical  services  for  the  poor  administered 
with  a  view  to  prevention  rather  than  for  the  mere  alleviation  of 
suffering. 

There  are  some  criticisms  of  the  National  Health  Insurance  act 
passed  in  1911  which  created  still  another  medical  service  providing 
ordinary  medical  treatment  for  that  third  of  the  population  who  are 
industrially  employed  and  receive  less  than  a  certain  sum  per  week, 
the  insured  paying  a  sum  which  is  less  than  one  half  the  estimated  cost 
of  benefits  received.  The  services  of  medical  specialists  are  not  avail- 
able, the  combined  financial  and  medical  aids  are  distributed  irrespec- 
tive of  the  needs  of  the  family,  money  instead  of  assistance  is  given  in 
cases  of  maternity  benefit,  and  there  is  an  inevitable  tendency  for  the 
individual  to  secure  as  much  as  possible  from  the  government  in  cases 
of  slight  sickness  or  trivial  disability. 

One  must  agree  with  the  author  that  we  shall  never  have  ideal  and 
effective  public  health  until  every  medical  practitioner  practices  pre- 
ventive medicine  as  well  as  curative  medicine,  and  becomes  the  health 
adviser  of  the  families  under  his  care.  It  is  undoubtedly  true  that  in 
any  country  one  of  the  greatest  possible  improvements  in  public  health 


1921]  Insurance  and  Pensions  335 

would  result  from  the  expansion  of  the  disease  prevention  services  of  the 
medical  profession.  It  must  be  recognized,  however,  that  in  general 
the  type  of  man  who  is  attracted  to  medicine  is  by  nature  more  inter- 
ested in  curative  processes ;  and  the  practice  of  preventive  medicine 
must  for  some  time  be  restricted  to  a  few  far-seeing  physicians.  It 
will  develop  slowly  as  the  public  comes  to  demand  health  information 
from  the  profession. 

Dr.  Newsholme  asserts  that  the  socialization  of  medicine  in  Great 
Britain  is  progressing  inevitably,  rapidly,  and  beneficially.  By  sociali- 
zation he  means  making  such  provisions  that  every  member  of  the 
community,  regardless  of  his  financial  condition,  may  have  available 
all  of  the  medical  services  which  may  be  needed,  and  it  is  held  that  the 
further  control  of  medical  practice  by  the  state  is  as  natural  as  the 
expansion  of  other  community  services  in  sanitation  and  education.  It 
should  be  recalled  that  he  is  speaking  of  English  and  not  American 
conditions  and  that  in  this  country  we  are  not  as  favorably  inclined 
to  the  expansion  of  state  medical  control.  Although  we  have  followed 
England  in  our  sanitary  development  in  many  particulars,  our  Ameri- 
can public  health  has  developed  more  under  private  initiative  and  less 
under  state  organizations ;  and  consequently  it  is  to  be  expected  that 
this  country  will  move  more  slowly  toward  the  socialization  of  medicine. 

The  history  of  these  important  matters  in  Great  Britain  as  presented 
by  a  man  who  has  had  twenty  years  of  experience  in  health  administra- 
tion for  the  central  government  and  who  is  able  to  discuss  the  problems 
with  the  sound  judgment  and  prophetic  vision  which  Dr.  Newsholme 
brings  to  the  task,  could  not  fail  to  be  both  instructive  and  stimulating. 

C.  E.  Turner. 

Massachusetts  Institute  of  Technology. 

NEW    BOOKS 

Finney,  H.  A.  Introduction  to  actuarial  science.  (New  York:  Am.  Inst, 
of  Accountants,  135  Cedar  St.     Pp.   101.     $1.50.) 

Harper,  S.  A.  The  law  of  workmen's  compensation;  the  workmen's  com- 
pensation act  with  discussion  and  annotations,  tables,  and  forms.  Second 
edition.     (Chicago:     Callaghan  &  Co.     1920.     Pp.  xx,  697.) 

Hupeden,  T.  Zur  Arbeitslosenversicherung.  (Leipzig:  F.  Meiner.  1921. 
Pp.  45.) 

Kaufmann,  P.  Wiederaufbau  und  Sozialversicherung .  (Berlin:  G.  Stilke. 
1920.) 

Kisch,  W.  Privatversicherungsrechtes.  (Munich:  Schweitzer.  1920.  Pp.  35.) 

Nelson,  T.  P.     Health  and  accident  insurance  policies  under  the  standard 

provisions  law.     (Madison,  Wis.:     Blied  Prtg.  Co.     1920.     Pp.  105.) 
White,  N.  G.,  editor.     Ohio  manual  of  compensation  law  containing  Ohio 


336  Reviews  and  New  Books  [June 

•workmen's  compensation  law,  Ohio  industrial  commission  law,  rules,  and 
regulations  governing  application  of  the  law.  (Cleveland:  Baldwin 
Law  Pub.  Co.     1920.     Pp.  xxii,  548,  118.) 

Fire  insurance  laws,  taxes  and  fees;  containing  a  digest  of  the  statutory  re- 
quirements in  the  United  States  and  Canada  relating  to  fire  insurance, 
companies  and  agents;  also  a  compilation  of  county  and  municipal  taxes 
and  fees.     (Chicago:    Spectator  Co.     1920.) 

Information  concerning  the  Virginia  workmen's  compensation  act,  as  amend- 
ed by  chapter  176,  laws  of  1920  effective  as  amended  July  1,  1920.  (Rich- 
mond:    Industrial  Commission  of  Virginia.     1921.     Pp.  31.) 

Premiums  and  losses  in  the  various  states  of  the  United  States,  Alaska,  Dis- 
trict of  Columbia  and  Hawaii,  1917-1919.  (New  York:  Nat.  Board  of 
Fire  Underwriters.     1920.     Pp.  171.) 

Proceedings  of  the  fourteenth  annual  meeting  of  the  Association  of  Life  In- 
surance Presidents,  December,  1920.  (New  York:  The  Assoc.,  165 
Broadway.     1921.     Pp.  168.) 

Sixty-second  annual  report  of  the  superintendent  of  insurance,  state  of 
New  York,  February,  1921,  covering  transactions  of  calendar  year  clos- 
ing December  81,  1920.     (Albany.     1921.     Pp.73.) 

United  States  Steel  and  Carnegie  pension  fund.  Treasurer's  and  manager's 
tenth  annual  report,  year  ending  December  81,  1920.  (Pittsburgh:  The 
Manager,  Oliver  Bldg.     1921.     Pp.  8.) 

Workmen's  compensation  law  journal.  Supplement,  vol.  Al,  comprising  the 
cases  of  1917.     (New  York:     Hine's  Sons  Co.     1921.     Pp.1053.) 

Workmen's  compensation  law  of  Georgia  with  a  complete  analysis  and  an 
explanation  of  the  changes  made  in  the  Georgia  laws  regulating  the 
liability  of  the  employer  to  the  employee  for  personal  injuries  and  death. 
(Atlanta,  Ga.:     Harrison  Co.     1920.     Pp.  51.) 

Workmen's  compensation  law,  as  amended  by  the  1920  session  of  the  general 
assembly,  amendments  to  become  effective  July  1,  1920;  and  the  vocational 
rehabilitation  law.  (Richmond:  Industrial  Commission  of  Virginia. 
1920.     Pp.  34.) 

Pauperism,  Chanties,  and  Relief  Measures 

NEW    BOOKS 

Ames,  F.     Civilian  relief.     (New  York:     Macmillan.     1921.     $2.) 

Bailward,  W.  A.  The  slippery  slope  and  other  papers.  (London:  Mur- 
ray.    1920.     Pp.236.     10s.  6d.) 

Fernald,  M.  R.  and  Hayes.  M.  H.  S.  A  study  of  women  delinquents  in 
New  York  state.     (New  York:     Bureau  of  Social  Hygiene.     1921.) 

Lloyd,  C.  M.  The  present  state  of  the  poor  law.  (London:  Labour  Party. 
Fccleston  Sq.      1920.     Pp.   8.) 

Pim.sbury,  A.  J.  The  problem  of  dependency.  (San  Francisco:  Indus. 
Accident  Commission  of  California.     1921.     Pp.  24.) 


1921]  Socialism  and  Cooperative  Enterprises 

Friendly  visiting.  Forty-third  annual  report  of  the  Charity  Organization 
Society  of  Buffalo.  (Buffalo:  The  Society,  181  Franklin  St.  1920. 
Pp.   39.) 

Socialism  and  Co-operative  Enterprises 

NEW    BOOKS 

Bauer,  O.  Bolscheivismus  oder  Sozialdemocratie.  (Vienna:  Volksbuch- 
handlung.     1920.     8.50  M.) 

Beer,  M.  A  history  of  British  socialism.  Vol  II.  (New  York:  Harcourt. 
1921.     Pp.  xi,  413.     $5.50.) 

Brown,  W.  M.  Communism  and  Christianism.  (Galion,  Ohio:  Bradford- 
Brown  Educ.  Co.     1921.     Pp.  184.     25c.) 

Burch,  H.  R.  American  economic  problems.  (New  York:  Macmillan. 
Pp.  xi,  525.) 

Degenfeld-Schonburg.  Die  Motive  des  volkswirtschaftlichen  Handelns 
und  der  deutsche  Marxismus.     (Tubingen:    Mohr.     1920.    20  M.) 

Diehl,  K.  and  Mombert,  P.  Sozialismus,  Kommunismus,  Anarchismus. 
(Karlsruhe:     Braun.     1920.     18  M.) 

Dosch-Fleurot,  A.  Horv  much  bolshevism  is  there  in  America?  (New 
York:    The  World.     1921.    Pp.48.) 

Ewbank,  R.  B.  Indian  cooperative  studies.  (New  York:  Oxford  Univ. 
Press.     1921.     Pp.  266.     $6.25.) 

Fisher,  C.  B.  The  Farmers'  Educational  and  Cooperative  Union  of  Amer- 
ica.    (Lexington,  Ky. :    Univ.  of  Kentucky.     1921.     Pp.  81.     75c.) 

Gide,  C.  Des  institutions  en  vue  de  la  transformation  ou  de  I'abolition  du 
salariat.     (Paris:    Giard.     1920.     Pp.  115.) 

Goebel,  O.  Entwicklungsgang  des  russischen  Industriearbeiters  bis  zur 
ersten  Revolution  (1905).  Osteuropa-Institut  Quellen  und  Studien,  vol. 
I,  no.  4.     (Leipzig:    Teubner.     1920.    Pp.44.) 

Hirschberg,  M.  Bolscheivismus.  Versuch  einer  prinzipiellen  Kritik  des 
revolutionaren  Sozialismus.  Archiv  fur  Sozialwissenschaft  und  Sozial- 
politik,  vol.  XLVIII,  no.  1.     (Tubingen:    Mohr.     1920.     Pp.43.) 

Kautsky.    Terrorismo  e  comunismo.    (Torino:    Fratelli  Bocca.    1921.    12  1.) 

Kohler,  S.  Die  russische  Industriearbeiterschaft  von  1905-1917.  Osteuro- 
pa-Institut Quellen  und  Studien,  vol.  I,  no.  5.  (Leipzig:  Teubner 
1920.     Pp.  vii,  106.) 

Laguerre,   D.     Des  societes  anonymes  a  participation  ouvriere.      (Paris: 

Jouve.     1920.     Pp.  199.) 
Laskine,   E.      Le   socialisme   suivant   les   peuples.      (Paris:      Flammarion. 

1920.     Pp.  264.) 
Lenin,  N.     Der  " Radihalismus" ,  die  Kinderkrankheit  des  Kommunismus. 

(Leipzig:    Francke.     1920.     Pp.  95.    3.50  M.) 

Levy,  R.  Trotsky.  (Paris:  Librairie  du  Parti  Socialiste  et  de  l'Humanite. 
1920.     Pp.  160.    3  fr.) 


838  Reviews  and  New  Books  [June 

Lloyd,  J.  W.  Cooperative  marketing  of  horticultural  products.  (Agric. 
Exp.  Sta.  bull.  244.     (Urbana:  Univ.  Illinois.     1921.     Pp.  15.) 

Lucas,  J.  Cooperation  in  Scotland.  (Manchester,  Eng. :  Cooperative 
Union.     1920.    Pp.  93.) 

Marshall,  L.  C.  and  Lyon,  L.  S.  Our  economic  organization.  (New  York: 
Macmillan.     1921.) 

Mead,  G.  W.  The  great  menace;  Americanism  or  bolshevism?  (New 
York:     Dodd,  Mead.     1920.     $1.25.) 

Mehl,  J.  M.  and  Jesness,  O.  B.  The  organization  of  cooperative  grain  ele- 
vator companies.    Bull.  860.     (Washington:    Dept.  Agri.    Pp.40.) 

Pasquali,  G.     Socialisti  tedeschi.      (Bari:     Laterza.     1920.     7.50  1.) 

Pohle,  L.  Kapitalismus  und  Socialismus.  (Leipzig:  Teubner.  1920. 
6  M.) 

Postgate,  R.  W.  The  Workers'  International.  Handbooks  on  international 
relations.     (New  York:     Harcourt.     1921.     Pp.  121.     $1.) 

Russell,  B.  Bolshevism:  practice  and  theory.  (New  York:  Harcourt 
Brace  &  Howe.     1920.     Pp.  192.) 

Bertrand  Russell  went  to  Russia  a  communist.  He  hoped  to  find  there  at 
least  a  partial  realization  of  his  dreams  of  a  regenerated  world.  With 
characteristic  honesty  he  tells  of  his  disappointment  in  the  development  of 
the  bolshevist  experiment  and  his  fears  for  the  future  of  the  world  through 
the  spread  of  bolshevism.  Bolshevism  is  not  a  political  theory;  it  is  a 
religion  with  the  oriental  fanaticism  of  Islam.  The  soviet  system  has  been 
abandoned  in  all  but  the  name.  The  dictatorship  of  the  proletariat  is 
literally  a  dictatorship,  but  the  term  proletariat  is  used  in  a  Pickwickian 
sense. 

The  failure  of  the  bolsheviki  to  achieve  real  communism  is  partly  due 
to  the  blockade  and  the  necessity  of  combating  the  forces  of  reaction, 
but  there  are  also  fundamental  theoretical  errors  which  cannot  be  over- 
looked. The  most  serious  of  these  errors  are  the  faith  in  the  tactics  of 
violence  and  the  literal  acceptance  of  the  materialistic  interpretation  of 
history  in  its  most  extreme  form. 

Nevertheless,  Mr.  Russell  feels  that  if  he  were  a  Russian  he  would, 
like  Maxim  Gorky,  support  the  bolshevik  regime,  as  the  only  possible  al- 
ternatives are  even  worse.  And,  although  communism  in  Russia  has 
failed,  he  still  hopes  for  the  building  of  a  new  communist  world  by  grad- 
ual and  peaceful  methods.  G.  L.  Arner. 

Salter,  F.  R.  Karl  Marx  and  modern  socialism.  (New  York:  Macmillan. 
1921.) 

Seligman,  E.  R.  A.  vs.  Nearing,  S.  A  public  debate  "Capitalism  vs. 
socialism."     (New  York:     Fine  Arts  Guild.     1921.     Pp.  46.) 

Smith,  G.  C.  Farmers'  cooperative  associations  in  Pennsylvania  under  the 
law  of  1919.  Bureau  of  Markets,  gen.  bull.  341.  (Harrisburg,  Pa.: 
Dept.  Agri.     1921.) 

Szana,  A.  Die  bolschewistische  Wirtschaftspolitik  in  Ungarn,  Aufbau  and 
Zusammenbruch.     (Vienna:     Strache.     1920.     2  M.) 


1921]  Socialism  and  Cooperative  Enterprises  339 

Tucker,  I.  St.  J.  A  history  of  imperialism.  (New  York:  The  Rand 
School.     1920.) 

Mr.  Tucker  has  made  an  interesting  contribution,  not  to  history,  but  to 
the  propaganda  literature  of  socialism.  In  the  light  of  the  class  struggle 
theory  and  the  materialistic  interpretation  of  history  he  has  sketched  in 
bold  outlines  the  characteristic  features  of  each  of  fourteen  great  em- 
pires from  Egypt  to  America.  Soviet  Russia  appears,  not  as  a  new  form 
of  imperialism,  but  as  an  industrial  republic,  whose  rise  means  the  dawn 
of  a  new  era  and  the  twilight  of  empire.  G.  L.  A. 

Varney,  N.  Sketches  of  soviet  Russia.  (New  York:  Nicholas  L.  Brown. 
1921.     Pp.  288.     $2.25.) 

Webb,  S.  and  B.  Industrial  democracy.  (New  York:  Longmans.  Pp. 
xxxix,  899.     1920.     $7.50.) 

The  only  changes  made  in  this  new  edition  are  found  in  the  introduc- 
tion, which  is  a  rewriting  of  the  one  prefixed  to  the  1902  edition,  and  in 
certain  alterations  in  and  additions  to  the  appendices.  The  text  itself 
has  not  been  changed  and  stands  as  an  analytic  description  of  British 
trade  unionism  as  it  was  in  the  last  decade  of  the  nineteenth  century. 

In  the  introduction  attention  is  called  to  such  changes  since  1897  as 
the  numerical  growth  of  trade  unionism,  the  development  of  new  ideas 
concerning  "payment  by  results"  and  scientific  management,  the  develop- 
ment of  industrial  insurance  and  various  legal  enactments,  and  the 
growth  of  industrial  unionism.  The  appendices  include:  The  legal 
position  of  collective  bargaining  concerning  which  the  reader  is  referred 
to  the  new  edition  of  the  author's  History  of  Trade  Unionism;  The  bear- 
ing of  industrial  parasitism  and  the  policy  of  a  national  minimum  on  the 
free  trade  controversy;  Some  statistics  bearing  on  the  relative  move- 
ments of  the  marriage  and  birth  rates,  pauperism,  wages,  and  the  price  of 
wheat;  and  A  comment  on  the  bibliography  of  trade  unionism.  Concern- 
ing the  work  itself  nothing  need  be  said  as  it  has  long  since  become  an 
economic  classic.  This  new  edition  caused  by  a  continued  and  increasing 
demand  for  the  book  is  to  be  welcomed.  George  M.  Janes. 

Act  creating  farmers'  cooperative  societies;  with  forms  governing  incorpora- 
tion.    (Austin,  Tex.:     Secretary  of  State.     1921.     Pp.  17.) 

The  second  congress  of  the  Communist  International  as  reported  and  inter- 
preted by  the  official  newspapers  of  Soviet  Russia,  Petrogr ad-Moscow, 
July  19-August  7,  1920.  (Washington:  Dept.  of  State,  Division  of  Rus- 
sian Affairs.     1920.     Pp.  166.) 

Trade  unions  in  Soviet  Russia.  Compiled  by  the  Independent  Labour  Party 
Information  Committee.  (New  York:  Rand  School  of  Social  Science. 
Pp.  91.     50c.) 

What  to  read  on  social  and  economic  subjects,  a  select  bibliography.  Sixth 
edition,  revised  to  December  1920.     (London:     Fabian  Society.     2s.  3d.) 


DOCUMENTS,  REPORTS,  AND  LEGISLATION 

Industries  and  Commerce 

Report  on  the  Grain  Trade.  The  report  on  the  grain  trade  had  its 
origin  in  the  general  food  investigation  made  by  the  Federal  Trade  Com- 
mission and  was  later  continued  as  a  separate  inquiry,  the  Bureau  of  Mar- 
kets of  the  Department  of  Agriculture  cooperating  in  the  investigation.  The 
report  (Report  of  the  Federal  Trade  Commission  on  the  Grain  Trade:  Vol. 
I,  Country  Grain  Marketing;  Vol.  II,  Terminal  Grain  Markets  and  Ex- 
changes; Vol.  V,  Future  Trading  Operations  in  Grain.  Washington:  Supt. 
Docs.  Sept.  15,  1920.  Pp.  350;  333;  347.)  presents  the  most  intensive 
and  comprehensive  study  of  the  grain  trade  yet  made.  It  logically  falls 
into  four  main  divisions:  (1)  country  elevators  and  country  grain  market- 
ing; (2)  terminal  grain  markets  and  terminal  cash  grain  business;  (3)  costs 
and  profits  of  the  present  marketing  system;  and  (4)  future  trading  opera- 
tions and  their  results.  The  three  volumes  that  have  already  appeared  are 
primarily  descriptive  in  character;  final  conclusions  and  recommendations 
will  be  covered  in  a  subsequent  volume. 

Country  grain  marketing.  Schedule  returns  made  by  approximately 
10,000  country  elevators  and  warehouses  in  the  United  States,  supplemented 
by  numerous  interviews  and  extensive  correspondence,  constitute  the  princi- 
pal sources  of  information.  In  most  instances,  the  returns  are  tabulated  by 
grains,  years,  types  of  elevators,  and  principal  grain-producing  states.  The 
inquiry  covers  approximately  the  period  1912-1918;  and  relates  in  general 
to  the  mechanism  and  methods  of  marketing  wheat,  corn,  oats,  barley,  and 
rye.  Most  of  the  data  and  discussion  relate  to  elevators;  warehouses  are 
numerically  important  only  in  the  Mountain  and  Pacific  states. 

The  primary  functions  of  country  elevators  are  the  merchandising  of  grain 
and  the  warehousing  of  grain.  Some  elevators  perform  minor  functions ;  for 
example,  cleaning  and  conditioning  grain,  and  handling  other  commodities. 
Country  elevators  are  of  two  general  classes,  individual  and  line.  "An 
individual  house  is  one  operated  as  a  unit  within  itself.  A  line  house  is 
one  of  two  or  more  operated  at  different  towns  by  a  central  organization." 
These  two  classes  include  eight  different  types,  the  names  and  relative 
numerical  importance  of  which  are: 

Individual:  Per  cent  Line:  Per  cent 

Cooperative   18.42  Commercial    36.01 

Independent   31.62  Cooperative    1.06 

Mill   5.54  Mill    6.97 

Malster    05  Malster    32 

The  commercial  line,  independent,  and  cooperative  elevators  are  operated 
primarily  to  obtain  merchandising  profit  from  the  purchase  and  sale  of 
grain.     The  cooperative  type  is  distinguished  by  being  operated  or  owned 


1921]  Industries  and  Commerce  341 

and  operated  by  farmers.  The  mill  types  are  concerned  primarily  with 
supplying  mill-grinding  requirements  and  only  incidentally  with  buying 
and  selling  grain  for  profit. 

One  chapter  is  devoted  to  the  historical  development  of  country  elevators 
and  country  marketing.  An  outstanding  development  in  the  marketing  of 
grain  in  recent  years  has  been  the  rapid  growth  in  cooperative  elevators. 
Not  only  are  they  rapidly  increasing  in  number,  but  their  importance  is  even 
greater  than  their  number  would  indicate,  for  they  operate  at  a  dispro- 
portionately large  number  of  country  points  as  compared  with  other  types 
of  elevators  and  therefore  their  influence  in  determining  grain  prices  is. 
probably  greater  than  that  of  any  other  type.  Also  they  handle  a  con- 
siderably larger  volume  of  grain. 

The  typical  country  elevator  of  today  is  of  wood  construction;  the  aver- 
age capacity  is  about  25,000  bushels,  and  the  average  number  of  bins,  ten. 
49.3  per  cent  of  the  elevators  are  equipped  with  cleaning  machinery;  about 
43  per  cent  of  them  clean  grain  for  farmers.  About  four  fifths  of  the  ele- 
vators handle  other  commodities  than  grain,  as  coal,  feed,  and  flour.  The 
extent  to  which  elevators  use  different  sources  of  price  information,  as  daily 
price  cards  and  private  wire  services,  is  indicated.  "On  the  average  the 
country  elevator  buys  slightly  less  than  100,000  bushels  of  grain  annually, 
of  which  about  36  per  cent  is  wheat,  31  per  cent  oats,  24  per  cent  corn,  7 
per  cent  barley,  and  2  per  cent  rye."  The  rate  of  capacity  turnover  is  great- 
est for  those  elevators  which  handle  corn  in  combination  with  one  or  more 
of  the  other  four  grains,  because  the  bulk  of  the  corn  crop  is  harvested  and 
marketed  at  a  considerably  later  date. 

"About  70  per  cent  of  the  grain  shipped  by  country  elevators  goes  to  terminal  mar- 
kets (those  markets  receiving  annually  more  than  1,000  cars  of  country  grain)  and 
about  7  per  cent  to  smaller  markets  (those  receiving  less  than  1,000  cars  annually). 
The  local  mills  absorb  13%  per  cent  of  the  country  elevator  shipments  and  interior 
brokers  6  per  cent ;  about  2  per  cent  goes  to  feeders,  and  approximately  the  same  pro- 
portion to  miscellaneous  purchasers.  Of  the  grain  shipped  to  specified  markets,  about 
71  per  cent  is  sold  on  consignment,  the  balance  being  sold  "to-arrive"  or  "on-track" 
to  representatives  of  these  market  organizations. 

About  40  per  cent  of  the  elevators  and  warehouses  generally  hedge  their  grain, 
another  10  per  cent  hedge  it  to  a  limited  extent,  while  about  50  per  cent  report  no 
hedging.  The  proportion  of  elevator  hedging  in  the  various  states  varies  directly 
with  the  proportion  of  consignment  sales  reported,  and  also  directly  with  the  extent 
of  commission  house  financing  of  country  elevators  and  the  proportions  of  line  ele- 
vators reported.  Hedging  is  usually  done  in  the  markets  to  which  the  grain  is 
generally  shipped." 

Line  elevators  obtain  most  of  their  funds  from  their  head  offices;  and  in- 
dividual elevators,  from  either  commission  houses  or  local  banks  or  both. 
Commission  house  financing  is  very  important  in  Minnesota,  North  Dakota, 
South  Dakota,  and  Montana.  In  general,  competition  in  buying  grain  in  the 
country  is  keen,  especially  that  of  the  mill  and  cooperative  elevators.     It 


34£  Documents,  Reports,  amd  Legislation  [June 

affects  not  only  grain  prices  but  also  grades.,  "dockages,"  weights,  elevator 
and  storage  charges,  and  side  lines. 

Terminal  grain  markets  and  exchanges.  This  volume  describes  the  growth 
and  relative  importance  of  the  terminal  grain  markets,  and  the  rules  pre- 
scribed and  the  functions  exercised  by  the  grain  exchanges.  It  covers  ten 
primary  and  seven  secondary  markets.  The  primary  market  receives  most 
of  its  grain  from  local  points  in  producing  territory;  the  secondary  market, 
from  primary  markets.  The  volume  of  cash  trading  cannot  be  employed  as  a 
criterion  of  the  relative  importance  of  these  markets  owing  to  the  lack  of 
data.  From  the  standpoint  of  receipts  the  order  of  importance  of  the  pri- 
mary markets  is  Chicago,  Minneapolis,  Kansas  City,  Duluth,  St.  Louis, 
Milwaukee,  Omaha,  Peoria,  Indianapolis,  and  Cincinnati;  of  the  secondary 
markets,  Buffalo,  New  York,  Baltimore,  Philadelphia,  Boston,  Louisville, 
and  Toledo.  Consideration  of  local  consumption — of  the  difference  between 
receipts  and  shipments  of  grain — places  the  primary  markets  in  this  order: 
Minneapolis,  Chicago,  Milwaukee,  St.  Louis,  Kansas  City,  Indianapolis, 
Peoria,  Cincinnati,  Omaha,  and  Duluth.  Elevator  capacity,  indicating  the 
facilities  for  merchandising,  storing,  and  transferring  grain,  reveals  the  fol- 
lowing line-up  of  primary  markets:  Chicago,  Minneapolis,  Duluth,  Kansas 
City,  Milwaukee,  Omaha,  St.  Louis,  and  Peoria.  Of  the  secondary  mar- 
kets, Buffalo  has  by  far  the  greatest  capacity.  The  controlling  factors  in 
the  development  of  terminal  markets  have  been:  (1)  proximity  of  the  pro- 
duction area,  (2)  transportation  facilities  and  rates  (including  terminal 
facilities),  and  (3)  consumption  demand,  especially  that  of  millers  and 
converters. 

The  volume  contains  a  detailed  account  of  the  historical  development  of 
the  different  grain  markets  and  exchanges,  especially  the  Chicago  market 
and  Board  of  Trade.  It  includes  such  subjects  as  transportation  prob- 
lems, the  organization  of  the  exchanges,  the  exchange  halls,  classification  of 
members,  the  conflict  of  interest  between  classes  of  members,  changes  in 
rules  and  regulations,  regulation  of  terminal  elevators,  opposition  to  bucket 
shops,  judicial  decisions  relating  to  the  exchanges  and  their  practices,  and 
the  development  of  future  trading.  Future  trading  developed  from  pur- 
chases of  grain  "to-arrive"  and  by  contract;  it  first  became  important  dur- 
ing the  Civil  War. 

The  present  rules  and  regulations  of  the  various  exchanges  are  com- 
pared. The  exchange  government — functions  of  officers  and  committees, 
adoption  of  rules,  discipline,  etc. — is  described.  Trading  rules,  relating  to 
uniform  commissions,  regular  warehouses,  defaults  on  future  contracts,  etc., 
are  presented.  The  functions  of  the  exchanges  are  described.  These  in- 
clude inspection,  grading,  weighing,  and  the  collection  and  dissemination 
of  quotations  and  market  information,  all  of  which  suggest  the  importance 


1921]  Industries  and  Commerce  343 

of  exchanges  to  the  public.  Inspection,  grading,  and  weighing  are  subject  to 
state  regulation  in  several  markets.  This  has  resulted  in  considerable  du- 
plication and  overlapping  of  jurisdictions,  especially  in  Kansas  City  and 
St.  Louis.  Federal  grades  of  wheat,  corn,  and  oats,  recently  announced 
by  the  Department  of  Agriculture,  have  instituted  a  nation-wide  uni- 
formity.    An  appendix  contains  the  definitions  of  grain-marketing  terms. 

Future  trading  operations  in  grain.  This  volume  describes  in  considerable 
detail  the  technique  of  future  trading.  A  "future"  is  defined  as  "an  agree- 
ment on  the  part  of  the  seller  to  deliver,  and  of  the  buyer  to  receive  and 
pay  a  certain  price  for,  a  certain  kind  and  quantity  of  a  commodity  at  some 
specified  future  time,  under  conditions  prescribed  by  an  exchange  or  under- 
stood in  the  trade."  Payment  for  the  grain  as  well  as  delivery  is  post- 
poned. It  is  not  a  contract  of  sale.  An  actual  sale  may  or  may  not  occur  as 
a  result  of  a  future  transaction.  The  margin  is  not  part  payment;  it  is 
mere  security  put  up  by  the  seller  as  well  as  by  the  buyer.  Future  markets, 
in  the  approximate  order  of  their  importance,  are  Chicago,  Minneapolis, 
Kansas  City,  Duluth,  St.  Louis,  Milwaukee,  and  Toledo.  Within  recent 
years  the  quantity  of  future  trading  in  grain  has  been  about  20,000,000,000 
bushels  annually.  About  five  sixths  of  this  trading  is  done  on  the  Chicago 
Board  of  Trade.  This  fact  justifies  the  special  attention  which  future  trad- 
ing in  Chicago  receives  in  this  volume.  Grain  is  the  subject  of  future 
trading  because  it  satisfies  the  prerequisites  of  homogeneity,  durability,  and 
adequacy  of  supply.  Wheat,  corn,  and  oats  are  the  cereals  most  commonly 
traded  in  on  a  future  basis. 

"The  standard  grade  of  grain  deliverable  in  specific  satisfaction  of  stand- 
ard future  contracts  is  prescribed  by  exchange  rules  and  is  known  as  the 
contract  grade.  There  may  be  more  than  one  variety  of  contract  grade, 
especially  in  the  case  of  wheat."  The  advantages  of  broad  deliverable 
grades,  as  in  Chicago,  consist  "of  keeping  the  channel  of  connection  be- 
tween future  and  cash  transactions  open  and  in  good  working  order,  and 
especially  of  preventing  the  technical  exploitation  of  the  market  through 
corners."  On  the  other  hand,  narrow  deliverable  grades,  as  in  Kansas  City, 
better  secure  "the  delivery  of  a  definite  quality  and  kind  of  grain."  Grain 
delivered  on  future  contracts  is  usually  at  the  bottom  of  the  contract  grade 
because  terminal  elevators  intentionally  mix  different  grades  so  that  the  re- 
sultant product  will  barely  qualify  for  the  contract  grade. 

Delivery  on  a  future  contract,  though  necessarily  contemplated  from  a 
legal  standpoint,  is  generally  obviated  by  subsequent  transactions  which  can- 
cel the  first  contract.  The  methods  by  which  futures  are  cancelled  or 
"cleared,"  whether  by  clearing  houses  or  otherwise,  are  minutely  described. 

The  principal  economic  service  of  future  trading  is  that  it  furnishes  the 
grain  merchant  or  manufacturer  an  opportunity  to  hedge.     Hedging  pre- 


344<  Documents,  Reports,  mid  Legislation  [June 

supposes  (1)  that  for  every  cash  purchase  of  grain  there  is  a  sale  of  fu- 
tures in  approximately  the  same  amount  and  at  the  same  time,  and  that  for 
every  cash  sale,  a  purchase  of  futures;  and  (2)  that  cash  and  future  prices 
will  be  affected  substantially  alike.  The  hedger  ordinarily  prefers  not  to 
deliver  on  his  future  sale.  His  grain  will  probably  sell  for  more  in  the 
"sample  market"  than  through  delivery  on  the  future.  Also,  the  converters, 
the  millers  especially,  who  have  bought  futures  against  sales  contracts,  sel- 
dom wish  to  take  delivery;  they  prefer  to  buy  their  grain  by  sample  with 
reference  to  its  adaptation  to  their  particular  needs. 

The  Board  of  Trade  has  provided  certain  safeguards  against  corners. 
Under  an  emergency  clause,  the  board  of  directors  "has  power  to  expand  or 
substitute  facilities  for  delivery  beyond  or  in  the  place  of  the  warehouses 
designated  by  the  board  for  the  issuance  of  regular  receipts."  Also  "de- 
livery in  cars  direct  from  the  country  has  been  made  possible."  Cars  must  be 
within  the  Chicago  switching  district.  In  case  of  failure  to  deliver  on  any 
future  contract,  provision  is  made  for  a  money  settlement,  including  a  pen- 
alty. Future  quotations  and  market  "gossip"  are  furnished  by  market  let- 
ters, telephones  from  offices,  private  wires,  and  news  ticker  companies. 
There  is  little  supervision  of  market  gossip  by  the  Chicago  Board  of  Trade, 
which  suggests  the  need  of  reform. 

The  most  important  physical  facility  for  future  trading  consists  of  the 
great  private  wire  systems.  All  of  them  except  one,  have  head  offices  in 
Chicago.  They  lease  their  wires  (96,000  miles  of  them  in  March,  1918) 
from  the  American  Telephone  and  Telegraph  Company,  Western  Union,  and 
Postal.  Rentals  are  probably  $2,000,000  a  year.  In  1918  they  served  199 
cities  and  towns  in  the  United  States  and  had  225  branch  offices  and  296 
correspondents.  The  advantages  of  private  wire  communication  over  public 
wires  for  sending  orders,  confirmations,  etc.,  are  speed,  privacy,  and  less 
likelihood  of  error.  The  concentration  of  outside  futures  business  in  the 
hands  of  private  wire  companies  is  increasing.  The  private  wire  offers 
quicker  and  more  frequent  service  to  the  country  customer  than  the  com- 
mission house  can  over  the  public  wires.  Since  1910  the  private  wires  have 
developed  cash-grain  departments  and  are  making  inroads  upon  the  busi- 
ness of  cash-grain  houses.  However,  they  serve  chiefly  the  purposes  of 
speculative  trading  in  various  markets,  and  in  general  stimulate  specula- 
tion. 

The  Chicago  Open  Board  of  Trade  is  a  satellite  of  the  Chicago  Board  of 
Trade.  It  is  called  "open"  because  the  privilege  of  the  trading  floor  is  open 
to  customers ;  their  orders  for  futures,  however,  may  be  executed  only  by  the 
members.  Trading  is  confined  entirely  to  futures  and  privileges.  Quo- 
tations are  secured  from  the  Chicago  Board  of  Trade.  The  Open  Board 
furnishes  an  opportunity  to  hedge  in  small  quantities,  as  the  unit  of  trading 
is  1,000  bushels;  aside  from  this,  its  economic  value  is  doubtful. 


1921]  Industries  and  Commerce  345 

The  last  chapter  of  the  report  is  devoted  to  the  legal  status  of  future 
trading. 

Floyd  L.  Vaughan. 
Brown  University. 

From  the  federal  Department  of  Commerce  have  been  received: 

The  Annual  Report  of  the  Director  of  the  Bureau  of  Foreign  and  Do- 
mestic Commerce  for  the  Fiscal  Year  Ended  June  30,  1920  (Washington, 
pp.  85). 

Schedule  Governing  the  Statistical  Classification  of  Imports  into  the 
United  States  with  Rates  of  Duty,  and  Regulations  Governing  the  Prepa- 
ration of  Monthly  and  Quarterly  Statements  of  Imports   (1920,  pp.   103). 

Statistical  Classification  of  Domestic  Commodities  Exported  from  the 
United  States  (1920,  pp.  35). 

Special  Agents  Series: 

No.  195,  Swedish  Forests,  Lumber  Industry,  and  Lumber  Export  Trade, 
by  A.  H.  Oxholm  (1891,  pp.  281).  This  contains  maps,  illustra- 
tions, and  charts. 

No.  201,  Lumber  Markets  of  Spain  and  Portugal,  by  N.  C.  Brown  (1921, 
.pp.  151). 

No.  205,  Electrical  Goods  in  British  South  Africa  with  Notes  on  Portu- 
guese East  Africa,  by  R.  E.  Lundquist  (1920,  pp.  118). 

The  Eighth  Annual  Report  of  the  Secretary  of  Commerce  (Washington, 
1920,  pp.  189)  summarizes  the  work  of  commercial  attaches  in  Europe, 
Latin-America,  and  Far  Eastern  markets. 

Bulletin  145  of  the  Bureau  of  the  Census  deals  with  Cotton  Production 
and  Distribution,  Season  of  1919-20  (Washington,  pp.  135). 

From  the  Federal  Trade  Commission  there  has  been  received,  in  the  series 
of  cost  reports  on  Coal,  No.  7,  Trans-Mississippi  States — Bituminous 
(Washington,  1921,  pp.  459).  With  previous  issues  this  covers  substan- 
tially all  of  the  coal  mines  of  the  United  States.  Also  Report  on  the  Pe- 
troleum Industry  of  Wyoming  (Washington,  1921,  pp.  54). 

The  Report  of  the  Select  Committee  of  the  United  States  Senate  on  Re- 
construction and  Production  has  been  published  as  Senate  Report  No.  829, 
66th  Congress,  3d  Session  (Washington,  Mar.  2,  1921,  pp.  61).  This  ac- 
companies the  three  volumes  of  Hearings  before  this  committee  which  have 
been  published.  The  report  deals  with  housing  conditions,  coal,  transpor- 
tation, direction  of  credit,  taxation,  labor,  and  materials  and  building  oper- 
ations. 

The  Annual  Report  of  the  Commissioner  of  Navigation  (Washington, 
1920,  pp.  242)  contains  data  on  the  wages  of  seamen  since  1895.     There 


3±6  Documents,  Reports,  and  Legislation  [June 

are  also  summarized  tables   of  the   world's   tonnage   and  the   progress   of 
British.,  German,  and  Japanese  shipping. 

Those  interested  in  the  Panama  Canal  may  obtain  pamphlets  published 
by  the  United  States  Government  by  applying  to  the  Panama  Canal,  Canal 
Zone,  Executive  Department,  Balboa  Heights,  C.  Z. 

Public  Utilities 
The  following  public  utility  reports  have  been  received: 

Ninth  Annual  Report  of  the  Public  Utilities  Commission  of  Connecticut 
(Hartford,  1920,  pp.  784). 

Report  of  the  Public  Service  Commission  for  the  First  District  of  the 
State  of  New  York  for  the  Year  Ending  December  31,  1910,  Vol.  I  (Albany, 
1919,  pp.  879). 

Twelfth  Annual  Report  of  the  Public  Service  Commission  of  the  State  of 
New  York,  Second  District,  for  the  year  ended  December  31,  1918  (Al- 
bany, 1920):  Vol.  II,  Abstracts  of  Reports  of  Corporations:  steam  rail- 
road, including  operations  by  United  States  Railroad  Administration,  electric 
railroad,  express,  sleeping  car,  stage  coach,  baggage  and  transfer,  stock 
yard,  freight  terminal  (pp.  216);  Vol.  Ill,  Abstracts  of  Reports  of  Cor- 
porations: electrical,  gas,  steam,  telegraph,  telephone   (pp.   344). 

Thirteenth  Annual  Report  of  the  Public  Service  Commission,  State  of 
New  York,  Second  District,  for  the  year  ended  December  31,  1919,  Vol. 
I  (Albany,  1920,  pp.  820). 

Reports  of  the  Decisions  of  the  Public  Service  Commission,  Second  Dis- 
trict, of  the  State  of  New  York,  from  January  1,  1919,  to  December  31, 
1919,  Vol.  VIII  (Albany,  1920,  pp.  563). 

Reports  of  the  Board  of  Public  Utility  Commissioners  of  the  State  of 
New  Jersey,  Vol.  VII,  February  18,  1919,  to  March  9,  1920  (Trenton,  pp. 
564). 

Report  of  the  Public  Service  Commission  of  Maryland  for  the  Year  1920 
(Baltimore,  1921,  pp.  492). 

Report  of  State  Board  of  Tax  Commissioners  of  Indiana  for  Year  End- 
ing 1920  (Indianapolis,  1920,  pp.  122). 

Thirty-sixth  Annual  Report  of  the  Railroad  and  Warehouse  Commission 
of  Minnesota  (Minneapolis,  1920,  pp.  386.) 

Tenth  Biennial  Report  of  the  Wisconsin  Tax  Commission,  1920  (Madi- 
son, pp.  215). 

Labor 
The  federal  Bureau  of  Labor  Statistics  has  issued  the  following  bulletins: 
No.  263,  Housing   by  Employers  in  the   United  States,  by  L.   Magnusen 

(Oct.,  1920,  pp.  283). 
No.  272,   Workmen's   Compensation   Legislation   of  the   United  States  and 
Canada  (Jan.,  1921,  pp.  1211). 


1921]  Labor  347 

No.  277,  Labor  Legislation  of  1919  (Jan.,  1921,  pp.  409).  This  is  a  con- 
tinuation of  the  series  prepared  for  many  years  by  Lindley  D. 
Clark. 

The  Women's  Bureau  of  the  United  States  Department  of  Labor  has  pre- 
pared Bulletin  No.  11,  Women  Street  Car  Conductors  and  Ticket  Agents 
(1921,  pp.  90),  which  contains  tables  showing  the  conditions  of  work  as  to 
hours,  wages,  night  work,  age,  and  marital  condition. 

Technical  Paper  386,  by  W.  M.  Adams,  reports  the  Metal-Mine  Acci- 
dents in  the  United  States  during  the  calendar  year  1919,  with  supplemental 
labor  and  accident  tables  for  the  years  1911  to  1919,  inclusive  (Washing- 
ton, Bureau  of  Mines,  1921,  pp.  99). 

The  Brief  for  Appellees  in  the  District  of  Columbia  Minimum  Wage 
Cases  before  the  Court  of  Appeals  of  the  District  of  Columbia,  submitted 
in  the  October  term  1920,  prepared  by  Professor  Frankfurter  and  Miss 
Dewsen  (National  Consumers'  League,  44  East  23d  St.,  New  York  City, 
pp.  453)  contains  a  large  amount  of  extracts  from  reports  of  various  com- 
missions of  the  United  States  and  also  data  in  regard  to  the  extension  of 
minimum  wage  legislation  not  only  in  this  country  but  in  foreign  countries. 
The  material  is  conveniently  arranged  and  furnishes  much  illustrative  mat- 
ter. 

The  following  labor  reports  have  been  received: 

New  York  Court  Decisions  on  Labor  Law  and  Industrial  Disputes,  Janu- 
ary, 1915,  to  January,  1921  (Albany,  Bureau  of  Statistics  and  Information, 
1921,  pp.  200). 

Union  Scale  of  Wages  and  Hours  of  Labor  in  Ohio  on  May  15,  1920,  De- 
partment of  Investigation  and  Statistics,  Report  No.  39  (Columbus,  Indus- 
trial Commission,  1921,  pp.  38). 

Industrial  Commission  of  Wisconsin,  Biennial  Report,  1918-1920  (Madi- 
son, 1920,  pp.  93). 

Labor  Laws  of  the  State  of  Wisconsin  and  Orders  of  the  Industrial  Com- 
mission, 1920  (Madison,  pp.  336). 

Nineteenth  Biennial  Report  of  the  Bureau  of  Labor  Statistics  of  the 
State  of  California,  1919-1920  (Sacramento,  1920,  pp.  471). 

Report  on  the  Wages  of  Women  employed  in  the  Manufacture  of  Food 
Preparations  and  Minor  Lines  of  Confectionery  in  Massachusetts,  Division 
of  Minimum  Wage,  Bulletin  No.  23  (Boston,  Dept.  Labor  and  Industries, 
Nov.,  1920,  pp.  41). 

Wages  and  Hours  of  Labor  in  the  Metal  Trades  in  Massachusetts,  191^- 
1919  (Boston,  Dept.  Labor  and  Industries,  Sept.,  1920,  pp.  72). 

Third  Annual  Report  of  the  Minimum  Wage  Board  of  the  District  of  Co- 
lumbia for  the  Year  Ending  December  SI,  1920  (Washington,  1921,  pp. 
64). 


348  Documents,  Reports,  and  Legislation  [June 

Minimum  Wage  Laws  are  Good  Business;  Minimum  Wage  Commissions, 
Current  Facts;  Earnings  of  Women  in  Factories  and  a  Legal  Living  Wage 
(National  Consumers'  League,  44  East  23d  St.,  New  York,  1921,  pp.  7, 
16,  26). 

Money,  Prices,  Credit,  and  Banking 
A  new  edition  of  the  Instructions  of  the  Comptroller  of  the  Currency 
Relative  to  the  Organization  and  Powers  of  National  Banks,  1920,  has  ap- 
peared (Washington,  Supt.  Docs.,  pp.  145,  15c.);  also  a  two-volume  edi- 
tion of  the  Report  of  the  Comptroller  of  the  Currency  for  1920  (Washing- 
ton, pp.  320,  886).  The  latter  contains  correspondence  in  regard  to  rates 
of  interest  charged  on  call  loans  in  New  York  City. 

The  federal  Bureau  of  Labor  Statistics  has  issued  Bulletin  269,  Whole- 
sale Prices,  1890-1918  (Washington,  1920,  pp.  205). 

A  circular  issued  March  15,  1921,  by  the  research  statistical  department 
of  the  First  National  Bank  in  St.  Louis  is  entitled  What  Determines  the 
Rate  of  Interest. 

The  following  reports  have  been  received: 

Sixty-third  Annual  Report  of  the  Bank  Commissioner  on  the  Condition  of 
Savings  Banks,  Trust  and  Banking  Companies,  etc.,  of  Maine,  1919  (Au- 
gusta, pp.  144). 

Twenty-first  Annual  Report  of  the  Kansas  Building  and  Loan  Associa- 
tions (Topeka,  1920,  pp  98). 

The  Laws  of  Wisconsin  Relating  to  Building  and  Loan  Associations 
(Madison,  1920,  pp.  24). 

Fourteenth  Annual  Report  of  the  State  Bank  Commissioner  of  Colorado, 
1920  (Denver,  pp.  273). 

Public  Finance 
From  the  United  States  Tariff  Commission  has  been  received  the  Fourth 
Annual  Report,  1920  (Washington,  pp.  64);  Tariff  Information  Series  No. 
20,  Agricultural  Staples  and  the  Tariff  (1920,  pp.  190),  which  contains 
much  valuable  material  in  regard  to  production,  trade,  and  foreign  compe- 
tition, together  with  many  charts  and  maps ;  and  Tariff  Information  Sur- 
veys on  the  Articles  in  Paragraphs  11-17  of  the  Tariff  Act  of  1918,  re- 
vised edition  (1921,  pp.  59). 

The  Thirtieth  Annual  Report  of  the  New  York  Tax  Reform  Association 
(29  Broadway)  discusses  the  need  of  changes  in  the  tax  law.  It  also  gives 
a  brief  summary  of  legislation  during  1920. 


1921]  Insurance  349 

The  following  state  reports  have  been  received  relating  to  taxation: 

Biennial  Report  of  the  Commissioner  of  Taxes  of  Vermont  for  the  Term 
Ending  June  SO,  1920  (Montpelier,  1920,  pp.  158). 

Tenth  Annual  Report  of  the  New  Hampshire  Tax  Commission,  for  1920 
(Concord,  pp.  203). 

Annual  Report  of  the  Commissioner  of  Corporations  and  Taxation  for  the 
Year  Ending  November  SO,  1920  (Boston,  pp.  226). 

Report  of  the  Tax  Commission  of  Connecticut  for  the  Biennial  Period 

1919  and  1920  (Hartford,  pp.  194). 

Eighth  Report  of  the  Board  of  Tax  Commissioners  of  Rhode  Island,  for 
the  biennial  period  1919-1920  (Providence,  pp.  69). 

The  Inheritance  Tax  Act  of  1916,  Rhode  Island,  Approved  February  22, 
1916  and  May  5,  1920  (Providence,  pp.  27). 

Fifth  Annual  Report  of  the  State  Board  of  Taxes  and  Assessment  of  New 
Jersey,  for  the  year  ending  June  30,  1920  (Trenton,  1920,  pp.  357). 

Report  of  the  State  Tax  Commission,  North  Carolina,  1920  (Raleigh,  pp. 
457). 

The  Executive  Budget  of  Ohio,  1921-1923  (Columbus,  John  E.  Harper, 
State  Budget  Commissioner,  pp.  140). 

Twelfth  Annual  Conference  of  the  State  Board  of  Tax  Commissioners 
and  County  Assessors  of  Indiana  (Indianapolis,  1921,  pp.  101). 

Report  of  State  Board  of  Tax  Commissioners  of  Indiana  for  Year  Ending 

1920  (Indianapolis,  1920,  pp.  122). 

Report  of  Board  of  State  Tax  Commissioners  and  State  Board  of  As- 
sessors of  Michigan,  1919-1920  (Lansing,  pp.  109). 

Assessed  Valuation,  Tax  Levy,  Tax  Limitations  and  Tax  Rates,  Wiscon- 
sin, 1920  (Madison,  pp.  30). 

Tenth  Biennial  Report  of  the  Wisconsin  Tax  Commission,  1920  (Madi- 
son, pp.  215). 

Ninth  Annual  Report  of  the  Colorado  Tax  Commission,  1920  (Denver, 
pp.  120). 

Report  of  the  California  State  Board  of  Equalisation  for  1919-1920 
(Sacramento,  1921,  pp.  78). 

Insurance 

The  federal  Bureau  of  Labor  Statistics  publishes  in  Bulletin  No.  273  the 
Proceedings  of  the  Sixth  Annual  Meeting  of  the  Interstate  Association  of 
Industrial  Accident  Boards  and  Commissions  held  at  Toronto,  September 
23-26,  1919  (Aug.,  1920,  pp.  424). 

Reference  has  been  made  (page  663  of  the  December,  1920,  number  of 
this  Review)  to  The  Status  of  Marine  Insurance  in  the  United  States.  A 
supplement  to  this  is  entitled  Report  on  Legislative  Obstructions  to  De- 
velopment of  Marine  Insurance  in  the   United  States,  by  S.  S.   Huebner. 


350  Documents,   Reports,    and   Legislation  [June 

This  pamphlet  also  includes  the  proposed  bill  to  regulate  marine  insurance 
which  was  approved  by  the  Committee  on  Merchant  Marine  and  Fisheries, 
December  II,  1920  (pp.  85). 

There  has  been  received  the  Fourth  Annual  Report  of  the  United  States 
Employees'  Compensation  Commission  (1920,  pp.  166). 

Workmen's  Compensation  Act  of  Nova  Scotia  with  Amendments  to  May, 
1920,  has  been  printed  (Halifax,  pp.  46);  also  Report  for  1920  of  the 
Workmen's  Compensation  Board  of  Nova  Scotia  (pp.  35). 

Further  reports  received  are:  Ninth  Annual  Report  of  the  Industrial  In- 
surance Department  of  Washington,  for  1920  (Olympia,  pp.  75);  and 
Fourth  Report  of  the  State  Industrial  Accident  Commission,  for  the  year 
ending  June  30,  1919  (Salem,  pp.  39). 


PERIODICALS 

The  Review  is  indebted  to  Robert  F.  Foerster  for  abstracts  of  articles  in  Italian 
periodicals,  and  to  R.  S.  Saby  for  abstracts  of  articles  in  Danish  and  Swedish  peri- 
odicals. 

Theory 
(Abstracts  by  Walton  H.  Hamilton) 

Adams,  G.  P.  An  apology  for  ethics.  Univ.  Calif.  Chronicle,  Jan.,  1931.  Pp.  20. 
"Ethics  becomes  an  inquiry  into  the  adequacy  of  existing  social  institutions  to 
satisfy  the  requirements  of  human  nature.  .  .  .  Ethics  becomes  the  focusing  point 
not  only  for  the  psychological  sciences,  but  for  the  historical  and  social  sciences 
as  well." 

Bernard,  L.  L.  Herbert  Spencer's  work  in  the  light  of  his  life.  Monist,  Jan., 
1921.  Pp.  35.  A  study  of  the  development  of  the  theory  of  laissez  faire  in  his 
writings  in  terms  of  the  facts  of  his  life. 

Beveridge,  W.  H.  Economics  as  a  liberal  education.  Economica,  Jan.,  1921.  Pp. 
18.  "The  liberty  of  spirit  which  a  liberal  education  should  give  is  at  bottom 
liberty  from  the  economic  motive,  a  capacity  to  value  things  and  to  decide  upon 
courses  of  action,  not  because  they  pay,  but  by  reference  to  other  standards." 

Clark,  J.  M.  Soundings  in  non-Euclidean  economics.  Am.  Econ.  Rev.  Supp.,  Mar., 
1931.     Pp.  11. 

Clement,  H.  Le  probleme  de  la  valeur  et  l'economie  pure,  d'apris  les  theories  actu- 
elles.  Ref.  Soc,  Dec,  1920.  Pp.  14.  "L'economie  politique  est  la  science  qui 
etudie  les  choses  ayant  une  valeur  et  susceptibles  d'appropriations  dans  leur  pro- 
duction, leur  circulation  et  dans  leur  rapports  avec  les  hommes." 

Davenport,  H.  J.    The  post-war  outlook.    Am.  Econ.  Rev.,  Mar.,  1921.     Pp.  15. 

Dean,  J.  C.  Mutations  in  human  progress.  Forum,  Mar.,  1931.  Pp.  10.  The 
record  of  civilization  shows  that  the  "security  of  private  property"  has  been 
the  indispensable  condition  to  the  development  of  art,  literature,  and  the  ameni- 
ties of  life. 

Dowd,  J.  Industrial  democracy.  Am.  Journ.  Soc,  Mar.,  1931.  Pp.  7.  "Shall  we 
have  self-direction,  democracy,  and  fellowship  in  the  industrial  world,  or  shall  we 
have  bolshevism?    One  or  the  other  is  coming." 

Estcourt,  R.  What  is  property?  S.  Atlantic  Quart.,  Jan.,  1931.  Pp.  9.  An  argu- 
ment that  confusion  has  been  caused  by  the  application  of  the  same  word  "prop- 
erty" to  both  consumers'  goods  and  the  instruments  of  production. 

Gonnard,  R.  L'economie  nouvelle. — A  propos  d'un  livre  recent.  Rev.  d'Econ. 
Polit.,  Jan.-Feb.,  1921.  Pp.  13.  A  critical  review  of  Georges  Valois,  L'Economie 
Nouvelle. 

Horwill,  H.  W.  Arrested  inventions.  Discovery,  Mar.,  1921.  Pp.  3.  A  study,  in 
specific  instances,  of  the  causes  which  tend  to  arrest  the  development  of  the  in- 
dustrial arts. 

Hostelet,  G.     Vers  le  productivisime.     Rev.  de  l'lnst.  de  Soc,  Jan.,  1921.     Pp.  24. 

A  critical  examination  of  Marxian  economics  in  the  light  of  the  social  problems 

which  the  end  of  the  war  has  brought. 
Hutchins,  B.  L.    The  creative  impulse  in  industry.    Contemp.  Rev.,  Feb.,  1921.    Pp. 


352  Periodicals  [June 

8.  "It  is  not  only  more  material  goods  that  men  need,  but  more  freedom,  more 
self-direction,  more  outlet  for  creativeness,  more  opportunity  for  the  joy  of  life, 
more  voluntary  cooperation,  and  less  involuntary  subservience  to  purposes  not 
their  own."    B.  Russell. 

Lovejot,  A.  O.  Profit-sharing  and  industrial  peace.  Intern.  Journ.  Ethics,  Apr., 
1921.  Pp.  23.  A  distinction  between  types  of  profit-sharing  in  terms  of  their 
purposes.  An  argument  that  a  scheme  cannot  both  meet  "business  reasons"  and 
make  for  "a  substantial  and  enduring  improvement  in  industrial  relations." 

Marriott,  J.  A.  R.  The  problem  of  unemployment.  Fortn.  Rev.,  Mar.,  1921.  Pp.  8. 
The  paradox  of  a  world  "suffering  at  once  from  a  shortage  of  commodities  and 
from  a  surplus  of  labor"  is  due  to  "economic  maladjustment"  between  "producer 
and  consumer."    Besides,  the  war  and  "labor"  have  had  a  hand  in  creating  it. 

Moeller,  H.  Zur  Frage  der  "Objektivitat  des  wirtschaftlichen  Prinzips.  Archiv  f. 
Sozialwis.,  Apr.,  Dec,  1920.  Pp.  '46,  39.  An  adventure  into  the  frontier  of  eco- 
nomics, psychology,  and  philosophy;  a  criticism  of  the  work  of  Schmoller,  Windel- 
band,  Weber,  and  others. 

Duke  of  Northumberland.  The  gospel  according  to  Mr.  Thomas.  Nat.  Rev.,  Mar., 
1921.     Pp.  13.     A  feudal  defense  of  capitalism  against  a  collectivistic  attack. 

Park,  R.  E.  Sociology  and  the  social  science.  Am.  Journ.  Sociol.,  Jan.,  1921.  Pp. 
23.  "It  is  upon  the  interpretation  of  the  facts  of  experience  that  we  formulate 
our  creeds.  .  .  .  Our  explanations  of  phenomena  are  the  basis  of  technique  and 
practical  devices  for  combating  nature  and  human  nature." 

Parry,  C.  E.  A  revaluation  of  traditional  economic  theory.  Am.  Econ.  Rev.,  Supp., 
Mar.,  1921.     Pp.  9. 

Patterson,  E.  M.  The  perils  of  the  new  economic  nationalism.  Ann.  Am.  Acad., 
Mar.,  1921.  Pp.  8.  "The  contest  is  on  a  large  scale  and  whole  countries  are  or- 
ganized. The  struggle  is  less  between  individuals  and  groups  of  different  coun- 
tries than  between  nations." 

Powell,  T.  R.  How  philosophers  may  be  useful  to  society.  Intern.  Journ.  Ethics, 
Apr.,  1921.  Pp.  14.  A  homily  upon  this  text  from  Mr.  Justice  Holmes:  "A 
generalization  is  empty  so  far  as  it  is  general.  Its  value  depends  upon  the  num- 
ber of  particulars  which  it  calls  up  to  the  speaker  and  the  hearer.  Hence  the 
futility  of  arguments  upon  economic  questions  by  one  whose  memory  is  not  stored 
with  economic  facts." 

Ryan,  J.  A.  The  purpose  of  the  state.  Erroneous  theories  concerning  the  functions 
of  the  slate.  Cath.  World,  Mar.,  Apr.,  1921.  Pp.  12,  8.  "The  state  is  under  ob- 
ligations to  promote  the  welfare  of  its  citizens  as  a  whole,  as  members  of  fami- 
lies and  as  members  of  economic  classes."  It  mediates  between  the  individualistic 
and  the  socialistic  principles  in  the  organization  of  society. 

Shadwell,  A.  Capitalism,  II.  Edinburgh  Rev.,  Jan.,  1921.  Pp.  20.  "There  is  a 
fallacy  in  the  assumption  that  riches  beyond  a  certain  point  make  any  difference 
in  actual  living  conditions;  and  if  the  poorer  classes  rise  toward  that  point  then 
the  real  difference  between  them  and  the  rich  diminishes  no  matter  how  much 
richer  the  rich  may  nominally  be." 

Sharp,  F.  C.  Some  problems  of  fair  competition.  Intern.  Journ.  Ethics,  Jan.,  1921. 
Pp.  23.  A  survey  of  many  trade  practices  with  the  end  of  formulating  principles 
for  determining  what  is  ethical  in  competitive  buying  and  selling. 


1921]  Economic  History  353 

Simpson,  K.  A  statistical  analysis  of  the  relation  between  cost  and  price.  Quart. 
Journ.  Econ.,  Feb.,  1921.  Pp.  24.  A  statement  of  a  method  for  a  statistical 
check  upon  the  theories  of  the  relationship  of  cost  to  price  and  applications  of 
the  method. 

Sombart,  W.  Probleme  der  Wirtschaftsgeschichte.  Schmollers  Jahrb.,  1920.  Pp. 
19.    A  critical  review  of  George  von  Below's  Probleme  der  Wirtschaftsgeschichte. 

Stoops,  J.  D.  The  instinct  of  workmanship  and  the  will  to  work.  Intern.  Journ. 
Ethics,  Jan.,  1921.  Pp.  17.  A  pica  for  the  "christianization"  of  "workmanship" 
and  other  recently  invented  instincts. 

Wells,  W.  R.  Natural  checks  on  human  progress.  Monist,  Jan.,  1921.  Pp.  12. 
"In  several  ways  .  .  .  human  nature  itself  limits  the  prospect  of  indefinite  hu- 
man progress." 

Wolmak,  L.     The  theory  of  production.     Am.  Econ.  Rev.,  March,  1921.     Pp.  20. 

Wright,  W.  K.  McDougall's  social  psychology  in  the  light  of  recent  discussion. 
Journ.  Philosophy,  Mar.  17,  1921.  Pp.  11.  McDougall  is  the  "William  James  of 
social  psychology."  The  Introduction  to  Social  Psychology  remains  .  .  .  the  foun- 
dation for  a  psychological  interpretation  of  human  social  life." 

Yarros,  V.  S.  Is  there  a  law  of  human  progress?  Intern.  Journ.  Ethics,  Jan.,  1921. 
Pp.  11.  "The  human  will  is  a  will  to  live,  to  remove  obstacles  ...  to  solve  rid- 
dles and  realize  the  ideal.  .  .  .  This  will  makes  progress  almost  a  law  of  human 
nature." 

Economic  History  (United  States) 
(Abstracts  by  Amelia  C.  Ford) 
Anderson,  B.  M.,  Jr.     The  return  to  normal.     Chase  Econ.   Bull.,  Feb.  28,   1921. 
Pp.  37.    Discusses  the  unsound  conditions  which  brought  about  the  crisis  of  1920, 
the  extent  to  which  these  abnormal  tendencies  have  been  corrected  by  the  crisis, 
and  the  remaining  problems  of  readjustment. 

Broshar,  H.  The  first  push  westward  of  the  Albany  traders.  Miss.  Valley  Hist. 
Rev.,  Dec.,  1920.  Tells  of  the  westward  expansion  of  British  trade  between  1684 
and  1695,  as  far  as  Mackinac  and  the  Wabash,  and  of  the  alarm  and  resistance 
of  the  French. 

Evermann,  B.  W.  Can  the  Alaska  salmon  fisheries  be  saved?  Sci.  Mo.,  Feb.,  1921. 
Pp.  22.  Discusses  the  life  history  of  the  sockeye  salmon,  questions  the  value  of 
artificial  propagation,  as  conducted,  and  sets  forth  a  plan  for  the  rehabilitation 
and  conservation  of  these  fisheries.     Illustrated. 

Fish,  C.  R.  The  German  indemnity  and  the  South.  Am.  Hist.  Rev.,  Apr.,  1921. 
Pp.  2.  Calls  attention  to  certain  differences  between  the  economic  situation  of 
the  South  after  the  Civil  War,  and  that  of  Germany  under  the  Versailles  peace. 

Mills,  C.  M.  Joplin  zinc.  Survey,  Feb.  5,  1921.  Pp.  10.  Finds  the  mining  area  is 
American  non-organized,  and  in  control  of  small  operators,  with  bad  working 
and  living  conditions;  gives  a  remedy  and  a  program  for  the  correction  of  the  evils. 

Mumford,  F.  B.  A  century  of  Missouri  agriculture.  Mo.  Hist.  Rev.,  Jan.,  1921.  Pp. 
21.  A  survey  which  includes  facts  as  to  prices,  crops,  conditions,  in  the  old  French 
and  pioneer  days,  and  the  present  methods  of  state  aid  to  farming. 


354  Periodicals  [June 

Schafeh,  J.  Muscoda,  1763-1856.  Wis.  Mag.  Hist.,  Sept.,  1920.  Pp.  17.  A  study 
of  the  economic  reasons  for  the  settlement  of  this  Wisconsin  village,  as  an  illus- 
tration of  the  light  which  local  inquiry  can  shed  upon  general  history. 

Sears,  L.  M.  Philadelphia  and  the  embargo  of  180S.  Quart.  Journ.  Econ.,  Feb., 
1921.  Pp.  6.  Shows  from  various  contemporary  accounts  that  Philadelphia  en- 
joyed a  boom  in  manufacturing  during  the  embargo  year  that  more  than  offset 
her  commercial  losses. 

Simkins,  F.  B.  Race  legislation  in  South  Carolina  since  1865.  I.  S.  Atlantic 
Quart.,  Jan.,  1921.  Pp.  11.  A  summary  with  some  discussion  of  the  contents  of 
the  South  Carolina  black  code  of  1865  and  the  school  laws  of  1870-71.  To  be  con- 
tinued. 

Stevens,  W.  B.  The  Missouri  tavern.  Mo.  Hist.  Rev.,  Jan.,  1921.  Pp.  36.  Sketches 
the  growth  of  the  hotel  business. 

Taylor,  R.  G.  Some  sources  for  Mississippi  valley  agricultural  history.  Miss.  Val- 
ley Hist.  Rev.,  Sept.,  1920.  Pp.  4.  Gives  a  list  of  books  on  America  by  European 
travelers  but  emphasizes  chiefly  the  observations  of  James  P.  Caird  and  of  Finlay 
Dun  as  together  forming  a  remarkable  record  of  the  expansion  and  conquest  of 
the  great  Northwest  in  the  sixties  and  seventies. 

Willis,  H.  E.  North  Dakota's  industrial  program  and  the  law.  Survey,  Dec.  18, 
1921.  Pp.  2.  Discusses  what  a  state  may  own  in  the  light  of  the  recent  Supreme 
Court  decision  which  upheld  the  constitutionality  of  North  Dakota's  legislation 
of  1919. 

Woehlke,  W.  V.  What  makes  the  Far  West  grow?  Am.  Rev.  Revs.,  Feb.,  1921. 
Pp.  11.  Outlines  the  achievements  of  the  Far  West  during  the  past  decade  along 
the  lines  of  agriculture,  manufacturing,  and  foreign  trade,  and  sketches  future 
reclamation  jirojects. 

Economic  History  (Foreign) 
Ashley,  W.    Bolshevism  and  democracy.     Quart.  Rev.,  Jan.,  1921. 
Blokdel,  G.    he  mouvement  dconomique  et  social.    R6f.  Soc,  Jan.,  1921. 
Braikevitch,  M.  V.     National  economy.     Russian  Econ.,  Jan.,  1921. 

. .     Russia  and  stability   of  Europe.     Russian   Econ.,   Sept.-Oct.,   1920. 

Pp.  5. 

Bryn,  H.  H.    Noncay.     Mag.  Wall  St.,  Mar.  19,  1921. 

Buell,  R.  L.  Political  and  social  reconstruction  in  France.  Am.  Pol.  Sci.  Rev., 
Feb.,  1921. 

Clapham,  J.  H.  Europe  after  the  great  wars,  1816  and  1920.  Econ.  Journ.,  Dec, 
1920. 

Darung,  M.  C  Prosperity  and  debt  in  the  Punjab.  Indian  Journ.  Econ.,  Jan., 
1921. 

Dechesne,  L.  Localisation  des  diverses  productions.  Rev.  de  l'lnst.  de  Sociol., 
Sept.,  1920. 

Di  Modica,  G.  Le  consequenze  economiche  delta  guerra.  Rif.  Soc,  Jan.-Feb.,  1921. 
Pp.  17.     A  critical  essay  taking  its  cue  from  Keynes'  book. 


1921]  Economic  History  355 

Fay,  C.  R.     Corn  prices  and  the  corn  laws,  1815-1846.     Econ.  Journ.,  Mar.,  1921. 

Fe'i-Shi.  The  financing  of  China  before  and  after  the  beginning  of  the  present 
century.     Econ.  World,  Feb.  26,  1921. 

Fyfe,  H.     The  industrial  outlook.    Finan.  Rev.  Rev.,  Mar.,  1921. 

Gregory,  T.  E.  The  economics  of  employment  in  England.  Economiea,  Jan.,  1921. 
Pp.  37. 

Grilli,  C.  La  riconstruzione  economiea  sociale  in  recenti  pubblicazioni.  Riv.  Intern., 
Nov.-Dec,  1920.     Pp.  7. 

Hauser,  H.  La  signification  prisente  de  Vhistoire  e"conomique.  Rev.  Intern.  So- 
eiol.,  Mar.-Apr.,  1920. 

Hobson,  J.  A.     The  neio  industrial  revolution.     Contemp.  Rev.,  Nov.,  1920. 

Jeze,  G.  The  economic  and  financial  position  of  France  in  1920.  Quart.  Journ. 
Econ.,  Feb.,  1921. 

Johnes,  T.  Notes  on  the  social  and  economic  transition  in  Japan.  Econ.  Journ., 
Mar.,  1921. 

Leao,  J.  De  S.    Brazil.    Mag.  Wall  St.,  Apr.  2,  1921. 

Lebon,  A.    La  paix  iconomique  de  1919.     Rev.  Econ.  Intern.,  May,  1920. 

Lederer,  E.  Die  Bewegung  der  Privatangestellten  seit  dem  Uerbst  1918,  die  Ent- 
wicklung  der  Organisationen,  die  Gestaltung  der  Lebenshaltung  und  der  Besol- 
dung.    Archiv  f.  Sociahvis.,  Jan.,  1921. 

.     Social  evolution  during  war  and  revolution.     Pol.  Sci.  Quart.,  Mar., 

1921.    Pp.  9. 

Levy,  R.-G.  Les  clauses  e'eonomiques  du  traite'.  Rev.  des  Deux  Mondes,  June, 
1920. 

Liesse,  A.  Quelques  aspects  de  la  vie  e"conomique  et  financier e  en  Allemagne. 
L'Econ.  Fran?.,  Dec.  25,  1921. 

Lotz,  W.  Die  Brusseler  internationale  Finanzkonference  von  1920.  Schmollers 
Jahrb.,  44  Jahrgang,  Heft  4,  1920. 

Malinowski,  B.  The  primitive  economics  of  the  Trobriand  Islanders.  Econ.  Journ., 
Mar.,  1921. 

Martix,  P.  F.    The  economic  crisis  in  Latin-America.    Finan.  Rev.  Rev.,  Mar.,  1921. 

Michel,  E.  La  valeur  immobilize  des  regions  libe're'es.  Journ.  Soc.  Stat,  de  Paris, 
Jan.,  1921. 

Mondolfo,  R.  II  marxismo  e  la  crisi  europea.  Scientia,  vol.  XXVIII,  N.  CIV-12, 
1920. 

Morris,  H.  Les  consequences  tconomiques  de  la  guerre.  Rev.  Econ.  Intern.,  June 
1920. 

Nart,  J.  La  desorganizacidn  econdmica  de  Europa.  Rev.  Nacional  de  Econ.  IX 
26,  1920. 

Nielsen,  R.    Denmark.    Mag.  Wall  St.,  Mar.  5,  1921. 

Petrescu,  N.    Financial  conditions  in  Roumania.    Bankers'  Mag.,  Feb.,  1921. 


356  Periodicals  [June 

Petrunkevitch,  I.     The  bolsheviks  in  the  Crimea.    Yale  Rev.,  Oct.,  1920. 

Haffalovich,  A.  Quelques  aspects  iconomiques  et  financiers  de  V  Allemagne :  revue 
de  Vannie  1920.    L'Econ.  Franc.,  Feb.  5,  1921. 

-.  Quelques  aspects  de  la  situation  dconomique  et  financier e  de  I'Alle- 
magne.    L'Econ.  Franc.,  Mar.  5,  1921. 

Read,  C.  Some  recent  studies  of  the  industrial  revolution.  Quart.  Journ.  Econ., 
Feb.,  1921. 

Rybabski,  R.     Two  years'  record  of  the  new  Poland.    Econ.  World,  Jan.  22,  1921. 

Sabkak,  B.  K.  The  economics  of  Hindu  craft  gilds  and  gild  merchants.  Journ. 
Indian  Econ.  Soc,  June,  1920. 

vonSchitlze-Gavebnitz,  G.  The  reconstruction  of  Europe.  Journ.  Royal  Stat. 
Soc,  Dec,  1920. 

Siepmann,  H.  A.  The  international  financial  conference  at  Brussels.  Econ.  Journ. 
(London),  Dec,  1920. 

Szende,  P.  Die  Krise  der  mitteleuropaischen  Revolution.  Archiv  f.  Sozialwis., 
Jan.,  1921. 

Tschiebsciiky,  S.  Die  Stellung  der  Sozialdemokratie  zu  den  Rartellen.  Kartell- 
Rundschau,  18  Jahrgang,  Heft  11,  1920. 

Van  Gennep,  A.  La  nationality  gtorgienne.  Les  causes  de  sa  formation  et  de  son 
maintien.     Rev.  de  l'lnst.  de  Sociol.,  Nov.,  1920. 

Wells,  B.  W.    Business  and  politics  at  Carthage.    Sewanee  Rev.,  Oct.-Dec,  1920. 

Economic  position  of  Spain.     Comm.  Mo.,  Jan.,  1921. 

The  economic  situation  in  soviet  Russia.    Russian  Econ.,  Jan.,  1921. 

Remarkable  growth  of  Canadian  manufacturing  as  shown  by  latest  census.  An- 
nalist, Feb.  14,  1921. 

Spain  retains  most  of  economic  gains  resulting  from  the  world  war.  Americas, 
Mar.,  1921. 

Agricultural  Economics 
(Abstracts  by  A.  J.  Dadisman) 
BoEGEit,  E.  A.     Rent  contracts  in  typical  counties  of  the  wheat  belt.     U.  S.  Dept. 
Agri.  Bull.  850   (1920),  Apr.  1920.     Pp.  13.     An  analysis  of  systems  of  renting 
land.    Data  from  tenants.     Eight  tables. 

Brady,  F.  Forest  products  research  save  millions.  Export,  Jan.,  1921.  Pp.  5.  The 
work  and  achievements  of  the  Forest  Products  Laboratory  at  Madison,  Wisconsin. 

Dixon,  II.  M.  Farm  business  analysis  studies.  Journ.  Farm  Econ.,  No.  2,  Apr., 
1920.  Pp.  14.  The  development  of  farm  analysis  studies,  and  the  essential  part 
of  the  studies  of  several  groups  of  farms.     Eight  tables. 

Dixon,  II.  M.  and  Purdon,  J.  M.  Farm  management  in  the  Ozark  region  of  Mis- 
souri. U.  S.  Dept.  Agri.  Bull.  941  (1921),  Apr.,  1921.  Pp.  52.  A  study  of  the 
organization  and  operation  of  31  hilly  and  rolling  upland  farms  and  48  valley  and 
level-upland  farms  from  survey  records.     A  detailed  study  of  10  farms  is  given. 


1921]  Railways  and  Transportation  357 

Dubey,  D.  S.  A  study  of  the  Indian  food  problem.  Indian  Journ.  Econ.,  Jan.,  1921. 
Pp.  16.     Continued  from  last  number. 

Funk,  W.  C.  An  economic  study  of  small  farms  near  Washington,  D.  C.  U.  S. 
Dept.  Agri.  Bull.  848  (1920),  June,  1920.  Pp.  19.  A  study  of  the  organization  of 
small  market  gardening  farms.  Data  for  the  study  from  survey  records  from 
152  farms.    Seven  tables. 

Jacob,  S.  Immigrant  farm  colonies  in  southern  New  Jersey.  Mo.  Labor  Rev., 
Jan.,  1921.  Pp.  22.  History,  development,  and  activities  of  colonies  of  Italian 
farmers  in  New  Jersey. 

Jesness,  O.  B.  Cooperative  marketing.  U.  S.  Dept.  Agri.,  Farmers'  Bull.  1141 
(1920),  Sept.,  1920.  Pp.  27.  A  discussion  of  purposes,  possibilities,  and  methods 
of  cooperative  marketing. 

McNaih,  A.  D.  Surveys  of  three  typical  farm  areas  in  Arkansas.  Ark.  Ext.  Cir. 
93  (1920),  Sept.,  1920.  Pp.  32.  An  analysis  of  the  farm  business  on  170  Arkan- 
sas farms.    Fourteen  tables  and  seven  charts. 

Putnam,  G.  E.  Interest  on  land  values  as  a  factor  in  farm  costs.  Annalist,  Feb., 
14,  1921.     P.  1.     A  criticism  of  methods  used  in  figuring  farm  costs. 

Tamagnini,  G.    L'economia  agraria  negli  studi  di  Ohino  Valenti.    Riv.  Intern.,  Dec, 

1920.  Pp.  10.    A  survey  of  the  contributions  of  Valenti  (who  died  at  Rome,  No- 
vember, 1920,  at  the  age  of  sixty-eight)   to  agricultural  economics. 

Thompson,  J.  G.  Mobility  of  the  factors  of  production  as  affecting  variation  in 
their  proportional  relation  to  each  other  in  farm  organization.  Journ.  Pol.  Econ., 
Feb.,  1921.  Pp.  31.  The  article  points  out  various  practical  ways  in  which  mo- 
bility of  the  factors  of  production  may  be  secured. 

Thomson,  E.  H.  American  farmers'  need  for  capital.  Ann.  Am.  Acad.,  Jan.,  1920. 
Pp.  6.  A  discussion  of  capital  in  relation  to  farm  earnings,  forms  of  credit 
needed  by  farmers,  and  the  part  the  federal  land  bank  plays  in  meeting  such  needs. 

.    Selecting  a  farm.    U.  S.  Dept.  Agri.,  Farmers'  Bull.  1088,  Mar.,  1920. 

Pp.  27.    A  popular  bulletin  setting  forth  the  fundamental  points  to  be  considered 
in  selecting  a  farm. 

Tourney,  J.  W.  Reshaping  our  forest  policy.  Sci.  Mo.,  Jan.,  1921.  Pp.  18.  A 
discussion  of  the  evolution  of  our  lumber  industry,  and  disappearing  forests,  and 
proposed  government  and  state  legislation. 

Germany:  cooperative  dairies  during  the  war.  Intern.  Rev.  Agri.  Econ.,  Nov.,  1920. 
Pp.  17.    The  development,  amount  of  business,  and  financial  results. 

Italy:  the  new  tendencies  in  the  recent  changes  in  agricultural  agreements.  Intern. 
Rev.  Agri.  Econ.,  Nov.,  1920.  Pp.  8.  A  discussion  of  recent  agitation  of  agri- 
cultural laborers  and  tenants  for  better  working  conditions,  more  control  of  the 
management  of  the  land,  higher  remuneration  for  their  services,  and  how  the  state 
might  intervene  in  making  reforms. 

Railways  and  Transportation 

(Abstracts  by  Julius  H.  Parmelee) 
Allen,  O.  F.    Railway  reconstruction  in  France  and  Belgium.     Ry.  Age,  Apr.  8, 

1921.  Pp.  4. 


358 


Periodicals  [June 


Armstrong,  A.  H.  The  economic  aspects  of  railway  electrification.  Journ.  Frank- 
lin Inst.,  Apr.,  1921.    Pp.  10. 

Basfobd,  G.  M.  Getting  better  results  from  railroad  organizations.  Ry.  Age,  Feb. 
25,  1921.     Pp.  4. 

Bibbins,  J.  R.  Economic  aspect  of  our  transportation  routes.  Ry.  Rev.,  Jan.  29, 
1921.     Pp.  3.     Traffic  distribution  and  coordination  of  transport  facilities. 

Castiau,  M.  La  crise  des  transports  au  BrCsil.  Rev.  Econ.  Intern.,  Feb.,  1921. 
Pp.  27. 

Clark,  E.  E.  The  new  problems  of  management  and  regulation.  Ry.  Age,  Apr.  1, 
1921.     Pp.  2.     By  the  chairman  of  the  Interstate  Commerce  Commission. 

Clark,  J.  M.  An  example  of  municipal  research.  Journ.  Pol.  Econ.,  Mar.,  1921. 
Pp.  8.    The  report  of  the  Chicago  commission  on  local  transportation. 

Cordeal,  E.  Where  the  railroad  and  the  motor-truck  dovetail  with  profit.  Trans. 
World,  Feb.,  1921.     Pp.  3. 

Daggett,  S.     The  railroad  rate  discrimination  provision  of  the  merchant  marine  act, 

1920.  Annals,  Mar.,  1921.     Pp.  6. 

Dunn,  S.  O.  Is  the  railroad  problem  really  being  solved?  Ry.  Age,  Jan.  28,  1921. 
Pp.  5.     Author's  reply  is  a  qualified  negative. 

Eaglesome,  J.  The  problem  of  the  canals.  Journ.  Inst.  Transport,  Feb.,  1921.  Pp. 
10.     History  of  British  waterways. 

Fritts,  J.  C.     Cause  of  the  present  condition  of  freight  cars.     Ry.  Age,  Jun.  28, 

1921.  Pp.  4.     Bad  condition  due  to  pooling  deferred  retirements,  labor  condi- 
tions, and  abuse  in  service;  remedies  suggested. 

Green,  C.  Water  transportation  of  American  railroads.  Proc.  Pacific  Ry.  Club, 
Nov.,  1920.    Pp.  8. 

Hallinan,  J.  P.  What  determines  adequacy  of  railway  maintenance.  Ry.  Age, 
Feb.  25,  1921.     Pp.  2.     Suggested  formula  for  mathematical  determination. 

Harris,  J.  A.  Essential  services  in  railway  operations  and  control.  Ry.  Gaz. 
(London),  Jan.  14,  28,  Feb.  25,  1921.     Pp.  2,  2,  3. 

Hartley,  G.  Opposition  to  England's  proposed  grouping  of  the  railroads.  Trans. 
World,  Feb.,  1921.  Pp.  3.  Summary  of  railways'  objections  to  consolidation 
scheme. 

Hooper,  W.  E.  A  billion-and-a-half -dollar  experiment  in  government  ownership. 
Scribner's  Mag.,  Apr.,  1921.     Pp.  5.     The  Canadian  railway  situation. 

Kahn,  O.  H.  The  market  of  American  railroad  securities.  Forum,  Apr.,  1921. 
Pp.  9. 

van  der  Leyen,  A.  Das  Bundesverkehrsgesetz  der  Vereinigten  Staaten  von  Amerika 
nach  der  Novelle  vom  28  Februar,  1920.  Archiv  f.  Eisenbahnw.,  J  an.- Feb.,  1921. 
Pp.  51.     History  of  American  interstate  commerce  act  of  1920. 

I.iesse,  A.  Le  nouveau  regime  des  chemins  de  fer  d'intirU  ge'ne'ral.  L'Econ.  Franc., 
Dec.  11,  1920.     Pp.  3. 

Lincoln,  J.  C.  The  readjustment  of  transportation  rates.  Shipper  &  Carrier,  Mar., 
1921.     Pp.  2.     Specific  data  on  increases  since  1913. 


1921]  Railways  and  Transportation  359 

McLean,  R.  W.  Troop  movements  on  the  American  railroads  during  the  great  war. 
Am.  Hist.  Rev.,  Apr.,  1921.  Pp.  25.  Describes  the  methods  by  which  the  special 
government  board  under  Mr.  George  Hodges  handled  the  problem  of  troop  trans- 
portation. 

de  Nouvion,  G.  Les  comptes  des  chemins  de  fer  de  I'etat  en  1919.  Journ.  des 
Econ.,  Mar.  15,  1921.     Pp.  8. 

Pahmelee,  J.  H.  An  optimistic  view  of  the  railway  situation.  Ry.  Age,  Feb.  11, 
1921.     Pp.  2. 

rAgzKowsKi,   F.     Eisenbahnpolitik  Norwegens.     Archiv   f.  Eisenbahnw.,   Nov.-Dec, 

1920.  Pp.  46. 

Payne,  J.  L.     Canada's  heavy   loss  from  government   railways.     Ry.   Age,  Apr.  8, 

1921.  Pp.  3. 

Peschaud,  M.  Labour  to  participate  in  French  railway  management.  Ry.  Gaz. 
(London),  Feb.  11,  1921.  Pp.  3.  Analysis  of  new  "statut  des  agents  de  chemins 
de  fer." 

.    La  reorganisation  des  chemins  de  fer  Grecs.     Rev.  Gen.  des  Chemins 

de  Fer,  Jan.,  1921.     Pp.  6. 

Poynton,  J.  J.  The  Trans-Australian  railway.  Ry.  Gaz.  (London),  Jan.  7,  1921. 
Pp.  3. 

Rhea,  F.  Railway  valuation.  Ry.  Rev.,  Feb.  5,  12,  Mar.  12,  1921.  Pp.  5,  5,  4. 
Additional  numbers  in  series  already  noted. 

Risque,  J.  P.  British  railways  predominated  in  Argentina.  Ry.  Age,  Feb.  18,  25, 
Mar.  4,  1921.    Pp.  3,  3,  3. 

Schlobohm,  O.  A.  The  controversy  now  before  the  Supreme  Court  regarding  the 
power  to  regulate  intrastate  railroad  rates.    Econ.  World,  Apr.  2,  1921.     Pp.  3. 

Trautvetter,  K.  Das  deutsche  Verkehrswesen.  Archiv  f.  Eisenbahnw.,  Nov.-Dec, 
1920.    Pp.  22. 

Wernekke.  Die  franzosischen  Eisenbahnen  in  und  nach  dem  Krieg.  Archiv  f. 
Eisenbahnw.,  Nov.-Dec,  1920.     Pp.  16. 

Willard,  D.  Some  present  day  problems  of  the  railroads.  Ry.  Age,  Feb.  18,  1921. 
Pp.  2.     Magnitude  of  problem,  also  seasonal,  periodic,  and  economic  aspects. 

.     Three  epochs  of  American  history.     Ry.  Age,  Apr.  1,  1921.     Pp.  3. 

Railroad  history  to  the  period  of  government  control,   during  that   period,  and 
since. 

Die  bayerischen  Staatseisenbahnen  in  den  Jahren  1916  und  1917.  Archiv  f.  Eisen- 
bahnw., Jan.-Feb.,  1921.    Pp.  10. 

Die  Eisenbahnen  in  Norwegen  in  den  Jahren  1917-18  und  1918-19.  Archiv  f.  Eisen- 
bahnw., Mar.-Apr.,  1921.     Pp.  8. 

Die  Eisenbahnen  in  Schweden.  Archiv  f.  Eisenbahnw.,  Nov.-Dec,  1920.  Pp.  12. 
Years  1913  to  1916  on  the  Swedish  railways. 

Die  Eisenbahnen  des  Sudafrikanischen  Staatenbundes  im  Rechnungsjahr  vom  1  April 
1918  bis  31  Marz  1919.    Archiv  f.  Eisenbahnw.,  Mar.-Apr.,  1921.     Pp.  12. 

Le  nouveau  regime  des  chemins  de  fer  et  le  rapport  de  M.  Henri  Lorin.    Journ.  des 


360  Periodicals  [June 

Econ.,  Nov.   15,   1920.     Pp.   16.     Railway   reorganization  in   France   treated   his- 
torically and  analytically.     Proposed  solutions. 

Oldham's  railroad  merger  plan.  Trans.  World,  Feb.,  1921.  Pp.  2.  Summary  of 
railway  consolidation  plan  proposed  by  John  E.  Oldham  of  Boston. 

Organisation  of  the  Ministry  of  Transport.  Ry.  Gaz.  (London),  Jan.  28,  1921. 
Pp.  7.    With  organization  chart  and  illustrations. 

Proposed  amalgamation  of  L.  £  N.  W.  R.  and  L.  §  Y.  R.  Ry.  Gaz.  (London), 
Apr.  1,  1921.    Pp.  11. 

The  Siamese  state   railways.     Far   East  Rev.,   Mar.,   1921.     Pp.   6.     Statistics   for 

1918-1920. 
Die    vereinigten   preussischen    und   hessischen   Staatseisenbahnen    im   Rechnungsjahr 

1918.     Archiv  f.  Eisenbahnw.,  Nov.-Dec,  1920.     Pp.  21. 

Commerce 

(Abstracts  by  Harry  R.  Tosdal) 
Berglund,  A.     Discriminatory  duties  on  imports  in  American  bottoms.     Ann.  Am. 
Acad.,  Mar.,    1921.     Pp.   11.     Is   not  inclined   to   favor  proposal   to  impose   dis- 
criminatory duties  in  favor  of  imports  entering  this  country  in  American  vessels, 
although  asserts  that  aid  in  some  form  should  be  rendered  to  new  shipping. 

Bushnell,  S.  The  relative  importance  of  cooperative  and  other  retail  traders.  Eco- 
nomica,  Jan.,  1921.  Pp.  64.  Statistical  study  of  proportion  of  population  buying 
government  butter  from  multiple  shops,  cooperative  stores,  and  private  dealers. 

Byrxes,  R.  M.  America's  choice  between  profitable  foreign  investments  and  loss  of 
export  trade.  Econ.  World,  Mar.  12,  1921.  Pp.  5.  Points  out  that  United  States 
can  hold  trade  gained  during  the  war  only  by  investing  in  industries  of  desired 
markets. 

Cadoux,  G.  Les  relations  commercials  franqaises  avec  le  Chili.  L'Econ.  Franc., 
Jan.  15,  1921.  Pp.  2.  Discussion  of  French  trade  wtih  Chile  and  possibilities  for 
future  development.     Regrets  neglected  opportunities  of  wholesale  trade. 

Gottlieb,  L.  B.  L'industrie  de  la  sole:  les  Etats-Unis  et  Japon.  Feb.  15,  1921. 
Pp.  15.  Statistical  examination  of  Japanese  silk  production  and  exports  during 
year  1919-20  with  special  reference  to  financial  panic  and  price  movement. 

Good,  E.  T.  German  dumping.  Finan.  Rev.  Rev.,  Mar.,  1921.  Pp.  18.  Warns  Great 
Britain  of  great  dangers  of  dumping  and  need  for  legislation  against  German 
practices. 

Macara,  C.  Survey  of  the  cotton  industry.  Finan.  Rev.  Rev.,  Mar.,  1921.  Pp.  9. 
Survey  of  the  cotton  industry  by  the  first  president  of  the  International  Cotton 
Federation. 

McPherson,  J.  B.  Annual  wool  review  for  1920.  Bull.  Nat.  Assoc.  Wool  Mfrs., 
Jan.,  1921.  Pp.  88.  Detailed  statistical  analysis  of  wool  market,  production  and 
prices  during  1920. 

Middletox,  P.  II.    German  plans  to  extend  foreign  trade.    Econ.  World,  Feb.,  1931. 

Pp.  3.     German  exports  for  first  five  months  of  1920  were  valued   at  more  than 

twice  those  for  whole  of  1919. 
Moritzen,   J.     Promising   commercial  future   of   the   new  Baltic  States.     Annalist, 


1921]  Commerce  361 

Feb.  28,  1921.  Pp.  2.  Tariff  and  transportation  relations  with  Germany,  Poland, 
and  Russia  are  most  important  problems  to  be  solved.  Esthonia,  Latvia,  and 
Lithuania  afford  very  good  future  markets  for  American  goods. 

Notz,  W.  New  phases  of  unfair  competition  and  measures  for  its  suppression- 
national  and  international.  Yale  Law  Journ.,  Feb.,  1921.  Gives  causes  of  efforts 
to  improve  standards  governing  world  trade  and  examples  of  progressive  legis- 
lation of  various  countries  for  prevention  of  unfair  competition  in  national  and 
international  commerce;  states  that  court  decisions,  however,  have  tended  to  fol- 
low pre-war  precedent.    Lists  methods  condemned  by  Federal  Trade  Commission. 

Plaut,  T.  Die  Bedeutung  des  Dumping  fiir  die  gegenwartige  englische  Handels- 
politik.  Weltwirtsch.  Archiv,  Jan.,  1921.  Pp.  23.  An  examination  of  the  nature 
of  dumping,  its  practical  importance,  and  a  critical  survey  of  anti-dumping  legis- 
lation with  special  reference  to  the  English  situation. 

Price,  F.  T.  The  present  through  export  bill  of  lading  and  the  liability  of  car- 
riers thereunder  for  loss  and  damage  in  transit.  Econ.  World,  Mar.  19,  1921. 
Pp.  2. 

del  Villar,  E.  H.  La  politica  de  alianzas  y  el  comercio  exterior.  Rev.  Nacional  de 
Econ.,  vol.  VIII,  no.  25,  1921.  Pp.  11.  Statistical  survey  of  Spain's  international 
trade  in  1911,  1912,  and  1913.  Approves  of  closer  relations  with  France  and 
England,  but  does  not  favor  a  military  alliance. 

Ward,  S.  E.  International  trade  in  wheat.  Comm.  Mo.,  Feb.,  1921.  Pp.  11.  "The 
dominant  factors  which  will  finally  determine  European  demand  are  low  pur- 
chasing power  and  policy  of  governmental  regulation  and  control,  which  has  re- 
sulted from  it." 

Wyse,  R.  C.  The  selling  and  financing  of  the  American  cotton  crop.  Econ.  Journ., 
Dec,  1920.    Pp.  11.     Outlines  method  of  financing  cotton  in  United  States. 

Le  commerce  de  la  Chine.  L'Econ.  Franc.,  Jan.  29,  Feb.  5,  1921.  Pp.  2,  3.  (1) 
Translation  of  statistical  report  on  Chinese  trade  by  a  prominent  Shanghai  cus- 
toms official.     (2)  Takes  up  imports  and  exports. 

Financing  foreign  trade.  Journ.  Am.  Bankers  Assoc,  Jan.,  1921.  Pp.  8.  Addresses 
given  at  conference  of  American  Bankers  Association  held  in  Chicago,  December 
10  and  11,  1920.  Immediate  organization  of  national  Edge  law  corporation, 
capitalized  at  $100,000,000  was  authorized. 

The  foreign  trade  situation.  Bull.  N.  Y.  Chamber  Comm.,  Jan.,  1921.  Pp.  15.  Rer 
port  of  the  committee  of  finance  and  currency  made  to  the  Chamber  of  Com- 
merce on  securing  relief  for  our  foreign  trade.  Asserts  that  United  States  might 
serve  its  own  ends  better  by  strengthening  credit  and  helping  to  reduce  financial 
burdens  of  continental  Europe  than  by  inflating  prices  here  with  revival  of  War 
Finance  Corporation  and  artificial  increase  of  credits. 

Future  outlook  for  the  copper  industry  is  one  of  great  promise.  Americas,  Jan., 
1921.  Pp.  8.  Fact  that  it  is  best  suited  of  all  metals  for  use  in  electrical  equip- 
ment makes  copper  of  increasing  importance. 

The  iron  and  steel  industry — a  barometer  of  the  world's  industrial  progress. 
Americas,  Mar.,  1921.  Pp.  9.  Brief,  illustrated  description  of  iron  and  steel 
industry,  emphasizing  present  position  of  United  States. 

Mexico.  A  great  market  for  American  manufacturers.  Americas,  Jan.,  1921.  In- 
teresting, illustrated  account  of  trade  possibilities  in  Mexico. 


362  Periodicals  [June 

Public  Utilities 

(Abstracts  by  Charles  S.  Morgan) 
Barker,  H.    Incentive  in  service-at-cost.    Aera,  Mar.,  1921.    Pp.  6.    A  consideration 
of  the  technique  of  service-at-cost  franchises.     A  bonus  to  stockholders  on  the 
one  hand  and  to  management  and  men  on  the  other  as  a  reward  for  efficiency  is 
suggested. 

Barstow,  W.  S.  Common  stock  the  basis  of  financing.  Elec.  World,  Feb.  5,  1921. 
Pp.  2.  Regulation,  which  is  held  to  have  encouraged  the  financing  of  utilities  with 
funded  debt  obligations,  should  now  assist  utilities  in  making  greater  use  of 
stock  financing. 

Bibbins,  J.  R.  Some  latent  possibilities  in  valuation  practice.  Aera,  Feb.,  1921. 
Pp.  5.  The  valuation  problem  needs  more  concentrated,  less  disparate,  study.  A 
careful  reconstruction  of  the  past  history  of  each  utility  undertaking  is  essential 
to  the  determination  of  the  relative  equities  of  the  investor  and  the  public. 

Biggab,  E.  B.  The  Ontario  Power  Commission:  its  origin  and  development.  Journ. 
Pol.  Econ.,  Jan.,  1921.  Pp.  27.  A  comprehensive  treatment  of  the  objects  and  ac- 
complishments of  this  important  undertaking  in  the  field  of  public  enterprise. 

Clark,  J.  M.  An  example  of  municipal  research.  Journ.  Pol.  Econ.,  Mar.,  1921. 
Pp.  8.  Report  of  Thompson  Commission  on  Local  Transportation  of  the  City  of 
Chicago,  1920,  is  shown  to  be  entirely  inadequate  to  meet  the  needs  of  the  situation. 

Edgerton,  E.  O.  Improving  laws  concerning  regulation  of  public  utilities.  Journ. 
of  Elec,  Mar.  15,  1921.  Pp.  2.  Former  California  commissioner  suggests  that 
state  commissions  be  given  wider  grants  of  power  and  more  stable  personnel. 
Commissions  should  be  able  to  decapitalize  overcapitalized  companies  and  operate 
the  inefficient  or  bankrupt  ones. 

Fogarty,  F.  J.  Previous  financial  methods — a  review  of  history  of  electric  rail- 
way financing  in  this  country  during  past  thirty  years.  Aera,  Mar.,  1921.  Pp.  6. 
A  valuable  survey  of  subject  indicated,  with  prediction  that  new  methods  will 
have  to  be  devised. 

Freeman,  F.  C.  Principles  governing  rate  making.  Gas  Age,  Feb.  25,  1921. 
Pp.  3.    Critical  analysis  of  various  forms  of  gas  rates  used  in  this  country. 

E.  C.  G.  Public  utility  rates — state  power  over  'municipality.  Mich.  Law  Rev., 
Mar.,  1921.  Pp.  2.  Review  of  recent  cases  in  which  the  state  is  held,  under  its 
police  power,  to  be  able  to  modify  contract  or  franchise  rates. 

R.  L.  H.  Public  utility  valuation,  the  "unearned  increment"  and  the  depreciated 
dollar.    Col.  Law  Rev.,  Feb.,  1921.    Pp.  2. 

Jackson,  J.  P.  Policies  for  future  power  development.  Mech.  Engg.,  Feb.,  1921. 
Pp.  6.  A  comprehensive  discussion  of  the  need  for  unified  power  development  in 
view  of  the  shortage  of  central-station  electric  power.  Consideration  of  some  of 
the  financial,  corporate,  and  managerial  problems  involved. 

McLaughlin,  J.  F.  Jitney  or  bus  competition.  Stone  &  Webster  Journ.,  Jan.,  1921. 
Pp.  16.  A  good  resume  of  the  arguments  for  a  rigid  regulation  of  jitney  or  bus 
competition  with  electric  railways. 

Mathews,  N.  The  valuation  of  property  in  the  Roman  law.  Harvard  Law  Rev., 
Jan.,  1921.     Pp.  31.     Instructive  discussion  of  the  general  principles  of  valuation 


1921]  Public  Utilities  363 

developed  under  the  Roman  law.     These  are  held  to  have  an  important  applica- 
tion to  the  valuation  practice  of  the  present  time. 

Nash,  L.  It.  Outlook  for  service-at-cost  franchises.  Elec.  Ry.  Journ.,  Jan.  1,  1921. 
Pp.  8.  A  brief  review  of  service-at-cost  franchises  which  have  been  adopted  or 
rejected  during  past  two  years  and  of  those  now  under  consideration,  with  special 
reference  to  their  provisions  for  securing  economy  and  efficiency. 

Raymond,  W.  G.  Value  versus  investment  as  a  basis  for  utility  service  rates. 
Journ.  Am.  Water  Works  Assoc,  Jan.,  1921.    Pp.  10. 

Sawyer,  W.  H.  Bates  of  fare  and  revenue.  Aera,  Apr.,  1921.  Pp.  4.  While  no 
one  fare  can  be  recommended  for  universal  use,  experience  with  the  higher  rates 
of  fare  is  said  to  show  that  they  produce  the  maximum  of  earnings. 

Stirling,  E.,  and  Cooke,  M.  L.  The  fate  of  the  five-cent  fare.  XIII.  Philadelphia 
succumbs.  Nat.  Munic.  Rev.,  Mar.,  1921.  Pp.  7.  Philadelphia  appears  to  be  about 
to  undertake  a  thoroughgoing  solution  of  its  persistent  street  railway  problem. 

Storrs,  L.  S.  Our  national  fare  experiment.  Elec.  Ry.  Journ.,  Jan.  1,  1921.  Pp. 
10.  In  recent  years  a  variety  of  fares  have  displaced  the  customary  five-cent  fare, 
but  no  standard  fare  has  been  or  probably  will  be  developed.  Survey  of  local 
experiences  with  fare  increases  and  zone  fares. 

Thompson,  C.  D.  Railway  and  utility  commissions  show  their  corporation  affilia- 
tions by  resolutions.  Am.  Municipalities,  Feb.,  1921.  Pp.  3.  Exception  is  taken 
to  unfavorable  report  on  municipal  ownership  made  by  National  Association  of 
Railway  and  Utilities  Commissioners. 

Traylor,  M.  A.  Municipal  aid  in  financing.  Aera,  Mar.,  1921.  Pp.  5.  Extensions 
of  street  railways  into  new  territory  should  be  financed  with  aid  of  credit  of 
municipality,  but  any  form  of  public  guarantee  of  earnings  is  considered  unde- 
sirable. 

White,  L.  D.  The  origin  of  utility  commissions  in  Massachusetts.  Journ.  Pol. 
Econ.,  Mar.,  1921.  Pp.  20.  An  informative  survey  of  the  conditions  which  led  to 
the  creation  of  permanent  regulatory  bodies  in  Massachusetts. 

Wilcox,  D.  F.  Danger  points  in  "service  at  cost."  Am.  Municipalities,  Apr.,  1921. 
Pp.  3.  Overvaluation,  an  unnecessarily  liberal  rate  of  return,  the  absence  of  a 
maximum  fare  limit  and  the  removal  of  inducements  for  economy  and  efficiency 
are  stated  to  be  points  of  danger  in  service-at-cost  franchises. 

Adjusting  fare  to  length  of  ride.  Elec.  Ry.  Journ.,  Apr.  9,  1921.  Pp.  7.  Descrip- 
tion of  an  experiment  in  "merchandising"  electric  railway  transportation  service. 

Emergency  commission  bill  signed.  Elec.  Ry.  Journ.,  Apr.  2,  1921.  P.  1.  Brief 
summary  of  recent  New  York  legislation  which  has  completely  overhauled  the 
regulatory  machinery  of  that  state. 

Fare  increases  continue.  Aera,  Feb.,  Apr.,  1921.  Pp.  23,  10.  Data  on  fare  in- 
creases in  the  288  cities  of  over  25,000  population,  here  set  forth,  show  further 
increases  in  the  general  level  of  fares. 

From  coach  and  omnibus  to  electric  car.  Stone  &  Webster  Journ.,  Mar.,  1921.  Pp. 
13.     Interesting  account  of  early  transit  conditions  in  Boston  and  vicinity. 

Governor  Miller  deals  with  transit  problem.  Greater  N.  Y.,  Feb.  7,  1921.  Pp.  4. 
Complete  text  of  Governor  Miller's  message  recommending  a  thorough  reorgani- 
zation of  the  machinery  for  the  regulation  of  utilities  in  New  York  state. 


364  Periodicals  [June 

Governors  hold  state  regulation  of  utilities  is  essential.  Elec.  World,  Feb.  12,  1921; 
Gas  Age,  Mar.  25,  1921.  Pp.  2,  2.  Replies  of  34  governors,  here  given,  show 
general  approval  of  state  utility  regulation. 

How  Indiana  commission  works.    Elec.  Ry.  Journ.,  Feb.  5,  1921.    Pp.  5. 

Many  suggestions  for  relief  of  electric  railways.  Elec.  Ry.  Journ.,  Jan.  8,  1921. 
P.  1.  Abstracts  from  a  recent  report  of  Public  Utilities  Commission  of  Con- 
necticut, presenting  a  general  review  of  electric  railway  situation  in  that  state 
and  numerous  recommendations  looking  to  its  improvement. 

Public  utilities  commission  of  the  nutmeg  state.  Elec.  Ry.  Journ.,  Jan.  29,  1921. 
Pp.  4.  Interesting  account  of  history  and  present  practice  of  regulation  in  Con- 
necticut. 

Service  at  cost  for  street  railways:  a  symposium.  Nat.  Munic.  Rev.,  Supp.,  Feb., 
1921.  Pp.  29.  J.  F.  Jackson,  Boston:  The  public  trustee  plan  (pp.  5).  A  brief 
statement  of  the  purposes  and  accomplishments  of  the  public  trustee  plan  which 
is  now  being  experimented  with  in  Massachusetts.  F.  Sanders,  Cleveland:  Service- 
at-cost  and  efficient  management  (pp.  9).  A  valuable  statement  by  city  street 
railroad  commissioner  of  Cleveland  of  the  reasons  for  and  evidences  of  the  suc- 
cess of  the  Cleveland  franchise.  "Incentive"  franchises  are  considered  undesir- 
able. E.  I.  Lewis:  Indianapolis  retains  the  five-cent  fare  (pp.  9).  Chairman  of 
Indiana  commission  shows  how,  through  economies  and  financial  reorganization, 
Indianapolis  was  able  to  maintain  the  five-cent  fare,  and  why  service-at-cost  was 
rejected.  C.  M.  Fassett:  Service-at-cost  versus  municipal  ownership.  Seattle's 
experience  (pp.  6).  Service-at-cost  is  held  to  be  a  transition  stage  to  public 
ownership.     Seattle's  experience  with  municipal  trolleys  inconclusive.  , 

The  truth  regarding  Cleveland's  light  plant.  Investigation  shows  reported  pros- 
perity to  be  myth.  Public  Service  Manag.,  Feb.,  1921.  Pp.  8.  Extended  discus- 
sion of  the  merits  of  this  important  municipal  undertaking. 

Water-supply  statistics  of  metered  cities.  Am.  City,  Dec,  1920,  Jan.,  1921.  Pp.  8, 
9.  Statistics  permitting  comparison  of  water  rates  in  all  cities  of  over  1,000  popu- 
lation in  United  States  and  Canada  which  have  metered  service. 

Year's  statistics  encouraging.  Aera,  Apr.,  1921.  Pp.  7.  Comparison  of  statistics 
for  1919  and  1920,  here  set  forth,  shows  some  improvement  in  finances  of  electric 
railways. 

Accounting 
(Abstracts  by  Martin  J.  Shugrue) 
Bauer,  J.  Is  increase  in  capital  income  and,  as  such,  taxable?  Annalist,  Jan.  31, 
1921.  P.  1.  A  recent  decision  of  the  Federal  District  Court  in  Connecticut  dis- 
putes the  verdict  of  the  Revenue  Department  that  profits  from  investments,  real- 
ized by  a  non-trader,  are  income.  Distinction  between  traders  and  investors  diffi- 
cult to  make.  Failure  to  recognize  accrual  period  a  second  objection  to  present 
law. 

Bexeix,  J.  A.     A   proposal  for  junior  C.  P.   A.   examinations.     Journ.   Account., 

Mar.,  1921.     Pp.  6. 
Copei.and,  M.  A.    Seasonal  problems  in  financial  administration.    Journ.  Pol.  Econ., 

Dec,  1920.     Pp.  34.    The  budget  and  the  report  are  the  basis  of  executive  control 

which  is  described  here. 


1921]  Accounting  365 

Gordon,  S.  Ft.  Comparative  cost  records  as  an  aid  to  manufacturing  profits.  Indus. 
Manag.,  Jan.  1,  1931.  Pp.  6.  How  attention  to  details,  such  as  decreasing  the 
waste  in  cutting  cloth  in  a  textile  mill  and  the  irregular  stretching  in  the  dye 
house  effected  a  saving  of  more  than  $16,000  a  year.  Also  describes  saving  due 
to  the  installation  of  a  simple  bonus  system  in  a  machine  shop. 

Graves,  M.  Amendments  of  New  York  income-tax  law.  Journ.  Account.,  Mar., 
1921.     Pp.  3. 

Greeley,  H.  D.  Accounting  in  decedents'  estates.  Administration,  Feb.,  1921.  Pp. 
10.     What  the  accounting  duties  of  the  executor  are. 

Hawkins,  L.  G.  Reconciling  depreciation  and  appraised  values  of  industrial 
equipment.  Engg.  Mag.,  Sept.,  1920.  Pp.  3.  Numerous  instances  that  have 
arisen  in  computing  federal  income  and  excess  profits  taxes  have  shown  wide  dis- 
crepancies between  the  book  values  of  industries  and  the  appraised  values  ascer- 
tained by  an  engineering  survey. 

Hiix,  J.  H.  Information  desired  by  a  banker.  Journ.  Account.,  Nov.,  1920.  Pp.  5. 
How  a  banker  analyzes  a  credit  statement  and  what  information  the  statement 
should  contain. 

Jackson,  J.  H.  Neglected  commercial  discounts.  Journ.  Account.,  Nov.,  1920.  Pp. 
8.  In  each  case  the  element  of  discount  should  be  added  to  the  real  sales  or  pur- 
chases to  determine  the  net  sales  revenue  or  purchases  outgo  of  the  period,  and 
the  reasons  will  be  obvious  as  the  discussion  proceeds. 

■ .    Some  problems  in  depreciation.    Journ.  Account.,  Feb.,  1921.    Pp.  20. 

Discusses  such  matters  as  proper  basis  for  computing  depreciation,  treatment  of 
unexpected  losses  from  obsolescence  and  deduction  of  depreciation  in  determining 
the  just  amount  on  which  a  utility  may  earn. 

Konopak,  L.  T.  Factory  costs.  Journ.  Account.,  Nov.,  1920.  Pp.  9.  Describes  a 
cost  system  for  a  factory  manufacturing  transmissions. 

McKinsey,  J.  O.  Budgetary  control  and  administration.  Administration,  Jan., 
1921.  Pp.  9.  Nature  of  information  necessary  for  exercise  of  such  control  and 
the  method  by  which  this  information  may  be  obtained  and  used. 

.     The  sales  budget  for  business.     Administration,  Feb.,  1921.     Pp.  15. 

The  first  step  in  the  preparation  of  a  firm's  budget  is  usually  made  by  the  sales 
department  after  which  estimates  for  the  other  departments  are  drawn  up. 

Mitchell,  P.  D.  Accounting  for  income  in  eleemosynary  institutions.  Journ.  Ac- 
count., Nov.,  1920.  Pp.  9.  Rising  costs  have  produced  serious  problems  of  ac- 
counting significance  in  the  case  of  institutions  whose  income  largely  arises  from 
long-term  investments. 

Nau,  C.  H.  The  American  Institute  of  Accountants.  Journ.  Account.,  Feb.,  1921. 
Pp.  6.  Brief  history  of  the  American  Institute  of  Accountants  and  C.  P.  A. 
law. 

NEWBAtrER,  C.  M.  Methods  in  credit  accounting.  Administration,  Feb.,  1921.  Pp. 
18.  Deals  with  the  analysis  of  a  credit  statement  by  a  banker.  Illustrated  with 
credit  forms  and  comparison  sheets. 

Nicholson,  J.  L.  Relation  of  cost  department  to  other  departments.  Adminis- 
tration, Jan.,  1921.     Pp.  8.     Explanation  of  the  specific   functions  of  a  cost   de- 


366  Periodicals  [June 

partment  and  its  relation  to  foreman,  superintendent,  sales  department,  and  chief 
executive. 
van  Oss,  A.  Computation  of  commissions  and  federal  taxes.  Journ.  Account.,  Jan., 
1921.  Pp.  20.  The  computation  of  commissions  and  federal  taxes  is  in  several 
instances  complicated  by  the  necessity  of  computing  the  commissions  upon  profits 
after  deducting  the   federal  tax.     Illustrated  with  five  concrete  problems. 

Paton,  W.  A.  Interest  during  construction.  Journ.  Pol.  Econ.,  Oct.,  1920.  Pp.  16. 
The  viewpoints  of  the  economist  and  accountant  must  be  of  necessity  very  differ- 
ent. There  are  important  reasons  why  for  purposes  of  the  balance  sheet  con- 
struction and  other  property  accounts  should  not  contain  interest  charges. 

Raymond,  W.  G.  Value  versus  investment  as  a  basis  for  utility  service  rates. 
Journ.  Am.  Water  Works  Assoc,  Jan.,  1921.  Real  investment  as  nearly  as  it 
can  be  obtained  is  the  fairest  and  the  best  basis  for  rate  making  and  such  allow- 
ance as  must  be  made  for  changed  conditions  should  be  made  in  the  rate  of 
return. 

Sampson,  E.  T.    Municipal  accounting.    Canadian  Munic.  Journ.,  Feb.,  1921.     Pp.  2. 

Splawn,  W.  M.  W.  Reproduction  cost  as  a  basis  of  valuation.  Journ.  Pol.  Econ., 
Feb.,  1921.  Pp.  4.  An  unfavorable  criticism  of  reproduction  cost  as  a  basis  of 
valuation. 

Stackhouse,  G.  F.,  Jr.  Accounting  for  the  tungsten  industry.  Pace  Student,  Dec, 
1920.  Pp.  5.  Outlines  the  accounting  classification  and  describes  the  various 
books  and  records  required. 

Sweet,  H.  N.  Treatment  of  commitments  of  purchasers,  etc.,  on  certified  balance 
sheets.    Journ.  Account.,  Mar.,  1921. 

Van  Pelt,  A.  F.  The  amortization  of  war  facilities.  Pace  Student,  Jan.,  1921. 
Pp.  5.  Deductions  permitted  under  the  amortization  section  of  the  Revenue  act 
greatly  exceed  in  value  the  deductions  allowed  under  any  other  clause  of  the  law. 

Vollersten,  E.  P.  Fiduciary  accounting.  Journ.  Am.  Bankers  Assoc,  Mar.,  1921. 
Pp.  5.  This  is  the  second  article  by  the  same  author  outlining  and  illustrating 
the  system  used  by  the  corporate  trust  department  of  a  bank. 

Wilcox,  D.  F.  Working  capital  in  street  railway  valuation.  Ann.  Am.  Acad.,  Nov., 
1920.  Pp.  24.  Cites  numerous  cases  to  show  the  problems  and  methods  involved 
in  arriving  at  the  proper  figure  for  working  capital  of  a  street  railway.  Street 
railways  are  not  entitled  to  include  working  capital  as  a  part  of  their  rate  base. 

Classification  of  profits  on  investments.  Journ.  Account.,  Feb.,  1921.  Pp.  5.  Com- 
ments on  the  decision  in  the  case  of  Brewster  v.  Walsh  by  the  federal  district 
court  of  Connecticut,  holding  that  profits  realized  from  the  sale  of  investments 
or  capital  assets  are  not  income,  and,  therefore,  are  not  taxable. 

Some  notes  on  the  negotiation  of  foreign  bills.  Bankers'  Mag.  (London),  Dec, 
1920.  Pp.  7.  The  consideration  of  the  subject  of  negotiation  of  bills  involves 
several  new  factors,  affecting  the  position  of  both  customer  and  banker,  which 
do  not  arise  in  the  case  of  collections. 

Suggestions  for  professional  conduct.  Pace  Student,  Dec,  1920.  Pp.  3.  Most  of 
the  leading  professional  accountancy  firms  have  codes  of  conduct  which  all  mem- 
bers of  their  staffs  are  required  to  observe.  One  of  the  most  comprehensive  of 
such  codes  is  that  prepared  by  Haskins  &  Sells.     It  is  reproduced  in  this  article. 


1921]  Labor  and  Labor  Organizations  367 

Labor  and  Labor  Organizations 

(Abstracts  by  David  A.  McCabe) 
Andrews,  J.  B.     Unemployment  prevention  and  insurance.     Am.  Lab.  Legis.  Rev., 
Dec,  1920.    Pp.  8. 

.    Reducing  unemployment  by  planning  public  works.    Nat.  Munic.  Itev., 

Apr.,  1921.     Pp.  6. 

Bauer,  S.  Past  achievements  and  future  prospects  of  international  labour  legisla- 
tion. Econ.  Journ.,  Mar.,  1921.  Pp.  10.  Sketches  the  pioneer  work  of  the  In- 
ternational Association  for  Labor  Legislation  and  favors  its  continuance  inde- 
pendent of  the  International  Labor  Conference  of  the  League  of  Nations. 

Beyer,  C.  M.  A  minimum  wage  conference  at  work:  award  for  District  of  Colum- 
bia laundry  workers.    Mo.  Lab.  Rev.,  Mar.,  1921.    Pp.  3. 

Bloomfield,  M.  Steady  work:  the  first  step  in  sound  industrial  relations.  Am.  Lab. 
Legis.  Rev.,  Mar.,  1921.    Pp.  3. 

Boas,  P.  R.  The  Loyal  Legion  of  Loggers  and  Lumbermen.  A  suggestion  for  capi- 
tal and  labor.    Atlantic,  Feb.,  1921.    Pp.  7. 

Brissenden,  P.  F.  and  Frankel,  E.  Mobility  of  labor.  Pol.  Sci.  Quart.,  Dec,  1920. 
Pp.  35.  Concerned  with  the  measurement,  extent,  and  causes  of  labor  changes. 
Shows  the  relative  responsibility  of  the  different  influences  making  for  instability 
and  the  effectiveness  of  liberal  labor  policies  and  centralized  systems  of  employ- 
ment in  reducing  unnecessary  mobility. 

Burkhard,  P.  L.  An  analysis  of  profit-sharing  plans.  Administration,  Mar.,  1921. 
Pp.  7.  Lays  down  four  laws  of  effective  profit-sharing.  Outlines  a  point  system 
of  basic  pay  and  suggests  that  this  be  used  also  to  determine  individual  shares  in 
distribution  of  profits. 

Carpenter,  O.  F.  A  shop  committee  that  failed.  Indus.  Manag.,  Jan.  1,  1921.  Pp. 
4.     The  plan  was  wrecked  by  a  strike  called  by  the  unions. 

Chamberlain,  J.  P.  Legislation  now  needed  to  restore  compensation  to  long- 
shoremen.   Am.  Lab.  Legis.  Rev.,  Dec,  1920.     Pp.  6. 

Chenery,  W.  L.  The  Alabama  coal  settlement.  Survey,  Apr.  9,  1920.  Pp.  2.  A 
criticism  of  the  award. 

: .     The  Department   of  Labor:   an  appraisal.     Survey,   Feb.   26,   1921. 

Pp.  2.    Generally  favorable. 

Clark,  L.  D.  Minimum  wage  laws  of  the  United  States.  Mo.  Lab.  Rev.,  Mar., 
1921.    Pp.  20. 

Commons,  J.  R.  A  cross  section  of  industrial  control.  Administration,  Feb.,  1921. 
Pp.  6.  A  survey  of  various  plans  of  industrial  government  and  their  workings 
shows  that  what  labor  wants  most  is  not  control  of  industry  but  security  in  a 
good  job.     Favors  compulsory  insurance  against  sickness  and  unemployment. 

Douglas,  P.  H.  The  relation  of  shop  committees  to  trade  unionism.  Pacific  Rev., 
Dec,  1920.     Pp.  15. 

.     Shop   committees:  substitute  for,  or  supplement    to,   trades-unions. 

Journ.  Pol.  Econ.,  Feb.,  1921.     Pp.  18.     Reasons  that  they  must  be  regarded  as 
supplement  rather  than  as  satisfactory  substitute. 


568  Periodicals  [June 

Doucet,  R.  La  dissolution  de  la  confederation  du  travail.  Le  Monde  Econ.,  Jan. 
22,  1921.  Pp.  3.  It  is  doubtful  if  the  decree  of  the  inferior  court  ordering  the 
dissolution  of  the  General  Confederation  will  be  carried  out,  even  though  the 
confederation  has  unquestionably  violated  the  trade  union  law  of  1884. 

Drury,  H.  B.,  and  others.  The  three-shift  system  in  the  steel  industry.  Bull. 
Taylor  Soc,  Feb.,  1921.  Pp.  49.  A  paper,  followed  by  discussion.  Investigation 
shows  that  eight-hour  day  is  feasible. 

Firth,  J.  B.  Labour  and  democracy  since  the  war.  Fortn.  Rev.,  Feb.,  1921.  Pp. 
14.     A  severe  criticism  of  English  labor  and  labor  leaders. 

Fitch,  J.  A.;  Shaw,  S.  A.;  and  Williams,  W.  Three  shifts  in  steel.  Survey,  Mar. 
5,  1921.  Pp.  36.  Special  number  presenting  results  of  a  study  made  for  the  Cabot 
Fund  for  Industrial  Research.  The  section  by  Whiting  Williams  deals  with  eight- 
hour  system  in  the  British  iron  and  steel  industry. 

Gleason,  A.  Industrial  democracy  and  gunmen.  New  Repub.,  Feb.  9,  1921.  Pp.  2. 
The  struggle  between  the  mine-owners  and  the  union  in  West  Virginia. 

Griffith,  S.  More  democracy  in  German  industry.  Survey,  Jan.  29,  1921.  Pp.  3. 
What  the  workers  have  gained  through  the  operations  of  the  Works  Councils  law 
of  1920.  The  great  majority  do  not  favor  immediate  socialization  but  the  exten- 
sion of  participation  in  control. 

Gompers,  S.  American  labor's  part  in  the  peace  treaty.  Am.  Fed.,  Mar.,  1921. 
Pp.  8. 

.    Engineers  and  industrial  progress.    Am.  Lab.  Legis.  Rev.,  Dec,  1920. 

Pp.  3.     Address  before  American  Society  of  Mechanical  Engineers.     Urges  that 
attention  be  given  to  the  elimination  of  the  monotony  of  repetitive  work. 

.     Organized  labor  and  industrial  engineers.     Am.  Federationist,  Jan., 


1921.  Pp.  14.  Comment  on  conference  between  Executive  Council  of  the  Ameri- 
can Federation  of  Labor  and  representatives  of  American  engineers.  Followed 
by  extracts  or  digests  of  papers  by  Herbert  Hoover,  Fred  J.  Miller,  and  Wil- 
liam B.  Dickson  on  relations  between  workers  and  employers. 

.    Pan-American  labor  congress  at  Mexico  City.    Am.  Fed.,  Mar.,  1921. 

.     Union  labor  and   the   enlightened  employer.     Indus.   Manag.,  Apr., 

1921.    Pp.  5. 

Haas,  F.  J.  Industrial  democracy  in  operation.  Cath.  Charities  Rev.,  Dec,  1920. 
Pp.  4.     Favorable  review  of  the  Hart  Schaffner  &  Marx  labor  agreement. 

Hatch,  H.  A.  An  American  employer's  experience  with  unemployment  insurance. 
Am.  Lab.  Legis.  Rev.,  Mar.,  1921.  Pp.  6.  Description  of  plan  and  favorable  re- 
view of  its  operation,  by  the  treasurer  of  the  company.  Favors  compulsory  un- 
employment insurance. 

Henderson,  A.  The  problem  of  permanent  industrial  peace.  Finan.  Rev.  Rev., 
Dec,  1920.  Pp.  22.  The  workers  must  be  admitted  to  partnership  in  the  con- 
trol of  industry  and  the  right  to  work  or  compensation  for  unemployment  must 
be  recognized  by  the  state. 

Higgins,  H.  B.  A  new  province  for  law  and  order.  III.  Harvard  Law  Rev.,  Dec, 
1920.  Pp.  33.  The  President  of  the  Court  of  Conciliation  and  Arbitration  of  the 
Commonwealth  of  Australia  explains  the  recent  workings  of  the  compulsory  arbi- 
tration law  and  points  out  the  defects  in  the  law  as  it  stands. 


1921]  Labor  and  Labor  Organizations  369 

Hillman,  S.  Views  of  an  American  worker  on  unemployment.  Am.  Lab.  Legis. 
Rev.,  Mar.,  1921.    Pp.  5. 

Hogg,  M.  Dependents  on  women  wage-earners.  Economica,  Jan.,  1921.  Pp.  18. 
Analysis  of  figures  from  several  English  towns,  showing  the  proportion  having 
responsibility  for  dependents,  the  degree  of  responsibility  and  the  causes. 

Hoover,  H.  What  America  faces.  A  review  and  forecast  of  the  fundamental  re- 
lationship between  employer  and  employee.     Indus.  Manag.,  Apr.,  1921.     Pp.  5. 

Howard,  S.  The  labor  spy.  I-VIT.  New  Repub.,  Feb.  16-Mar.  30,  1921.  Pp.  25. 
A  series  of  seven  articles  based  on  an  investigation  made  for  the  Cabot  Fund  for 
Industrial  Research. 

Howerth,  I.  W.  The  labor  problem  from  the  social  viewpoint.  Intern.  Journ. 
Ethics,  Jan.,  1921.  Pp.  15.  It  is  the  problem  of  supplying  the  needs  of  society 
with  the  least  expenditure  of  time,  means,  and  energy.  It  can  be  solved  by  the 
elimination  of  all  unnecessary  purposes,  the  proper  assignment  of  tasks,  and 
making  all  labor  attractive. 

Humphrey,  A.  W.  The  changing  outlook  of  trade  unionism.  Fortn.  Rev.,  Jan., 
1921.  Pp.  13.  British  labor  is  looking  toward  national  guilds;  it  will  cling  also 
to  political  activity  for  some  time  to  come. 

Hutchins,  B.  L.  The  creative  impulse  in  industry.  Contemp.  Rev.,  Feb.,  1921. 
Pp.  9.  Modern  industry  makes  self-expression  in  work  impossible.  A  share  in 
control  must  be  substituted. 

Hyndman,  H.  M.  Le  chomage  en  Angleterre.  Rev.  Econ.  Intern.,  Feb.,  1921.  Pp. 
23.  Largely  historical.  Condemns  the  government  for  shirking  responsibility  in 
the  present  situation  and  calls  the  proposals  of  the  Labour  party  mere  palliatives. 
Concludes  that  the  present  economic  system  has  broken  down  the  world  over. 

Janes,  G.  M.  The  shingle  weavers.  Quart.  Journ.  Univ.  N.  Dak.,  Jan.,  1921.  Pp. 
12.    The  history,  structure,  and  policies  of  the  organization. 

"Janus."    Juvenile  labor:  a  problem  of  industry.    Contemp.  Rev.,  Feb.,  1921.    Pp.  9. 

Lasker,  B.,  editor.  How  to  meet  hard  times.  Survey,  Feb.  5,  1921.  Pp.  15.  Sum- 
mary of  the  report  made  in  December,  1917,  by  the  New  York  Mayor's  Commit- 
tee on  Unemployment. 

Laski,  H.  J.  British  labor's  future.  Survey,  Feb.  26,  1921.  Pp.  2.  The  causes  of 
the  decline  of  the  Labor  party  in  power  and  prestige  and  a  suggestion  for  the 
next  general  election. 

.     England  out  of  work.     Survey,  Jan.  22,  1921.     Pp.  2.     Analysis  of 

causes  and  criticism  of  the  remedies  proposed  by  the  government  and  the  Labor 
party. 

.     More  unrest  among  British  miners.     Survey,  Apr.  2,  1921.     Pp.  2. 

Lewisohn,  S.  A.  Recent  tendencies  in  bringing  about  improved  relations  between 
employer  and  employee  in  industry.  Econ.  World,  Mar.  5,  1921.  Pp.  3.  Empha- 
sizes particularly  industrial  relations  departments  and  employee  representation. 

Mack,  W.  J.  Industrial  peace  in  Cleveland.  Nation,  Feb.  16,  1921.  Pp.  2.  De- 
scription, by  the  impartial  chairman,  of  the  results  obtained  through  the  ma- 
chinery of  adjustment  in  the  ladies'  garment  industry. 


870  Periodicals  [June 

Marriott,  J.  A.  R.  The  problem  of  unemployment.  Fortn.  Rev.,  Mar.,  1921.  Pp. 
IS.  Presents  diagnosis  of  causes,  and  condemns  attitude  of  labor  party  as  pro- 
longing unemployment  in  order  to  discredit  the  present  industrial  system. 

Malleby,  O.  T.  Preventing  periods  of  unemployment  by  expanding  public  works. 
Am.  Labor  Lcgis.  Rev.,  Mar.,  1921.     Pp.  3. 

Mottrre,  B.  C.  La  lois  de  huit  heures  et  sa  repercussion  sur  le  pouvoir  d'achat  des 
diffSrentes  categories  sociales.  Rev.  d'Econ.  Pol.,  Nov.-Dec,  1920.  Pp.  7.  The 
eight-hour  day  has  resulted  in  decreased  production,  along  with  other  causes,  and 
has  reduced  the  purchasing  power  of  the  workers  thus  augmenting  the  unemploy- 
ment crises. 

Neal,  J.  Workmen's  compensation  reform.  Law  Quart.  Rev.,  Jan.,  1921.  Pp.  11. 
Shows  confusion  in  interpretations  of  phrase  "arising  out  of  and  in  the  course  of' 
employment  and  urges  that  the  words  "out  of  and"  be  deleted. 

Piot,  S.  Les  ricents  mouvements  ouvriers  en  Italie.  R6f.  Soc,  Feb.,  1921.  Pp.  27. 
A  graphic  and  interpretative  account. 

Prato,  G.  L'epilogo  di  uno  storico  conflitto  industrials.  Rif.  Soc,  Jan.-Feb.,  1921. 
Pp.  19. 

Rand,  W.  H.    Occupational  lead  poisoning.    Mo.  Lab.  Rev.,  Feb.,  1921.    Pp.  14. 

Reed,  C.  M.  The  Kansas  Court  of  Industrial  Relations.  Nation,  Apr.  6,  1921.  Pp. 
3.     Favorable  review  of  the  first  year's  operation. 

Robertson,  G.  D.  Canada's  program  for  meeting  unemployment.  Am.  Lab.  Legis. 
Rev.,  Mar.,  1921.     Pp.  3. 

Ryan,  J.  A.  The  open  shop  controversy.  Cath.  Charities  Rev.,  Mar.,  1921.  Pp.  3. 
Facts  in  support  of  the  charge  that  the  open-shop  campaign  really  aims  at  the 
elimination  of  effective  collective  bargaining. 

Stewart,  E.  Tonnage  output  per  pick  miner  per  day  in  bituminous  coal  fields.  Mo. 
Labor  Rev.,  Feb.,  1921.    Pp.  11. 

Stoddard,  W.  L.  What  the  workers  want  to  know.  Indus.  Manag.,  Mar.,  1921. 
Pp.  3.    The  objects  and  methods  of  the  labor  college  movement. 

Stone,  N.  I.  Continuity  of  production  in  the  clothing  industry.  Am.  Labor  Legis. 
Rev.,  Mar.,  1921.  Pp.  9.  Favors  compulsory  unemployment  insurance  with 
premiums  graded  according  to  the  proportion  of  continuity  of  employment. 

Tawney,  R.  H.  The  unemployment  crisis  in  England.  New  Repub.,  Feb.  23,  1921. 
Pp.  3.  The  government's  proposals  are  inadequate;  the  recommendations  of  the 
Labor  party  look  in  the  right  direction. 

Taylor,  G.  R.  S.  A  new  basis  for  industrial  corporations.  Journ.  Comp.  Legis., 
Oct.,  1920.  Pp.  19.  Suggests  provisions  of  a  guild  company  law  which  would 
give  labor  representation  in  the  general  meetings  of  the  company  and  full  claim  to 
all  profits  in  excess  of  a  specified  rate  of  dividend  on  the  share  capital. 

Turner,  V.  B.  Labor  unrest  in  Great  Britain.  Mo.  Lab.  Rev.,  Mar.,  1921.  Pp. 
20.    Developments  since  beginning  of  year  1919. 

Vance,  W.  R.  The  Kansas  Court  of  Industrial  Relations  and  its  background. 
Yale  Law  Journ.,  Mar.,  1921.  Pp.  23.  Views  the  act  and  its  workings  as  an 
attempt  to  extend  the  reign  of  law  to  industrial  disputes. 


1921]  Labor  and  Labor  Organizations  371 

Wagoaman,  M.  T.  Collection  of  wage  claims  by  state  labor  offices.  Mo.  Lab.  Rev., 
Mar.,  1921.     Pp.  10. 

Walker,  C.  R.  A  national  council  for  the  printing  trades.  Mo.  Labor  Rev.,  Jan., 
1921.  Pp.  22.  History,  structure,  operations,  and  proposed  activities  of  the  In- 
ternational Joint  Council  of  employers  and  unions. 

Walling,  W.  E.    The  German  shop  councils.    Am.  Federationist,  Feb.,  1921.     Pp.  6. 

Williams,  W.  The  job  and  Utopia.  Am.  Lab.  Legis.  Rev.,  Mar.,  1921.  Pp.  7. 
Unemployment  is  the  chief  cause  of  unrest. 

Woodbury,  H.  S.     Working  children  of  Boston.    Mo.  Labor  Rev.,  Jan.,  1921.     Pp.  15, 

Woods,  C.  E.  Combination  bonus  and  production  control.  Administration,  Feb., 
1921.  Pp.  6.  Includes  two  plans  of  bonus  payment.  In  both  the  worker  is  paid 
less  per  piece  for  the  larger  output. 

Zimand,  S.  Who  is  behind  the  open  shop  campaign?  New  Repub.,  Jan.  26,  1921. 
Pp.  3.     The  campaign  is  one  for  the  destruction  of  trade  unionism. 

Adjustment  of  wages  in  accordance  with  cost  of  living.  Lab.  Gaz.  (London),  Dec, 
1920.  Pp.  3.  Gives  provisions  of  joint  agreements  in  many  trades  calling  for 
automatic  adjustments  of  wage  rates  in  accordance  with  variations  in  the  cost 
of  living. 

Apprenticeship  council  for  the  building  trades.  Lab.  Gaz.  (Canada),  Feb.,  1921. 
Pp.  3.     Plan  approved  by  the  national  joint  conference  of  employers  and  unions. 

Arbitration  awards  in  book  and  job  printing  trades  of  New  York  City.  Mo.  Labor 
Rev.,  Mar.,  1921.     Pp.  4. 

Coal  mining  industry:  coal  mines  (decontrol)  bill.  Lab.  Gaz.  (London),  Mar.,  1921. 
Pp.  2.  The  positions  of  the  Miners'  Federation,  the  employers,  and  the  govern- 
ment, respectively,  with  reference  to  decontrol  and  wages. 

Joint  reviewing  committee  of  the  Pennsylvania  Railroad  System.  Mo.  Lab.  Rev., 
Mar.,  1921.     Pp.  4. 

National  labor  council  for  the  electrical  construction  industry.  Mo.  Lab.  Rev, 
Mar.,  1921.     Pp.  2. 

New  arbitration  agreement  affecting  building  trades  in  San  Francisco.  Mo.  Lab. 
Rev.,  Mar.,  1921.    Pp.  2. 

Organization  of  employers  and  workers  in  Germany.  Mo.  Lab.  Rev.,  Mar.,  1921. 
Pp.  8. 

Plan  in  use  by  an  American  industry  for  combating  unemployment.  Am.  Lab.  Rev., 
Mar.,  1921.  Pp.  (i.  The  measures  applied  to  reduce  seasonal  variation;  the  plan 
of  transferring  employees,  and  the  scheme  of  co-insurance. 

Present-day  labor  litigation.  Yale  Law  Journ.,  Jan.,  Feb.,  Mar.,  Apr.,  1921.  Pp. 
7,  5,  6,  5.  (1)  Analyzes  recent  court  decisions.  Classifies  cases  according  to 
justifiability  of  the  objects  of  the  combination.  (2)  Deals  with  means  employed 
by  unions  in  strikes.  (3)  The  cases  in  which  union  tries  to  coerce  employer 
through  third  party.  Holds  that  strike  is. a  species  of  boycott  and  considers  le- 
gality of  "secondary  strikes."  (4)  Considers  cases  in  which  workers  strike  in 
violation  of  an  agreement  or  cause  other  workers  or  an  employer  to  break  con- 
tractual relations.     Also  briefly  considers  remedies. 


372  Periodicals  [June 

The  rise  in  wages  from  July,  1914,  to  the  end  of  1920.  Lab.  Gaz.  (London),  Feb., 
1921.    Pp.  3. 

Money,  Prices,  Credit,  and  Banking  j: 
(Abstracts  by  C.  A.  Phillips) 

Brigham,  W.  E.  Effect  of  depreciated  exchange  on  imports.  Protectionist,  Jan., 
1921.     Pp.  6. 

Brown,  P.  W.  What  has  happened  to  prices?  America  at  Work,  Dec.  9,  1920. 
Pp.9. 

Copeland,  D.  B.  Currency  inflation  and  price  movements  in  Australia.  Econ. 
Journ.,  Dec,  1920.  Pp.  25.  Currency  expansion  has  been  an  important  factor 
underlying  the  increased  price  level. 

Darling,  J.  F.    Stabilization  of  the  inter-empire  exchange.     Wealth  of  India,  Dec, 

1920.  Pp.  5. 

Deans,  H.  G.  P.  Some  problems  of  foreign  exchange.  Journ.  Account.,  Jan.,  1921. 
Pp.  17. 

Dodwell,  H.  Substitution  of  silver  for  gold  in  the  currency  of  South  India.  Indian 
Journ.  Econ.,  Jan.,  1921.    Pp.  21. 

Eaton,  M.  R.  J.  Silver  and  Indian  exchange.  Bankers'  Mag.  (London),  Feb.,  1921. 
Pp.  5. 

Einzig,  P.  Notes  on  Roumanian  currency.  Econ.  Journ.,  Dec,  1920.  Pp.  4.  The 
withdrawal  of  Kronen  and  Rubel  notes  circulating  in  Rumanian  territory. 

Englis,  K.  Die  wirtschaftliche  Theorie  des  Oeldes.  Archiv  f.  Socialwis.  &  Sozial- 
pol.,  Jan.,  1921.    Pp.  65. 

Hernandez,  A.  R.  A  plan  for  the  reorganization  of  the  banking  system  of  Mexico. 
Econ.  World,  Mar.  19,  1921.  Pp.  5.  Analyzes  the  shortcomings  of  the  Mexican 
banking  system  and  recommends  the  establishment  of  a  reserve  system  similar 
to  our  own. 

Kemmerer,  E.  W.  The  duration  of  the  process  of  price  deflation.  Econ.  World, 
Feb.  12,  1921.  Pp.  4.  Deflation  should  go  far  enough  to  insure  the  reestablish- 
ment  of  adequate  gold  reserves  for  the  restoration  and  maintenance  of  the  gold 
standard  where  it  has  been  abandoned. 

Kent,  F.  I.     Foreign  trade  financing  corporation.     I.  B.  A.  of  A.  Bull.,  Mar.  24, 

1921.  Pp.  4.    Our  foreign  trade  and  exchange  relations;  the  far-reaching  value  of 
the  proposed  Foreign  Trade  Financing  Corporation. 

Kiddy,  A.  W.  Our  foreign  trade  in  relation  to  the  position  of  the  exchanges.  Bank- 
ers' Mag.,  Mar.,  1921.    Pp.  18. 

Leaf,  W.     What  is  a  bank?     Scottish  Bankers'  Mag.,  Jan.,  1921.     Pp.  13. 

Morss,  C.  A.  The  principles  of  sound  banking.  Stone  &  Webster  Journ.,  Dec, 
1920.    Pp.  8. 

Noyes,  C.  R.  The  stabilizing  of  the  dollar.  Journ.  Pol.  Econ.,  Mar.,  1921.  Pp.  10. 
Denies  the  feasibility  of  the  stabilized  dollar,  contending  that  "it  is  not  the  value 
of  the  dollar  that  is  fixed  in  terms  of  gold,  but  the  value  of  gold  that  is  fixed 
in  terms  of  the  dollar." 


1921]  Momey,  Prices,  Credit,  and  Banking  373 

O'Malley,  F.  Premium  on  dollar  exchange  a  heavy  burden  to  South  American  coun- 
tries. Americas,  Feb.,  1921.  Pp.  3.  A  succinct  account  of  recent  developments  in 
the  South  American  exchanges. 

Piebson,  L.  E.  What  is  happening  to  the  trade  acceptance?  Trust  Companies,  Jan., 
1921.    Pp.  4. 

Raffalovich,  A.  Les  mitaux  precieux  en  1920.  Journ.  des  Econ.,  Feb.  15,  1921. 
Pp.  2.    An  account  of  production  and  price  fluctuations. 

Reed,  H.  L.     A  stabilized  dollar.     Am.  Econ.  Rev.,  Mar.,  1921.     Pp.  3. 

Roberts,  G.  E.  The  stupendous  fall  in  prices.  Am.  Rev.  Revs.,  Feb.,  1921.  Pp.  5. 
A  statistical  and  explanatory  account. 

Rosboch,  E.  II  problema  monetario  fiumano.  Rif.  Soc,  Nov.-Dec,  1920.  Pp.  30. 
A  study  of  the  strange  vicissitudes  of  the  currency  system  of  Fiume  during  and 
since  the  war. 

Rossy,  P.  La  banque  nationale  suisse  pendant  la  guerre.  Rev.  d'Econ.  Pol.,  Jan.- 
Feb.,  1921.     Pp.  50. 

Scott,  G.  A.  The  London  money  market.  Scottish  Bankers'  Mag.,  Jan.,  1921.  Pp. 
14.  The  constitution  and  operations  of  the  money  market  and  its  relation  to  the 
banks  throughout  the  country. 

Segheb,  B.  Le  societd  fiduciarie  in  Germania.  Riv.  delle  Soc.  Com.,  Sept.,  1920. 
Pp.  12. 

Simokis,  E.  Le  regime  monetaire  du  Grand-Duche  de  Luxembourg.  Rev.  d'Econ. 
Pol.,  Jan.-Feb.,  1921.     Pp.  11. 

Sosland,  S.  Progressive  discount  rate  system.  Bankers'  Mag.,  Mar.,  1921.  Pp.  5. 
An  examination  of  its  successful  operation  in  the  tenth  federal  reserve  district. 

Spbaoue,  O.  M.  W.  Discount  policy  of  federal  reserve  banks.  Am.  Econ.  Rev., 
Mar.,  1921.    Pp.  14. 

Todd,  F.  How  an  international  currency  might  be  established.  Annalist,  Jan.  17, 
1921.     Pp.  2. 

Wiggleswobth,  A.  Florin  versus  rupee.  United  Empire,  Feb.,  1921.  Pp.  3.  East 
Africa  is  financed  from  London  and  not  from  Bombay,  although  its  financial  sys- 
tem is  allied  to  the  East  Indian. 

Wilfobd,  R.  S.  A  British  plea  for  restoration  of  English  currency.  Annalist,  Apr. 
4,  1921.    Pp.  2.    The  English  mind  ignores  the  depreciation  of  the  paper  pound. 

Credit  and  trade  in  1920.  Bankers'  Mag.  (London),  Feb.,  1921.  Pp.  7.  The  num- 
ber of  English  failures  in  1920  was  but  a  fraction  of  the  number  occurring  in  any 
average  pre-war  year. 

Letter  of  credit  litigation  and  its  effect  on  foreign  trade  in  the  future.  Americas, 
Dec,  1920.  Pp.  6.  Use  of  acceptances  in  United  States  practically  started  in 
1914.  Use  of  letters  of  credit  as  authorized  by  Federal  Reserve  act  has  given 
rise  to  important  legal  questions  as  to  force  of  confirmation  of  letters  of  credit. 
Suggests  that  Federal  Reserve  Board  decline  to  purchase  paper  of  any  bank  that 
endeavors  to  avoid  drafts  drawn  under  irrevocable  letters  of  credit. 

The  South  African  reserve  bank.  Bankers'  Mag.,  Jan.,  1921.  Pp.  5.  Founded  on 
lines  of  the  federal  reserve. 


374<  Periodicals  [June 

Public  Finance 

(Abstracts  by  Charles  P.  Huse) 
Addikoton,  K.  H.     Invested  capital  from  a  legal  standpoint  as  applied  to  excess 
and  war  profits  taxation.    Journ.  Account.,  Feb.,  1921.     Pp.  11. 

Bache,  J.  S.  Why  not  a  sales  tax?  Am.  Rev.  Revs.,  Jan.,  1921.  Pp.  4.  Favors 
the  tax. 

Bbindley,  J.  E.  History  of  taxation  in  Iowa,  1910-1920.  la.  Journ.  Hist.  &  Pol., 
Jan.,  1921.  Pp.  50.  Tells  of  reforms  in  the  personal  property  tax  accomplished 
and  in  prospect. 

Bullock,  C.  J.  Drafts  of  tax,  acts  prepared  by  the  model  taxation  committee. 
Bull.  Nat.  Tax  Assoc,  Jan.,  1921.  Pp.  27.  Gives  model  acts  for  personal  and 
business  income  taxes  with  introduction  by  chairman. 

Buaaows,  F.  W.  The  powerful  inflationary  influence  of  the  proposed  federal  sales 
tax.  Econ.  World,  Apr.  2,  1921.  Pp.  3.  Believes  tax  would  be  shifted  to  con- 
sumer. 

Chandler,  H.  A.  E.  The  sales  tax  and  our  fiscal  system.  Econ.  World,  Mar.  5, 
1921.     Pp.  3.     Discusses  various  methods  of  increasing  the  federal  revenues. 

: — .     The  sales   tax  and  our  fiscal  system.     Comm.   Monthly,  Mar.,   1921. 

Pp.  11.    A  brief  history  of  the  tax  and  an  analysis  of  several  proposed  forms. 

Chenery,  C.  T.  A  short-cut  to  income  and  excess  profits  taxation.  Annalist,  Jan. 
17,  1921.    P.  1.     Gives  a  table  for  rapid  calculation  of  corporation  taxes. 

Clash,  J.  M.  An  example  of  municipal  research.  Journ.  Pol.  Econ.,  Mar.,  1921. 
Pp.  8.    The  report  of  the  Chicago  commission  on  local  transportation* 

Davis,  G.  C.  Our  customs  organization.  Protectionist,  Mar.,  1921.  Pp.  8.  Greater 
efficiency  could  be  secured  by  assigning  more  officials  to  the  work  of  appraisement 
and  by  paying  higher  salaries. 

.  United  States  selling  price.  Protectionist,  Feb.,  1921.  Pp.  6.  De- 
preciation in  foreign  currencies  makes  it  desirable  to  use  the  selling  price  in  the 
United  States  as  a  basis  for  ad  valorem  duties. 

Deans,  H.  G.  P.  Some  problems  of  foreign  exchange.  Journ.  Account.,  Jan.,  1921. 
Pp.  18.    Observations  on  the  current  conditions  of  the  exchanges. 

Doucet,  R.  Le  budget  des  postes.  Monde  Econ.,  Mar.  5,  1921.  Pp.  3.  Proposes  a 
reduction  in  rates  as  a  means  of  increasing  the  revenue. 

Douglas,  P.  H.  A  system  of  federal  grants-in-aid.  II.  Pol.  Sci.  Quart.,  Dec,  1920. 
Pp.  23.  A  review  of  recent  grants  leads  to  the  conclusion  that  the  advantages 
of  the  system  much  outweigh  its  disadvantages. 

1'haseh,  T.  M.  The  budget  system  in  Canada.  Pol.  Sci.  Quart.,  Dec,  1920.  Pp.  16. 
Fundamentally  British,  the  system  was  adopted  more  than  three  quarters  of  a 
century  ago. 

Garino-Canina,  A.    Note  sulle  finanze  dell'  Austria  nel  periodo  bellico  e  post-bellico. 

Rif.  Soc,  Nov.-Dec,  1920.    Pp.  14. 
GiEAULT,    A.     La   riforme    des    budgets    departementaux    et    communaux.      L'Econ. 

Fran?.,  Mar.  12,  1921.     Pp.  3.    A  commission  was  appointed  in  1920  to  study  this 

problem. 


1921]  Public  Finance  375 

Gottlieb,  L.  R.  Finances  d'apres  guerre.  Rev.  Sci.  Legis.  Finan.,  Oct.-Dec,  1920. 
Pp.  102.  A  statistical  survey  of  the  belligerent  nations  indicates  an  early  re- 
covery in  the  case  of  most  of  the  victors. 

Graves,  M.  Amendments  of  New  York  income-tax  law.  Journ.  Account.,  Mar., 
1921.    Pp.  3.    Discusses  recent  amendments  from  point  of  view  of  the  accountant. 

Green,  R.  W.  An  excess  income  tax.  Econ.  Journ.,  Dec,  1920.  Pp.  8.  A  proposal 
to  levy  an  additional  tax  on  increases  in  personal  incomes. 

Grlziotti,  B.  La  soluzione  dei  problemi  finanziari  dopo  la  guerra  nella  letteratura 
italiana.    Giorn.  d.  Econ.,  Dec,  1920.    Pp.  19. 

Gulick,  L.  H.  A  model  system  of  municipal  revenues.  Bull.  Nat.  Tax  Assoc, 
Dec,  1920.  Pp.  5.  Comprises  taxes  on  real  estate,  personal  incomes  and  incre- 
ments in  land  value  and  adequate  charges  for  services  and  privileges. 

.     Municipal  budget  standards.     Am.  City,  Sept.,  1920.     Pp.  4. 

Hollander,  J.  H.  Unraveling  our  taxation  tangle.  Mag.  Wall  St.,  Feb.  5,  1921. 
Pp.  3.  Would  reduce  expenditures,  fund  the  floating  debt,  and  improve  adminis- 
tration of  present  taxes. 

Hord,  J.  S.  The  sales  tax  a  success  in  the  Philippines.  Can  it  be  made  successful 
here?    Bull.  N.  Y.  Chamber  Comm.,  Jan.,  1921.     Pp.  10.     Advocates  its  adoption. 

Houston,  D.  F.  The  treasury's  plan  for  federal  taxes.  Am.  Rev.  Revs.,  Jan.,  1921. 
Pp.  5.  Reduction  of  surtaxes  on  larger  incomes,  substitution  for  the  excess  profits 
tax  of  a  tax  on  undistributed  profits  or  a  corporation  surtax,  and  repeal  of  a  few 
consumption  taxes. 

Howe,  S.  H.  How  the  taxpayers'  money  is  spent.  Am.  Rev.  Revs.,  Feb.,  1921.  Pp. 
'4.     A  plea  for  a  budget  system. 

Htne8,  T.    Should  the  excess  profits  duty  be  abolished?     Finan.  Rev.  Revs.,  Dec, 

1920.  Pp.  10.     Recommends  its  abolition  and  a  reduction  in  public  expenditures 
equal  to  the  loss  in  revenue. 

Joshi,  R.  M.  The  Meston  committee's  report.  Journ.  Indian  Econ.  Soc,  June,  1920. 
Pp.  7.  Discusses  possible  sources  of  increased  revenues  and  their  division  be- 
tween central  and  provincial  governments. 

Kahn,  O.  Suggestions  regarding  the  revision  of  our  federal  taxation.  Econ. 
World,  Jan.  15,  1921.  Pp.  2.  Suggests  reduction  of  surtax,  increase  in  corpora- 
tion income  tax,  and  establishment  of  a  turnover  tax  on  commodities  at  the  rate 
of  one  third  per  cent. 

Kaiser,  R.  Einnahmen  und  Ausgaben  schweizerischer  Stadte  im  ordentlichen  Ver- 
kehr,  1913-1920.  Zeit.  f.  Schweiz.  Stat.  u.  Volkswirtschaft,  Heft  3,  1920.  Pp.  7. 
Classifies  Swiss  cities  on  basis  of  population. 

Kates,  P.  The  recent  federal  court  decision  holding  gains  from  the  sale  of  capital 
assets  not  subject  to  income  tax.  Econ.  World,  Jan.  29,  1921.  Pp.  2.  If  upheld 
by  the  Supreme  Court,  this  decision  will  seriously  reduce  the  yield  of  the  income 
tax. 

Kiddy,  A.  W.     The  true  significance  of  our  external  debt.     Bankers'   Mag.,  Jan., 

1921.  Pp.  18.    This  menace  to  British  industry  and  finance  can  be  met  only  by 
consuming  less  and  producing  more. 


876  Periodicals  [June 

Kierstead,  W.  C.  The  Saint  John  City  income  tax  act.  Bull.  Nat.  Tax  Assoc,  Mar., 
1921.     Pp.  4.     The  city  uses  a  moderately  progressive  income  tax. 

Kip,  F.  E.  Urgent  need  of  tax  revision.  Protectionist,  Apr.,  1921.  Pp.  8.  Favors 
more  reliance  on  indirect  taxes. 

Leffingwell,  R.  C.  The  question  of  refunding  the  country's  long-dated  war  debt. 
Econ.  World,  Feb.  12,  1921.  Pp.  3.  Opposes  the  issue  of  a  "stabilized"  bond  and 
other  refunding  schemes. 

Liesse,  A.  Le  budget  de  1931:  equilibre  et  tresorerie.  L'Econ.  Franc.,  Feb.  12, 
1921.  Pp.  3.  Discusses  the  provisions  in  the  three  budgets:  ordinary,  extraordi- 
nary, and  budget  of  expenditures  recoverable  from  Germany. 

.     La  situation  budgetaire  pour  1921.     L'Econ.  Franc.,  Nov.  27,  1920. 

Pp.  3.     Discusses  the   budget   for  extraordinary  expenditures,   pointing   out   the 
need  for  its  rapid  elimination. 

McCamic,  C.  Appreciation  in  value  as  invested  capital  under  the  excess  profits 
law.  Yale  Law  Journ.,  Jan.,  1921.  Pp.  11.  Argues  against  the  ruling  of  the 
treasury  department  that  appreciation  in  value  shall  not  be  counted  invested 
capital. 

McKay,  W.  K.  History  of  the  poll  tax  in  Illinois.  Journ.  111.  State  Hist.  Soc, 
Apr.,  1920. 

Matthews,  J.  S.  Proposed  flat  rate  upon  the  transfer  at  death  of  personal  prop- 
erty of  non-residents.  Bull.  Nat.  Tax  Assoc,  Feb.,  1921.  Pp.  6.  Would  remove 
many  difficulties  of  administration. 

Millet,  P.  Fixez  la  dette  allemande.  L'Europe  Nouvelle,  Jan.,  1921.  Pp.  2.  A 
plea  for  the  immediate  determination  of  the  amount  of  the  German  reparation 
payment. 

Moll,  B.  Brauchen  wir  eine  "neue"  Finanzwissenschaft?  Weltwirtsch.  Archiv, 
Jan.,  1921.  Pp.  15.  Urges  greater  devotion  to  what  is  best  in  the  past  rather 
than  the  establishment  of  a  new  science. 

Nash,  F.     Revaluation  and  taxation  in  North  Carolina.     S.  Atlantic  Quart.,  Oct., 

1920.  Pp.  13.     By  securing  uniformity  in  valuations  a  beginning  has  been  made 
in  tax  reform. 

van  Oss,  A.    Computation  of  commissions  and  federal  taxes.    Journ.  Account.,  Jan., 

1921.  Pp.  20.    Gives  several  problems. 

Pavlovskiy,  G.  A.  The  Russian  national  debt.  Russian  Econ.,  Sept.-Oet,  1920. 
Pp.  11.  With  improved  transportation  facilities,  Russia's  great  natural  resources 
will  be  able  to  take  care  of  her  debt. 

Plehn,  C.  C.  Assessment  of  income  tax,  once  more.  Bull.  Nat.  Tax  Assoc,  Mar., 
1921.     Pp.  3.    Maintains  that  self-assessmont  is  no  assessment. 

Powell,  T.  R.  Income  from  sales  of  investments.  Bull.  Nat.  Tax  Assoc,  Feb., 
1921.     Pp.  11.    Discusses  from  legal  and  also  economic  point  of  view. 

Putnam,  G.  E.  Income  tax  exemption.  Bull.  Nat.  Tax  Assoc,  Dec,  1920.  Pp. 
3.     Opposes  especially  the  exemption  given  to  federal  farm  loan  bonds. 

Rhodes,  E.  E.  Federal  taxation  of  life  insurance.  Econ.  World,  Dec.  18,  1920. 
Pp.  3.     Discusses  present  law  and  suggests  revisions. 


1921]  Public  Finance  377 

Rindleb,  M.  Revision  of  the  excess  profits  tax.  Administration,  Feb.,  1921.  Pp. 
10.    Suggests  amendments  to  meet  criticisms. 

Sakolski,  A.  M.  Simplification  of  fiduciary  income  tax  forms.  Trust  Companies, 
Jan.,  1921.  Pp.  3.  Shows  need  of  uniformity  among  accountants,  lawyers,  and 
tax  officials. 

Sensini,  G.  Ulteriori  classificazioni  dei  problemi  principali  della  finanza.  Giorn. 
d.  Econ.,  Oct.,  1920.    Pp.  15. 

Traylor,  M.  A.  Tax  exemption  of  securities.  Journ.  Am.  Bankers  Assoc,  Dec, 
1920.  Pp.  4.  Disastrous  to  sound  public  finance,  industrial  growth,  and  national 
thrift. 

Trocton,  R.  Cancellation  of  the  inter-allied  debts.  Econ.  Journ.,  Mar.,  1921.  Pp. 
8.     Favors  cancellation. 

Vierlikg,  F.  Effect,  of  federal  inheritance  taxes  on  property  transferred  under 
voluntary  trusts.  Trust  Companies,  Jan.,  1921.  Pp.  5.  Explains  the  conditions 
under  which  trusts  created  by  living  persons  are  nevertheless  taxable. 

Wallace,  B.  B.  American  tariff  policy  in  the  Pacific  possessions  and  in  the  Far 
East.  Pacific  Rev.,  Dec,  1920.  Pp.  14.  Gives  the  history  of  our  tariff  policy 
and  outlines  present  problems. 

White,  E.  Income  distribution  in  the  United  States  for  the  year  1918;  and  the 
functions  of  the  statistical  division,  income  tax  unit.  Econ.  World,  Feb.  5,  1921. 
Pp.  3.    Analyzes  statistics  for  individual  and  corporation  taxes. 

Williamson,  K.  M.  The  effects  of  varying  the  rate  of  the  tax  on  spirits.  Quart. 
Pubs.  Am.  Stat.  Assoc,  Dec,  1920.  Pp.  14.  American  experience  shows  that 
spirits  have  an  inelastic  demand  and  that  for  some  time  before  the  war  the  gov- 
ernment did  not  fully  utilize  spirits  for  revenue  purposes. 

Bibliography  on  income  taxes.  Bull.  Nat.  Tax  Assoc,  Mar.,  1921.  Pp.  2.  Refer- 
ences to  books  and  articles. 

La  Haute-Silesie  et  les  reparations.    L'Europe  Nouvelle,  Jan.  23,  1921. 

L'import  sur  le  chiffre  d'affaires.  Rev.  Sci.  de  Legis.  Finan.,  Oct.-Dec,  1920.  Pp.  4. 
In  effect  from  July  1,  1920,  this  new  tax  is  expected  to  produce  a  large  revenue. 

Operation  of  the  general  property  tax.  Bull.  Nat.  Tax  Assoc,  Mar.,  1921.  Pp.  2. 
Report  of  the  South  Carolina  Special  Revenue  Committee,  illustrating  the  in- 
justice of  the  system. 

A  plan  for  equalizing  changes  in  tariff  duties  due  to  fluctuations  in  exchange.  Bull. 
Nat.  Assoc.  Wool  Mfrs.,  Jan.,  1921.  Pp.  18.  Depreciation  in  foreign  currencies 
calls  for  changes  in  tariff  administration. 

Tax  exempt  securities — tax-free  interest.  Bull.  Nat.  Tax  Assoc,  Mar.,  1921.  Pp.  3. 
The  chamber's  resolution  against  further  issue  of  tax-exempt  securities. 

Taxation  of  foreign  corporations.  Yale  Law  Journ.,  Mar.,  1921.  Pp.  3.  Consti- 
tutional, when  a  bona  fide  attempt  is  made  to  estimate  the  "true  value"  or  allo- 
cate the  property. 

Taxing  both  income  and  property.  Bull.  Nat.  Tax  Assoc,  Mar.,  1921.  P.  1.  South 
Carolina  Revenue  Committee  holds  it  is  not  a  case  of  double  taxation. 


378  Periodicals  [June 

Population  and  Migration 

(Abstracts  by  A.  B.  Wolfe) 

Boggs,  T.  H.  Oriental  immigration  from  the  Canadian  standpoint.  Pacific  Rev., 
Dec,  1920.  Pp.  11.  Indian  immigration  within  the  British  Empire  in  an  im- 
perial question  of  the  widest  dimensions.  Through  the  agreement  of  1908  Hindoo 
immigration  to  Canada  has  been  practically  prevented.  By  an  agreement  with 
Japan  passports  for  Japanese  coming  to  Canada  are  limited  to  486  annually. 
Despite  a  head  tax  of  $500  levied  on  Chinese  since  1904  the  number  of  Chinamen 
entering  steadily  increased  up  to  1914. 

Bolch,  L.  The  ability  of  European  immigrants  to  speak  English.  Quart.  Pub.  Am. 
Stat.  Assoc,  Dec,  1920.  Pp.  15.  The  problem  of  learning  to  speak  English  af- 
fects the  first  generation  only.  Concentration  of  immigrants  does  not  seem  to 
retard  the  learning  of  English.  Five  Southern  states,  Arizona  to  Florida,  show 
exceptionally  large  proportions  of  those  not  able  to  speak  English. 

Campbell,  P.  Asiatic  immigration  into  Australia.  Economica,  Jan.,  1921.  Pp. 
10.  Reviews  the  history  of  Asiatic  immigration  as  a  political  issue  in  Australia. 
Concludes  that  "in  adopting  the  shibboleth  'White  Australia,'  the  Australian  peo- 
ple have  been  unjust  to  their  own  cause." 

Correard,  J.  Organization  financiere  d'une  caisse  nationale  des  grandes  families. 
Mus.  Soc,  Mem.  et  Doc,  Oct.,  1920.  Pp.  17.  A  report  to  the  Conseil  sup6rieur 
de  la  natality  May,  1920. 

Cox,  H.  Population  and  progress.  Edinburgh  Rev.,  Oct.,  1920.  Pp.  13.  None  of 
the  modern  means  for  trying  by  devices  of  state  subsidies  to  mothers  to  get  over 
the  evils  of  uncontrolled  birth  rates  remove  the  ultimate  necessity  of  that  control. 
A  low  birth  rate  is  a  sine  qua  non  to  human  progress.  The  author  is  editor  of 
the  Edinburgh  Review. 

.  War  and  population.  Edinburgh  Rev.,  July,  1920.  Pp.  17.  A  vigo- 
rous article  showing  the  desirability  and  necessity  of  birth  control. 

Hehsch,  L.  La  situation  sociale  et  Vitat  stationnaire  de  la  population  frangaise. 
Rev.  de  Paris,  Feb.  15,  1921.  Pp.  16.  An  informing  and  non-hysterical  article 
based  on  Paris  statistics.  Gives  some  valuable  new  data  on  birth  rates  by  social 
status.  Emphasizes  the  necessity  for  a  lower  death  rate.  The  French  population 
is  "burning  the  candle  at  both  ends" — a  low  birth  rate  and  a  high  death  rate. 

Lacoin,  G.  Baisons  qui  justifient  I'institution  d'une  contribution  nationale  et  d'une 
assurance  familiale  en  faveur  des  families  nombreuses.  Mus.  Soc,  Mem.  et  Doc, 
Oct.,  1920.  Pp.  24.  A  report  presented  to  the  Conseil  supe>ieur  de  la  natalite, 
April,  1920.  Reviews  provisions  of  recent  laws.  Two  comprehensive  positive 
measures  are  advocated:  government  contribution  to  the  cost  of  large  families, 
and  family  insurance. 

Latrd,  J.  Malthus's  devil.  Hibbert  Journ.,  Oct.,  1920.  Pp.  13.  A  stimulating  and 
thoughtful  article.  While  Malthus's  method  of  presentation  is  open  to  criticism, 
there  is  no  escaping  the  fundamental  logic  of  Malthusianism.  It  is  rash  to  think 
that  human  beings  should  deplore  the  necessity  of  limiting  their  numbers. 

Millard,  C.   K.  and  others.     The  falling  birth  rate:  is  it  to  be  deplored?     Journ. 

Royal  Sanitary  Inst.,  Sept.,  1920.     Pp.  21. 
Pearx,  R.     Effect  of  the  war  on  the  chief  factors  of  population  change.     Science^ 


1921]  Insurance  and  Pensions  379 

June  4,  1920  and  Feb.  4,  1921.  Pp.  5.  An  examination  of  the  ratio  of  births  to 
deaths  in  Vienna,  France,  and  England  during  and  since  the  war.  The  author 
is  convinced  that  the  statistics  show  that  war  and  epidemics  make  the  merest 
ephemeral  flicker  in  the  steady  onward  march  of  population  growth. 

Risler,  G.  Pour  la  de'veloppement  de  la  natality  franqaise.  Mus.  Soc,  Sept.,  1920. 
Pp.  39.  Part  I,  Financial  measures  capable  of  contributing  to  the  increase  of 
French  birth  rate,  is  a  report  presented  to  the  Conseil  de  l'alliance  d'hygiene  so- 
ciale  in  May,  1919.  Part  II,  a  survey  of  a  program  of  propaganda  for  the  in- 
crease of  French  natality,  was  presented  to  the  Conseil  superieur  de  la  natalite  in 
June,  1920.  Part  I,  besides  proposing  various  fiscal  reforms  and  subventions,  re- 
views the  laws  passed  since  1905  for  encouraging  large  families.  Both  parts  are 
in  the  best  French  nationalistic  spirit — pour  la  yrandeur  de  la  Patrie — and  read 
like  a  chapter  from  Colbert. 

Westergaard,  H.  Public  health  before  and  after  the  war.  Intern.  Journ.  Pub. 
Health,  Jan.-Feb.,  1921.  Pp.  5.  If  the  present  unsettled  state  of  Europe  can  be 
changed  into  one  of  peace,  even  though  the  world  has  been  pitifully  impoverished 
by  the  war  and  the  troubles  which  have  followed,  no  serious  increase  in  the  mor- 
tality rate  over  pre-war  years  is  to  be  looked  for. 

Wyler,  J.  Die  Demographie  der  Auslander  in  der  Schweiz.  Zeitsch.  f.  Schweiz.  Stat. 
&  Volkswirtsch.,  Heft  3,  1920.  Pp.  33.  Part  III  of  this  exhaustive  study,  eco- 
nomic demography,  and  conclusion  of  the  whole  series.  Occupational  distribu- 
tion, migration. 

Malthus  up  to  date.     Nation  (London),  June  12,  1920.     Pp.  13. 

Present-day  immigration.  With  special  reference  to  the  Japanese.  Ann.  Am.  Acad., 
Jan.,  1921.  Pp.  224.  Some  forty  articles  by  as  many  authors.  (1)  Our  relation 
to  the  Japanese  and  Chinese.  (2)  The  Mexican  immigrant.  (3)  Some  factors 
affecting  the  assimilation  of  the  immigrant.  (4)  Elements  in  the  immigration 
policy  of  the  United  States.  As  usual  in  such  collections,  there  is  more  senti- 
ment and  opinion  than  fact. 

Report  and  debate  at  the  special  meeting  of  the  Chamber  of  Commerce  of  January 
20,  1921  .—Immigration  into  the  United  /States.  Mo.  Bull.  N.  Y.  Chamber  of  Com- 
merce, Supp.,  Jan.,  1921.  Pp.  24.  Discussion  on  the  Johnson  and  Sterling  bills. 
Very  little  debate.  Most  of  the  speakers  were  in  favor  of  total  exclusion  as  an 
emergency  measure  and  of  rigid  restriction  as  a  permanent  policy. 

Switzerland:  The  efforts  to  arrest  rural  depopulation.  Intern.  Rev.  Agri.  Econ., 
Dec,  192C.  Pp.  9.  A  survey  of  the  reason  why  agricultural  laborers  leave  the 
country  districts,  development  of  small  holdings,  decentralization  of  urban  popu- 
lation, consolidation  of  holdings,  and  social  insurance. 

Insurance  and  Pensions 

(Abstracts  by  Henry  J.  Harris) 
Adams,  J.    Fifty  years  of  government  life  insurance  in  New  Zealand.    Econ.  World, 
Jan.  8,  1921.     P.  1.     The  department  now  carries  55,570  policies;  annual  premium 
income  £423,065;  sum  assured  £14,123,729. 

Andrews,  J.  B.  Representative  opinion  of  health  insurance  in  Great  Britain.  Am. 
Labor  Legis.  Rev.,  Mar.,  1921.  Pp.  7.  Representative  opinion  from  the  insured, 
employers,  medical  profession,  pharmacists,  and  administrators,  is  to  the  effect 
that  system  has  been  of  distinct  benefit. 


380  Periodicals  [June 

Bernhabu,  E.  Das  Problem  der  Arbeitslosenversicherung  und  seine  Lbsung  im  In- 
und  Ausland.  Zeitschr.  f.  d.  ges.  Versicherungswis.,  Jan.,  1931.  Pp.  10.  Pro- 
visions of  proposed  law  discussed. 

Brown,  H.  The  effect  of  the  war  on  British  life  assurance.  Econ.  World,  Jan.  22, 
1921.  Pp.  3.  Speaking  generally,  the  losses  due  to  the  war  have  been  met  almost 
entirely  from  current  profits  or  special  reserves;  the  ordinary  reserves  remain 
practically  intact. 

Chamberlain,  J.  P.  A  personal  view  of  health  insurance  in  England.  Am.  Labor 
Legis.  Rev.,  Mar.,  1921.  Pp.  4.  The  medical  profession  and  the  public  gener- 
ally in  Britain  are  working  for  the  improvement  of  the  act,  not  its  repeal. 

Finlayson,  G.  D.  Fifty  years  of  fire  insurance  in  Canada.  Econ.  World,  Feb.  26, 
1921.  Pp.  3.  Only  in  the  last  five  years  have  satisfactory  returns  been  earned 
by  companies. 

French,  W.  J.  The  trend  of  workmen's  compensation — glance  at  compensation  his- 
tory, past  and  present.  Mo.  Labor  Rev.,  Nov.,  1920.  Pp.  9.  Review  of  events 
during  past  ten  years. 

Grieshaber,  H.  Beitrag  zur  Berufsmorbiditat.  Zeitschr.  f.  d.  ges.  Versicherungs- 
wis., Jan.,  1921.  Pp.  8.  Develops  a  formula  for  expressing  sickness  rate  by  oc- 
cupation using  data  of  Leipzig  local  fund. 

Hoffman,  F.  L.  British  experience  with  unemployment  insurance  and  the  conclu- 
sions to  be  drawn  therefrom.  Econ.  World,  Feb.,  1921.  Pp.  2.  Benefits  paid 
are  inadequate  and  system  in  general  is  not  for  the  best  interests  of  labor  or  of 
industry.     Solution  of  problem  would  be  best  secured  from  voluntary  effort. 

.     The  facts  with  regard  to  so-called  unemployment  insurance.     Econ. 

World,  Mar.  26,  1921.  Pp.  3.  Opposes  the  bdl  drawn  by  Professor  Commons  for 
Wisconsin,  providing  system  of  unemployment  insurance. 

Hookstadt,  C.  Comparison  of  compensation  insurance  systems  as  to  cost,  security, 
and  service.  Mo.  Labor  Rev.,  Dec,  1920.  Pp.  21.  It  costs  the  insured  employers 
$30,000,000  more  to  insure  in  stock  and  mutual  companies  than  if  there  had  been 
exclusive  state  funds  only.  Service  is  more  prompt  in  state  funds.  No  injured 
workman  has  suffered  loss  from  a  state  fund,  nor  has  a  large  mutual  become  in- 
solvent.    Several  disastrous  failures  among  stock  companies. 

.     Cost  of  occupational  diseases  under  workmen's  compensation  acts  in 

the  U.  8.  Mo.  Labor  Rev.,  Feb.,  1921.  Pp.  o".  Comparison  of  experience  under 
federal  act  and  state  laws. 

.    Seventh  annual  meeting  of  the  International  Association  of  Industrial 

Accident  Boards  and  Commissions.  Mo.  Labor  Rev.,  Nov.,  1920.  Pp.  9.  Digest 
of  discussions. 

Huebner,  S.  S.  Excessive  and  unscientific  taxation  as  an  obstacle  to  the  develop- 
ment of  American  marine  insurance.  Econ.  World,  Jan.  1,  1921.  Pp.  3.  Total 
taxes  and  fees  paid  by  71  companies  in  1918  was  22.49  per  cent  of  capital  stock 
and  T.titi  per  cent  of  stock  and  surplus  combined.     Recommends  amendments. 

.     The  need  of  adequate  reinsurance  facilities  for  the  development  of 

American  marine  insurance.  Econ.  World,  Jan.  8,  1921.  Pp.  3.  At  present  legul 
restrictions  prevent  reinsurance;  effect  is  to  aid  foreign  companies.  Remedies 
proposed. 


1921]  Insurance  and  Pensions  381 

Jackson,  G.  E.  Possibilities  of  unemployment  insurance  in  Canada.  Econ.  World, 
Apr.  2,  1921.  Pp.  2.  Information  on  which  to  base  system  lot  available.  Sug- 
gests possibility  of  drawing  up  scale  of  benefits  and  meeting  expense  by  assess- 
ments. 

Jones,  F.  It.  Status  of  workmen's  compensation  legislation  in  the  United  States  at 
the  end  of  1920.  Econ.  World,  Dec.  25,  1920.  Pp.  2.  Topical  headings,  with  pro- 
visions of  laws  of  various  states. 

Kerstino,  D.  Vorschriften  fiir  die  Auszahlung  von  Summen  auf  Lebensversiche- 
rungsvertrage.  Zeitschr.  f.  d.  ges.  Versicherungswis.,  Jan.,  1921.  Pp.  14.  Laws 
and  decisions  as  to  tax  deductions  when  payments  are  made  on  policies  in  Ger- 
many and  other  countries. 

Lott,  E.  S.  American  insurance  as  a  vital  element  in  world  reconstruction.  Econ. 
World,  Jan.  1,  1921.  Pp.  2.  Foreign  operations  of  American  companies  practi- 
cally ceased  at  outbreak  of  war.    Recommends  campaign  to  develop  such  business. 

Macaulay,  T.  B.  The  rise  and  progress  of  life  assurance  in  Canada.  Econ.  World, 
Dec.  25,  1920.  Pp.  4.  Account  of  early  companies  and  statement  of  business  now 
carried  by  Canadian  and  foreign  companies. 

Manes,  A.  Social  insurance  in  the  new  Germany.  Survey,  Jan.  1,  1921.  Pp.  4. 
Little  change  in  insurance  of  salaried  employees,  or  in  accident  and  invalidity 
systems.  In  health  insurance,  income  limit  raised  to  5,000  marks,  maternity  bene- 
fits greatly  extended. 

Mead,  F.  B.     The  cost  of  lapsation  in  life  insurance.     Econ.  World,  Jan.  15,  1921. 

Phillips,  J.  S.  Developments  in  workmen's  compensation  insurance  in  the  State  of 
New  York.  Econ.  World,  Mar.  12,  1921.  Pp.  2.  Extract  from  annual  report  of 
state  insurance  commissioner. 

Reid,  E.  E.  Life  insurance  without  medical  examination.  Econ.  World,  Mar.  5, 
1921.  Pp.  3.  Success  of  group  insurance  suggests  use  of  blank  to  be  filled  out 
by  applicant  and  by  agent  only.  System  used  successfully  in  England.  Restric- 
tions necessary. 

Rohrbeck,  W.  Betriebsrategesetz  und  Versicherungsgewerbe.  Zeitschr.  f.  d.  ges. 
Versicherungswis.,  Jan.,  1921.  Pp.  15.  Finds  the  law  on  establishment  councils 
vague. 

Stewaet,  E.  A  plea  for  more  adequate  accident  compensation  rates.  Mo.  Labor 
Rev.,  Dec,  1920.  Pp.  10.  The  restrictions  in  the  laws  on  the  benefits  paid,  re- 
duce the  payments  to  the  injured  man;  in  Pennsylvania  he  bears  four-fifths  and 
in  New  York  over  one-half  the  loss. 

Stier-Somlo,  F.  Die  Reichssteuergesetze  und  das  Versicherungswesen.  I  Teil. 
Zeitschr.  f.  d.  ges.  Versicherungswis.,  Jan.  1,  1921.  Pp.  20.  Detailed  analysis 
of  the  federal  tax  laws  of  Dec.  13,  1919,  and  Dec.  31,  1919,  in  their  relation  to 
insurance. 

Tead,  O.  Fact  and  opinion  as  to  the  British  National  Health  Insurance  act.  Am. 
Labor  Legis.  Rev.,  Mar.,  1921.  Pp.  7.  Opposition  to  act  comes  not  from  em- 
ployers, tax-payers,  workmen-contributors,  nor  doctors,  but  from  advocates  of 
state  medical  service  idea.  Act  is  accepted  by  great  majority  of  groups  affected 
as  good,  as  a  workable  instrument  and  as  a  valuable  starting  point  towards  better 
times  in  public  health. 


382  Periodicals  [June 

Worley,  A.  The  governmental  inquiry  into  the  operation  of  the  British  workman's 
compensation  act.  Econ.  World,  Mar.  2G,  1921.  Pp.  34.  Summarizes  report,  which 
recommends  compulsory  insurance,  use  of  stock  companies  and  mutuals  as  car- 
riers subject  to  state  supervision. 

Zedermann,  F.  Transportversicherung  und  Haftungsbeschrankung  der  Eisenbahn 
fiir  Kostarkeiten.  Zeitschr.  f.  d.  ges.  Versicherungswis.,  Jan.,  1921.  Pp.  4.  In- 
surance of  "valuables"  on  railways;  laws  and  decisions  as  to  railway  liability. 

Actuarial  aspects  of  industrial  assurance  with  special  reference  to  the  report  of  the 
departmental  committee  on  the  business  of  industrial  assurance  companies  and  col- 
lecting societies.  Journ.  Inst.  Actuaries,  Oct.,  1920.  Pp.  20.  Round  table  discus- 
sion with  criticisms,  by  actuaries. 

Projected  compulsory  automobile  insurance  in  the  state  of  New  York.  Econ.  World, 
Jan.,  29,  1921.  P.  1.  Proposes  to  give  persons  injured  by  commercial  vehicles 
same  benefits  as  under  compensation  law. 

Pauperism,  Charities,  and  Relief  Measures 

(Abstracts  by  George  B.  Mangold) 
Anderson,  J.  E.  A  mental  survey  of  the  Connecticut  Industrial  School  for  Oirls. 
Journ.  Delinquency,  Jan.,  1921.  Pp.  10.  An  examination  of  more  than  500  delin- 
quent girls  reveals  the  fact  that  about  one  fifth  were  rated  as  mentally  defective, 
one  fourth  as  dull,  one  fifth  as  normal,  and  one  twelfth  as  superior.  The  tests 
were  found  to  be  very  valuable  in  promoting  the  grade  location  of  girls  in  the 
institution  school. 

Andrews,  I.  O.  State  legislation  for  maternity  protection.  Am.  Labor  Legis.  Rev., 
Mar.,  1921.  Suggests  standard  provisions  for  state  laws  dealing  with  maternity 
aid.  A  few  facts  relating  to  the  cost  of  this  system  in  European  countries  are 
given. 

Beard,  M.  Progress  toward  'maternity  benefits  in  Massachusetts.  Am.  Labor  Legis. 
Rev.,  Mar.,  1921.  In  Massachusetts  considerable  attention  has  been  given  to  the 
problem  of  maternity  aid.  Several  state  commissions  have  dealt  with  the  prob- 
lem and  a  maternity  protection  bill  has  been  before  the  Massachusetts  legislature. 
The  needed  legislation,  however,  has  not  yet  been  enacted. 

Bolt,  R.  A.  A  natiotial  program  for  maternity  aid.  Am.  Labor  Legis.  Rev.,  Mar., 
1921.  This  article  presents  the  reasons  for  a  program  for  maternity  aid.  The 
writer  favors  the  bill  that  was  introduced  into  the  previous  Congress. 

Feugere,  E.  L'assistance  aux  families  nombreuses  et  aux  femmes  en  couches  dans' 
le  department  de  la  Seine  et  les  primes  departementales  de  natalit4.  L'Econ. 
Franc.,  Jan.  29,  1921.  Discusses  the  recent  development  in  the  Paris  plan  for 
pensioning  poor  families.  There  has  been  a  tremendous  increase  in  the  expendi- 
tures for  tliis  purpose. 

Merrill,  W.  The  public  schools  and  the  treatment  of  delinquent  children.  Journ. 
Delinquency,  Nov.,  1920.  Pp.  7.  Emphasizes  the  importance  of  the  public  schools 
as  a  factor  in  the  treatment  of  incipient  delinquency  among  children.  The  author 
would  not  interfere  with  the  rights  of  the  police  or  of  the  juvenile  courts  but 
would  make  the  schools  an  effective  preventive  agency. 

Saunderson,  R.     The  relief  of  the  unemployed.     Charity  Organ.  Rev.,  Feb.,  1921. 


1921]  Statistics  383 

Outlines  the  various  methods,  both  public  and  private,  now  available  in  England 
for  the  relief  of  distress  due  to  unemployment.     Suggests  additional  plans. 

Sobel,  J.  Need  for  protecting  maternity  and  infancy.  Am.  Labor  Legis.  Rev., 
Mar.,  1921.  Presents  figures  showing  the  need  of  maternity  protection.  Many  of 
the  facts  are  based  on  conditions  in  New  York  City.  The  author  believes  that 
the  bill  formerly  before  Congress  should  provide  for  the  distribution  of  money 
among  the  states,  not  on  the  basis  of  total  population  but  on  some  other  basis  such 
as  births  registered,  number  of  women  of  child-bearing  age,  or  number  of  mar- 
riages. 

Socialism 

Ashton,  T.  S.     The  guild  socialists.     Econ.  Journ.,  Sept.,  1920. 

Err,  R.  T.     What  is  bolshevism?    Rev.  Rev.,  Nov.,  1920. 

Guyot,  Y.     L'endosmose  bolchevique.     Journ.  des  Econ.,  Oct.,  1920. 

Kautzsch.    Sozialdemokratie  wider  Sozialismus.     Natur  u.  Gesellschaft.,  Jan.,  1921. 

MacCuixagh,  F.     The  design  of  the  bolsheviks.    Nineteenth  Cent.,  Aug.,  1920. 

Reynard,  H.     The  guild  socialists.    Econ.  Journ.,  Sept.,  1920.     Pp.  20. 

■ 

Statistics 
(Abstracts  by  Horace  Secrist) 
Anderson,  B.  M.,  Jr.     Nation  on  a  sound  basis  despite  troubles  of  last  year.     An- 
nalist, Jan.  3,   1921.     Pp.   2.     An   interesting   study,  largely   in    continuation   of 
former  ones  made  by  the  author.    The  ratio  of  foreign  to  domestic  trade  is  sup- 
plied for  the  years  1890-1919  inclusive. 

Andreades,  A.  De  la  population  de  Constantinoples  sous  les  empereurs  byzantins. 
Metron,  Dec,  1920.  Pp.  50.  An  estimation  of  the  population  of  Constantinople 
at  various  periods  of  its  history.  "From  the  seventh  to  the  twelfth  century,  the 
population  has  rarely  fallen  below  50,000  while  it  has  at  times  been  very  close  to 
1,000,000." 

Balducci,  G.  Sulla  mortality  degli  insegnanti  elementari  pensionati.  Metron,  Dec, 
1920.    Pp.  11. 

Barnett,  G.  E.  Index  numbers  of  the  total  cost  of  living.  Quart.  Journ.  Econ., 
Feb.,  1921.  Pp.  23.  A  clear-cut  and  significant  discussion  which  will  do  much  to 
demonstrate  the  shadowy  meaning  of  the  expression,  "cost  of  living,"  and  makes 
clear  the  difficulties  and  problems  of  measuring  it  by  the  index  number  method. 

Boldrini,  M.  Nuovi  contributi  alle  ricerche  ull'azione  dell'ordien  di  nascita.  Met- 
ron, Dec,  1920.    Pp.  5. 

Bonner,  H.  R.  A  graphic  method  for  presenting  comparative  cost  analyses.  Quart. 
Pubs.  Am.  Stat.  Assoc,  Sept.,  1920.  Pp.  12.  Presents  a  graphic  method  for 
analyzing  and  interpreting  the  expenditures  incurred  by  nine  state  normal  schools. 
Method,  however,  has  other  applications. 

Cantelli,  F.  P.  Sulle  applicazioni  del  calcolo  dell  probabilith  all  fisica  molecolare 
(rassegna).    Metron,  July,  1920.     Pp.  32. 

Cherinoton,  P.  T.  Errors  of  judgment  by  a  professional  statistician,  W.  Jett 
Lauck.     Bull.  Nat.  Assoc  Wool  Mfrs.,  July,  1920.     Pp.   10. 


384  Periodicals  [June 

Copeland,  M.  T.  The  importance  of  securing  reliable  statistics  of  business  activity. 
Fed.  Reserve  Bull,  Mar.,  1921.  Pp.  3.  Stresses  the  necessity  of  securing  more 
adequate  statistics  of  production,  prices,  mercantile  trade,  and  credit  conditions. 

Czuber,  E.  Ueber  Funktionen  von  variablen  zwischen  welchen  Korrelationen  beste- 
hen.    Metron,  July,  1920.    Pp.  8. 

Davenport,  C.  The  mean  stature  of  American  males.  Quart.  Pubs.  Am.  Stat. 
Assoc,  Dec,  1920.  Pp.  3.  A  comparison  of  the  stature  of  American  soldiers  in 
the  Civil  War  and  the  World  War. 

Day,  E.  E.  The  measurement  of  variations  in  the  national  real  income.  Quart. 
Pubs.  Am.  Stat.  Assoc,  Mar.,  1921.  Pp.  7.  An  abbreviated  statement  of  the 
methods  and  results  used  by  the  author  in  developing  an  index  of  production  for 
the  Harvard  Committee  on  Economic  Research. 

Douglas,  A.  W.  The  study  and  purpose  of  statistics.  Administration,  Feb.,  1921. 
Pp.  2.  A  brief  and  easily  understood  account  of  the  purposes  of  statistics  in 
their  relation  to  general  business  conditions  and  needs,  but  too  narrow  and  re- 
stricted in  viewpoint. 

Dublin,  L.  I.  and  Whitney,  J.  On  the  cost  of  tuberculosis.  Quart.  Pubs.  Am. 
Stat.  Assoc,  Dec,  1920.  Pp.  9.  A  discussion  of  loss  in  terms  both  of  years  and 
money.  Results  of  a  study  made  by  the  Metropolitan  Life  Insurance  Company 
and  the  National  Tuberculosis  Association. 

Edgeworth,  F.  Y.     Entomological  statistics.     Metron,  July,  1920.     Pp.  7. 

Fay,  C.  R.  Corn  prices  and  the  corn  laws,  1815-1846.  Econ.  Journ.,  Mar.,  1921. 
Pp.  10. 

Fisher,  I.  The  best  form  of  index  number.  Quart.  Pubs.  Am.  Stat.  Assoc,  Mar., 
1921.  Pp.  18.  An  abstract  only  of  Professor  Fisher's  comprehensive  paper  read 
at  the  annual  meeting  of  the  American  Statistical  Association  in  December,  1920. 
The  purpose  is  to  determine,  so  far  as  mathematical  formulas  are  concerned,  the 
best  form  of  an  index  number.  He  reduces  to  two  the  tests  which  index  num- 
bers must  stand,  viz:  "the  formula  should  work  both  ways  as  to  the  two  factors, 
prices  and  quantities.  The  formula  should  work  both  ways  as  to  time."  Dis- 
cussion by  W.  C.  Mitchell,  C.  M.  Walsh,  W.  M.  Persons. 

Fiske,  H.  Life  insurance  investments — what,  where,  and  why.  Address  delivered 
at  the  llfih  Annual  Meeting  of  the  Association  of  Life  Insurance  Presidents,  Dec. 
9,  1920.  Pp.  13.  A  discussion  of  the  principles  of  the  investments  of  life  insur- 
ance companies;  together  with  an  appendix  giving  the  investment  statistics  of 
thirty-nine  life  insurance  companies  as  of  December  31,  1919. 

Fleissig,  P.  Preisstatistik  der  Arzneimittel  vom  Jahre  1914  bis  1920.  Zeitschr.  f. 
Schweiz.  Stat.  u.  Volkswirtsch.,  Heft  3,  1920. 

Florence,  P.  S.  The  measurement  of  labor  productivity.  Quart.  Pubs.  Am.  Stat. 
Assoc,  Sept.,  1920.  Pp.  16.  The  necessity  for,  and  the  difficulty  of,  developing  a 
unit  of  labor  productivity,  and  the  relation  which  records  in  industrial  establish- 
ments bear  to  this  problem,  both  from  the  individual  and  the  social  point  of  view. 

Gardner,  E.  H.  Salient  factors  in  sales  control.  Administration,  Jan.,  1921.  Pp.  '4. 
Control  by  means  of  statistics  urged. 

Gini,  C.  La  coscrizione  militare  dal  punto  di  vista  eugenico.  Metron,  July,  1920. 
Pp.  29. 


1921]  Statistics  385 

Hansen,  A.  H.  Industrial  class  alignments  in  the  United  States.  Quart.  Pubs.  Am. 
Stat.  Assoc,  Dec,  1920.  Pp.  7.  An  attempt  to  determine  statistically,  on  the 
basis  of  census  occupational  data,  the  relative  strength  of  "capital,"  "labor," 
and  "the  public." 

Hcx8T,  M.  M.  Mortality  rates  of  college  women.  Quart.  Pubs.  Am.  Stat.  Assoc, 
Mar.,  1921.     Pp.  6. 

Karsten,  K.  G.  An  index  of  incomes.  Quart.  Pubs.  Am.  Stat.  Assoc,  Sept.,  1920. 
Pp.  24.  "The  purpose  of  this  article  is  to  suggest  a  set  of  two  figures  or  coeffi- 
cients for  the  measurement  and  analysis  of  income  and  wealth  statistics,  which 
shall,  without  loss  of  statistical  accuracy,  be  suitable  for  popular  presentation. 
One  of  these  coefficients  gives  a  quantitative  measurement  and  may  be  called  an 
index  of  the  size  of  incomes;  the  other  is  qualitative  and  may  be  called  an  index 
of  the  distribution  of  wealth." 

Knibbs,  G.  H.  The  theory  of  large  populations-aggregates.  Metron,  July,  1920. 
Pp.  13. 

Livi,  L.  Memoria  e  profit  to  nei  ragazzi.  Esperimento  di  stitistica  psicometrica 
sugli  alunni  delle  scuole  comunali  di  Modena.     Metron,  Dec,  1920.     Pp.  19. 

MacDonald.    Scots  and  Scottish  influence  in  Congress.    Metron,  Dec,  1920.    Pp.  15. 

McMancs,  R.  J.  An  analysis  of  health  claims  by  disease.  Pro.  Casualty  Actuarial 
&  Stat.  Soc  of  Am.,  May  28,  1920.  Pp.  20.  Tabulations  are  confined  to  claims 
presented  by  best  risks,  and  refer  to  the  total  of  policy  years  1914-1916,  inclusive, 
representing  illness  contracted  during  the  calendar  years  1914-1917,  inclusive- 
Data  are  taken  from  paid  claims  of  the  Travelers  Insurance  Company. 

MacDonald,  A.    Study  of  man  after  death.    Western  Medical  Times,  Dec,  1920. 

March,  L.  International  statistics  and  the  League  of  Nations.  Quart.  Pubs.  Am. 
Stat.  Assoc,  Mar.,  1921.    Pp.  10. 

.     La  mfthode  statistique.     Metron,  July,  1920.     Pp.  30. 

Maroi,  L.     La  guerra  e  la  popolazione   (Rassegna  di  demografia).     Metron,  Dec, 

1920.  Pp.  10. 

Medolaghi,  P.  La  previsione  statistica  ed  il  calcolo  delle  probability.  Metron, 
Dec,  1920.    Pp.  13. 

Meriam,  L.  The  classification  of  United  States  statistical  employees.  Quart.  Pubs. 
Am.  Stat.  Assoc,  Sept.,  1920.  Pp.  18.  A  discussion  of  the  principles  controlling 
the  classification  of  United  States  statistical  employees,  the  difficulties  encountered 
in  such  a  study,  and  the  salaries  recommended  for  the  various  classes  of  statisti- 
cal employees. 

Moore,  H.  L.    Generating  cycles  of  products  and  prices.    Quart.  Journ.  Econ.,  Feb., 

1921.  Pp.  24.  A  continuation  of  Professor  Moore's  valuable  and  fundamental 
analyses  by  means  of  the  statistical  method  cf  the  relation  between  crops  and 
prices. 

Pollock,  H.  M.  Standardization  of  statistics  in  state  institutions.  Quart.  Pubs.  Am. 
Stat.  Assoc,  Mar.,  1921.     Pp.  3. 

Rortt,  M.  C.  A  national  money  accounting  as  the  basis  for  studies  of  income  dis- 
tribution. Quart.  Pubs.  Am.  Stat.  Assoc,  Mar.,  1921.  Pp.  8.  A  study  of  the 
more  important  details  of  method  that  should  be  observed  in  studies  of  income  and 


386  Periodicals  [June 

income  distribution,  centering  attention  upon  the  semi-exact  national  money  ac- 
counting which  is  becoming  more  and  more  practicable  because  of  the  increasing 
accuracy  in  income  tax  statistics  and  the  publicity  of  financial  and  corporate 
activities. 

Savorgnan,  F.    La  natimortality  negli  anni  di  guerra.    Metron,  Dec,  1920.     Pp.  19. 

Schwarz-Leyen,  A.  Die  Notwendigkeit  einer  Reform  der  gewerblichen  Zahlungen. 
Zeitschr.  f.  schweiz.  Stat.  u.  Volkswirtsch.,  56  Jahrg.,  Heft  2.  Pp.  32.  Discus- 
sion of  present  trade  statistics,  their  outstanding  faults,  and  a  proposed  reform. 

Shaw,  J.  P.,  Jr.  Statistics  of  college  graduates.  Quart.  Pubs.  Am.  Stat.  Assoc, 
Sept.,  1920.  Pp.  6.  Gives  results  of  study  of  American  statistics  of  collegiate 
and  professional  education  with  the  purpose  of  estimating  and  comparing  the 
number  of  male  graduates  in  the  country  holding  various  degrees  at  certain  times. 

Simpson,  K.  A  statistical  analysis  of  the  relation  between  cost  and  'price.  Quart. 
Journ.  Econ.,  Feb.,  1921.  Pp.  23.  Devoted  largely  to  an  analysis  of  the  relation 
between  cost  and  prices  for  book  paper,  newsprint  paper,  canned  salmon,  sugar 
beets,  copper. 

Snodgrass,  K.  International  price  indexes.  Quart.  Pubs.  Am.  Stat.  Assoc,  Sept., 
1920.  Pp.  7.  A  description  of  the  international  price  indexes  now  being  pre- 
pared by  the  Division  of  Analysis  and  Research  of  the  Federal  Reserve  Board. 

Steiner,  W.  H.  Methods  of  developing  an  index  of  collection  conditions.  Quart. 
Pubs.  Am.  Stat.  Assoc,  Dec,  1920.  Among  the  methods  discussed  are  "the  abso- 
lute collection  percentage"  ratio  of  number  of  days  in  which  accounts  were  actu- 
ally paid  to  number  of  days  time  on  which  goods  were  originally  sold,  etc 

Steuart,  W.  M.  The  conduct  of  the  fourteenth  census.  Quart.  Pubs.  Am.  Stat. 
Assoc,  Mar.,  1921.  Pp.  14.  A  clear  and  forceful  statement,  by  one  who  knows, 
of  the  problems  of  census  taking. 

Stewart,  W.  W.  Prices  during  the  war.  Quart.  Pubs.  Am.  Stat.  Assoc,  Sept.,  1920. 
Pp.  9.  A  review  of  the  statistical  measure  of  prices  during  the  war.  Account  of 
the  most  significant  step  yet  taken  in  perfecting  an  instrument  for  testing  price 
theory  by  the  facts. 

Stouman,  K.  From  the  Baltic  to  the  Adriatic.  Intern.  Journ.  Pub.  Health,  Jan.- 
Feb.,  1921.  Pp.  12.  A  survey  of  the  demographic  effects  of  the  world  war 
upon  the  countries  "from  the  Baltic  to  the  Adriatic."  Contains  tables  showing 
mortality  rates  from  tuberculosis,  typhus,  etc 

Stringher,  B.     In  memoria   di  Luigi  Bodio.     Rif.   Soc,  Jan.-Feb.,   1921.     Pp.   10. 

Syndenstrjcker,  E.  and  King,  W.  I.  A  method  of  classifying  families  according  to 
incomes  in  studies  of  disease  prevalence.  Public  Health  Repts.,  Nov.  2G,  1920. 
Pp.  20.  An  ingenious  method  of  classifying  families  according  to  incomes  in 
studies  of  disease  prevalence,  together  with  criticisms  of  other  methods  in  use. 

Syndenstricker,  E.  and  Brundage,  D.  K.  Industrial  establishment  disability  records 
as  a  source  of  morbidity  statistics.  Quart.  Pubs.  Am.  Stat.  Assoc,  Mar.,  1921. 
Pp.  14. 

Tracy,  F.  W.  Security  price  movements  after  the  Civil  War  and  now.  Annalist, 
Apr.  4,  1921. 

Tryon,  F.  G.     Control  statistics  of  coal  production  and  distribution.     Quart.  Pubs. 


1921]  Statistics  387 

Am.  Stat.  Assoc,  Sept.,  1950.     Pp.  12.     The  possibility  of  the  use  of  statistical 
data  for  planning  production  and  distribution  in  the  coal  industry. 

Vinci,  E.    Sui  coefflcienti  di  variabilita.    Metron,  July,  1920.     Pp.  12. 

Weinbeb,  W.  Methodologische  O esichtspunkte  fur  die  statistische  Untersuchung  bei 
Dementia  praecox.    Metron,  Dec,  1920.     Pp.  12. 

Westergaard,  H.  On  the  study  of  displacements  within  a  population.  Quart.  Pubs. 
Am.  Stat.  Assoc,  Dec,  1920.  Pp.  18.  A  review  of  statistical  data  with  the  be- 
lief, as  the  writer  says,  that  "an  old  census  report  may  under  certain  circum- 
stances give  fresh  output,  just  as  a  gold  mine  which  has  been  given  up  for  years 
often  will  pay  if  new  technical  methods  are  applied,"  and  in  continuation  of  the 
writer's  earlier  expressed  opinion,  that  what  is  most  needed  is  not  so  much  more 
statistical  data,  as  more  adequate  analysis. 

Wyeeb,  J.  Die  Demographie  der  Auslander  in  der  Schweiz.  Zeitschr.  f.  schweiz. 
Stat.  u.  Volkswirtsch.,  56  Jahrg.,  Heft  2.  Pp.  24.  Distribution  of  foreigners  in 
Switzerland,  classified  by  nationality,  language,  religion,  etc 

Zingali,  G.  Delia  misura  statistica  dell'  abilita  dei  giocatori  nelle  corse  al  galoppo. 
Metron,  July,  1920.     Pp.  10. 

Second  report  of  the  advisory  committee  on  the  census.  Quart.  Pubs.  Am.  Stat. 
Assoc,  Dec,  1920.  Pp.  13.  An  interesting  account  of  the  cooperation  of  repre- 
sentatives of  learned  societies  in  the  planning  and  execution  of  a  big  statistical 
undertaking,  and  evidence  of  the  type  of  cooperation,  of  which  there  is  far  too 
little  in  the  United  States. 


EIGHTEENTH    LIST    OF    DOCTORAL    DISSERTATIONS    IN    POLITICAL 
ECONOMY  IN  PROGRESS  IN  AMERICAN  UNI- 
VERSITIES AND  COLLEGES 

Students  whose  period  of  continuous  non-residence  exceeds  three  years  are  omit- 
ted from  the  list.     The  last  date  given  is  the  probable  date  of  completion. 

The  first  list  of  this  kind  was  dated  January  1,  1904,  and  was  sent  to  all  mem- 
bers, but  not  regularly  bound  in  the  publications.  The  subsequent  lists  have  ap- 
peared in  the  publications  as  follows: 

Second  list,  1905,  in  third  series,  vol.  iv,  p.  737. 
Third  list,  190(i,  in  third  series,  vol.  vii,  no.  3,  supplement,  p.  43. 
Fourth  list,  1907,  in  third  series,  vol.  viii,  no.  2,  supplement,  p.  42. 
Fifth  list,  1908,  in  the  Bulletin  for  April,  1908,  p.  69. 
Sixth  list,  1909,  in  the  Bulletin  for  April,  1909,  p.  16. 
Seventh  list,  1910,  in  the  Bulletin  for  March,  1910,  p.  12. 
Eighth  list,  1911,  in  the  Review  for  March,  1911,  p.  212. 
Ninth  list,  1912,  in  the  Review  for  June,  1912,  p.  519. 
Tenth  list,  1913,  in  the  Review  for  June,  1913,  p.  527. 
Eleventh  list,  1914,  in  the  Review  for  June,  1914,  p.  524. 
Twelfth  list,  1915,  in  the  Review  for  June,  1915,  p.  476. 
Thirteenth  list,  1916,  in  the  Review  for  June,  1916,  p.  499. 
Fourteenth  list,  1917,  in  the  Review  for  June,  1917,  p.  485. 
Fifteenth  list,  1918,  in  the  Review  for  June,  1918,  p.  459. 
Sixteenth  list,  1919,  in  the  Review  for  June,  1919,  p.  433. 
Seventeenth  list,  1920,  in  the  Review  for  September,  1920,  p.  692. 

Theory  and  Its  History 

James  Pickwell  Adams,  A.B.,  Michigan,  1919.  The  nature  of  income.  1922.  Michi- 
gan. 

Daniel  Merino  Benitez,  Seminary  of  Santiago  de  Chile.  Natural  justice  in  ref- 
erence to  the  private  appropriation  and  exchange  of  wealth.  1921.  Catholic 
University. 

Alice  S.  Cheyney,  A.B.,  Vassar,  1909.  A  theory  of  social  work.  1921.  Pennsyh 
vania. 

Maueice  Albert  Copeland,  A.B.,  Amherst,  1917.  Some  phases  of  institutional  value 
theory.     1921.    Chicago. 

Carl  Addington  Dawson,  A.B.,  Acadia,  1912.  The  social  nature  of  thinking.  1922. 
Chicago. 

Herbert  Feis,  A.B.,  Harvard,  1916.  An  investigation  of  wage  principles  underlying 
a  policy  of  industrial  peace.     1921.    Harvard. 

Cm  Hsiu  Hu,  B.S.,  Pennsylvania,  1917;  A.M.,  1918.  The  economic  thought  of 
James  Steuart.     1921.     Columbia. 

Ralph  W.  Nelson,  A.B.,  Phillips,  1915;  A.M.,  Kansas,  1916;  B.D.,  Yale,  1918. 
Elements  of  the  social  theory  of  Jesus.     1921.     Chicago. 

Frances  Lester  Patton,  A.B.,  Ohio  State,  1913;  A.B.,  Oxford,  1916;  A.M.,  1919. 
Diminishing  returns.     1921.     Columbia. 

Marjorie  Tappan,  A.B.,  Cornell.    Time  and  the  economic  process.     1921.     Columbia. 

J.  Franklin  Thomas,  A.B.,  Beloit,  1904.  Theories  concerning  the  influence  of 
physical  environment  upon  society.     1921.     Columbia. 

Rexford  G.  Tugwell,  B.S.     University  of  Pennsylvania,  1915;  A.M.,  1916.     A  defi- 


1921]  Economic  History  and  Geography  389 

nilion  of  public  utility:  an  interpretation  of  the  doctrine  of  public  interest  in 
economics  and  law.    1921.    Pennsylvania. 

Economic  History  and  Geography 

Martin  Hayes  Bickham,  A.B.,  Pennsylvania,  1908;  A.M.,  Chicago,  1917.  The  so- 
cial evolution  of  democracy.     1921.     Chicago. 

It.  G.  Booth,  A.B.,  Illinois  Wesleyan,  1914;  A.M.,  Columbia,  1915.  Some  social 
aspects  of  the  development  of  the  natural  sciences  in  England  in  the  eighteenth 
century.    1921.    Columbia. 

Kathleen  Eveleth  Beuce,  A.B.,  Radcliffe,  1918;  A.M.,  1919.  The  iron  industry  in 
Virginia  to  1914,  an  historical  study.     1922.    Radcliffe. 

Eleanor  C.  Buckley,  A.B.,  Texas,  1908;  A.M.,  Pennsylvania,  1909.  The  economic 
forces  underlying  Latin-American  independence.     1922.    Pennsylvania. 

Ginevra  Capocelli,  A.B.,  University  of  Naples,  1916;  A.M.,  Columbia,  1918.  Some 
of  the  effects  of  the  war  on  Italy.     1922.    Columbia. 

Anna  C.  Clauder,  A.B.,  Bryn  Mawr,  1905.  The  Napoleonic  Wars  as  reflected  in 
the  commerce  to  Philadelphia  and  New  York  from  1806  to  1812.  1922.  Pennsyl- 
vania. 

Roth  Clausing,  A.B.,  Ohio  Wesleyan,  1912;  A.M.,  Columbia,  1917.  Theories  of 
the  Colonate.     1922.     Columbia. 

Michael  Dorizas,  A.B.,  Robert  College,  1907;  A.M.,  Pennsylvania,  1915.  Economic 
geography  of  Greece.     1921.     Pennsylvania. 

Georoina  Droitcouh,  A.B.,  A.M.,  Minnesota,  1920.  The  grouping  of  manors  in  me- 
dieval England.    1922.    Minnesota. 

Wayland  Fuller  Dunaway,  A.B.,  A.M.,  Richmond  College;  B.D.,  Th.M.,  Crozer 
Theological  Seminary;  A.M.,  Chicago.  History  of  the  James  River  and  Kanawha 
Company.    1922.    Columbia. 

Joseph  A.  Geddes,  A.B.,  Brigham  Young  College,  1907;  A.M.,  Columbia,  1913. 
Some  economic  aspects  of  the  settlement  and  growth  of  Franklin  County,  Idaho. 
1922.     Columbia. 

Frances  E.  Gillespie,  A.B.,  Washington,  1906;  A.M.,  Chicago,  1908.  The  political 
history  of  the  English  workingman,  1850-1900.     1921.     Chicago. 

H.  E.  Grimshaw,  B.S.,  Columbia,  1914;  A.M.,  1915.  Influence  on  England  of  India 
under  the  rule  of  the  Company.     1921.     Columbia. 

Samuel  Hagop  Jamgochian,  S.T.B.,  Yale,  1919;  A.B.,  Amherst,  1920.  Introduc- 
tion of  machine  system  into  Armenia.     1922.    Columbia. 

Leland  Jenks,  A.B.,  Ottawa,  1913;  A.M.,  Kansas,  1914.  Social  aspects  of  the  Revo- 
lution of  1688-1689  in  England.     1921.     Columbia. 

Howard  C.  Kidd,  A.B.,  Geneva,  1909;  A.M.,  Columbia,  1911.  The  development  of 
laissez-faire  to  legislative  control  in  the  United  States.     1921.     Columbia. 

Barnabas  Shigeharu  Kimura,  A.B.,  Hobart,  1900;  S.T.B.,  Episcopal  Theological 
School  (Cambridge),  1903;  A.M.,  Harvard,  1903.  The  economic  policy  of  the 
Tokugawa  Shogunate.    Harvard. 

Sever  Klaragard,  A.B.,  St.  Olaf  College,  1917.  Some  economic  aspects  of  the  Non- 
partisan League  movement.     1921.    Illinois. 

L.  A.  Lawson,  A.B.,  Upsala,  1909;  A.M.,  Columbia,  1911.  Social  conditions  in  the 
principate  of  Augustus.     1921.    Columbia. 

Isabel  McKenzie,  A.B.,  Barnard,  1912;  A.M.,  Columbia,  1914.  Social  activities 
of  English  Friends  in  the  period  of  Industrial  Revolution.     1922.    Columbia. 

E.  C.  Macklin,  A.B.,  Indiana,  1911;  B.F.,  Union  Theological  Seminary,  1914.     So- 


390  Doctoral  Dissertations  [June 

cial  and  philanthropic  work  of  the  Church  of  Scotland  in  the  sixteenth  century. 

1921.     Columbia. 
W.  E.  Meyer,  A.B.,  Southwestern,  1910;  A.M.,  Chicago,  1913.     The  social  history 

of  Kansas.     1921.     Chicago. 
A.  S.  Neumann,  A.B.,  Columbia,  1909;  A.M.,  1912.    Jewish  communal  life  in  Spain 

during  the  thirteenth  century.     1921.     Columbia. 
Leland  Olds,  A.B.,  Amherst,  1912.     Social  unrest  in  England,  1811  to  1819.     1921. 

Columbia. 
O.  H.  Pannkoke,  A.B.,  Concordia,  1905.     The  interrelation  of  the  reformation  and 

the  social  movement  in  Saxony.    1921.    Columbia. 
Albert  James  Saunders,  A.B.,  Christian,  1906;  A.M.,  Chicago,  1913.     A  social  and 

economic  survey  of  the  Madura  Mission  District.     1921.    Chicago. 
H.  L.  Scott,  Ph.B.,  Denison,  1911.     The  social  influence  of  oversea  expansion  on 

France  to  1785.     1921.    Columbia. 
Lawrence  Smith,  B.A.,  Clark  University,  1915;  M.A.,  1916.    The  political  and  eco- 
nomic philosophy  of  Woodrow  Wilson.     1923.    Minnesota. 
Lewis  Francis  Thomas,  S.B.,  Denison,   1910.     A  geographic  interpretation  of   St. 

Louis.     1922.    Chicago. 
Mary  E.  Townsend,  A.B.,  Wellesley,  1905;  A.M.,  Columbia,  1917.     Origins  of  mod- 
ern German  colonialism,  1871  to  1885.     1921.     Columbia. 
Carl  O.  Williams,  S.B.,  Valparaiso,  1916;   A.M.,   Chicago,   1918.     The   history   of 

slavery  in  Iceland.     1921.     Chicago. 
Levi  Edgar  Young,  S.B.,  Utah,  1895.    The  social  and  economic  development  of  Utah 

under  the  leadership  of  Brigham  Young.     1921.    Columbia. 

Agriculture,  Mining,  Forestry,  and  Fisheries 

O.  E.  Baker,  B.S.,  Heidelberg,  Ohio,  1903;  M.S.,  1904-;  A.M.,  Columbia,  1905.  Land 
utilization.     1921.     Wisconsin. 

Alva  H.  Benton,  B.S.,  Ohio  State,  1912;  M.S.,  Pennsylvania,  1913.  Farmers'  per- 
sonal credit.     1921.     Wisconsin. 

F.  A.  Buechel,  Ph.B.,  Wisconsin,  1911;  Ph.M.,  1912.  The  relation  of  rent  to  land 
values.     1921.    Wisconsin. 

Merton  Kibe  Cameron,  A.B.,  Princeton,  1908;  A.M.,  Harvard,  1914.  The  history 
of  tobacco  growing  in  the  Ohio  valley.    1921.    Harvard. 

Edward  Everett  Dale,  A.B.,  Oklahoma,  1911;  A.M.,  Harvard,  1914.  A  history  of 
the  ranch  cattle  industry  in  Oklahoma.     1921.    Harvard. 

J.  B.  Dennison,  B.S.,  Lenox  College,  1912;  A.M.,  Wisconsin,  1915.  Land  and 
credit.     1921.     Wisconsin. 

Eric  Englund,  B.A.,  Oregon,  1919;  B.S.,  Oregon  Agricultural  College,  1918.  The 
relation  of  free  land  to  American  agriculture:  historical  study  and  critical  esti- 
mate.    1922.     Wisconsin. 

John  Abel  Hopkins,  Jr.,  S.B.,  Delaware  College,  1917.  The  depression  and  read- 
justment in  agriculture  in  the  United  States  in  1920-1921.     1923.     Harvard. 

J.  H.  Kolb,  B.S.,  Northwestern  College,  1912;  A.M.,  Chicago,  1913.  Aspects  of  the 
rural  life  problem.     1921.     Wiscons'in. 

Mabel  T.  Lee,  A.B.,  Barnard,  1916;  A.M.,  Columbia,  1917.  Intensive  agriculture 
in  China.     1921.     Columbia. 

P.  E.  McNall,  B.S.,  Kansas  Agricultural  College,  1914;  M.S.,  1915.  Farm  land 
values  and  prices  of  farm  products.     1921.     Wisconsin. 

Robebt  W.  Mackie,  Ph.B.,  Chicago,  1920.    Land  as  an  investment.     1923.     Iowa. 


1921]  Transportation  and  Communication  391 

William  Archibald  Mackintosh,  A.M.,  Queen's  University,  1916.  Agricultural  co- 
operation in  western  Canada.     1921.    Harvard. 

John  Ewing  Orchard,  A.B.,  Swarthmore,  1916;  A.M.,  Harvard,  1920.  The  eco- 
nomics of  mineral  lands.     1922.    Harvard. 

Bernhard  Ostrolenk,  B.S.,  Boston  University,  1911;  A.M.,  Pennsylvania,  1919. 
Social  aspects  of  a  decreasing  food  supply.     1922.     Pennsylvania. 

Leo  Rogin,  A.B.,  Rutgers,  1916.  The  relation  between  farm  and  labor  movements 
since  the  Civil  War.     1922.     Columbia. 

E.  Tetreau,  A.B.,  Hamline,  1915 ;  A.M.,  Wisconsin,  1920.  Land  problems  in  France. 
1922.     Wisconsin. 

G.  S.  Wehrwein,  B.S.,  Wisconsin,  1913;  M.S.,  1920.  The  ownership  and  tenancy 
of  agricultural  land.     1922.     Wisconsin. 

David  G.  White,  B.S.,  Nebraska,  1911;  M.F.,  1912.  Valuation  and  utilization  of 
timber  lands  with  reference  to  its  effect  on  a  national  forest  policy.     Wisconsin. 

Holbrook  Working,  A.B.,  Denver,  1915;  A.M.,  Cornell,  1919.  A  study  of  the  in- 
fluence of  price  changes  on  the  production  and  consumption  of  wheat.  1920. 
Wisconsin. 

B.  Youngblood,  B.S.,  Texas  Agricultural  and  Mechanical  College,  1902;  M.S.,  1907. 
Range  economics.     1921.     Wisconsin. 

Manufacturing  Industries 

Rudolf  Alexander  Leopold  Clemen,  A.B.,  Dalhousie,  1913;  A.M.,  1914;  A.M., 
Harvard,  1915.  The  history  of  the  meat  packing  industry  in  the  United  States. 
1921.    Harvard. 

John  Higson  Cover,  A.B.,  Columbia,  1916;  A.M.,  1919.  The  economics  of  journal- 
ism.    1922.    Columbia. 

Charles  Byron  Ktjhlmann,  A.B.,  Wisconsin,  1906;  A.M.,  Minnesota,  1920.  The 
development  of  the  flour-milling  industry.     1923.     Minnesota. 

Robert  Herbert  Loomis,  A.B.,  Clark,  1911;  A.M.,  Harvard,  1918.  The  development 
of  the  boot  and  shoe  industry  in  Massachusetts  since  1875.     Harvard. 

William  George  Sutcliffe,  A.B.,  University  of  British  Columbia,  1919.  The  United 
States  glass  and  pottery  industry.     Harvard. 

Transportation  and  Communication 

Elizabeth  C.  Brook,  A.B.,  Kansas,  1912;  A.M.,  1913.  The  struggle  for  the  Inter- 
state Commerce  Commission,  1876-1887.     1921.     Chicago. 

Harcourt  Lenhart  Caverly,  A.B.,  Michigan,  1919.  Federal  railroad  control;  Janu- 
ary 1,  1918,  to  March  1,  1920.     1922.     Michigan. 

Hugh  Campbell  Frame,  A.B.,  Dalhousie,  1917.  The  division  of  joint  freight  rates. 
Harvard. 

Martin  Gustave  Glaeser,  A.B.,  Wisconsin,  1912.  The  cost  of  service  theory  in  rate 
regulation.     Harvard. 

E.  A.  Kincaid,  A.B.,  Washington  State  College,  1910;  A.M.,  Harvard,  1911.  The 
federal  land  grant  to  the  Central  Pacific  Railway.     1921.     California. 

Andrew  J.  Newman,  A.B.,  Washington,  1910;  A.M.,  Missouri,  1911.  The  port  of 
San  Francisco.     1922.    California. 

Webster  R.  Robinson,  A.B.,  California,  1919.  History  of  the  Pacific  Mail  Steam- 
ship Company.     1922.     California. 

Koichi  Shimada,  B.C.,  Waseda,  1917;  A.M.,  Pennsylvania,  1920.  Japanese  shipping 
policy.    1921.    Pennsylvania. 


392  Doctoral  Dissertations  [June 

Jonas  W.  Stehman,  A.B.,  Lebanon,  1909;  A.M.,  Pennsylvania,  1910.  History  of 
the  American  Telephone  and  Telegraph  Company.     1921.     Chicago. 

Trade,  Commerce,  and  Commercial  Crises 

Arthur  Bruce  Anthony,  A.B.,  Stanford,  1919.  Economic  relations  between  debtor 
and  creditor  countries.    1923.    Stanford. 

Ralph  Eastman  Badger,  A.B.,  Dartmouth,  1913;  M.C.S.,  Dartmouth,  1914.  The 
marketing  of  hardware  in  the  United  States.    1921.     Tale. 

William  Arthur  Berridge,  A.B.,  Harvard,  1914;  A.M.,  1919.  Unemployment  and 
its  relation  to  the  business  cycle,  in  the  United  States  and  the  United  Kingdom. 
1921.    Harvard. 

Norman  Sydney  Buck,  A.B.,  Yale,  1913.  Development  of  the  organization  in 
trade  between  England  and  the  United  States.     1922.     Yale. 

Yu  Meng  Chen,  A.B.,  University  of  Nanking,  1914;  A.M.,  Butler  College,  Indian- 
apolis, 1916.    Commercial  problems  of  the  Far  East.    1921.    Columbia. 

John  Truman  Horner,  A.B.,  Oklahoma,  1909;  B.S.  and  A.M.,  1916.  Principles  of 
agricultural  marketing.     1922.     Columbia. 

Allen  Dunning  Jennings,  A.B.,  St.  Stephens,  1913.  Milk  supply  of  New  York 
City.     1921.     Columbia. 

Isador  Lubin,  A.B.,  Clark,  1916.  The  economic  costs  of  retail  distribution.  1921. 
Michigan. 

Thomas  Powderly  Martin,  A.B.,  Leland  Stanford,  1913;  A.M.,  California,  1914. 
The  effect  of  trade  on  Anglo-American  relations,  1840-1865.     1921.     Harvard. 

Robert  Louis  Masson,  A.B.,  Iowa,  1912;  A.M.,  1915.  The  international  trade  of 
Australia.    Harvard. 

Grace  Lee  Nute,  A.B.,  Smith,  1917;  A.M.,  Radcliffe,  1918.  American  foreign  com- 
merce, 1825-1850.     1921.    Radcliffe. 

Hugh  Bruce  Price,  A.B.,  Wisconsin,  1914;  A.M.,  Minnesota,  1916.  The  inspection 
and  grading  of  grain.     1921.     Tale. 

Morgan  Hampton  Rice,  A.B.,  Southwestern,  1919.  An  inquiry  into  the  marketing 
and  production  of  cotton.     1922.     Columbia. 

William  Charles  Schluter,  A.B.,  Iowa,  1915;  A.M.,  Columbia,  1916.  A  study  in 
business  cycles;  the  industrial  conditions  of  Germany,  France,  England,  and  the 
United  States  from  1907  to  July,  1914.     1921.     Columbia. 

Lloyd  Lorenzo  Shaulis,  A.B.,  Harvard,  1915.  The  Boston  produce  market.  Har- 
vard. 

Jacob  Viner,  A.B.,  McGill,  1914;  A.M.,  Harvard,  1915.  The  Canadian  balance  of 
international  indebtedness,  1900-1913.     1921.     Harvard. 

Vertrees  J.  Wyckoff,  A.  B.,  Johns  Hopkins,  1920.  Trade  union  policies  in  times 
of  industrial  depression.     1923.     Johns  Hopkins. 

Daniel  K.  F.  Yapp,  A.B.,  Swarthmore,  1917;  A.M.,  Pennsylvania,  1918.  The  for- 
eign trade  of  Hong  Kong.     1921.     Columbia. 

Accounting,  Business  Methods,  Investments,  and  the  Exchanges 

Patt.  Moody  Atkins,  A.B.,  Yale,  1914;  A.M.,  1915.  The  business  manager's  ad- 
ministration of  production.     1922.     Chicago. 

Joseph  Charles  Bartley,  A.M.,  Villanova,  1918.  Price  fixing  in  the  United  States 
dnrinp  the  world  war.     1921.     Catholic  University. 

Fiimttnd  William  Bradwtn,  A.M.,  Queen's  University,  1914.  Contract  system  on 
railroad  construction.     1922.     Columbia. 


1921]  Labor  and  Labor  Organizations  393 

Wallace  M.  Cunningham,  A.B.,  Roanoke,  1902;  A.M.,  Princeton,  1903.  Automo- 
bile finance  companies.     1921.     Pennsylvania. 

William  D.  Gordon,  B.S.,  Pennsylvania,  1916;  A.M.,  1918.  Stores  control.  1921. 
Pennsylvania. 

Albert  Claire  Hodge,  Ph.B.,  Chicago,  1914.  The  functional  approach  to  account- 
ing problems.     1921.     Chicago. 

Albert  Samuel  Keister,  A.B.,  Otterbein,  1910;  A.M.,  Columbia,  1911.  Recent 
tendencies  in  corporate  finance.     1922.     Chicago. 

Robert  G.  Merrick,  A.B.,  Johns  Hopkins,  1917.  The  development  of  the  finance 
company.     Johns  Hopkins. 

Nina  Miller,  A.B.,  Wisconsin,  1915;  M.S.,  Columbia,  1918.  Analysis  of  financial 
reports.     1921.    Columbia. 

Elizabeth  Morrisst,  A.B.,  Beloit,  1908.  Graft  in  the  building  trades.  1923.  Johns 
Hopkins. 

Milton   Nels   Nelson,  A.B.,  Illinois,   1915;   A.M.,   1917.     Open   price   associations. 

1921.  Illinois. 

Prank  Parker,  B.S.,  Pennsylvania,  1911;  LL.B.,  1915.  Theories  of  depreciation 
applied  to  public  utilities.     Pennsylvania. 

Thomas  Henry  Sanders,  B.C.,  University  of  Birmingham  (England),  1905;  M.C., 
1914.    The  valuation  of  assets.     1921.    Harvard. 

Theodore  R.  Snyder,  B.S.,  Pennsylvania,  1919.     Salvage.     1923.     Pennsylvania. 

Archibald  Herbert  Stockder,  A.B.,  Colorado,  1915;  A.M.,  1916.  Ownership  or- 
ganization in  industry.     1921.     Columbia. 

Kenneth  Waldie  Webb,  A.B.,  Haver  ford,  1918;  A.M.,  Harvard,  1920.  A  study  of 
the  control  of  management  of  American  business  organization.     Harvard. 

Capital  and  Capitalistic  Organizations 
Harvey   G.    Forster,    A.B.,   Toronto,    1913.     Anti-trust    legislation    in    the    United 

Kingdom.     1922.     Columbia. 
George   Abbott  Merrill,  A.B.,  Colgate,   1910;   A.M.,  Columbia,   1914.     The   history 

of  general  incorporation  legislation  in  New  Jersey.     1921.     Columbia. 
William  Harvey  Reeves,  A.B.,  Pennsylvania,  1916;  A.M.,  1919.     Federal  and  state 

regulation  of  corporate  business.     1922.     Columbia. 
I.eland   Rex   Robinson,  A.B.,  Columbia,   1915.     The   social   principle   of   municipal 

monopoly  charges.     1921.     Columbia. 
Tatsumosuke  Ueda,  M.S.,  Tokio,  1916.     The  corporate  form  of  management  in  the 

shipping  industry.     1921.     Pennsylvania. 

Labor  and  Labor  Organizations 
Arthur  Emile  Albrecht,  A.B.,  College  of  the  City  of  New  York;  A.M.,  George 

Washington,  1917.     The  history  and  organization  of  the  International  Seamen's 

Union  of  America.     1922.    Columbia. 
Louis  Bloch,  A.B.,  Wisconsin,   1916;   A.M.,  1917.     The  collective  contract   in   the 

central  competitive  field  of  the  bituminous  coal  industry.     1922.     Columbia. 
Lucy   Gwynne   Branham,   A.B.,   Washington,    1911;    A.M.,   Johns    Hopkins,    1914. 

The  history  of  labor  and  politics  in  New  York.     1922.     Columbia. 
Elizabeth    Rhodes    Butler,    A.B.,    Vassar,    1918;    A.M.,    Columbia,    1919.      Labor 

struggle  between  journeymen   and  master   under   the   guild   system   in    England. 

1922.  Columbia. 

O.  F.  Carpenter,  A.B.,  Ohio  Northern,  1912;  A.M.,  Wisconsin,  1917.  Government 
in  industry.     1921.     Wisconsin. 


394  Doctoral  Dissertations  [June 

Warren    B.   Catlin,   A.B.,   Nebraska,   1903.     The  labor   movement;   its   roots   and 
branches.     1921.     Columbia. 

Lysle  W.  Cooper,  A.B.,  Colorado  College,  1917.    Economic  theories  of  the  American 
labor  movement.     1923.     California. 

Jean  Davis,  A.B.,  Bryn  Mawr,  1914;  A.M.,  Wisconsin,  1920.     Collective  bargaining 
in  the  men's  ready-made  clothing  industry.     1921.     Wisconsin. 

Ethel  B.  Dietrich,  A.  B.,  Vassar,  1913;  A.M.,  Wisconsin,  1914.     Collective  bar- 
gaining in  the  book  and  job  printing  industry.     1921.     Wisconsin. 

Jesse  D.  Clarkson,  A.B.,  Williams,  1918;  A.M.,  Columbia,  1920.     Labor  and  nation- 
alism in  Ireland.     1921.     Columbia. 

Carroll   E.   French,   A.B.,   Monmouth,    1916.     The   shop   committee.      1922.     Johns 
Hopkins. 

Alfred  P.  Haake,  A.B.,  Wisconsin,  1914;  A.M.,  1916.     Wage  measurement  and  the 
management  of  labor.     1921.     Wisconsin. 

Francis  Joseph   Haas,   A.M.,   Marquette,   1919.     Shop   collective   bargaining   in   the 
men's  clothing  industry.     1921.     Catholic  University. 

Elmo  Paul  Hohman,  A.B.,  Illinois,  1916;  A.M.,  1917.     Marine  labor  organizations 
(seamen's  unions).    1922.    Harvard. 

Charles  Paddock  Johnson,  A.B.,  Trinity,  1916;  A.M.,  Princeton,  1917.     Collective 
bargaining  in  the  New  York  building  trades.     1922.     Princeton. 

Carl    Smith    Joslyn,    A.B.,    Harvard,    1920.      The    prevention    of    unemployment. 
Harvard. 

Walter  Benjamin  Kahn,  A.B.,  Harvard,  1916;  A.M.,  1917.     The  labor  movement 
in  Italy.     1922.     Harvard. 

A.  W.  Newcombe,  A.B.,  Bowdoin,  1914;  D.B.,  Newton,  1917.     The  Catholic  Church 
and  the  labor  problem.     1921.     Chicago. 

Roland  McLeod  Miller,  A.B.,   University  of   British   Columbia,   1916;   M.A.,   Cali- 
fornia, 1920.     Labor  legislation  in  California  since  1908.     1922.     California. 

Richard  Stockton    Meriam,   A.B.,   Harvard,    1914.      Trade   unionism   in    Germany, 
1865-1914.     1921.    Harvard. 

Parker   Thomas   Moon,   B.S.,  Columbia,   1913.     The   labor   problem   and   the   social 
Catholic  movement  in  France.     1921.     Columbia. 

Victor  Pierpont  Morris,  A.B.,  Oregon,  1915;  A.M.,  1920.     Oregon  minimum  wage. 
1922.     Columbia. 

H.  H.  Smith,  B.A.,  Iowa,  1909;  M.A.,  Washington,  1915.     Employee  participation 
in  management  of  industry.     1922.     Wisconsin. 

Earl  D.  Strong,  A.B.,  Grinnell,  1909;  A.M.,  Wisconsin,  1921.     The  Western   Fed- 
eration of  Miners  and  affiliations.     1921.     Columbia. 

Paul  S.  Taylor,  A.B.,  Wisconsin,  1917;  M.A.,  California,  1920.     History  and  poli- 
cies of  the  Sailors'  Union  of  the  Pacific.     1922.     California. 

Mns.  Glenn  Turner,  A.B.,  Chicago,  1908;  A.M.,  Wisconsin,  1913.     The  labor  union 

and  production.    1922.     Wisconsin. 
Davis  Weiss,  A.B.,  Wisconsin,  1919;  M.A.,  1920.     The  principles  of  industrial  arbi- 
tration.    1923.     California. 

Money,  Prices,  Credit,  and  Banking 

Charles  E.  Artman,  A.M.,  Columbia,  1918.     Gold  movements  in  relation  to  foreign 

credit  during  the  Great  War.     1922.     Columbia. 
Thomas  Andrew  Beal,  A.B.,  Utah,  1906;  A.M.,  Columbia,   1910.     The  importance 

of  trade  and  bankers'  acceptances  in  business.     1922.     Columbia. 


1921]  Public  Finance,  Taxation,  and  Tariff  395 

J.    Ray   Cable,   A.B.,    B.S.,   Missouri,    1913;    A.M.,   Chicago,    1917.     The    Bank   of 

Missouri.     19:22.    Columbia. 
John  Martin  Chapman,  A.B.,  Indiana,  1917;  A.M.,  Columbia,  1920.     Exercise  of 

the  fiscal  functions  of  federal  reserve  banks.     1922.     Columbia. 
G.  H.  Evans,  Jb.,  A.B.,  Johns  Hopkins,  1920.     The  note  issue  of  the  Federal  Re- 
serve Banks.     1923.     Johns  Hopkins. 
Abthub  L.  Faubel,  B.S.,  New  York,  1919;  A.M.,  Columbia,  1911.    Price  fixing  and 

competitive  prices.     1922.    Princeton. 
Laurence  Hobart  Fleck,  A.B.,  Michigan,  1919;  A.M.,  1920.     The  interdependence 

of  interest  rates.     1921.    Michigan. 
Bartow   Gbiffiss,  A.B.,  Johns   Hopkins,   1920.     The  call  money   rate   in  the    New 

York  money  market.     1923.    Johns  Hopkins. 
Seymour  E.  Harris,  A.B.,  Harvard,  1920.     A  history  of  the  English  currency  notes 

(Bradburies).     1923.    Princeton. 
Lazar  A.  Itzkovich,  A.B.,  Michigan,  1919;  A.M.,  1920.     Institutions  of  pecuniary 

valuation.     1921.    Michigan. 
Ruth  Jaeger,  A.B.,  Radcliffe,  1920;  A.M.,  1921.     The  inflation  and  resumption  of 

specie  payments,  1865-79.    1922.    Columbia. 
H.  L.  McCracken,  B.S.,  Penn  College,  1914;  B.S.,  Haverford,   1915;  M.A.,  Penn, 

1916.    The  role  of  a  fluctuating  standard  of  value  in  the  distribution  of  wealth  and 

class  struggle.    1922.    Wisconsin. 
Morris  A.  Mechanic,  A.B.,  Johns  Hopkins,  1918.     Building  and  loan  associations  in 

the  United  States.     1921.    Johns  Hopkins. 
Harry  E.  Miller,  A.B.,  Boston  University,  1919;  A.M.,  Harvard,  1920.     Histoiy  of 

banking  theory  in  the  United  States  before  the  Civil  War.    Harvard. 
Geoboe  Odatey,  B.S.,  New  York  University,  1917;  A.M.,  Columbia,  1918.     Methods 

of   improving   banking   and    financial    relations    between    the    United    States    and 

Japan.     1921.    Columbia. 
Herbert  Saphir,  A.B.,  Cornell,  1919;  A.M.,  1920.     Commercial  credit  and  the  rate 

of  interest.    Harvard. 
Henby  Schenck,   A.B.,  Harvard,   1903;   A.M.,   Columbia,   1919.     Dollar   exchange. 

1921.     Columbia. 
Walter  E.  Spahr,  A.B.,  Wisconsin,  1914;  A.M.,  1917.     Local  clearings  and  collec- 
tion of  checks.     1922.     Columbia. 

Public  Finance,  Taxation,  and  Tariff 

A.  J.  Altmeyer,  B.A.,  Wisconsin,   1914;  M.A.,   1920.     Recent  developments  in   the 

application  of  special  assessments.     1922.     Wisconsin. 
Andries  Johannes  Bruyere,  A.B.,  Cape  of  Good  Hope,  1915.     Protection  in  South 

Africa.     1922.    Harvard. 
Arthur  Eugene  Buck,  Ph.B.,  Milligan,  1910;  B.S.,  Tennessee,  1913;  A.M.,  Colum- 
bia, 1917.     New  York  budget  law.     1921.     Columbia. 
Edward  Taylor  Bullock,  A.B.,  Michigan,  1910;  A.M.,  1912.     The  financial  aspects 

of  highway  construction.     Harvard. 
Dudley  DeWitt  Carroll,  A.B.,  Guilford,  1907;  A.M.,  Haverford,  1908.    The  history 

of  taxation  in  North  Carolina.     1922.     Columbia. 
Alzada  Comstock,  A.B.,  Mt.   Holyoke,   1910;  A.M.,  Columbia,   1913.     State  income 

taxes.     1921.     Columbia. 
Felix    Flugel,    A.B.,    Leland    Stanford,    1914;    M.A.,    California,    1917.      Types    of 

income  taxes.     1921.    California. 


396  Doctoral  Dissertations  [June 

Alexander  Gourvitch,  University  of  Paris,  1913.  French  public  debt.  1921.  Co- 
lumbia. 

Jose  M.  Hilario,  A.B.,  University  of  the  Philippines,  1914;  A.M.,  Columbia,  1920. 
Excise  taxes  during  the  Civil  War  and  the  Great  War.     1922.    Columbia. 

Duncan  Clark  Hyde,  A.B.,  McGill,  1917;  A.M.,  Harvard,  1918.  The  war  finance 
of  the  Dominion  of  Canada.    1921.    Harvard. 

Michiel  Hendrick  de  Kock,  A.B.,  Cape  of  Good  Hope,  1915;  A.B.  with  honors, 
1916.    The  finances  of  South  Africa,  1910-1920.     1922.    Harvard. 

J.  G.  McKay,  A.B.,  Wisconsin,  1913.  Income  and  inheritance  taxation  in  the  state 
of  Wisconsin.     1921.     Wisconsin. 

A.  R.  Mead,  A.B.,  Miami;  A.M.,  Columbia,  19] 0.  The  development  of  the  free 
school  and  the  abolition  of  rate  bills  in  the  states  of  Connecticut  and  Michigan. 
1921.    Columbia. 

Harvey    Whitefield   Peck,    A.M.,  Yale,    1907;    Ph.D.,    1913.     Contemporary    fiscal 

theories.     1922.     Columbia. 
Mark  Anson  Smith,  A.B.,  Dartmouth,  1910;  A.M.,  Wisconsin,  1913.    A  study  of  the 

financial  aspects  of  the  wool  tariff  schedule.    Harvard. 

Population  and  Migration 
Clyde  Julian  Crobaugh,  A.B.,  Stanford,  1920.    The  oriental  problem  on  the  Pacific 

coast.     1924.     Stanford. 
Stanley  Powell  Davies,  A.B.,  Bucknell,  1912.     Racial  assimilation  in  a  community 

in  the  anthracite  coal  region.     1922.     Columbia. 
Jerome  Davis,  A.M.,  Columbia,   1919.     Russians  in  the  United  States.     1921.     Co- 
lumbia. 
Howard  Charles  Green,  A.B.,  College  of  the  City  of  New  York,  1902.    The  racial 

movement  of  the  American  Revolution.     1922.     Columbia. 
Marcus  Lee  Hansen,  A.B.,  Iowa,  1916;  A.M.,  1917.     The  problem  and  distribution 

of  immigration,  1820-1860.     1922.     Harvard. 
George  E.  Hartmann,  A.B.,  Cincinnati,  1917.     Race  consciousness:  a  function  of 

race  prejudice,  with  particular  reference  to  the  American  negro.     1921.     Chicago. 
Clemens  Niemi,  A.B.,  Minnesota,  1915;  A.M.,  Chicago,  1919.     The  Finnish  element 

in  the  American  population.     1921.    Chicago. 

B.  M.  Stewart,  A.M.,  Queen's  University,  1911.  Immigration  settlement  in  Canada 
before  Confederation.     1921.     Columbia. 

Donna  Fay  Thompson,  A.B.,  Indiana,  1913;  A.M.,  1914.  The  birth  rate  in  col- 
lege graduates'   families.     1921.     Columbia. 

Social  Problems  and  Reforms 

L.   E.   Blanch,  A.B.,  Goshen,   1915;   A.M.,  Chicago,   1917.     The   history   of   federal 

legislation  for  industrial  education.     1921.     Chicago. 
Beulah    Belle   Briley,   B.S.,    Iowa   State   College,    1917;   M.S.,    1918;    M.A.,    State 

University    of   Iowa,    1920.     The   economic   efficiency   of   the   single    family    as    a 

household  unit.     1922.     State    University   of  Iowa. 
Emerson   O.   Bradshaw,  Ph.B.,  Chicago,  1910;  A.M.,  1911.     Social   forces  affecting 

the  life  of  the  industrial  community.     1922.     Chicago. 
Frieda   Opal  Daniel,  A.B.,  Drake,   1916.     A   social   survey   of   an   industrial   area. 

1922.    Chicago. 
Harmon   O.   DeGraff,   Bachelor   of  Didactics,   Iowa   State  Teachers   College,   1908; 


1921]  Social  Problems  and  Reforms  397 

B.A.,  State  University  of  Iowa,  1916;  M.A.,  1918.  Juvenile  delinquency  in  Iowa. 
1921.    State  University  of  Iowa. 

John  R.  Hart,  Jb.,  A.B.,  Pennsylvania,  1911;  A.M.,  1914.  Economic  waste  in  the 
distribution  of  protestant  churches.     1922.     Pennsylvania. 

Horace  B.  Hawthorn,  B.S.,  Iowa  State  College,  1915;  M.S.,  1915.  The  compara- 
tive psychic  efficiency  of  rural  social  groups.     1921.     Wisconsin. 

Cary  Walker  Hayes,  A.B.,  Washburn,  1909;  A.M.,  Columbia,  1912.  Public  morals 
and  recreation;  a  municipal  program.     1921.     Columbia. 

Margaret  T.  Hogden,  B.L.,  California,  1913.  Workers'  education:  an  historical 
study  of  the  working  class  movement  with  reference  to  the  development  by  adult 
education  of  working  class  leadership.     1922.    California. 

Jakub  Horak,  Ph.B.,  Chicago,  1916.  A  study  of  Czecho-Slovak  community  organi- 
zation in  Chicago.     1921.     Chicago. 

Helen  Rankin  Jeter,  A.B.,  California,  1917.  The  Chicago  Juvenile  Court  1922. 
Chicago. 

Charles  Dee  Johnson,  A.B.,  Mississippi  College,  1910;  A.M.,  1916;  relation  of  the 
negro  problem  to  education  in  the  South.     1921.    Iowa. 

Glenn  R.  Johnson,  A.B.,  Reed,  1915.  The  American  newspaper  as  an  indicator 
of  social  forces.     1921.     Columbia. 

Oscar  W.  Junek,  A.M.,  Prague.  Contribution  to  the  technique  of  the  study  of 
group  psychology.     1922.    Chicago. 

Samuel  Clarence  Kincheloe,  A.B.,  Drake,  1916;  A.M.,  Chicago,  1919.  The  psy- 
chology of  leadership.     1922.     Chicago. 

Oswald  Rothsay  Lavers,  A.B.,  Queens,  1913;  A.M.,  Chicago,  1920.  The  social 
significance  of  housing.    1922.    Chicugu, 

Robert  Rockwood  McCormich,  A.B.,  College  of  Idaho,  1915.  The  financial  sup- 
port of  American  colleges.     1922.     Columbia. 

Roderick  D.  McKenzie,  A.B.,  Manitoba,  1912;  A.M.,  Chicago,  1916.  The  social 
study  of  the  neighborhood.     1921.     Chicago. 

A.  J.  Mertzke,  A.B.,  Wisconsin,  1916.  The  development  of  the  idea  of  public  pur- 
pose.    1922.     Wisconsin. 

Sadie  T.  Mossell,  B.S.,  Pennsylvania,  1918;  A.M.,  1919.  The  budgets  of  one  hun- 
dred negro  families  in  Philadelphia.     1921.    Pennsylvania. 

Hazel  Grant  Ormsbee,  A.B.,  Cornell,  1915.  The  juvenile  labor  exchange  in  the 
United  States  and  England,  with  a  statistical  analysis  of  records  in  the  Phila- 
delphia Bureau  of  Compulsory  Education.     1922.     Bryn  Mawr. 

Clarence  E.  Rainwater,  A.B.,  Drake,  1907;  A.M.,  1908.     The  neighborhood  center. 

1921.  Chicago. 

Johan  T.  Sellin,  A.B.,  Augustana,  1915;  A.M.,  Pennsylvania,  1916.  Swedish  so- 
ciology.    1922.    Pennsylvania. 

Herbert  Newhard  Shenton,  A.B.,  Dickinson,  1906;  A.M.,  1909;  B.D.,  Drew, 
1910.     Collective  decision.     1921.     Columbia. 

Ernest  Hugh  Shideler,  A.B.,  Ottawa,  1915;  A.M.,  Chicago,  1917.     Social  heredity. 

1922.  Chicago. 

Russell  Gordon  Smith,  A.B.,  Richmond,  1911;  A.M.,  Columbia,  1914.  A  sociologi- 
cal study  of  opinion  in  the  United  States.     1922.     Columbia. 

W.  R.  Tylor,  A.B.,  Swarthmore,  1911;  A.M.,  Wisconsin,  1916.  Organized  dis- 
guised propaganda.     1921.     Wisconsin. 

Mary  Van  Kleeck,  A.B.,  Smith,  1904.  The  fact  basis  for  industrial  reform.  1921. 
Columbia. 

Amey  Eaton  Watson  (Mrs.  Frank  D.),  A.B.,  Women's  College  in  Brown  University, 


3i)8  Doctoral  Dissertations  [June 

1907;  A.M.,  Pennsylvania,  1910.  Social  treatment  of  illegitimate  mothers.  1921. 
Bryn  Mawr. 

Helen  Russell  Weight,  A.B.,  Smith,  1912.  Gainful  employment  of  mothers  in  re- 
lation to  child  welfare.     1922.     Chicago. 

Donald  R.  Young,  A.B.,  Lafayette,  1919;  A.M.,  Pennsylvania,  1920.  The  social 
importance  of  motion  pictures.     1922.     Pennsylvania. 

Erle  Fiske  Young,  Ph.B.,  Chicago,  1917;  A.M.,  1920.  The  use  of  case  method  in 
training  social  workers.     1922.     Chicago. 

Insurance  and  Pensions 
Barbara   N.   Grimes,  A.B.,  California,   1913;  J.D.,   1915.     Sickness   as   a  cause   of 

poverty  in  California  and  a  consideration  of  social  health  insurance  as  a  remedy. 

1921.    California. 
Dwight  D.  Johnson,  A.B.,  Coe,  1918.     Standards  of  comparison  in  life  insurance. 

1921.    Pennsylvania. 
Harry  J.  Loman,  B.S.,  Pennsylvania,  1919.    Credit  insurance.     1922.     Pennsylvania. 
Edward  L.  McKenna,  A.B.,  Columbia,  1923;  A.M.,  Illinois,  1914.     Title  insurance 

in  the  United  States.    1922.    Pennsylvania. 

Pauperism,  Charities,  and  Relief  Measures 

Cyprian  William  Emanuel.  An  interpretation  of  the  work  of  St.  Vincent  de  Paul 
in  the  light  of  modern  principles  of  relief.    1922.    Catholic  University. 

Ralph  P.  Holren,  A.B.,  Franklin  and  Marshall,  1913.  Poverty  in  its  relation  to 
education.     1921.    Pennsylvania. 

Porter  R.  Lee,  A.B.,  Cornell,  1903.  Public  outdoor  relief  in  the  United  States. 
1921.    Columbia. 

S.  C.  Ratcliffe,  A.B.,  Mt.  Allison,  1909;  A.M.,  Alberts,  1918.  The  historical  de- 
velopment of  poor  relief  legislation  in  Illinois.     1921.     Chicago. 

Rene  Vaillant,  A.B.,  Lille,  1908;  LL.B.,  1910;  LLR.,  1911.  Relief  of  unemploy- 
ment in  France  during  and  since  the  great  war.    Columbia. 

Socialism'and  Co-operative  Enterprises 
Samuel  Bernstein,  A.B.,  College  of  the  City  of  New  York,  1919;  A.M.,  Columbia, 

1920.  The  origins  of  the  guild  socialist  movement  in  England.     1921.     Columbia. 
Joseph   Bernard   Kenkel,   A.B.,  St.   Joseph's   College,   Collegeville,   Indiana,    1913. 

Cooperative  marketing  of  grain  at  country  points  in  the  North  Central  States. 

1921.  Catholic  University. 

Paschal  Larkin,  A.M.,  National  University  of  Ireland,  1916.  Marxian  socialism 
in  some  recent  developments.     1922.     Catholic  University. 

Ellery  F.  Reed,  B.A.,  Lenox  College,  1914;  M.A.,  Clark  University.  The  treat- 
ment of  social  radicalism.     1921.     Wisconsin. 

Statistics  and  Its  Methods 
John  Randolph   Riggleman,  A.B.,  Cornell  College,   1918;  M.B.A.,  Harvard,  1920. 

Graphic  methods  in  the  analysis  and  presentation  of  business  statistics.    Harvard. 
Frank  Alexander  Rosa,  Ph.B.,  Yale,  1906;  A.M.,  Columbia,  1913.     A  study  of  the 

application  of  statistical  methods  to  sociological  problems.     1921.     Columbia. 


NOTES 

The  Executive  Committee  has  voted  to  hold  the  next  annual  meeting  of 
the  American  Economic  Association  in  Pittsburgh,  Pa.  The  date,  though 
not  definitely  decided,  will  probably  be  December  27-29. 

Sale  of  Surplus  Stock  of  Publications  of  the  American  Economic  Associa- 
tion. The  Secretary  has  been  authorized  to  dispose  of  the  surplus  stock  of 
publications  of  the  American  Economic  Association  at  reduced  prices. 
The  reasons  for  this  action  are  the  desire  to  make  these  publications  useful; 
to  reduce  the  heavy  storage,  insurance,  and  interest  chaiges;  to  convert  these 
assets  to  cash;  and  to  make  it  possible  for  the  younger  economists  to  com- 
plete their  sets  of  the  Association's  publications.  Accordingly  the  members 
of  the  Association  and  the  libraries  are  given  the  first  opportunity  to  buy 
these  publications ;  the  offers  are  open  to  them  exclusively  until  November 
1,  1921,  and  thereafter  the  general  public  will  be  permitted  to  buy  at  the 
reduced  prices.  After  March  1,  1922,  all  unsold  surplus  publications,  except 
those  reserved  as  stated  below  and  possibly  certain  single  numbers  for  which 
fairly  steady  demand  is  visible,  will  be  pulped. 

Reserved  publications: 

a.  Three  copies  of  each  number  will  be  permanently  retained  by  the 

Association. 

b.  As  far  as  possible,  ten  other  copies  of  each  number  will  be  reserved 

for  sale  only  in  complete  series. 

c.  As  far  as  possible,  ten  other  copies  of  each  number  will  be  reserved 

for  sale  only  in  complete  volumes. 
Above  these  23  reserved  copies  all  copies  of  every  number  will  be 
sold  by  single  copy  or  volume. 
The  prices  at  which  the  surplus  publications  will  be  sold  are  determined 
by  deducting  the  following  discounts  from  the  list  prices  given  for  single 
numbers  or  volumes  in  the  pages  appended  to  Vol  XI,  No.  1,  Supplement, 
March,  1921.     In  case  you  are  interested  in  these  reduction  sales  and  have 
not   a   copy   of  that   Supplement,   the    Secretary   will    furnish   you   with    a 
copy  of  the  list  prices. 

Discounts  from  List  Prices  (Per  cent) 

Per 

Full  series         Per  volume  single  number 

First  Series,  1886-1896,  Vols.   I-XI 75                        70  65 

Economic  Studies,  1896-1899,  Vols.  I-IV...       75                       70  65 

New  Series,  1896-1899,  Vols.  I-II 75                        70  70 

Third  Series,  1900-1910,  Vols.  I-XI 75                       70  5 

Economic  Bulletin,  1908-1910,  Vols.  I-III..       75                        70  65 
Fourth  Series:    American  Economic  Review 

1911-1915,  Vols.  I-V 65                        60  50 

1916-1918,  Vols.   VI-VIII 50                        45  30 

1919-1921,  Vols,  IX-XI No  discounts 

The  above  quotations  are  for  paper  bound  copies ;  volumes  bound  in  cloth 


400  Notes  [June 

may  be  had  at  25  per  cent  additional.  In  filling  orders  for  bound  volumes 
time  must  be  allowed  for  binding. 

Exceptions  will  be  made  of  a  certain  few  single  numbers,  which  will  not 
be  sold  at  the  discounts  above  quoted;  but  instead  a  discount  of  30  per  cent 
will  be  allowed  from  the  list  price. 

Orders  will  be  filled  as  received,  first  come  first  served.  Address  all 
orders  to  Professor  R.  B.  Westerfield,  Secretary,  Yale  Station,  New  Haven, 
Conn. 

Karelsen  Prizes.  The  Karelsen  prizes  of  $1000  and  $500  for  the  best 
and  second  best  papers  on  the  subject  "What  can  a  man  afford"  have  been 
awarded  to  Paul  and  Dorothy  Douglas,  of  Chicago,  and  Carl  S.  Joslyn, 
of  Cambridge,  Massachusetts,  respectively.  According  to  the  terms  of  the 
contest  the  papers  were  judged  by  one  economist  (F.  A.  Fetter,  of  Princeton 
University),  one  practical  social  worker  (Mrs.  Irene  Osgood  Andrews,  of 
the  American  Association  for  Labor  Legislation),  and  one  student  of  ethics 
(James  H.  Tufts,  of  the  University  of  Chicago).  This  committee  were 
unanimous  in  their  decision.  They  also  made  honorable  mention  of  a  third 
paper  by  Miss  Lillian  Brandt,  New  York  City.  The  Association  proposes  to 
publish  the  prize  papers,  and  possibly  the  third  one,  in  a  Supplement  to  the 
American  Economic  Review,  probably  in  September  or  December  of  this 
year. 

Second  Karelsen  Prize  Essay  Competition.  The  American  Economic  As- 
sociation wiil  conduct  a  second  prize  essay  competition.  The  award  of 
the  prizes  of  the  first  competition  on  "What  can  a  man  afford"  is  announced 
above. 

The  subject  of  the  essays  of  the  second  contest  will  be  "The  relations 
of  capital  and  labor."  What  is  expected  is  a  working  plan  for  division  of 
profits  or  bonus  in  the  conduct  of  an  industrial  plant  of  small  or  moderate 
size,  some  plan  or  suggestion  which  will  give  the  employee  a  share  of  the 
profits  or  a  voice  in  the  management  or  any  other  incentive  to  do  his  job 
well,  and  which  will  be,  if  possible,  an  application  of  the  Golden  Rule. 
Three  prizes  will  be  offered  for  the  most  meritorious  essays:  first  prize, 
$1,000;  second  prize,  $500;  and  third  prize,  $250. 

Any  American  citizen  is  eligible  to  compete.  It  is  particularly  hoped  that 
the  officers  of  labor  unions  and  employers'  associations  will  bring  this  contest 
to  the  attention  of  their  members  and  employees  and  that  many  from  these 
industrial  groups  will  enter  the  contest. 

The  essays  are  to  be  submitted  in  typewritten  form  on  or  before  Septem- 
ber 1,  1922,  to  the  Secretary  of  the  American  Economic  Association,  New 
Haven,  Connecticut.  Each  is  to  be  signed  with  a  pseudonym,  which  should 
also  be  written  on  a  sealed  envelope  containing  the  real  name  and  address 
of  the  writer.     No  definite  length   is   prescribed   for  the  essays;  but  it   is 


1921]  Notes  401 

expected,  that  each  will  constitute  a  small  monograph  of  some  30  to  100 
typewritten  pages  (7,500  to  25,000  words).  The  successful  papers  will 
become  the  property  of  the  American  Economic  Association,  and  it  is 
expected  that  they  will  be  published  as  a  supplement  to  the  American 
Economic  Review,  or  in  some  other  way.  Further  particulars  of  the  contest 
will  be  given  in  the  September  number  of  the  Review  and  in  circulars  from 
the  Secretary's  office.  All  inquiries  regarding  the  contest  should  be  addressed 
to  the  Secretary  of  the  American  Economic  Association,  Yale  Station, 
New  Haven,  Connecticut. 

The  judges  who  will  determine  the  award  of  the  prizes  will  be  persons 
of  national  reputation  and  representative  of  different  social  and  economic 
groups. 

Any  member  who  is  willing  to  sell  a  copy  of  the  American  Economic 
Review,  Supplement,  for  March,  1919,  is  requested  to  notify  Professor 
Irving  Fisher,  460  Prospect  St.,  New  Haven,  Conn. 

Since  the  December  meeting,  the  following  names  have  been  added  to  the 
membership  of  the  American  Economic  Association: 
Anthony,  Arthur  B.,  Sunnyvale,  Calif. 
Axe,  Emerson  \V.,  27  W.  44th  St.,  New  York  City. 
Baker,  Elizabeth  F.,  Barnard  College,  New  York  City. 
Belcher,  Donald  R.,  195  Broadway,  New  York  City. 
Berliner,  Ronald  R.,  55  Wall  St.,  New  York  City. 
Berridge,  William  A.,  Wadsworth  House,  Cambridge,  Mass. 
Bevis,  Howard  L.,  3924  Floral  Ave.,  Norwood,  Ohio. 
Bigelow,  Chester  W.,  25  Pine  St.,  New  York  City. 
Billingsley,  Allen  L.,  70  Fifth  Ave.,  New  York  City. 
Bird,  William  P,,  1746  Lamont  St.,  N.  W.,  Washington,  D.  C. 
Blackwell,  C.  T.,  R.  F.  D.,  No.  2,  Del  Norte,  Colo. 
Bliven,  Bruce,  The  Globe,  73  Dey  St.,  New  York  City. 
Bohnfolk,  J.  F.,  20  Vesey  St.,  New  York  City. 
Bonneville,  Joseph  H.,  101  E.  78th  St.,  New  York  City. 
Borja,  Alejandro  Ponce,  Quito,  Ecuador. 
Brissenden,  P.  F.,  32  Waverly  Place,  New  York  City. 
Brown,  Lathrop,  St.  James,  N.  Y. 

Brown,  Travis  H.,  Jr.,  195  Broadway,  New  York  City. 
Butler,  Elizabeth  R.,  Furnald  Hall,  Columbia  University,  New  York  City. 
Carmichael,  Albert,  218  N.  Walnut  St.,  Lamoni,  Iowa. 
Chen,  Tsing  Hua,  Box   10,   Univ.  of  California,  Berkeley,  Calif. 
Chiba,  Saburo,  72  Graduate  College,  Princeton,  N.  J. 
Clabaugh,  Hinton  G.,  Lincoln  Hotel,  Indianapolis,  Ind. 
Cordell,  H.  W.,  Pullman,  Wash. 

Craig,  Ralph  C,  Liberty  National  Bank,  New  York  City. 
Cross,  M.  C,  336  Lutz  Ave.,  West  Lafayette,  Ind. 
Davidson,  Blaine  T.,  211  West  Hill  St.,  Champaign,  111. 
Draper,  Ernest  G.,  375  Washington  St.,  New  York  City. 
Duffus,  Robert  L.,  New  York  Globe,  73  Day  St.,  New  York  City. 


402  Notes  [June 

Ellis,  Ray  G.s  1102  W.  Oregon  St.,  Urbana,  111. 

Fisher,  John  A.,  Ohio  State  University,  Columbus,  Ohio. 

Frankenfield,  Lorraine,  5026  15th  Ave.,  N.E.,  Seattle,  Wash. 

Fullbrook,  E.  S.,  University  of  Nebraska,  Lincoln,  Neb. 

Galster,  Augusta  E.,   109  Commerce  Bldg.,  Univ.  of  Illinois,  Urbana,  111. 

Garrett,  S.  S.,  Sibley  College,  Cornell  Univ.,  Ithaca,  N.  Y. 

Gosswiller,  Eugene  R.,  1639  Lunt  Ave.,  Chicago,  111. 

Gotoh,  Teijo,  c/o  Nippon  Usen  Kaisha,  120  Broadway,  New  York  City. 

Gottschall,  M.  H.,  Dept.  of  Internal  Affairs,  Harrisburg,  Pa. 

Grady,  Eleanor  H.,  550  W.  140th  St.,  New  York  City. 

Graham,  Frank  D.,  Dartmouth  College,  Hanover,  N.  H. 

de  Haas,  J.  A.,  90  Trinity  Place,  New  York  City. 

Hallberg,  R.  E.,  Room  1660,  208  S.  La  SaUe  St.,  Chicago,  111. 

Hall,  Lincoln  W.,  Univ.  of  Pennsylvania,  Philadelphia,  Pa. 

Hansen,  Stanley  O.,  3406  N.  Halsted  St.,  Chicago,  111. 

Harr,  Luther  A.,  4213  Chester  Ave.,  Philadelphia,  Pa. 

Hayes,  Carleton,  333  Henry   Bldg.,   Seattle,  Wash. 

Hewett,   William  W.,  University  of  Pennsylvania,  Philadelphia,   Pa. 

Hill,  Mrs.  W.  H.,  58  Village  Ave.,  Dedham,  Mass. 

Hilmer,  Hermann,  Clark  College,  Worcester,  Mass. 

Ho,  Yuan-Ian,  Customs  House,  Shanghai,  China. 

Hoffman,  Wright,  University  of  Pennsylvania,  Philadelphia,  Pa. 

Holt,  Col.  Lucius  H.,  West  Point,  N.  Y. 

Hyde,  Duncan  C,  27  Gray's  Hall,  Cambridge,  Mass. 

Iott,  J.  M.  A.,  246b  The  Terrace,  Wellington,  New  Zealand. 

Ishida,  I.,  Room  708,  277  Broadway,  New  York  City. 

James,  Francis  B.,  804  Westory  Bldg.,  Washington,  D.  C. 

Johnson,  Robert  P.,  6153  S.  Paulina  St.,  Chicago,  111. 

Johnston,  Douglas,  Box  124,  Evanston,  111. 

Jones,  Charles  W.,  403  Clifton  Terrace,  West,  Washington,  D.  C. 

Kawata,   Shiro,   Kitashirakawa,   Oiwakecho,   Kyoto,   Japan. 

Keene,  Alden  V.,  Federal  Reserve  Bank,  Boston,  Mass. 

Keir,  Malcolm,  Dartmouth  College,  Hanover,  N.   H. 

Kimball,  Milo,  525  Boylston  St.,  Boston,  Mass. 

King,  Clyde  L.,  University  of  Pennsylvania,  Philadelphia,  Pa. 

Klaragard,  Sever,  31  E.  Daniel  St.,  Champaign,  111. 

Kohn,  Robert  D.,  56  West  45th  St.,  New  York  City. 

Krafft,  W.  E.,  Continental  Casualty  Co.,  910  Michigan  Ave.,  Chicago,  111. 

Lautner,  J.  E.,  Northern  State  Normal  School,  Marquette,  Mich. 

Lay,  Tracy,  Department  of  State,  Washington,  D.  C. 

Leffingwell,  R.  C,  52  William  St.,  New  York  City. 

Leib,  Karl  E.,  University  of  Washington,  Seattle,  Wash. 

Lesher,  Carl  E.,  Linda  Ave.,  White  Plains,  N.  Y. 

Lewis,  John  C,  Garrett  Bldg.,  Baltimore,  Md. 

Lightbody,  W.  A.,  72  Cedar  St.,  Chicago,  111. 

Livingston,  George,  1760  Euclid  St.,  Washington,  D.  C. 

Lubarsky,  L.  H.,  63  East  Woodland  St.,  Baltimore,  Md. 

Lustig,  A.  A.,  National  Press  Club,  Washington,  D.  C. 

McClung,  Reid  L.,  New  York  University,  82  Waverly  Place,  New  York  City. 

McKay,  M.  K.,  University  of  Pittsburgh,  Pittsburgh,  Pa. 


1921]  Notes  403 

McLean,  George,  Dubuque,  Iowa. 

MaeClintock,  Samuel,  City  College,  New  York  City. 

Mason,  David  T.,  University  of  California,  Berkeley,  Calif. 

Matthews,  James  M.,  465  Worcester  "St.,  Wellesley  Hills,  Mass. 

Meyers,  Shafter  L.,  First  National  Bank,  Chicago,  111. 

Misner,  E.  G.,  State  College  of  Agriculture,  Ithaca,  N.  Y. 

Moderwell,  Charles  N.,  332  S.  Michigan  Ave.,  Chicago,  111. 

Montgomery,  Hugh  W.,  28  E.  Jackson  St.,  Chicago,  111. 

Moore,  George  H.,  15  Ashburton  Place,  Boston,  Mass. 

Moorhouse,  H.   W.,  2151   Sherman  Ave.,   Evanston,   111. 

Morson,  Walter  R.,  64  Wellington  St.,  West,  Toronto,  Ontario,  Canada. 

Negoro,  Mr.,  c/o  Kyo  Bun  Kwan,  No.  1  Shicome,  Ginza,  Toyko,  Japan. 

Noshomu,  Rodo,  c/o  Maruzen  Co.,  Tokyo,  Japan. 

Osborn,  Grover  P.,  1003  Chapel  St.,  Cincinnati,  Ohio. 

Otzuka,  Kinnosuke,  Japanese  Consulate  General,  Hamburg,  Germany. 

Percefull,  Sabin  C,  Northwestern  State  Normal  School,  Alva,  Okla. 

Peterson,  C.  M.,  3704  Greenview  Ave.,  Chicago,  111. 

Reed,  William  G.,  121  Chestnut  St.,  Philadelphia,  Pa. 

Richter,  Erwin  E.,  2701  Larkin  St.,  San  Francisco,  Calif. 

Ross,  Harry  A.,  University  of  Illinois,  Urbana,  111. 

Rossell,  Robert  T.,  747  Union  Arcade,  Pittsburgh,  Pa. 

Rossmoore,  E.  E.,  217  Broadway,  New  York  City. 

Ryan,  Franklin  W.,  Box  121,  Cambridge,  Mass. 

Scholz,  Karl  W.  H.,  University  of  Pennsylvania,  Philadelphia,  Pa. 

Seltzer,  Lawrence,  University  of  Michigan,  Ann  Arbor,  Mich. 

Skinner,  M.  M.,  University  of  Washington,  Seattle,  Wash. 

Slade,  Mrs.  A.  J.,  15  West  55th  St.,  New  York  City. 

Staples,  M.  H.,  130  King  St.,  East,  Toronto,  Ontario,  Canada. 

Stewart,  Bryce  M.,  112  Argyle  Ave.,  Ottawa,  Ontario,  Canada. 

Toi,  Lam  Sing,  Customs  College  Library,  Peking,  China. 

Traylor,  M.  A.,  68  West  Monroe  St.,  Chicago,  111. 

Waggener,  J.  P.,  P.  O.  Box  1031,  Wichita  Falls,  Texas. 

Walker,  J.  E.,  446  Senate  Office  Bldg.,  Washington,  D.  C. 

Wallace,  B.  A.,  610  13th  Ave.,  S.  E.,  Minneapolis,  Minn. 

Watkins,  T.  H.,  Whitehall  Bldg.,  New  York  City. 

Weld,  William  E.,  Columbia  University,  New  York  City. 

Whyte,  John,  National  Ass'n  of  Credit  Men,  41  Park  Row,  New  York  City. 

Wilmerding,  C.  H.,  502  National  Life  Bldg.,  Chicago,  111. 

Winsor,  Lucy  B.,  Stanford  University,  Calif. 

Wisler,  Willis,  University  of  Wisconsin,  Madison,  Wis. 

Woodward,  J.  H.,  Equitable  Life  Assurance  Society,  New  York  City. 

Yang,  Chien,  Nanking  Teachers  College,  Nanking,  China. 

Yoder,  F.  R.,  State  College,  Pullman,  Wash. 

Young,  E.  Marshall,  Room  1415,  29  Broadway,  New  York  City. 

Youngblood,  B.,  College  Station,  Texas. 

Zimmerman,  Erich  W.,  James  Milliken   University,  Decatur,  111. 

Announcement  has  been  made  of  the  offer  of  four  Hart  Schaffner  &  Marx 
prizes  for  the  best  studies  in  the  economic  field,  to  be  submitted  in  1922. 
The  six  new  subjects  which  are  suggested  in  addition  to  a  long  list  of  avail- 
able subjects  are:  (1)  Undetected  monopoly  as  affecting  cost  of  living;  (2) 


404  Xotes  [June 

A  classification  of  federal  expenditures  for  a  national  budget  system;  (3) 
A  program  for  the  industrial  transformation  of  China;  (4)  Protectionism 
as  affected  by  the  war;  (5)  The  effects  of  price-fixing  by  the  government 
during  the  war;  (6)  The  function  of  capital.  For  two  of  the  prizes,  the 
competition  is  open  to  undergraduates.  Full  particulars  may  be  obtained 
by  addressing  Professor  J.  Laurence  Laughlin,  University  of  Chicago, 
Chicago,  111. 

The  Carnegie  Corporation  of  New  York  announces  an  agreement  entered 
into  by  the  corporation  and  Leland  Stanford  Jr.  University  of  California 
by  which  a  Food  Research  Institute  is  to  be  established  at  the  university  for 
the  intensive  study  of  the  problems  of  production,  distribution,  and  consump- 
tion of  food.  The  work  will  be  begun  July  1.  The  Carnegie  Corporation 
provides  a  fund  of  $700,000  for  its  support  for  a  period  of  ten  years.  There 
will  be  three  directors  in  charge  of  as  many  divisions,  namely,  physiology  and 
chemistry  of  nutrition,  economics  and  food  distribution,  and  chemistry  of 
food  manufacture  and  agriculture.  A  small  group  of  fellowships  will  be 
available. 

The  College  of  William  and  Mary,  Virginia,  announces  the  establishment 
of  a  graduate  division  of  the  School  of  Finance  and  Business  Administration. 

The  Beta  Chapter  of  Delta  Phi  Epsilon,  a  national  foreign  trade  pro- 
fessional fraternity,  has  been  organized  in  Wall  Street  Division  of  New 
York  University.  This  organization  admits  students  and  members  of  the 
faculty  who  are  interested  in  the  development  of  foreign  trade.  The  pur- 
pose is  to  create  a  closer  affiliation  between  the  various  institutions  which 
are  developing  foreign  trade  education  and  machinery  for  keeping  in  closer 
contact  with  graduates  and  former  students  of  the  Department  of  Foreign 
Trade  who  are  in  the  foreign  field. 

A  special  meeting  and  dinner  of  the  American  Statistical  Association  was 
held  in  New  York,  April  15,  at  which  Sir  Arthur  Newsholme  was  the  guest 
and  spoke  on  "The  better  use  of  vital  statistics  in  public  health  administra- 
tion." 

An  International  Conference  of  Child  Welfare  will  be  held  in  Brussels 
under  the  auspices  of  the  Belgian  government  July  18-21,  1921.  Detailed 
information  may  be  obtained  from  the  Children's  Bureau,  Department  of 
Labor,  Washington,  D.  C. 

Preliminary  announcement  has  been  made  of  the  Second  International 
Congress  of  Eugenics  to  be  held  in  New  York  City,  September  22-28,  1921. 
Information  may  be  obtained  by  addressing  Dr.  C.  C.  Little,  Secretary- 
General,  American  Museum  of  Natural  History,  77th  St.  and  Central  Park, 
West,  New  York  City. 


1921]  Notes  405 

The  June  meeting  of  the  Governmental  Research  Conference  will  be  held 
in  Philadelphia  June  2-4.  The  Secretary  of  the  Conference  is  Dr.  L.  D. 
Upson,  542  Griswold  St.,  Detroit,  Michigan. 

The  Nationaloekonomische  Gcsellschaft  of  Vienna  recently  celebrated  the 
eightieth  birthday  of  Professor  Carl  Menger.  A  medal  was  struck  in  honor 
of  this  occasion.  The  medal  bears  on  its  face  in  profile  the  face  of  the 
honored  economist  and  the  words  "Carl  Menger."  On  the  reverse  side  is 
the  full  length  figure  of  a  sower,  with  the  words:  Frugiferarum  Doctri- 
narian et  Auctori  et  Propagatori  Octogenario  Amici  Discipuli  D.  D.  Anno 
MCMXX. 

Bronze  copies  of  the  medal  were  sent  to  several  Americans,  accompanied 
by  a  letter  from  Professor  Joseph  Schumpeter  expressing  the  "cordial 
feelings  and  admiration"  of  the  Austrian  economists.  American  economists 
to  whom  the  medals  were  sent  are  Professors  John  B.  Clark,  Frank  A.  Fetter, 
J.  Laurence  Laughlin,  Edwin  R.  A.  Seligman,  and  Frank  W.  Taussig. 
Other  Americans  receiving  the  medal  are  Messrs.  Sigmund  Zeisler  and  Henry 
Jewett  Furber  of  Chicago,  who  at  one  time  were  students  of  Professor 
Menger's ;  also  Professor  James  T.  Shotwcll  of  Columbia  University,  who 
was  present  at  the  celebration  in  Vienna.  Professor  Shotwell  brought  the 
medals  to  America,  and  they  were  presented  through  the  Carnegie  Endow- 
ment for  International  Peace. 

Professor  Seba  Eldridge,  head  of  the  department  of  social  sciences  at 
Rockford  College,  is  editing  a  new  social  science  series  to  be  published  by 
Thomas  Y.  Crowell  Company.  The  following  volumes  have  been  arranged 
for:  Economics  Considered  as  a  Social  Science,  by  Professer  Lionel  Edie; 
International  Government,  by  Dr.  Jessie  W.  Hughan ;  Labor  Problems,  by 
Professor  Gordon  S.  Watkins ;  Crime  and  Punishment  by  Clarence  Darrow; 
and  The  History  of  Socialism,  by  Dr.  Harry  W.  Laidler. 

Professor  Eliot  Jones,  of  Leland  Stanford  Junior  University,  has  pre- 
pared for  early  publication  a  volume  on  The  Trust  Problem  in  the  United 
States  (Macmillan). 

The  University  of  Chicago  Press  announces  Introduction  to  the  Study  of 
Sociology,  by  Ernest  D.  Burton  and  Edgar  J.  Park. 

The  Bureau  of  Business  Research,  Northwestern  University,  will  shortly 
publish  through  Prentice-Hall,  Inc.,  New  York  City,  a  series  of  six  volumes 
relating  to  merchandise  of  clothing.  These  volumes  deal  with  the  follow- 
ing subjects:  (1)  Sales  and  sales'  ratios  in  retail  clothing  stores,  1919,  1918, 
and  1914;  (2)  Expenses  and  expense  ratios — rent  and  wages  and  salaries, 
1919,  1918,  and  1914;  (3)  Expenses  and  expense  ratios— general,  bushelling, 
and  total  expenses,  1919,  1918,  and  1914;  (4)  Advertising  methods  and  ex- 
penses, 1919,  1918,  and  1914;  (5)  Purchase  discounts,  inventories,  average 


406  Notes  [June 

stock  and  stock  turnover,  1919,  1918,  and  1914;  (6)   Retail  clothing  stores 
as  operating  units. 

The  Library  of  Congress  has  published  a  List  of  Doctoral  Dissertations 
Printed  in  1917,  prepared  by  Katherine  Jacobs  (Washington,  1921,  pp. 
204). 

The  Yearbook  of  the  Carnegie  Endoxcment  for  International  Peace,  1920 
contains  a  report  of  the  director  of  the  division  of  economics  and  history 
(pp.  65-82). 

The  Thomas  Y.  Crowell  Company  will  publish,  shortly,  The  Sophistry  of 
Socialism,  an  explanation  and  criticism  of  the  doctrines  and  proposals  of 
scientific  socialism,  by  J.  E.  LeRossignol,  University  of  Nebraska. 

The  United  States  Department  of  Labor  is  publishing  a  new  bulletin  en- 
titled Industrial  Employment  Survey  Bulletin.  The  first  issue  appeared 
in  January. 

The  Library  Journal  for  January  15,  1921  (R.  R.  Bowker  Co.,  62  West 
45th  St.,  New  York)  contains  a  classified  list  of  "Special  libraries  in  New 
York  City,"  compiled  by  Rebecca  B.  Rankin.  In  this  are  the  names  of 
many  business  houses  which  maintain  libraries. 

Occasional  Papers,  No.  7,  published  by  the  General  Education  Board  is 
entitled  Teachers'  Salaries  in  Certain  Endowed  Colleges  and  Universities  in 
the  United  States,  by  Trevor  Arnett  (New  York,  61  Broadway,  1921. 
Pp.  42).       . 

Bulletin  No.  9  published  by  the  Connecticut  State  Library,  Hartford, 
contains  a  Select  List  of  Manuscripts  in  the  Connecticut  State  Library 
(pp.  32). 

The  College  of  William  and  Mary,  Williamsburg,  Va.,  has  issued  a 
mimeographed  List  of  Bibliographies  on  Commercial  Education. 

The  International  Labour  Office,  Geneva,  Switzerland,  under  date  of  Jan- 
uary, 1921,  issued  the  first  number  of  the  International  Labour  Review. 
Among  the  articles  are:  "The  International  Labour  Organization,"  by 
Albert  Thomas ;  "The  international  trade  union  movement  and  the  Labour 
Office,"  J.  Oudegeest ;  "The  process  of  amalgamation  in  British  trade  union- 
ism," by  Sidney  Webb;  and  "Industrial  government,"  by  J.  R.  Commons. 
This  journal  is  published  in  English  and  "will  contain  brief  scientific  articles 
and  important  information  relating  to  labor  and  industry,  written  in  read- 
able, non-technical  language." 


1921]  Notes  407 

Appointments  and  Resignations 

Mr.  S.  B.  Ackerman,  assistant  actuary  in  the  Insurance  Department, 
State  of  New  York,  has  been  appointed  lecturer  in  workmen's  compensation 
at  New  York  University. 

Mr.  B.  W.  Barnard  resigned  his  position  in  the  department  of  economics 
at  Trinity  College  and  is  now  alumni  secretary  and  graduate  manager  of  ath- 
letics in  the  same  college. 

Mr.  Fred  C.  Croxton  has  resigned  as  assistant  general  manager  of  the 
American  Red  Cross  to  become  executive  secretary  of  the  Columbus,  Ohio, 
Council  of  Social  Agencies. 

Mr.  William  S.  Culbertson,  who  was  reappointed  last  fall  to  the  United 
States  Tariff  Commission  by  President  Wilson,  but  whose  nomination  was 
not  acted  upon  by  the  United  States  Senate,  has  been  again  appointed  by 
President  Harding  and  his  appointment  confirmed  by  the  Senate. 

Dr.  Joseph  Stancliffe  Davis,  of  Harvard  University,  has  been  appointed 
one  of  three  directors  of  the  new  Food  Research  Institute  of  Stanford  Uni- 
versity, and  will  take  up  his  work  in  July. 

Dr.  C.  S.  Duncan  has  resigned  his  position  as  chief  investigator  for  the 
National  Industrial  Conference  Board  to  become  director  of  the  Bureau 
of  Business  Research  for  the  Southern  Wholesale  Grocers  Association.  His 
office  is  in  New  York  City. 

Captain  W.  H.  Hamilton,  until  recently  judge-advocate  in  the  United 
States  army,  has  been  appointed  associate  professor  of  commercial  law  at 
the  college  of  William  and  Mary. 

Professor  M.  B.  Hammond,  of  Ohio  State  University,  will  give  courses  in 
industrial  relations  and  labor  legislation  at  the  University  of  Chicago  during 
the  summer. 

Mr.  Francis  W.  Hirst  of  London  will  lecture  at  Stanford  University  dur- 
ing the  coming  summer  and  autumn.  He  will  give  courses  on  the  financial 
conditions  of  Great  Britain  and  Europe. 

Professor  Eliot  Jones,  of  Stanford  University,  will  teach  in  the  summer 
session  of  the  Southern  Branch  of  the  University  of  California. 

Mr.  Thomas  O.  Marvin,  secreatry  of  the  Home  Market  Club  of  Boston 
and  editor  of  The  Protectionist  has  been  appointed  a  member  of  the  United 
States  Tariff  Commission  by  President  Harding. 

Mr.  Edward  T.  Paxton  has  resigned  his  position  as  secretary  of  the  Phila- 
delphia Bureau  of  Municipal  Research  in  order  to  give  full  time  to  research 
duties  on  the  staff  of  this  bureau. 


408  Notes  [June 

Professor  Warren  M.  Persons,  of  Harvard  University,  has  been  appointed 
Harvard  lecturer  at  Yale  University  for  the  year  1921-1922. 

Mr.  Russell  Ramsey,  formerly  assistant  treasurer  of  the  Philadelphia  Bu- 
reau of  Municipal  Research  has  been  made  secretary  of  the  bureau. 

Mr.  L.  R.  Robinson  has  been  appointed  instructor  in  economics  at  Co- 
lumbia University. 

Professor  C.  O.  Ruggles,  who  went  from  Ohio  State  University  last  year 
to  become  professor  of  economics  and  director  of  the  course  in  commerce  in 
the  State  University  of  Iowa,  will  return  to  Ohio  State  University  as  pro- 
fessor of  business  organization. 

Dr.  Frank  R.  Rutter,  of  the  Bureau  of  Foreign  and  Domestic  Commerce, 
Department  of  Commerce,  has  been  appointed  professor  of  foreign  trade  at 
the  University  of  Oregon.  He  will  give  two  courses  on  foreign  trade  at  the 
coming  summer  session  of  the  University  of  California. 

Professor  E.  R.  A.  Seligman  has  recently  been  made  president  of  the 
American  Association  of  University  Professors. 

Professor  C.  J.  Sembower,  who  this  year  has  held  the  position  of  professor 
of  advertising  and  salesmanship  at  Ohio  State  University  will  return  to 
Indiana  University  in  the  fall  as  dean  of  men  students. 

Professor  Martin  J.  Shugrue,  of  the  Massachusetts  Institute  of  Tech- 
nology, will  give  a  course  in  cost  accounting  in  the  summer  school  of 
Columbia  University. 

Sir  Arthur  Steel-Maitland,  formerly  of  the  British  Foreign  Office  and 
Board  of  Trade,  gave  a  course  of  six  lectures  under  the  Norman  Wait  Har- 
ris Foundation  at  Northwestern  University  in  March. 

Professor  Frank  H.  Streightoff  is  now  associate  professor  of  business  ad- 
ministration in  the  Extension  Division  of  Indiana  University. 

Mr.  W.  E.  Weld  has  been  appointed  assistant  professor  of  economics  at 
Columbia  University. 

Dr.  Nathaniel  R.  Whitney,  professor  of  finance  in  the  College  of  Engi- 
neering and  Commerce  at  the  University  of  Cincinnati,  will  offer  two  grad- 
uate courses  in  finance  during  the  summer  at  the  University  of  Chicago. 

Professor  Elmer  Wood,  of  the  University  of  Missouri,  has  been  granted 
a  leave  of  absence  and  will  pursue  graduate  work  during  this  next  aca- 
demic year  at  Harvard  University. 

Professor  Harvey  A.  Wooster,  of  Tufts  College,  is  giving  a  course  of 
lectures  in  American  economic  history  at  the  Boston  Union  College  during 
the  spring  term  of  1921. 


The 
American  Economic  Review 

VOL.  XI  SEPTEMBER,  1921  No.  3 

THE  MOVEMENT  OF  REAL  WAGES,  1890-1918 

No  economic  question  has  been  more  widely  discussed  of  late  than 
that  of  the  effect  of  the  great  war  upon  real  wages.  Were  they  higher 
at  its  conclusion  than  at  its  beginning?  What  was  their  progress  dur- 
ing its  course?  How  do  all  these  rates  compare  with  earlier  wage 
levels?  This  study  aims  to  throw  light  upon  the  problem  by  continu- 
ing, for  the  years  1912-1918,  an  investigation  made  by  Dr.  I.  M. 
Rubinow  for  the  period  1890-1912.1  Since  what  we  are  interested  in 
is  real  wages,  we  are,  of  course,  equally  concerned  with  the  relationship 
between  money  wages  and  prices. 

It  will  be  remembered  that  Dr.  Rubinow's  computations  showed  a  de- 
cline in  the  purchasing  power  of  hourly  wages  in  terms  of  food,  from 
the  1890-1899  average  to  the  1912  average  of  8.2  per  cent  and  of  the 
purchasing  power  of  full-time  earnings  of  14.7  per  cent.  Although 
Dr.  Rubinow's  method  was  criticized  in  some  respects,  an  investigation 
by  Mr.  F.  W.  Jones2  showed  substantially  similar  results.  In  the  main, 
then,  Dr.  Rubinow's  investigation  may  be  said  to  have  stood  the  test  of 
criticism  and  to  be  sound  within  its  self-constituted  limits.  If  this  study 
can  be  carried  on  to  1918,  we  shall  have  a  fairly  accurate  picture  of 
the  movement  of  real  wages  for  a  period  of  nearly  thirty  years  (1890- 
1918).  Such  a  period  is  long  enough  to  show  the  general  trends  in 
money  wages,  prices,  and  real  wages. 

Any  study  of  real  wages  must,  of  course,  deal  with  the  relation  be- 
tween (1)  money  wages  and  (2)  the  cost  of  living.  Dr.  Rubinow's  wage 
material  was  based  upon  the  wage  rates  from  1890  to  1912  for  fifteen 
different  industries  as  published  by  the  United  States  Bureau  of  Labor 

1 1.  M.  Rubinow,  "The  Recent  Trend  of  Real  Wages,"  American  Economic  Re- 
view, vol.  IV  (Dec.,  191'4),  pp.  798-817. 

2  F.  W.  Jones,  "Real  Wages  in  Recent  Years,"  American  Economic  Review,  vol. 
VII  (June,  1917),  pp.  318-330.  By  projecting  a  series  of  30  food  commodities 
from  1907  to  1912,  Mr.  Jones  arrived  at  the  conclusion  that  the  index  of  these  30 
food  commodities  instead  of  the  15  that  Dr.  Rubinow  used  would  have  shown  ap- 
proximately a  3  point  less  decrease  than  that  evidenced  by  Dr.  Rubinow's  statistics. 
Professor  H.  P.  Fairchild  tends  to  corroborate  Rubinow's  study  when  he  infers 
that  the  standard  of  living  of  the  average  American  workingman  decreased  from 
1890  to  1908.  See  his  "The  Standard  of  Living— Up  or  Down,"  Am.  Econ.  Rev., 
vol.  VI  (Mar.,  1916),  pp.  9-25.  The  four  years  from  1908  to  1912  which  were  not 
included  in  Fairchild's  study  were  the  very  years,  according  to  both  Rubinow  and 
Jones,  in  which  the  greatest  amount  of  the  fall  in  real  wages  occurred. 


H^ 


410  Paul  H.  Douglas  and  Frances  Lamberson       [September 

Statistics.3  These  industries  were:  woolen  goods,  cotton  goods,  boots 
and  shoes,  millwork,  furniture,  lumber,  silk  goods,  bakers,  foundry  and 
machine  shops,  marble  and  stone  cutters,  building  trades,  car  building, 
knitted  goods,  book  and  job  printing,  and  newspaper  printing.  By  us- 
ing the  simple  average  of  these  fifteen  industries,  index  numbers  for 
the  relative  hourly  and  "full-time"  weekly  wages  were  derived  for  each 
year  with  the  average  for  the  period  1890  to  1899  serving  as  the  base 
or  100. 

The  price  material  was  based  upon  the  average  annual  retail  prices 
of  fifteen  food  commodities  for  which  permanent  records  existed  from 
1890  to  1912.  These  commodities  were  granulated  sugar,  wheat  flour, 
creamery  butter,  fresh  milk,  rib  roast,  pure  lard,  cornmeal,  strictly 
fresh  eggs,  hens,  round  steak,  sirloin  steak,  smoked  ham,  pork  chops, 
smoked  bacon,  and  Irish  potatoes.  The  annual  figures  were  expressed 
as  index  numbers  with  the  average  for  the  period  1890-1899  as  the 
base  or  100.  The  use  of  retail  food  prices  alone  as  a  measurement  of 
the  cost  of  living  has  been  criticized  by  some  authorities.  However, 
since  food  forms  approximately  40  per  cent  of  the  workingman's  ex- 
penditures, it  is  the  best  single  index  that  we  have.  Moreover,  as  we 
shall  see  from  later  investigations,  in  complete  studies  of  the  cost  of 
living,  the  increase  in  food  prices  over  a  period  of  years  has  been 
found  to  approximate  closely  the  increase  in  the  cost  of  living.  It 
seems  fair,  therefore,  to  conclude  that  Dr.  Rubinow's  computation  was 
an  approximately  accurate  reflection  of  general  living  costs.* 

By  what  methods  then  has  this  study  of  Dr.  Rubinow's  been  carried 
on  for  the  six-year  period  1912-1918? 

1.  Money  Wages 

Data  as  to  wages  and  hours  during  this  period  have  been  published 
for  only  ten  of  the  fifteen  industries  represented  in  Dr.  Rubinow's  in- 
vestigation. These  industries  and  the  bulletins  of  the  United  States 
Bureau  of  Labor  Statistics  in  which  the  material  is  published  are  as 
follows : 

Bulletin  259,  Baking  trades,  building  trades,  foundry  and  machine 
work,  marble  and  stone  cutters,  millwork,  book  and  job  printing,  news- 
paper printing. 

Bulletin  260,  Boot  and  shoe  industry. 

Bulletin  261,  Woolen  goods. 

Bulletin  262,  Cotton  goods. 
The  wage  scales  quoted  for  the  first  seven  industries  were  the  accepted 

s  In  bulletins  128,  129,  134,  135,  137,  and  131. 

*  With  the  exception,  of  course,  of  the  slight  changes  that  might  be  introduced 
hy  using  Dr.  Jones's  method. 


1921] 


The  Movement  of  Real  Wages,  1890-1918 


411 


union  rates,  while  those  for  the  cotton,  woolen,  and  boot  and  shoe  in- 
dustries were  taken  from  actual  pay-rolls. 

The  question  may  well  be  asked  whether  the  reduction  in  the  number 
of  industries  from  fifteen  to  ten  does  not  invalidate  the  comparison. 
To  test  this  objection  a  comparison  was  made  for  the  period  1890-1912 
of  the  ten  industries  as  compared  with  the  fifteen  taking  up  (1)  num- 
ber of  hours  per  week,  (2)  average  hourly  wage-rates,  (3)  average 
full-time  weekly  earnings,  (4)  purchasing  power  of  wages  per  hour  in 
terms  of  food,  and  (5)  purchasing  power  of  full-time  weekly  earnings 
in  terms  of  food.  The  same  methods  of  computation  employed  by  Rubi- 
now  were  used  for  the  index  numbers  of  the  ten  industries.  While  the 
detailed  results  for  the  ten  industries  will  be  given  later,  the  following 
table  shows  that  the  differences  between  the  two  for  the  period  in  ques- 
tion were  not  appreciable. 

Table  I. — Deviation  of  Ten  Industries  from  Fifteen  Industries  fob 

Period  1890-1912. 

(+  indicates  when  10  industries  exceed  15.  —  indicates  when  they  fall  below) 


Hours 

Wages 

"Full-time"  | 
weekly 

Purchasing  power 

Year 

Wages 

Weekly 

per  week 

per  hour 

earnings 

per  hour 

earnings 

1890 

—  .2 

—  .8 

—1.0 

—  .8 

—1.0 

1891 

—  .1 

—  .6 

—  .7 

—  .6 

—  .7 

1892 

+  .1 

—  .2 

+  .1 

—  .2 

—  .1 

1893 

—  .1 

—1.1 

—  .2 

—  .1 

—  .1 

1894 

+  .7 

—  .9 

—  .2 

—  .9 

—  .2 

1895 

4-  .3 

—  .4 

—  .9 

—  .4 

—1.0 

1896 

.0 

+  .2 

+  .2 

+  .3 

—  .1 

1897 

.0 

+  .6 

+  .6 

+  .6 

PI 

1898 

—  .3 

u 

+  A 

+  •* 

1899 

+  .5 

+  .5 

+1.0 

+  .5 

1900 

—  .7 

+2.1 

+1.4 

+2.1 

+1.4 

1901 

—  .6 

+1.7 

+  .9 

+1.5 

+  .8 

1902 
1903 

—  .8 
—1.0 

—  .1 
+1.1 

td 

+  .3 

1904 

—  .6 

+1.9 

+1.0 

+1.7 

+  .9 

1905 

—  .6 

+  .4 

—  .4 

+  .3 

—  .3 

1906 

—  .6 

+  1.5 

+  .7 

+1.2 

+  .6 

1907 
1908 
1909 

—  .8 

—  .9 
—1.0 

+1.9 

+3.1 
-f3-5 

+1.8 

+  1.5 
-J-2.4 
+2.5 

+  .5 
+1.6 
+1.3 

1910 

—1.3 

+3.0 

+  .8 

+2.1 

+  .6 

1911 
1912 

—1.1 
—1.9 

+3.5 
+4.4 

4-1.7 

4-i.o 

+2.5 
+2.8 

+1.2 
+  .6 

412  Paul  H.  Douglas  and  Frances  Lamberson       [September 

It  will  be  noticed  that  the  differences  in  wages  per  hour  were  less 
than  one  point  for  half  of  the  years  with  a  maximum  deviation  of  4.4 
and  an  average  deviation  of  approximately  3.4  for  the  six  years  from 
1907  to  1912.  The  deviation  for  "full-time"  weekly  earnings  was  less 
than  1.0  for  over  half  of  the  years  and  never  exceeded  1.8,  averaging 
1.1  for  the  years  1907-1912.  The  deviation  for  the  purchasing  power 
of  hourly  wages  was  less  than  1.0  in  ten  of  the  years,  in  no  year  ex- 
ceeded 2.8  and  for  the  last  six  years  averaged  approximately  2.3. 
Finally  the  deviation  for  the  purchasing  power  of  full-time  weekly 
earnings  was  less  than  1.0  for  two  thirds  of  the  years,  never  exceeded 
1.6,  and  averaged  .9  for  the  last  six  years. 

It  will  thus  be  seen  that  the  results  are  substantially  the  same 
whether  one  uses  ten  industries  or  fifteen.  Moreover,  from  1903  to 
1913,  when  real  wages  were  dropping  most  rapidly,  the  ten  industries 
show  a  less  decrease  than  the  fifteen.  It  seems  safe  to  assume  therefore 
that  the  use  of  the  ten  industries  will  give  as  accurate  results  as  the 
fifteen  used  by  Dr.  Rubinow.  Indeed  any  defects  that  exist  will  prob- 
ably be  in  overestimating  the  rise  in  money  wages  and  in  underestimat- 
ing the  fall  in  real  wages.  In  other  words,  any  errors  will  be  on  the 
bright  rather  than  the  dark  side  of  the  picture. 

The  method  of  carrying  on  the  study  was  as  follows:  First,  an  in- 
dex number  for  each  industry  as  a  whole  was  derived  from  the  simple 
averages  of  the  index  numbers  of  all  the  occupations  withm  the  indus- 
try as  given  by  the  bulletins  of  the  Bureau  of  Labor  Statistics.  Simple 
rather  than  weighted  averages  were  used  because  the  Nineteenth  Annual 
Report  of  the  Bureau  of  Labor  on  Wages  and  Hours  of  Labor  clearly 
demonstrated  that  simple  averages  gave  almost  exactly  the  same  re- 
sults as  weighted  averages.5  Second,  when  index  numbers  were  found 
for  each  industry  for  the  years  1912-1918  for  (1)  hours  per  week, 
(2)  wages  per  hours,  and  (3)  full-time  weekly  earnings,  the  figures 
were  converted  from  the  1913  base  used  in  the  Bureau  of  Labor  Sta- 
tistics studies  to  the  1890-1899  base  used  by  Rubinow.  The  year  1912 
acted  as  the  point  at  which  the  new  index  was  spliced  to  Rubinow's 
index.  Third,  the  index  number  for  ten  industries  as  a  whole  was  ob- 
tained. Here  again,  as  in  Rubinow's  investigation,  the  simple  rather 
than  the  weighted  average  was  used. 

Table  II  shows  the  change  in  relative  number  of  hours  agreed  upon 
as  a  week's  work  for  the  period  1890-1918.     This  table  shows:  (1)  an 

b  Nineteenth  Annual  Report  United  States  Bureau  of  Labor:  Wages  and  Hours 
of  Labor,  p.  22.  Four  methods  of  averaging  were  used  yet  the  greatest  deviation 
between  any  two  of  them  for  the  fourteen  years  from  1890  to  1903  was  1.7  points 
and,  save  for  that  one  year,  it  never  exceeded  .8  and  for  ten  of  the  fourteen  years 
ranged  between  .1  and  .5. 


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414  Paul  H.  Douglas  and  Frances  Lamberson       [September 

average  decrease  of  11.5  per  cent  in  the  length  of  the  average  working 
week  in  1918  as  contrasted  with  the  average  for  1890-1899;  (£)  a 
difference  in  the  amount  of  the  decrease  from  industry  to  industry  vary- 
ing from  19.6  per  cent  in  the  baking  trades  to  6.1  per  cent  in  news- 
paper printing. 

Turning  now  to  hourly  wage  rates,  the  statistics  for  the  ten  indus- 
tries are  presented  in  Table  III.  This  table  shows:  (1)  an  average 
increase  of  111.8  per  cent  from  the  period  1890-1899  to  1918;  (2)  a 
varying  increase  for  the  different  industries  ranging  from  192  and  190 
per  cent  for  the  cotton  and  woolen  goods  trades  respectively  to  46.1 
per  cent  for  newspaper  printing.  The  hourly  earnings  for  the  three 
industries  for  which  the  actual  pay-rolls  were  used  were  secured  by 
dividing  the  total  earnings  for  the  week  by  the  number  of  hours  worked. 
This  gives  a  slightly  higher  figure  than  the  hourly  rate,  more  especially 
in  the  later  years,  since  it  partially  includes  any  overtime  bonuses  that 
may  have  been  paid.  The  increase  in  basic  hourly  rates  themselves 
therefore  tends  to  be  slightly  overestimated  by  their  use. 

By  multiplying  the  relative  number  of  hours  per  week  by  the  rela- 
tive wages  per  hour,  we  may  obtain  the  relative  full-time  weekly  earn- 
ings. This  means  the  relative  amount  in  money  that  would  be  secured 
if  all  operatives  worked  the  established  number  of  hours  per  week  at 
the  given  hourly  rate  or  wage.  Thus  in  the  industries  for  which  union 
rates  are  given,  if  50  hours  constituted  the  established  week's  work  and 
if  the  hourly  wage  was  30  cents,  then  $15  would  comprise  the  full-time 
weekly  earnings.  This  term  therefore  does  not  signify  the  relative 
amounts  of  money  that  the  workers  actually  receive  in  their  weekly  pay 
check,  or  as  their  annual  earnings;  since  it  makes  no  allowance  for  (1) 
unemployment,  (2)  under-employment,  or  (3)  overtime.  In  other 
words  full-time  weekly  earnings  are  based  upon  the  working  of  the 
established  number  of  hours  for  the  occupation  or  industry  and  do  not 
deal  with  deviations  from  that  scale  whether  they  be  above  or  below.  In 
the  three  other  trades,  the  relative  hourly  earnings  were  also  multi- 
plied by  the  established  number  of  hours  per  week.  This  gives  a  result 
which  is,  of  course,  not  equivalent  to  actual  earnings  but  is  somewhat 
higher  than  the  method  followed  for  the  other  industries,  since  it  in- 
cludes a  large  part  of  any  overtime  bonuses  that  may  have  been  paid. 
This  is  more  especially  true  of  the  later  years. 

The  movement  of  relative  full-time  weekly  earnings  is  shown  by 
Table  IV. 

This  table  shows  (1)  an  average  increase  for  1918  over  the  period 
1890-1899  of  87.7  per  cent,  (2)  a  variation  in  the  amount  of  the  in- 
crease in  different  industries  ranging  from  39.1  per  cent  in  news- 
paper printing  to  162.4  per  cent  for  cotton  goods,  and  166.4  for 
woolen  goods. 


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1 

416  Paul  H.  Douglas  and  Frances  Lamberson       [September 

2.  TJie  Increase  in  the  Cost  of  Living 

It  is  only  within  the  last  few  years  that  comprehensive  surveys  of 
the  increase  in  the  cost  of  living  for  different  localities  covering  rent, 
clothing,  fuel,  and  light,  and  miscellaneous  items  as  well  as  food  have 
been  made.  The  only  retail  prices  for  which  there  is  a  continuous 
record  for  the  entire  period  1890-1918  on  any  country-wide  scale  are, 
however,  those  for  certain  food  items.  As  has  been  pointed  out,6  the 
price  data  compiled  by  the  Bureau  of  Labor  Statistics  have  many  gaps. 
For  the  period  1890-1907  an  index  of  thirty  commodities,  weighted  ac- 
cording to  their  relative  importance  in  the  average  family  budget  as 
revealed  by  an  investigation  in  1901  was  used.  In  1907  fifteen  of 
these  commodities  were  omitted  and  for  the  five  years  1908-1912  in- 
clusive we  have  only  fifteen  commodities.  It  was  these  fifteen  commo- 
dities that  were  used  by  Rubinow  in  constructing  his  index  of  food 
prices.  In  1913  seven  more  commodities  were  added,  making  twenty- 
two  in  all  and  these  were  weighted  according  to  their  relative  impor- 
tance. This  constitutes  the  present  index  of  retail  food  prices  com- 
piled by  the  Bureau  of  Labor  Statistics. 

The  method  followed  in  continuing  the  study  was  to  take  the  fif- 
teen commodities  for  which  there  was  a  permanent  record  and  weight 
them  in  the  same  fashion  as  practiced  by  the  Bureau  of  Labor  Statis- 
tics from  1908  to  1912  and  which  Rubinow  copied.7 

e In  footnote  2. 

7  This  weighting  system  was  derived  from  the  nation-wide  budgetary  investiga- 
tion conducted  in  1901  by  the  Bureau  of  Labor  and  which  assigned  the  following 
relative  importance  to  these  fifteen  commodities  (Eighteenth  Annual  Report  United 
States  Bureau  of  Labor,  1903,  p.  650). 

COMMODITY  BELATIVE    IMPORTANCE 

Fresh    beef 1,531 

(a)  Sirloin  steak 

(b)  Round  steak 

(c)  Rib  roast 

Pork  chops 429 

Salt  pork  products  425 

(a)  Bacon,  smoked 

(b)  Ham,  smoked 

Hens    290 

Eggs,  strictly  fresh 514 

Milk,  fresh 652 

Butter,  creamery  880 

Lard,  pure  286 

Sugar,  granulated   482 

Flour  and  meal 513 

(a)  Wheat  flour  (double  weight) 

(b)  Corn  meal 

Irish  potatoes   395 

Total    6,397 

These  items  represented  63.97  per  cent  of  the  total  expenditures  for  food 
of  2,567  families  in  1901. 


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y, 


418 


Paul  H.  Douglas  and  Frances  Lamberson       [September 


Before  proceeding  further  with  this  material  two  questions  may  legit- 
imately be  asked:  (1)  whether  these  fifteen  commodities  afford  a  true 
picture  of  food  prices  in  general  and  (2)  whether  the  changes  in  food 
prices  themselves  are  an  accurate  index  of  changes  in  the  cost  of  liv- 
ing as  a  whole. 

In  dealing  with  the  first  objection,  we  should  realize  that  these  fif- 
teen commodities  formed  64  per  cent,  or  nearly  two  thirds  of  the  aver- 
age food  budget  in  1901.  Though  the  relative  importance  of  these 
items  may  well  have  lessened  in  the  years  since  then,  they  undoubtedly 
still  comprise  a  major  portion  of  the  food  budget  of  the  average  work- 
ingman's  family  today. 

Moreover,  while  the  relative  importance  of  these  fifteen  commodities 
as  compared  with  each  other  has  also  undoubtedly  changed,  it  is  ex- 
tremely doubtful  whether  this  change  in  weights  would  affect  the  result 
appreciably.  Finally,  the  relative  reliability  of  the  index  numbers  of 
these  fifteen  commodities  can  be  checked  up  by  comparing  them  with 
the  index  numbers  derived  from  a  larger  number  of  commodities.  Jones, 
in  his  critique  of  Rubinow's  investigation,  compared  the  series  of  fifteen 
commodities  with  the  old  series  of  thirty  commodities  for  the  period 
1890-1907  and  found  that,  while  there  was  little  difference  before  1900, 
after  that  date  the  index  for  the  thirty  commodities  lagged  some  3 
to  5  points  below  the  index  for  the  fifteen.  This  difference,  though 
real,  does  not  seriously  impair  the  general  credibility  of  the  index  of 
the  fifteen  commodities.  If  we  compare  the  weighted  index  number  for 
these  fifteen  commodities  for  the  period  1911-1918  with  the  weighted 
index  for  the  twenty-two  food  commodities  now  used  by  the  Bureau 
of  Labor  Statistics,  we  have  the  following  results  expressed  to  the 
nearest  point. 


(Average 

1913  =  100) 

Differences 

Year 

Weighted  index 

Weighted   index 

between  the 

15  commodities 

22  commodities 

two  indices 

1911 

93 

92 

1 

1912 

99 

98 

1 

1913 

100 

100 

0 

1914 

102 

102 

0 

1915 

101 

101 

0 

1916 

114 

114 

0 

1917 

150 

146 

4 

1918 

172 

167 

5 

This  shows  an  almost  complete  correspondence  for  the  first  six  years 
and  a  difference  of  4  and  5  points  for  the  last  two.  It  is  safe  to  con- 
clude, therefore,  that  the  weighted  index  number  of  these  fifteen  food 
commodities  is  a  fairly  close  approximation  to  the  real  movements  of 


1921] 


The  Movement  of  Real  Wages,  1890-1918 


419 


food  prices  although  it  may  slightly  over-estimate  the  real  increase. 

To  turn  now  to  the  second  question,  Do  the  changes  in  retail  food 
prices  correspond  with  the  changes  in  the  cost  of  living?  Cost  of  liv- 
ing surveys  for  workingmens'  families  have  been  made  only  within  the 
last  few  years  by  the  Bureau  of  Labor  Statistics  for  a  number  of  cities. 
The  actual  prices  of  commodities  in  the  various  groups  of  expenditure 
including  food,  clothing,  housing,  fuel  and  light,  furniture  and  furnish- 
ing, and  miscellaneous  items  were  collected  and  weighted  according  to 
their  relative  importance  in  the  average  workingman's  budget  of  that 
city  as  disclosed  by  an  investigation  of  the  expenditures  of  several 
hundred  local  families  during  the  period  of  a  year. 

The  relative  cost  of  living  has  been  carried  back  to  December,  1914, 
as  the  base  for  eighteen  cities8  and  the  simple  average  of  these  rela- 
tives will  give  a  reliable  cost  of  living  index  for  the  urban  sections  of 
the  country.9  This  can  be  compared  for  a  similar  period  with  the 
weighted  index  of  the  fifteen  food  commodities  and  the  relationship  in- 
dicated.    The  following  table  gives  this  material: 


Table  V. — Relation  between  Retail  Food  Prices  and  the  Cost  op  Living 

(December, 

L914  =  100). 

Relation  between 

Relative  cost   of 

Weighted    index, 

food  index  and 

Date 

living  in  eigh- 

fifteen  food 

cost  of  living 

teen  cities 

commodities 

index 

Dec,    1914 

100 

100 

. 

"        1915 

100/4 

102.2 

+  1.8 

"       1916 

114.8 

122.0 

4-  7.2 

"        1917 

141.0 

153.3 

-fl2.3 

■        1918 

172.5 

182.8 

-|- 10.3 

"        1919 

197.2 

195.0 

—  2.2 

This  table  indicates  therefore  that  the  cost  of  living  will  lag  behind 
food  prices  for  short  periods,  because  of  the  slowness  of  rents  to  keep 
pace,  but  that  in  longer  periods  the  two  are  closely  approximate.  In 
all  probability,  therefore,  the  use  of  food  prices  (which  is  all  we  have) 
will  give  an  accurate  picture  of  the  cost  of  living  for  the  period  1890- 
1912,  but  it  will  somewhat  exaggerate  the  increase  during  the  years 
1916,  1917,  and  1918. 

Since  the  prices  for  the  food  commodities  collected  by  the  United 
States  Bureau  of  Labor  Statistics  have  since  1912  been  computed  with 
1913  as  a  base,  two  steps  were  necessary  to  connect  this  price  material 
with  Rubinow's  index:     (1)  To  secure  the  weighted  index  by  years  of 

8  I.e.,  Portland,  Me.,  Boston,  New  York,  Philadelphia,  Baltimore,  Norfolk,  Chi- 
cago, Detroit,  Cleveland,  Buffalo,  Los  Angeles,  Portland,  Ore.,  San  Francisco,  and 
Seattle. 

o  For  the  increase  for  each  of  these  cities  see  Monthly  Labor  Review,  Sept.,  1919, 
pp.  107-111;  Feb.,  1921,  pp.  52-57. 


420 


Paul  H.  Douglas  and  Frances  Lamberson       [September 


the  fifteen  commodities  used  by  Dr.  Rubinow  instead  of  the  twenty-two 
used  by  the  bureau;  (2)  to  transfer  these  index  numbers  from  a  1913 
base  to  an  1890-1899  base  by  using  1912  as  the  connecting  link.10  By 
this  method,  we  secure  the  following  index  of  food  prices  for  the  years 
1890-1918. 


RELATIVE    PRICE         YEAR 


1890  101.9 

1891  103.4 

1892  101.6 

1893  104.1 

1894  99.2 

1895  97.1 

1896  95.2 

189T  96.7 

1898  99.7 

1899  100.8 

1900  103.0 

1901  108.5 

1902  114.6 

1903  114.7 

1904  116.2 


RELATIVE    PRICE 


1905   116.4 

1906  120.3 

1907  125.9 

1908  130.1 

1909  137.2 

1910  144.1 

1911  143.0 

1912  154.2 

1913  155.7 

1914  158.5 

1915  156.5 

1916  177.6 

1917  233.4 

1918  266.6 


3.  Real  Wages 
We  can  now  bring  our  material  together  into  a  final  table  summar- 
izing the  trend  of  hours  per  week,  wages  per  week,  full-time  weekly 
earnings,  and  retail  food  prices.  From  the  last  three  of  these  items 
the  relative  purchasing  power  of  an  hour's  work  and  a  full-time  week's 
work  can  be  computed.  Table  VI  contains  all  this  material.  An  an- 
alysis of  this  table  shows  that: 

1.  The  purchasing  power  of  an  hour's  wages  was  20.7  per  cent  less 
in  1918  than  it  had  been  during  the  years  1890-1899,  and  that  the 
purchasing  power  of  full-time  weekly  earnings  was  29.6  per  cent  less, 
than  during  this  period. 

2.  This  great  decrease  was  concentrated  almost  wholly  in  two  peri- 
ods: (a)  the  years  1907-1912,  (b)  the  years  1916-1917. 

3.  During  the  period  1907-1912  wages  per  hour  increased  from  131.2 
to  145.9  or  11.0  per  cent,  yet  from  1913  to  1918  they  increased  from 

149.6  to  211.3  or  41  per  cent. 

4.  During  the  years  1907-1912  full-time  weekly  earnings  rose  from 

123.7  to  132.6  or  7  per  cent,  while  in  the  period  1913-1918  they  in- 
creased from  135.2  to  187.7  or  38  per  cent. 

5.  During  the  period  1907-1912  retail  food  prices  rose  from  125.9 
to  154.2  or  22  per  cent,  while  during  the  years  1913-1918  they  in- 
creased from  155.7  to  266.6  or  71  per  cent. 

6.  In  the  years  1907-1912  the  purchasing  power  of  hourly  wages  as 

io  There  is,  of  course,  the  possibility  of  a  slight  error  in  thus  splicing  the  index 
numbers,  but  for  all  practical  purposes  it  can  be  neglected. 


1921] 


The  Movement  of  Real  Wages,  1890-1918 


421 


Table  VI. — Index  of  Real  Wages  1890-1918. 


1       Purchasing  power 

measured 

by  retail 

Hours 

Wages 

Full  time 

Retail 

prices  of 

food,  of: 

Wages 

Full-time 

Year 

per 

per 

weekly 

food 

per 

weekly 

week 

hour 

wages 

prices 

hour 

earnings 

1890 

100.9 

99.4 

100.3 

101.9 

97.5 

98.4 

1891 

100.8 

99.3 

100.1 

103.4 

96.0 

96.8 

1892 

100.8 

100.1 

100.9 

101.6 

98.5 

99.3 

1893 

100.3 

101.1 

101.4 

104.1 

97.1 

97.5 

1894 

99.9 

98.0 

97.9 

99.2 

98.8 

98.7 

1895 

100.1 

98.2 

98.3 

97.1 

101.1 

101J 

1896 

99.7 

100.2 

99.9 

95.2 

105.S 

104.6 

1897 

99.5 

100.2 

99.7 

96.7 

103.6 

103.2 

1898 

99.3 

100.9 

100.2 

99.7 

101.2 

100.5 

1899 

98.7 

102.4 

101.1 

100.8 

101.6 

100.3 

1900 

97.9 

106.8 

104.6 

103.0 

103.7 

101.6 

1901 

97.5 

108.7 

105.9 

108.5 

100.1 

97.6 

1902 

96.6 

112.9 

109.0 

114.6 

98.5 

95.1 

1903 

95.7 

117.2 

112.1 

114.7 

102.2 

97.6 

1904 

95.4 

118.2 

112.6 

116.2 

101.7 

96.9 

1905 

95.4 

120.0 

114.4 

116.4 

103.1 

98.S 

1906 

94.8 

125.1 

118.6 

120.3 

103.9 

98.6 

1907 

94.3 

131.2 

123.7 

125.9 

104.2 

98.2 

1908 

93.6 

131.6 

123.1 

130.1 

101.2 

94.6 

1909 

93.4 

133.4 

124.4 

137.2 

97.2 

90.7 

1910 

92.5 

137.0 

126.5 

144.1 

95.1 

87.8 

1911 

92.2 

139.8 

128.9 

143.0 

97.8 

90.1 

1912 

91.1 

145.9 

132.6 

154.2 

94.6 

85.9 

1913 

90.6 

149.6 

135.2 

155.7 

96.1 

86.8 

1914 

90.1 

153.1 

137.9 

158.5 

96.5 

87.0 

1915 

89.2 

152.5 

135.5 

156.5 

97.5 

86.6 

1916 

89.7 

164.5 

144.8 

177.6 

92.6 

80.8 

1917 

88.5 

167.0 

146.9 

233.4 

71.6 

64.0 

1918  1 

88.5 

211.3 

187.7 

266.6 

79.3 

70.4 

measured  by  retail  food  prices  decreased  from  104.2  to  94.6  or  9  per 
cent,  while  from  1913  to  1918  the  decrease  was  from  96.1  to  79.3  or  a 
drop  of  17  per  cent. 

7.  In  the  years  1907-1912  the  purchasing  power  of  full-time  weekly 
earnings  decreased  from  98.2  to  85.9  or  13  per  cent,  while  from  1913 
to  1918  they  fell  from  86.8  to  70.4  or  a  decrease  of  19  per  cent. 

8.  From  1912  to  1916  money  wages  not  only  held  their  own  but  in- 
deed gained  slightly  upon  prices,  but  the  sudden  upward  movement  of 
prices  in  1916  was  accompanied  by  only  a  slight  increase  in  wage  rates 
and  the  result  was  that  in  two  years  the  purchasing  power  of  hourly 
wages  declined  27.1  per  cent  and  the  purchasing  power  of  full-time 
weekly  earnings  26  per  cent. 

9.  Money  wages  began  to  gain  upon  prices  in  1918  and  in  conse- 
quence real  wages  rose  in  that  year  over  their  low-water  mark  of  1917. 

Certain  cautions,  however,  should  be  observed  in  using  this  material: 
(1)   The  industries  covered  do  not  include  such  wartime  industries 


42£  Paul  H.  Douglas  and  Frances  Lamberson       [September 

as  munitions  plants.  Some  of  the  occupations  within  these  industries 
enjoyed  increases  in  wages  more  than  sufficient  to  compensate  for  the 
increase  in  the  cost  of  living.  Household  servants  are  naturally  not 
included  and  they  too  profited.  On  the  other  hand,  neither  are  the 
railroad  workers  and  the  coal  miners  included,  and  their  wages  notori- 
ously lagged  behind  the  increase  in  prices.11  Farm  laborers  also  lost 
during  the  war  period,  as  Professor  Viner  has  shown.12  Moreover,  the 
wage  statistics  after  1907  refer  chiefly  to  union  workmen.  They  conse- 
quently do  not  include  most  of  the  unskilled  workers  and,  save  for  the 
year  1918,  it  is  extremely  probable  that  the  increases  for  this  class  were 
not  as  great  as  for  the  union  workers  who  were  at  once  more  skilled 
and  possessed  stronger  bargaining  powers. 

(2)  The  wage  scales  used  since  1907  for  seven  of  the  industries 
were  the  union  scales.  Until  1917,  and  perhaps  even  until  1918,  the 
union  scale  did  actually  represent  in  practice  "the  prevailing  wage  of  a 
locality  for  efficient  labor."13  In  1918,  however,  due  to  the  relative 
scarcity  of  labor,  a  much  larger  percentage  than  usual  of  the  workers 
were  paid  in  excess  of  this  scale.  To  the  extent  that  this  occurred, 
the  use  of  the  union  scale  fails  to  give  a  completely  accurate  repre- 
sentation of  actual  wage  rates.  This  criticism,  of  course,  does  not  ap- 
ply to  the  three  industries  for  which  pay-roll  data  were  used. 

(3)  As  has  been  pointed  out,  the  use  of  retail  food  prices  exagger- 
ates the  increase  in  the  cost  of  living  for  the  years  1916,  1917,  and 
1918.14  The  actual  decline  in  real  wages  for  these  years  was  accord- 
ingly somewhat  less  than  is  shown  above. 

(4)  As  has  been  explained,  the  relative  full-time  weekly  earnings 
do  not  represent  the  relative  amounts  of  money  actually  received  per 
week.  If  the  relative  amount  of  unemployment  or  under-employment 
should  decrease,  then  the  relative  actual  amounts  received  would  (to 
that  extent  at  least)  increase.  Likewise  if  the  relative  amount  of 
overtime  increased,  the  relative  actual  earnings  would  rise.  The  in- 
dustrial pressure  brought  by  the  war  did,  beyond  doubt,  decrease  un- 
employment and  increase  overtime. 

Two  questions  may  then  be  asked:     (a)  Was  the  increase  in  em- 

ii  See  Report  of  the  Railroad  Wage  Commission  to  the  Director  General  of  the 
Railroads  (1918),  published  by  the  United  States  Railway  Administration;  also 
Award  and  Recommendations  of  the  United  States  Bituminous  Coal  Commission 
(1920),  pp.  36-45. 

12  Jacob  Viner,  "Who  Paid  for  the  War,"  Journal  of  Political  Economy  (Jan., 
1920),  pp.  70-71. 

13  Union  Scale  of  Wages  and  Hours  of  Labor,  United  States  Bureau  of  Labor 
Statistics  Bulletin  No.  214,  p.  11. 

i*  For  the  years  1919  and  1920  on  the  other  hand  the  retail  food  index  was  con- 
siderably less  than  the  cost  of  living. 


1921] 


The  Movement  of  Real  Wages,  1890-1918 


423 


ployment  per  week  more  than  sufficient  to  offset  the  loss  in  hourly  wage 
rates?  What  was  the  course  of  actual  money  earnings  per  week  as 
compared  with  the  cost  of  living?  (b)  Which  is  the  more  significant, 
actual  earnings  or  wage  rates?  These  will  now  be  considered  in  turn: 
(a)  Practically  the  only  authoritative  material  on  actual  weekly 
wage  payments,  including  both  overtime  and  undertime,  is  that  col- 
lected by  the  industrial  commissions  of  New  York  and  Wisconsin  and 
published  in  their  respective  Labor  Market  bulletins.  The  former 
covers  some  600,000  workmen,  while  the  latter  is  based  upon  approxi- 
mately 80,000  workmen.  In  both  cases  a  very  narrow  base  is  used  for 
computation,  the  single  month  of  June,  1914,  serving  in  New  York 
and  the  first  quarter  of  1915  in  Wisconsin.  The  following  table  shows 
the  purchasing  power  of  average  weekly  wage  payments  in  the  manu- 
facturing industries  of  each  of  these  two  states  in  terms  of  their  re- 
spective bases. 

Table  VII. — Comparison  of  Average  Weekly  Earnings  of  Factories  in  New  York 

State  and  Wisconsin  with  Course  of  Retail  Food  Prices 

in  the  United  States.i 

(For  New  York,  June  1914  =  100.    For  Wisconsin,  first  quarter,  1915  =  100.) 


Purchasing  power  of 

Average 

weekly- 

Retail   food  prices 

average  weekly  earn- 

E 

ate 

earnings 

U.  S.  22  commodities 
New  York  1   Wisconsin 

ings  in  terms  of  food 

New  York 

Wisconsin 

New  York 

Wisconsin 

1914 

98 

105 

93.3 

1915 

101 

102 

99.0 

Aug. 

u 

108 

99 

109.1 

1916 

114 

115 

99.1 

Feb. 

iC 

117 

105 

111.4 

Aug. 

(1 

124 

112 

110.7 

1917 

129 

147 

87.7 

Feb. 

« 

134 

132 

101.5 

Aug. 

u 

146 

148 

98.6 

1918 

160 

170 

94.1 

Feb. 

ii 

157 

160 

98.1 

Aug. 

it 

193 

170 

113.5 

1919 

185 

188 

98.4 

Feb. 

it 

209 

171 

122.2 

Aug. 

it 

205 

191 

107.3 

Feb. 

1920 

224 

240 

198 

121.2 

July 

it 

250 

221 

217 

101.4 

115.2 

t-New  York  Labor  Market  Bulletin,  Oct.,  1920,  p.  5;  The  Wisconsin  Labor  Market, 
Bulletin  No.  1  and  data  furnished  by  Mr.  A.  J.  Altmyer,  statistician  for  the  com- 
mission. Prior  to  July,  1920,  the  Wisconsin  statistics  are  given  by  quarters  and 
not  by  months.  The  middle  month  of  the  quarter  has  accordingly  been  taken  as 
typical  of  the  quarter  as  a  whole. 

This  table  shows  that  so  far  as  New  York  state  workers  were  con- 
cerned the  greater  amount  of  employment  was  not  sufficient  to  com- 
pensate for  the  decreased  purchasing  power  of  an  hour's  work.  The 
average  week's  pay  envelope  actually  purchased  12  and  6  per  cent  less 
respectively  in  1917  and  1918  than  in  June,  1914,  despite  the  fact  that 


424  Paul  H.  Douglas  and  Frances  Lamberson       [September 

the  workmen  were  employed  more  steadily  and  worked  longer  hours. 
In  Wisconsin,  however,  there  was  apparently  a  fluctuating  increase  in 
real  weekly  wages  over  the  base  after  February,  1918,  although  for  a 
few  months  preceding  this,  the  index  was  slightly  lower  than  in  the 
period  chosen  as  the  base. 

As  a  matter  of  fact  both  the  New  York  and  Wisconsin  figures  give 
a  more  optimistic  picture  than  is  justified.  It  has  already  been  pointed 
out  that  both  use  an  exceedingly  narrow  base — that  of  New  York  be- 
ing only  one  month,  while  that  of  Wisconsin  is  only  three  months. 
What  is  more,  each  of  the  base  periods  occurred  during  the  depression 
of  1914-1915  when  there  was  a  large  amount  of  unemployment  and 
short  time.  Thus  in  June,  1914,  25.5  per  cent  of  the  union  members  in 
New  York  state  for  whom  reports  were  made  were  unemployed.15  This 
percentage  was  in  excess  of  the  percentages  of  unemployment  for  fifty 
out  of  the  sixty-six  months  from  January,  1909,  to  June,  1914,  in- 
clusive. Periods  of  unusual  unemployment  are  accompanied  by  a  great 
deal  of  short  time,  and  weekly  pay  checks  are  in  consequence  abnorm- 
ally low.  The  use  of  June,  1914,  as  the  base,  therefore,  fixes  an  unduly 
low  starting  point  and  consequently  exaggerates  the  later  increase  in 
actual  weekly  earnings.16  The  same  criticism  applies  with  even  greater 
force  to  the  base  used  by  the  Wisconsin  commission.  The  early  winter 
months  of  1915  were  marked  by  closed  factories,  widespread  unem- 
ployment and  extensive  short-time.  There  are  no  statistics  covering 
the  actual  amount  of  unemployment  in  Wisconsin  at  this  time,  but 
in  New  York  32.6  per  cent  of  the  trade-union  members  were  idle  during 
the  first  quarter  of  1915  ;17  while  in  Massachusetts  in  March  16.6  per 
cent,  or  practically  twice  as  many  as  the  average  for  the  years  1911, 
1912,  and  1913,  were  unemployed.18  This  in  large  part  accounts  for 
the  fact  that  the  Wisconsin  index  rises  more  rapidly  than  that  of  New 
York  during  1915  and  for  its  higher  position  throughout  the  war 
period.  Had  a  longer  or  a  more  representative  period  been  used  as  the 
base  for  both  of  these  studies,  the  later  figures  concerning  actual 
weekly  wages  expressed  in  relatives  would  have  been  considerably  lower. 
In  other  words,  the  workers  in  New  York  state  lost  even  more  than  is 
indicated  above,  while  the  workers  in  Wisconsin  gained  less  than  is 
shown  and,  at  least  until  late  in  1918,  quite  probably  did  not  gain  at  all. 

is  Bulletin  No.  85,  New  York  State  Department  of  Labor,  Course  of  Employ- 
ment in  New  York  State,  p.  50. 

is  For  the  same  reason,  the  use  of  the  year  1896  as  the  base  would  exaggerate 
the  increase  in  retail  food  costs  and  in  wholesale  prices.  The  ten-year  period  1890- 
1899  is  used  to  obviate  this  difficulty. 

it  Bulletin  85.    New  York  State  Department  of  Labor,  op  cit.,  p.  50. 

is  Massachusetts  Industrial  Review,  vol.  I,  no.  2  (July,  1920),  p.  25. 


1921]  The  Movement  of  Real  Wages,  1890-1918  425 

(b)  Whether,  as  a  matter  of  fact,  total  weekly  earnings  would  give 
a  fairer  picture  of  the  worker's  status  than  do  hourly  wage  rates,  it 
is  impossible,  with  our  scanty  material,  to  tell.  The  answer  would  re- 
quire a  knowledge  of  pre-war  and  post-war  hours  worked;  and  that 
knowledge  is  not  available.  It  may  be  worth  while,  however,  to  point 
out  how  such  material  could  be  used  if  we  did  have  it. 

Very  roughly,  the  question  of  the  relative  significance  of  hourly  rates 
and  weekly  earnings  depends  necessarily  upon  a  somewhat  complex 
double  factor  of  judgment;  the  interrelation  not  merely  of  previous 
and  present  hours  worked  to  previous  and  present  wage  rates  but  the 
relation  of  all  four  to  some  sort  of  mental  standard  in  the  way  of  a 
"normal"  working  week.  This  last  criterion  is  indispensable.  Sup- 
pose a  man  had  previously  been  employed  only  20  hours  a  week  and  was 
now  enabled  to  work  40  hours.  Even  though  his  total  earnings  rose 
thereby  only  50  per  cent,  would  not  most  critics  be  assured  that  his 
new  surplus  constituted  a  real  human  gain  and  would  they  not  hence  be 
forced  in  this  case  to  consider  weekly  earnings  the  significant  standard? 
Suppose,  however,  that  he  had  already  been  employed  40  hours  and  was 
now  raised  to  80  hours.  Would  this  inhumanly  long  labor  be  com- 
pensated for  adequately  by  a  50  per  cent  addition  in  earnings?  As- 
suredly no.  Hence  the  hourly  wage  would  here  give  the  fairer  picture. 
Or  again,  in  the  third  place,  suppose  the  original  hours  worked  were 
40  and  were  now  raised  to  48  or  50  (an  amount  typically  involving  no 
undue  strain)  but  the  gain  in  total  earnings  was  only  2  or  3  per  cent. 
Would  that  small  cash  gain  be  worth  the  extra  effort?  Here  the  issue 
is  not  so  clear,  although  most  of  us  would  probably  hold  that  the  gain 
was  not  worth  the  trouble  and  that  once  more  the  hourly  rate  was  the 
more  significant.  If,  on  the  other  hand,  the  increase  from  40  hours  of 
labor  to  50  had  entailed  an  income  gain  of  12  to  15  per  cent,  many 
would  think  the  result  worth  while — and  hence  again  resort  to  the 
weekly  earnings  as  base. 

It  is  believed  that  the  qualifications  pointed  out  above  with  respect 
to  other  industries,  trade-union  rates,  and  retail  food  prices,  would  not 
greatly  alter  the  situation  as  revealed  by  Table  VI.  While  any  esti- 
mate may  be  in  the  nature  of  a  guess,  it  is  the  belief  of  the  writers  that 
these  factors  would  not  introduce  a  change  in  real  wages  in  excess  of 
10  points  and  probably  less. 

All  the  evidence  seems  to  indicate  that  at  the  termination  of  the 
great  war19  the  return  in  commodities  which  the  American  workman  re- 

19  It  is  probable  that  labor  gained  ground  upon  the  cost  of  living  in  1919  and  the 
early  part  of  1920.  Whether  this  was  sufficient  to  bring  them  back  to  the  pre-war 
basis  is  not  certain.  It  is  clear  that  it  was  not  so  far  as  Boston,  Mass.  was  con- 
cerned.    The  increase  in  hourly  wage  rates  in  organized   occupations   from   July, 


426  Paul  H.  Douglas  and  Frances  Lamberson       [September 

ceived  for  an  equal  length  of  time  worked  (one  hour)  was  from  10  to 
20  per  cent  less  than  it  was  in  the  decade  1890-1899,  and  from  7  to 
17  per  cent  less  than  it  was  before  the  sharp  upward  movement  of 
prices  in  1916.20  The  purchasing  power  of  the  established  week's  work, 
moreover,  was  from  20  to  30  per  cent  less  than  in  the  nineties  and 
from  10  to  20  per  cent  less  than  in  1915.  American  labor  as  a  whole, 
therefore,  cannot  legitimately  be  charged  with  having  profiteered  dur- 
ing the  war.  Rather,  like  Alice  in  Wonderland,  it  was  compelled  to 
run  faster  in  order  to  stay  in  the  same  place. 

Paul  H.  Douglas,  University  of  Chicago. 

Frances  Lamberson,  Portlernd,  Oregon. 

1914,  to  July  1,  1920,  was  83.5  per  cent  and  for  "full-time"  weekly  earnings  73.7 
per  cent  while  the  cost  of  living  increased  in  Boston  from  December,  1914  to  June, 
1920,  110.7  per  cent!  See  Massachusetts  Industrial  Review,  vol.  I,  no.  2  (July,  1920), 
pp.  13-20  and  mimeographed  bulletin  964,  U.  S.  Bureau  of  Labor  Statistics. 

20  For  a  summary  and  critique  of  the  wage  studies  of  the  National  Industrial  Con- 
ference see  the  review  by  Paul  H.  Douglas  in  Quarterly  Publications  of  the  American 
Statistical  Association,  September,  1921. 


RECENT  DEVELOPMENTS  IN  THE  FEDERAL  FARM 
LOAN  SYSTEM 

The  decision1  of  the  Supreme  Court  of  the  United  States  on  Febru- 
ary 28,  1921,  sustaining  the  constitutionality  of  the  Federal  Farm 
Loan  act  came  as  no  surprise  to  those  who  were  familiar  with  the  more 
subtle  provisions  in  the  act  and  the  points  involved  in  the  litigation. 
In  framing  the  original  measure  Congress  had  taken  pains  to  insure  its 
constitutionality.  It  had  empowered  the  Secretary  of  the  Treasury 
to  designate  any  land  bank,  federal  or  joint-stock,  as  a  depositary  of 
public  money,  except  receipts  from  customs,  and  as  a  financial  agent 
of  the  government;  it  had  empowered  both  federal  and  joint-stock  land 
banks  to  buy  and  sell  United  States  bonds ;  and,  lest  there  be  some 
question  about  the  constitutionality  of  exempting  the  bonds  of  these 
banks  from  all  taxation,  especially  state  taxes,  it  had  declared  all  first 
mortgages  executed  to  land  banks  and  all  farm  loan  bonds  to  be  "in- 
strumentalities of  the  government  of  the  United  States."  These  safe- 
guards effectively  accomplished  the  purpose  for  which  they  were  in- 
tended because  the  Supreme  Court  in  its  decision  adhered  closely  to 
time  honored  precedents. 

The  case  first  got  into  the  hands  of  the  courts  in  July,  1919,  when 
Charles  E.  Smith,  a  stockholder  in  the  Kansas  City  Title  and  Trust 
Company,  instituted  proceedings  in  the  United  States  District  Court 
at  Kansas  City,  Missouri,  to  enjoin  the  trust  company  from  investing 
funds  to  the  amount  of  $10,000  in  bonds  of  the  federal  land  banks, 
and  $10,000  in  bonds  of  the  joint-stock  land  banks.  It  was  the  con- 
tention of  Smith,  among  other  things,  that  although  farm  loan  bonds 
purported  to  be  tax  exempt,  Congress  had  exceeded  its  constitutional 
authority  in  providing  for  the  creation  of  federal  and  joint-stock  land 
banks  with  the  power  to  issue  tax-exempt  bonds ;  and  that  therefore 
these  bonds  were  improper  securities  for  the  investment  of  trust  com- 
pany funds. 

The  Federal  Land  Bank  of  Wichita  and  certain  joint-stock  land 
banks  intervened  in  the  suit.  The  case  was  heard  on  October  29  and 
30,  1919,  and  at  the  conclusion  of  the  hearing  the  trial  judge  upheld 
the  constitutionality  of  the  act  and  dismissed  the  bill  of  complaint. 
From  this  decision,  Smith  immediately  appealed  to  the  United  States 
Supreme  Court  where  the  case  was  argued  January  6,  1920,  and  again 
on  October  14  and  15  by  Ex-Justice  Hughes  and  Ex-Attorney  General 

1  Charles  E.  Smith  v.  Kansas  City  Title  $  Trust  Company  et  al.  Justice  Brandeis 
took  no  part  in  the  consideration  of  the  case.  Justices  McReynolds  and  Holmes 
in  dissenting  from  the  majority  opinion  took  exception  to  the  court's  assumption 
of  jurisdiction  rather  than  to  the  findings  themselves. 


428  George  E.  Putnam  [September 

Wickersham  on  behalf  of  the  banks  and  by  Messrs.  Marshall  Bullitt  and 
Frank  Hagerman  on  behalf  of  the  complainant.  In  its  conclusions  the 
court  expressed  its  conviction  that  "the  contention  of  the  government 
and  of  the  appellees  that  these  banks  are  constitutionally  organized 
and  the  securities  here  involved  legally  exempted  from  taxation  must 
be  sustained." 

A  review  of  the  numerous  briefs  submitted  by  counsel  for  appellant 
shows  that  the  case  against  the  farm  loan  act  was  based  upon  three 
contentions  as  follows: 

1.  That  Congress  has  no  power  under  the  Constitution,  either  ex- 
pressed or  implied,  to  create  a  corporation  for  the  purpose  of  conduct- 
ing a  farm-mortgage  loan  business. 

2.  That  Congress  could  not  acquire  power  to  create  a  series  of  cor- 
porations to  engage  in  this  business  or  to  exempt  them  from  all  state 
control  by  the  mere  expedient  of  calling  them  "banks"  and  endowing 
them  with  the  possible  function  of  acting  as  financial  agents  or  deposi- 
taries of  public  money. 

3.  That  in  view  of  the  unconstitutionality  of  the  act,  the  tax  exemp- 
tion clause  cannot  be  sustained. 

It  can  hardly  be  said  that  the  above  contentions  were  adhered  to 
rigidly  throughout  the  entire  course  of  the  litigation  proceedings.  On 
the  contrary,  there  was  a  good  deal  of  diversity,  at  least  on  the  matter 
of  emphasis,  in  the  method  of  attack  that  was  followed.  In  the  earlier 
hearings,  the  case  against  the  government  was  based  chiefly  on  the 
contention  that  Congress  had  no  power  under  the  Constitution  to  create 
land  banks  or  to  appropriate  public  money  for  the  purpose.  In  the 
final  brief,  submitted  upon  re-argument,  counsel  for  the  appellant 
seemed  partly  to  admit  the  power  of  Congress  to  appropriate  money 
for  the  creation  of  the  land  banks  and  to  exempt  their  bonds  from 
federal  taxes.  They  contended,  however,  that  these  bonds  are  at  least 
subject  to  state  taxation,  and  that,  after  all,  "tax  exemption  is  the 
real  issue  sought  to  be  settled  here." 

In  support  of  the  contention  that  Congress  has  no  power  to  create 
federal  and  joint-stock  land  banks,  it  was  pointed  out  that  the  decisions 
of  the  Supreme  Court  in  McCulloch  v.  Maryland,2  etc.,  afford  no  basis 
for  the  creation  of  land  banks ;  that  the  implied  power  of  Congress  to 
incorporate  a  bank  under  article  1,  section  8,  clause  18  of  the  Consti- 
tution was  based  upon  the  ground  that  in  order  to  carry  out  the  ex- 
press powers  to  collect  taxes,  to  borrow  money,  to  regulate  commerce, 
to  carry  on  war  and  to  raise  and  support  armies  and  navies,  it  was 
absolutely  necessary  for  the  government  to  conduct  fiscal  operations ; 
and  that  the  corporations  created  under  the  farm  loan  act  were  not 

2  4-  Wheat,  316. 


1921]       Recent  Developments  in  Federal  Farm  Loan  System  429 

intended  "as  a  machine  for  the  fiscal  operations  of  the  government," 
nor  were  they  designed  to  engage  in  a  commercial  banking  business. 
On  the  contrary  they  (especially  the  joint-stock  banks)  were  intended 
primarily  as  private  profit-making  institutions  and  were  non-essential 
to  the  performance  of  any  governmental  function. 

The  position  taken  by  Ex-justice  Hughes  on  this  point  on  behalf  of 
the  federal  land  banks  was  that  the  agricultural  interests  of  the  coun- 
try are  of  public  national  concern  and  relate  directly  to  general  wel- 
fare; that  Congress  has  the  power  to  appropriate  the  public  money  to 
such  purposes;  that  the  machinery  created  by  the  farm  loan  act  was 
intended  to  stimulate  the  cultivation  of  the  soil  and  to  promote  agri- 
cultural development;  and  that  Congress  could  therefore  appropriate 
money  and  lend  it  to  farmers  at  low  interest  rates.  It  was  argued  by 
Ex-attorney  General  Wickersham,  representing  the  joint-stock  land 
banks,  that  in  creating  corporations  to  engage  in  the  business  of  mak- 
ing farm  loans,  Congress  had  merely  exercised  its  power  to  establish 
agencies  to  perform  necessary  and  essential  governmental  functions. 

In  deciding  this  point,  on  which  the  other  issues  involved  were  really 
dependent,  the  court  by  Justice  Day  said : 

Since  the  decision  of  the  great  cases  of  McCulloch  v.  Maryland,  4 
Wheaton  316,  and  Osborn  v.  Bank,  9  Wheaton  738,  it  is  no  longer  an  open 
question  that  Congress  may  establish  banks  for  national  purposes,  only  a 
small  part  of  the  capital  of  which  is  held  by  the  Government,  and  a  ma- 
jority of  the  ownership  in  which  is  represented  by  shares  of  capital  stock 
privately  owned  and  held;  the  principal  business  of  such  banks  being 
private  banking  conducted  with  the  usual  methods  of  such  business. 

In  answer  to  the  contention  that  land  banks  are  not  comparable  in 
function  to  the  commercial  banks  which  Congress  has  from  time  to  time 
authorized  and  which  have  been  held  to  be  within  the  power  of  Congress 
to  authorize,  the  court  held  that : 

A  bank  may  be  organized  with  or  without  the  authority  to  issue  currency. 
It  may  be  authorized  to  receive  deposits  in  only  a  limited  way.  Speaking 
generally,  a  bank  is  a  moneyed  institution  to  facilitate  the  borrowing,  lend- 
ing and  caring  for  money. 

And  by  way  of  justifying  reasonable  liberality  in  construing  the  im- 
plied powers  of  Congress,  the  court  referred  to  the  decision  in  First 
National  Bank  v.  Union  Trust  Company3  where,  after  reviewing  Mc- 
Culloch v.  Maryland  and  Osborn  v.  Bank,  the  chief  justice,  speaking 
for  the  court,  said: 

In  terms  it  was  pointed  out  that  this  broad  authority  was  not  stereotyped 
as  of  any  particular  time  but  endured,  thus  furnishing  a  perpetual  and  liv- 
ing sanction  to  the  legislative  authority  within  the  limits  of  a  just  discretion 
enabling  it  to  take  into  consideration  the  changing  wants  and  demands  of 

3  244  U.  S.  416,  419. 


430  George  E.  Putnam  [September 

society  and  to  adopt  provisions  appropriate  to  meet  every  situation  which 
it  was  deemed  required  to  be  provided  for. 

The  opinion  of  the  court  as  above  quoted  touches  also  upon  the  sec- 
ond contention  of  the  appellant,  namely,  that  it  was  not  the  purpose  of 
Congress  to  provide  agencies  which  were  intended  to  perform  essential 
and  necessary  governmental  functions,  and  that  section  6  of  the  act 
providing  that  the  Secretary  of  the  Treasury  might  designate  any  of 
the  federal  or  joint-stock  land  banks  as  depositaries  of  public  money 
and  financial  agents  of  the  government  was  merely  a  device  to  make 
valid  what  would  otherwise  be  unconstitutional. 

There  can  be  no  question  but  that  section  6  of  the  act  was  a  subter- 
fuge. While  the  bill  was  pending  in  Congress,  Senator  Hollis  and  other 
friends  of  the  measure  had  such  grave  doubts  as  to  its  constitutionality 
that  they  openly  admitted  the  necessity  of  endowing  the  proposed  land 
banks  with  some  governmental  function  however  unnecessary  and  inci- 
dental to  the  main  operations  this  function  might  be.  Senator  Hollis, 
for  instance,  made  the  following  statement  on  the  floor  of  the  Senate: 

The  constitutional  features  of  the  bill  have  given  me  great  concern.  .  .  . 
If  any  friend  of  the  bill  can  think  of  any  other  feature  that  should  be  added 
to  it  to  make  the  bill  surely  constitutional,  I  would  very  gladly  welcome  it.4 

Responding  to  the  call  for  help,  Senator  Cummins  later  made  the 
significant  statement : 

In  this  case,  however,  the  chief  purpose  of  the  corporation,  as  avowed 
by  all  who  have  spoken  on  its  behalf  and  as  I  think  will  be  admitted  by 
everybody,  is  to  secure  a  lower  rate  of  interest  to  those  who  borrow  from 
the  land  banks;  that  is  its  only  object.  It  is  necessary,  however,  to  find 
some  governmental  purpose,  however  slight  or  insignificant,  in  order  to  in- 
voke the  authority  of  Congress  in  the  incorporation,  and,  therefore,  it  is 
declared  that  these  land  banks  shall  be  public  depositaries,  .  .  .5 

Not  only  is  it  true  that  the  land  banks  were  not  intended  by  Con- 
gress to  become  necessary  governmental  agencies,  but  there  is  also  the 
fact  that  these  banks  have  not  been  designated  as  government  deposi- 
taries or  financial  agents,  except  that  during  the  summer  of  1918  the 
federal  land  banks  at  Wichita,  St.  Paul,  and  Spokane  were  temporarily 
designated  as  financial  agents  of  the  government  for  the  sole  purpose 
of  making  seed  grain  loans  to  drought-stricken  farmers.6  No  joint- 
stock  land  bank,  however,  has  ever  been  used  even  temporarily  for  this 
purpose. 

It  is  possible  that  the  court  felt  constrained  to  consider  carefully 

*  Congressional  Record,  vol.  53,  p.  7026. 
b  Ibid.,  p.  7246. 

e  For  details  see  Annual  Report  of  the  Secretary  of  the  Treasury,  1919,  pp.  139- 
1«. 


1921]       Recent  Developments  in  Federal  Farm  Loan  System  431 

the  fact  that  in  section  6  Congress  had  deliberately  maneuvered  to 
safeguard  the  constitutionality  of  the  act  and  thereby  to  accomplish 
the  real  purpose  it  had  in  mind,  namely,  to  reduce  the  rate  of  interest 
to  farmers.  But  the  issue  is  clearly  disposed  of  in  the  decision.  Re- 
ferring again  to  the  decision  in  McCulloch  v.  Maryland  which  in- 
volved, among  other  things,  the  right  of  Congress  to  establish  the  Sec- 
ond Bank  of  the  United  States,  the  court  said: 

That  the  formation  of  the  bank  was  required  in  the  judgment  of  the  Con- 
gress for  the  fiscal  operations  of  the  Government,  was  a  principal  consider- 
ation upon  which  Chief  Justice  Marshall  rested  the  authority  to  create  the 
bank;  and  for  that  purpose  being  an  appropriate  measure  in  the  judgment 
of  the  Congress,  it  was  held  not  to  be  within  the  authority  of  the  court  to 
question  the  conclusion  reached  by  the  legislative  branch  of  the  Government. 

And  again : 

The  existence  of  the  power  under  the  Constitution  is  not  determined  by 
the  extent  of  the  exercise  of  the  authority  conferred  upon  it.  Congress  de- 
clared it  necessary  to  create  these  fiscal  agencies,  and  to  make  them  author- 
ized depositaries  of  public  money.  Its  power  to  do  so  is  no  longer  open 
to  question. 

But,  it  is  urged,  the  attempt  to  create  these  Federal  agencies,  and  to  make 
these  banks  fiscal  agents  and  public  depositaries  of  the  Government,  is  but 
a  pretext.  But  nothing  is  better  settled  by  the  decisions  of  this  court  than 
that  when  Congress  acts  within  the  limits  of  its  constitutional  authority,  it 
is  not  the  province  of  the  judicial  branch  of  the  Government  to  question 
its  motives. 

In  sustaining,  in  toto,  the  power  of  Congress  to  establish  land  banks 
which,  though  incidental  to  their  main  function,  might  be  employed  as 
public  depositaries  and  financial  agents  of  the  government,  the  con- 
tention of  counsel  for  the  appellant  that  the  exemption  of  farm  loan 
bonds  from  federal  taxation  could  not  be  sustained,  naturally  fell  to 
the  ground.     In  this  connection  the  court  said: 

Deciding  as  we  do,  that  these  institutions  have  been  created  by  Congress 
within  the  exercise  of  its  legitimate  authority,  we  think  the  power  to  make 
the  securities  here  involved  tax  exempt  necessarily  follows.  This  principle 
was  settled  in  McCulloch  v.  Maryland,  and  Osborn  v.  Bank,  supra. 

There  remained  only  the  argument  that  even  though  farm  loan  bonds 
were  legally  exempt  from  federal  taxes,  they  would  still  be  subject  to 
state  taxation  because  they  were  not  real  or  essential  instrumentalities 
of  the  federal  government.  To  hold  otherwise,  it  was  argued,  would 
permit  Congress  to  encroach  little  by  little  upon  the  taxing  power  of 
the  states  merely  by  designating  taxable  objects  as  "instrumentalities 
of  the  government  of  the  United  States"  until  there  would  remain  noth- 
ing for  the  states  to  tax  and  they  would  be  destroyed  on  account  of 
their  inability  to  raise  revenue. 


432  George  E.  Putnam  [September 

Without  attempting  to  deal  specifically  with  the  logic  in  this  argu- 
ment, the  court  quoted  Chief  Justice  Marshall's  famous  "power  to 
"destroy"  doctrine7  as  laid  down  in  McCulloch  v.  Maryland  and  held 
that: 

The  exercise  of  such  taxing  power  by  the  states  might  be  so  used  as  to 
hamper  and  destroy  the  exercise  of  authority  conferred  by  Congress,  and 
this  justifies  the  exemption.  If  the  states  can  tax  these  bonds  they  may 
destroy  the  means  provided  for  obtaining  the  necessary  funds  for  the  future 
operation  of  the  banks. 

And  the  court  added  significantly,  "With  the  wisdom  and  policy  of 
this  legislation  we  have  nothing  to  do." 

The  fundamental  reason  for  this  litigation  together  with  the  results 
that  have  followed  and  may  be  expected  to  follow  will  now  be  noted. 

It  is  no  secret  that  although  one  Smith  was  the  original  complainant 
in  what  was  purely  a  test  case,  it  was  at  the  instance  of  the  farm  mort- 
gage bankers  that  proceedings  were  instituted.  They  were  the  ones 
who  were  vitally  interested  in  having  the  farm  loan  act  declared  invalid, 
especially  that  provision  in  the  law  exempting  farm  loan  bonds  from 
taxation.  For  good  cause  they  feared  the  competition  of  the  federal 
land  banks  less  than  that  of  the  joint-stock  banks,  and  it  was  there- 
fore against  the  latter  that  their  attack  was  concentrated  throughout 
the  litigation  proceedings. 

That  the  joint-stock  land  banks  promised  to  be  the  more  dangerous 
competitors  is  shown  by  the  record  of  their  progress.  Up  to  November 
30,  1918,  nine  joint-stock  banks  had  been  organized.  Their  paid-in 
capital  amounted  to  $2,010,850  and  the  volume  of  their  loans  was 
$7,289,870  or  less  than  5  per  cent  of  the  total  volume  of  loans  out- 
standing under  the  entire  system.  By  July  of  the  following  year,  when 
proceedings  were  instituted,  twenty-one  joint-stock  banks  had  been 
organized  with  a  total  paid-up  capital  of  $5,308,000.  On  November 
30,  1919,  there  were  thirty  joint-stock  banks  in  existence  with  a  paid- 
up  capital  of  $8,638,650  and  total  outstanding  loans  of  $54,126,357, 
or  more  than  16  per  cent  of  the  volume  of  loans  granted  under  the  en- 
tire system.8 

Even  more  striking  has  been  the  rate  of  progress  of  the  joint-stock 
banks  when  the  results  for  particular  months  are  noted.  During  No- 
vember, 1918,  the  loans  made  by  these  banks  amounted  to  15  per  cent 
of  the  total  for  the  entire  system.  During  the  corresponding  month 
of  1919,  their  loans  represented  38  per  cent  of  the  business  of  the 

7  For  a  review  and  criticism  of  this  doctrine  as  now  applied  see  the  writer's 
article  "Investment  Securities  and  Tax  Exemption,"  Washington  University  Studies, 
vol.  VII,  Humanistic  Series,  no.  1,  1919,  pp.  6-14. 

s  Data  from  Third  Annual  Report  of  the  Federal  Farm  Loan  Board,  1919,  pp.  3-4. 


1921]       Recent  Developments  in  Federal  Farm  Loan  System  433 

system  for  that  month.  So  rapid  was  their  progress  during  the  year 
1919  that  the  Federal  Farm  Loan  Board  expected  them  to  transact 
over  40  per  cent  of  the  total  land  bank  business  for  the  period  Novem- 
ber 1, 1919  to  May  1,  1920.9 

But  it  was  not  alone  the  actual  and  potential  growth  in  the  business 
of  the  joint-stock  banks  that  aroused  the  antagonism  of  the  farm 
mortgage  bankers.  Of  even  greater  importance  was  the  fact  that  these 
banks,  unlike  the  federal  land  banks,  confined  their  operations  chiefly 
to  the  more  highly  developed  agricultural  sections  of  the  country  which 
were  already  served  by  the  old  line  mortgage  agencies.  Of  the  twenty- 
one  banks,  for  instance,  which  had  been  organized  before  July,  1919, 
nine  were  chartered  to  do  business  in  Iowa  (and  in  all  cases  one  other 
contiguous  state),  five  in  Minnesota,  three  in  Illinois,  and  three  in 
Nebraska,10  etc.  There  can  be  no  question  but  that  the  joint-stock 
banks  found  their  most  profitable  field  for  operation  in  the  states  which 
rank  first  in  agricultural  development,  and  that  the  growth  in  the 
volume  of  their  business  was  largely  at  the  expense  of  the  farm  mort- 
gage companies  rather  than  the  federal  land  banks.  Under  these  con- 
ditions, it  was  but  natural  that  the  farm  mortgage  bankers  should  at- 
tack the  constitutionality  of  the  farm  loan  act,  especially  that  section 
of  the  law  exempting  farm  loan  bonds  from  taxation. 

But  if  tax  exemption  gave  the  joint-stock  banks  any  substantial  ad- 
vantage over  the  farm  mortgage  companies,  why  did  not  the  latter  re- 
organize their  business  under  a  federal  charter  and  secure  the  same 
privileges  ? 

The  reason  for  their  hesitancy  in  joining  the  system  was  twofold. 
In  the  first  place  they  had  attempted  as  early  as  October,  1917,  to 
secure  certain  changes  in  the  law  which  would  enable  them  to  come 
into  the  system  as  federal  corporations  and  to  operate  on  terms  of 
equality  with   federal  land  banks  without  prejudicing   their   earning 

» Ibid.  One  reason  for  the  greater  rate  of  progress  shown  by  the  joint-stock 
banks  is  the  fact  that  they  make  larger  individual  loans.  Up  to  November  30, 
1919,  the  average  size  of  loans  made  by  these  banks  was  $9,308,  while  the  amount 
loaned  by  the  federal  land  banks  on  the  same  date  represented  an  average  of  $2,637 
per  loan.  There  is  a  legal  limit  of  $10,000  to  the  size  of  individual  loans  that  federal 
land  banks  may  make,  and  no  legal  limit  to  the  amount  that  joint-stock  banks  may 
lend  to  individual  borrowers.  In  the  exercise  of  its  general  supervisory  powers, 
however,  the  Farm  Loan  Board  has  ruled  that  a  joint-stock  bank  may  not  make  a 
loan  to  any  one  borrower  in  excess  of  15  per  cent  of  its  capital  stock,  nor  in  any 
case  in  excess  of  $50,000.     (Third  Annual  Report,  1919,  p.  4.) 

io  For  full  details  as  to  name  and  location  of  joint-stock  banks  and  the  states 
in  which  they  are  authorized  to  operate,  see  Hearings  before  the  Committee  on 
Banking  and  Currency  of  the  House  of  Representatives  on  H.  R.  8159,  66  Cong., 
1  Sess.,  p.  27. 


434  George  E.  Putnam  [September 

power  or  methods  of  doing  business  during  the  experimental  stage  of 
their  existence.  The  changes11  which  they  proposed  in  the  law  were 
entirely  reasonable  and  in  keeping  with  the  place  that  private  enter- 
prise should  occupy  in  the  farm  loan  system.  But  their  proposals 
failed  to  receive  the  endorsement  of  the  Federal  Farm  Loan  Board, 
and  the  matter  got  no  further. 

In  the  second  place,  largely  as  a  result  of  the  numerous  conferences 
that  were  held  between  a  special  committee  of  the  Farm  Mortgage 
Bankers  Association  and  the  Federal  Farm  Loan  Board,  there  de- 
veloped a  feeling  that  the  board  was  hostile  toward  those  sections  of 
the  law  pertaining  to  joint-stock  land  banks,  and  it  was  generally  con- 
cluded that  these  institutions  would  not  be  accorded  fair  treatment  in 
the  system. 

However  much  there  may  have  been  at  the  time  to  warrant  this  feel- 
ing, subsequent  events  seem  to  have  justified  the  premonitions  of  the 
farm  mortgage  bankers.  The  board  is  now  none  too  friendly  toward 
the  joint-stock  banks.  It  has  viewed  with  some  concern  their  remark- 
able progress  due  to  their  "ability  to  sell  a  standard  form  of  tax  free 
security";12  the  Secretary  of  the  Treasury  has  definitely  recommended 
the  withdrawal  of  the  tax  exemption  privilege  from  all  their  future 
bond  issues  ;13  and  the  board  has  not  only  endorsed  a  bill  introduced 
in  the  Senate  to  accomplish  this  purpose,  but  has  also  stated  its  con- 
viction that  "the  federal  land  banks  can  fully  serve  all  those  classes 
of  farm  borrowers  who  are  within  the  reasonable  purview  of  the  act."14 
This  statement,  made  while  the  constitutionality  of  the  farm  loan  act 
was  being  considered  by  the  Supreme  Court,  was  prompted  ostensibly 
by  the  fear  that  in  view  of  the  rapid  increase  in  the  number  of  joint- 
stock  banks,  the  growth  in  the  volume  of  their  business,  and  the  condi- 
tion of  the  investment  market,  it  might  become  impossible  to  dispose 
of  farm  loan  bonds  in  sufficient  quantities  to  keep  both  federal  and 
joint-stock  land  banks  in  operation.15 

The  fears  of  the  board  lest  the  federal  land  banks  be  obliged  to  dis- 
continue their  operations  were  realized,  but  for  a  totally  different  rea- 
son. The  institution  of  proceedings  by  the  farm  mortgage  bankers 
seriously   affected   the   operations   of  the  whole   system — a  cloud   was 

11  Enumerated  by  the  writer  in  "The  Federal  Farm  Loan  System,"  American 
Economic  Review,  vol.  IX,  no.  1   (March,  1919),  p.  73. 

i2  Third  Annual  Report,  pp.  3-4. 

is  Annual  Report  of  the  Secretary  of  the  Treasury,  1920,  p.  188. 

i*  For  details  see  letter  of  Geo.  W.  Norris,  Farm  Loan  Commissioner  to  George 
B.  McLean,  Chairman,  Senate  Committee  on  Banking  and  Currency,  Feb.  17,  1920. 
Reprinted  by  Farm  Mortgage  Bankers  Association  of  America  as  Special  Bulletin 
No.  62. 

is  Ibid. 


1921]       Recent  Developments  in  Federal  Farm  Loan  System  435 

cast  upon  the  validity  of  farm  loan  bonds  which  made  them  virtually 
unmarketable.  Fortunately,  at  the  conclusion  of  the  Victory  Loan 
campaign  in  the  spring  of  1919,  bonds  had  been  offered  and  sold  in 
sufficient  quantities  to  carry  the  banks  to  January,  1920;  and  in  antici- 
pation of  an  early  decision  by  the  Supreme  Court,  some  of  the  banks 
used  their  commercial  credit  and  continued  lending  operations  till  Feb- 
ruary. By  March  1,  1920,  however,  their  funds  were  entirely  ex- 
hausted, and  thereafter  they  remained  practically  inactive.16 

Believing  that  the  emergency  called  for  public  intervention,  Congress 
passed  a  House  joint  resolution  May  26,  1920,  authorizing  the  Treas- 
ury to  purchase  a  limited  amount  of  federal  land  bank  bonds  to  be 
secured  only  by  mortgages  approved  before  March  1.  The  rate  on  the 
bonds  was  raised  from  4  y%  to  5  per  cent.  On  December  31,  1920,  the 
Treasury  had  purchased  bonds  to  the  amount  of  $45,400,000  thereby 
enabling  the  federal  land  banks  to  take  care  of  the  greater  portion  of 
their  definite  commitments  up  to  March  1  of  that  year,  and  to  liquidate 
their  short-time  paper.17 

The  joint-stock  banks  received  no  aid  from  the  national  treasury 
during  the  litigation  period,  yet  in  the  fourteen  months,  October  31, 
1919,  to  December  31,  1920,  the  number  of  banks  increased  from  25  to 
30  and  the  volume  of  loans  outstanding  from  $48,092,816  to  $77,958,- 
642.  During  the  same  period  the  number  of  national  farm  loan  asso- 
ciations increased  from  3,862  to  3,966  and  the  volume  of  federal  land 
bank  loans  from  $271,317,816  to  $349,678,987.18  Not  only  was  the 
rate  of  progress  of  the  joint-stock  banks  much  greater  than  that  of 
their  competitors,  but  they  transacted  over  28  per  cent  of  the  new 
business  of  the  farm  loan  system  during  the  fourteen  months  period. 
The  year  1920  ended,  however,  with  only  twenty-seven  joint-stock 
banks  in  existence,  three  of  the  newly  organized  banks  having  gone 
into  liquidation  under  an  amendment  to  the  farm  loan  act  approved 
May  29,  1920,  wherein  provision  was  made  for  the  voluntary  liquida- 
tion of  these  banks  and  for  the  acquisition  of  their  assets  and  the  as- 
sumption of  their  liabilities  by  the  federal  land  banks.19 

Notwithstanding  the  fact  that  the  validity  of  farm  loan  bonds  has 
been  established,  there  is  still  some  question  as  to  whether  the  land 
banks  will  be  able  immediately  to  function.  With  a  view  to  securing 
approximate   uniformity   and   a   material   reduction    in    interest   rates 

ic  The  Commercial  and  Financial  Chronicle,  vol.  112,  no.  2905  (Feb.  26,  1921), 
p.  792. 

i7  Annual  Report  of  the  Secretary  of  the  Treasury,  1920,  p.  187;  also  House  Doc. 
No.  998,  66  Cong.,  3  Sess.,  p.  2. 

is  Annual  Report  of  the  Secretary  of  the  Treasury,  1919,  pp.  1085-1091 ;  also 
House  Doc.  No.  998,  66  Cong.,  3  Sess.,  pp.  3-5. 

19  For  details  see  Annual  Report  of  the  Secretary  of  the  Treasury,  1920,  p.  186. 


43C  {<     rg*  1-   Putnam  [September 

throughout  the  country,  the  farm  loan  act  fixed  the  maximum  rate 
that  might  be  paid  on  bonds  at  5  per  cent,  and  the  highest  rate  includ- 
ing commissions  that  might  be  paid  by  borrowers  at  6  per  cent.  With 
5  per  cent  bonds  of  the  federal  land  bunks  selling  in  the  open  market 
below  par,  and  with  a  flood  of  applications  for  loans,  it  is  difficult  to 
see  how  either  the  federal  or  joint-stock  land  banks  can  meet  the  farm 
loan  needs  of  the  country  without  an  amendment  to  the  act  raising  the 
maximum  interest  charges  allowed,  or  permitting  the  sale  of  5  per  cent 
bonds  below  par.20  In  any  case,  it  is  hardly  to  be  expected  that  the 
problem  will  be  easily  solved  for  the  joint-stock  banks  because,  even  if 
Bome  liberality  were  allowed  in  the  rates  that  could  be  paid  to  bond- 
holders, there  is  less  likelihood  that  the  Farm  Loan  Board  would  recom- 
mend an  increase  in  the  maximum  rate  that  farmers  might  pay  on 
loans. 

There  is  another  and  even  more  serious  problem  confronting  the 
joint-stock  banks.  While  the  Supreme  Court  has  settled  the  consti- 
tutionality of  their  right  under  the  present  law  to  issue  tax-exempt 
bonds,  there  is  reason  to  believe  that  attempts  will  be  made,  as  in  the 
past,"1  to  amend  the  law  so  as  to  deprive  these  banks  of  the  tax  exemp- 
tion privilege.  Action  of  this  kind  would  readily  meet  with  the  ap- 
proval of  the  Farm  Loan  Board — assuming  that  the  tax  exemption 
privilege  was  still  retained  for  the  federal  land  hanks- — and  would 
probably  be  d  1  on  the  ground  that  "tax  exemptions  in  the  case 

of  joint-stock  land  banks  amount  to  a  gift  at  the  expense  of  the  govern- 
ment and  the  taxpayers  generally  and  should  not  be  continued  with 
ct  to  these  private-mortgage  companies  organized  for  private 
profit/'""  If  this  point  could  once  be  gained,  further  attempts23  would 
doubtless  be  made,  in  accordance  with  the  suggestions  of  Ex-secretary 

20  It  might  be  that  the  hoard  wouhl  so  construe  its  powers  as  to  permit  the  sale 
of  5  per  cent  I  w  par.     Section  20  of  t:  1   Farm  Loan   set   hiving 

to  do  with  the  form  of  farm  loan  bonds  says  merely  that  "they  shall  bear  a  rate  of 
interest  not  to  exceed  five  per  centum  per  annum." 

-  A  bill  was  introduced  in  Congress  (S.  3109,  66  Cong.,  2  Sess.)  Sept.  30,  1919. 
&  >ator  Smoot  providing  for  the  repeal  of  the  tax  exemption  privilege  on  future 
bond  issues  of  the  joint-stock  banks.  It  is  worth  noting  that  while  the  bill  «U 
under  consideration  by  the  Senate  Committee  on  Banking  and  Currency,  repre- 
sentations were  made  to  the  committee  that  the  joint-stock  banks  "are  likely  to  en- 
croach upon  the  legitimate  field  now  occupied  by  the  farm-loan  banks  BnlcM  their 
activities    are   restricted."      (Calendar    N  .    Senate    Report    No.    317,    66    Cong., 

2  Sess.) 

Innutil  Report  of  the  Secretary  of  the  Treasury,  1920,  p.  189. 

23  H.  II.  8159  (66  Cong.  1  Sess.)  provided  for  an  increase  in  the  maximum  amount 
that  a  federal  land  hank  might  lend  to  a  angle  borrower  from  £10,000  to  $25,000. 
This  was   in   accordance  with  a  recommendation  made  by   the    Farm   Loan   Board  in 
<t  .tnnu.il  Report  ami  renewed  in  the  Second  Annual  Report. 


19°.l]       Recent  Developments  in  Federal  Farm  Loan  Sysfrtn  187 

of  tin-  Treasury  Houston,  to  enlarge  the  powers  of  the  federal  land 
banks  and  permit  them  to  make  any  l<>.-in  now  authorised  by  joint-stock 
hanks  so  thai  "there  would  be  no  curtailment  of  the  financial  benefits 
to  agriculture  provided  by  the  act."  ' 

Manifestly,  the  status  of  the  joint-stock  banks  is  unsettled  and  in>e- 
eure  Unless  they  find  a  friend  in  the  new  administration  it  is  doubtful 
whether  they  will  be  able  to  hold  their  own  in  the  farm  loan  system. 
It  is  certain,  at  least,  that  if  the  policies  whieh  have  been  recommended 
to  date  were  carried  OUt,  many  of  tlusc  institutions  would  be  com- 
pelled to  go  into  "voluntary*1  liquidation  and  few  new  banks  would  be 
established,  because  they  would  have  the  greatest  difficulty  in  compet- 
ing with  the  federal  land  banks  BO  long  as  the  latter  were  allowed  to 
make  large  individual  loans  and  to  issue  tax-exempt  bonds.      It  remains 

to  be  seen  just  what  attitude  the  new  administration  will  take  toward 
these  proposals, 
It  is  unfortunate  for  the  join!  stork  banks,  and  for  sound  public 

policy  as  well,  that  the  constitutionality  of  exempting  farm  loan  bonds 
from  federal  taxes  has  been  sustained.  At  most,  the  joint-stock  banks 
can  derive  but  a  temporary  benefit  from  tax  exemption— in  view  of 
the  Deeds  of  the  national  Treasury  and  the  demand  for  an  equitable 

distribution  of  the  tax  burden      while  forpolitic.il  reasons  it   may  prove 

to  be  exceedingly  difficult  to  withdraw  the  tax  exemption  privilege  from 
bonds  of  th*1  federal  land  banks.  It  should  be  noted,  however,  that  (1) 
no  valid  argument  can  be  advanced  to  Bupport  the  policy  of  exempting 

the  bonds  of  federal  land  banks  from  taxation  which  does  not  also  apply 
to  bonds  of  the  joint  slock  banks,  and  that  ($)  the  evils'^  of  tax  ex- 
emption in  a  system  of  progressive  taxation  arc  so  great  that  under 

no   circumstances   should    the  bonds   of  cither   type  of  bank   he  exempt 

from  federal  income  taxes.    General  recognition  of  these  fundamentals 

would  not   only  be  a  desirable  Btep  in  the  direction  of  tax   reform,  but 

would  also  remove  once  and  for  all  the  opportunity  to  use  the  tax 

weapon    as    a    means    of   discriminating    against    the    joint -stock    banks, 

ami  would  strengthen  materially  the  position  of  private  enterprise  in 

the   farm  loan   system. 

Gforof.  E.  Putnam. 
ChicogOt  tUinoit, 

<   tnmiii!  Report  of  th>>  Bterttary  of  the  Treasury,  t9tO,  p.  189. 

or  ■  discussion  of  the  arguments  for  and  against  tax  exemption  see  the  writ- 
er's article  "Investment   Securities  and   Tax   Exemption,"   Washington    University 

Studies,  vol.   VII.   Humanistic  Series,  no.   1.    1!)1<).   pp.  3  19, 


RAILWAY  SERVICE  AND  REGULATION  IN 
PORT  TERMINALS 

The  regulation  of  transportation  in  the  United  States  has  been  the 
outgrowth  of  a  theory  which  has  demanded  competition  among  com- 
mon carriers.  Our  early  railroads  were  short  and  disconnected  lines 
and  the  regulation,  if  any,  was  local  in  character.  As  these  roads 
lengthened  out  into  systems  many  difficult  problems  presented  them- 
selves and  the  relation  of  common  carriers  to  industries  took  on  a  new 
significance.  This  was  not  appreciated  for  some  time  and  the  carriers 
in  this  country  were  left  without  adequate  control  for  more  than  half 
a  century.  Even  at  the  present  time  our  legislation  does  not  recognize 
sufficiently  the  fundamental  principles  of  economics  which  should  be 
applied  to  the  transportation  business.  Our  theory  of  railroad  control 
in  this  country  has  apparently  assumed  that  carriers  and  industries  be- 
long to  the  same  class.  The  principles  of  economics  which  might  apply 
to  certain  industries  have  been  carried  over  into  railway  regulation, 
and  it  has  been  impossible,  therefore,  for  carriers  to  render  the  kind 
of  service  which  the  public  has  a  right  to  expect.  Nor  will  carriers 
render  the  service  which  they  should  until  legislation  forces  them  to  do 
certain  things  they  will  not  do  under  present  railway  legislation. 

In  this  country  as  compared  with  European  countries  we  had  little 
regulation  of  railway  building.  For  many  years  railroads  were  built 
parallel  to  each  other;  in  some  instances,  merely  to  force  the  original 
road  to  buy  out  the  newcomer  in  order  to  prevent  rate  wars.  In 
France,  on  the  other  hand,  the  regulation  of  railway  building  was  of 
such  character  that  railroads  were  planned  by  engineers  under  direc- 
tion of  the  French  government.  Generally  speaking,  the  roads  there 
radiate  out  from  Paris  like  the  spokes  in  a  wheel.  The  ambitious  pro- 
moter of  railroads  did  not  find  a  fertile  field  in  France.  In  this  coun- 
try, in  addition  to  much  parallel  building,  certain  roads  secured  most 
of  the  valuable  land  suitable  for  terminal  transportation  and  it  has 
been  difficult  for  late  comers  in  our  important  terminals  to  render  effi- 
cient service  to  the  public. 

The  lack  of  regulation  of  railroad  building  in  America  has  had  some 
very  unfortunate  results.  It  resulted  in  excess  of  railroad  mileage 
over  needs  throughout  many  portions  of  the  country  and  it  brought 
monopoly  control  of  terminal  facilities.  Charles  Francis  Adams 
pointed  out  in  1875  that  in  this  country  railroads  were  built  out  into 
sections  where  nobody  lived  and  from  that  point  on  out  to  where  no- 
body cared  to  go.  The  excess  of  transportation  facilities  continued 
until  about  1905  and  it  meant  keen  competition  among  roads.  Our 
parallel  mileage  has  meant  more  discrimination  on  the  part  of  carriers 


1921]       Railway  Service  and  Regulation  in  Port  Terminals  439 

in  favor  of  or  against  industries  than  has  been  the  case  in  other  coun- 
tries. Moreover,  it  has  meant  that  terminal  facilities  over  which  cer- 
tain roads  have  had  monopoly  control  have  been  used  to  secure  traffic 
that  could  not  otherwise  be  obtained.  It  is  evident,  therefore,  that  one 
of  the  most  vital  phases  of  railway  regulation  for  the  future  is  that  of 
the  control  of  transportation  service  within  our  important  port  termi- 
nals and  in  a  proper  coordination  of  rail  and  ocean  transportation. 

The  difficulties  now  encountered  in  rendering  efficient  transportation 
service  in  our  port  terminals  may  be  attributed  to  three  groups  of 
causes:  (1)  those  which  concern  railroads  primarily;  (2)  those  that 
result  from  the  practice  of  certain  industries;  and  (3)  those  due  to  the 
lack  of  foresight  on  the  part  of  governing  authorities  in  providing  for 
the  coordination  of  all  terminal  transportation  services  and  facilities. 
The  traffic  which  enters  important  ports  is  of  two  kinds :  first,  traffic 
destined  for  points  beyond  the  port,  and,  second,  that  for  distribution 
within  the  port  terminal  itself.  It  will  not  be  possible  to  prevent  the 
clogging  of  our  transportation  machinery  and  the  necessity  for  em- 
bargoes upon  freight  when  traffic  becomes  heavy,  so  long  as  all  the 
carriers  within  our  port  terminals  are  permitted  to  handle  traffic  in 
the  interest  of  the  individual  systems  concerned.  Railroad  control  of 
strategic  terminal  facilities  in  our  ports  has  been  the  natural  outcome 
of  competition  among  our  railroads,  but  it  has  had  some  very  unfor- 
tunate results. 

In  the  first  place,  government  control  over  railroad  rates  has  inten- 
sified railroad  competition  in  terminals ;  railroads  have  vied  with  each 
other  in  offering  ample  terminal  facilities  and  this  practice  has  re- 
sulted in  duplication  of  expensive  terminals  without  adequate  provision 
for  their  physical  coordination.     Such  a  policy  has  meant  the  purchas- 
ing of  much  terminal  land  or  water  frontage  by  the  railroads  in  an- 
ticipation of  their  needs.     Thus  we  have  railroad  domination  of  the 
New  Jersey  side  of  New  York  Harbor.     Some  of  the  unfortunate  re- 
sults of  this  situation  were  indicated  in  the  evidence  presented  to  the 
Interstate   Commerce  Commission  in   the  notable  New  York  Harbor 
case.     It  was  pointed  out  in  the  decision  in  this   case  that  railroad 
rivalry  had  prevented  the  establishment  of  reciprocal  switching  ar- 
rangements and  a  joint  terminal  operation  of  railway  facilities  on  the 
New  Jersey  shore.     In  other  words,  the  lack  of  a  program  of  unifica- 
tion of  facilities  has  caused  carriers  to  invest  large  sums  in  new  termi- 
nals for  their  individual  use  instead  of  uniting  in  a  common  effort  to 
solve  in  a  larger  way  the  terminal  problems  of  our  ports.     At  only  a 
few  ports  in  this  country  have  such  unsatisfactory  conditions  been 
prevented.    New  Orleans  and  San  Francisco  are  conspicuous  exceptions 
to  the  general  rule.    Examination  of  the  dockage  and  wharfage  charges 


440  C.  0.  Ruggles  [September 

at  the  various  ports  in  this  country  indicates  that  in  some  instances 
terminal  charges  are  in  addition  to  the  line  haul  and  in  other  cases  are 
absorbed.1  Ordinarily  these  charges  are  absorbed  on  traffic  coming 
from  competitive  territory  or  in  cases  in  which  the  railroad  receives  a 
certain  minimum  revenue. 

The  second  unsatisfactory  result  of  railroad  competition  in  our 
terminals  and  ports  has  been  the  rendering  of  services  in  terminals  for 
less  than  cost.  This  has  been  done  in  order  to  secure  the  line  haul  of 
the  traffic.  Testimony  was  given  before  the  Interstate  Commerce  Com- 
mission in  1912  to  the  effect  that  lighterage  and  other  terminal  ser- 
vices in  New  York  cost  the  Baltimore  and  Ohio  Railroad  more  than 
the  allowance  it  received  for  those  services  out  of  joint  rates;  that  on 
this  account  that  railroad  had  a  deficit  on  its  terminal  services  in  New 
York,  for  the  years  1909-1911,  of  more  than  one  and  one  quarter 
million  dollars.  In  the  decision  of  the  so-called  Five  Per  Cent  case, 
the  Interstate  Commerce  Commission  said  there  were  many  special  ser- 
vices being  rendered  by  carriers  to  shippers  for  which  no  special  charge 
or  a  non-compensatory  charge  was  being  made.  The  commission  stated 
that  the  compilations  prepared  by  it  from  carriers'  answers  to  its  in- 
quiries showed  that  the  practice  of  individual  roads  meant  the  absorp- 
tion of  enormous  expenses  by  carriers  for  such  terminal  services  as 
loading  and  unloading  carload  freight,  allowing  for  free  time  for  load- 
ing and  unloading,  collecting  and  delivering  freight,  storing  freight, 
furnishing  and  transporting  dunnage,  furnishing  or  paying  for  wharf- 
age and  dockage  and  other  special  services. 

The  third  unsatisfactory  result  of  competition  in  furnishing  termi- 
nal and  port  facilities  by  a  number  of  different  railroads  is  lack  of  co- 
ordination both  among  the  railroads  and  between  rail  and  water  car- 
riers. A  common  provision  in  terminal  tariffs  is  to  the  effect  that  a 
railroad  does  not  obligate  itself  to  furnish  wharfage,  storage,  or 
handling  of  freight  which  has  not  been  transported  or  is  not  intended 
to  be  transported  over  its  line;  but  that  it  reserves  the  absolute  right 
to  the  use  of  its  piers  or  docks.  In  response  to  an  inquiry  concerning 
wharfage  rates  in  New  York  Harbor  for  the  United  States  Shipping 
Board  the  reply  was  given  by  a  number  of  railroads  that  they  quoted 
no  wharfage  rates  on  their  piers,  for  to  do  so  would  be  to  give  the  im- 
pression that  they  were  open  to  public  use,  which  they  said  was  not 
desired.  In  actual  practice,  such  theories  frequently  mean  the  refusal 
of  one  railroad  to  permit  the  use  of  its  terminal  facilities  by  other 
roads  unless  it  receives  the  line  haul  of  the  traffic.  From  the  land  end 
of  transportation  it  is  the  switching  service  which  must  be  depended 

i  Terminal  Charges  at   United  States  Ports,  prepared  under  direction  of  C.  O. 
Ruggles   (U.  S.  Shipping  Board  publication,  May  1919),  pp.  181. 


1921]       Railway  Service  and  Regulation  in  Port  Terminals  441 

upon  to  unify  the  port  in  the  movement  of  cars  from  one  waterfront  to 
another  with  the  least  possible  delay.  But,  as  a  matter  of  fact,  there 
is  often  much  delay  and  sometimes  refusal  on  the  part  of  carriers  in 
rendering  switching  service  for  each  other.  What  this  means  at  Boston, 
for  example,  may  be  seen  from  the  Second  Annual  Report  of  the  Com- 
misskm  on  Waterways  and  Public  Lands,  in  which  it  is  stated  that  the 
time  limits  are  marked  by  the  "number  of  days  involved  rather  than 
hours,"  and  where  "charges  are  several  times  as  large  as  those  made 
under  better  organized  conditions."  The  President  of  the  Port  of 
Seattle,  before  the  American  Association  of  Port  Authorities  in  1917, 
pointed  out  that  at  that  time,  the  Northern  Pacific  switching  tracks 
on  Seattle's  marginal  streets  were  divided  into  "thirteen  districts  or 
zones  each  having  a  switching  rate  ranging  from  $1.50  to  $12." 

The  refusal  of  a  railroad  to  do  switching  when  import  or  export 
freight  is  involved  means  inefficiency  of  both  rail  and  water  transpor- 
tation. For  example,  if  railroad  A  refuses  to  accept  freight  in  switch 
movement  from  railroad  B  when  it  is  to  be  exported  from  the  piers  of 
railroad  A,  this  means  that  railroad  B  is  compelled  to  lighter  the  cargo 
to  the  vessel  at  the  pier  of  railroad  A  or  the  vessel  must  shift  to  the 
piers  of  railroad  B  after  taking  on  its  cargoes  at  the  piers  of  railroad 
A.  Likewise,  if  part  of  the  cargo  of  the  vessel  is  destined  to  points  not 
located  on  the  line  of  the  railroad  at  whose  piers  the  vessel  docks,  this 
cargo  must  be  lightered  to  the  piers  of  the  railroad  over  which  it  is  to 
be  carried  or  the  vessel  must  shift  in  order  to  discharge  the  cargo  at 
the  piers  of  the  road  which  is  to  have  the  line  haul.  Such  a  practice 
makes  as  many  separate  ports  within  a  port  as  there  are  deep  water 
terminals  controlled  by  the  different  railroad  companies.  It  some- 
times means  too  that  there  is  congestion  at  the  water  terminals  of  some 
railroads  while  others  are  not  used  to  their  capacity.  This  inefficiency 
in  terminal  services,  which  means  imperfect  coordination  of  rail  and 
water  carriers,  makes  embargoes  upon  traffic  necessary.  The  effects  of 
these  embargoes  extend  far  into  the  interior.  Obviously  the  restriction 
of  strategic  port  terminal  facilities  to  its  own  use  is  an  attempt  by  the 
railroad  to  secure  a  line  haul  of  the  traffic.  While  this  is  a  failure  to 
appreciate  that  railroads  are  common  carriers,  it  is,  as  has  been  said, 
the  logical  result  of  railway  competition  in  the  furnishing  and  in  the 
operation  of  terminal  facilities. 

The  second  group  of  causes  which  are  responsible  for  the  inefficiency 
in  our  port  terminals  relates  to  the  fact  that  industries  now  occupy 
certain  locations  which  should  be  devoted  to  transportation  services 
only.  There  are  two  important  functions  which  ports,  for  example, 
must  serve,  industrial  and  commercial.  Generally  speaking,  the  in- 
dustrial function  is  the  use  of  the  port  in  serving  local  needs,  whereas 


44£  C.  0.  Ruggles  [September 

the  commercial  function  involves  the  use  of  the  port  as  an  essential 
link  in  commerce.  Frequently  the  two  uses  are  confused  and  there  is 
inefficiency  in  both.  The  industrial  use  of  the  port  through  the  ap- 
propriation of  deep  waterfront  is  an  old  and  common  practice  in 
American  ports.  Industries  have  had  great  difficulty  in  securing  effi- 
cient railway  service  within  ports  and  hence  they  have  frequently  se- 
cured a  location  on  the  waterfront  itself  where  they  might  be  able  to 
avail  themselves  of  lighterage  services  and  to  gain  a  more  direct  con- 
nection with  ocean  carriers,  thus  making  themselves  practically  inde- 
pendent of  rail  transportation.  Every  port  has  a  right  to  develop  in- 
dustrially. It  is  in  the  interest  of  society  that  it  should;  for  it  is  fre- 
quently there  that  greatest  efficiency  in  industrial  processes  can  be 
obtained.  Statistics  of  manufactures  show  that  this  fact  is  recognized. 
Rail  carriers  are  interested  in  transporting  raw  material  away  from  the 
port  to  some  point  in  the  interior  where  it  is  manufactured  and  re- 
turned to  the  port  for  export  or  distribution  within  the  country,  thus 
giving  the  railroad  a  haul  in  both  directions.  But  has  any  port  the 
right  to  develop  industries  on  its  waterfront  in  such  manner  as  to  inter- 
fere with  the  function  of  the  port  as  a  link  in  the  chain  of  world  com- 
merce? Ocean-going  vessels  can  be  accompanied  only  at  the  deep 
waterfront.  Industries,  on  the  other  hand,  can  be  served  back  some 
distance  from  the  waterfront  if  efficient  rail  service  is  provided.  In 
New  York  Harbor  at  the  present  time  the  dockage  facilities  on  the 
Manhattan  side  of  the  North  River  are  being  used  by  vessels  that  could 
be  accommodated  in  the  East  River  or  elsewhere.  There  are  vessels  now 
using  the  waterfront  of  the  North  River  that  draw  no  more  than  17 
feet  of  water  and  they  are  occupying  berthage  space  which  ought  to  be 
available  to  ocean-going  vessels  that  draw  35  feet  of  water.  It  is  in- 
teresting to  observe  that  the  Director  of  the  Port  of  New  York  recom- 
mended in  November,  1918,  the  shifting  of  the  Sound  steamers  to  the 
East  River.  In  making  this  recommendation  he  pointed  out  that,  in 
addition  to  providing  greater  accommodation  for  ocean-going  vessels, 
such  a  change  would  eliminate  the  trip  of  the  Sound  steamers  around  the 
Battery,  saving  sixty  miles  of  useless  navigation  per  day  and  reliev- 
ing much  of  the  congestion  at  that  point;  also  that  if  the  freight  car- 
ried by  the  Sound  steamers  were  discharged  in  the  East  River  it  would 
greatly  relieve  congestion  from  drayage  in  certain  parts  of  Manhattan 
and  make  effective  use  of  streets  which  at  present  are  used  much  under 
capacity.  It  is  evident  that  the  Sound  steamers  use  North  River  be- 
cause it  means  cheaper  service  and  greater  convenience  for  certain  in- 
dustrial interests  in  lower  Manhattan.  The  fourth  preliminary  re- 
port on  the  port  of  New  York  by  the  New  Jersey  Harbor  Commission 
contains  evidence  showing  that  certain  sections  of  New  York  Harbor 


1921]       Railway  Service  and  Regulation  in  Port  Terminals  443 

frequently  have  become  congested  while  other  portions  with  great 
commercial  possibilities  have  remained  undeveloped;  that  private  in- 
terests have  acquired  by  purchase  or  lease  the  best  localities  in  the 
harbor  and,  hi  the  absence  of  any  general  authority,  have  planned  their 
terminals  for  individual  needs,  which  were  often  not  for  the  benefit  of 
the  port  as  a  whole.  In  contrast  to  the  policy  in  the  port  of  New  York, 
New  Orleans  has  complete  control  over  her  waterfront.  It  is  true  that 
the  Illinois  Central  Railroad  now  holds  a  portion  of  the  waterfront  at 
that  port,  but  this  can  be  taken  away  from  it  at  any  time  the  port 
authorities  of  New  Orleans  deem  such  action  to  be  in  the  interest  of 
the  port.  In  the  improvement  which  is  now  going  on  in  New  Orleans 
attempt  is  being  made  to  reserve  the  deep  waterfront  of  that  port  for 
commercial  uses.  New  Orleans  is  now  preparing  industrial  sites  and 
constructing  canals  which  will  enable  industries  although  located  some 
distance  from  the  waterfront  to  use  lighterage  services  in  the  making 
or  receiving  of  deliveries.  New  Orleans,  San  Francisco,  and  some  other 
Pacific  ports  have  made  much  headway  in  preventing  the  conflict  of  the 
industrial  and  commercial  uses  of  a  port. 

The  third  group  of  causes  of  inefficiency  in  our  ports  has  been  due 
to  the  lack  of  foresight  on  the  part  of  governing  authorities  in  securing 
the  coordination  of  transportation  services  within  our  port  terminals. 
It  was  natural  that  industries  and  railroads  should  have  been  given 
what  they  asked  in  the  early  history  of  port  development.  Hence  rail- 
roads and  industries  secured  control,  many  times  through  actual  owner- 
ship, of  much  deep  water  frontage  which  never  should  have  been  sur- 
rendered to  them.  Railroad  maps  of  many  of  our  important  ports 
show  clearly  that  railroads  not  only  attempted  to  secure  exclusive  con- 
trol over  deep  water  frontage  but  that  they  located  their  lines  in  such 
manner  as  to  make  it  impossible  for  other  railroads  to  secure  water- 
front privileges  without  consent  of  the  road  already  located  in  the 
port.  It  is  strange  that  cities  have  not  appreciated  that  it  is  to  their 
interest  to  secure  the  actual  ownership  of  waterfronts  and  to  control 
them  in  such  manner  as  to  prevent  inefficienc}'  of  transportation  within 
their  harbors.  But  even  in  cases  where  the  cities  have  secured  the 
ownership  of  their  waterfront  they  have  not  always  taken  advantage 
of  their  opportunities.  For  example,  New  York  owns  most  of  its 
waterfront  but  has  been  following  the  policy  of  granting  long-time 
leases,  which  has  resulted  in  loss  of  control  of  the  water  frontage  as 
definitely  as  if  that  city  had  resold  its  water  frontage  to  individual  in- 
terests. Charges  and  services  have  not  been  controlled  by  the  city 
but  have  been  determined  by  private  interests  that  have  held  the  long- 
time leases.  Cities  have  found  it  profitable  to  lease  their  waterfront 
because  it  has  meant  a  definite  amount  of  revenue  for  the  city  treasury. 


444  C.  O.  Ruggles  [September 

But  the  question  may  be  asked  whether  cities  should  be  permitted  to 
use  their  waterfront  as  a  revenue  producing  facility,  and  so  cause 
expense  and  inconvenience  to  the  country  at  large.  For  example, 
would  it  not  be  as  logical  to  permit  New  York  City  to  retain  the  cus- 
toms duties  collected  at  that  port  upon  the  commerce  of  the  United 
States  as  it  is  to  permit  a  use  of  the  harbor  which  produces  revenue 
for  the  city  treasury  at  the  expense  of  the  country's  commerce. 

What  remedy  can  be  found  for  the  present  inefficiency  of  transpor- 
tation service  in  our  port  terminals?  Some  authorities  have  held  that 
our  present  difficulties  are  due  to  certain  features  of  past  railway  legis- 
lation and  that  with  the  repeal  of  that  legislation  nothing  more  is 
necessary.  But  it  does  not  appear  that  repeal  of  legislation  prohibit- 
ing certain  railway  combinations  is  sufficient.  It  is  not  reasonable  to 
expect  (human  nature  being  the  same  in  the  railroad  as  in  other  busi- 
nesses) that  the  railroad  which  enjoys  a  strategic  position  in  a  terminal 
will  voluntarily  give  up  its  monopoly  advantages  by  granting  to  other 
roads  privileges  which  will  mean  the  dividing  of  profits  with  those  roads. 
Hence  railroads  in  important  port  terminals  must,  apparently,  be  re- 
quired to  relinquish  their  rights  to  individual  ownership  of  railroad 
facilities  in  such  terminals.  This  would  not  necessarily  mean  govern- 
ment ownership  or  government  operation  of  terminal  facilities.  Sepa- 
rate terminal  companies  could  be  organized  that  would  have  no  more 
interest  in  the  business  of  one  carrier  than  in  that  of  another. 

If  the  control  of  all  terminal  facilities  were  in  the  hands  of 
a  separate  terminal  company,  many  economies  could  be  realized  in  the 
handling  of  freight  destined  for  points  beyond  the  terminal  or  to  the 
terminal  itself.  The  operation  of  a  belt  line  by  a  separate  terminal 
company  receiving  freight  from  all  carriers  on  equal  terms  would  ex- 
pedite the  movement  of  freight  from  rail  to  ocean  carriers  and  vice 
versa,  and  would  also  lessen  the  time  and  effort  required  for  the  dis- 
tribution of  freight  destined  for  the  port  terminal  itself.  We  per- 
mitted railroads  at  one  stage  of  our  development  to  take,  through  emi- 
nent domain,  land  from  private  parties  to  be  used  for  common  carrier 
purposes.  With  the  enormous  growth  of  certain  of  our  port  terminals 
and  the  increase  in  the  number  of  carriers  which  now  are  in  need  of 
terminal  facilities,  it  ought  to  be  clear  that  the  same  rule  of  eminent 
domain  which  was  applied  to  secure  the  land  for  an  individual  railroad 
should  now  be  applied  to  secure  the  land  and  all  other  terminal  facili- 
ties for  the  port  terminal  transportation  companies.  In  other  words, 
individual  railway  ownership  and  control  of  port  terminal  facilities 
should  no  longer  be  permitted  in  our  important  port  terminals.  If 
such  ownership  were  eliminated  it  would  be  much  easier  to  give  more 
efficient  transportation  service  at  much  less  expense.     This  would  mean 


1921]       Railway  Service  and  Regulation  in  Port  Terminals  445 

the  division  of  freight  rates  in  carrier  accounts  into  a  line  haul  charge 
and  a  terminal  charge.  This  would  not  need  to  annoy  shippers,  as  they 
would  not  know  that  such  a  division  existed;  but  it  could  be  recorded 
in  the  railway  accounts,  and  the  terminal  services  could  be  made  to 
yield  sufficient  revenue  to  cover  the  cost  of  terminal  services.  This 
would  prevent  a  carrier  from  using  its  advantages  in  terminal  location 
to  secure  for  itself  more  line  haul  traffic.  In  other  words,  as  at  pres- 
ent managed,  the  absorption  of  many  terminal  charges  by  railroads  is 
the  means  by  which  traffic  may  be  inveigled  to  travel  over  a  certain  line. 

But  the  elimination  of  individual  railroad  ownership  and  control  of 
port  terminal  facilities  will  not  solve  all  our  terminal  problems.  It 
will  be  necessary  also  to  compel  certain  industries  to  relinquish  im- 
portant port  terminal  holdings  that  ought  to  be  used  for  transportation 
purposes.  The  right  of  eminent  domain  should  be  exercised  in  dis- 
lodging interests  that  now  occupy  important  deep  water  frontage.  In 
our  ports  private  interests  often  have  exclusive  contracts  with  ocean 
or  rail  carriers  and  these  interests  are  often  responsible  for  the  secur- 
ing of  certain  exclusive  contracts  between  rail  and  ocean  carriers;  all 
of  which  may  mean  more  business  for  the  private  interests  involved  and 
more  traffic  for  certain  rail  and  ocean  carriers.  From  the  standpoint 
of  the  public,  however,  it  means  an  inefficiency  in  the  use  of  facilities 
which  in  turn  slows  up  the  movement  of  traffic  in  our  port  terminals 
often  causing  embargoes  throughout  the  entire  country.  The  Trans- 
portation act  of  1920  might  possibly  be  construed  so  as  to  enable  the 
Interstate  Commerce  Commission  to  accomplish  much  in  unification  of 
port  terminal  facilities.  But  the  fact  that  the  conference  committee 
excluded  the  provisions  for  compulsory  consolidation  makes  it  doubt- 
ful whether  the  Interstate  Commerce  Commission  would  feel  justified 
in  adopting  a  vigorous  program  of  compulsory  consolidation ;  and 
nothing  short  of  such  a  program  will  ever  give  to  the  public  what  it 
has  a  right  to  expect  in  efficient  terminal  service. 

Finally,  it  is  evident  that  if  a  program  of  compulsory  consolidation 
is  to  be  carried  out,  it  will  be  necessary  to  recognize  the  jurisdiction  of 
the  national  government  over  terminals  and  ports  that  are  of  national 
importance.  New  York  City,  Baltimore,  Philadelphia,  Boston,  or  other 
ports,  should  not  be  permitted  to  handle  their  port  terminal  facilities  in 
such  manner  as  to  interfere  with  the  efficiency  of  transportation  from 
the  standpoint  of  the  shippers  in  Kansas,  Colorado,  or  Iowa.  At  the 
present  time  there  are  three  important  railroads  controlling  the  port 
of  Boston,  dividing  it,  in  reality,  into  three  separate  ports.  In  Nor- 
folk, Virginia,  for  example,  although  a  belt  line  company  handles  do- 
mestic freight,  one  of  the  eight  railroads  there,  the  Norfolk  and  Wes- 
tern,  controls    the    important   deep    water    terminals    and   hence   very 


446  C.  O.  Ruggles  [September 

largely  controls  the  movement  of  exports  and  imports  at  that  port. 
This  road  uses  its  deep  water  terminals  as  a  means  of  practically  com- 
pelling traffic  to  come  in  over  its  own  lines  if  it  is  to  be  exported  from 
the  Norfolk  and  Western  deep  water  piers.  It  likewise  places  restric- 
tions upon  the  acceptance  of  cargo  from  an  ocean  liner  on  its  deep 
water  piers  unless  that  cargo  is  destined  for  some  point  on  its  own 
system. 

Such  lack  of  coordination  in  port  and  terminal  facilities  very  often 
means  liberal  profits  to  the  carrier  or  carriers  advantageously  located 
within  the  port,  for  they  are  not  seriously  concerned  with  the  fact  that 
freight  congestion  exists  on  their  lines.  In  fact,  congestion  means  to 
them  as  individual  companions  very  liberal  profits.  From  the  stand- 
point of  the  public,  however,  it  is  clear  that  it  is  not  desirable  to  have 
congestion  of  freight  within  a  portion  of  a  port  terminal  and  certain 
other  facilities  within  the  port  used  much  under  their  capacity. 

In  conclusion  it  seems  evident  that  we  cannot  much  longer  permit 
railway  companies,  private  industries,  ocean  carriers,  cities  or  even 
states  to  maintain  a  policy  within  our  important  port  terminals  which 
may  be  profitable  to  certain  interests  but  against  the  best  interests 
of  commerce  generally.  If  this  reasoning  is  sound  we  shall  continue 
to  have  difficulties  in  this  country  until  federal  legislation  is  enacted 
which  will  direct  the  Interstate  Commerce  Commission  or  other  author- 
ity to  compel  consolidation  of  all  important  port  terminal  facilities 
under  one  ownership  and  management.  The  public  must  insist  upon 
the  complete  unification  and  coordination  of  these  important  facilities 
if  it  is  to  have  sufficient  and  efficient  transportation  service. 

C.  O.  Ruggles. 

State  University  of  Iowa. 


FAMILY  BUDGETS  AND  WAGES 

Since  the  days  of  LePlay  and  Engel  there  have  been  recurrent  waves 
of  interest  in  collecting  and  analyzing  family  budgets.  The  cost  and 
standard  of  living  have  been  studied  in  connection  with  investigations 
of  factors  entering  into  international  trade;1  to  determine  the  living 
conditions  of  wage-earners  ;2  to  provide  standards  of  normality  for  the 
administration  of  poor  relief;3  as  companion  studies  to  wages  investi- 
gations ;4  and  to  secure  a  basis  for  the  establishment  of  minimum  wage 
rates.5  The  earlier  studies  were  made  on  broad  lines  and  such  conclu- 
sions as  were  drawn  were  usually  qualified  to  safeguard  their  specific 
use.  Many  of  them  were  incidental  to  more  comprehensive  investiga- 
tions of  trade  or  social  conditions.  The  later  studies  were  often  made 
for  the  express  purpose  of  affording  a  basis  for  settling  wage  disputes. 
From  the  early  investigations  of  expenditures  and  of  goods  consumed 

i  Massachusetts.  Bureau  of  Statistics  of  Labor,  Sixth  Annual  Report  (1875),  pp. 
189-450;  United  States.  Commissioner  of  Labor,  Sixth  Annual  Report  ^1890),  part 
III;  ibid.,  Seventh  Annual  Report.  (1891),  vol.  2;  Great  Britain.  Board  of  Trade, 
Cost  of  Living  in  American  Towns  (London,  1911). 

2  Charles  Booth,  Life  and  Labour  of  the  People  in  London  (1902),  vol.  I,  pp.  130- 
146;  B.  Seebohm  Rowntree,  Poverty:  A  Study  of  Town  Life  (1901),  chs.  VIII-IX; 
United  States.  Commissioner  of  Labor,  Eighteenth  Annual  Report,  Cost  of  Living 
and  Retail  Prices  of  Food  (1903) ;  Louise  B.  More,  Wage-Earners'  Budgets  (1907)  ; 
United  States  Bureau  of  Labor,  Report  on  Condition  of  Woman  and  Child  Wage- 
Earners  in  the  United  States,  vol.  XVI,  Family  Budgets  of  Typical  Cotton  Mill 
Workers  (1911);  United  States  Bureau  of  Labor  Statistics,  "Cost  of  Living  in  the 
United  States,"  Monthly  Labor  Review,  May,  1919,  and  succeeding  months;  ibid., 
"Cost  of  Living  in  the  District  of  Columbia,"  Monthly  Review  of  the  U.  S.  Bureau 
of  Labor  Statistics,  Oct.,  Nov.,  Dec,  1917;  Margaret  F.  Byington,  Homestead:  The 
Households  of  a  Mill  Town  (1910);  National  Industrial  Conference  Board,  The 
Cost  of  Living  Among  Wage-Earners,  Fall  River,  Mass.,  Research  Report  No.  22 
(1919);  Lawrence,  Mass.,  Research  Report  No.  24  (1919);  North  Hudson  County, 
N.  J.,  Special  Report  No.  7  (1920);  Greenville  and  Pelzer,  S.  C,  and  Charlotte,  N. 
C,  Special  Report  No.  8  (1920)  ;  Cincinnati,  Ohio,  Special  Report  No.  13  (1920)  ; 
Worcester,  Mass.,  Special  Report  No.  16  (1920);  Little  and  Cotton,  Budgets  of 
Families  and  Individuals  in  Kensington,  Philadelphia   (1920). 

3  Robert  C.  Chapin,  The  Standard  of  Living  in  New  York  City  (1909). 

*  J.  C.  Kennedy,  Wages  and  Family  Budgets  in  the  Chicago  Stockyards  District 
(1914) ;  United  States.  Railroad  Administration,  Report  of  the  Railroad  Wage  Com- 
mission to  the  Director  General  of  Railroads,  April  30,  1918. 

s  State  of  New  York.  Factory  Investigating  Commission.  Fourth  Report .  (1915), 
vol.  IV,  pp.  1461  ff. ;  New  York  City,  Board  of  Estimate  and  Apportionment.  Re- 
port on  the  Cost  of  Living  for  an  Unskilled  Laborer's  Family  in  New  York  City, 
submitted  by  the  Bureau  of  Standards  to  the  Committee  on  Salaries  and  Grades 
(1915) ;  ibid.,  Report  on  the  Increased  Cost  of  Living  for  an  Unskilled  Laborer's 
Family  in  New  York  City,  prepared  by  the  Bureau  of  Personal  Service,  1917;  Dallas 
Wage  Commission,  Report  of  Survey  Committee  (1917) ;  Bureau  of  Municipal  Re- 
search of  Philadelphia,  Workmen's  Standard  of  Living  in  Philadelphia    (1917). 


448  Margaret  Loomis  Stecker  [September 

by  actual  families  the  content  of  a  fair  minimum  standard  of  living  for 
a  given  group  of  wage-earners  in  a  given  locality  was  frequently  de- 
veloped, and  the  probable  cost  of  maintaining  it  was  roughly  worked 
out  from  budgets  of  those  families  studied  who  met  certain  objective 
tests  of  adequacy  of  food,  housing,  clothing,  and  other  necessary  items. 
A  number  of  the  later  studies  aimed  to  establish  an  ideal  standard  and 
did  not  purport  to  be  a  measure  of  the  prevailing  cost  of  living. 

So  far  as  is  known,  up  to  the  period  of  the  world  war,  no  extensive 
use  was  made  in  this  country  of  family  budgets  for  the  purpose  of  ad- 
justing wage  rates,  although  they  were  often  used  by  relief  agencies  as 
a  criterion  of  the  support  being  given  to  dependent  families.6  In  1915, 
however,  a  study  of  the  cost  of  living  on  the  budgetary  plan  was  made 
specifically  for  the  purpose  of  establishing  rates  of  wages  for  unskilled 
laborers  in  the  employ  of  the  city  of  New  York.7  In  1917  and  succeed- 
ing years  a  number  of  studies  of  the  cost  of  living  were  made  for  use  in 
wage  arbitrations.8  Cases  coming  before  the  National  War  Labor 
Board  were  frequently  decided  on  the  basis  of  budgetary  studies  of  the 
cost  of  living;  and  in  1920  the  settling  of  important  street  railway  dis- 
putes, of  the  demands  of  the  railroad  employees  and  of  the  miners  in 
both  the  bituminous  and  the  anthracite  fields  turned  largely  upon  the 
accuracy  of  cost  of  living  figures  introduced  as  evidence. 

In  estimating  the  minimum  cost  of  maintaining  a  fair  standard  of 
living  in  this  country  it  has  usually  been  considered  not  enough  to  ac- 
cept the  average  of  what  families  actually  are  spending,  since  the  stan- 
dard at  which  they  live  may  be  deficient  at  one  or  more  points.  More- 
over, comparisons  are  not  possible  unless  all  are  related  to  the  require- 
ments of  families  having  the  same  or  similar  attributes.  In  practice, 
therefore,  the  needs  of  a  family  of  five  persons,  as  determined  either  by 
expenditures  of  actual  families  who  met  certain  standards  or  by  theo- 
retical considerations  of  what  such  a  family  required,  have  been  the 
basis  of  estimates  of  the  minimum  cost  of  living.  Originally  this  family 
of  five  and  its  needs  seems  to  have  been  regarded  as  a  convenient 
measuring  unit  only,  and  where  used  in  case  work  by  charitable  so- 
cieties the  requirements  of  families  of  varying  sizes  have  been  estimated 

e  Budgets  for  single  wage-earning  women  have,  however,  been  the  basis  of  ad- 
justing rates  in  those  American  states  having  minimum  wage  laws,  and  in  England, 
Australia,  and  New  Zealand,  the  cost  of  living  of  families  is  at  the  basis  of  pre- 
vailing wage  legislation. 

7  Report  on  the  Cost  of  Living  for  an  Unskilled  Laborer's  Family  in  New  York 
City,  op.  cit. 

8  Bureau  of  Applied  Economics,  Inc.,  Standards  of  Living,  revised  edition,  Bul- 
letin No.  7  (1920),  pp.  48-63;  92-95;  96-101;  115-117;  National  War  Labor  Board, 
Memorandum  on  the  Minimum  Wage  and  Increased  Cost  of  Living  (Washington, 
1918). 


1921]  Family  Budgets  and  Wages  449 

from  those  of  the  type  family.  When,  however,  the  cost  of  living  came 
to  be  used  in  establishing  wage  rates,  the  problem  assumed  a  very  dif- 
ferent aspect.  Individual  families  were  no  longer  dealt  with,  but  the 
standard  and  cost  of  living  had  to  be  established  for  groups  of  persons 
without  opportunity  for  adaptation  to  individual  cases. 

The  use  of  budgetary  studies  in  case  work  presents  no  serious  diffi- 
culties since  standards  for  families  of  any  size  and  composition  can 
readily  be  worked  out  from  standards  set  for  the  family  of  five  persons. 
In  wage  arbitrations  the  needs  of  this  same  family  of  five  have  like- 
wise been  taken  as  a  measure  of  costs  with  little  or  no  attempt  to  verify 
their  applicability  to  the  groups  under  consideration.  Such  changes  as 
have  been  made  in  family  budgets,  where  these  have  been  used  for  set- 
tling wage  disputes,  have  been  with  regard  to  the  standard  of  living 
and  not  to  the  type  family  to  which  this  standard  should  apply. 

The  present  paper  deals  with  some  of  the  questions  which  have  arisen 
from  trying  to  use  family  budgets  in  adjusting  wage  rates;  it  attempts 
also  to  indicate  to  what  extent  the  family  of  five  where  the  father's 
earnings  are  the  only  source  of  income  is  representative  of  all  wage- 
earner's  families.9 

The  Minimum  Standard  of  Living 

The  matter  of  family  budgets  in  relation  to  wages  was  undoubtedly 
considered  by  the  United  States  Anthracite  Coal  Commission  of  1920 
more  carefully  than  it  has  ever  been  considered  by  any  other  such  tri- 
bunal. Sixteen  budgetary  studies  were  introduced  in  evidence  at  the 
hearings  before  this  commission  in  July,  1920,  and  the  whole  theory  of 
the  cost  of  living  in  relation  to  wages  was  discussed  in  great  detail.  The 
argument  was  somewhat  as  follows:10 

The  principle  that  wages  should  merely  keep  pace  with  the  cost  of 
living  was  a  wartime  measure  only,  to  be  abandoned  now  in  favor  of  a 
new  principle  which  must  be  adopted  as  the  true  basis  for  wage  adjust- 
ments. This  principle  is  designed  to  prevent  the  "free  and  relentless 
play  of  the  forces  of  supply  and  demand  in  fixing  wages"  and  recognizes 
"that  every  wage-earner  is  entitled  to  a  living  wage.  By  a  living  wage 
is  meant  not  merely  a  subsistence  rate  of  pay,  but  a  wage  sufficient, 
after  meeting  the  minimum  physical  needs  of  food,  clothing  and  shelter 
to  yield  a  balance  sufficient  for  a  small  degree  of  comfort  and  to  enable 

»  A  report  soon  to  be  issued  by  the  National  Industrial  Conference  Board  will 
present  in  detail  a  critical  analysis  of  the  budgets  noted  in  the  present  paper. 

io  Before  the  United  States  Anthracite  Coal  Commission,  Summary.  Analysis 
and  Statement,  presented  by  W.  Jett  Lauck  on  behalf  of  the  United  Mine  Workers 
of  America  (Washington,  1920),  pp.  5  ff.  This  argument  has  been  used  in  greater 
or  less  detail  at  most  of  the  wage  arbitrations  in  the  United  States  since  1918. 


450  Margaret  Loomis  Stecker  [September 

the  wage- earner  to  secure  some  reasonable  measure  of  health,  recreation 
and  education."11 

Hitherto  accepted  concepts  of  a  fair  minimum  standard  of  living 
were  abandoned  and  in  place  of  the  budgets  developed  by  Chapin  in 
1907,  by  the  New  York  State  Factory  Investigating  Commission  in 
1914,  and  by  other  students  of  the  standard  of  living  of  wage-earners' 
families,  which  up  to  the  period  of  the  war  had  been  generally  accepted 
as  an  adequate  measure  of  the  goods  and  services  necessary  for  the 
maintenance  of  a  minimum  American  standard  of  living,  there  were  of- 
fered a  new  series  of  budgets  developed  since  1917,  and  designed  to  pro- 
vide for  a  standard  somewhat  above  this  which  is  now  called  a  "subsis- 
tence level." 

The  anthracite  operators  on  their  part  stated  at  the  beginning  of 
the  hearings  that  "so  far  as  the  principle  of  a  living  wage  is  concerned, 
there  is  no  issue  between  the  operators  and  the  miners.  The  difference 
consists  in  what  constitutes  a  living  wage  and  on  that  experts  dis- 
agree."12 They  pointed  out  that  the  budgets  offered  by  the  mine  work- 
ers as  evidence  of  the  cost  of  living  were  not  for  families  living  in  the 
anthracite  region.  "No  method  of  determining  the  specific  require- 
ments for  a  healthy  and  decent  standard  of  living  is  practicable,"  they 
maintained,  "unless  it  gives  due  recognition  to  actual  local  conditions."13 
"The  only  fair  and  practical  test  of  the  wage  status  of  employees  in 
a  given  industry  is  an  examination  of  facts  bearing  upon  the  general 
prosperity  of  the  employees  where  the  industry  is  a  dominating  one.  A 
living  wage  is  not  a  definite  sum  of  money."14  Whether  an  industry  is 
paying  a  living  wage  "can  be  learned,  not  by  theoretically  constructed 
family  budgets,  that  do  not  fit  the  locality  under  consideration,  but  by 
examining  the  effect  of  the  existing  wage  scale  upon  the  community."15 
They  then  cited  the  prevailing  prosperity  in  the  anthracite  region  and 
the  great  increase  in  savings  banks  deposits  within  the  last  few  years.18 

ii  Ibid.,  p.  6. 

12  United  States.  Anthracite  Coal  Commission.  Second  Day,  Stenographic  Trans- 
script,  p.  323. 

is  Before  the  United  States  Anthracite  Coal  Commission,  Exhibits  of  the  An- 
thracite Operators  in  Reply  to  Exhibits  Presented  by  the  Anthracite  Mine  Workers, 
(Scranton,  Pa.,  July,  1920),  Exhibit  No.  12,  p.  7. 

I*  Ibid.,  p.  18. 

is  Ibid.,  p.  19. 

16  Operators  Exhibit  No.  4;  ibid.,  No.  12,  p.  19;  United  States  Anthracite  Coal 
Commission.  Sixth  Day,  Stenographic  Transcript,  pp.  904  ff.  One  of  the  strong 
points  made  by  the  company  in  the  arbitration  of  wages  between  the  Boston  Ele- 
vated Railway  Company  and  its  employees  in  the  spring  of  1920  was  that  the  wages 
paid  their  men  must  be  sufficient  and  as  good  as  those  paid  in  other  industries,  else 
with  the  unprecedented   opportunities   for  employment   in  other   occupations  there 


1921]  Family  Budgets  and  Wages  451 

The  problem  as  to  what  constitutes  a  fair  minimum  standard  of  liv- 
ing resolves  itself,  therefore,  from  the  point  of  view  of  wage  adjust- 
ments into  three  successive  questions : 

(a)  Can  the  adequacy  of  wage-earners'  incomes  be  measured  by 
budgetary  standards  at  all? 

(b)  If  so,  must  local  studies  always  be  made  to  establish  local  con- 
ditions, or 

(c)  Can  studies  of  standards  and  costs,  made  in  one  locality,  be 
used  as  a  measure  of  standards  and  costs  in  another? 

The  answer  to  these  questions  is  not  simple.  While  pragmatic  tests 
of  adequacy  may  seem  to  justify  an  existing  wage  scale,  they  afford  no 
means  of  establishing  a  new  scale  or  of  revising  one  which  may  appear 
to  be  inadequate.  On  the  other  hand,  the  construction  of  budgets  which 
will  fairly  represent  the  minimum  requirements  of  American  working- 
men's  families  involves  much  guess  work  on  the  part  even  of  those  who 
are  most  thoroughly  equipped  to  determine,  by  such  objective  tests  as 
are  possible,  requirements  of  food,  house  room,  clothing,  and  other  items 
in  the  family  budget. 

Up  to  the  time  of  the  war,  the  budgets  collected  by  Chapin  and  by 
other  students  of  budgets  which  are  now  described  as  representative  of 
"a  bare  subsistence  level  of  physical  needs  only — food,  fuel,  clothing 
and  shelter"  which  "provides  for  a  subsistence  only  just  above  a 
poverty  level,  and  makes  no  provision  whatsoever  for  comfort,  health, 
savings,  recreation  or  amusement,"17  were  generally  accepted  as  a  fair 
measure  of  the  minimum  standard  of  living.  Nearing,  for  example,  in 
1913  mentioned  these  budgets  as  affording  "to  a  family  what  might  be 
described  as  the  decencies  of  modern  American  life.  Practically  no 
luxuries  are  allowed,  but  the  minimum  comforts  are  provided  and  all  of 
the  strict  necessaries  of  life  are  made  possible."17  Lauck's  study  of 
the  sum  necessary  in  1915  for  the  maintenance  of  "a  fair  minimum  of 
decent,  healthful  and  tolerable  living,"  was  based  on  the  budgets  col- 
lected by  Chapin,  More,  Byington,  Kennedy,  and  on  the  reports  of  the 
New  York  State  Factory  Investigating  Commission  and  the  New  York 
City  Bureau  of  Standards.19  Streightoff,  in  his  analysis  of  the  stan- 
dard of  living  among  the  industrial  people  of  America20  and  in  his  re- 
would  have  been  a  high  labor  turnover  whereas,  in  fact,  almost  no  men  had  left  the 
company  and  there  was  a  waiting  list  of  applicants  for  employment. 

it  Summary,  Analysis  and  Statement,  op.  cit.,  p.  17.    Italics  appear  in  the  original. 

18  Scott  Nearing,  Financing  the  Wage-Earner's  Family,  p.  79. 

19  W.  J.  Lauck  and  E.  Sydenstricker,  Conditions  of  Labor  in  American  Industries, 
PP.  367  ff. 

20  Frank  Hatch  Streightoff,  The  Standard  of  Living  among  the  Industrial  People 
of  America,  1911,  chs.  II  and  XI. 


452  Margaret  Loomis  Stecker  [September 

port  on  the  cost  of  living  in  New  York  State  in  1914,21  accepted  exist- 
ing budgets  as  a  measure  of  a  "decent  livelihood"  and  based  his  own 
theoretical  budget  largely  upon  Chapin's  study  made  several  years 
before.22 

However  low  may  be  the  standard  of  living  portrayed  in  these  bud- 
gets they  are  not  representative  of  "bare  subsistence."  This  is  indi- 
cated by  a  study  of  the  percentage  of  all  expenditures  available  for 
sundries.  In  a  period  when  average  wage-earners'  families  were  spend- 
ing about  20  per  cent  of  their  incomes  for  sundries,23  within  which 
group  lies  the  greatest  margin  for  expenditures  not  absolutely  essen- 
tial, Mrs.  More's  families  were  spending  21.5  per  cent;  Chapin's  $800- 
$900  income  families  averaged  16  per  cent ;  Kennedy's  families  averaged 
15.1  per  cent;  Streightoff  allowed  21.8  per  cent  in  New  York  City  and 
24.8  per  cent  in  Buffalo  in  the  ideal  budgets  which  he  worked  up  for 
the  New  York  State  Factory  Investigating  Commission  in  1914.  These 
included  allowances  for  recreation  and  amusement,  doctor  and  medicine, 
insurance,  church,  union  and  lodge  dues,  carfare,  and  miscellaneous  ex- 
penditures. While  in  no  case  was  the  outlay  for  these  items  large 
or  even  liberal,  such  budgets  can  scarcely  be  spoken  of  as  "sufficient 
only  for  meeting  the  animal  needs  for  food,  clothing,  and  shelter."24 

These  early  budgets  were  designed  to  meet  minimum  requirements 
only.  As  such  they  were  based  on  the  expenditures  of  those  families 
which  were  maintaining  a  fair  standard  of  living  on  the  smallest  pos- 
sible sum;  or  where,  as  in  the  case  of  the  investigation  for  the  New 
York  State  Factory  Investigating  Commission  or  the  New  York  City 
Board  of  Estimate  and  Apportionment,  prices  were  collected  and  theo- 
retical budgets,  subjected  to  objective  tests  of  sufficiency,  were  used,  the 
aim  was  to  establish  the  lowest  standard  consistent  with  suitability  for 
American  workmen.  They  represent,  therefore,  minima  above  which 
expenditures  might  rise  as  increased  incomes  permitted,  but  below 
which  they  might  not  fall  without  the  sacrifice  of  something  essential. 

The  attempt  to  revise  the  earlier  concept  of  a  minimum  standard  of 
living  and  to  establish  in  its  place  one  which  would  permit  certain 
additional  comforts  was  an  outgrowth  of  the  use  of  budgetary  studies 
in  wage  arbitrations.  It  is  the  result  of  a  desire  to  get  away  from  the 
needs  of  the  lowest  grade,  unskilled  workers  whose  wages  and  cost  of 
living  represent  the  minimum  from  which  all  workers  are  to  be  graded 

21  Report  of  the  Factory  Investigating  Commission,  op.  cit.,  pp.  1625  ff. 

22  Streightoff  criticized  the  Chapin  budget  at  some  points  and  his  own  budget 
allowed  $51  more  to  make  up  these  deficiencies.  The  Standard  of  Living,  op.  cit., 
p.  162;  Report  of  the  Factory  Investigating  Commission,  op.  cit.,  pp.  1668  ff. 

23  Eighteenth  Annual  Report  of  the  Commissioner  of  Labor,  op.  cit.,  pp.  593,  648. 
24 Summary,  Analysis  and  Statement,  op.  cit.,  p.  17. 


1921]  Family  Budgets  and  Wages  453 

up,  and  is  an  attempt  to  estimate  the  standard  of  average  or  high- 
grade  workers.  Dr.  Peixotto,  for  example,  in  describing  her  budget 
for  San  Francisco  workers  in  1917,  speaks  of  the  "typical  worker";23 
the  budget  awarded  the  men  in  the  Seattle  and  Tacoma  Street  Railway 
Arbitration  of  1917  was  based  on  a  study  of  family  budgets  among 
skilled  workers;26  the  minimum  comfort  budget  suggested  to  the  Na- 
tional War  Labor  Board  by  Professor  Ogburn  in  1918  was  reached  by 
"a  study  of  the  workers  in  the  ship  yards  in  the  New  York  District  who 
receive  the  higher  incomes."27 

Thus  the  new  standard,  put  forward  in  1917  and  known  variously  as 
the  minimum  of  comfort  budget28  or  the  minimum  standard  of  whole- 
some living29  or  the  standard  of  health  and  decency,30  was  based  on  the 
needs  and  expenditures  not  of  the  lowest  grade  workers  whose  living 
conditions  were  satisfactory,  but  of  the  higher  grade,  skilled  workers. 
Objective  tests  of  sufficiency  of  food,  housing,  clothing,  and  other  items, 
which  figured  so  largely  in  establishing  the  minimum  standard  in  the 
earlier  budgets,  were  less  applicable  to  the  more  liberal  standard  and 
such  subjective  considerations  as  the  investigator's  opinions  of  ade- 
quacy were  often  the  determining  factors  in  developing  content  and 
cost.  Such  budgets  are  not  representative  of  a  minimum  standard  in 
the  sense  of  indicating  a  level  below  which  no  American  family  should 
fall;  rather  they  picture  an  ideal  average  standard,  below  which  the 
minimum  must  fall  and  above  which  there  will  inevitably  be  a  smaller 
margin  than  is  the  case  with  the  true  minimum.31 

Another  tendency  observable  in  connection  with  the  employment  of 
family  budgets  as  a  measure  of  the  cost  of  living  in  wage  arbitrations 
has  been  the  indiscriminate  application  of  budgets  collected  in  one  lo- 
cality for  one  purpose,  as  a  measure  of  the  standard  or  cost  of  living 
in  another. 

25  Memorandum  on  the  Minimum  Wage  and  Increased  Cost  of  Living,  op.  cit.,  p. 
47. 

26  Ibid.,  p.  14. 

27  Ibid.,  p.  14. 

28  Bureau  of  Applied  Economics,  Inc.,  op.  cit.,  p.  97. 

29  Ibid.,  p.  115. 
so  Ibid.,  p.  27. 

si  In  presenting  the  demands  of  the  anthracite  miners,  while  the  living  wage  was 
placed  at  $2,242  annually,  the  rate  demanded  for  the  lowest  grade  unskilled  worker 
was  $6  a  day,  which,  assuming  the  maximum  days  of  employment  in  the  industry, 
would  amount  to  only  $1,836  a  year.  Summary,  Analysis  and  Statement,  op.  cit., 
p.  18.  Professor  Ogburn  wrote  in  1917,  in  explaining  the  minimum  comfort  budget 
he  prepared  for  the  wage  arbitration  of  Seattle  and  Tacoma  Street  Railway  em- 
ployees, that  lower  differentials  could  be  worked  out  from  the  maximum  hourly 
rate  his  minimum  comfort  budget  required.  Memorandum  on  the  Minimum  Wage 
and  Increased  Cost  of  Living,  op.  cit.,  p.  19. 


454 


Margaret  Loomis  Stecker 


[September 


Referring  again  to  the  anthracite  wage  arbitration  case,  evidence 
was  submitted  that  "the  amounts  absolutely  necessary  for  the  main- 
tenance of  an  average  family  of  five  persons  on  a  bare  subsistence  level 
of  physical  needs  only  (food,  fuel,  clothing  and  shelter),  when  brought 
up  to  May  1,  1920,  show  the  need  of  an  annual  earning  or  income 
amounting  to  $1,772."32  This  sum  was  reached  by  taking  ten  esti- 
mates of  the  minimum  cost  of  living,  made  at  various  dates  from  1905 
to  1919,  calculating  what  had  been  the  probable  increase  in  cost  be- 
tween each  of  these  dates  and  May  1,  1920,  and  finding  the  cost  of 
each  on  this  common  date.  These  sums  were  then  averaged  and  found 
to  have  been  $1,772.54,  which  was  said  to  represent  the  cost  of  bare 
subsistence  in  the  anthracite  region  in  May,  1920. 

In  similar  fashion  the  cost  of  six  so-called  minimum  comfort  budgets 
were  brought  to  a  common  date,  averaged,  and  made  to  serve  as  the 
basis  for  the  statement  that  "the  amount  necessary  in  industrial  lo- 
calities to  maintain  an  average  family  on  the  basis  of  a  minimum  stan- 
dard of  health,  and  with  a  reasonable  or  small  degree  of  comfort,  on 
the  basis  of  prices  in  May,  1920  ...  is  an  average  annual  wage  or 
earning  capacity  of  $2,242."33 

Study  of  this  method  of  determining  the  cost  of  living  reveals  the 
possibilities  of  error  to  have  been  several.  The  first  and  most  impor- 
tant is  that  six  of  the  so-called  subsistence  budgets  were  made  in  or 
were  based  upon  studies  made  in  the  city  of  New  York  where  living 
conditions  are  different  from  those  in  any  other  section  of  the  country. 
A  comparison  of  the  results  obtained  in  three  separate  investigations 
made  at  the  same  time  by  identical  methods  illustrates  how  different  is 
the  cost  of  living  in  New  York  from  that  in  a  city  so  nearby  as  Buf- 
falo.34 


Investigation 

New  York  City 

Buffalo 

For    the    New    York    State    Conference    of 
Charities  and  Corrections,  1907 — 

By  R.  C.  Chapin    

$825.001 

876.13 
1525.66 

$675,001 

For  the  New  York  State   Factory   Investi- 
gating Commission,  1914 — 

By  Frank  H.  Streightofif   

772.43 

By    the    United    States    Bureau    of    Labor 
Statistics,  1918   

1460.00 

i  Families  in  Buffalo  averaged  six  persons  as  against  five  in  New  York  City. 


32  Summary,  Analysis  and  Statement,  op.  cit.,  p.  17.     Italics  appear  in  the  original. 

33  Ibid.,  p.  17. 

34  Chapin,  op.  cit.,  pp.  281,  316;  Report  of  the  Factory  Investigating  Commission, 
op.  cit.,  p.  1668;  Monthly  Labor  Review,  May,  1919,  pp.  152  and  158. 


1921]  Family  Budgets  and  Wages  455 

The  cost  of  living  in  Scranton,  the  only  city  in  the  anthracite  region 
where  figures  were  collected  by  the  United  States  Bureau  of  Labor 
Statistics  in  1918,  averaged  $1,344.99  for  a  family  of  5.2  persons  as 
against  $1,525.66  in  New  York  City  for  a  family  of  4.9  persons  and 
$1,460  in  Buffalo  for  a  family  of  4.6  persons.  In  the  92  localities 
where  the  study  was  made,  costs  varied  all  the  way  from  $1,167.12  for 
an  average  family  of  4.9  persons  in  Chippewa  Falls,  Wis.,  to  $1,919.40 
for  a  family  of  five  persons  in  Bisbee,  Ariz.  The  average  of  12,096 
white  families  was  $1,434.36.35 

With  so  great  a  difference  in  the  actual  cost  of  living  in  different 
places  it  is  plain  that  not  even  a  rough  approximation  can  be  made 
for  any  given  locality  without  a  special  study.  When,  moreover,  the 
cost  in  the  community  where  the  study  was  made  is  based  on  expendi- 
tures of  families  who  were  selected  to  come  within  a  definite  income 
group,  as  is  frequently  the  case,  the  danger  of  not  reflecting  prevailing 
conditions  is  even  greater.86 

Although  increases  in  the  cost  of  living  within  the  last  few  years  have 
probably  been  more  uniform  in  different  communities  than  is  the  actual 
cost  of  living  at  any  given  time,  these  also  have  varied  greatly.  Ac- 
cording to  figures  collected  by  the  United  States  Bureau  of  Labor  Sta- 
tistics in  June,  1920,  the  cost  of  living  for  the  country  as  a  whole  had 
increased  110.2  per  cent  above  the  level  of  December,  1914. 37  In  the 
city  of  Detroit,  however,  this  increase  was  reported  to  have  averaged 
136  per  cent  within  the  same  period,  whereas  in  San  Francisco  it  was 
only  96  per  cent.38  With  such  a  difference  in  price  changes  in  differ- 
ent cities,  it  is  obvious  that  any  general  estimate  of  increase  in  the 
cost  of  living  applied  unguardedly  to  specific  localities  may  give  a 
very  erroneous  picture  of  the  actual  cost  of  living. 

Recent  family  budget  investigations  have  aimed  to  establish  a  so- 
called  quantity  budget  which  would  not  depend  on  prices,  but  would 
specify  amounts,  grades,  and  qualities.  It  was  thought  that  this  would 
be  a  convenient  measure  of  the  standard  of  living  which  could  be  priced 
from  time  to  time  to  obtain  comparative  costs.89     The  best  known  of 

35  Monthly  Labor  Review,  May,  June,  July  and  August,  1919. 

s«  Chapin,  for  example,  studied  particularly  families  whose  cost  of  living  aver- 
aged between  $600  and  $1100  a  year;  the  families  studied  by  the  Philadelphia 
Bureau  of  Municipal  Research  in  1917  were  chosen  so  as  to  exclude  those  where 
the  principal  bread-winner  earned  more  than  $2,000  annually.  Other  studies  in 
which  families  were  selected  on  the  basis  of  income  were  those  by  the  United  States 
Bureau  of  Labor  for  the  country  as  a  whole  in  1901  and  for  the  District  of  Columbia 
in  1916;  by  Howard  in  Buffalo  in  1907;  by  Streightoff  for  the  New  York  State 
Factory  Investigating  Commission  in  1914. 

M  Monthly  Labor  Review,  Oct.,  1920,  p.  65. 

™Ibid.,  September,  1920,  pp.  76-80. 


456  Margaret  Loomis  Stecker  [September 

these  is  that  worked  out  for  the  family  of  a  government  employee  in 
the  city  of  Washington.  In  the  wage  arbitrations  of  1920,  this  budget 
was  frequently  quoted,  and  it  was  argued  that  "what  is  a  standard  of 
health  and  decency  for  families  of  government  employees  should,  in  its 
main  outlines,  also  be  the  standard  of  health  and  decency  for  families 
of  mine  workers."40  Difficulties  have  arisen  in  pricing  the  items  in  this 
budget  in  other  localities,  however.  In  certain  bituminous  mining  towns 
of  Pennsylvania  and  Illinois  "it  was  impossible  to  price  a  particular 
article  in  the  community"  and  "prices  furnished  by  the  Bureau  of 
Labor  Statistics  from  other  places  were  used."41  In  the  wage  arbitra- 
tion between  the  Boston  Elevated  Railway  Company  and  its  employees 
in  the  spring  of  1920,  certain  budgets  were  criticized  by  the  men  be- 
cause they  did  not  meet  the  requirements  of  the  Washington  budget. 
The  former  admittedly  reflected  local  conditions,  but  since  they  failed 
to  meet  the  Washington  standard,  even  though  the  latter  could  not 
possibly  be  realized  in  the  communities  under  consideration  because 
facilities  for  doing  so  did  not  exist,  they  were  rejected  by  the  men  as 
inadequate.42 

Obviously  there  is  a  great  difference  between  budgets  which  aim  to 
portray  the  lowest  standard  at  which  American  workingmen's  families 
can  be  expected  to  live  and  a  standard  which  it  would  be  ideal  for  aver- 
age families  to  attain.  The  first,  represented  by  budgetary  studies 
made  before  1917  and  by  the  National  Industrial  Conference  Board 
in  1919  and  1920,  have  been  based  on  conditions  actually  prevailing 
in  a  specified  locality.  They  were  not  intended  for  use  in  any  com- 
munity other  than  that  in  which  they  were  collected.  They  were  in  no 
sense  ideal  but  aimed  rather  to  represent  the  lowest  fair  standard  of 
living  that  could  be  expected  for  workingmen's  families  under  existing 
local  conditions.  The  minimum  of  comfort  or  the  health  and  decency 
budgets,  on  the  other  hand,  while  often  based  on  the  expenditures  of 
some  families  somewhere  were  frequently  those  of  high  grade  skilled 
workers  whose  standard  of  living  was  considerably  above  what  could  be 
considered  a  fair  minimum.  They  took  into  account  not  so  much  con- 
ditions actually  prevailing  as  those  which  might  be  found  under  ideal 
conditions.  They  did  not,  therefore,  measure  the  cost  of  living  but 
only  what  would  be  the  cost  were  it  possible  to  obtain  locally  all  of  the 
items  in  the  budgets  which  were  deemed  essential. 

89  United  States  Bureau  of  Labor  Statistics,  Tentative  Quantity  and  Cost  Bud- 
get Necessary  to  Maintain  a  Family  of  Five  in  Washington,  D.  0.,  at  a  Level  of 
Health  and  Decency,  1919;  Bureau  of  Municipal  Research  of  Philadelphia,  op.  cit., 

«o  Bureau  of  Applied  Economics,  Inc.,  op.  cit.,  p.  48. 

*ilbid.,  p.  57. 

« Boston  Elerated  Railway  Company  Arbitration,  May  3,  1920,  Stenographic 
Transcript,  vol.  4,  pp.  257  ff. 


1921]  Family  Budgets  and  Wages  457 

This  difference  between  the  two  sets  of  budgets  has  not  always  been 
kept  in  mind  and  confusion  has  resulted.  The  anthracite  mine  oper- 
ators, for  example,  brought  out  in  the  testimony  that  housing  such  as 
was  specified  in  the  budgets  presented  to  them  as  a  measure  of  the  cost 
of  living  of  their  employees  was  not  typical  of  the  localities  they 
were  interested  in.  The  Boston  Elevated  Railway  Company  knew  that, 
although  the  representative  of  their  men  stated  his  belief  that  a  man 
earning  less  than  75  cents  an  hour  for  an  eight-hour  day  did  not  have 
a  subsistence  wage,  there  were  thousands  of  men  in  the  city  of  Boston 
who  were  supporting  their  families  decently  on  this  or  less. 

Such  circumstances  as  these  have  tended  to  cause  a  questioning  of 
budgetary  studies  as  a  measure  of  the  cost  of  living  and  to  call  atten- 
tion to  the  necessity  for  an  investigation  of  budget  standards  in  order 
that  they  may  either  become  practical  tools  rather  than  theoretical 
concepts  or  that  they  may  be  abandoned  entirely  for  the  purpose  of 
wage  adjustments. 

The  Type  Family 

A  less  obvious  but  equally  serious  problem  connected  with  establish- 
ing standards  in  family  budgets  for  use  in  wage  arbitrations  involves 
the  question  of  the  type  family  to  whom  this  budget  shall  apply.  Of 
how  many  members  is  it  composed?  What  are  their  ages?  To  what 
extent  can  they  be  counted  on  as  a  source  of  income? 

As  already  noted,  it  has  been  customary  to  assume  in  measuring  the 
cost  of  living  that  the  type  family  consists  of  five  persons.  Rowntree 
used  this  unit  in  his  study  of  York,  England,  because  the  British  census 
of  1901  showed  average  families  to  number  four  and  a  fraction  per- 
sons.48 Mrs.  More  followed  Rowntree's  example  in  estimating  the  mini- 
mum cost  of  living  in  New  York  City,  although  the  size  of  the  families 
whose  cost  of  living  she  studied  actually  averaged  somewhat  larger.44 
Kennedy  estimated  the  cost  of  living  for  five  but  also  included  estimates 
for  larger  families.45  Chapin  carefully  selected  the  families  he  studied 
so  that  they  would  average  five.46  Later  budgets  were  constructed  to 
meet  the  needs  of  families  of  this  size  and,  in  addition,  ages  and  compo- 
sition were  often  arbitrarily  assigned. 

The  selection  of  families  having  certain  attributes  in  common  is,  of 
course,  essential  for  any  comparative  study  of  family  budgets.  It  is 
equally  essential  for  practical  purposes  that,  so  far  as  possible,  the 
attributes  selected  should  most  fairly  represent  prevailing  conditions. 

«  Rowntree,  op.  cit.,  pp.  28,  81. 
**  More,  op.  cit.,  pp.  267,  269. 
*B  Kennedy,  op.  cit.,  pp.  77  ff. 
<8  Chapin,  op.  cit.,  p.  37. 


458  Margaret  Loomis  Stecker  [September 

As  Professor  Giddings  said  in  his  introduction  to  Mrs.  More's  book, 
"Nothing  is  easier  than  to  choose  from  a  given  population  so  many 
hundreds  or  so  many  thousands  of  individuals  or  of  families  whose  cir- 
cumstances duly  set  down  in  arithmetical  terms  shall  constitute  a 
picture  of  economic  life  thoroughly  biased  and  misleading."47 

The  family  of  five,  consisting  of  father,  mother,  and  three  children 
under  14  years  of  age  where  the  father  is  the  only  wage-earner,  has 
come  to  be  accepted  as  the  "typical"  or  "normal"  American  wage- 
earner's  family.  The  reasons  for  this  are  said  to  be:  (1)  this  is  the 
average  size  of  the  American  family;  (2)  it  is  necessary  for  the  per- 
petuation of  the  race  that  marriage  be  universal  and  that  three  chil- 
dren survive.48 

Careful  study  of  available  data,  assembled  both  in  budgetary  in- 
vestigations and  from  other  sources  indicates  how  confused  is  the  evi- 
dence on  the  validity  of  this  family  as  the  standard  unit.  This  evi- 
dence may  be  noted  as  follows : 

1.  The  census  of  1910  shows  that  all  families  in  the  United  States  at 
that  time  averaged  4.5  persons  per  family. 

2.  Studies  of  wage-earners'  families  where  they  have  not  been  se- 
lected to  produce  this  size,  show  the  average  to  be  about  five  persons. 

3.  Where  wage-earners'  families  average  five  or  more  persons  the 
children  are  not  all  under  14  years  of  age,  and,  conversely, 

4.  Where  families  are  chosen  so  as  to  include  only  children  under 
14  years  of  age,  they  average  fewer  than  five  persons  to  a  family. 

5.  Among  families  unselected  as  to  size  or  income  there  are  usually 
other  sources  of  income  than  the  earnings  of  the  head  of  the  family. 

6.  A  number  of  studies  of  family  budgets  have  been  of  families  se- 
lected so  as  to  conform  to  certain  requirements  as  to  size,  composi- 
tion, and  income. 

The  United  States  census  defines  family  as  follows :  "A  household 
or  group  of  persons,  whether  related  by  blood  or  not,  who  share  a  com- 
mon abode,  usually  also  sharing  the  same  table.  If  one  person  lives 
alone,  he  constitutes  a  family,  while  on  the  other  hand  those  who  dwell 
in  a  hotel  or  institution  in  which  many  people  live  are  also  treated  as 
forming  a  single  family."  Lest  it  be  thought  that  so  wide  a  variety 
of  family  types  would  produce  an  average  having  little  significance,  it  is 
pointed  out  that  the  average  of  these  families  and  the  average  of  so- 
called  "private  families"  differ  so  little  from  each  other  as  to  make  the 
average  of  all  families  in  reality  the  representative  American  type.49 

47  More,  op.  cit.,  p.  iv. 

48  Interchureh  World  Movement  Commission  of  Inquiry,  Report  on  the  Steel 
Strike  of  1919,  p.  255. 

40  United  States  Thirteenth  Census   (1910),  Abstract,  p.  259. 


1921]  Family  Budgets  and  Wages  459 

This  family,  however,  includes  not  only  fathers,  mothers,  and  children 
but  also  other  relatives,  boarders,  lodgers,  and  servants ;  and  no  data 
are  available  in  the  census  to  determine  the  distribution  by  age  of  the 
component  members. 

Among  wage-earners'  families,  specifically,  the  average  number  of 
members  is  probably  not  far  from  five  persons.  Data  on  this  point  are 
available  from  several  investigations  where  families  were  unselected. 
Thus,  among  the  25,440  families  whose  budgets  were  collected  by  the 
United  States  Bureau  of  Labor  in  1901,  the  average  number  of  per- 
sons per  family  was  4.88;  Mrs.  More's  families  in  New  York  City  in 
1905  averaged  5.6 ;  Howard's  families  in  Buffalo  in  1907  averaged  6 ; 
Miss  Byington's  families  in  Homestead  in  1908  averaged  5 ;  the  cotton- 
mill  families  studied  by  the  United  States  Bureau  of  Labor  in  1908 
averaged  8.5  persons  in  the  South  and  6.8  persons  in  Fall  River;  the 
British  Board  of  Trade  found  the  average  in  the  United  States  in  1909 
to  be  4.9  persons ;  Kennedy  found  among  the  families  of  stockyard 
workers  in  Chicago  in  1911  an  average  of  7.25  persons;  among  families 
in  the  District  of  Columbia  in  1916,  there  were  4.9  persons  per  family; 
among  Kensington  mill  workers  in  Philadelphia  in  1913,  the  average 
was  5.2  persons;  in  Dallas,  in  1917,  the  average  was  4.08;  in  Phila- 
delphia in  1918  it  was  5.57.50  In  these  families  also,  there  were  board- 
ers, lodgers,  servants,  other  relatives,  etc.,  as  well  as  parents  and  chil- 
dren both  under  14  years  of  age  and  over. 

In  only  one  of  these  studies  is  it  possible  to  separate  families  with 
children  under  14  years  of  age  and  no  boarders  or  lodgers  or  servants 
from  all  families.  This  is  the  investigation  by  the  United  States  Bureau 
of  Labor  in  1901.  As  a  part  of  that  study  certain  families  were  chosen 
for  comparative  analysis.  They  were  called  "normal"  and  consisted 
of  a  father  at  work,  a  mother,  not  more  than  five  children  and  none 
over  14  years  of  age  and  no  boarders,  lodgers  or  servants.  These 
families  numbered  11,156  or  44  per  cent  of  all  families  from  whom  in- 
formation was  secured.  Their  average  size  was  3.96  persons  as  against 
4.88  among  all  families ;  their  average  annual  cost  of  living  per  person 
was  $157.13  as  against  $143.29  per  person  among  all  families,  al- 
though the  ages  in  the  latter  necessarily  averaged  somewhat  older. 

so  Many  data  from  other  than  budgetary  sources  are  also  available  to  indicate  the 
average  size  of  wage-earners'  families.  Thus,  for  example,  among  2,421  families  of 
cotton  mill  workers  studied  in  1908,  the  average  number  of  persons  per  family  was 
6.6  with  an  average  of  3.7  wage-earners  each;  among  827  silk  mill  workers'  families, 
the  average  number  was  5.5  per  family  with  3  wage-earners  each;  among  2,137 
glass  workers'  families,  the  average  size  was  6.3  persons  with  3  wage-earners  each; 
among  2274  garment  workers'  families  the  average  size  was  5.4  persons  with  2.9 
wage-earners  each.  Report  on  Condition  of  Woman  and  Child  Wage-Earners,  op. 
cit.,  vol.  1,  p.  414;  vol.  IV,  p.  227;  vol.  Ill,  p.  517;  vol.  II,  p.  349. 


460  Margaret  Loomis  Stecker  [September 

Figures  collected  recently  by  the  Metropolitan  Life  Insurance  Com- 
pany from  among  their  industrial  policy  holders,  most  of  whom  are 
wage-earners,  afford  evidence  that  among  families  having  several  chil- 
dren, only  a  small  proportion  of  the  children  will  at  any  time  average 
less  than  16  years  of  age.  A  study  was  made  of  663  families  where 
deaths  occurred  in  July  and  August,  1920.  In  these  families,  there 
was  an  average  of  2.4  children.  Of  these,  34  per  cent  were  under  16 
years  of  age.  In  24  per  cent  of  the  families  there  were  no  children  at 
all ;  in  37  per  cent  there  were  children  under  16  years  of  age  and  in  the 
remaining  39  per  cent,  all  of  the  children  were  16  years  of  age  or 
over.51 

Another  method  of  determining  upon  the  representativeness  of  the 
so-called  "normal"  family  of  five  persons  where  the  father  is  the  only 
wage-earner  is  to  ascertain  how  many  wage-earners  there  are  in  actual 
families  whose  budgets  have  been  studied  and  what  are  the  sources  of 
income  other  than  the  earnings  of  the  father. 

Mrs.  More  wrote  on  this  point : 

The  popular  impression,  outside  the  working  class,  seems  to  be  that  the 
entire  income  of  the  workingman's  family  is  from  the  earnings  of  the  head  of 
the  family.  This  implies  that  if  the  head  of  the  family  is  an  unskilled  day 
laborer,  the  income  of  his  family  is  that  grade.  On  the  contrary,  some  of 
the  largest  incomes  in  this  study  are  of  this  class.  The  fact  is  there  are 
comparatively  few  families  of  wage-earners  who  are  entirely  dependent  on 
the  earnings  of  the  head  of  the  family.  This  may  be  true  in  families  where 
there  are  several  young  children,  and  the  wife's  strength  is  needed  at  home, 
but  even  then  it  is  surprising  how  frequently  other  sources  of  income  are 
added.  .  .  . 

All  the  larger  families  having  five  or  more  in  the  family  have  from  one 
to  five  children  who  are  adding  to  the  family  income.  As  the  children  be- 
come wage-earners  the  mother  stays  at  home  and  does  the  house-keeping.52 

Among  the  200  families  Mrs.  More  studied,  63.5  per  cent  of  the 
average  income  was  derived  from  earnings  of  the  father;  9.4  per  cent 
from  the  mother;  11.5  per  cent  from  the  children;  9.2  per  cent  from 
boarders  and  lodgers ;  6.4  per  cent  from  other  sources. 

In  1911,  Kennedy  found  that  although  his  families  averaged  7.25 
persons  there  was  an  average  of  1.9  boarders  per  family  and  the  fath- 
er's earnings  amounted  to  only  54.5  per  cent  of  the  average  income. 

In  the  District  of  Columbia  in  1916,  white  families  which  averaged 
4.9  persons  with  boarders  and  lodgers  averaged  only  3.8  without. 
Fifty-one  per  cent  of  the  families  had  income  from  this  source;  11.2 
per  cent  from  the  mother;  14.5  per  cent  from  children  or  other  relatives; 
and  46.7  per  cent  had  income  from  other  sources. 

5i  Metropolitan  Life  Insurance  Company,  Statistical  Bulletin,  October,  1920,  p.  4. 
62  More,  op.  cit.,  p.  83-87. 


1921]  Family  Budgets  and  Wages  461 

Among  the  families  studied  by  the  Bureau  of  Municipal  Research  in 
Philadelphia  in  1917,  of  which  the  average  size  was  5.57  persons  and 
where  only  families  were  studied  in  which  there  was  a  man  at  work, 
5.9  per  cent  of  the  total  average  income  was  derived  from  boarders  and 
lodgers  which  were  kept  by  34.6  per  cent  of  all  families;  19.6  per  cent 
of  the  families  had  income  from  earnings  of  the  children;  11.5  per  cent 
from  the  mother  and  34.6  from  other  sources.  The  father  contributed 
84.8  per  cent  of  the  average  income. 

The  study  by  the  British  Board  of  Trade  in  the  United  States  in 
1909  showed  that  among  the  group  of  1,036  families  averaging  4.54 
persons  per  family,  4.2  per  cent  of  the  income  came  from  children  16 
years  of  age  and  over;  among  the  545  families  averaging  5.02  per- 
sons per  family,  11  per  cent  of  the  family  income  was  derived  from 
children  16  years  and  over.  The  percentage  of  the  income  contributed 
by  the  father  decreased  steadily  with  an  increase  in  income,  being  93.2 
per  cent  among  families  having  the  smallest  incomes  and  44.4  per  cent 
among  families  having  the  largest  incomes. 

Streightoff  found  in  his  study  for  the  New  York  State  Factory  In- 
vestigating Commission  in  1914  that,  while  families  averaged  about 
five  persons,  the  number  of  wage-earners  averaged  about  three. 

Among  the  very  large  cotton  mill  families  noted  above,  there  were 
1.5  boarders  and  3.6  wage-earners  per  family  in  the  South  and  .6  board- 
ers and  3.2  wage-earners  per  family  in  Fall  River. 

All  of  this  seems  to  indicate  that  where  families  average  five  or  more 
persons  there  are  likely  to  be  children  in  the  family  over  14  years  of 
age  and  there  are  also  likely  to  be  other  sources  of  income  than  the 
father's  earnings.63 

A  further  complicating  element  regarding  size  and  composition  of 
the  family  is  introduced  in  budgetary  studies  by  the  custom  of  count- 
ing as  children  only  those  who  do  not  work  or  who,  if  employed,  turn 
all  of  their  earnings  into  the  family  fund.  Children  who  merely  pay  a 
fixed  sum  a  week  into  the  family  purse  are  listed  as  boarders.  Where, 
as  has  been  the  case  with  some  investigations,  families  have  been  chosen 
specifically  to  exclude  children  over  14  or  over  16  years  of  age  or 
families  with  boarders  and  lodgers,  the  presence  of  older  children  in 
the  family  would  not  appear  at  all. 

For  this  reason,  conclusions  reached  by  such  investigations  as  Chap- 
in's  or  that  by  the  United  States  Bureau  of  Labor  Statistics  in  1918 
are  not  representative.     Chapin's  families  were  chosen  to  include  only 

63  The  evidence  of  this  point  is  very  extensive  but  is  developed  only  incidentally  in 
the  present  paper  since  it  is  important  in  the  establishing  of  wage  rates  from  the 
income  side  of  the  problem  rather  than  in  connection  with  the  cost  of  living,  See, 
for  example,  Lauck  and  Sydenstricker,  op.  cit.,  pp.  253  ff. ;  pp.  357  ff. 


462  Margaret  Loomis  Stecker  [September 

those  having  not  less  than  two  or  more  than  four  children  under  16 
years  of  age.  One  hundred  six  schedules  or  one  sixth  of  all  collected 
were  discarded  because  the  families  numbered  less  than  four  or  more 
than  six  persons.54  The  fact,  therefore,  that  his  average  family  was 
five  is  not  a  measure  of  the  size  of  wage-earners'  families,  since  the  com- 
ponent parts  of  the  average  were  selected  to  produce  that  result. 

The  instructions  to  agents  in  the  federal  investigation  of  1918  were 
as  follows,  regarding  the  selection  of  families  to  be  scheduled : 

1.  The  family  must  be  that  of  a  wage-earner  or  salaried  worker,  but 
not  of  a  person  in  business  for  himself.  The  families  taken  should  repre- 
sent proportionally  the  wage-earners  and  the  low  or  medium  salaried  fami- 
lies of  the  locality. 

2.  The  family  must  have  as  a  minimum  a  husband  and  wife  and  at  least 
one  child  who  is  not  a  boarder  or  lodger. 

3.  The  family  must  have  kept  house  in  the  locality  for  the  entire  year 
covered. 

4.  At  least  75  per  cent  of  the  family  income  must  come  from  the  princi- 
pal breadwinner  or  others  who  contribute  all  earnings  to  family  fund. 

5.  All  items  of  income  or  expenditure  of  members  other  than  those  living 
as  lodgers  must  be  obtainable. 

6.  The  family  may  not  have  boarders  nor  over  three  lodgers  either  out- 
siders or  children  living  as  such. 

7.  The  family  must  have  no  subrental  other  than  furnished  rooms  for 
lodgers. 

8.  Slum  or  charity  families  or  non-English  speaking  families  who  have 
been  less  than  five  years  in  the  United  States  should  not  be  taken. 

Requirement  6  has  been  construed  not  to  refer  to  or  include  relatives, 
servants,  nurses,  etc.,  temporarilv  in  the  home,  who  were  furnished  board 
free.55  j.^.j     .J^IM 

In  gathering  the  schedules  in  this  investigation  by  the  United  States 
Bureau  of  Labor  Statistics,  emphasis  is  said  to  have  been  laid  on  the 
selection  of  families  of  five;  and  the  fact  that  the  final  average  was 
4.9  persons  apparently  has  little  significance  as  a  measure  of  the  size  of 
average  American  wage-earners'  families.56 

The  conclusion  to  be  reached  from  the  federal  investigation  of  1901 
is  thus  apparently  verified  by  the  results  of  other  studies.  This  is  that 
families  where  the  father's  earnings  are  the  only  source  of  income  and 
all  children  are  under  14  years  of  age  tend  to  average  considerably 
less  than  half  of  all  wage-earners'  families.  To  this  extent,  they  are 
unrepresentative.      Such   families   seem  to  be  unrepresentative  also  in 

54  Chapin,  op.  cit.,  pp.  28;  37. 

55  Monthly  Labor  Review,  May,  1919,  p.  1'47. 

56  The  fact  that  4.9  was  the  average  number  of  persons  per  family  studied  in  this 
investigation  was  "the  determining  factor  in  selecting  the  standard  family"  as  a 
measure  of  the  cost  of  living  for  a  government  employee  in  Washington  in  1919. 
Tentative  Quantity  and  Cost  Budget,  op.  cit.,  p.  7. 


1921]  Family  Budgets  and  Wages  463 

their  cost  of  living,  since  even  though  they  average  fewer  adults,  their 
per  capita  cost  of  living  tends  to  be  greater  than  the  average  among 
all  families.  It  appears,  further,  that  families  where  all  children  are 
under  14  years  of  age  average  fewer  than  four  persons,  and  that  where 
the  average  is  nearer  five  there  are  other  members  of  the  family  in  ad- 
dition to  the  children  under  14  and  their  parents.  The  average  Ameri- 
can wage-earner's  family  income  is,  therefore,  to  a  large  extent  com- 
posite, and  is  derived  from  earnings  of  the  wife  and  children  and  from 
the  keeping  of  boarders  and  lodgers  as  well  as  from  the  wages  of  the 
husband. 

While  this  paper  is  concerned  primarily  with  expenditures  and  the 
standards  by  which  they  are  to  be  measured,  the  use  of  budgetary 
studies  in  wage  adjustments  calls  to  attention  certain  factors  regard- 
ing sources  of  the  income  by  which  these  standards  are  to  be  maintained. 

The  adoption  of  the  family  of  five,  in  which  all  children  are  under 
14  years  of  age  and  the  father's  earnings  are  the  only  source  of  in- 
come as  the  unit  of  measurement  for  expenditures,  necessarily  implies 
that  the  father's  wage  shall  be  sufficient  to  meet  the  cost  of  maintaining 
what  has  been  established  as  a  fair  minimum  standard  of  living.  Pro- 
fessor Peixotto,  in  making  her  estimate  of  the  cost  of  living  for  Pacific 
Coast  workers  in  1917,  stated  that  in  case  a  man  who  was  the  head  of 
a  family  consisting  of  himself,  a  wife,  and  three  children  of  school  age 
were  not  receiving  in  wages  what  she  believed  to  be  necessary,  one  of 
three  things,  any  one  of  them  harmful  for  the  group  and  for  the  com- 
munity, is  likely  to  happen : 

1.  Other  members  of  the  family  will  have  to  work  to  eke  out  the  in- 
come ;  or 

2.  There  will  be  less  food  than  is  necessary  for  the  men  to  do  efficient 
work.  The  risks  of  ill  health  to  all  members  of  the  group  and  the  conse- 
quent costs  to  the  group  and  to  the  society  are  equally  plain ;  or 

3.  The  group  must  go  without  many  of  the  articles  noted  under  Sundries 
and  House  Operations.57 

In  the  anthracite  wage  arbitration  it  was  frequently  claimed  that  in- 
sufficient wages  of  the  miners  was  forcing  the  employment  of  children 
and  filling  their  homes  with  boarders  and  lodgers.58  There  is  in  most 
American  states,  however,  little  opportunity  for  the  employment  of 
children  under  14  years  of  age  at  the  present  time.  If  by  "children" 
is  meant  those  14  or  over,  the  family  immediately  steps  out  of  the  so- 
called  "normal"  class,  and  the  question  arises:  At  what  age  may 
children  go  to  work  without  this  being  considered  an  evidence  of  pov- 
erty?    Sixteen  is  the  age  usually  set  as  the  limit  below  which  legal  per- 

57  Bureau  of  Applied  Economics,  Inc.,  op.  (At.,  p.  115-116. 

58  See,  for  example,  Summary,  Analysis  and  Statement,  op.  cit.,  pp.  19,  20. 


464  Margaret  Loomis  Stecker  [September 

mission  is  required  for  employment.  This  is  in  order  to  safeguard 
health  and  education,  but  it  offers  no  criterion  as  to  economic  status. 
The  United  States  and  some  of  the  states  having  income  taxes  allow 
exemptions  for  the  support  of  children  up  to  the  age  of  18  years.  On 
the  other  hand,  such  studies  as  have  been  made  of  the  conditions  under 
which  children  leave  school  to  go  to  work  indicate  that  other  factors 
than  poverty  are  important  in  starting  the  industrial  career  of  children 
between  14  and  16  years  of  age.B9 

Establishing  the  conditions  under  which  the  employment  of  married 
women  is  socially  desirable  and  when  it  is  to  be  condemned  is  as  diffi- 
cult as  suggesting  economic  standards  for  the  employment  of  children. 
One  of  the  most  interesting  studies  which  could  be  made  would  be  one 
which  would  throw  light  on  the  effect,  as  regards  the  employment  of 
women  and  children,  of  increased  wages  during  the  period  from  1914 
to  1920.  In  many  industries  there  is  no  doubt  but  that  wage  rates 
and  weekly  earnings  advanced  far  beyond  the  increase  in  the  cost  of 
living.  Was  the  result  of  the  greatly  increased  earnings  of  adults, 
especially  adult  males,  to  keep  the  children  in  school  longer  and  to 
reduce  the  number  of  married  women  employed?  Common  observation 
suggests  that  the  opposite  was  the  case,  but  no  careful  investigation  of 
the  subject  has  as  yet  been  made. 

Or,  again,  the  question  may  be  raised:  When  is  a  family  justified 
and  when  is  it  to  be  censured  for  taking  boarders  or  lodgers?  Ob- 
viously such  conditions  as  those  revealed  by  the  Immigration  Com- 
mission,60 and  other  studies  showing  the  "boarding  boss"  system  in  all 
its  evils,  are  to  be  disapproved  from  any  point  of  view.  The  British 
Board  of  Trade,  on  the  other  hand,  noted  in  its  study  of  the  budgets 
of  American  wage-earners'  families : 

About  one  third  of  those  thus  reckoned  [as  boarders]  were  in  fact  older 
children,  as  to  whose  earnings  particulars  were  not  furnished.,  but  instead 
the  amount  paid  into  the  family  purse  as  boarders.  The  purchase  of  the 
house  by  the  tenant,  especially  in  certain  towns,  and  the  charges  on  incom- 
ings thus  incurred,  explain  the  presence  of  boarders  in  many  cases,  whilst 
in  others  boarders  perhaps  merely  supply  the  means  of  occupying  larger 
and  more  comfortable  premises.61 

From  what  has  been  said,  it  must  be  apparent  that  there  is,  at  the 

59  Report  on  Condition  of  Woman  and  Child  Wage-Earners  in  the  United  States, 
op.  cit.,  vol.  VII,  p.  46;  Report  of  the  Factory  Investigating  Commission,  op.  cit., 
p.  1485;  More,  op.  cit.,  p.  87;  Monthly  Labor  Review,  Jan.,  1921,  p.  47;  Anna  Y. 
Reed,  Junior  Wage  Earners,  pp.  11-12. 

60  United  States.  Immigration  Commission,  Abstracts  of  Reports,  vol.  1,  pp. 
422  ff.     (61  Cong.,  3  Sess.,  S.  Doc.  No.  747,  1911). 

si  British  Board  of  Trade  Report  on  the  Cost  of  Living  in  American  Towns,  op. 
cit.,  p.  xlviii. 


1921]  Family  Budgets  and  Wages  465 

present  time,  a  deal  of  confusion  in  the  interpretation  and  use  of  budge- 
tary studies  of  the  standard  and  cost  of  living.  The  results  of  investi- 
gations made  in  one  locality  for  one  purpose  have  been  used  in  other 
localities  for  totally  different  purposes  with  little  or  no  effort  to  verify 
their  adaptability.  Circumstances  which  exist  only  in  theory  have  been 
presented  as  if  they  were  fact,  and  conditions  actually  existing  have 
been  disregarded,  because  they  did  not  conform  to  theoretical  consider- 
ations. Such  a  situation  has  tended  to  discredit  in  the  popular  mind 
the  whole  method  of  measuring  the  cost  of  living  by  budgetary  units. 

Summary 

In  the  present  paper  an  attempt  has  been  made  to  show  that : 

1.  The  extensive  use  of  family  budgets  as  a  basis  for  establishing 
wages  is  a  new  thing  in  this  country  and  the  attempts  to  adapt  for  this 
purpose  budgets  collected  a  number  of  years  ago  for  a  very  different 
purpose  is  putting  them  to  a  use  which  raises  a  number  of  serious 
questions. 

2.  The  rejection  of  hitherto  accepted  budgets  as  a  measure  of  a 
fair  minimum  standard  of  living  and  attempts  to  establish  in  their 
place  a  new  standard  based  on  the  needs  of  the  higher  grade  and  skilled 
workmen  points  out  the  need  for  careful  study  of  the  exact  basis  on 
which  a  minimum  standard  of  living  should  be  predicated. 

3.  Attempts  to  measure  the  cost  of  living  in  one  community  by  stan- 
dards developed  for  another  which,  in  fact,  do  not  exist  in  the  first, 
and  failure  to  take  into  account  prevailing  local  conditions  have  brought 
into  question  the  entire  principle  of  the  family  budget  as  a  measure  of 
the  standard  and  cost  of  living. 

4.  The  family  of  five  where  the  father  is  the  only  wage-earner  and 
all  children  are  under  14  years  of  age,  which  has  been  selected  as  the 
normal  or  typical  family,  is  apparently  not  most  representative  of 
American  wage-earners,  since  in  families  where  the  father  is  the  only 
wage-earner  and  all  children  are  under  14  years  of  age  the  average  size 
is  smaller  than  this,  while  in  families  having  five  members  there  is 
an  average  of  more  than  one  wage-earner. 

5.  The  fact  that  family  budgets  have  recently  been  so  frequently 
used  in  the  determination  of  wage  rates  without  sufficient  regard  for 
their  applicability,  and  their  obvious  divergence  from  conditions  actu- 
ally prevailing  has  cast  such  serious  discredit  on  them  as  to  require  a 
careful  study  of  the  possibility  of  establishing  new  standards  in  accord 
with  the  facts  or  of  devising  some  other  means  of  measuring  the  cost 
of  living. 

Margaret  Looms  Stecker,. 
New  York  City. 


THE  EFFICACY  OF  CHANGES  IN  THE  DISCOUNT  RATES  OF 
THE  FEDERAL  RESERVE  BANKS 

The  recent  controversial  and  critical  discussion  of  the  discount  poli- 
cies of  central  banking  systems  both  in  the  United  States  and  in 
Europe  has  frequently  resulted  in  confusing  rather  than  in  clarifying 
public  opinion  upon  a  subject  of  vital  importance  to  all  classes  of  so- 
ciety. This  situation  is  not  due  to  a  lack  of  thoughtful  and  well-sup- 
ported arguments  designed  to  maintain  particular  theses  as  to  what 
central  banking  systems  can  or  ought  to  do  in  given  emergencies.  The 
confusion  arises  largely  because  the  advocates  of  opposing  views  are 
apt  to  base  their  respective  cases  upon  quite  different  presuppositions, 
in  consequence  of  which  they  fail  to  join  issue  squarely  with  their  op- 
ponents. For  example,  the  question  whether  a  central  bank  ought  to 
attempt  to  restrict  credit  or  to  encourage  its  expansion  by  changes  in 
its  discount  rates  is  one  that  offers  opportunity  for  debate,  if  it  be 
taken  for  granted  that  such  changes  in  discount  rates  afford  an  effec- 
tive weapon  of  credit  control.  But  this  reservation  is  itself  a  highly 
debatable  point.  In  other  words,  the  question  of  the  desirability  of  a 
given  policy  must  be  sharply  differentiated  from  the  discussion  of  the 
efficacy  of  that  policy.  Men  who  agree  as  to  the  desirability  of  check- 
ing or  of  encouraging  credit  expansion  under  given  conditions,  may  yet 
hold  opposed  views  as  to  the  efficacy  of  the  means  chosen  to  bring 
about  the  desired  result.  Failure  to  make  this  distinction  has  led  to  ob- 
scurity in  discussion  and  to  much  talking  at  cross  purposes.  Even  if 
the  question  at  issue  concerns  only  the  desirability  of  credit  control, 
on  the  assumption  that  this  control  is  possible,  the  different  angles  of 
approach  to  the  subject  augment  the  opportunities  for  contradictory 
expressions  of  opinion.  The  topic  may  be  treated  simply  from  the 
standpoint  of  the  general  social  expediency  of  permitting  a  central  bank 
to  exert  a  wide  measure  of  control  over  trade  and  industry  through  its 
control  of  credit  accommodation.  Or  the  treatment  may  be  purely 
temporal — i.e.,  confined  to  a  discussion  of  whether  the  time  is  oppor- 
tune for  introducing  a  change  in  policy  by  raising  or  lowering  rates  as 
the  case  may  be.  The  differences  of  opinion  that  arise  in  the  last- 
named  instance  are  usually  due  to  divergent  views  as  to  the  stability 
of  the  current  business  situation  and  the  probable  developments  of  the 
immediate  future.  At  any  given  moment,  one  man  may  believe  that 
the  existing  business  and  industrial  situation  has  reached  a  degree  of 
expansion  where  stability  is  jeopardized  and  rates  should  be  advanced 
as  a  means  of  forcing  a  reduction  in  the  scale  of  business  operations. 
Another  man  may  fail  to  see  any  such  elements  of  unsoundness  in  the 
business  structure  and  oppose  all  changes.     Contrariwise,  similar  dis- 


1921]     Changes  in  Discount  Rates  of  Federal  Reserve  Banks         467 

agreements  arise  concerning  the  timeliness  of  rate  reductions.  It  is 
furthermore  obvious  that  a  man  who  on  one  occasion  is  an  eager  ad- 
vocate of  higher  rates  as  a  means  of  credit  contraction  may  at  an- 
other time  be  an  equally  ardent  and  at  the  same  time  consistent  cham- 
pion of  lower  rates.  For  example,  some  of  those  writers  who  are  at 
present  enthusiastic  spokesmen  for  rate  reductions  were  less  than  a 
year  ago  the  most  forcible  advocates  of  advances. 

To  repeat :  the  discount  policy  of  central  banks  may  be  discussed 
either  from  the  point  of  view  of  actual  efficacy,  or  conceding  that,  of 
general  expediency  and  temporal  wisdom.  Possibly  special  mention 
ought  to  be  made  also  of  the  controversial  differences  that  are  traceable 
to  the  existence  of  wartime  inflation.  Many  European  financiers  who 
would  have  no  doubts  either  as  to  the  efficacy  or  the  desirability  of 
changes  in  central  bank  rates  as  a  means  of  credit  control  under  the 
nicely  adjusted  conditions  of  prewar  times  have  considered  rate 
changes  impotent  in  countries  where  the  necessities  of  government 
finance  were  a  controlling  factor  and  were  responsible  for  a  continuous 
inflation  of  currency  and  credit.  A  year  ago,  when  discussion  was 
most  active  concerning  the  best  means  to  curb  inflation,  European  stu- 
dents took  sharp  issue  with  one  another  as  to  the  means  to  be  employed, 
even  when  they  were  in  harmony  concerning  the  ends  to  be  achieved. 
The  effective  opponents  (scientifically  speaking)  of  advances  in  central 
bank  rates  of  discount  were  usually  as  hostile  to  the  idea  of  further 
credit  inflation  as  were  the  spokesmen  for  higher  rates.  Indeed,  their 
remedy  for  inflation  was  more  drastic  and,  they  believed,  better  adapted 
to  the  end  in  view.  The  exponents  of  this  point  of  view  are  very  fairly 
represented  by  Vissering  who  in  his  address  before  the  Brussels  con- 
ference said :  "A  contraction  of  this  money  [depreciated  fiduciary 
money]  outstanding  by  the  old  method  of  raising  the  bank  rate  will 
have  no  effect,  because  this  abundance  of  money  was  not  caused  by  giv- 
ing too  much  credit  on  easy  terms  or  by  speculation,  which  must  be 
curbed;  for  even  if  in  some  countries  the  granting  of  credit  and  specu- 
lation apparently  revived  to  some  extent  during  a  short  period,  this 
was  insignificant  when  compared  to  the  very  considerable  volume  of 
the  created  currency.  Moreover  the  amount  of  created  currency  is  too 
large  for  contraction  to  be  feasible  by  such  simple  means." 

"Two  methods  of  doing  this  are  fairly  obvious,  but  their  effect  will 
only  be  felt  in  the  long  run.  The  first  is  the  amortization  of  govern- 
ment and  municipal  debt,  and  the  other  is  the  rationing  of  credit  under 
the  guidance  of  the  bank  of  issue."1 

Similarly  McKenna,  in  an  address  to  the  stockholders  of  the  London 

i  International  Financial  Conference.  Verbatim  Record  of  the  Debates.  Brus- 
sels 1920),  vol.  II,  pp.  53-54. 


468  Anna  Yowngman  [September 

Joint  City  and  Midland,  on  January  28,  1921  said:  "Monetary  in- 
flation, unlike  speculative  inflation,  is  not  a  temporary  condition  cap- 
able of  remedy  by  raising  the  Bank  rate  and  restricting  credit.  .  .  . 
If  permanent  monetary  deflation  is  to  be  accomplished  it  can  only  be 
by  a  reduction  of  the  purchasing  power  brought  into  existence  by  the 
great  war  loans,  a  reduction  which  can  only  be  effected  by  paying  off 
part  of  the  national  debt."  The  London  Economist  also  over  a  period 
of  months  published  editorials  and  special  letters  intended  to  point  out 
that  advances  in  discount  rates  could  only  penalize  industry  and  could 
not  correct  deflation  so  long  as  the  government  made  no  provision  for 
funding  its  floating  debt. 

The  evidence  available  shows,  therefore,  that  there  were  strong  oppo- 
nents of  the  high  rate  policy  who  were  not  inflationists — at  least  that 
was  true  for  Europe.  In  this  country,  some  critics  have  rather  un- 
critically assumed  that  advocates  of  a  low  rate  policy  for  central  banks 
were  desirous  of  encouraging  inflation;  while  on  the  other  hand,  the 
adherents  of  the  low  rate  policy  have  often  taken  it  for  granted  that 
the  protagonists  of  high  rates  were  bent  upon  bringing  about  imme- 
diate drastic  deflation.  As  a  matter  of  fact  the  numbers  and,  unfor- 
tunately, the  political  power  of  those  who  have  consistently  advocated 
low  discount  rates  as  a  means  of  obtaining  "cheap  money"  to  the  end 
of  prolonging  good  times,  are  probably  great.  But  scientifically  speak- 
ing, they  can  be  ignored  and  placed  in  the  same  category  as  those  per- 
sons who  thought  interest  rates  could  be  manipulated,  to  the  end  of  se- 
curing an  immediate  return  to  "normal"  or  prewar  conditions. 

On  the  whole,  trained  opinion  in  this  country  would  seem,  judging 
from  published  statements,  to  harbor  a  belief  in  the  potency  of  the 
discount  rates  of  the  federal  reserve  banks,  as  an  instrument  of  credit 
control.  For  example,  both  Sprague  and  Moulton  concede  the  effi- 
cacy of  rate  changes,  as  if  the  proposition  required  no  demonstration, 
although  the  force  of  the  concession  is  considerably  weakened  by  ex- 
pressions of  opinion  found  elsewhere  in  their  writings.2  In  Sprague's 
article  in  the  American  Economic  Review  for  March,  1921,  on  "The 
Discount  Policy  of  the  Federal  Reserve  Banks"  (p.  24),  it  is  stated 
that  "the  discount  rate  of  the  reserve  banks  is  clearly  an  effective 
means  of  checking  credit  expansion,  but  it  is  also  evident  that  advanc- 
ing rates  influence  the  situation  rather  slowly."  And  Moulton  says  in 
the  American  Economic  Review  (Supplement,  March  1920,  p.  170), 
that  "a  raising  of  the  rate  of  discount  at  the  federal  reserve  banks 
tends  to  increase  the  discount  rates  on  all  loans  by  member  banks." 

2  Cf.  Sprague,  American  Economic  Review,  Mar.,  1921,  p.  27,  and  H.  G.  Moulton, 
Banking  Policy  and  the  Price  Situation,  Am.  Econ.  Review,  Supplement,  Mar.,  1920, 
note  22,  p.  175. 


1921]     Changes  in  Discount  Rates  of  Federal  Reserve  Banks         469 

Since  the  above  excerpts  appear  to  reflect  with  fair  accuracy  the  gen- 
eral attitude  (at  least  until  quite  recently  when  a  considerable  body  of 
contrary  opinion  has  developed),  it  follows  that  the  major  part  of  the 
discussion  as  to  rate  policy  in  this  country  has  been  devoted  to  con- 
sidering the  desirability  and  timeliness  of  attempts  to  control  the  credit 
situation. 

The  Federal  Reserve  Board  appears  to  have  adopted  the  prevailing 
belief  and  to  have  conceded  that  the  discount  rates  of  the  reserve  banks 
influence  market  rates  and  thereby  have  a  controlling  effect  upon  the 
amount  of  bank  credit  outstanding.  It  must  be  confessed  that  if  one 
cared  to  dispute  this  statement,  there  are  published  expressions  of 
opinion  that  would  give  support  to  the  opposition.  But  it  is  prob- 
ably safe  to  say  that  the  influence  of  the  discount  rates  of  the  reserve 
banks  has  been  affirmed  more  often  than  it  has  been  denied.  In  a  letter 
made  public  by  the  Board  June  10,  1919,  addressed  to  all  federal  re- 
serve agents  the  influence  of  central  bank  rates  in  controlling  not  only 
the  amount  of  credit  granted  but  the  character  of  that  credit  is  assumed, 
as  if  it  were  a  commonplace  statement  of  fact.  The  letter  says  in  part : 
"The  Federal  Reserve  Board  is  concerned  over  the  existing  tendency 
towards  excessive  speculation,  and  while  ordinarily  this  could  be  cor- 
rected by  an  advance  in  discount  rates  at  the  federal  reserve  banks, 
it  is  not  practicable  to  apply  this  check  at  this  time  because  of  govern- 
ment financing." 

The  following  spring,  in  several  incidental  references  in  the  Federal 
Reserve  Bulletin,  credit  control  through  rate  fixation  is  apparently 
taken  for  granted  as  witness  the  following  in  the  Bulletin  for  March, 
1920  (p.  214)  :  "The  improvement  which  has  taken  place  in  our  own 
finances  opens  the  way  to  a  more  effective  use  of  the  rediscount  rate  as 
a  means  of  credit  regulation."  And  later,  in  July  1920,  on  page  665 
of  the  Bulletin  is  the  following:  "The  question  constantly  asked  within 
the  past  few  months  has  been  the  relationship  noted  between  control 
of  credit,  the  application  of  higher  discount  rates,  and  the  actual  ex- 
pansion of  operations.  .  .  .  The  general  conclusion  to  be  drawn  is  un- 
mistakably to  the  effect  that  the  operation  of  credit  control  through 
higher  discount  rates  has  had  a  marked  success."  A  good  deal  of  testi- 
mony is  then  brought  forward  to  show  that  since  the  first  of  the  year 
successive  rate  advances  have  halted  the  pace  of  credit  expansion  de- 
spite the  heavy  actual  increases  in  earning  assets.  The  real  question  is 
held  to  be  whether  the  increase  would  not  have  been  greater  but  for 
the  application  of  this  method.  By  the  fall  of  1920,  however,  the  Board 
was  more  concerned  to  prove  that  it  had  been  liberal  in  its  extensions 
of  credit  to  agriculture  and  other  "legitimate"  interests,  and  to  show 
that,  as  it  put  it  in  the  Bulletin  for  September  1920  (p.  904),  "Indis- 


470  Anna   Youngman  [September 

criminate  liquidation  of  credits  has  not  been  the  object  of  the  recent 
policy  of  the  federal  reserve  system.  The  primary  concern  of  the 
Federal  Reserve  Board  now,  as  always,  has  been  to  make  sure  that  the 
essential  credit  needs  of  American  industry  are  being  met."  It  is  inter- 
esting to  set  this  off  against  an  expression  of  opinion  found  in  the  Bul- 
letin for  October  1919  (p.  911)  which  says:  "There  is  no  ready 
method  in  reserve  banking  by  which  the  use  of  reserve  facilities  can  be 
withheld  from  use  in  undesirable  lines  of  activity  without,  also,  being 
withheld  from  use  in  desirable  lines."  The  catholicity  of  the  opinions 
expressed  above  is  further  enhanced  by  occasional  remarks  casting 
doubt  upon  the  possibility  of  changes  in  discount  rates  having  any 
potency  at  all  as  a  means  of  credit  control.3 

It  is  evident  that  the  support  of  official  authority  cannot  be  invoked 
by  either  side  to  a  controversy  when  the  quoted  official  opinions  would, 
as  in  this  case,  neutralize  one  another.  Nor,  for  that  matter  can  sta- 
tistics be  used  either  to  prove  or  to  disprove  the  contention  that  the 
discount  rates  of  the  reserve  banks  have  been  the  primary  factors  in 
credit  control,  when  as  is  the  case  here,  the  same  statistical  data  can 
be  used  both  by  the  affirmative  and  by  the  negative  sides.  Statistical 
demonstration  is  inconclusive  because  the  forces  working  to  create  or 
destroy  a  given  volume  of  credit  are  too  multifarious  and  complex  in 
their  workings  to  permit  the  study  of  the  effects  of  any  one  factor 
working  in  isolation.  In  brief,  one  is  dealing  here  with  matters  of 
opinion  which  may  be  upheld  by  a  priori  reasoning  but  can  at  best  re- 
ceive only  negative  support  from  an  examination  of  the  facts. 

To  return  for  a  moment  to  the  argument  that  advances  in  discount 
rates  by  central  banks  are  a  more  or  less  automatic  device  for  enforc- 
ing discrimination  in  the  types  of  loans  granted,  it  should  be  said  that 
this  belief  has  been  more  or  less  widely  held  and  positively  expressed  in 
Europe  as  well  as  in  the  United  States.  Gustav  Cassel  who  has  lately 
been  urging  rate  reductions,  put  the  argument  for  high  rates  most 
trenchantly  in  his  "Memorandum  on  the  World's  Monetary  Problems" 
prepared  for  the  International  Financial  Conference  held  at  Brussels 
last  year.  He  says,  on  page  22 :  "An  interest  policy  which  gives  the 
scarcity  of  capital  its  true  expression  in  a  sufficiently  high  rate  of  in- 
terest can  in  no  way  prevent  the  productive  powers  of  the  community 
from  being  fully  employed.  It  only  directs  these  powers  to  a  certain 
extent  from  future  needs  to  present,  and  in  this  way,  it  secures  a  bet- 
ter provision  for  the  present  than  would  otherwise  be  possible."  And 
on  page  23:  "Besides  the  rate  of  interest,  there  are  other  means  for 
enforcing  the  necessary  restriction  on  the  demand  for  capital.  The 
banks  always  discriminate  between   the  proposals  for  which  their  ac- 

3(7/.  Federal  Reserve  Bulletin,  Oct.,  1919,  p.  911-     ]bid„  January,  1921,  p.  6. 


1921]     Changes  hi  Discount  Rates  of  Federal  Reserve  Banks         471 

commodation  is  sought,  and  in  periods  of  particular  scarcity  of  capi- 
tal, it  is  only  natural  that  this  discrimination  is  made  more  severe  than 
usual.  ...  If  the  rate  of  interest  is  kept  so  high  as  to  correspond  to 
the  real  scarcity  of  capital,  there  will  be  no  need  for  a  further  restric- 
tion of  the  demand  on  bureaucratic  lines." 

As  a  matter  of  fact,  the  attacks  of  opponents  of  a  high  rate  policy 
were  directed  with  especial  cogency  against  the  contention  that  high 
rates  made  for  the  most  effective  and  economically  desirable  distribu- 
tion of  credit.  Why,  they  asked,  should  high  rates  of  interest  on  bank 
loans  deter  undesirable  borrowers  such  as  speculators,  or  producers 
and  purveyors  of  socially  deleterious  and  extravagantly  wasteful  arti- 
cles from  continuing  to  borrow?  Just  such  classes  of  borrowers,  it  was 
contended,  would  be  least  likely  to  feel  the  pressure  of  high  rates.  In 
any  case,  there  was  no  reason  to  suppose  that  the  selective  elimination 
forced  by  high  rates  would  exclude  just  these  classes  of  borrowers  and 
no  one  else.  When  exorbitant  speculative  profits  were  in  anticipation, 
as  during  the  period  of  rising  prices,  what  reason  would  the  speculator 
have  to  curtail  his  operations  because  interest  charges  had  advanced 
1,  2  or  3,  etc.  per  cent?  In  answer  to  this  it  was  alleged  that  high 
rates  do  bear  more  heavily  upon  the  speculator  in  commodities  than 
upon  the  producer  or  the  manufacturer,  since  the  latter  have  many  ex- 
penses connected  with  operations,  whereas  the  chief  costs  for  the  specu- 
lator are  the  interest  charges  on  borrowed  capital.  As  a  matter  of  fact, 
in  the  absence  of  comprehensive  data  concerning  the  proportionate  bur- 
den of  interest  charges  for  various  groups,  one  man's  opinion  is  no 
better  than  that  of  another.  And  to  attempt  to  distinguish  illegitimate 
speculative  activity  from  other  types  of  business  operation  is,  as  has 
been  frequently  pointed  out,  an  impossible  task. 

The  arguments  of  those  who  see  in  discount  rate  fixation  merely  a 
particular  aspect  of  the  price  problem — namely,  the  price  of  the  com- 
modity called  bank  funds,  fluid  capital,  etc. — appear  to  the  writer  to 
be  essentially  fallacious.  The  case  for  higher  discount  rates,  for  ex- 
ample, has  sometimes  been  expounded  as  follows :  Under  competition, 
high  prices  of  competitively  produced  goods  are  socially  desirable  be- 
cause at  a  time  of  scarcity,  they  will  induce  economy  and  lead,  via  in- 
creased profits,  to  the  creation  of  greater  supplies.  Similarly,  high 
rates  on  bank  loans  will  conserve  existing  capital  supplies  and  evoke 
fresh  ones.  To  this  it  may  be  replied,  that  so  far  as  the  United  States 
is  concerned  variations  in  domestic  rates  may  cause  a  shift  of  lending 
from  one  community  to  another,  but  otherwise  there  is  nothing  in  high 
rates  to  evoke  more  "bank  funds,"  if  by  that  is  meant  cash  resources. 
Receipts  of  gold  from  abroad  do  not  at  present  have  any  connection 
with  changes  in  market  rates  and  to  the  extent  that  they  occur  may 


472  Anna  Yowngman  [September 

defeat  the  very  purpose  of  the  high  rates  which  are  intended  to  restrict 
the  amount  of  credit  granted.  One  is  not  dealing  with  some  intangible 
elusive  capital  supply  that  can  be  evoked  or  dissipated  by  means  of 
price  manipulations.  The  banking  system  is  built  not  on  "funds"  but 
on  claims  to  goods  and  property  and  what  is  bought  by  the  borrower 
is  the  services  of  the  bank  in  facilitating  transfers  of  goods,  enabling 
the  borrower  to  get  possession  of  goods  and,  if  necessary,  providing 
actual  cash  to  enable  him  to  do  it.  There  may  be  formal,  legal,  or 
customary  limitations  placed  upon  the  extent  to  which  banks  can  dis- 
pose of  their  services,  but  in  the  United  States  at  any  rate  the  limita- 
tion is  found  in  a  reserve  which  the  bank  can  create  by  borrowing  in 
its  turn.  What  is  the  rate  except  the  expression  of  a  greater  or  less 
inclination  on  the  part  of  the  bank  to  sell  its  services? 

So  as  far  as  the  demand  is  concerned,  it  is  true  that  considerations 
of  expense  attached  to  borrowing  may  restrict  demand,  although  in 
a  very  active  boom  period  it  is  highly  probable  that  the  marginal  bor- 
rower would  pay  more  if  he  had  to  do  so  and  that  many  borrowers 
would  be  willing  to  expand  their  loans  if  they  could  at  existing  rates. 
This  probability  shows  that  the  rates  fixed  are  not  determined  on  a 
severely  competitive  basis.  If  they  were,  they  would  be  higher  at  such 
times.  On  the  other  hand,  when  opportunities  for  business  profit  are 
reduced,  the  banks  will  charge  less  for  their  services  but  it  does  not  fol- 
low that  the  utilization  of  credit  will  be  thereby  greatly  stimulated. 

Irrespective  of  the  relationship  existing  between  rediscount  rates 
and  general  market  rates,  it  seems  that  undue  emphasis  has  been  put 
upon  the  "highness"  or  "lowness"  of  actual  rates  paid  by  borrowers. 
The  pervasive  insistence  upon  the  efficacy  of  changes  in  short-time 
interest  rates  as  an  instrument  of  credit  control  involves  a  gross  ex- 
aggeration of  their  importance  as  an  element  in  expenses  of  produc- 
tion. So  long  as  business  prosperity  continues  and  goods  move  regu- 
larly from  producer  through  intermediaries  to  consumer,  their  influence 
is  not  nearly  so  great  as  is  imagined  in  determining  the  volume  of  busi- 
ness. To  be  sure,  if  goods  do  not  move  regularly,  the  burden  of  inter- 
est charges  may  be  keenly  felt,  but  it  will  then  be  felt  even  if  rates  are 
very  low.  In  itemized  expense  accounts,  the  interest  charge  on  short- 
time  loans  ordinarily  appears  as  an  insignificant  percentage  of  the 
total  outlay.  After  all,  the  costs  of  labor  and  material  are  the  primary 
expenses,  and  interest  as  a  payment  made  to  secure  control  of  the  means 
to  purchase  goods  and  services  must  in  the  nature  of  the  case  be  a 
subordinate  element.  Yet  the  interest  charge  always  looms  large  in 
the  mind  of  the  borrower  because  there  is  usually  a  belief,  however 
mistaken,  that  other  outlays  are  represented  by  tangible  goods  and  by 
services  whose  value  are  at  least  equal  to  the  amounts  paid  to  secure 


1921]     Changes  in  Discount  Rates  of  Federal  Reserve  Banks         473 

them.  Interest,  however,  appears  as  an  item  of  expense  not  offset  by 
these  purchases.  Provision  must  be  made  for  it,  and  if  it  cannot  be 
met  except  by  trenching  upon  the  usual  profits  or  by  incurring  actual 
losses,  the  failure  is  apt  to  be  attributed  more  particularly  to  the  exis- 
tence of  the  interest  charge.  Of  course,  the  reason  may  be  that  the  de- 
mand for  salable  goods  has  fallen  or  the  services  bought  have  not  been 
satisfactory,  but  whatever  the  cause,  the  interest  charge  appearing  as 
an  amount  in  excess  of  the  property  offset  against  the  sum  borrowed, 
has  imputed  to  it  a  disproportionate  share  of  the  blame  for  failure.* 
To  be  sure,  if  extensive  data  were  available  showing  what  reliance  is 
placed  by  different  industries  and  trades  and  different  firms  within  the 
same  competitive  group  upon  short-time  borrowings,  the  differences 
would  be  shown  to  be  profound.     This  means  of  course  that  increases 

*  A  few  illustrations,  taken  at  random  from  the  very  scanty  published  material 
accessible,  showing  itemized  production  costs  for  given  establishments  or  groups  of 
estabUshments,  bear  out  the  statements  just  made.  The  Federal  Trade  Commission 
for  example  in  a  report  on  "Anthracite  and  Bituminous  Coal"  (June  20,  1917,  pp. 
153-157)  gave  the  expenses  by  months  of  a  large  New  England  wharf  yard  from 
April  1915  to  December  1916.  In  the  case  of  an  intermediary  handling  concern  of 
this  sort  one  would  expect  interest  on  borrowed  funds  to  be  relatively  an  impor- 
tant item.  But  during  1916,  although  total  expenses  varied  from  a  minimum  of 
$.942  per  ton  in  August  to  a  maximum  of  $1,389  in  November,  the  interest  on  ac- 
counts payable  which  amounted  to  $.004  per  ton  in  January  reached  $.20  in  No- 
vember, but  in  no  other  month  exceeded  $.043. 

The  Federal  Trade  Commission  also  published  in  its  "Report  on  the  Meat  Pack- 
ing Industry"  (Part  V,  p.  101)  a  statement  of  the  Cudahy  Company  which  was 
the  only  one  of  the  great  packers  which  compiled  a  classified  profit  and  loss  state- 
ment. In  1912  total  interest  amounted  to  $692,163  out  of  a  total  outlay  of  $90,644,- 
292.  In  1917,  total  outlay  had  increased  somewhat  more  than  100  per  cent  to 
$182,203,286  while  interest  charges  were  $1,549,224.  In  both  years  therefore  the 
total  interest  charges  amounted  to  a  negligible  fraction  of  a  per  cent  of  total 
outlays. 

In  the  bulletins  issued  by  the  Bureau  of  Business  Research  at  Harvard  Uni- 
versity giving  in  detail  operating  expenses  in  certain  lines  of  wholesale  and  retail 
trade,  there  are  set  forth  some  valuable  statistics  showing  the  percentage  relation- 
ship of  total  interest  charges  to  net  sales.  These  figures  include  interest  on  long 
and  short-time  borrowing  plus  interest  estimated  on  the  proprietor's  net  invest- 
ment in  the  business,  exclusive  of  real  estate.  In  1919  for  155  retail  hardware 
stores,  total  expenses  varied  from  11.4  per  cent  to  36.3  per  cent  of  net  sales  with 
21  per  cent  common  figure,  and  interest,'  from  0.95  per  cent  to  8.95  per  cent  with 
3.3  per  cent  common.  In  the  retail  drug  business  in  1919,  with  185  stores  reporting, 
the  range  was  from  17.7  per  cent  to  42.9  per  cent  for  total  expenses  with  27.6  per 
cent  the  common  figure  and  from  1.1  per  cent  to  11.8  per  cent  for  total  interest, 
with  3.1  per  cent  the  common  figure.  To  take  one  more  illustration:  159  wholesale 
grocers  in  1919  had  total  operating  expenses  amounting  to  4.35  per  cent  of  net 
sales  as  a  minimum  and  14.71  per  cent  as  a  maximum  with  9.1  per  cent  the  rom- 
mon  figure.  Total  interest  ranged  from  0.34  per  cent  to  2.75  per  cent,  with  1.6 
per  cent  as  the  common  figure. 


474  Anna  Youngman  [September 

in  rates  for  short-time  loans  are  felt  very  unequally  by  competitors  in 
the  same  business,  given  their  unequal  dependence  upon  banks.  Hence 
it  is  true  that  any  pronounced  rate  changes  will  in  the  case  of  highly 
competitive  businesses  exert  an  effect  out  of  relation  to  their  absolute 
importance  which  is  very  often  insignificant. 

The  arguments  set  forth  above  which  have  been  the  ones  most  fre- 
quently presented  in  discussions  of  rate  policy  usually  take  for  granted 
that  changes  in  the  discount  rates  of  central  banks  will  have  a  direct 
effect  upon  outside  market  rates.  So  far  as  the  United  States  is  con- 
cerned, the  assumption  is  a  large  one,  and  in  the  opinion  of  the  writer, 
an  incorrect  one.  It  has  been  often  pointed  out  that  the  English  pre- 
war banking  system  differed  from  the  present  federal  reserve  system  in 
many  important  particulars.  There  has  been  nevertheless  a  hesitancy 
to  accept  the  inevitable  conclusions  to  be  deduced  from  those  differ- 
ences, and  the  major  part  of  rate  discussion  in  the  United  States  has 
therefore  been  based  upon  the  assumption  that  the  federal  reserve  sys- 
tem occupied  a  position  of  control  similar  to  that  held  by  the  Bank  of 
England.  Incidentally,  it  should  be  remembered  that  even  before  the 
war  the  Bank  of  England  frequently  had  difficulty  in  forcing  the  market 
to  take  cognizance  of  its  rate  policy.  Its  control  had  been  gradually 
weakening  over  a  long  period  of  years  as  outside  institutions  grew  in 
resources  and  power,  and  the  authority  exercised  was  based  upon  a 
voluntary  deference  to  its  leading,  the  outgrowth  of  custom  and  of  a 
conviction  that  its  power  ought  to  be  maintained.  During  the  war 
and  afterward  the  Bank  had  to  yield  to  the  exigencies  of  governmental 
needs  with  a  resultant  loss  of  control  over  the  general  discount  market. 

In  the  United  States  there  is  at  present  no  customary  or  legal 
coercion  strong  enough  to  bring  outside  market  rates  into  line  with  the 
official  rates  of  the  federal  reserve  banks  and  there  is  nothing  in  the 
structure  of  our  banking  organization  to  force  such  conformity.  The 
federal  reserve  banks  do  not  serve  a  highly  centralized  and  highly  sen- 
sitive international  market  and  if  the  system  continues  to  function  on 
a  regional  basis,  they  never  can  do  so.  On  the  regional  basis,  each  dis- 
trict ought  to  develop  a  discount  market  of  its  own  relatively  inde- 
pendent of  all  others,  although  to  meet  temporary  needs,  funds  may 
flow  in  or  out.  If  there  were  not  this  concept  of  regional  independence, 
rediscounting  among  the  federal  reserve  banks  would  take  place  freely 
and  as  a  matter  of  course.  In  fact,  the  banks  do  not  like  to  rediscount 
and  their  managements  regard  it  as  duty  to  try  to  avoid  doing  so,  ex- 
cept upon  occasions  when  seasonal  demands  are  extraordinarily  heavy. 
There  exists  in  this  attitude  and  in  legal  intent  (else  why  did  not  the 
law  establish  one  central  bank?)  a  hindrance  to  the  unimpeded  flow  of 
funds  and  to  the  development  of  one  centralized  discount  market. 


1921]     Changes  in  Discount  Rates  of  Federal  Reserve  Banks         475 

Moreover,  the  federal  reserve  banks  do  not  deal  with  a  few  institu- 
tions  doing  a  largely   international  business,  based  upon   the  closest 
competitive  calculations.     They  do  business  instead  with  thousands  of 
small  institutions  whose  interests  are  wholly  or  primarily  domestic — 
institutions  which  serve  limited  areas  and  often  feel  only  remotely  the 
influence  of  competition.     The  tables  published  monthly  in  the  Fed- 
eral Reserve  Bulletin  showing  discount  and  interest  rates  prevailing  in 
various  centres  for  different  classes  of  paper  are  an  excellent  illustra- 
tion of  the  lack  of  a  competitive  distribution  of  banking  resources  ade- 
quate to  bring  about  an  approach  to  uniform  rates  throughout  the 
country.     And  if  rates  in  small  towns  and  remote  communities  were 
taken  into  account,  concepts  as  to  what  constituted  ruling  rates  of 
discount  would  be  severely  shaken.     These  local  rates  differences  un- 
deniably make  for  a  greater  claim  upon  the  resources  of  rediscounting 
agencies  in  those  sections  where  rates  are  highest.     The  resources  of 
the  Second  Bank  of  the  United  States  were  diverted  toward  the  South 
and  West  where  local  interest  rates  were  high.     Under  the  federal  re- 
serve system,  undue  sectional  demands  {i.e.,  undue  in  relation  to  local 
banking  resources)   are  prevented  to  the  extent  that  the  banks  are 
operated  as  independent  units.    If  no  objection  arose  to  unlimited  inter- 
bank rediscounting  or  if  lending  were  undertaken  from  a  single  centre, 
there  would  probably  be  much  greater  utilization  of  funds  by  the  high 
interest  parts  of  the  country  than  is  now  the  case.     Thereby,  however, 
greater  uniformity  in  interest  rates  throughout  the  United  States  would 
be  more  speedily  achieved.     As  it  is,  there  are  many  factors  at  work 
making  for  the  gradual  elimination  of  the  extreme  variations  in  local 
interest  rates,  such,  for  example  as  the  activity  of  commercial  paper 
houses  in  placing  paper  throughout  the  United  States  and  the  existence 
of  opportunities  to  rediscount  paper  originating  in  high  interest  com- 
munities at  as  low  and  sometimes  at  lower  rates  than  in  low  interest 
sections.      Still,   differences  persist.     Many  local   borrowers   are  not 
now  and  never  will  be  able  to  offer  their  paper  outside  their  own  com- 
munities.    Often  country  bank  loans  are  of  a  semi-perpetual  type  and 
are  carried  at  high  rates  which  the  borrower  must  pay  or  else  go  with- 
out accommodation.     The  bank  can  secure  the  necessary  proportion 
of  liquid  assets  by  the  purchase  of  commercial  paper,  investment  of 
funds  in  the  call  market  or  through  holdings  of  customers'  paper  eligi- 
ble for  rediscount.    Naturally  the  utilization  of  all  these  avenues  of  in- 
vestment tends  to  make  it  easier  for  the  local  borrower,  but  so  long  as 
he  is  forced  to  depend  upon  a  local  institution  there  is  no  driving  force 
of  competition  to  bring  the  rate  of  interest  charged  him  into  line  with 
the  rates  charged  elsewhere,  even  making  allowances  for  risk  and  char- 
acter of  the  loan. 


476  Anna  Youngman  [September 

The  twelve  rediscounting  agencies  which  comprise  the  Federal  Re- 
serve System  serve  then  innumerable  small,  independent  banks,  which 
charge  interest  rates  that  sometimes  evidence  local  monopolistic  power 
of  the  leading  agency,  more  or  less  restrained  by  usury  laws,  generous 
or  severe,  rates  largely  the  product  of  local  custom  and  feeling  only  re- 
motely the  influence  of  outside  competition.  Under  such  circumstances, 
the  problem  of  credit  control  cannot  be  solved  by  advances  of  frac- 
tional or  even  full  percentages  in  the  rediscount  rates  of  the  regional 
banks?  What  efficacy  has  such  an  advance  as  applied  to  a  bank,  let 
us  say,  in  some  western  or  southwestern  state  which  customarily  lends 
at  8,  10  or  12  per  cent?  None  at  all,  if  such  a  bank  is  pressed  for 
loans,  recognizes  the  profit  that  lies  in  rediscounting,  and  insists  upon 
taking  it.  The  only  remedy  for  this  situation  is  an  outright  refusal 
to  lend. 

It  is  significant  in  this  connection  to  read  the  published  summaries 
of  policies  actually  pursued  by  several  federal  reserve  bank  manage- 
ments in  their  attempts  to  curtail  credit  applications.6  The  excerpts 
make  it  very  clear  that  the  officials  recognized  that  there  was  no  sub- 
stitute for  direct  action  in  determining  which  borrowers  should  be  ac- 
commodated and  how  much  they  might  have.  The  policy  has  not  been 
— and  could  not  have  been — to  serve  all  comers  at  fixed  rates.  There 
is  no  intention  of  denying  that  the  announced  policy  of  the  Federal 
Reserve  Board  as  advertised  by  rate  advances  helped  to  hasten  an  in- 
evitable credit  contraction  and  served  to  make  its  consequences  less 
disastrous  than  they  would  otherwise  have  been.  But  it  is  not  believed 
that  the  changes  in  discount  rates  were  the  directly  effective  weapons 
of  credit  control.  Downright  refusal  to  expand  certain  classes  of  loans 
and  pressure  for  repayment  of  others  were  the  potent  factors  in  credit 
contraction,  and  the  rate  advances  were  mere  outward  signs  of  the 
initiation  of  a  sterner  policy  toward  member  banks.  The  pressure  ex- 
erted by  the  member  banks  in  their  turn  upon  their  customers  no  doubt 
became  more  severe  as  the  result  of  warnings  coming  from  the  redis- 
counting agencies,  but  the  actual  advances  in  rediscount  rates  would 
not  have  had  any  material  effect  if  they  had  not  been  accompanied  by 
vigorous  action. 

This  belief  in  the  ineffectiveness  of  the  changes  in  the  official  rates 
finds  further  support  in  the  fact  that  the  discount  rates  of  the  reserve 
banks,  and  notably  those  of  the  Federal  Reserve  Bank  of  New  York, 
have  not  only  been  maintained  below  the  current  market  rates  but  the 
upward  and  downward  movements  have  tardily  followed  instead  of  pre- 

*Cf.  Federal  Reserve  Bulletin,  Feb.,  1920,  pp.  116-117. 


1921]     Changes  in  Discount  Rates  of  Federal  Reserve  Banks         477 

ceding  changes  in  the  outside  market  rates.8  In  the  Bulletin  for  Sep- 
tember, 1920  (p.  942),  appears  this  statement:  "Average  rates  of 
discount  charged  by  the  Federal  Reserve  Bank  of  New  York  on  all  dis- 
counts were  about  l^o  per  cent  below  the  market  rate  until  November 
1919  when  the  Federal  Reserve  Board  and  the  federal  reserve  banks 
embarked  upon  the  policy  of  raising  discount  rates.  After  that  date 
the  spread  between  the  market  rates  and  the  federal  reserve  rate  de- 
creased rapidly  and  in  March  and  April  was  about  ^  per  cent.  Since 
then  commercial  rates  have  increased  more  rapidly  than  the  federal 
reserve  rate,  although  the  margin  narrowed  somewhat  when  the  federal 
reserve  bank  {i.e.,  New  York)  raised  its  rate  on  commercial  paper  to 
7  per  cent  in  May."  Similarly  the  rate  reductions  recently  made  were 
preceded  by  reductions  in  outside  market  rates.  Indeed  the  discount 
rates  of  the  Federal  Reserve  Bank  of  New  York  seem  to  have  been  mere- 
ly a  somewhat  diminished  reflection  of  what  market  rates  have  actually 
become.  The  fact  that  the  spread  between  the  reserve  bank  rates  and 
the  outside  rates  in  the  New  York  market  has  also  varied,  shows  that 
changes  in  outside  rates  are  governed  by  an  independent  set  of  causes. 
A  frequent  answer  to  the  question  as  to  whether  reserve  bank  rates 
have  any  control  over  the  market  is  that  they  have  a  sentimental  effect, 
even  if  they  bear  no  very  definite  relation  to  outside  market  rates:  i.e., 
advances  indicate  a  need  for  caution,  while  reductions  are  a  signal  that 
restriction  of  credit  need  not  be  so  rigid.  Sentimental  control,  how- 
ever, has  just  this  disadvantage:  the  sentiments  are  heeded  if  they  hap- 
pen to  mirror  the  opinions  and  coincide  with  the  particularistic  inter- 
ests of  those  whom  it  is  intended  to  reach.  The  warning  is  often 
ignored  unless  it  is  backed  by  a  weapon  that  can  enforce  control. 
Certainly  the  discount  rates  of  the  federal  reserve  banks  cannot  be 
employed  as  such  a  weapon  until  they  are  maintained  at  a  level  as 
compared  with  outside  market  rates  which  will  penalize  rediscounting, 
instead  of,  as  in  many  cases,  putting  a  positive  premium  upon  it.  This 
is  admittedly  difficult  to  do  immediately  when  many  banks  have  so  ex- 
panded their  investments  that  they  are  hopelessly  dependent  upon  the 
support  afforded  by  rediscounts.  But  once  the  abnormal  reliance  upon 
the  reserve  banks  growing  out  of  the  war  and  the  post-war  boom  is 
past,  steps  should  be  taken  to  prevent  the  continuous  use  of  the  re- 
sources of  the  federal  reserve  system  as  an  addition  to  the  capital  and 
surplus  of  member  banks.  In  any  case,  the  effective  utilization  of  dis- 
count rates  will  be  hampered  by  the  factors  already  mentioned :  the 

«  January  23,  1920,  when  the  New  York  Reserve  Bank  rate  for  commercial  paper 
advanced  to  6  per  cent  the  open  market  rate  had  already  been  6  per  cent  for  some 
weeks.  When  on  June  1,  the  reserve  rate  went  to  7  per  cent  commercial  paper  had 
been  7%  per  cent  for  2  weeks  and  7  per  cent  for  a  month. 


478  Anna  Youngman  [September 

extraordinarily  high  rates  of  remote  centers  and,  at  intervals,  of  the 
call  loan  market.  Under  certain  circumstances,  no  practicable  ad- 
vances in  discount  rates  may  suffice  to  control  expansion  and  it  may 
become  necessary  to  enforce  reasonable  regulations  regarding  usury 
or  to  refuse  rediscounts  to  a  bank  that  lends  at  extortionate  rates. 

Certainly  warnings  issued  by  the  Federal  Reserve  Board  against  us- 
ing the  privilege  of  rediscounting  as  a  source  of  profit  will  not  always 
be  heeded  if  rediscount  rates  are  favorable  and  positive  refusals  are  not 
encountered.  It  is  well  known  that  country  banks  have  frequently 
bought  commercial  paper  at  attractive  rates  instead  of  using  surplus 
funds  to  reduce  their  borrowings,  because  it  paid.  Apparently  there 
was  no  sentiment  against  the  practice  and  it  could  hardly  be  expected 
that  there  would  be.  No  doubt  some  banks  have  pursued  a  conscious 
policy  of  abstention  from  rediscounting  believing  that  their  operations 
should  be  kept  within  the  limits  of  their  own  resources.  A  study  made 
by  the  writer  of  changes  in  the  loans  and  discount  and  in  the  rediscounts 
and  bills  payable  of  eleven  of  the  large  banks  of  New  York  City  in  1918- 
1919  brought  out  very  clearly  that  some  institutions  had  expanded 
their  scale  of  operations  without  reference  to  their  ability  to  carry  their 
investments ;  and  it  was  also  clear  that  the  explanation  was  not  to  be 
found  in  their  increased  investments  in  United  States  securities,  al- 
though that  afforded  a  partial  explanation.  On  the  other  hand,  a  few 
banks  had  regarded  the  right  to  rediscount  as  a  privilege  to  be  used  in 
an  emergency  and  had  only  resorted  to  it  reluctantly  toward  the  end 
of  1919  on  any  considerable  scale.  It  is  true  that  there  still  remain 
banks  which  have  taken  little  or  no  advantage  of  the  rediscounting 
privilege.  When  pressure  for  loans  was  great  and  profit  lay  in  re- 
discounting, it  is  not  easy  to  see  why  the  smaller  institutions  held  back 
except  through  ignorance  or  timidity.  Certainly  there  was  not  until 
recently  any  force  of  public  opinion  to  prevent  rediscounting — rather 
the  contrary.  Indeed,  one  of  the  extraordinary  developments  of  war- 
time finance  has  been  the  matter-of-course  assumption  that  rediscount- 
ing ought  normally  to  yield  a  profit  to  the  borrowing  bank. 

Another  fact  should  be  kept  in  mind  in  considering  the  incentives 
making  for  rediscounts.  Since  member  banks  have  to  maintain  re- 
quired reserves  with  the  federal  reserve  banks,  they  are  disposed  to  re- 
duce the  expense  thereby  entailed  to  a  minimum.  That  often  means 
that  they  will  keep  their  reserves  at  such  a  low  point  that  any  unex- 
pected or  unusually  heavy  withdrawals  will  necessitate  an  application 
for  rediscounts.  This  disposition  was  particularly  noticeable  in  fol- 
lowing the  daily  reserve  statements  of  certain  of  the  eleven  banks  to 
which  reference  has  been  made.  If  rediscount  rates  were  above  out- 
side lending  rates,  this  attitude  toward  the  reserve  requirement  would 


1921]     Changes  m  Discount  Rates  of  Federal  Reserve  Banks        479 

be  altered  because  penalties  would  attach  to  the  failure  to  make  ade- 
quate provision. 

Now  that  the  outside  market  rates  have  fallen  and  the  pressure  for 
loans  by  member  banks  has  been  relaxed,  an  opportunity  has  been  af- 
forded of  keeping  discount  rates  of  the  reserve  banks  at  levels  where 
with  reviving  business  they  would  have  offered  little  incentive  to  expan- 
sion for  the  sake  of  expansion.  Judged  from  that  point  of  view,  it 
seems  unfortunate  that  rates  have  been  reduced  so  that  they  continue 
to  be  below  the  outside  rates  in  the  chief  money  market  centers.  On 
this  account  (not  because  it  is  believed  that  the  lower  rediscount  rates 
will  just  at  present  lead  to  resumption  of  credit  expansion)  the  down- 
ward movement  appears  unfortunate. 

When  the  discount  rates  of  the  federal  reserve  banks  lead  the  market 
rates  in  the  chief  money  centers,  when  liquidation  on  the  part  of  bor- 
rowing banks  has  been  largely  consummated  and  the  system  becomes, 
as  it  was  intended,  a  source  of  reliance  for  recurrent  seasonal,  or  other 
extraordinary  needs,  the  reserve  banks  ought  to  be  in  a  position  to  ex- 
ercise a  measure  of  control  over  outside  market  rates.  Even  so,  the 
effectiveness  of  such  control  will  be  dependent  upon  the  creation  of  a 
broad  discount  market  of  a  genuinely  competitive  sort,  sensitive  to  the 
influence  of  rate  changes.  So  far  such  a  market  has  been  lacking  and 
it  remains  to  be  seen  whether  the  surplus  funds  of  the  federal  reserve 
banks,  once  released  from  the  abnormally  heavy  demands  which  have 
engrossed  them,  can  be  successfully  utilized  in  the  development  of  a 
genuine  open  market.  So  far  open  market  operations  have  been  con- 
fined to  purchases  of  acceptances  at  artificially  low  rates,  and  it  must 
be  confessed  that  the  future  for  an  open  market  based  primarily  upon 
acceptances  is  not  over-promising.  England  is  essentially  furthering 
her  domestic  business  in  discounting  bankers'  acceptances  to  a  greater 
extent  than  would  be  true  in  the  United  States.  Why  should  our  cen- 
tral banks  confine  their  open  market  purchases  to  a  type  of  paper  that 
represents  a  relatively  small  proportion  of  general  banking  business? 
Even  with  the  preferential  buying  rate  which  acts  more  or  less  as  a 
subsidy  to  dealers  in  acceptances,  the  market  has  not  developed  ac- 
cording to  expectations.  The  Acceptance  Bulletin  of  May  1921  gives 
the  result  of  a  nation-wide  inquiry  into  acceptance  conditions.  The  re- 
sults of  a  quite  comprehensive  survey  showed  that  on  April  1,  $664*,- 
092,000  of  bankers  acceptances  were  outstanding,  a  decline  of  18  per 
cent  from  the  preceding  year.  A  significant  statement  is  appended  to 
this  effect:  "Inquiry  among  international  bankers  discloses  that  two 
items  represent  a  large  proportion  of  the  acceptances  now  outstanding ; 
namely,  credits  covering  sugar  and  those  granted  for  the  creation  of 
dollar  exchange."     Conceding  that  the  acceptance  market  has  been  de- 


480  Anna  Youngman  [September 

veloped  under  trying  conditions,  it  still  remains  true  that  the  outlook 
for  economic  stability  in  international  relations  within  the  next  few 
years  is  not  good.  It  would  seem  highly  dubious  therefore  to  build  up 
by  artificial  means  an  open  market  confined  to  bills  originating  chiefly 
in  export  and  import  transactions.  Morever,  as  the  English  rates  on 
acceptances  have  to  be  met,  if  financing  is  to  be  done  in  this  market,  the 
outside  market  is  likely  to  be  a  highly  uncertain  one.  Advances  in 
rates  on  other  types  of  paper  may  well  make  acceptances  unsalable, 
and  if  the  market  is  not  to  be  destroyed,  the  federal  reserve  banks  will 
have  to  come  to  the  rescue  of  the  dealers  without  any  reference  to  their 
own  investment  needs  and,  it  may  be,  at  a  time  when  it  seems  desirable 
to  curtail  general  credit.  From  the  point  of  view  of  the  solidity  and 
security  of  our  banking  system,  it  would  not  appear  wise  for  the  port- 
folios of  our  federal  reserve  banks  to  be  filled  largely  with  paper 
growing  out  of  international  transactions.  Whatever  might  have  been 
the  advantages  in  the  past,  many  of  them  have  been  lost  for  the  present. 

If  a  genuine  discount  market  is  to  be  developed  in  this  country — 
one  whose  activities  can  be  influenced  by  the  federal  reserve  banks — 
it  must  be  of  a  more  catholic  type.  Artificial  preferments  and  discrimi- 
nations, whose  aim  seems  to  have  been  to  give  us  a  ready-made  British 
discount  market,  ought  to  be  eliminated.  Why  should  not  the  provi- 
sions of  the  Federal  Reserve  act  be  changed  so  as  to  empower  the  fed- 
eral reserve  banks  to  extend  their  open  market  operations  to  cover 
notes  as  well  as  bills  growing  out  of  commercial  transactions,  since  this 
is  a  country  whose  banking  needs  are  after  all  primarily  domestic  and 
whose  banking  accommodation  for  domestic  purposes  is  based  princi- 
pally on  the  note?  And  why  should  not  the  banks  also  be  given  the 
legal  right,  at  discretion,  to  make  loans  against  stock  exchange  col- 
lateral not  only  at  official  rates  for  members  but  at  market  rates  for 
their  own  account?  Presumably,  the  bulk  of  the  lending  against  stock 
exchange  securities  would  be  confined  to  the  New  York  market.  Such 
an  extension  of  open  market  operations  and  of  rediscounting  activities 
would  inevitably  be  attended  with  danger,  but  it  is  assumed  that  the 
power  so  obtained  would  be  used  discreetly,  and  it  would  certainly 
afford  the  best  possible  means  of  bringing  about  an  equalization  of  the 
rates  on  different  classes  of  paper  (with  due  allowance  for  risk  and  for 
the  time  element).  As  it  is,  inequalities  of  an  irrational  sort  tend  to 
be  perpetuated  by  the  existing  policy  of  discriminating  in  favor  of 
bankers'  acceptances  and  discriminating  against  loans  on  stock  ex- 
change collateral.  The  existing  prohibitions  do  not  prevent  funds  be- 
ing obtained  by  both   classes   of  borrowers,7  but   they  do  introduce 

i  Federal  Reserve  Bulletin,  Dec,  1919,  p.  1107.  ".  .  .  experience  has  demonstrated 
that  the  prohibition  of  direct  speculative  loans  does  not  of  itself  act  to  prevent 
the  indirect  use  of  funds  ohtained  from  the  system  for  speculation." 


1921]     Changes  in  Discount  Rates  of  Federal  Reserve  Banks         481 

greater  uncertainty  and  wider  fluctuations  in  rates  than  would  other- 
wise obtain.  The  result  is  a  considerable  and  incalculable  shifting  of 
loans  with  a  view  to  profit-taking,  which  affords  the  worst  possible 
conditions  for  building  a  strong  reliable  discount  market  that  can  be 
counted  upon  to  absorb  offerings  at  a  predicable  rate. 

To  the  extent  that  call  loan  rates  can  be  brought  into  reasonable 
conformity  with  other  rates,  with  the  elimination  of  all  extreme  varia- 
tions, a  long  step  will  have  been  taken  in  the  direction  of  steadying  and 
enlarging  the  market  for  short-term  investments.  Apologists  for  the 
excessively  high  call  loan  rates  that  from  time  to  time  prevail  in  the 
New  York  market  sometimes  allege  that  only  by  the  imposition  of  high 
charges  is  it  possible  to  prevent  the  speculative  markets  from  securing 
an  undue  share  of  credit.8  To  this  it  may  be  replied  that  high  rates 
do  not  necessarily  mean  restricted  demand.  The  demand  for  specula- 
tive loans  in  "boom"  periods  is  highly  inelastic ;  the  high  rates  merely 
indicate  that  more  funds  would  be  taken  if  they  could  be  got.  It  can- 
not be  confidently  deduced  that  reductions  in  the  amounts  of  such  loans 
have  occurred.  High  rates  in  a  period  of  active  speculation  may  rule 
for  a  long  time,  and  attract  funds  of  banks  that  would  otherwise  in- 
vest in  other  types  of  loans.  Rediscounts  of  eligible  paper  may  be  made 
in  order  to  release  such  funds  to  the  stock  market  or  loans  already 
obtained  may  not  be  paid  off  by  banks  wishing  to  utilize  the  oppor- 
tunity to  secure  high  rates  of  interest.  Such  rates  are  not  always  self- 
correcting  and  may  have  a  disintegrating  influence  upon  the  market  for 
other  classes  of  paper.  If  the  federal  reserve  banks  were  in  a  position 
to  "break"  abnormally  high  rates  by  direct  lending,  they  would  per- 
form a  real  service  at  such  times.  Of  course  if  rates  could  only  be 
brought  down  by  a  too-lavish  use  of  resources,  it  might  be  necessary  to 
invoke  more  drastic  methods  of  control,  such  as  usury  laws  made  ap- 
plicable to  call  loans. 

*  A  memorandum  on  the  New  York  call  money  market,  prepared  by  the  Federal 
Reserve  Agent  in  New  York  for  the  information  of  the  Board  was  published  in  the 
Bulletin  for  April  1920  (pp.  369-372).  It  presents  what  seems  to  the  writer  to  be 
two  irreconcilable  points  of  view,  when  explaining  and  tacitly  defending  high  call 
loans  rates.  First  "call  money"  is  regarded  as  a  surplus  available  only  after  the 
obligations  to  the  customers  of  the  various  banks  have  been  satisfied.  Then  it  is 
stated — and  here  is  a  fundamental  contradiction — that  "It  has  long  been  recognized 
that  for  assurance  of  a  sufficient  amount  of  money  to  finance  the  volume  of  busi- 
ness in  securities,  reliance  cannot  be  placed  on  a  rate  of  interest  limited  to  the 
rates  which  obtain  or  are  permitted  in  commercial  transactions  whose  prior  claim 
on  banking  accommodations  is  universally  conceded."  The  suggestion  here  unde- 
niably is  that  the  call  market  has  to  draw  funds  away  from  other  uses  by  extra- 
ordinarily high  bids.  How  can  this  idea  be  reconciled  with  the  notion  that  call 
funds  are  a  surplus,  large  or  small,  according  to  customers'  demands,  and  quanti- 
tatively speaking,  presumably  not  influenced  by  rates? 


482  Anna  Youngman  [September 

The  discussion  on  the  New  York  call  money  market  published  in 
the  Bulletin  for  April  1920  says  (p.  371),  that  "rates  for  call  money 
do  not  determine  and  have  not  exerted  an  important  influence  on  the 
rates  for  commercial  borrowings."  And  the  belief  is  expressed  that 
"there  is  little  causal  relation  between  the  rates  for  call  money  and 
those  on  commercial  loans."  This  statement  is  opposed  by  a  consider- 
able body  of  testimony  to  the  contrary,  for  dealers  in  acceptances  and 
commercial  paper  brokers  insist  that  their  markets  expand  or  contract 
according  to  the  force  of  the  pull  exerted  by  the  demand  for  stock 
exchange  "call"  loans.  Bank  buyers  of  commercial  paper,  it  is 
averred,  cut  down  their  purchases  when  the  call  rates  advance  to  at- 
tractive figures.  Similarly  dealers  in  acceptances  find  their  markets 
narrowing  and  if  they  are  operating  on  funds  borrowed  at  call,  may 
find  these  funds  no  longer  available.  Indeed,  advances  in  call  loan 
rates  have  had  as  a  characteristic  accompaniment,  increases  in  accep- 
tances holdings  of  the  reserve  banks  upon  whom  dealers  have  been 
forced  to  rely.  The  fact  is  one  that  has  become  a  subject  of  frequent 
comment. 

If  the  call  loan  market  were  isolated,  in  point  of  fact,  it  would  not 
be  a  matter  for  congratulation  as  supposed.  A  balanced  distribution 
of  loanable  funds  is  best  achieved  by  the  interaction  of  the  various  pulls 
for  funds,  provided  no  one  pull  is  devastatingly  strong.  No  doubt 
call  rates  have  at  times  been  so  high  as  to  interfere  with  this  adjust- 
ment, but  the  call  loan  market  is  not  unique  in  the  way  in  which  it  was 
when  it  offered  the  banks  their  chief  outlet  for  excess  funds  on  which 
they  could  speedily  realize.  It  was  then  inevitable  that  rates  should 
sometimes  rise  very  high  as  well  as  fall  very  low.  Under  present  con- 
ditions, it  becomes  possible  and  desirable  for  the  banks  to  adopt  an  in- 
vestment policy  which  will  distribute  their  risks  among  various  types 
of  paper,  in  the  knowledge  that  they  may  be  realized  upon  at  need.9 

From  all  that  has  been  said,  the  inference  is  that  the  call  loan  rate 
ought  to  become  more  and  more  "tied  to"  other  market  rates.  Then, 
too,  as  the  market  for  acceptances  gradually  expands,  call  funds  will 
be  borrowed  in  increasing  amounts  by  bill  dealers.  It  is  very  doubtful 
whether  the  proposition  to  make  the  acceptance  market  the  chief  source 
of  demand  for  call  funds,  by  introducing  term  settlements  on  the  stock 
exchange  would  have  the  beneficial  results  that  the  advocates  of  the 

9  It  is  significant  in  this  connection  that  some  commercial  paper  brokers  insist 
that  banks  will  not  buy  paper  except  at  a  more  or  less  fixed  advance  over  the  re- 
discount rate,  asserting  that  they  wish  to  be  in  a  position  to  rediscount  without  loss. 
As  a  matter  of  fact  this  would  not  be  true  in  a  period  of  inactive  demand,  when 
funds  were  abundant. 


1921]     Changes  in  Discount  Rates  of  Federal  Reserve  Banks         483 

change  recite.  Settlement  days  would  inject  an  element  of  disturbance 
at  frequent  intervals  whose  magnitude  could  not  be  foreseen,  and  the 
substitution  of  short  term  stock  exchange  collateral  time  paper  for 
stock  exchange  call  loans  would  still  leave  open  the  question  of  policy 
concerning  the  extent  to  which  the  banks  should  employ  their  resources 
in  this  field.  If  call  loans  were  to  be  based  primarily  on  acceptances 
(assuming  so  revolutionary  a  change  to  be  possible)  the  acceptance 
market  would  feel  the  full  force  of  calls  and  might  well  be  hurt  rather 
than  helped. 

Acceptance  dealers  instead  of  stock  exchange  operators  would  then 
be  hurrying  about  to  find  the  means  to  repay  called  loans  and  would 
have  as  a  final  recourse  the  federal  reserve  banks.  This  might  be  in 
line  with  the  frequently  cited  English  practice  but  with  the  difference, 
often  ignored,  that  the  call  market  which  was  being  so  squeezed,  would 
be  neither  dominant  nor  secure.10  In  countries  in  which  the  discount 
market  is  largely  dependent  upon  foreign  trade  bills,  it  is  logical  that 
the  banker's  acceptance  should  predominate.  But  an  imitative  struc- 
tural frame  work  will  not  provide  materials  for  a  solid  edifice  so  far  as 
this  country  is  concerned.  Advocates  of  the  change  may  see  in  it  a 
device  for  encouraging  the  growth  of  acceptances  by  "pouring  in" 
funds  that  were  released  from  stock  exchange  use.  But  this  "pouring 
in"  would  only  follow  to  the  extent  that  profitable  opportunities  for 
investment  offered.  The  acceptance  market  is  quite  as  likely  to  be 
hampered  by  a  lack  of  good  bills  as  by  a  shortage  of  funds. 

A  further  word  should  be  said  in  support  of  the  proposition  that 
loans  against  stock  exchange  collateral  be  made  eligible  for  redis- 
count. It  does  not  follow  that  the  scope  of  collateral  lending  will 
thereby  be  unduly  encouraged.  "Experience  has  demonstrated,"  says 
the  Federal  Reserve  Bulletin  for  October  1919,  "that  the  prohibition 
of  direct  speculative  loans  does  not  of  itself  act  to  prevent  the  indi- 
rect use  of  funds  obtained  from  the  system  for  speculation."  As  a 
matter  of  fact  since  commercial  banking  is  inextricably  bound  up  with 
investment  and  related  speculative  activities,  and  since  it  follows  that 
any  form  of  rediscount  furthers  any  type  of  member  bank  investment 
activity,  there  is  argument  for  permitting  the  reserve  authorities  to 
make  loans  against  securities.  These  loans  might  be  made  at  a  rate  ex- 
pressing a  difference  in  the  desirability  of  the  paper  from  the  point  of 
view  of  liquidity.  Variations  in  the  rate  would  have  a  selective  influ- 
ence and  enable  the  banks  to  keep  their  portfolios  from  becoming  too 
one-sided.    If  this  did  not  serve,  the  banks  could  in  their  judgment  re- 

io  Rovensky,  The  Acceptance  as  the  Basis  of  the  American  Discount  Market.  "In 
every  commercial  country  in  the  world,  the  discount  market  is  based  upon  the  bank 
acceptance  and  the  discount  market  in  turn  is  the  basis  of  the  entire  money  market." 


484  Anna  Youngman  [September 

fuse  to  make  further  loans  if  successive  rate  advances  did  not  dis- 
courage them. 

There  seems  no  reason  why  the  member  banks  should  not  have  the 
right  to  obtain  loans  against  readily  marketable  collateral,  just  be- 
cause the  proceeds  may  be  used  to  further  investment  or  related  specu- 
lative activities.  Whatever  form  rediscounts  may  take,  their  proceeds 
are  used  to  support  a  conglomerate  mass  of  obligations  assumed  by 
member  banks,  which  may  grow  either  out  of  investment  activities  or 
result  from  commercial  loans.  As  Moulton  says,11  "It  will  be  recalled 
from  our  previous  analysis  of  the  relation  of  the  commercial  banking 
system  to  the  financing  of  stock  exchange  speculation,  to  the  outright 
purchase  of  securities,  to  the  making  of  collateral  loans  for  fixed  capi- 
tal purposes  and  to  the  activities  of  investment  bankers  engaged  in  the 
marketing  of  securities,  that  the  funds  of  the  commercial  banking  sys- 
tem constitute  the  support  for  the  entire  financial  fabric,  investment 
and  speculative,  as  well  as  commercial."  The  chief  concern  therefore 
of  the  rediscounting  agency  cannot  be  to  keep  remote  from  all  invest- 
ment activities.  It  cannot  do  that  even  if  it  refuses  to  accept  anything 
but  the  most  unimpeachable  commercial  bills  of  exchange.  What  it 
does  want  to  do  is  to  prevent  if  possible  any  radical  shifting  of  bank 
credit  which  alters  the  proportional  amount  of  accommodation  avail- 
able to  the  different  groups  dependent  upon  the  commercial  banking 
system. 

Only  when  increases  in  loans  obtained  for  investment  purposes,  or 
increases  in  direct  purchases  of  securities  (which  are  in  essence  the 
same)  outstrip  the  accommodation  given  the  commercial  borrower,  is 
there  danger  of  a  break-down  of  the  delicately  poised  economic  struc- 
ture. A  disproportionate  expansion  of  investment  credit  increases  the 
demand  for  goods  already  adapted  to  the  uses  for  which  they  were  in- 
tended; and  on  the  other  hand,  it  reduces,  at  least  relatively,  the  pur- 
chasing power  of  those  engaged  in  the  rapid  transformation  and  trans- 
ference of  goods.  Hence  it  upsets  calculations  as  to  the  direction 
purchasing  power  will  take,  changes  the  values  of  goods,  and  jeopard- 
izes the  repayment  of  many  loans.  To  cut  off  or  reduce  the  investment 
demand  as  compared  with  the  commercial  demand  has  equally  serious 
consequences.  If  people  cannot  obtain  purchasing  power  to  use  for 
buying  all  the  various  commodities  needed  in  furthering  the  process  of 
production,  neither  can  those  persons  who  had  hoped  to  sell  such  com- 
modities after  a  brief  period  of  holding,  get  rid  of  them.  Their  ability 
to  repay  through  transfer  is  destroyed.  As  a  matter  of  fact,  the  pres- 
ent failure  of  investment  demand  has  been  responsible  for  converting 

11  Cf.  Financial  Organization,  p.  633. 


1921]     Changes  in  Discount  Rates  of  Federal  Reserve  Banks         485 

many  so-called  quick  loans  into  slow  assets.  Moreover,  as  the  invest- 
ment demand  is  the  demand  which  pays  for  the  services  of  a  vast  body 
of  producer-consumers,  lack  of  such  demand  has  an  incalculable  effect 
upon  the  "liquidity"  of  all  sorts  of  commercial  loans  based  upon  con- 
sumers' goods  at  various  stages  of  production. 

It  is  useless  to  set  up  an  ideal  type  of  bank  loan  and  by  legislation 
or  through  pressure  exerted  by  rediscounting  agencies  try  to  exclude 
other  types  from  the  portfolios  of  member  banks.  If  it  could  be  done, 
it  would  be  disastrous  and  the  "ideal"  type  of  commercial  bank  loan 
of  which  samples  can  now  be  found,  would,  in  that  event,  cease  to  exist, 
as  the  market  for  "liquid"  commercial  assets  would  be  largely  de- 
stroyed by  the  blow  dealt  to  investment  purchasing  power.  What  is 
needed — and  the  task  is  hard  and  failure  comes  periodically — is  to  at- 
tempt to  maintain  a  balance  among  the  various  types  of  lending  activity 
to  the  end  that  the-  purchasing  power  of  the  community  may  not  be 
sharply  diverted  in  new  directions  or  be  spent  in  disproportionate 
amounts  in  familiar  ways. 

To  sum  up:  it  is  not  believed  that  the  discount  rates  of  the  federal 
reserve  banks  have  so  far  been  used  effectively  as  a  means  of  credit 
control.  If  they  are  to  function  successfully  in  the  future  in  this 
respect,  it  will  be  necessary  not  only  to  keep  the  official  rates  above 
the  market  rates  in  the  chief  money  centers,  but  it  will  also  be  essen- 
tial to  bring  the  market  rates  under  better  control  with  a  view  to  the 
elimination  of  extreme  and  erratic  fluctuations,  such  as  have  been  espe- 
cially pronounced  in  the  call  market.  To  this  end,  it  is  proposed  that 
the  open  market  operations  and  the  rediscounting  activities  of  the  fed- 
eral reserve  banks  be  expanded  in  an  attempt  to  develop  a  discount 
market,  or  rather  discount  markets,  which  will  not  be  based  chiefly 
upon  acceptances — discount  markets,  moreover,  in  which  the  rates  on 
various  classes  of  paper  will  maintain  a  stable  and  fairly  predicable 
relation  to  one  another. 

Anna  Youngman. 
Brooklyn,  N.  Y. 


COMMUNICATIONS 

Shifting  the  War  Burden 

In  his  presidential  address,  published  in  the  March  number  of  the  Ameri- 
can Economic  Review,  Professor  Davenport  restates  the  argument  in  sup- 
port of  the  proposition  that  no  part  of  the  burden  of  a  war  can  be  shifted 
to  future  generations.  The  argument  put  briefly  is  somewhat  as  follows: 
The  future  generation  necessarily  inherits  not  merely  the  burden  of  taxes 
required  to  meet  interest  and  principle  payments  on  the  war  debt,  but  also 
the  interest-paying  and  principle-maturing  bonds.  In  short  no  burden  is 
imposed  upon  the  future  generation  because  the  inheritance  of  war  taxes  is 
balanced  by  the  inheritance  of  bonds.  In  fact  it  would  be  neither  better  nor 
worse  if  the  bonds  were  repudiated  and  the  taxes  wiped  out.  What  is  taken 
out  of  one  pocket  is  paid  into  the  other.  The  whole  burden  of  the  war  there- 
fore falls  entirely  upon  the  present  generation.  It  is  therefore  argued  that 
the  only  possible  shifting  is  a  shifting  of  the  burden  from  the  bond-holding 
class  to  the  other  classes  of  society.  For  the  time  being  the  bond-holding 
class  pays  for  the  war,  but  in  the  end  this  class  gets  back  what  it  paid,  or 
at  any  rate  gets  part  of  it  back  by  taxing  the  masses.  The  burden  is  not 
shifted  to  another  generation;  it  is  shifted  from  one  class  to  another  class. 
Says  Professor  Davenport:  "Solely  in  the  sense  of  this  redistributive 
bearing  on  the  future,  can  burdens  be  passed  on." 

This  argument  is  no  doubt  entirely  sound  when  applied  to  a  static  so- 
ciety, but  the  writer  raises  the  question  whether  it  would  hold  in  a  progres- 
sive society  with  an  increasing  population  and  growing  wealth  and  income. 
An  illustration  will  make  the  point  clear.  Assume  first  a  static  society.  A 
war  is  on.  Mr.  A  buys  $100,000  of  bonds.  His  purchase  of  bonds  is  pro- 
portional to  his  income.  But  for  the  rest  of  his  life  he  is  also  taxed  in  pro- 
portion to  his  income.  At  4%  per  cent  interest  he  receives  each  year  from 
the  government  $4,500,  but  he  also  pays  to  the  government  war  taxes 
amounting  to  $4,500  a  year,  which  taxes  would  have  been  unnecessary  had 
the  bonds  not  been  issued.  In  reality  therefore  the  bonds  are  worth  noth- 
ing to  him.  His  son  inherits  the  bonds,  but  he  also  inherits  the  taxes.  He 
is  neither  worse  nor  better  off  for  the  inheritance.  In  fact  the  situation 
would  have  been  no  whit  different  had  Mr.  A  paid  the  government  $100,- 
000  in  taxes  to  begin  with.  In  that  case  neither  war  taxes  nor  bonds  would 
have  been  inherited. 

Consider  now  the  situation  in  a  progressive  society.  Mr.  A  buys  $100,- 
000  of  bonds,  his  proportional  share.  He  receives  $4,500  in  interest.  Since 
he  is  also  taxed  in  proportion  to  his  income  he  pays  for  the  time  being 
$4,500  in  war  taxes.  But  the  country  is  growing  in  population,  wealth,  and 
income.  At  the  end  of  twenty-five  years  the  income  of  the  people  of  the 
country  has  increased  50  per  cent.     Mr.  A  is  still  taxed  in  proportion  to 


1921]  Communications  487 

his  income.  The  burden  has  not  been  shifted  to  the  masses  in  direct  tax- 
ation. But  the  proportion  of  Mr.  A's  income  to  the  total  national  income  is 
now  smaller.  He  now  pays  in  war  taxes  not  $4,500  but  $3,000.  Since  he 
receives  $4,500  in  interest  on  his  bonds  he  is  $1,500  ahead.  Capitalizing 
this  figure  at  4>y2  per  cent  we  may  say  that  the  net  value  of  his  bonds  is 
now  $33,333.  He  has  in  effect  received  back  $33,333  of  the  $100,000  ad- 
vanced. But  it  cannot  be  said  that  the  burden  has  been  shifted  from  one 
class  to  another  class.  Mr.  A  is  still  paying  his  share  in  proportion  to  his 
income.  The  increase  in  the  income  of  the  nation  as  a  whole  has  assumed 
part  of  the  burden.  Had  no  bonds  been  issued,  that  income  would  have 
borne  no  burden  whatever.  It  now  bears  a  burden.  The  burden  carried  by 
the  bondholders  originally  has  therefore  been  correspondingly  reduced.  In 
short,  is  it  not  possible  that  the  burden  can  in  a  progressive  society  be 
shifted  to  the  future  without  that  redistribution  as  between  classes  men- 
tioned by  Professor  Davenport? 

If  it  is  assumed  that  proportional  taxation  is  not  equitable,  progressive 
taxation  may  be  substituted  without  in  any  way  modifying  the  argument.  In 
that  case  it  will,  of  course,  be  assumed  that  the  amount  of  bonds  purchased 
would  also  be  progressively  greater  the  larger  the  income. 

Alvin  H.  Hansen. 

The  University  of  Minnesota. 

Integration  in  Marketing 

In  the  March  number  of  this  Review,  Mr.  L.  D.  H.  Weld,  of  Swift  & 
Co.,  presents  some  criticisms  of  my  article  on  "Integration  in  Marketing," 
which  appeared  in  the  September  number.  His  criticisms  for  the  most 
part  imply  such  a  misrepresentation  of  my  position,  that  a  brief  reply  is 
called  for.  He  states  that  my  point,  that  the  need  of  introducing  new  and 
expensive  methods  of  marketing  tends  toward  integrated  marketing,  is  de- 
signed to  create  the  "wrong  impression."  On  the  contrary,  this  point  tends 
to  justify  the  packers  and  the  Standard  Oil  Company  to  the  extent  that 
they  undertook  to  introduce  desirable  marketing  methods  because  the  estab- 
lished agencies  were  not  prepared  to  adopt  the  more  expensive  devices 
required. 

Again,  I  am  taken  to  task  for  stating  that  many  small  packers  market  as 
cheaply  as  the  large  packers.  His  criticism  that  the  small  packer  does  a 
local  business  and  cannot  be  compared  with  the  larger  packer  does  not 
apply,  for  I  specifically  mentioned  as  an  illustration  of  the  smaller  packers 
the  Cudahy  Company,  the  scope  of  whose  operations  is  comparable  with  that 
of  Swift  and  Company,  although  the  latter  is  several  times  larger.  My 
point  was  and  is  that  the  packer  may  be  large  enough  to  perform  the  essen- 
tial operations  of  marketing  surplus  livestock  products  without  being  as  large 


488  Communications  [September 

(overgrown)  as  Armour  and  Swift  are.  In  the  same  way,  my  point  that 
the  large-scale  operations  of  some  wholesale  grocers  are  not  based  on  eco- 
nomic efficiency  in  marketing  is  misrepresented.  My  point  is,  not  that 
these  large-scale  operations  are  necessarily  uneconomic,  but  that  the  small 
wholesaler  often  can  and  does  make  as  high  a  rate  of  profit  as  the  large 
one.  Mr.  Weld  is  mistaken  in  his  statement  that  the  small  jobber  cannot 
market  a  line  of  canned  goods  under  his  own  label,  for  many  relatively  small 
jobbers  do  this. 

The  criticism  ends  with  a  protest  against  references  to  "excessive  adver- 
tising" and  to  "public  benefit"  and  wasteful  methods  of  competition,  saying 
that  these  references  tend  to  inflame  prejudices  and  suspicions.  I  men- 
tioned as  a  case  of  excessive  advertising  a  two-page  display  in  the  Satur- 
day Evening  Post  setting  forth  in  two  colors  the  picture  of  a  platter  of 
ham  and  eggs.  This  seems  sufficiently  specific,  and  I  believe  few  will  deny 
that  a  line  can  be  drawn  between  those  advertisements  which  are  calcu- 
lated to  develop  a  market  for  new  commodities  and  those  which  are  purely 
acquisitive  and  apply  to  well  established  commodities.  Large  expenditures 
for  the  latter  class  of  advertisements  may  not  be  for  the  public  benefit. 

Mr.  Weld  attacks  my  implication  that  the  expenses  of  a  mail-order  house 
for  handling  groceries  are  similar  to  the  average  for  its  entire  business. 
This  is  a  matter  which  requires  further  study  and  more  exact  information. 
Meanwhile  it  is  something  definite  to  know  that  the  cost  of  marketing 
groceries  via  wholesaler  and  retailer  is  about  the  same  as  the  cost  of  all 
marketing  by  mail-order  houses,  in  spite  of  the  greater  services  given  by 
the  former  channel. 

It  is  stated  that  I  omit  what  is  perhaps  the  most  important  reason  for 
integration  in  marketing — perishability  of  products.  This  point  is  covered 
in  my  classification  under  the  need  for  introducing  new  and  expensive 
marketing  methods.  The  refrigerator  car  was  the  method  required  by  the 
meat  packers  and  it  was  required  on  account  of  the  perishability  of  meat. 
The  statement  that  the  marketing  of  cheese  has  been  taken  over  largely  by 
the  meat  packer,  because  the  wholesale  grocer  did  not  have  the  facilities  for 
handling  this  perishable  product,  is  indicative  of  the  attitude  of  the  meat 
packers  toward  the  government's  investigation  of  their  business.  A  study 
of  the  Federal  Trade  Commission's  report  on  this  subject  will  convince  any 
unbiased  reader  that  the  packers  have  acquired  the  cheese  business  as  a  re- 
sult of  other  forces  than  those  which  arise  from  the  semi-perishability  of  this 
product. 

In  concluding,  I  would  call  attention  to  the  statement  that  in  1919  Swift 
and  Company  spent  less  than  one  fourth  of  one  per  cent  of  its  sales  on  ad- 
vertising. This  is  the  same  device  which  the  packers  have  used  in  their 
endeavor  to  convince  the  public  that  their  profits  are  small.  As  I  recall, 
Swift  and  Company  was  reported  to  be  spending  something  like  $2,500,000 


1921]  Communications  489 

on  advertising,  which  does  not  appear  so  small.  Moreover,  if  the  packer's 
entire  net  profit  is  only  something  less  than  2  per  cent  on  sales,  it  should  be 
apparent  that  .4  of  one  per  cent  is  a  very  large  fraction  of  their  total  net 
earnings. 

After  careful  reflection  on  Mr.  Weld's  criticism  I  am  inclined  to  maintain 
without  change  my  judgment  that  there  is  such  a  thing  as  "excessive  ad- 
vertising," that  it  has  been  a  potent  factor  in  bringing  about  integration  of 
marketing,  and  that  integration  so  brought  about  does  not  represent  any 
"public  benefit." 

Lewis  H.  Haney. 

New  York  University. 


REVIEWS  AND  NEW  BOOKS 

General  Works,  Theory  and  Its  History 

NEW  BOOKS 

Aslanian,  D.  Les  principes  de  I 'evolution  sociale.  I.  La  cinimatique.  II. 
La  dynamique.     (Constantinople-Pera:   D.  Valery.     1921.     Pp.  29;  32.) 

Burton,  E.  D.  and  Park,  E.  J.  Introduction  to  the  study  of  sociology. 
(Chicago:   Univ.  of  Chicago  Press.     1921.) 

Burch,  H.  R.  American  economic  life,  in  its  civic  and  social  aspects.  (New 
York:    Macmillan.     1921.     Pp.  viii,  533.) 

This  brief  elementary  text,  a  revision  of  Dr.  Burch's  Elements  of  Eco- 
nomics, seems  capable  of  guiding  the  student  successfully  through  a  mass 
of  bookish  material,  with  satisfaction  in  the  process.  The  language  has 
the  ease  and  concreteness  of  conversation  yet  is  scholarly  and  mature. 
The  elements  of  economics  are  here  considered  as  the  problems  of  con- 
sumption, production,  exchange,  distribution,  and  economic  reform.  Every 
chapter  is  preceded  by  an  outline  of  its  contents,  and  followed  by  ques- 
tions on  the  material  studied,  questions  for  discussion,  and  library  ref- 
erences. The  civic  and  social  factors  of  American  life  are  also  empha- 
sized.    The  book  impresses  one  as  a  model  of  the  art  of  teaching. 

Amelia  C.  Ford. 

Coni,  E.  A.  Las  tierras  en  economia  politica.  Ensayo  de  diferenciacion 
tecnica,  econdmica  y  social.  (Buenos  Aires:  Imprenta  Mercatali,  calle 
Jose  A.  Terry  285.     1920.    Pp.  22.) 

Cunnison,  J.  Economics.  (New  York:  Dutton.  1920.  Pp.  xv,  168.  $2.) 
Despite  its  publication  in  the  United  States  this  little  volume  is  a  Brit- 
ish book.  The  author  is  a  lecturer  in  social  economics  at  the  University  of 
Glasgow.  The  title  is  rather  pretentious  for  so  brief  a  treatise,  but  the 
author  confines  himself  to  the  discussion  of  production  in  part  I,  The 
Making  of  Wealth;  of  distribution  in  part  II,  The  Wealth  of  the  Indi- 
vidual— Earning  and  Spending;  and  in  part  III,  The  Question  of  the 
System,  he  discusses  the  question  of  the  limits  of  state  intervention. 
Throughout  the  style  is  closely  packed  and  unadorned.  Much  matter  is 
compressed  into  few  words. 

Part  III  is  concerned  with  what  ought  to  be,  and  regards  "with  conT 
siderable  doubt  the  easy  optimism  which  suggests  that  freedom  of  enter- 
prise leads  to  a  just  and  smoothly  working  system."  The  facts  of  unem- 
ployment show  that  production  does  not  accommodate  itself  quickly  to 
change  in  demand  as  indicated  by  prices  and  wages.  And  prices  are  not 
a  true  measure  of  worth  but  of  wants  combined  with  means.  "A  rich 
lady  would  be  willing  to  pay  more  for  food  for  her  dog  than  a  poor  man 
for  food  for  his  child."  Such  failures  justify  the  public  control  of  mon- 
opolies, labor  legislation,  social  insurance,  and  the  Poor  Law.  Lastly  the 
text  considers  the  regulation  of  industry  in  war  time  and  after,  conclud- 
ing that  government  control  "was  intended  to  apply  only  so  long  as  ex- 
ceptional conditions  lasted"  and  "implied  no  loss  of  faith  in  the  efficacy  of 
free  economic  forces,  in  normal  times,  to  bring  about  the  best  results." 
A  via  media  is  found  between  crude  individualism  on  the  one  hand  and 


1921]  General  Works,  Theory  and  Its  History  491 

absolute  government  control  on  the  other  in  a  conception  of  state  action 
to  "promote  conditions  of  equality."  This  is  illustrated  by  the  develop- 
ment of  a  peculiar  legal  status  for  the  trade  unions  which  places  them  on 
a  footing  of  equality  with  the  employers. 

A  student  having  need  of  a  concise  statement  of  the  essentials  of  eco- 
nomic theory  will  find  this  a  useful  little  book.  Not  the  least  of  its  merits 
lies  in  the  author's  clear  apprehension  and  constant  application  of  his 
discussion  to  questions  of  human  welfare.  C.  E.  P. 

Edie,  L.     Economics  considered  as  a  social  science.     Edited  by  Seba  El- 
dridge.     (New  York:    Crowell.     1921.) 

Gobbi,  U.  La  scienza  economica  de  la  crisi  sociale.    (Milan:   Hoepli.    1921.) 

Guenther,   A.     Krisis   der   Wirtschaft   und   der   Wirtschaftswissenschaft. 
(Dresden:   Sybillen-Verlag.     1921.     9  M.) 

Kirkaldy,  A,  W.     Wealth:  its  production  and  distribution.      (New  York: 
Dutton.     1920.    Pp.  147.    $2.25.) 

This  is  the  introductory  volume  of  a  series,  being  published  under  the 
general  editorship  of  G.  Armitage  Smith,  which  is  to  cover  trade,  com- 
merce, exchange,  and  finance.  This  first  book  is  "designed  to  explain  in 
a  lucid  and  popular  manner  the  fundamental  facts  in  the  production  of 
Wealth  and  the  causes  which  regulate  distribution."  Little  emphasis  is 
placed  on  matters  of  production  which  are  disposed  of  along  with  the  his- 
torical stages  of  man's  development,  the  problems  of  money  and  money 
lending,  the  mercantile  system,  preliminary  definitions,  and  other  matters, 
in  the  first  thirty  pages.  The  remaining  space  is  given  to  three  chapters 
on  land,  labor  and  capital  as  factors  in  production.  The  doctrines  pre- 
sented can  be  briefly  indicated:  "Theoretically  the  amount  of  what  is 
produced  that  can  be  claimed  by  the  labour  force  we  have  just  considered, 
is  the  whole  body  of  wealth  produced  after  the  shares  due  to  land  and 
capital  have  been  deducted.  The  amount  due  to  land  depends  on  the  fer- 
tility or  utility  of  the  land;  that  due  to  capital  is  the  market  rate  of 
interest  together  with  an  addition  proportionate  to  the  risk  involved  in  the 
industry  in  which  it  is  employed.  In  some  cases  the  risk  may  be  small, 
in  others  it  may  be  considerable.  This  insurance  against  risk  requires 
careful  consideration.  For  instance,  the  risk  increases  when  producers  do 
not  cooperate  harmoniously,  and  production  is  thereby  hampered"  (pp. 
73-74). 

It  is  difficult  to  conceive  what  service  a  treatment  so  brief  and  discur- 
sive, not  to  say  superficial,  can  render.  It  is  certainly  not  fitted  for  a 
text  and,  while  its  preachments  with  their  complacent  defence  of  things 
as  they  are.  may  find  favor  in  certain  quarters,  its  doctrines,  however 
pleasantly  presented,  cannot  be  said  to  furnish  a  dependable  chart  of  the 
pathway  of  progress.  C.  E.  P. 

Turgeon,  C.  La  valeur  d'apres  les  economistes  anglais  et  frangais  depuis 
Adam  Smith  et  les  physiocrates  jusqu'a  nos  jours.  (Paris:  Recueil  Sirey. 
1921.     25  fr.) 

Watts,  F.  An  introduction  to  the  psychological  problems  of  industry. 
(London:  Allen  &  Unwin.     1921.     12s.  6d.) 

Worms,  R.     Philosophic  des  sciences  sociales.     Vol.  III.    Conclusions  des 


492  Reviews  and  New  Books  [September 

sciences  sociales.     Second  edition  revised.     (Paris:    Giard.     1920.     Pp. 
802.) 

Economic  History  and  Geography 

The  Yorkshire  Woollen  and  Worsted  Industries.  By  Herbert  Heaton. 
Oxford  Historical  and  Literary  Studies,  Vol.  X.  (Oxford:  Clar- 
endon Press.     1920.     Pp.  x,  457.) 

This  careful  monograph  is  the  first  exhaustive  study  of  any  of  the 
great  textile  districts  of  England.  Important  contributions  to  the  his- 
tory of  some  of  the  districts  have  been  made  by  the  writers  in  the  vol- 
umes of  the  Victoria  County  History,  notably  by  Professor  Unwin  and 
Miss  Sellars,  but  even  the  best  chapters  in  the  county  histories  fail  to 
exhaust  the  rich  material  that  we  now  know  is  available.  Mr.  Heaton 
has  made  good  use  of  local  manuscripts  and  printed  records,  so  that 
little  remains  to  be  done  for  Yorkshire. 

Mr.  Heaton  has  made  no  attempt  to  describe  the  changes  in  the  in- 
dustry in  the  nineteenth  century.  The  narrative  is  brought  down  to 
the  beginning  of  the  transformation  wrought  by  the  Industrial  Revolu- 
tion, but  for  the  later  history  the  reader  is  referred  to  the  work  of 
Mantoux,  Clapham,  and  the  Hammonds.  It  was  a  wise  decision  thus 
to  avoid  the  complex  problems  of  the  recent  period,  but  it  is  to  be  hoped 
that  writers  whose  interests  are  chiefly  in  the  nineteenth  century  will 
make  good  use  of  Mr.  Heaton's  study.  The  eighteenth  century  appears 
in  very  different  guise  according  as  it  is  treated  as  the  "good  old  time" 
prior  to  the  wage  slavery  of  the  Industrial  Revolution  or  as  the  period 
in  which  the  outlived  fabric  of  the  feudal  order  was  sloughed  off.  Full 
knowledge  of  the  past,  in  this  case  as  in  others,  reveals  substantial 
discomforts  and  difficulties  that  can  be  easily  forgotten  when  the  past 
is  made  to  serve  merely  as  a  decorative  back-drop  for  the  tragedy  of 
the  present  day.  Historians  will  not  be  surprised  to  find  that  Mr. 
Heaton  discovered  a  social  order  that  differs  in  many  respects  from  the 
idyl  so  frequently  drawn  of  the  "spinners  in  the  sun."  "There  was 
much  in  the  cottage  industry,"  he  says,  "which  was  quite  as  unhealthy 
as  the  conditions  in  the  early  factories."  Dye  vats,  foul  dyestuffs, 
charcoal  stoves  for  heating  combs,  low  ill-ventilated  rooms,  all  contained 
elements  of  danger  that  were  only  in  part  counteracted  by  the  oppor- 
tunities for  outdoor  life  in  the  intervals  between  the  spells  of  industrial 
work  (p.  349). 

We  find  also  this  judgment  of  the  old  craft  industry  (pp.  350-351)  : 

The  Industrial  Revolution  has  been  accused  of  having  destroyed  man's 
joy  in  labour,  and  of  depriving  him  of  that  pleasure  which  he  is  supposed 
to  have  experienced  from  working  in  his  own  home,  at  something  which 
was  entirely  the  work  of  his  own  hands.     But  the   Industrial  Revolution 


1921]  Economic  History  and  Geography  498 

never  destroyed  any  such  joy  and  pleasure  in  the  textile -industry,  simply 
because  they  never  existed.  The  trivial  round  and  common  task  of  the 
eighteenth  century  worker  was  drab  and  monotonous,  and  he  would  be  in- 
tensely amused  if  he  could  realize  the  glamour  which  has  been  cast  today 
over  his  dreary  toil. 

Although  the  ground  of  the  study  has  been  worked  over  by  many 
hands  there  is  much  in  the  book  that  is  distinctively  new.  Some  of  the 
author's  work  upon  new  sources  of  information  has  already  been  given 
to  the  public  in  periodical  articles,  though  many  of  these  have  doubt- 
less had  a  restricted  circulation.  Examination  of  the  early  rolls  of 
freemen  has  thrown  light  upon  the  perplexed  question  of  Flemish  im- 
migration in  the  early  fourteenth  century.  The  development  of  the 
gilds  is  traced  with  care  from  sources  only  recently  printed.  The  or- 
ganization of  the  crafts  in  the  Stuart  period  is  very  well  described  from 
new  materials.  The  ulnage  accounts,  which  have  been  utilized  in  part 
by  others,  have  been  examined  in  their  entirety  for  York.  For  pur- 
pose of  comparison,  the  accounts  for  the  other  counties  have  been  tabu- 
lated for  the  year  nearest  1470,  giving  us  our  first  genuine  knowledge  of 
the  relative  importance  of  the  various  textile  areas.  The  history  of 
the  cloth  halls  is  complete,  thanks  to  the  manuscript  of  the  trustees  of 
the  White  Cloth  Hall.  The  statutes  and  the  quarter  sessions  books 
supply  material  for  a  complete  description  of  state  regulation  of  the 
industry  during  the  eighteenth  century.  In  addition  to  these  longer 
passages  that  are  largely  if  not  entirely  new,  there  are  many  small 
items  that  are  frequently  of  substantial  importance,  though  it  is  impos- 
sible to  refer  to  them  in  a  brief  notice. 

The  description  of  the  organization  of  the  industry  is  detailed  and 
interesting,  but  the  terminology  used  in  classifying  the  various  forms 
of  organization  is  not  satisfactory.  Mr.  Heaton  expressed  dissatis- 
faction with  the  term  "domestic  system,"  but  he  suggests  no  solution. 
"The  suggested  alternative,"  he  says,  "  'commission  system,'  is  open  to 
criticism,  and  it  seems  impossible  to  invent  a  really  adequate  title  to 
describe  in  a  couple  of  words,  the  distinctive  characteristics  of  the  in- 
dustrial society  that  came  between  the  gild  and  the  factory"  (p.  89). 
It  is  unfortunate  that  the  German  classification  of  the  industrial  forms 
has  made  so  little  impression  upon  English  writers.  It  is  not  necessary 
to  invent  a  term;  literal  translation  of  the  German  "Verlagssystem" 
yields  an  unmistakable  term, — putting-out  system.  This  phrase  is 
perhaps  not  elegant,  but  it  has  no  misleading  connotations  and  is  so 
close  to  the  English  idioms  of  the  trade  that  it  is  in  no  sense  forced  in 
meaning.  Had  such  a  term  been  used,  Mr.  Heaton  would  scarcely  have 
failed  to  recognize  the  significance  of  the  difference  in  the  scale  of 
operations  that  existed  between  the  small  clothiers  of  Yorkshire  and 


494  Reviews  and  New  Books  [September 

the  large  clothiers  of  the  west  of  England.  The  emphasis  upon  the 
putting  out  of  work  by  a  capitalist  employer  would  have  forced  him  to 
distinguish  between  the  craft  work  of  the  small  master  and  the  capital- 
istic system  that  grew  up  with  the  progress  of  the  division  of  labor. 
The  growth  is  sketched  in  some  detail  in  connection  with  the  description 
of  conditions  at  the  close  of  the  eighteenth  century,  but  the  distinction 
between  craft  industry  and  the  putting-out  system  is  denied  in  an 
earlier  passage.  The  value  of  the  text  is  not  impaired  by  this  slight 
confusion  in  terminology,  but  an  opportunity  was  lost.  Careful  at- 
tention to  terms  might  have  done  much  towards  a  clarification  of  Eng- 
lish usage  in  a  matter  that  is  of  great  moment  in  the  presentation  of 
industrial  history. 

Abbott  Payson  Usher. 
Boston  University,  College  of  Business  Administration. 

The  Enclosure  and  Redistribution  of  Our  Land.  By  W.  H.  R.  Cubt- 
leb.     (Oxford:   The  Clarendon  Press.     1920.    Pp.  viii,  334.) 

The  general  reader  of  English  economic  history  will  welcome  this 
volume  as  a  much  needed  complement  to  A  Short  History  of  English 
Agriculture,  by  the  same  author,  for  in  the  earlier  volume  the  reader 
is  likely  to  feel  the  need  of  a  more  complete  account  of  the  peculiarities 
of  English  land  tenure  as  a  background  for  an  understanding  of  the 
historical  development  of  English  agriculture.  There  is  a  certain 
amount  of  overlapping  in  the  two  volumes,  more  especially  with  regard 
to  land  tenure.  Likewise,  from  the  standpoint  of  the  general  reader, 
Professor  Curtler's  new  book  may  fill  the  need  for  a  continuous  history 
of  English  land  tenure  from  the  early  Saxon  period  to  and  including 
the  Small  Holdings  and  Allotment  act  of  1908.  Teachers  of  economic 
history  will  find  the  book  useful  for  supplementary  reading  because  of 
the  clarity  of  style  and  the  care  with  which  the  author  has  either 
avoided  technicalities  or  has  made  them  clear  to  the  general  reader  by 
careful  definition — a  most  welcome  characteristic  to  many  American 
readers  when  first  encountering  the  intricacies  of  English  land  tenure. 

However,  from  the  standpoint  of  the  technical  student,  the  book  is 
not  and  does  not  purport  to  be  a'complete  and  continuous  history  of 
English  land  tenure.  The  central  theme,  as  suggested  by  the  title,  is, 
on  the  one  hand,  the  processes  of  enclosure  and  engrossment  and,  on  the 
other  hand,  the  movements  and  policies  designed  to  modify  the  effects 
of  these  earlier  processes  by  redistributing  the  land. 

As  introductory  to  the  history  of  the  enclosure  movement,  the  author 
devotes  seven  chapters  to  a  description  of  the  manorial  system  and  the 
common  field  system  as  existing  before  modified  by  enclosure  and  other 
changes. 


1921]  Economic  History  and  Geography  495 

In  this  portion  of  the  book,  the  author  does  not  pretend  to  break  new 
ground.  In  the  preface  he  states :  "In  the  early  part  I  have,  in  order 
to  present  a  consecutive  story,  trodden  well  worn  ground,  and  where 
Vinogradoff,  Maitland,  Ashley,  Seebohm,  Slater,  Gonner,  Tawney,  Gray 
[H.  L.],  and  others  have  worked  there  is  little  that  is  fresh  to  be  dis- 
covered. I  have,  therefore,  relied  largely  on  their  guidance,  which  is 
freely  acknowledged  in  the  text." 

The  general  reader  will  appreciate  this  summary  of  the  latest  results 
of  research  in  this  difficult  field  and  particularly  the  pains  the  author 
has  taken  to  clarify  the  subject  by  careful  definitions.  Sometimes  this 
very  clarity  leads  the  author  to  indulge  in  doubtful  generalizations. 
Among  these  may  be  noted  the  statement  on  page  2,  "Enclosure  and  the 
consolidation  of  holdings  was  unanimously  desired  and  no  sign  of  op- 
position was  evinced,"  although  plenty  of  evidence  of  such  opposition 
both  on  the  part  of  persons  affected  and  on  the  part  of  contemporary 
writers  on  the  common  field  system  is  presented  in  other  portions  of  the 
book.  Also  questionable  is  the  statement  on  page  23:  "We  may, 
perhaps,  look  on  the  gafol  gelder,  the  gereat,  and  the  gebur  as  the 
representatives  of  the  ceorls  of  JEthelbert's  laws;  the  former  having 
maintained  his  position,  the  second  deteriorated  somewhat,  and  the 
third  deteriorated  to  a  greater  extent."  It  may  be  asked  whether  it  is 
not  probable  that  laetmen  of  iEthelbert's  time  were,  to  a  considerable 
extent,  the  prototypes  of  the  geburs? 

The  second  main  division  of  the  book,  including  two  thirds  of  the 
total  number  of  pages,  is  devoted  to  the  history  of  the  enclosure  move- 
ment from  the  early  pre-Tudor  instances  of  consolidation  to  the  close 
of  the  nineteenth  century.  So  far  as  the  Tudor  enclosure  movement  is 
concerned,  the  writer  has  relied  on  the  results  of  researches  by  Tawney, 
H.  L.  Gray,  Gonner,  Slater,  Gay,  Johnson,  and  others.  One  gets  the 
impression,  however,  that  the  author  is  acquainted  with  the  sources, 
which  he  has  drawn  on  freely  for  illustrative  material.  In  the  study 
of  the  later  enclosure  movement,  particularly  the  parliamentary  en- 
closures, he  has  entered  a  much  less  thoroughly  explored  territory  and 
the  125  pages  devoted  to  this  period  gives  evidence  of  intensive  research. 
The  author's  real  contributions  on  the  subject  consist  in  his  detailed 
description  of  the  modus  operandi  of  enclosure  both  under  the  private 
acts  and  under  the  general  acts  of  Parliament  and  in  his  critical  dis- 
cussion of  the  effects  of  enclosure  and  of  the  responsibility  of  the  land- 
lord class  for  the  movement. 

The  discussion  of  the  methods  of  bringing  about  enclosure  is  simpli- 
fied by  a  classification  of  the  kinds  of  enclosure  and  the  methods  of 
enclosure  (pp.  81-83).  The  description  of  enclosure  by  private  acts 
gives  the  impression  that  the  movement,  in  spite  of  its  abuses,  was  a 


496  Reviews  and  New  Books  [September 

systematic  program  of  land  utilization  and  community  planning,  based 
on  a  careful  land  classification  and  survey.  Considerable  foresight  was 
exercised  in  planning  public  roads,  setting  aside  quarries  for  the  im- 
provement of  the  roads,  and  at  a  later  time  providing  recreation 
grounds  and  other  public  utilities.  The  private  acts  are  by  no  means 
a  series  of  isolated  and  unrelated  policies,  but  as  early  as  1760  had  at- 
tained a  fairly  regular  form.  The  author  discusses  in  detail  the  ex- 
pense of  enclosure.  He  concludes  that  the  direct  expenses  averaged 
about  £1  per  acre,  but  the  indirect  expenses,  such  as  interior  fencing, 
readjustment  of  buildings,  and  construction  of  private  roads  and  drains 
were  much  heavier.  In  short,  the  indirect  expenses  probably  amounted 
frequently  to  ten  times  the  direct  expenses.  The  poorer  farmers  with- 
out suitable  credit  were  compelled  in  large  numbers  to  relinquish  their 
allotments  through  inability  to  finance  the  expense  of  enclosure,  even 
though  the  increase  in  some  of  the  holdings  resulting  therefrom  was 
usually  much  greater  than  the  expense.  In  reading  the  account  one  is 
inclined  to  regret  that  the  enclosure  acts  were  not  supplemented  by 
some  system  of  public  credit  for  refunding  the  expenses  falling  to  the 
share  of  the  small  holders.  As  to  the  equity  of  the  process  of  enclosure 
by  private  act,  the  author  concludes,  "In  spite  of  some  favoritism,  there 
is  no  reason  to  think  that  the  commissioners  behaved  with  the  partiality 
often  attributed  to  them  and  on  the  whole  they  did  their  work  honestly 
and  impartially"  (p.  159). 

The  author's  attitude  toward  enclosures,  and  indeed  toward  allot- 
ments and  small  holdings,  must  be  gauged  in  part  by  his  evident  "soft- 
ness" toward  the  large  landlord  class.  Many  passages  in  the  book  re- 
flect his  impatience  of  the  prevalent  modern  tendency  to  blame  this 
class  with  the  economic  ills  of  England.  It  would  be  possible,  if  space 
permitted,  to  cite  many  passages  which  reflect  this  attitude.  A  single 
passage  may  be  quoted  for  illustration :  "Few  will  have  sympathy  with 
those  who  represent  English  landlords  as  engaged  in  a  long  sustained 
Machiavellian  plot  to  deprive  the  poor  man  of  his  land,  for  such  a 
charge  shows  ignorance  both  of  history  and  of  the  character  of  English- 
men but  the  sin  of  ignoring  the  moral  claims  of  the  poor  on  enclosure, 
must  on  the  whole  be  laid  to  their  charge"  (p.  245).  In  view,  how- 
ever, of  the  author's  admission  in  the  latter  part  of  the  quotation  and 
of  other  admissions  that  landlords  employed  high  handed  methods, 
albeit  commonly  by  legal  procedure,  that  they  were  for  the  most  part, 
prime  movers  in  the  process  and  that  they  were  largely  moved  by  eco- 
nomic self  interest,  it  is  difficult  to  see  that  he  has  made  out  a  favorable 
case,  except  probably  to  show  that  the  process  of  enclosure  far  ex- 
ceeded the  disadvantages,  however  selfish  may  have  been  the  impelling 


1921]  Economic  History  and  Geography  497 

motives,  and  that  enclosure  should  not  be  charged  with  some  of  the  evils 
commonly  attributed  to  it. 

On  the  question  of  the  advantages  and  disadvantages  of  the  enclosure 
movement,  the  author  must  be  credited  with  many  passages  of  well  bal- 
anced discussion.  In  the  first  place  he  attempts  to  exonerate  the  en- 
closure movement  from  entire  responsibility  for  the  disappearance  of 
small  holders,  recognizing  that  small  holders  (freeholders,  copyholders, 
and  tenants)  were  a  numerous  and  a  relatively  important  class  at  the 
beginning  of  the  eighteenth  century.  He  attributes  the  decline  in  their 
relative  numbers  to  other  causes  as  well  as  to  enclosure,  including  the 
development  of  commercial  and  competitive  agriculture,  the  over-valu- 
ation of  land  as  a  result  of  the  desire  of  the  newly  rich  to  acquire  the 
social  prestige  of  estate  ownership,  the  disappearance  of  cottage  by- 
industries,  and  the  doctrine  of  the  profitableness  of  large-scale  owner- 
ship which  accompanied  the  predominance  of  grain  farming.  In  fact, 
the  author  believes  that  had  the  present  urban  demand  for  dairy  pro- 
ducts, eggs,  fruits,  and  vegetables  existed  during  the  period  of  rapid 
enclosure,  a  much  larger  number  of  small  holdings  probably  would  have 
survived. 

As  to  the  improvement  in  economic  efficiency  attributable  to  en- 
closure, the  author  makes  a  convincing  case.  He  has  also  assembled 
significant  data  to  show  that  the  commons  had  become  an  anachronism. 
After  the  system  of  village  control  and  regulation  of  the  commons  had 
passed  away,  the  commons  became  a  public  nuisance — the  refuge  of  the 
idle  and  criminal,  the  occasion  of  innumerable  disputes,  and  altogether 
a  wasteful  method  of  using  the  land.  In  this  case,  the  author  makes 
bold  to  say  that  "opinions  of  most  modern  writers  on  the  subject,  who 
lament  the  loss  of  the  commons,  are  engendered  in  the  closet"  (p.  224). 
However,  it  is  admitted  that  many  deserving  persons  suffered  loss 
through  enclosure  of  the  commons,  and  particularly  those  who  had  a 
moral  rather  than  a  legal  right  to  their  use.  "This  is  the  great  blot 
on  the  enclosure  movement — the  failure  to  make  compensation  for  the 
moral  loss  suffered  by  the  deserving  commoners.  Many  of  the  best 
men  of  the  day — Sinclair,  Young,  and  others — urged  that  this  should 
be  done,  and  in  a  few  cases  it  was  done;  but  in  the  great  majority  it 
was  not"  (p.  245). 

The  discussion  of  the  small  holdings  and  allotments  movement  in  the 
last  four  chapters  is  a  sequel  to  the  discussion  of  foreclosures:  it  is 
shown  that  as  a  means  of  mitigating  the  hardships  incident  to  en- 
closure, many  private  landlords  provided  allotments  for  laborers.  The 
author  traces  the  beginning  of  this  movement  to  the  early  part  of  the 
eighteenth  century.  By  1887  there  were  749,309  working  men  in  Eng- 
land and  Wales  who  had  allotments  out  of  a  total  of  about  850,000 


498  Reviews  and  New  Books  [September 

agricultural  laborers  in  the  preceding  year.  While  not  all  of  those 
provided  with  allotments  at  that  date  were  agricultural  laborers,  it  is 
probable  that  a  large  proportion  of  the  agricultural  laborers  of  the 
country  were  not  landless,  and  the  author  believes  that  this  result  had 
largely  been  accomplished  by  the  voluntary  action  of  large  landowners. 
In  fact,  the  allotment  legislation  from  1782  to  1887  had  been  generally 
incident  to  poor  relief  and  on  the  whole  unsuccessful. 

For  the  most  part,  the  author's  attitude  toward  allotments  is  favor- 
able, but  he  is  extremely  doubtful  of  the  advantages  of  small  holdings 
and  particularly  of  the  success  of  small  holdings  created  by  legislation. 
The  success  of  small  holdings  in  the  days  of  Gregory  King  is  attribut- 
able to  the  fact  that  agriculture  was  largely  self  sufficing  and  free 
from  keen  competition  and  to  the  advantage  of  by-industries.  It  is 
probable  that  the  creation  of  small  holdings  by  legislation  implies  in 
part  a  substitution  of  an  uneconomical  for  an  economical  scale  of  or- 
ganization. "Moreover,  against  the  'magic'  of  property  is  put  the 
'poison'  of  property — whereby  a  man  is  led  to  sacrifice  everything, 
even  his  health,  to  his  land  and  his  crops"  (p.  265  note).  Supple- 
menting the  tendency  of  legislation  for  small  holdings  the  author  points 
to  the  marked  tendency  for  landlords  voluntarily  to  subdivide  and  sell 
their  estates,  which  are  largely  being  purchased  by  their  tenants.  More 
than  one  third  of  the  land  of  England  had  thus  changed  hands  in  the 
ten  years  preceding  1919.  In  these  ways  the  results  of  the  enclosure 
and  engrossment  processes  are  being  reversed. 

Lewis  C.  Geay. 

new  BOOKS 
Bachi,  R.     L'ltalia  economica  nel  1919.     Anno  XI.      (Milan:     Soc.  Ed. 
Dante  Alighieri.      1920.     Pp.  xii,  476). 

The  first  year  of  peace  in  Italy,  hailed  as  a  year  likely  to  restore  at 
least  the  semblance  of  pre-war  conditions,  was  an  epoch  of  grave  dis- 
orders. Inflation  of  the  currency  was  at  once  the  effect  and  the  cause 
of  profound  trouble.  The  latest  edition  of  Bachi's  annual  follows  the 
course  of  these  changes  and  indicates  Jhe  specific  forms  they  took  in  mat- 
ters of  trade,  banking,  prices,  production,  labor,  transportation  and  pub- 
lic finance,  together  with  the  activities  of  the  various  classes  of  associa- 
tion (industrial,  labor,  etc.)  of  the  nation.  A  feature  new  with  the  cur- 
rent volume  is  a  considerable  section  dealing  with  the  economic  conditions 
and  problems  of  Julian  Venetia. 

R.  F.  Foerster. 

Baker,  C.  W.  Government  control  and  operation  of  industry  in  Great 
Britain  and  the  United  States  during  the  world  war.  Carnegie  Endow- 
ment for  International  Peace.  Preliminary  economic  studies  of  the  war, 
no.  18.     (New  York:    Oxford  Univ.  Press.     1921.     Pp.  v,  138.) 

Buckle,  K.  China,  Wirtschaft  und  Wirtschaftsgrundlagcn.  (Berlin: 
Vereinigung  Wissensch.  Verlcger.     1921.     36  M.) 


1921]  Economic  History  and  Geography  499 

Bresciani-Turroni,  C.  La  politico  commerciale  dell'  Italia.  L'ltalia 
Nuova,  series  A,  no.  9.  (Bologna:  Nicola  Zanichelli.  1920.  Pp.  130. 
5  1.) 

Brown,  R.  N.  R.  The  principles  of  economic  geography.  (London:  Pit- 
man.    1920.     10s.  6d.) 

Bulkeley,  J.  P.  The  British  Empire:  a  short  history.  (Oxford:  Claren- 
don Press.     1921.     Pp.  x,  227.) 

Chessa,  F.  Costo  economico  e  costo  finanziario  della  guerra.  (Rome: 
Athenaeum.     1920.     Pp.  137.) 

Dix,  A.  Wirtschaftskrieg  und  Kriegswirtschaft.  (Leipzig:  Koehler.  Pp. 
369.) 

Domville-Fife,  C.  The  states  of  South  America.  (New  York:  Macmil- 
lan.     1921.) 

Eldridge,  S.  Social  legislation  in  Illinois;  needs  and  opportunities  in 
1921.     (Rockford,  111.:   W.  M.  Shimmin  &  Co.     1921.     Pp.  110.) 

Fraccareta,  A.  La  trasformazione  degli  impieghi  di  intrapresa.  (Na- 
poli:   Pierro.     1920.     Pp.  442.     18  1.) 

Gavronky,  D.  Le  bilan  du  bolchevisme  russe  d'apres  des  documents  au- 
thentiques.     (Paris:    Imprimerie  Union.     1920.     Pp.  104.) 

Giles,  H.  F.  The  advantages  and  opportunities  of  the  state  of  Washington 
for  homebuilders,  investors  and  travelers.  (Olympia,  Wash.:  Bureau  of 
Statistics  and  Immigration.     1920.     Pp.   152.) 

Green,  F.  E.  A  history  of  the  English  agricultural  labourer,  1870-1920. 
(London:    King.     1920.     Pp.  x,  355.     16s.) 

Harper,  R.  M.  Resources  of  southern  Alabama;  a  statistical  guide  for  in- 
vestors and  settlers.  Special  report  no,  11.  (University,  Ala.:  Geologi- 
cal Survey.     1920.     Pp.  152.) 

Hasbach,  W.  A  history  of  the  English  agricultural  labourer.  Translated 
by  Ruth  Kenyon.     (London:    King.     1920.     Pp.  xvi,  465.     12s.  6d.) 

Howe,  F.  C.  Denmark:  a  cooperative  commonwealth.  (New  York:  Har- 
court,  Brace  &  Co.     1921.     Pp.  ix,  203.     $2.) 

Hughan,  J.  W.  International  government.  Edited  by  Seba  Eldridge. 
(New  York:   Crowell.    1921.) 

Iwasaki,  U.  The  working  forces  in  Japanese  politics.  A  brief  account  of 
political  conflicts,  1867-1920.  Columbia  University  studies  in  history,  eco- 
nomics and  public  law,  vol.  XCVII,  no.  1.  (New  York:  Longmans. 
1921.     Pp.  141.     $1.50.) 

Chapter  8  is  entitled  "The  workers." 

Lingelbach,  W.  E.,  compiler.  Economic  aspects  of  the  war.  Historical 
outlook  reprints,  no.  8.     (Philadelphia:    McKinley.     1921.     20c.) 

Lippincott,  I.  Economic  development  of  the  United  States.  (New  York: 
Appleton.     1921.     Pp.  670.     $3.50.) 

Encyclopedic  information  has  here  been  reduced  to  the  limits  of  an 


500  Reviews  and  New  Books  [September 

easily  handled  volume  of  six  hundred  odd  pages.  This  comprehensive 
textbook  surveys  the  whole  field  of  American  industry  from  1492  to  1920, 
and  gives,  therefore,  necessarily,  only  the  gist  of  the  whole  story,  but 
every  chapter  is  followed  by  a  list  of  a  few  well  chosen  references  with 
which  the  text  can  easily  be  amplified.  It  is  truly  a  history  as  it  concerns 
itself  not  only  with  results  but  particularly  with  the  causes  which  have 
brought  about  those  results;  it  records  economic  growth.  The  funda- 
mental factors  in  our  economic  life  are  first  set  forth  in  the  opening 
chapters,  as  man,  human  institutions,  and  natural  resources.  The  author 
then  divides  his  subject  into  the  usual  four  periods;  the  colonial  period  to 
1789;  the  period  of  the  founding  of  our  industrial  system,  1789  to  1865; 
the  period  of  expansion  of  national  industries,  1860  to  1914;  and  the  war 
period,  1914-1920;  in  each  epoch  he  traces  through  the  changes  in  regard 
to  territorial  expansion,  population,  the  extractive  industries,  manufac- 
tures, and  commerce.  To  make  it  clear  that  development  was  contempo- 
raneous in  all  these  different  fields,  in  spite  of  their  being  studied  sepa- 
rately, the  author  frequently  shows  their  relation  in  the  process  of  de- 
velopment by  the  use  of  summaries  and  by  introductory  matter  at  the  be- 
ginning of  the  chapters.  Parts  II  and  III  covering  the  first  two  eras 
up  to  1866  contain  more  or  less  familiar  material  and  are  treated  rather 
briefly.  It  is  the  section  devoted  to  the  expansion  of  our  national  indus- 
tries between  1860  and  1914,  and  occupying  over  half  the  book,  that  is 
the  author's  masterpiece.  Here  one  finds  the  new  material  and  new 
emphasis  that  form  the  unique  excellence  of  this  latest  history.  Every 
topic  is  rounded  out  by  a  discussion  of  recent  methods,  and  thus  an  in- 
sight into  present  business  conditions  is  given.  For  instance,  under  the 
caption  of  manufactures,  emphasis  has  been  laid  on  such  modern  features 
as  the  development  and  use  of  raw  materials,  technical  improvements, 
the  expansion  of  our  industrial  organization,  the  growing  specialization  in 
industry,  and  the  growth  of  government  regulation;  in  the  discussion  of 
commercial  development,  it  is  shown  that  the  significant  outcome  of  the 
past  sixty  years  of  development  has  been  not  only  the  enormous  growth 
of  industry,  but  the  closer  association  of  business  men  into  various  kinds 
of  organizations,  such  as  chambers  of  commerce  and  boards  of  trade;  the 
development  of  new  methods  of  marketing,  such  as  the  department  store, 
the  mail-order  firm,  and  the  chain  stores ;  the  introduction  of  new  commer- 
cial facilities  such  as  various  forms  of  insurance,  mercantile  agencies  for 
credit  information,  storage,  growth  of  advertising;  and  lastly,  the  rise 
of  schools  for  higher  commercial  education. 

The  brief,  closing  chapter  on  the  war  period  deals  with  the  various 
measures  adopted  to  cope  with  war  conditions,  and  the  legislation  re- 
storing industry  to  a  peace  basis.  At  the  end,  the  writer  outlines  seven 
problems  which  he  considers  among  the  most  important  ones  in  our  eco- 
nomic world.  While  college  students  will  probably  make  the  most  use 
of  the  book,  it  is  also  well  adapted  to  the  general  reader.  Tables  of  sta- 
tistics, quotations  from  standard  authorities,  and  other  illustrative  ma- 
terial have  been  so  woven  into  the  text  that  the  book  is  remarkably  free 
from  the  usual  impedimenta  of  footnotes  and  appendices.  There  is  a 
table  of  contents  and  an  index.  Amelia  C.  Ford. 

Lord,  A.  R.    The  principles  of  politics.    An  introduction  to  the  study  of  the 


1921]  Economic  History  and  Geography  501 

evolution  of  political  ideas.     (New  York:    Oxford  Univ.  Press.     1921. 
Pp.  308.) 
de  Louter,  J.    Le  droit  international  public  positif.     Two  vols.     (Oxford: 
Univ.  Press.     1920.     Pp.  vii,  573;  vi,  509.     22s.) 

This  work  originally  appeared  in   1910.     It  is  now  published  under 
the  auspices  of  the  Carnegie  Foundation  for  International  Peace. 

Mackinnon,  J.  The  social  and  industrial  history  of  Scotland  from  the 
union  to  the  present  day.     (New  York:    Longmans.     1921.) 

Martin  Saint-Leon,  E.  La  bourgeoisie  francaise  et  la  vie  chere.  (Paris: 
Musee  Social.     1921.     Pp.  40.) 

Mowrer,  P.  S.     Balkanized  Europe.     (New  York:    Dutton.     1921.     $5.) 

Ogg,  F.  A.  The  governments  of  Europe.  Revised  edition.  (New  York: 
Macmillan.     1920.     Pp.  x,  775.) 

Price,  M.  P.  My  reminiscences  of  the  Russian  revolution.  (London: 
Allen  &  Unwin.     18s.) 

Rawlinson,  H.  C.  British  beginnings  in  Western  India,  1579-1657.  (Ox- 
ford:   Clarendon  Press.     1921.     Pp.  158.) 

Reordan,  E.  J.  Modern  Irish  trade  and  industry.  (London:  Methuen. 
1920.     Pp.  335.) 

Saksena,  E.  B,  The  economic  effects  of  the  war  on  India.  Part  I.  (Luck- 
now:   Canning  College.     1921.) 

Sarkar,  J.  Economics  of  British  India.  Fourth  edition.  (London:  Long- 
mans.   1920.    7s.) 

Smith,  C.  M.  The  British  in  China  and  Far-Eastern  trade.  (London: 
Constable.     Pp.  ix,  295.     18s.) 

Stevens,  W.  B.  Centennial  history  of  Missouri,  one  hundred  years  in  the 
Union,  1920-1921.  Four  vols.  (St.  Louis,  Mo.:  S.  J.  Clarke  Publishing 
Co.     1921.) 

Totomiantz,  V.  L'Armenie  economique.  (Paris:  H.  Turabian,  227, 
Boulevard  Raspail.     1920.     Pp.  94.     5  fr.) 

Townsend,  M.  E.  Origins  of  modern  German  colonialism,  1871-1885.  Co- 
lumbia University  studies  in  history,  economics  and  public  law,  vol. 
XCVIII,  no.  1.     (New  York:    Longmans.     1921.     Pp.  205.     $2.25.) 

Waters,  C.  M.  A  school  economic  history  of  England.  I.  From  the  con- 
quest to  the  middle  of  the  eighteenth  century.  (New  York:  Oxford 
Univ.  Press.     1920.     Pp.  xi,  315.) 

L'Annuaire  industriel.  I.  Section  francaise.  (Paris:  Pernet,  Gensel, 
Thirion  &  Co.     1921.     Pp.  xvi,  526.) 

Economic  history  of  Chosen.  Economic  history  of  Manchuria.  (Seoul: 
Bank  of  Chosen.     1920.     Pp.  viii,  266;  iv,  303.) 

Students  of  the  Orient   must  regard  with   satisfaction   the   conjoined 
compactness  and  considerable  scope — almost  encyclopaedic — of  these  two 


502  Reviews  and  New  Books  [September 

books,  each  presenting  systematically  a  geographical  and  historical  sketch 
of  the  region  dealt  with  and  a  statistical  and  descriptive  account  of  its 
recent  economic  life  (agriculture,  industry,  money,  banking,  transporta- 
tion and  trade). 

The  desire  to  stand  well  in  the  eyes  of  the  world,  so  characteristic  of 
modern  Japan,  forces  itself  rather  too  constantly  on  the  reader's  notice. 
The  book  on  Chosen,  especially,  is  in  large  part  an  Apologia.  In  race 
and  language  it  is  said  the  Koreans  are  akin,  not  to  the  Chinese  but  to 
the  Japanese.  "The  recent  union  of  the  two  nations  may,  therefore,  be 
said  to  be  the  reunion  of  two  brothers  of  the  same  family  whom  nature 
had  long  separated."  The  dullness,  slovenliness,  laziness,  and  lack  of 
thrift  long  characteristic  of  the  Koreans  are  now  being  rapidly  corrected 
under  Japanese  guidance;  the  Koreans  "are  after  all  a  people  worthy  of 
being  acknowledged  as  kinsmen."  The  specific  proofs  of  benefit  to  Korea 
from  this  renewed  fraternity  might  be  more  convincing  if  they  were  not 
at  some  points  too  good  for  ready  belief.  Thus  a  series  of  tables  shows 
an  immense  increase  in  the  productivity  of  the  fields  from  1910  (the 
year  of  actual  annexation)  to  1918.  Even  from  1910  to  1913  the  rice 
crop  is  represented  as  increasing  by  33  per  cent,  the  barley  by  92  per 
cent,  beans  nearly  30  per  cent,  wheat  88  per  cent,  the  total  volume  of 
these  chief  food  products  together  with  millet,  rye  and  oats,  by  44  per 
cent.  In  three  years  it  would  appear  the  official  activity  of  the  Japanese 
has  so  stirred  the  dull,  indolent  mass  of  rural  Korea — two  and  one-half 
million  families — as  to  increase  the  product  of  their  labors  by  more  than 
40  per  cent.  In  eight  years — up  to  1918 — these  chief  products  of  the 
soil  are  represented  as  increasing  by  almost  90  per  cent.  It  seems  not 
out  of  place  to  note  that  Japanese  official  statistics,  at  least  those  refer- 
ring to  the  dependencies,  have  been  unmistakably  untrustworthy.  Thus 
in  the  Financial  and  Economic  Annual  of  Japan  for  1912  the  rice  crops 
of  Formosa  for  the  years  1901  to  1907  were  represented  as  being  just 
half  as  great  as  they  had  been  reported  in  the  earlier  issues  of  the  same 
publication.  In  1916  the  "Annual,"  and  also  the  "Resume  Statistique 
de  l'Empire  du  Japon"  revert  to  the  higher  figures  for  the  crops  1901- 
1904  but  not  for  the  1905-1907  crops.  There  is  a  somewhat  similar  con- 
tradiction as  to  tea  and  sugar.  It  seems  not  unfair  to  recommend  that  both 
these  volumes  be  employed  with  a  critical  regard  to  the  fact  that  they 
are  designed  to  represent  in  the  best  possible  light  Japan's  policy  of 
expansion.  A.  P.  W. 

Readings  in  English  social  history  from  contemporary  literature.  Vol.  I. 
From  pre-Roman  days  to  A.D.  1272.  Pp.  xv,  117.  $1.40.  Vol.  II. 
A. D.  1272-1^85.     Pp.  xi,  109.     $1.40.     (New  York:   Macmillan.     1921.) 

La  Republique  de  Finlande.  Apercu  economique  et  financier.  (Helsinki, 
Helsingfors:    Bureau  Central  de  Statistique.     1921.     Pp.  75.) 

Venezuela.  An  economic  report  presented  by  students  of  the  school  of 
foreign  service  as  an  aid  to  the  foreign  trade  of  the  United  States. 
School  of  Foreign  Service  series  II,  bull.  no.  1.  (Washington:  George- 
town Univ.     1921.     Pp.  166.) 


1921]  Agriculture,  Mining,  Forestry,  and  Fisheries  503 

Agriculture,  Mining,  Forestry,  and  Fisheries 

NEW    BOOKS 

Browne,  E.  A.  Tea.  Peeps  at  industries.  Second  edition.  (London: 
A.  &  C.  Black.     1917.     Pp.  88.) 

Cencelli,  A.  La  proprieta  colletttva  in  Italia.  Le  origini,  gli  avanzi,  la 
ricostruzione.  I  demani  collettivi  per  i  contadini.  Second  edition,  en- 
larged.    (Milano:    Hoepli.     Pp.  viii,  216.     7.50  1.) 

Conacher,  H.  M.  and  Scott,  W.  R.  Report  of  the  Board  of  Agriculture 
for  Scotland  on  agricultural  credit  and  organization  in  France,  with  sug- 
gestions for  a  Scottish  scheme  of  agricultural  credit.  (Edinburgh:  Scot- 
tish Board  Agri.     1920.     Pp.  69.) 

Cooper,  M.  R.,  and  Washburn,  R.  S.  Cost  of  producing  wheat  on  Jf.81 
farms  in  the  states  of  North  and  South  Dakota,  Minnesota,  Kansas,  Ne- 
braska, and  Missouri,  for  the  crop  year  1919.  Bull.  no.  943.  (Washing- 
ton:   U.  S.  Dept.  Agri.     1921.     Pp.  59.) 

Cunningham,  J.  C.  Products  of  the  Empire.  (New  York:  Oxford  Univ. 
Press.     1921.    Pp.  299.) 

Folger,  J.  C.  and  Thomson,  S.  M.  The  commercial  apple  industry  of 
North  America.     (New  York:    Macmillan.     1921.     Pp.  xxii,  466.) 

Green,  F.  E.  A  new  agricultural  policy.  (London:  Leonard  Parsons. 
1921.     4s.  6d.) 

Howe,  F.  C.  Denmark,  a  cooperative  commonwealth.  (New  York:  Har- 
court,  Brace  &  Co.     Pp.  ix,  203.) 

Here  is  a  very  readable  and  so  far  as  it  applies  to  Denmark  a  very  in- 
structive book  dealing  chiefly  with  agriculture  and  cooperation  by  a  man 
who  apparently  is  a  student  of  neither.  Of  the  books  on  Denmark  and 
Danish  cooperation  there  are  many.  Mr.  Howe  has  used  them  very 
freely.  In  fact,  except  for  an  introductory  hint  there  is  nothing  to  indi- 
cate that  the  material  of  the  book  was  gathered  by  personal  observation. 
It  contains  nothing  new  about  Denmark  but  it  does  present  very  forcibly 
the  fundamental  reasons  for  the  high  degree  of  intelligence,  democracy, 
social  progress  and  economic  prosperity  for  which  the  Danes  are  con- 
spicuous. 

The  Danish  farm  population  represents  only  one  third  of  the  total,  but 
the  farmers  rule.  The  chief  industry,  as  in  most  countries,  is  agriculture. 
The  local  cooperative  society  and  the  excellent  system  of  rural  and  agri- 
cultural education  for  adults  as  well  as  children  are  the  chief  factors  in 
Danish  rural  progress.  The  people's  high  schools  are  known  the  world 
over  but  it  is  astonishing  to  read  that  more  than  a  hundred  people's  high 
schools  and  agricultural  colleges  are  maintained  in  a  population  of  three 
million  people — one  third  agricultural — in  a  territory  twice  the  size  of 
Massachusetts. 

Moreover  the  Danes  have  taken  an  advanced  stand  on  matters  of  social 
legislation  and  taxation.  There  is  food  for  thought  in  the  fact  that  a 
naturally  poor  agricultural  country  thrives  on  free  trade  and  business 
efficiency,  that  only  one  fourth  of  the  national  budget  is  expended  for 
military  purposes,  20  per  cent  for  administration  and  40  per  cent  for 


504  Reviews  and  New  Books  [September 

social  betterment  and  direct  support  of  trade  and  industry,  whereas  in 
the  United  States  92  per  cent  of  the  present  national  budget  is  for  mili- 
tary purposes,  8  per  cent  for  administration,  education,  aids  to  commerce 
and  all  other  purposes. 

The  book  is  not  statistically  exact  nor  scientifically  accurate  in  state- 
ment. Moreover,  those  portions  which  deal  with  conditions  of  American 
agriculture  and  the  application  of  Danish  methods  of  agricultural  poli- 
cies in  the  United  States  are  very  superficial.  Nevertheless,  the  ma- 
terial on  Denmark  is  very  well  compiled  and  presented  and  merits  wide 
popular  reading. 

ALEXANDER    E.    CANCE. 

Massachusetts  Agricultural  College. 

Jillson,  W.  R.  The  oil  and  gas  resources  of  Kentucky.  Second  edition. 
(Frankfort,  Ky.:    Ky.  Geological  Survey.     1921.     Pp.  xvi,  630.     25c.) 

Kahn,  A.  R.  Sugar;  a  popular  treatise.  (Los  Angeles,  Cal. :  Sugar  Pub. 
Co.     1921.     Pp.  78.     $2.) 

Martin,  G.  C.  Preliminary  report  on  petroleum  in  Alaska.  Geol.  Survey 
bull.  719.     (Washington:    Supt.  Docs.     1921.     50c.) 

Thompson,  J.  W.  Pennsylvania  mining  statutes  annotated.  Bull.  185. 
(Washington:    Dept.  of  the  Interior.     1920.     Pp.  xlvii,  1221.) 

Manufacturing  Industry 

NEW    BOOKS 

Browne,  E.  A.     Tea.     (London:   A.  &  C.  Blake.     1917.     Pp.  viii,  88.) 

One  of  a  "Peeps  at  Industries"  series  this  book,  first  published  in  1912, 
claims  to  be  the  "result  of  experience,  observation,  information  and  pic- 
tures harvested  'on  the  spot.'  "  Its  style  is  popular  and  it  quotes  "only 
such  figures  ...  as  make  for  broad,  general  ideas"  although  "great  care 
has  been  taken  to  get  accurate  figures."  The  book  will  hardly  "bring  the 
reader  into  a  complete  understanding"  of  the  tea  industry,  as  promised 
in  the  prefatory  note,  but  it  will  be  helpful  toward  that  end. 

W.  M.  Duffus. 

Carter,  H.  R.  Jute  and  its  manufacture.  (New  York:  Macmillan.  1921. 
Pp.  vi,  192.     $2.) 

Facts  and  figures  of  the  automobile  industry.  1921.  (New  York:  Na- 
tional Automobile  Chamber  of  Commerce,  366  Madison  Ave.     Pp.  96.) 

Wool  and  cotton  in  all  forms  from  yarn  to  fabric.  (Boston:  William  Whit- 
man Co.     1921.    Pp.  177.) 

Transportation  and  Communication 

NEW  books 

Atterbury,  W.  W.  Where  our  railroads  stand  today;  is  their  credit  basis 
yet  sufficient?  how  can  pre-war  personal  efficiency  be  restored?  (Har- 
risburg,  Pa.:    Chamber  of  Commerce.     1920.     Pp.   19.) 

Colin,  E.    Les  grands  ports  francais.     Vol.  XIII.    Le  port  de  Paris.     Vol. 


1921]  Trade,  Commerce,  and  Commercial  Crises  505 

XIV.     Les  ports  de  la  Basse-Loire:  Nantes  et  Saint-Nazaire.     (Paris: 
Dunod.     1921.     Pp.  172;  176.) 

Lanino,  P.  Degli  scioperi  sulle  ferrovie  Italiane.  (Romen:  Tip.  dell'- 
Unione  Editrice.     1920.     Pp.  94.) 

Flexible  fares.  Service  at  cost  as  applied  to  the  New  York  transit  lines. 
With  comment  on  Governor  Miller's  program.  (New  York:  The  City 
Club,  55  W.  44th  St.     1921.     Pp.  46.) 

Good  roads  and  motor  transportation.  Factors  in  food  production.  (New 
York:  Nat.  Automobile  Chamber  of  Commerce,  366  Madison  Ave.  1921. 
Pp.  11.) 

Parcel  post  statistics.  Issued  by  the  United  States  Post  Office  Dept. 
(Washington:    Supt.  Docs.     1921.     Pp.  63.) 

Transportation.  The  problem  of  soft  coal.  (Washington:  Nat.  Coal  As- 
soc.    1921.     Pp.  15.) 

Trade,  Commerce,  and  Commercial  Crises 

NEW    BOOKS 

Austin,  O.  P.  Trading  with  the  new  countries  of  Central  Europe.  Foreign 
commerce  series,  no.  6.     (New  York:    National  City  Bank.     Pp.  66.) 

Cunningham,  J.  C.  Products  of  the  Empire.  (Oxford:  Oxford  Univer- 
sity Press.     1920.     Pp.  299.) 

This  little  book  is  a  summary  survey  of  the  principal  products  of  the 
British  Empire,  the  factors  limiting  their  supply  and  the  trade  in  them, 
domestic,  intercolonial  and  international.  The  extent  to  which  the  Empire 
is,  or  might  be,  self-sufficing  in  particular  products  and  current  tendencies 
towards  change  in  their  output  are  investigated.  There  are  numerous 
illustrations,  also  tables  showing  imports  of  wheat,  maize,  beef,  sugar 
and  raw  cotton  (1913-1917)  and  the  area  and  population  of  the  Empire 
in  1919.  The  book  should  prove  useful  to  students  of  economic  geography 
and  international  trade.  W.  M.  Duffus. 

Ewbank,  R.  B.,  editor.  Indian  cooperative  studies.  University  of  Bom- 
bay economic  series,  no.  2.  (New  York:  Oxford  Univ.  Press.  1921. 
Pp.  266.    $6.25.) 

Picciotto,  C.  M.,  editor.  The  British  year  book  of  international  trade. 
(London:    Frowde.     Pp.  292.) 

Chicago,  the  great  central  market.  (Chicago:  Marshall,  Field  &  Co.  1921. 
Pp.  50.) 

Ireland's  markets,  or  a  new  field  for  American  trade.  (New  York:  Office 
of  the  Irish  Consul-General,  119  Nassau  St.     1921.     Pp.  11.) 

List  of  publications  of  the  Department  of  Commerce  available  for  distribu- 
tion. Eighteenth  edition.  (Washington:  Dept.  Commerce.  1920.  Pp. 
80.) 

Our  new  place  in  world  trade.  (New  York:  Guaranty  Trust  Co.  1921. 
Pp.  24.) 


506  Reviews  and  New  Books  [September 

Memorandum  regarding  the  application  of  the  customs  regulations  of  Vene- 
zuela, especially  with  reference  to  the  North  American  commerce.  (Cara- 
cas: Interamerican  High  Commission,  Venezuelan  section.   1921.   Pp.39.) 

Accounting,    Business    Methods,    Investments,   and    the 

Exchanges' 

NEW    BOOKS 

Allen,  F.  J.  A  guide  to  the  study  of  occupations.  Prepared  under  the 
auspices  of  the  Bureau  of  Vocational  Guidance,  Graduate  school  of  Edu- 
cation, Harvard  University.  (Cambridge:  Univ.  Press.  1921.  Pp. 
xiii,  183.) 

Aspley,  J.  C.  What  a  salesman  should  know  about  advertising.  Pocket 
edition.     (Chicago:    Dartnell  Corporation.     1921.     Pp.  119.) 

Ballantine,  H.  W.  The  preparation  of  contracts  and  conveyances,  with 
forms  and  problems.  (New  York:  Macmillan.  1921.  Pp.  vi,  226. 
$2.50.) 

Carlios,  M.  J.  Le  gouvernement  des  entreprises  commerciales  et  indus- 
trielles.     Vol.  XI.     (Paris:    Dunod.     Pp.  viii,  320.     1921.) 

Carthage,  P.  I.  Retail  organization  and  accounting  control.  (New  York: 
Appleton.     1920.     Pp.  349.    $3.) 

The  need  of  a  textbook  on  department  store  procedure  is  well  an- 
swered by  this  publication  which  treats  of  accounting  and  management 
systems.  No  consideration  whatever  is  given  to  manufacturing,  except 
where  it  is  necessary  to  draw  a  comparison.  The  department  store,  the 
specialty  shop,  and  retail  store  of  any  description  are  within  the  book's 
scope.  Proper  recording  and  marking  of  merchandise,  from  its  receipt 
to  its  sale  are  clearly  shown.  Of  particular  value  is  the  detailed  study 
of  the  turnover,  which  is  accompanied  by  statistics  furnished  by  the 
leading  stores.  The  problem  of  sales  checks,  their  auditing  and  classi- 
fication is  thoroughly  treated  and  consideration  is  given  to  the  prepara- 
tion and  analysis  of  the  various  financial  statements  and  reports. 

M.  J.  S. 

Chapman,  J.  C.  Trade  tests.  (New  York:  Holt.  1921.  Pp.  435.  $4.) 
In  the  recent  war  the  personnel  division  of  our  army  was  confronted 
with  the  problem  of  finding  400  occupational  specialists  in  every  1,000 
men  in  the  infantry,  and  a  much  higher  percentage  in  the  technical  corps. 
On  interview  62  per  cent  of  the  draftees  and  enlisted  men  credited  them- 
selves with  trade  ability.  In  all,  over  250,000  soldiers  were  eventually 
trade  tested.  Of  those  professing  trade  skill  6  per  cent  were  found  ex- 
pert, 24  per  cent  journeymen,  40  per  cent  apprentices,  and  SO  per  cent 
novices  or  inexperienced  men.  Every  industry  finds  much  the  same 
difficulty  in  selecting  its  personnel.  The  large  labor  turnovers  are  due 
in  part  to  unsatisfactory  conditions  of  work,  in  part  to  inaptitude  of  the 
workman,  either  general  or  specific.  The  problem  of  special  aptitude  is 
generally  more  inviting  to  industrial  executives  because  it  is  more  tangi- 
ble. These  executives  will  welcome  Dr.  Chapman's  book  for  its  sugges- 
tiveness  of  methods  capable  of  successful  operation  in  practically  every 


1921]       Accounting,  Business  Methods,  and  the  Exchanges  507 

industrial  field.  The  trade  test,  as  the  author  explains,  "was  devised  and 
constructed  to  make  it  possible  for  a  trained  examiner,  unskilled  in  any 
particular  trade,  to  measure  in  objective  terms  the  trade  standing  of  any 
recruit  claiming  skill  in  any  of  the  several  hundred  trades  necessary  to 
the  work  of  the  army."  This  fact  makes  the  various  types  of  trade 
tests  available  to  the  personnel  assistants.  The  particular  industry  has 
a  choice  of  four  types  of  tests  on  which  to  work,  the  oral  trade  test,  the 
picture  trade  test,  the  performance  trade  test,  and  the  written  group  trade 
test.  This  book  adequately  explains  each  type,  and  has  profuse  illustra- 
tions and  specimen  tests  (published  by  permission  of  the  Adjutant-Gen- 
eral);  it  describes  test  methods,  technique,  and  scoring;  and  it  discusses 
the  relative  merits  and  defects  of  each  type  of  test. 

Before  such  material  can  be  used,  of  course,  there  must  be  a  thorough- 
going job  analysis.  The  book  is  fortunate  in  its  inclusion  of  a  chapter  on 
this  subject.  Other  of  the  fifteen  chapters  discuss  the  adaptation  of  trade 
test  methods  to  the  training  of  employees,  and  the  installation  of  trade 
tests.  In  all,  the  book  is  well  organized,  has  much  excellent  material, 
and  is  well  worth  careful  study. 

Although  trade  testing  will  eliminate  many  troubles  in  industry,  it 
alone  will  not  ensure  perfect  industrial  operation.  This  book,  therefore, 
should  be  read  in  conjunction  with  three  other  excellent  books  on  the 
employment  problem,  Link's  Employment  Psychology,  Tead's  Instincts 
in  Industry,  and  Goddard's  Human  Efficiency  and  Levels  of  Intelligence. 

Charles  Leonard  Stone. 

Dawson,  S.  S.    Accounting.     (New  York:   Pitman.     1921.     Pp.  279.     $4.) 

Diemer,  H.  Industrial  organization  and  management.  (Chicago:  La  Salle 
Exten.  Univ.     1921.     Pp.  xv,  291.     $3.) 

Earle,  G.  H.  Does  price  fixing  destroy  liberty?  A  consideration  of  cer- 
tain economic  and  common  law  principles  applying  to  governmental  in- 
terferences with  the  liberty  of  trade.  (Philadelphia:  Author.  1920. 
Pp.  183.) 

Eaves,  L.  Training  for  store  service.  (Boston:  Richard  C.  Badger.  1920. 
Pp.  143.     $2.) 

This  book  is  the  report  of  a  series  of  investigations  made  by  the  Re- 
search Department  of  the  Women's  Educational  and  Industrial  Union 
into  the  vocational  experiences  and  training  of  juvenile  employees  (four- 
teen to  twenty-one  years  old)  of  retail  department,  dry  goods  and  cloth- 
ing stores  in  Boston,  Massachusetts.  The  purpose  of  the  study  may  be 
stated  in  the  author's  words,  "It  is  hoped  that  the  reading  of  such  a  dis- 
cussion will  assist  young  mercantile  workers  to  see  their  tasks  as  part  of 
the  great  public  service  of  distribution,  that  store  managers  in  other  cities 
may  profit  by  the  description  of  progressive  policies  which  are  being  de- 
veloped by  Boston  business  men,  and  that  educators  will  find  suggestions 
which  may  be  embodied  in  the  courses  of  training  for  store  service  which 
are  being  introduced  in  the  secondary  and  continuation  schools  of  many 
cities." 

For  this  purpose,  the  discussion  substantiates  the  following  points:— 
The  field  of  retailing  furnishes  employment  to  a  larger  number  of  in- 


508  Reviews  and  New  Books  [September 

habitants  of  great  cities  than  any  other  single  occupation.  The  sale  of 
clothing  offers  the  city  dweller  greater  opportunity  for  employment  than 
any  other  field  of  distribution  because  its  sale  is  more  concentrated  in 
large  centers  than  in  the  case  of  other  human  needs.  In  a  study  in  1914 
of  the  large  department  and  dry  goods  stores  of  Boston,  it  was  found 
that  44  per  cent  of  the  regular  employees  and  45  per  cent  of  the  extra 
employees  were  under  twenty-one  years  of  age.  There  is  a  marked  in- 
crease in  the  sale  of  ready-made  clothing.  Stores  carrying  such  mer- 
chandise require  a  higher  grade  of  employees  and  offer  them  less  season- 
al employment  than  other  stores.  "Retail  department,  dry  goods  and 
clothing  stores  offer  important  fields  of  vocational  education,  not  merely 
because  they  employ  large  numbers  of  juvenile  and  adult  workers  but 
also  because  such  training  is  necessary  for  the  successful  development  of 
their  business  and  because  they  afford  peculiar  facilities  for  sound  edu- 
cational work  which  may  have  personal  as  well  as  economic  value." 

There  follows  a  discussion  of  the  qualities  found  most  valuable  in  store 
work,  the  occupations  offered  in  stores  and  the  distribution  of  store  work- 
ers, why  young  store  workers  shift  employment  and  the  education  which 
is  given  or  might  be  given  to  store  workers  or  prospective  store  workers 
in  elementary,  continuation  and  secondary  schools  or  in  business  itself. 
One  fact  brought  out  that  should  make  those  establishing  courses  in 
salesmanship  pause,  is  the  fact  that  only  20  per  cent  of  the  1,000  young 
people  studied  go  into  selling,  20  per  cent  into  clerical  work,  and  60  per 
cent  into  subsidiary  occupations  and  yet  our  secondary  schools  are  plac- 
ing the  chief  emphasis  on  salesmanship  training,  expecting  young  people 
to  go  from  school  into  selling  where  stores  are  unwilling  to  place  them 
because  of  their  lack  of  maturity. 

Of  the  three  classes  which  the  author  has  tried  to  reach,  young  workers, 
business  men  and  educators,  the  book  will  be  of  most  value  to  the  latter. 
And  to  that  group  it  will  be  found  a  valuable  contribution  because  of  the 
extension  of  training  for  store  work  throughout  the  states  because  of  the 
federal  aid  through  the  Smith-Hughes  money.  It  will  be  most  useful  to 
those  arranging  for  the  training  to  be  given,  whether  they  are  outside  or 
within  the  store.  Bernice  M.  Cannon. 

Eggleston,  D.  C.  and  Robinson,  F.  B.  Business  costs.  The  College  of 
the  City  of  New  York  series  in  commerce,  civics  and  technology.  (New 
York:     Appleton.     1921.     Pp.  xxx,  587.     $7.50.) 

A  worthy  addition  has  been  made  to  the  growing  body  of  scientific 
business  literature  by  the  publication  of  this  book  on  cost  accounting  for 
extractive,  manufacturing,  and  mercantile  industries  of  either  the  continu- 
ous-process or  the  job-order  type.  The  general  plan  is  to  present  at  the 
outset  a  comprehensive  view  of  the  elements  of  cost,  including  the  general 
cost  formula,  and  to  set  forth  the  relationship  of  cost  to  production  and 
the  general  system  of  interlocking  the  cost  accounts  with  the  financial 
records.  The  rest  of  the  book  deals  with  the  details  of  device  and  prac- 
tice that  would  be  met  in  many  different  situations  confronting  the  cost 
accountant  in  various  lines  of  business.  A  wealth  of  illustrations  and 
forms,  in  all  over  two  hundred,  have  been  well  chosen  and  are  conveniently 
distributed  throughout  the  text.  One  of  the  especially  desirable  features 
of  the  work  is  the  large  number  of  arithmetical  calculations  illustrating 


1921]       Accounting,  Business  Methods,  and  the  Exchanges  509 

definitely  and  concretely  various  problems  and  principles.  The  last  part  is 
confined  to  a  brief  description  of  several  complete  cost  systems  covering 
a  trading  enterprise,  process  factories,  job  order  factories,  estimating  cost 
systems,  and  textile  mills. 

The  essential  characteristic  of  the  book  is  concreteness.  It  lacks,  how- 
ever, an  adequate  presentation  of  the  philosophical,  controversial,  and 
moot  aspects  of  the  subject.  When  used  in  connection  with  a  text  deal- 
ing more  completely  with  these  fundamentals,  excellent  results  should  be 
obtained.  M.  J.  Shugrue. 

Frenz,  G.    Kritik  des  Taylor-Systems.     (Berlin:   Springer.     1921.     10  M.) 

Harrison,  G.  C.  Cost  accounting  to  aid  production;  a  practical  study  of 
specific  cost  accounting.  (New  York:  Engg.  Mag.  Co.  1921.  Pp.  xv, 
234.) 

Hawkins,  N.  A.  The  selling  process.  Sixth  edition.  (Detroit:  Author, 
318  Majestic  Bldg.     1920.     $3.50.) 

Holmes,  A.  H.  A  study  of  personality  and  its  relation  to  salesmanship. 
(Cincinnati,  O.:    South-western  Pub.  Co.     1920.     Pp.  x,  254.     $1.20.) 

Jones,  J.  W.  The  position  and  rights  of  a  bona  fide  purchaser  for  value 
of  goods  improperly  obtained.  Yorke  prize  essay  for  the  year  1918. 
(New  York:    Macmillan.     1921.     Pp.  128.     $4.) 

Kahn,  O.  H.  The  marketing  of  American  railroad  securities.  (New  York: 
The  Forum,  354  Fourth  Ave.     Pp.  32.) 

Kaye,  J.  R.  A  sales  manual:  the  basic  principles  of  salesmanship  in  their 
practical  applications.     (New  York:   Boro  Prtg.  Co.     1921.    Pp.  iv,  212.) 

Mehl,  J.  M.  Cooperative  grain  marketing.  A  comparative  study  of  meth- 
ods in  the  United  States  and  Canada.  Bull.  937.  (Washington:  Dept 
Agri.,  Bureau  of  Markets.     1921.     Pp.  21.     5c.) 

Mulliner,  R.  H.  Human  engineering.  First  edition.  (Syracuse,  N.  Y.: 
Mulliner  Bros.     1920.     Pp.  xv,  367.) 

Naylor,  E.  H.  Trade  associations:  their  organization  and  management. 
(New  York:     Ronald.     1921.     Pp.  xiv,  386.     $5.) 

A  general  work  upon  the  organization  and  operation  of  trade  associa- 
tions is  a  novelty,  in  spite  of  the  fact  that  trade  associations  have  existed 
and  exerted  more  or  less  influence  for  a  score  of  years. 

The  experience  of  the  author  in  the  active  management  of  such  associa- 
tions qualifies  him  to  give  a  description  of  the  organization  and  function- 
ing of  such  trade  organizations ;  but,  as  might  be  expected,  it  also  offers 
an  inducement  to  present  only  the  arguments  for  association.  The  argu- 
ment given  has  its  weak  points,  which  may  be  illustrated  by  the  following 
statement  found  in  the  chapter,  Competition  and  Cooperation:  "Compe- 
tition at  all  times  should  be  based  on  quality  and  service  and  never  on 
prices.  ...  It  is  the  application  of  law  of  nature."  Since  the  book  is 
intended  to  appeal  to  the  business  man  interested  in  trade  association  as 
a  present  or  prospective  member,  the  larger  part  is  devoted  to  matters  of 
organization,  routine,  personnel,  and  the  functions  and  services  performed 
by  trade  associations.  Such  chapter  titles  as  Organizing  the  Association, 
Association  Routine,  Meetings,  Commercial  Functions,  Industrial  Func- 


510  Reviews  and  New  Books  [September 

tions,  Service  Activities,  The  Secretary,  Statistics  and  Their  Use,  The 
Law  and  the  Association,  give  an  idea  of  the  scope  of  the  work.  From 
the  viewpoint  of  the  economic  student,  the  information,  classification,  and 
analysis  of  associations  are  neither  complete  nor  scientific,  and  there  is 
little  attempt  to  give  an  impartial  estimate  of  the  benefits  and  the  dangers 
of  the  different  types.  The  work  is  useful  in  showing  the  inside  workings 
of  an  average  association  and  bringing  to  the  attention  of  many  of  the 
ineffectual  organizations,  with  which  the  country  is  infested,  some  view  of 
the  possibilities  of  a  trade  association. 

As  a  whole,  the  work  is  very  interesting.  Although  the  fact  that  the  in- 
formation might  be  compressed  into  much  smaller  space  and  that  the  atti- 
tude is  not  scientific  may  affect  its  value  for  the  student,  it  does  not  detract 
so  seriously  from  its  value  for  the  business  man  for  whom  it  is  intended. 
It  is  to  be  regretted  that  no  comparison  of  American  associations  with  pres- 
ent European  associations  has  been  undertaken  and  that  the  newer  re- 
search work  of  British  organizations  is  neglected.         Harry  R.  Tosdal. 

Newlove,  G.   H.      C.   P.  A.   accounting,   theory,   auditing,   and  problems. 
(New  York:   Appleton.     1920.    Pp.  x,  416.) 

.     Industrial  accounting :  with  C.  P.  A.  questions  and  prob- 
lems.    (New  York:    Appleton.     1921.     Pp.  viii,  266.) 

Oakey,   F.     Principles   of  government   accounting   and   reporting.      (New 
York:   Appleton.     1921.     Pp.  xxvi,  561.     $5.) 

The  Institute  for  Government  Research,  which  is  an  association  of 
citizens  for  cooperating  with  public  officials  with  a  view  to  promoting 
efficiency  and  economy  in  government  operations,  publishes  a  series  called 
Principles  of  Administration.  The  aim  is  to  subject  each  of  the  more 
important  technical  branches  of  public  administration  to  careful  study. 
The  present  volume  treats  of  the  manner  in  which  government  accounts 
should  be  kept  and  the  proper  form  and  content  of  public  reports  of  gov- 
ernment financial  transactions.  State  and  municipal  government  account- 
ing and  reporting  are  covered  in  particular.  Information  needed  by  oper- 
ating and  controlling  executives,  the  legislative  body,  and  the  public  is 
given  fully.  There  are  also  chapters  dealing  with  funds,  including  ap- 
propriations and  their  content  and  operation,  the  budget,  the  balance 
sheet,  surplus  accounts,  receipts,  expenditures,  fixed  property  accounts 
and  numerous  allied  items.  M.  J.  S. 

Osborn,  A.  F.     A  short  course  in  advertising.      (New  York:    Scribner's. 
1921.     Pp.  xiii,  248.) 

Parsons,  F.  W.    American  business  methods.     (New  York:   Putnam.     1921. 
Pp.  ix,  373.    $2.50.) 

Payne,  F.  M.     The  real  estate  educator.     (New  York:    Carey  Co.,  143  W. 
96th  St.     1920.     Pp.  205.) 

Sakolski,  A.   M.     Elements  of  bond  investment.      (New   York:    Ronald. 
1921.     Pp.  158.    $2.) 

Stanger,  W.  A.     Personal  selling.     (New  York:    Biddle  Pub.  Co.     1920.) 

Thompson,  M.  W.     Liberty  bonds  at  par:  outline  of  a  plan  to  stabilise  the 
market  value  of  liberty  bonds  at  the  original  subscription  price  and  to 


1921]  Capital    and  Capitalistic  Organization  511 

reconstruct   the  public  finances.      Studies   addressed   to   men   of   affairs, 
series  II,  no.  1.     (New  York:    Thompson  &  Worley.     1921.     Pp.  19.) 

Thomson,  W.  R.  The  premium  bonus  system.  (Glasgow:  McCorquodale. 
1921.     Pp.  99.     10s.) 

Valois,  G.  Intelligence  et  production;  la  nouvelle  organisation  economique 
de  la  France.  (Paris:   Nouvelle  Librairie  Nationale.     1920.    Pp.  ix,  269.) 

Watts,  F.  An  introduction  to  the  psychological  problems  of  industry. 
(New  York:    Macmillan.     1921.     Pp.  240.     $5.) 

Wilcox,  D.  F.  Working  capital  in  street  railway  valuation.  (Philadelphia: 
Am.  Acad.  Pol.  &  Soc.  Sci.     1920.     Pp.  24.) 

Wright,  H.  T.  Organization:  as  applied  to  industrial  problems.  (Phila- 
delphia:  Lippincott.     1921.     Pp.  268.     $8.) 

Buying  commodities  by  weight  or  measure.  Misc.  pub.  no.  45.  (Washing- 
ton:   Dept.  Comm.,  Bureau  of  Standards.     1920.     Pp.  42.     10c.) 

Consolidated  tables  of  bond  values.     (Boston:    Finan.  Pub.  Co.     1921.     Pp. 

663.) 
Course  in   modern  production   methods.     Vol.    IV.      Handling    equipment. 

(New  York:    Business  Training  Corp.     1921.     Pp.  144.) 

Government  price  control.  University  of  Oklahoma  bulletin,  new  series 
no.  204.     (Norman,  Okla.:    Univ.  of  Okla.     1920.     Pp.  110.) 

Individual  home  study  course  in  higher  accounting.  Four  vols.  (Chicago: 
Washington  Institute.     1920.) 

List  of  references  on  landlord  and  tenant,  with  special  reference  to  recent 
rent  increases.     (Washington:    Library  of  Congress.     1920.     Pp.  9.) 

The  reduction  of  merchandising  expense:  methods  which  distributors 
throughout  the  United  States  are  applying  to  ease  the  process  of  read- 
justment and  the  results  of  these  methods.  (Washington:  Domestic  Dis- 
tribution Dept,  Chamber  of  Commerce.     1921.     Pp.  21.) 

Capital  and  Capitalistic  Organization 

NEW    BOOKS 

Cohn,  G.  Die  Aktiengesellschaft.  Vol.  I.  Geschichte  der  Aktiengesell- 
schaft  und  des  Aktienrechts.  (Zurich:  Art.  Inst.  Orell  Fiissli.  1921. 
Pp.  viii,  108.     10  fr.) 

Cotter,  A.  United  States  Steel:  a  corporation  with  a  soul.  (Garden  City: 
Doubleday.     1921.     Pp.  xii,  312.     $3.) 

Gary,  E.  H.  Principles  and  policies  of  the  United  States  Steel  Corpora- 
tion. Statement  made  at  annual  meeting  of  stockholders,  April  18,  1921. 
(New  York:   U.  S.  Steel  Corp.,  71  Broadway.     1921.     Pp.  22.) 

Guggenheim,  S.  R.  An  answer  to  the  attacks  made  upon  the  American 
Smelting  fy  Refining  Company,  delivered  at  the  meeting  of  the  company, 
April  6,  1921.  (New  York:  Am.  Smelting  &  Refining  Co.,  120  Broad- 
way.    1921.    Pp.  28.) 


512  Reviezvs  and  New  Boohs  [September 

Jones,  E.  The  trust  problem  in  the  United  States.  (New  York:  Macmil- 
lan.     1921.) 

Kaeppelin,  R.  Des  projets  de  monopole  de  I'energie  electrique  en  Alle- 
magne.     (Paris:    Jouve.     1921.     Pp.  290.) 

McMillin,  J.  M.  The  public  utilities  and  the  public:  paper  read  before 
Ptovidence  Engineering  Society,  February  22,  1921.  (New  York: 
Doherty.     1921.     Pp.  23.) 

Smith,  J.  B.  R.,  editor.  New  York  laws  affecting  business  corporations. 
Revised  to  January  1,  1921.  (New  York:  U.  S.  Corporation  Co.  1921. 
Pp.  xxxii,  223.     $2.) 

Labor  and  Labor  Organizations 
Wages   and  Empire.     By  Vyvyan   Ashleigh   Lyons.      (New   York: 
Longmans,  Green  and  Company.     1921.     Pp.  96.     $1.75.) 

The  author  develops  and  endeavors  to  illustrate  statistically  the 
principle  that  all  wages  are  dependent  on  the  ratio  of  available  agri- 
cultural land  to  the  population.  He  begins  logically  by  showing  the 
use  of  the  earth  in  the  production  of  food  and  the  elements  necessary 
for  plant  growth.  He  develops  the  fact  that  only  a  comparatively 
small  portion  of  the  earth's  surface  is  naturally  available  for  food 
production,  leading  to  the  general  principle  that  increase  in  agricul- 
tural production  must  be  developed  along  one  of  two  lines — either  by 
increase  of  human  power  and  its  efficient  use  or  by  an  increase  in  plant 
yields.  In  general,  progress  in  either  direction  will  finally  mean  a 
greater  amount  of  human  labor  engaged  in  the  production  of  a  given 
amount  of  food. 

Agricultural  wages  are  based  on  the  marginal  production  in  agri- 
culture; and  wages  of  all  other  occupations  are  based  on  wages  in 
agriculture,  since,  says  Mr.  Lyons,  other  occupations  are  indirectly 
agricultural.  The  proof  of  these  statements  he  finds  in  the  lower  aver- 
age rate  of  wages  in  the  older  countries  in  the  world  where  the  area 
of  land  per  man  is  small  compared  with  the  higher  average  rate  of 
wages  in  the  United  States,  Canada,  Australia,  and  New  Zealand  where 
the  area  of  land  per  man  is  high. 

Mr.  Lyons  points  out  that  the  well-being  of  man  as  measured  in  real 
wages  is  greater  in  the  newer  countries  where  there  is  an  abundance 
of  land.  He  shows,  furthermore,  that  it  is  possible  in  the  newer  coun- 
tries of  the  world  to  increase  the  population  considerably  before  the 
area  of  good  agricultural  land  is  exhausted,  whereas  in  the  old  world 
the  population  has  pretty  well  overtaken  the  food  supply.  This  leads 
to  the  constructive  proposal  that  Great  Britain,  which  has  little  avail- 
able agricultural  land  within  her  local  boundaries,  should  aggressively 
undertake  the  development  of  her  provinces  such  as  Australia,  New 


1921]  Labor  and  Labor  Organizations  513 

Zealand,  and  Canada  by  the  deportation  of  large  numbers  of  workers 
from  England  to  these  countries. 

Of  course,  agricultural  emigrants  are  required  and  England  has  no 
agricultural  emigrants  to  deport.  Therefore,  it  will  be  necessary  to 
deport  adaptable  youths  from  other  overflowing  occupations,  train 
them  in  agricultural  methods  and  establish  them  on  farms  in  the  prov- 
inces. For  this  purpose  Mr.  Lyons  would  have  Great  Britain  estab- 
lish farms  in  the  mother  country  for  the  purpose  of  giving  the  neces- 
sary elementary  training  in  agriculture  to  the  youths  whom  she  sends 
out. 

The  significance  of  this  lies  in  the  fact  that  the  United  Kingdom 
has  the  coal  and  other  natural  resources  necessary  for  an  efficient 
manufacturing  nation.  The  dominions  have  quantities  of  agricultural 
land  and  other  natural  resources  sufficient  to  provide  the  raw  materials 
and  the  food  for  a  manufacturing  population.  An  exchange  of  prod- 
ucts between  the  dominions  and  the  mother  country  would  therefore 
put  the  natural  resources  of  the  entire  empire  to  their  most  productive 
use  and  consequently  would  make  real  wages  as  high  as  they  possibly 
could  be.  Science  and  nature  would  both  aid  in  efficient  production. 
To  keep  real  wages  high,  however,  it  would  be  necessary  that  this  ex- 
change be  protected  between  the  mother  country  and  the  dominions 
by  certain  trade  restrictions,  probably  in  the  form  of  a  protective  tariff 
wall  extending  about  the  entire  empire.  In  this  way  every  part  of  the 
empire  would  be  saved  from  the  cheap  competition  of  other  countries 
and  under  an  aggressive  development  policy  would  provide  the  most 
productive  occupations  for  all  her  citizens.  Since  the  British  empire  is 
in  the  fore-front  of  scientific  progress  the  wages  in  all  parts  of  the 
empire  would  probably  be  as  high  as  it  is  possible  for  them  to  be. 

The  little  book  is  interesting  and  thoughtful.  It  is  marred  by  cer- 
tain glaring  errors — for  example,  the  statement  that  "Canada  is  the 
best  country  in  the  world  for  the  production  of  maize."  The  statistics 
are  not  always  above  question.  On  the  whole,  however,  the  book  is  a 
fairly  good  brief  for  the  establishment  of  an  economic  United  States 
of  Great  Britain. 

Alexander  E.  Cance. 

The  Frontier  of  Control:    A  Study  m  British  Workshop  Politics.     By 
Carter  L.  Goodrich.     (New  York:   Harcourt,  Brace  and  Howe. 
1920.    Pp.  xvi,  277.) 
This  little  book  deals  with  a  number  of  questions  that  it  is  highly 
important  to  have  answered.     They  are  the  specific  questions  that  be- 
long to  the  general  question  as  to  what  the  situation  actually  is  in 
England  in  regard  to  workers'  control  in  industry.     To  what  extent 


514  Reviews  and  New  Boohs  [September 

and  in  what  particulars  do  the  workers  now  exercise  control?  What 
further  control,  specifically,  are  they  seriously  demanding?  Why  do 
they  want  it?  How  many  of  them  really  want  it?  These  are  the  main 
queries  that  the  author,  an  American  who  has  studied  the  subject  on 
the  ground,  through  interview  as  well  as  through  search  of  the  docu- 
ments, endeavors  to  answer  as  far  as  the  information  which  he  has  been 
able  to  get  will  permit. 

What  Mr.  Goodrich  has  to  say  as  the  result  of  his  study  is  well 
worth  reading,  both  for  its  content  and  because  it  is  excellently  pre- 
sented. Mr.  R.  H.  Tawney,  who  contributes  a  stimulating  foreword, 
writes  that  Mr.  Goodrich's  book  is  the  best  account  known  to  him  of  the 
extent  to  which  British  workers  have  claimed  and  secured  control  in 
industry.  That  statement  establishes  the  value  of  the  book  on  the 
side  of  content.  As  a  piece  of  writing,  it  is  refreshing.  The  style  is 
direct,  clear  and  informal;  it  is  a  very  easy  book  to  read. 

In  his  first  chapter,  the  longest  in  the  book,  the  author  resolves  the 
inquiry  into  its  elements.  This  is  an  informing,  suggestive,  and  alto- 
gether interesting  introductory  essay.  In  the  following  chapters  he 
sketches  briefly,  and  in  some  places  rather  scantily,  the  specific  ways 
in  which  the  workers  have  already  invaded  the  province  of  "manage- 
ment." Nearly  all  of  this  ground  had  been  occupied  by  the  trade 
unionists  before  syndicalism  was  preached  to  the  British  workman  or 
he  had  been  called  upon  to  mourn  the  loss  of  his  creative  instinct. 
These  types  of  control  are  familiar  to  students  of  American  trade 
unionism,  as  are  the  workers'  reasons  for  demanding  that  these  rules 
or  conditions  be  observed  by  the  employers.  Many  of  them  may  be 
interpreted  as  corollaries  of  the  standard  rate  policy  or  as  safeguards 
against  such  dangers  as  the  depreciation  of  skill  through  changes  in 
methods  of  production  or  the  victimization  of  members  for  union  ac- 
tivity. This  kind  of  control  is  characterized  as  negative.  Union  rules 
governing  the  selection  and  assignment  of  personnel,  as,  for  example, 
rules  establishing  seniority  rights  in  promotion  and  tenure,  or  covering 
the  allocation  of  choice  jobs,  or  the  distribution  of  work  in  dull  periods, 
lie  closer  to  what  the  author  regards  as  the  present  frontier  of  control. 

The  demand  for  control  that  is  new  as  to  subject  and  different  in 
spirit  is  represented  by  a  reaching  out  for  a  share  in  the  direction  of 
industry  for  its  own  sake  or  the  sake  of  the  public  in  its  consuming 
capacity,  not  for  the  protection  or  enhancement  of  wage  rates  or 
safety  or  bargaining  position.  The  author  finds  this  new  spirit  in  the 
demand  for  the  right  to  select  the  foremen  rather  than  to  procure 
occasionally  the  discharge  of  one,  to  have  their  own  suggestions  for 
the  improvement  of  technique  adopted  instead  of  merely  holding  a 
veto  over  those  proposed  by  the  employer,  and  to  share  in  the  determi- 


1921]  Labor  and  Labor  Organizations  515 

nation  of  such  trade  policies  as  those  that  concern  price  and  output. 
But  few  instances  of  actual  extension  of  control  over  matters  of  this 
kind  on  their  own  initiative  are  marked  up  to  the  credit  of  the  workers, 
outside  the  war  industries.  The  frontier  has  not  yet  been  advanced 
far  or  uniformly  beyond  the  line  attained  by  the  trade  unionists  before 
the  war.  That  new  demands  are  being  made  and  new  reasons  given  is 
clearly  shown,  but  even  here  the  instances  are  drawn  from  but  few  in- 
dustries. 

Mr.  Goodrich  has  not  presented  much  original  material.  That  was 
not  his  purpose.  But  he  has  classified  his  material  skilfully  and  an- 
alyzed it  with  discernment.  At  a  time  when  there  is  so  much  loose 
talk  and  loose  writing  about  workers'  movements  for  control  in  industry 
this  book,  with  its  clear  recognition  that  established  trade-union  poli- 
cies represent  much  participation  in  control,  with  its  careful  discrimina- 
tion between  the  new  and  the  old,  between  a  general  resolution  of  a 
trades-union  congress  and  actual  shop  practice,  between  eagerness  for 
higher  money  returns  and  the  desire  to  see  things  well  done  and  to  direct 
rather  than  be  directed,  comes  as  a  welcome  aid  to  accurate  appraisal 
and  sound  thinking. 

D.  A.  McCabe. 

NEW    BOOKS 

Allen,  H.  J.  The  party  of  the  third  part:  the  story  of  the  Kansas  Indus- 
trial Relations  Court.     (New  York:    Harper.     1921.     Pp.  283.     $2.50.) 

Arnett,  T.  Teachers'  salaries  in  certain  endowed  colleges  and  universities 
in  the  United  States.  Occasional  papers,  no.  7.  (New  York:  General 
Education  Board,  61  Broadway.     1921.     Pp.  42.) 

Barnes,  G.  N.  The  industrial  section  of  the  League  of  Nations.  Barnett 
House  Papers,  no.  5.     (Oxford:    University  Press.     1920.     Pp.  16.     Is.) 

Bing,  A.  M.  War-time  strikes  and  their  adjustment.  (New  York:  Dut- 
ton.     1921.     Pp.  ix,  329.     $2.50.) 

The  title  of  this  book  does  not  adequately  describe  its  scope.  It  is 
true  that  the  author  treats  of  some  of  the  strikes  that  occurred  during  and 
immediately  after  the  war,  but  the  greater  part  of  the  work  is  concerned 
with  the  history,  organization,  and  functions  of  the  various  governmental 
mediating  agencies  which  existed  or  were  set  up  during  the  war. 

It  is  fortunate  that  this  material  should  have  been  collected  and  ren- 
dered easily  available  for  future  reference  in  this  brief  but  comprehensive 
form.  It  is  also  fortunate  that  the  facts  should  have  been  interpreted  by 
one  who  knew  them  at  first-hand  and  who  was  equipped  for  the  task  by 
large  business  experience  and  keen  social  sympathies. 

The  book  contains  a  number  of  charts  of  wage  rates — compared  with 
the  rising  cost  of  living  between  1914  and  1919.  These  indicate  clearly 
that  real  wages  advanced  slightly  in  a  few  occupations,  but  that  they 
actually  decreased  in  many  cases,  notably  in  the  navy  yards,  the  metal 
trades,  building  trades,  and  for  the  printers  and  electrotypers. 


516  Reviews  and  New  Books  [September 

In  Appendix  I,  strike  data  for  the  years  1914  to  1919  are  given.  These 
meager  statistics  which  were  gathered  by  the  United  States  Bureau  of 
Labor  Statistics  are  woefully  inadequate  for  any  real  study  of  the  extent 
to  which  war  work  was  impeded  or  of  the  waste  in  time  and  money  result- 
ing from  strikes  during  the  year  following  the  war.  Perhaps  the  most  im- 
portant point  brought  out  by  these  figures  is  that  strikes  during  the  war, 
though  numerous  and  though  they  often  involved  large  numbers  of  em- 
ployers, were  usually  of  very  short  duration.  C.  W.  Doten. 

Bullard,  F.  L.  The  public  refuses  to  pay.  Editorials  from  the  Boston 
Herald  on  the  railroad  and  buildiyig  situation.  (Boston:  Marshall  Jones 
Co.,  212  Summer  St.     1921.     Pp.  91.) 

Carlton,  F.  T.  The  history  and  problems  of  organized  labor.  Revised. 
(New  York:    Heath.     1920.     Pp.  xi,  559.) 

This  is  a  revision  of  Professor  Carlton's  book  of  the  same  name  pub- 
lished in  1911.  The  new  edition  is  enlarged  by  about  eighty  pages,  and 
also  much  new  material  has  been  substituted  for  old.  The  same  general 
plan  of  arrangement  and  emphasis  has  been  followed.  The  main  plan  of 
the  revision  has  been  to  add  to  the  topics  as  treated  formerly  such  items 
and  discussion  as  the  ten  intervening  years  have  made  important.  This 
treatment  preserves  the  value  of  the  work  and  adds  to  it  by  bringing  it 
up  to  date. 

That  this  has  been  done  with  thoroughness,  rather  than  cursorily,  will 
appear  from  an  instance  or  two.  In  the  earlier  edition  Professor  Carlton 
speaks  of  the  Industrial  Workers  of  the  World  as  "a  frankly  socialistic 
labor  organization.  Its  ambitious  aim  is  to  unite  all  the  workers  of  the 
nation  into  an  industrial  union  (p.  82)."  In  the  revision  (same  page) 
he  says:  "This  is  an  ultra-radical  labor  organization;  it  represents  the 
American  bolshevist  or  syndicalist  group.  Its  ambitious  aim  is  to  unite 
all  of  the  workers  of  the  nation  into  an  industrial  union  committed  to 
bitter  opposition  to  the  present  industrial  and  political  order."  In  the 
paragraph  on  new  aspects  of  strikes  (p.  165)  an  entire  page  of  new  ma- 
terial appears   (pp.   179,  180). 

There  are,  of  course,  occasions  for  differing  with  the  author  in  some 
of  the  opinions  stated;  but  in  the  main  they  are  matters  of  opinion  only, 
and  cannot  even  be  touched  upon  in  a  brief  note.  The  revision  brings 
before  labor  students  an  authoritative  text  at  a  time  when  interest  in  this- 
subject  is  especially  keen.  George  G.  Groat. 

Chisholm,  A.  Labour's  Magna  Charta:  a  critical  study  of  the  labour 
clauses  of  the  peace  treaty  and  of  the  draft  conventions  and  recommenda- 
tions of  the  Washington  international  labour  conference.  (New  York: 
Longmans.      1921.     Pp.  viii,  192.     $3.40) 

Citrine,  W.  M.  The  labour  chairman  and  speaker's  companion.  (London: 
Labour  Pub.  Co.     1921.     2s.  6d.) 

Cole,  M.  I.  The  control  of  industry.  (London:  Labour  Pub.  Co.  1921. 
6d.) 

Commons,  J.  R.  Trade  unionism  and  labor  problems.  (Boston:  Ginn. 
1921.     Pp.  xiii,  838.     $4.00.) 

This  book  is  a  new  edition,  not  a  revised  edition  of  Trade  Unionism 


1921]  Labor  and  Labor  Organizations  517 

and  Labor  Problems,  published  in  1905.  The  reprints  consist  of  recent 
papers  on  various  phases  of  trade  union  and  labor  activities  and  thus  an 
account  of  present-day  conditions  is  given.  Professor  Commons  in  an 
introductory  chapter  brings  together  from  all  the  cases  thus  presented 
the  items  on  which  generalizations  may  be  made.  The  papers  are  grouped 
under  the  following  headings:  I,  Security;  II,  The  Labor  Market;  III, 
Labor  Management;  IV,  Labor  Unions;  and  V,  The  Law.  An  excellent 
index  is  provided.  The  book  furnishes  valuable  material  for  both  the 
student  and  the  man  of  affairs.  G.  M.  J. 

Lewisohn,  S.  A.  Recent  tendencies  in  bringing  about  improved  relations 
between  employer  and  employe  in  industry.  (New  York:  Econ.  World. 
1921.     Pp.  14.) 

Liggett,  H.  M.  The  relation  of  wages  to  the  cost  of  living  in  Los  Angeles 
1915  to  1920.  Sociological  monographs,  no.  19.  (Los  Angeles,  Cal. : 
Southern  Cal.     Sociological  Soc,  Univ.  of  Southern  Cal.      1921.      15c.) 

Milner,  D.  Higher  production  by  a  bonus  on  national  output.  A  pro- 
posal for  a  minimum  income  for  all,  varying  with  national  productivity. 
(London:    Allen  &  Unwin.     1920.     Pp.  127.) 

Myers,  C.  S.  Mind  and  work:  the  psychological  factors  in  industry  and 
commerce.     (New  York:   Putnam.     1921.     Pp.  xi,  175.) 

Most  books  written  on  industrial  applications  of  psychology  attempt 
either  a  restricted  field  or  else  are  merely  a  compendium  of  facts.  Dr. 
Myers  not  merely  summarizes  the  work  done  in  England  and  America 
on  movement  study,  fatigue  study,  and  the  selection  of  personnel,  but 
explains,  adequately  and  untechnically,  the  conditions  and  circumstances- 
in  the  industrial  world.  Especially  in  the  chapters  on  Restriction  of 
Output,  Systems  of  Payment,  and  on  Industrial  Unrest  he  makes  a  clear, 
logical,  and  interesting  interpretation  of  the  psychology  of  the  employer 
and  that  of  the  employee.  A  background  of  this  nature  makes  more 
valuable  the  reading  of  such  other  books  as  Tead's  Instincts  in  Industry, 
Parker's  Casual  Laborer,  Marot's  Creative  Impulse  in  Industry.  Mind 
and  Work  was  not  intended  to  be  an  exhaustive  treatment  of  any  of  the 
factors  of  industry,  but  a  helpful,  suggestive  interpretation  of  industrial 
problems.  Charles  Leonard  Stone. 

Simons,  A.  M.  Personnel  relations  in  industry.  (New  York:  Ronald. 
1921.     Pp.  xi,  341.     $3.) 

Slesser,  H.  H.     Trade  unionism.      (London:    Methuen.     1921.     5s.) 

Walker,  C.  R.,  Jr.  A  national  council  for  the  printing  trades.  (New 
York:  Bureau  of  Industrial  Research,  289  Fourth  Ave.  1921.  Pp.  28. 
50c.) 

Watkins,  G.  S.  Labor  problems.  Seba  Eldridge,  editor.  (New  York: 
Crowell.     1921.) 

Webb,  S.  The  root  of  labour  unrest:  an  address  to  employers  and  man- 
agers.   Fabian  tract  no.  196.    (London:    Fabian  Soc.    1920.    Pp.  15.    2d.) 

.  The  story  of  the  Durham  miners.  (London:  Fabian  Book- 
shop.    1921.     2s.  6d.) 


518  Reviews  and  New  Books  [September 

Zimand,  S.  The  open  shop  drive.  Who  is  behind  it  and  where  is  it  going? 
(New  York:  Bureau  of  Industrial  Research,  289  Fourth  Ave.  1921. 
Pp.  61.) 

Board  of  arbitration  for  the  agreements  between  the  Amalgamated  Clothing 
Workers  and  the  Chicago  Clothing  Manufacturers.  Preliminary  edition. 
(Chicago:    Bd.  of  Arbitration,  H.  A.  Millis,  chairman.     1921.     Pp.  32.) 

Labor  terminology.  Bulletin  No.  25,  Bureau  of  Business  Research,  The 
Graduate  School  of  Business  Administration,  Harvard  University. 
(Cambridge,  1921.    Pp.  108.) 

This  little  booklet  is  more  than  a  glossary  of  terms.  It  defines  or  ex- 
plains a  great  many  words  and  phrases,  it  is  true,  but  it  also  gives  a  con- 
siderable amount  of  detailed  information,  including  statistics,  concerning 
the  more  important  labor  organizations.  It  explains  fully  the  method  of 
organization  of  industrial  councils  and  shop  committees  and  reprints 
typical  constitutions  and  by-laws  of  such  organizations. 

In  the  effort  to  be  brief  the  authors  have  sometimes  failed  to  make 
their  definitions  sufficiently  descriptive.  A  more  general  use  of  examples 
would  have  remedied  this  defect  which  is  probably  due,  in  part  at  least, 
to  the  fact  that  the  authors  were  too  familiar  with  the  matters  under  con- 
sideration to  realize  what  the  average  reader  would  really  need  to  be  told. 

On  the  whole  the  book  is  well  done  and  it  will  be  a  very  useful  addi- 
tion to  the  working  libraries  of  those  who  are  interested  in  labor  problems. 

Carroll  W.  Doten. 

Practical  experience  with  the  work  week  of  forty-eight  hours  or  less.  (New 
York:   Nat.  Indus.  Conference  Bd.     1921.     Pp.  ix,  88.) 

Proceedings  of  eighth  annual  meeting  of  the  International  Association  of 
Public  Employment  Services.  (Ottawa:  Dept.  of  Labour.  1921.  Pp. 
230.) 

Public  opinion  and  the  steel  strike  of  1919.  Supplementary  reports  to  the 
commission  of  inquiry,  Interchurch  World  Movement.  (New  York:  Har- 
court.     1921.     $1.50.) 

Report  of  a  conference  on  industrial  relations  held  at  Ottawa,  February  21 
and  22,  1921.  Industrial  relations  series,  bull.  no.  2.  (Ottawa:  Dept. 
of  Labour.     1921.     Pp.  61.) 

Resolutions  for  the  twenty-first  annual  conference  to  be  held  at  the  Dome, 
Brighton,  June  21,  1921.  (London:  The  Labour  Party,  33  Eccleston 
Sq.,  S.  W.   1.     1921.     Pp.  30.) 

Second  report  on  industrial  relations.  (New  York:  The  Merchants'  Assoc, 
S.  C.  Mead,  secretary.     1921.     Pp.  8.) 

Standard  time  rates  of  wages  and  hours  of  labour  in  the  United  Kingdom 
at  31st  December,  1920.  (London:  Ministry  of  Labour.  1921.  Pp. 
288.     2s.  6d.) 

Unemployment:  a  labour  policy.  Being  the  report  of  the  joint  committee 
on  unemployment,  appointed  by  the  parliamentary  committee  of  the 
Trades  Union  Congress  and 'the  Labour  Party  executive.  (London: 
Trades  Union  Congress,  32,  Eccleston  Sq.,  S.  W.  1.     1921.    Pp.  48.     3d.) 


1921]  Money,  Prices,  Credit,  and  Banking  519 

Wage   changes   in  industry,   September,   1914-December,   1920.      Research 
report  no.  35.     (New  York:  Nat.  Indus.  Conference  Bd.     1921.    Pp.  49.) 

Wages  and  hours  of  labour  in  Canada,  1901-1920.    Report  no.  1.     (Ottawa: 
Dept.  Labour.     1921.     Pp.  31.) 

A  works  council  in  being:  the  Bourneville  scheme.     (Birmingham:    Bourne- 
ville  Works.     1921.) 

Money,  Prices,  Credit,  and  Banking 

Banking  Progress.  By  J.  Laurence  Laughlin.  (New  York: 
Charles  Scribner's  Sons.     1920.     Pp.  x,  349.     $5.00.) 

This  account  of  the  banking  legislation  of  the  last  twenty-five  years 
presents  the  attitude  of  a  contemporary  on  the  questions  at  issue.  It 
records  the  opinions  of  one  who,  throughout  the  period,  was  influential 
with  bankers  and  with  members  of  Congress ;  as  such  it  is  more  than  an 
objective  record  of  what  happened;  it  is  a  document  which,  even  beyond 
the  intention  of  the  author,  indicates  how  completely  political  consider- 
ations determine  the  legislation  on  questions  which  are  essentially  tech- 
nical and  require  expert  opinion. 

In  the  long  struggle  from  the  days  of  greenbackism  and  free  silver  to 
the  establishment  of  the  federal  reserve  system,  Professor  Laughlin, 
judged  by  the  political  outcome,  has  invariably  been  right.  He  sup- 
ported the  campaign  for  sound  money,  suggested  an  asset  currency, 
recognized  the  inadequacy  of  emergency  note  issues,  opposed  the  guar- 
anty of  bank  deposits,  and  anticipated  the  idea  of  regional  banks  co- 
ordinated by  a  supervisory  board.  At  one  point  in  the  organization 
of  the  federal  reserve  system,  the  maintenance  of  a  single  reserve 
against  both  notes  and  deposits,  the  bill  as  enacted  differed  from  his 
recommendations,  and  the  course  of  events  since  then  has  proved,  he 
believes,  that  there  is  a  structural  weakness  at  just  that  point.  Chap- 
ter by  chapter,  the  questions  are  taken  up  chronologically;  the  argu- 
ments presented  are  those  which  were  most  effective  in  persuading  busi- 
ness men  of  the  need  for  banking  reform ;  the  political  compromises 
described  are  those  which  led  to  the  ordinarily  makeshift  legislation 
which  was  hurried  through  after  a  banking  crisis. 

One  reason  the  legislative  result  agreed  so  well  with  the  opinions 
Professor  Laughlin  had  already  expressed,  is  that  he  made  articulate 
the  aspirations  of  those  in  the  banking  and  business  community  who 
were  influential  in  securing  legislation.  For  this  task  he  was  admirably 
fitted  by  reason  of  his  lucid  style,  his  uncritical  acceptance  of  the 
fundamentals  of  business  enterprise,  and  by  the  character  of  his  ex- 
pressed opinions  which  were  never  too  far  in  advance  of  what  was  po- 
litically possible.     No  wonder  that  as  he  looks  back  over  the  events 


520  Reviews  and  New  Books  [September 

which  led  finally  to  the  Federal  Reserve  act,  it  is  to  him  "an  interesting 
story  with  a  happy  ending"  (p.  216). 

When  considered  in  the  light  of  the  present  problems  of  money  and 
credit,  however,  the  surprising  thing  is  how  many  of  these  questions 
dealt  with  legislatively  are  still  unsolved, — are,  in  fact,  present  in  a 
more  aggravated  form  and  under  conditions  which  make  them  more 
difficult  to  handle.  The  maintenance  of  the  gold  standard,  for  ex- 
ample, is  not  now  a  domestic  problem  which  may  be  settled  by  a  presi- 
dential campaign,  for  the  standard  has  broken  down  internationally. 
Instead  of  the  United  States  having  so  little  gold  as  to  endanger  its 
ability  to  maintain  redemption,  it  has  so  much  of  the  world's  gold  that 
other  nations,  its  chief  customers,  are  now  off  the  gold  standard  and 
see  little  prospect  of  resumption.  Inflation,  due  to  government  bor- 
rowing, instead  of  dying  with  greenbackism,  was  as  great  during  the 
recent  war  as  during  the  Civil  War  and  left  the  same  heritage  of  prob- 
lems. The  standard  of  prices,  instead  of  stabilizing  to  some  degree  the 
price  movement,  permitted  fluctuations  as  precipitous  as  in  the  days 
when  the  currency  was  irredeemable.  The  assets  of  banks,  in  spite  of 
all  the  preaching  about  the  superiority  of  self-liquidating  paper,  are 
composed  today  of  a  larger  proportion  of  investment  loans  than  ever 
before.  Perhaps  one  ought  not  to  expect  a  banking  and  currency  sys- 
tem to  come  through  a  war  without  some  scars,  and  yet  as  a  record 
of  legislative  achievement  the  present  situation  is  a  little  discouraging. 
Banking  progress,  instead  of  ending  happily  in  the  Federal  Reserve 
act,  appears  to  be  a  continued  story  in  which  the  present  episode  is  so 
complicated  and  full  of  danger  that  the  credit  system  and  the  gold 
standard  may  count  themselves  lucky  if  they  come  out  alive. 

Under  our  system  of  legislation  the  proper  policies  to  be  pursued  in 
such  technical  matters,  difficult  enough  to  decide  even  when  discretion  is 
in  the  hands  of  experts,  are  determined  by  a  body  of  men  entirely  in- 
competent to  deal  with  such  questions.  This  is  the  conclusion  which 
must  be  drawn  from  Professor  Laughlin's  record  of  the  law's  delay. 
"Hearings  are  usually  held,  not  primarily  to  have  various  sides  pre- 
sented by  experts,  but  to  enable  the  ignorant  member  to  be  taught  and 
to  understand  some  of  the  obvious  parts  of  a  proposed  measure.  .  .  . 
Since  men  who  are  primarily  politicians,  and  have  little  or  no  expert 
knowledge  or  training,  must  be  personally  convinced  before  a  bill  can 
even  be  reported  from  a  committee,  it  is  a  perpetual  wonder  that  work- 
able laws  on  technical  subjects  are  ever  passed"  (p.  156).  Through 
this  political  maze  must  be  guided  the  legislation  which  deals  with  the 
present  problems.  In  view  of  their  great  complexity,  and  given  the 
same  rate  of  legislative  progress  that  prevailed  during  the  past  gen- 


1921]  Money,  Prices,  Credit,  and  Banking  521 

eration,  the  provisions  of  the  law  will  doubtless  continue  to  lag  far 
behind  the  long  evident  need. 

Walter  W.  Stewaet. 

Amherst  College. 

NEW    BOOKS 

Aspley,  J.  C.  What  a  salesman  should  know  about  credits.  (Chicago: 
Dartnell  Corp.     1921.     Pp.  v,  102.) 

Christ,  W.  Schiffs-Hypotheken-Banken.  (Grief swald:  Bamberg.  1920. 
20  M.) 

Dalberg,  R.     Valuta-Dumping.     (Berlin:    Heymann.     1921.     8  M.) 

Damiris,  C.  J.  Le  systeme  monetaire  grec  et  le  change.  Three  vols. 
(Paris:    Giard.     1920.     Pp.  363;  359;  238.     70  fr.  complete.) 

Douglas,  C.  H.     Credit-power  and  democracy.      (London:    Cecil  Palmer. 

1920.  Pp.  212.) 

Engel,  W.  Geldgestaltung  und  Einhommensgestaltung ,  zugleich  ein  Bei- 
trag  zur  Theorie  der  Gewerkschaften.  (Leipzig:  Mirschfeld.  1920. 
8  M.) 

Fry,  M.  H.  Bankers  acceptances  as  an  investment.  (New  York:  Ameri- 
can Acceptance  Council,  111   Broadway.     1921.     Pp.  18.) 

Hall,  R.  O.  Chapters  and  documents  on  Chinese  national  banking.  (Wash- 
ington:   Ballantyne.     1921.     Pp.   198.     $2.) 

Heloury,  L.  La  crise  monetaire  en  Indo-China.  Piastre  ou  franc? 
(Saigon:    Heloury  et  Montegout.     1920.) 

Jores,  C.  Grundziige  des  Geld-  Kredit-  und  Banlcwesens.  Fourth  edition. 
(Leipzig:    Gloeckner.     1920.     24  M.) 

Kale,  V.  G.     Currency   reform   in  India.      (Poona:    Aryabhushan   Press. 

1919.  Pp.  107.     Is.) 

Layton,  W.  T.  An  introduction  to  the  study  of  prices,  with  special  refer- 
ence to  the  history  of  the  nineteenth  century.  New  edition.  (London: 
Macmillan.     1921.     Pp.  xiii,  194.     7s.  6d.) 

Lescure,  J.    La  baisee  des  prix  et  ses  problemes.     (Paris:    Librairie  Sirey. 

1921.  Pp.  74.) 

McMaster,  J.  S.  McMaster's  irregular  and  regular  commercial  paper. 
New  and  enlarged  edition.     (New  York:    McMaster  Co.,  37  W.  39th  St. 

1920.  $8.) 

Mawas,  A.  Le  systeme  monetaire  et  le  change  anglais  depuis  la  guerre. 
(Paris:    Giard/   1921.     Pp.  336.) 

Park,  O.  A.  Park's  banking  law  of  Georgia  as  amended  1920  with  the 
Trust  Company  and  State  Depository  acts.  (Atlanta:  Harrison  Co. 
1920.     Pp.  xii,  524.) 

Prion,  W.  Die  Finanzierung  und  Bilanz  wirtschaftlicher  Betriebe  unter 
dem  Einfluss  der  Geldentwertung.     (Berlin:    Springer.     1921.     8.80  M.) 


522  Reviews  and  Nero  Books  [September 

Shugrue,  M.  J.  Problems  in  foreign  exchange.  (New  York:  Appleton. 
1920.     Pp.  173.     $2.) 

As  stated  by  the  author  in  the  preface,  this  volume  "can  be  utilized 
most  efficiently  when  supplemented  by  other  sources  of  information." 
There  is  a  brief  introduction  that  explains  a  few,  but  only  a  few,  ele- 
ments of  the  subject.  In  fact,  the  value  of  the  introduction  is  by  no  means 
clear.  What  is  given  of  the  elements  of  the  subject  is  too  brief  to  aid 
a  beginner  in  the  subject,  and  yet  contains  nothing  that  is  not  elementary. 
The  text  proper  is  divided  into  three  parts.  The  first  is  a  series  of  six- 
teen typical  problems  and  their  solutions.  The  second  is  a  collection  of 
151  problems  for  solution  by  the  student,  these  being  appropriately 
grouped  under  seven  headings.  The  third  part  contains  two  appendices, 
one  of  which  includes  copies  of  numerous  foreign  exchange  documents 
and  the  other  a  number  of  foreign  exchange  tables. 

The  author  has  shown  good  judgment  in  his  choice  of  problems  and 
documents,  one  illustration  being  his  introduction  of  "dollars"  into  only 
a  part  of  the  problems  presented,  the  fact  that  sterling  has  by  no  means 
disappeared  as  a  world  factor  being  thus  recognized.  It  would  perhaps 
have  been  better  had  all  or  at  least  a  part  of  the  references  to  French  ex- 
change been  expressed  not  by  giving  the  value  of  the  dollar  in  francs  but 
the  worth  of  the  franc  in  cents.  The  latter  form  of  quotation  is  now  very 
common. 

Most  discussions  of  foreign  exchange  assume  that  foreign  exchange 
rates  are  determined  solely  by  commercial  and  banking  factors.  The  rate 
is  thought  of  as  being  set  by  the  private  purchase  and  sale  of  commodi- 
ties and  securities  and  by  the  movement  of  gold.  It  seems  to  be  taken 
for  granted  that  we  are  living  in  a  laissez-faire  regime.  Actually,  move- 
ments of  gold,  interest  rates,  and  exchange  rates  are  not  determined  by 
the  free  operation  of  "the  law  of  supply  and  demand."  Central  banks, 
to  an  important  extent  under  the  influence  of  their  respective  governments, 
adjust  discount  rates,  and  borrow,  buy  and  sell  gold  and  securities  in  such 
manner  as  to  affect  very  definitely  the  current  quotations  for  exchange. 
Yet  only  here  and  there  in  treatments  of  the  subject  is  this  fact  recog- 
nized. Goschen's  explanations  are  still  accepted  with  but  slight  modifi- 
cations. In  the  volume  before  us  the  same  viewpoint  is  maintained,  the 
influence  of  government  being  recognized  only  in  discussions  of  India 
and  in  reference  to  the  "pegging"  of  exchange  during  the  war. 

These  comments  should  not  be  interpreted  as  a  general  criticism  of  an 
admirable  book.  The  exercises  are  well  selected  and  have  to  do  with  a 
wide  range  of  countries.  They  also  have  the  merit  of  combining  ad- 
mirably the  theoretical  and  the  practical,  an  accomplishment  not  often 
to  be  observed  in  a  volume  of  problems.  E.  M.  Patterson. 

Spalding,  W.  F.  Bankers'  credits,  and  all  that  appertains  to  them  in  their 
practical,  legal  and  everyday  aspects.     (London:    Pitman.     1921.) 

.  The  functions  of  money:  a  handbook  dealing  with  the  sub- 
ject in  its  practical,  theoretical  and  historical  aspects.  (London:  Pit- 
man.    1921.     Pp.  xi,  168.     .$3.) 

Stern,  S.  The  foreign  exchange  problem.  (New  York:  Columbia  Trust 
Co.,  60  Broadway.     1921.     Pp.  124.) 


1921]  Public  Finance,  Taxation,  and  Tariff  523 

Talley,  L.  P.  The  financial  outlook.  Address  delivered  at  the  annual 
convention  of  the  Cattle  Raisers'  Association  of  Texas,  March  16,  1921. 
(Dallas:    Federal  Reserve  Bank.     1921.     Pp.  16.) 

Vissering,  G.  De  problemen  van  geldivezen  en  wisselkoers  op  de  finantieele 
confer entie  te  Brussel.      (The  Haag:  Van  Stockum.      1920.     2.25  fl.) 

Bibliografia  sobre  bancos  y  credito.  (Havana,  Cuba:  Camara  de  Repre- 
sentantes,  Biblioteca.     1921.     Pp.  59.) 

Changes  in  the  cost  of  living,  July,  191Jf.-M.arch,  1921.  Research  report  no. 
36.     (New  York:    Nat.  Indus.  Conference  Board.     1921.     Pp.  28.) 

A  century  of  the  Institution  for  Savings  in  Newburyport  and  its  vicinity. 
(Newburyport,  Mass.:    Institution  for  Savings.     1920.     Pp.  44.) 

Credits:  how  to  avoid  commercial  losses;  including  cancellations  and  returns. 
(New  York:   The  Credit  Guide,  415  Broadway.     1921). 

Pratt's  digest  of  federal  banking  lazes.  1920  edition.  (Washington:  A.  S. 
Pratt  &  Sons.     1920.     Pp.  xxix,  590.) 

Public  Finance,  Taxation,  and  Tariff 

The  Federal  Income  Tax.     By  Robert  M.  Haig,  Thomas  S.  Adams, 
Thomas  Reed  Powell,  Fred  T.  Field,  Robert  H.  Montgomery, 
George  E.  Holmes,  Arthur  A.  Ballantine,  Walter  A.  Staub, 
R.  V.  Norris,  and  P.  S.  Talbert.    A  Series  of  Lectures  delivered 
at  Columbia  University  in  December,  1920.     Edited  by  Robert 
M.  Haig,  with  an  introduction  by  E.  R.  A.  Seligman.      (New 
York:   Columbia  University  Press.     1921.) 
The  titles  of  the  several  lectures  in  this  collection  are:     "The  con- 
cept of  income,"  by  Haig ;  "When  is  income  realized,"  by  Adams ;  "The 
constitutional  aspects  of  federal  income  taxation,"  by  Powell;  "The 
legal  force  and  effect  of  treasury  interpretation,"  by  Field ;  "Reorgani- 
zation and  the  closed  transaction,"  by  Montgomery;  "Loss  as  a  factor 
in  the  determination  of  income,"  by  Holmes ;  "Inventories,"  by  Ballan- 
tine ;  "Consolidated  returns,"  by  Staub ;  "The  taxation  of  income  from 
natural  resources,"  by  Norris ;  "Relief  provisions  and  treasury  pro- 
cedure on  appeals,"  by  Talbert.    Professor  Seligman  in  a  graceful  "in- 
troduction" states  some  of  the  problems. 

As  in  the  case  of  some  of  our  magazines  this  publication  seems  to 
need  a  few  words  on  the  "contributors  to  this  issue."  Haig  is  known 
as  the  tireless  investigator  of  the  single  tax-limited  experiments  in  Can- 
ada, and  more  recently  as  editor  of  the  Report  to  the  American  Eco- 
nomic Association  on  the  Taxation  of  Excess  Profits  in  Great  Britain. 
Adams,  now  of  Yale,  is  known  to  all  economists  as  formerly  professor 
and  tax  commissioner  in  Wisconsin  and  lately  as  the  indispensable  ad- 
visor to  Congress  and  to  the  Treasury  on  the  income  tax.  What  is 
good  in  the  income  tax  law  is  due  to  Adams,  what  is  bad  to  the  in- 


524  Reviews  and  New  Books  [September 

superable  obstacles  he  encountered.  Powell,  professor  of  constitutional 
law,  Columbia,  is  known  to  all  the  legal  profession  and  to  many  econo- 
mists for  his  profound  knowledge  of  the  inter-relation  between  the 
taxing  powers  of  the  states  and  the  federal  government.  Field  is  a 
Boston  lawyer  and  one-time  member  of  the  Advisory  Tax  Board. 
Montgomery  needs  no  introduction  to  readers  of  the  Review,  for  his 
Income  Tax  Procedure  has  been  reviewed  each  year.  Holmes  is  Mont- 
gomery's friendly  rival  as  author  of  a  standard  annual  on  Federal 
Taxes.  Ballantine  is  a  lawyer  and  was  for  a  time  Solicitor  of  Internal 
Revenue.  Staub  is  an  accountant  in  the  same  firm  with  Montgomery, 
and  author  of  Income  Tax  Guide;  Norris  is  a  mining  engineer.  Tal- 
bert  was  at  one  time  chairman  of  the  committee  on  appeals  and  re- 
view in  the  Bureau  of  Internal  Revenue.  Of  the  right  of  these  notables 
to  "speak  with  authority"  there  can  be  no  doubt. 

To  pass  these  ten  lectures,  each  full  of  controversial  matters,  in  re- 
view within  our  allotted  space  is  exceedingly  difficult.  Nothing  more 
can  be  done  than  to  select  arbitrarily  one  point  in  each  lecture. 

Haig  builds  his  lecture  around  a  definition  of  income  which  he  says 
"the  economist  offers."  According  to  that  definition,  "Income  is  the 
money  value  of  the  net  accretion  to  one's  economic  power  between  two 
points  of  time."  Since  he  quotes  a  good  many  other  definitions  by 
economists  all  of  which  are  different  we  may  take  the  liberty  of  read- 
ing "Haig"  for  "the  economist."  The  great  difficulty  with  the  defini- 
tion is  that  it  leaves  undecided,  as  does  the  lecture  itself,  the  issue 
whether  in  the  case  of  income  from  property,  that  is  investment  in- 
come, the  measure  of  "economic  power"  shall  be  the  annual  value,  or 
the  increase  in  capital  value,  or,  as  our  federal  law  is  now  interpreted, 
both  of  these  whenever  the  increase  of  capital  value  is  reduced  to 
money.  He  discusses  briefly  the  British  concept  of  taxable  income  as 
the  "annual  value"  of  property,  the  annual  profits,  earnings,  etc.,  and 
discharges  it  apparently  because  it  is  so  old.  "For  an  explanation  of 
this  conception  .  .  .  one  must  go  back  as  far  as  the  fifteenth  century. 
.  .  ."     Thus  lightly  are  the  good  old  things  cast  aside. 

Adams'  lecture  is  for  him  unusually  technical.  It  is  in  the  main  an 
explanation,  carrying  in  some  measure  a  defense  of  the  Treasury  rul- 
ings as  to  the  year  in  which  income  not  strictly  current  is  to  be  con- 
sidered taxable.  There  is  as  is  usual  in  Adams'  statements  a  lot  of 
common  sense,  forcefully  presented.  As  a  sample  we  may  cite  the 
argument  that  sound  practice  in  income  taxation  must  adopt  as  basis 
of  determining  the  income  received,  the  accounting  and  other  business 
practices  of  each  of  the  different  lines  of  business.  Following  this 
line  of  argument  one  wonders  why  the  bureau  cannot  furnish  different 
forms  for  returns  by  different  classes  of  taxpayers.     The  regulations 


1921]  Public  Finance,  Taxation,  and  Tariff  525 

recognize  differences,  yet  since  the  forms  are  all  the  same,  the  differen- 
tiating calculations  must  be  made  all  outside  the  forms.  A  very 
enlightening  review  of  the  cases  decided  by  the  courts  is  part  of  the 
lecture. 

To  select  a  point  or  two  from  Powell's  comprehensive  survey  is 
merely  to  make  one  regret  all  the  more  the  many  others  one  leaves  un- 
mentioned.  But  no  more  can  be  done.  We  select  thus  the  one  point 
(p.  62)  that  when  the  court,  ruling  on  legal  or  constitutional  provi- 
sions, reaches  a  decision  which  is  "hard-hearted"  or  "inclement,"  Con- 
gress may  repent  and  has  repented  such  "unkindness."  Turning  the 
point  to  what  has  occurred  since  the  lecture  was  delivered,  if  we  feel 
that  the  decision  that  increments  in  capital  investments  are  legally  tax- 
able works  a  hardship  in  all  cases  where  the  income  that  caused  them 
is  already  taxed  the  remedy  is  not  in  disputing  the  decision  but  in 
moving  Congress  not  to  exercise  the  power,  which  the  court  says  it  has, 
of  working  this  injustice.  It  is  interesting  to  note  that  Powell  proved 
a  true  prophet  in  forecasting  the  decision  of  the  court  as  delivered 
March  28,  1920.  There  is  a  great  deal  in  the  "study  of  the  psychol- 
ogy of  courts"  in  which  Powell  is  an  expert. 

It  is  new  to  American  law  to  give  to  an  administrative  officer  any 
powers  approaching  legislation.  Yet  in  passing  a  law  like  the  income 
tax  law  Congress  cannot  foresee  every  application  it  may  have  and 
the  power  to  make  either  administrative  or  interpretative  rulings 
amounting  almost  to  new  legislation  has  to  be  vested  in  the  administra- 
tion. Congress  hedged  this  delegated  power  about  with  restrictions 
that,  by  taking  from  such  rulings  anything  final  or  conclusive,  leave 
the  taxpayer  all  too  often  "up  in  the  air."  But  that  is  part  of  our 
system  of  government.  The  conclusion  of  Field's  lecture  is :  "Admin- 
istrative rulings  are  made  under  authority  of  a  delegated  quasi-legisla- 
tive power  and,  if  within  the  scope  of  the  delegation,  have  the  effect 
of  law  as  quasi-statutes.  They  are  presumed  to  be  valid.  Interpre- 
tative rulings  have  no  effect  as  law,  since  they  are  not  within  the  dele- 
gation of  quasi-legislative  power  and  since  no  power  of  conclusive 
quasi- judicial  construction  is  given  to  the  Treasury  Department" 
(p.  113). 

Montgomery's  article  deals  with  a  much  vexed  question,  a  part  of  the 
question  "when  is  a  transaction  a  closed  transaction."  The  difficulty 
is  the  old  one  of  the  interpretation  of  the  par  value  of  shares  of  stock. 
"Par"  being  always  a  fiction,  even  if  "par"  at  one  time  corresponded 
to  "true,"  may  at  another  time  be  something  far  different.  Yet  un- 
doubtedly juggling  with  par  values  may  cover  or  reveal  profits,  and  in 
some  cases  enable  a  shrewd  one  to  make  a  profit  from  the  loss  of  one 


526  Reviews  and  New  Books  [September 

less  sharp.  This  is  a  highly  technical  matter  discussed  with  Mont- 
gomery's usual  force  and  bluntness. 

"Depreciation,  obsolescence,  amortization  and  losses  due  to  casualties 
or  theft"  is  the  subtitle  of  Holmes's  lecture.  "In  our  present  system, 
comprising  all  the  acts  passed  since  the  Sixteenth  Amendment  to  the 
Constitution,  the  notion  is  that  not  only  should  the  taxpayer  be  taxed 
on  the  annual  fruit  which  his  tree,  capital,  bears,  but  also  upon  the 
growth  of  the  tree  itself — the  enlargment  of  the  trunk  and  branches, 
and  the  new  branches  which  have  sprouted  during  the  year"  (p.  137). 
With  this  admirable  simile,  showing  how  we  came  to  be  dealing  at  once 
with  income  and  capital  under  the  guise  of  an  income  tax,  Holmes 
opens  his  lecture.  Since  we  are  going  to  tax  the  growth  of  the  tree  we 
have  to  consider  the  damage  to  the  old  growth,  hence  the  deductions 
above  listed. 

Ballantine's  lecture  is  a  straight  away  explanation  of  the  rulings  on 
inventories.  Inventories  have  a  twofold  importance.  Not  only  may 
they  be  so  taken  as  to  increase  or  decrease  the  income  tax,  but  if 
taken  so  as  to  increase  the  income  tax,  will  decrease  the  excess  profits 
tax  and  the  contrary.  Furthermore,  with  the  great  fluctuations  in 
prices  inventory  taking  has  presented  serious  technical  difficulties. 

Nowhere  has  the  proverbial  ingenuity  of  the  Philadelphia  lawyer 
found  greater  scope  than  in  making  intricate  combinations  of  corpora- 
tions within  corporations.  For  wheels  within  wheels  a  Swiss  watch  is 
simplicity  itself  compared  with  some  of  our  "affiliations  or  communi- 
ties of  financial  interests."  It  is  possible  to  trace  the  line  of  power 
when  there  is  one  main  spring  in  a  parent  company  but  that  is  not 
always  the  case.  Staub  explains,  with  numerical  illustrations,  the 
meaning  of  the  rulings  on  this  complicated  and  technical  subject. 

Norris  takes  up  the  subject  of  wasting  assets,  especially  the  deple- 
tion of  mines.  There  is  a  distinct  analogy  between  an  annuity  and 
the  proceeds  of  mining.  This  Norris  recognizes  in  his  suggestion  that 
"as  the  fair  value  of  a  property  at  any  date  is  the  present  value  of  the 
future  earnings  discounted  to  that  date,  depletion  could  logically  be 
taken  as  a  percentage  of  earnings  for  each  year,  such  percentage  be- 
ing the  present  value  of  an  annuity  of  $1,000  a  year  for  the  estimated 
life  of  the  property,  divided  by  the  number  of  years  estimated  life." 
He  has  also  interesting  alternative  suggestions.  He  recognizes  the  dif- 
ferences in  different  industries.  The  lecture  is  full  of  suggestions  and 
leads  the  reviewer  to  the  conclusion  that  all  annuities  and  all  like  in- 
comes should  have  a  special  treatment,  if  not  special  and  lower  rates, 
by  reason  of  the  fact  that  the  only  known  quantity,  the  annual  pay- 
ment or  dividend,  is  in  part  only  true  net  income. 

Except  for  the  few  large  taxpayers  or  associations  of  taxpayers  who 


1921]  Public  Finance,  Taxation,  and  Tariff  527 

can  keep  attorneys  or  experts  in  Washington  always  on  the  job,  the 
problem  of  getting  a  hearing,  of  obtaining  refunds,  and  of  making  ap- 
peals is  like  that  confronting  Stanley  when  he  set  out  to  find  Livingston 
in  Darkest  Africa.  Talbert  shows  the  taxpayer  his  legal  rights  and 
discusses  the  administrative  methods,  and  difficulties.  But  he  does 
not,  nor  can  he  as  long  as  the  law  compels  the  taxpayer  to  shoot  so 
long  a  bow,  show  you  or  me  where  to  aim.  It  is  with  relief,  not  to 
say  surprise,  that  we  read  that  every  "case  receives  the  most  careful 
scrutiny."  But  it  is  cold  comfort  to  learn  that  it  is  only  fear  of  estab- 
lishing precedents  that  deprives  one  of  the  satisfaction  of  knowing  the 
result  of  an  attempted  appeal  even  when  knowing  the  worst  would  be 
better  than  the  uncertainty. 

Carl,  C.  Plehn. 
University  of  California. 

British  War  Finance  and  the  Consequences.  By  T.  J.  Kiernan.  (Lon- 
don: P.  S.  King  and  Son.    1921.     Pp.  vi,  134.    5s.  6d.) 

I  read  this  little  book  through  carefully  preparatory  to  writing  this 
review.  Then  I  read  it  all  over  again  to  renew  the  pleasure  I  had 
found  in  it.  It  deals  with  important  matters,  and  presents  them 
clearly  and  very  attractively.  It  is  a  dissertation  presented  for  the 
M.  A.  degree,  at  the  National  University  of  Ireland.  Would  that  all 
scholastic  dissertations  were  as  good.  Brief  as  it  is,  it  will  serve  as  a 
handy  reference  book  and  one  wishes  it  had  an  index,  which  is  missing. 

The  book  begins  with  a  statement  of  the  financial  system  of  Great 
Britain  as  it  was  before  the  war,  in  which  none  but  the  essentials  are 
reviewed.  The  gold  standard,  a  currency  supplied  by  the  Mint,  the 
complete  separation  of  the  Bank  of  England's  issue  department  from 
the  fiscal  operations  of  the  government,  the  non-interference  of  the 
government  with  the  currency,  and  the  freedom  of  credit  from  politi- 
cal control  are  the  main  points  set  forth.  The  first  chapter  ends  with 
a  table  showing  that  British  government  expenditures  multiplied  thir- 
teenfold,  increasing  from  £m  196.5  in  the  fiscal  year  1913-14  to  £m  2,- 
576.5  in  1918-19.  This  sets  the  problem,  which  is  to  trace  the  changes 
in  the  financial  system  thus  occasioned. 

The  story  of  the  first  shock  to  credit  in  1914  has  been  well  told 
several  times,  but  never  better  than  by  Mr.  Kiernan.  He  is  franker 
than  some  others  have  been  in  condemnation  of  the  resort  to  and  con- 
tinuance of  issue  of  the  £1  and  10s.  legal  tender  currency  notes.  "By 
this  measure,  the  monetary  and  fiscal  functions  of  the  State  were  con- 
fused for  the  first  time  in  the  modern  history  of  the  country,  and  all 
check  on  the  Government's  power  of  issuing  more  currency  than  was 
required  by  the  demands  of  industry  was  removed"  (p.  25).    Was  that 


528  Reviews  and  New  Boohs  [September 

necessary  in  view  of  the  suspension  of  the  Bank  act — an  expedient  far 
less  fraught  with  subsequent  dangers?  "The  Treasury's  power  of 
printing  and  issuing  Currency  Notes  was  used  as  a  fiscal  device  for  get- 
ting a  loan  without  having  to  pay  interest  for  it;  these  notes  were,  in 
the  result,  the  means  of  confusing,  in  a  most  shameless  and  unprece- 
dented fashion,  the  monetary  and  fiscal  functions  of  the  State"  (p.  33). 

Next  comes  a  review  of  the  increase  of  the  public  debt,  from  £m  716 
in  1913  to  fm  7,882  in  1920  or  about  elevenfold,  but  the  debt  charges 
grew  over  thirteenfold.  Expenditures,  which  had  increased  from 
£m  197.5  in  1913-14  (these  are  Exchequer  Issues  and  differ  a  little  from 
the  figure  given  above)  to  £m  2,696  in  1917-18  had  been  reduced  by 
1919-20  to  £m  1.666  but  still  exceeded  the  revenues  by  £m  326.  In  re- 
viewing the  items  of  revenue,  borrowings  and  expenditures,  Mr.  Kiernan 
is  of  the  opinion  that  war  time  taxation  was  not  sufficiently  heavy.  While 
it  did  seem  that  England  got  under  way  with  new  taxation  more  slowly 
than  accorded  with  her  traditions  of  war  finance,  yet  it  appears  to  the 
reviewer  that  an  80  per  cent  excess  profits  tax  and  an  income  tax  drop- 
ping down  to  little  folks  with  $12  a  week,  and  approaching  a  maximum 
limit  of  over  12s.  in  20s.,  together  with  other  forms  of  heavy  taxes  is 
by  no  means  insufficient  even  for  war  taxes. 

The  relative  effects  of  public  borrowings  from  each  of  the  different 
possible  sources  is  admirably  set  forth  (pp.  46  ff.)  and  the  conclusion 
reached  that  there  was  too  much  dependence  on  "money  subscribed 
directly  by  banks,  or  money  borrowed  from  banks  by  individual  sub- 
scribers to  the  loans"  (p.  49).  It  would  have  been  better  in  the  long 
run  had  the  war  debt  been  "spread  among  the  masses  of  the  people." 
All  this  seems  sound  judgment,  but  may  there  not  be  some  personal 
prejudice  in  the  implication  (p.  92)  "that  the  moneyed  minority  had 
influence  over  the  Chancellors"?  Watching  at  long  range,  some  5,000 
miles  distant,  reading  carefully  every  available  report,  budget,  speech, 
and  other  document  which  could  be  obtained  the  reviewer  formed  so 
high  an  opinion  of  the  sound  wisdom  and  firmness  of  Mr.  McKenna  as 
Chancellor  of  the  Exchequer,  that  the  "surmise"  above  quoted  seems 
wholly  unjust. 

The  review  of  the  effect  of  currency  issues,  and  of  the  excessive  use 
of  short-time  notes  on  prices  is  admirably  done.  In  calling  attention 
to  the  frequent  fallacious  use  of  percentages,  the  partial  breakdown 
of  index  numbers,  and  to  the  presence  in  the  usual  formulas  of  impor- 
tant "unknown"  quantities,  Mr.  Kiernan  has  done  a  real  service.  The 
general  conclusion  that  it  was  the  rapidity  of  spending  by  government 
and  people  alike  which  raised  prices,  and  that  prices  were  assisted  in 
rising  by  currency  and  credit  inflation  is  admirably  put.  Some  rather 
caustic  remarks  about  Ricardo's  alleged  contribution  to  the  "quantity 


1921]  Public  Finance,  Taxation,  and  Tariff  529 

theory"  are  amusing.  Why  Ricardo  should  be  required  to  have  fore- 
seen and  refuted  the  fallacies  which  developed  a  century  later  any 
more  than  Adam  Smith's  works  should  be  searched  for  a  refutation  of 
Marx  theories,  or  a  confirmation  of  the  Austrian  theory  of  value? 

The  chapter  on  the  foreign  exchanges  is  interesting  and  well  put. 
But  we  may  wonder  whether  the  author's  view  that  parity  can  be  re- 
stored mainly  by  increased  production  and  exports  is  correct.  Until 
the  currency  system  is  restored  and  the  outstanding  treasury  bills  re- 
duced it  seems  doubtful  whether  a  favorable  balance  of  trade  alone  will 
bring  back  the  gold  pound  sterling. 

The  conclusion  is  that  the  war  has  left  England's  one-time  nearly 
perfect  system  of  finance  in  some  disorder.  "The  perfection  of  this 
(pre-war)  financial  machinery  lay  in  its  automatism.  That  automatic 
action  has  ceased."  The  market  holds  £m  1,000  of  treasury  bills,  and 
that  puts  the  Bank  of  England  at  the  mercy  of  the  market.  Then 
there  are  still  £m  335.4  of  currency  notes  outstanding.  It  will  require 
strenuous  taxation,  strenuous  economy,  and  a  great  sacrifice  of  "the 
enjoyment  of  indolence"  on  the  part  of  the  people  to  restore  to  Great 
Britain  the  old  time  soundness  of  her  financial  system. 

Carl  C.  Plehn. 

University  of  California. 

NEW    BOOKS 

Allix,  E.  Tra'ite  elementaire  de  la  science  des  finances  et  de  legislation 
financiere  francaise.     Fourth  edition.     (Paris:    Arthur  Rousseau.     1921.) 

Alverson,  L.  T.  Digest  of  American  income  tax  cases.  (New  York: 
Baker,  Voorhis  &  Co.     1921.     Pp.  viii,  453.) 

Dede,  E.  Die  neuen  Reichssteuern.  (Leipzig:  Teubner.  1921.  Pp. 
100.     3.50  M.) 

Frye,  R.  The  income  and  other  federal  taxes  as  affected  by  patents,  trade- 
marks, copyrights  and  goodwill.  (Chicago:  Gunthorp-Warren  Printing 
Co.     1921.     Pp.  xii,  331.) 

Holmes,  G.  E.  1921  supplement  to  federal  income  tax,  war-profits  and 
excess-profits  taxes,  including  stamp  taxes  and  capital  stock  tax.  (Indian- 
apolis:   Bobbs-Merrill.     1921.     Pp.  xxiv,  539.) 

Kahn,  O.  H.  The  American  "man  in  the  street"  and  the  allied  debt.  'A 
letter  to  the  London  Times.  (New  York:  Committee  of  American  Busi- 
ness Men,  354  Fourth  Ave.     1921.     Pp.  15.) 

Levy,  B.  G.     L'initiation  financiere.      (Paris:  Librairie  Hachette.      1921.) 

McCaleb,  W.  F.  The  public  finances.  (New  York:  Harper.  1921.  Pp. 
267.     $2.50.) 

This  book  published  under  the  auspices  of  the  Doheny  Foundation  re- 
lates to  Mexico. 

Normand,  G.   La  mort  des  octrois.    (Paris:   Librairie  Perrin.    1921.    5  fr.) 


530  Reviews  and  New  Books  [September 

Pigou,  A.  C.  A  capital  levy  and  a  levy  on  war  wealth.  World  of  today 
series  no.  4.     (New  York:    Oxford  Univ.  Press.     1921.     $1.) 

Pommier,  H.     La  liquidation  financiere  de  la  guerre.      (Paris:    Imp.  des 

Assureurs.     1921.) 
Respondek,  E.     Die  Reichsfinansen  auf  Grund  der  Reform  von  1919-20. 

(Berlin:    Vereinigung  Wissensch.  Verleger.     1921.     Pp.  277.     28  M.) 

Rex,  G.  M.  Federal  taxes  on  income  and  profits  under  the  Revenue  ad 
of  1918  pertaining  to  corporations,  estates,  trusts  and  partnerships. 
(Providence,  R.  I.:   Author.     1920.     Pp.  xii,  124.) 

Rossmoore,  E.  E.  Federal  corporate  income  taxes.  (New  York:  Dodd, 
Mead.     1921.     Pp.  338.    $7.50.) 

Terhalle,  F.    Steuerlast  und  Steuerkraft.     (Jena:    Fischer.     1921.) 

Walter,  A.  School  finances  of  Monterey  Co.,  California:  and  the  crisis  in 
education.    (Salinas,  Cal. :    Monterey  Co.  Teachers'  Club.    1921.  Pp.  30.) 

Webb,  S.  Grants  in  aid:  a  criticism  and  a  proposal.  Studies  in  economics 
and  political  science.  No.  24  in  the  series  of  monographs  by  writers  con- 
nected with  the  London  School  of  Economics  and  Political  Science.  New 
edition,  revised  and  enlarged.      (London:     Longmans.     1920.     Pp.   145.) 

The  first  edition  of  this  polemic  essay,  published  in  1911,  was  reviewed 
in  the  American  Economic  Review,  vol.  II,  no.  3,  September,  1912, 
p.  686.  (A  misprint  making  "child  nurture"  read  "child  nature"  mars 
that  review.)  The  revision  consists  in  bringing  the  comparative  data 
used  down  to  1920,  and  in  urging  that  the  reforms  advocated,  and  under 
consideration  when  the  war  broke  out,  be  taken  up  again  and  put  through. 

The  book  discusses  a  problem  of  local  government  in  England,  is  ad- 
dressed to  Englishmen  and  presumes  for  its  understanding  a  knowledge 
of  local  history  and  institutions  which  few  but  the  natives  of  that  country 
possess. 

A  "Grant  in  Aid"  (printed  uniformly  with  initial  caps)  is  an  appro- 
priation by  Parliament  from  national  funds  to  some  Local  Government 
usually  to  assist  that  government  in  some  specified  local  activity.  Some- 
times there  is  and  sometimes  there  is  not  a  string  tied  to  it.  Thus  in 
the  case  of  the  appropriations  for  the  support  of  the  constabulary  the 
local  government  must,  to  receive  assistance,  keep  its  local  police  force 
up  to  a  standard  of  "adequacy  and  efficiency"  prescribed  by  the  Home 
Office.  If  inspectors  sent  out  from  that  office  find  the  force  not  up  to 
standard,  as  to  numbers,  stations,  personnel,  and  even  pay,  the  grant 
may  be  withheld.  But  many  other  appropriations  are  handed  over  with- 
out   supervision. 

The  main  thesis  is  that  Grants  in  Aid  should  not  only  be  centrally 
supervised  but  the  whole  system  extended,  because  "they  furnish  the  only 
practicable  method,  consistent  with  local  autonomy,  of  bringing  to  bear 
upon  local  administration  the  wisdom  of  experience,  superiority  of  knowl- 
edge, and  breadth  of  view  which,  as  compared  with  the  administrators  of 
any  small  town  or  any  rural  area,  a  central  executive  department  cannot 
fail  to  acquire,  for  the  carrying  into  effect  of  the  general  policy  which 
Parliament  has  prescribed."  It  is  assumed,  without  argument,  that  this 
is  such  a  blessing  that  it  is  well  that  the  national  government  has  already 


1921]  Public  Finance,  Taxation,  and  Tariff  531 

"  'bought'  the  rights  of  inspection,  audit,  supervision,  initiative,  criticism, 
and  control,  in  respect  of  one  local  service  after  another"  and  that  after 
selling  their  birth  rights  in  this  shameless  fashion  it  will  still  be  possible 
for  local  governments  to  have  a  certain  amount  of  local  autonomy,  if 
none  of  self-respect.  It  is  difficult  to  see  how  they  can  have  either.  The 
further  excuse  for  this  system  is  one  familiar  enough,  unfortunately,  in 
America,  namely,  that  as  between  the  several  local  governments  great 
needs  exist  where  there  are  little  means  and  that  national  aid  is  necessary 
to  "equalize"  opportunities. 

It  is  very  clearly  shown  that  the  system  of  Grants  in  Aid  is  politically 
too  strongly  entrenched  in  Great  Britain  to  be  removed,  that  there  are 
abuses,  that  the  cost  has  trebled  since  1911,  and  that  even  the  constabu- 
lary have  doubled  in  number  in  proportion  to  population  under  this  nu- 
tritive system,  which  now  costs  <£m  65  per  annum.  If  it  cannot  be  ex- 
tirpated it  would  seem  wise  to  put  it  in  order.  But  when  Mr.  Webb 
commends  (p.  5)  such  a  system  to  Americans  for  use  in  the  United  States 
to  displace  what  he  calls  our  "Anarchy  of  Local  Autonomy"  (the  caps  are 
his)  he  must  have  overlooked  the  "pauper  counties"  of  the  South  and 
elsewhere  which  receive  more  money  in  aid  than  they  raise  themselves,  the 
undermining  of  the  old  school  district  by  state  subsidies  and  other  notor- 
ious evils.  He  fails  to  appreciate  the  dangers  to  a  self  respecting,  healthy 
system  of  local  government  on  which  the  very  life  of  democracy  depends, 
that  lurk  in  national  and  state  appropriations  buying  from  the  local  gov- 
ernment their  right  to  muddle  along  if  they  can  do  no  better,  but  yet  to 
enjoy,  what  is  far  more  precious  certainly  than  bureaucratic  efficiency,  the 
blessings  of  liberty.  The  general  conclusions  one  draws  from  Mr.  Webb's 
argument  is  that  the  evils  he  would  correct  are  only  symptoms  of  a  greater 
disease.  One  gathers  from  his  book  that  local  government  in  England  is 
suffering  from  pernicious  anaemia  due  to  a  diet  of  inspection,  supervision, 
criticism  and  control  served  up  in  too  rich  a  butter  sauce  of  grants  in  aid. 

C.  C.  P. 

The  Corporation  Trust  Company's  1921  war  tax  service.     (New  York:   Cor- 
poration Trust  Company.     1921.     Pp.  832.     $25.) 

Digest  of  treasury  decisions  relating  to  internal  revenue,  during  the  period 
from  Sept.  9,  1916,  to  Bee.  31,  1920.     (Washington:   Supt.  Docs.    $1.) 

Emergency  tariff  act  of  1921.     (Boston:    National  Shawmut  Bank.     1921. 
Pp.  25.) 

Federal  income  tax  and  its  relation  to  real  property.      (New  York:    Real 
Estate  Board,  217  Broadway.     1921.     Pp.  96.) 

Fifty  points  on  the  income  tax  for  the  individual.     (Providence,  R.  I.:   R.  I. 
Hospital  Trust  Co.     1920.     Pp.  vi,  41.) 

Final  report  of  the  committee  on  new  sources  of  revenue.     Doc.  34.     (Bos- 
ton:   City  Record.     1921.     Pp.  42.) 

Income  tax  primer;  revised  January  1,  1921.     Prepared  by  the  Bureau  of 
Internal  Revenue.     (Washington:    Supt.  of  Docs.     1921.) 

Handbook  of  customs  procedure  at  Shanghai.     (Shanghai:    Kelly  &  Walsh, 
Ltd.     1921.     Pp.  300.     $5.) 


532  Reviews  and  New  Books  [September 

Marine  insurance  clauses.  (New  York:  N.  A.  Phemister  Co.,  42  Broadway. 
1920.     Pp.  iv,  152.     $3.) 

Proceedings  of  the  second  National  Industrial  Tax  Conference.  Special  re- 
port no.  17.  (New  York:  Nat.  Indus.  Conference  Board.  1921.  Pp. 
vi,  200.) 

Population  and  Migration 

NEW    BOOKS 

Abbott,  G.  The  educational  needs  of  immigrants  in  Illinois.  The  immi- 
grant and  coal  mining  communities  of  Illinois.  Bulletin  of  the  Immi- 
grants Commission,  nos.  1,  2.  (Springfield,  111.:  Dept.  of  Registration 
and  Education.     1920.     Pp.  37,  43.) 

Drachsler,  J.  Democracy  and  assimilation:  the  blending  of  immigrant 
heritages  in  America.    (New  York:   Macmillan.    1920.   Pp.  xii,  275.    $3.) 

The  nucleus  of  this  book  is  a  discussion  of  the  results  of  the  examina- 
tion of  a  hundred  thousand  marriage  records  of  New  York  City,  a  study 
of  much  value.  About  one  in  seven  of  these  represents  an  intermarriage, 
and  among  the  intermarriages  persons  of  the  first  and  second  generation 
generally  mate  with  others  of  their  respective  generations.  The  term 
intermarriage  is  used  in  a  sociological  rather  than  an  ethnical  sense,  with 
reference  to  social  assimilation  rather  than  race  mixture,  but  even  when 
this  qualification  is  made,  the  figures  seriously  need  further  interpreta- 
tion; the  marriage,  for  example,  of  a  German  from  Austria  with  a  Ger- 
man from  Hungary  or  of  a  Swiss  Italian  with  a  Piedmontese  Italian  hav- 
ing a  significance  almost  negligible  beside  that  of  a  Lombard-Bavarian 
intermarriage. 

There  is  a  general  study  of  assimilation.  The  author's  recommendations 
for  an  immigration  policy  comprise  selection,  distribution,  and  incorpora- 
tion. Of  incorporation  there  should,  he  says,  be  much,  but  it  should  not 
go  beyond  a  certain  point,  since  some  peoples  can  be  most  useful  by  re- 
taining their  group  fellow-consciousness;  of  distribution  there  should  be 
a  great  deal.  Restriction  should  give  way  before  selection,  which  plainly 
is  not  intended  to  be  inspired  by  a  desire  to  reduce  numbers  generally. 
The  author  steers  clear  of  any  economic  emphasis,  but  the  reviewer  re- 
tains two  doubts,  which  he  believes  important:  (1)  whether  a  program 
of  distribution  and  incorporation  would  not  be  very  costly,  especially  if 
the  foreign-born  were  not  to  be  given  preferential  treatment  over  the 
more  backward  native-born  (rural  folk,  negroes,  etc.)  ;  (2)  whether  ac- 
tive distribution  and  incorporation  will  not  enormously  stimulate  further 
immigration  into  the  country  (the  author  would  not  check  this  by  a 
frankly  restrictive  policy)  which  in  turn  would  require  greatly  increased 
expenditure  for  distribution  and  incorporation.  R.  F.  Foerster. 

Yule,  U.  The  fall  of  the  birth-rate.  Paper  read  before  the  Cambridge 
University  Eugenics  Society.  (Cambridge,  Eng. :  University  Press. 
1920.     Pp.  43.) 

Annual  report  of  the  Commissioner  General  of  Immigration,  fiscal  year 
ended  June  SO,  1920.  (Washington:  Bureau  of  Immigration.  1920. 
Pp.  454.) 


1921]  Social  Problems  and  Reforms  633 

"Immigration  laws."     (Washington:   Bureau  of  Immigration.     1921.     10c.) 

Rapports  presentes  au  Congres  par  la  Commission  d'action  religieuse  catho- 
lique.  (Paris:  Assoc,  du  Mariage  Chretien,  86  rue  de  Gergovie.  1920. 
Pp.  84.) 

Social  Problems  and  Reforms 

NEW    BOOKS 

Aronovici,  C.  Housing  and  the  housing  problem.  The  national  social 
science  series.     (Chicago:    McClurg.     1920.     Pp.  160.     75c.) 

To  gauge  this  book  properly,  it  is  necessary  to  consider  the  author's 
intention,  which  he  expresses  in  the  following  words:  "This  book  is 
not  intended  as  a  text  for  field  workers  engaged  in  the  inspection  of  sani- 
tary conditions,  nor  does  it  deal  with  any  details  of  the  technical  features 
of  construction.  All  that  can  be  claimed  is  that  it  presents  in  outline., 
at  least,  some  of  the  fundamental  social  and  economic  principles  upon 
which  a  constructive  national  housing  program  may  be  built."  In  his 
eight  brief  chapters,  Dr.  Aronovici  outlines  his  problem,  deals  with  the 
economic  factors  in  housing,  with  housing  legislation  and  the  housing  sur- 
vey, and  with  garden  cities.  He  states  that  the  housing  problem  consists 
in  "the  furnishing  of  healthful  accommodations  adequately  provided  with 
facilities  for  privacy  and  comfort,  easily  accessible  to  centers  of  employ- 
ment, culture,  and  amusement,  accessible  from  the  centers  of  distribution 
of  the  food  supply,  rentable  at  reasonable  rates,  and  yielding  a  fair  return 
on  the  investment."  The  importance  of  the  problem  is  illustrated  by 
quotations  from  statistics  on  the  correlation  of  housing  and  mortality 
drawn  from  Dr.  Arthur  Newsholme,  the  report  of  the  United  States 
Children's  Bureau  for  Johnstown,  Pa.,  and  from  tables  of  Dr.  A.  K. 
Chalmers  of  Scotland.  These  statistics  ingenuously  correlate  high  death 
rates  of  slum  populations  with  factors  of  insanitation  and  overcrowding, 
but  fail  to  consider  the  other  possible  causes.  It  is  probable  that  poverty 
and  its  consequences,  malnutrition,  overwork,  etc.,  may  play  a  larger  part 
than  housing  conditions  do  in  the  production  of  such  high  mortality  rates. 

In  his  consideration  of  rents,  Dr.  Aronovici  in  ten  pages  treats  in  an 
original  and  suggestive  manner  the  causes  of  variation  in  rentals.  He 
fails  to  mention  equipment,  fashion,  and  racial  factors,  but  his  treatment, 
despite  its  brevity,  is  a  contribution  to  its  subject.  Under  economic  fac- 
tors, he  deals  with  land,  materials,  labor,  capital,  maintenance,  and  cost 
and  urges  that  "a  reduction  to  a  minimum  of  the  non-creative  labor,  a 
general  recognition  of  the  financial  value  of  architectural  planning  and 
administration,  a  change  from  a  non-creative  and  restrictive  to  a  creative 
point  of  view  of  governmental  functions  in  building  affairs  and  a  rise  in  the 
standard  of  efficiency  of  the  building  trades,  will  meet  the  needs  of  the 
labor  problem  in  the  field  of  building  in  general  and  home  building  in 
particular." 

The  later  chapters  contain  less  that  is  original  and  controversial.  There 
is  occasional  carelessness  in  classification  (see  bottom  of  page  2  and  page 
46)  and  typographical  errors  occur  in  several  places  (e.g.,  top  of  page  28 
and  bottom  of  page  79).  The  book  may  also  annoy  the  careful  reader  be- 
cause of  dogmatic  assertions.  Such  assertions,  however,  could  not  ade- 
quately be  defended  in  a  book  of  this  size.     They  may  be  used  to  great 


534  Reviews  and  New  Books  [September 

advantage  as  hypotheses  which  may  be  tested  by  specialists  who  have 
access  to  original  data  on  the  subject  of  housing.  In  spite  of  the  above 
criticisms,  I  find  the  book  broad,  original,  creative,  and  often  brilliant 
with  more  social  philosophy  than  is  to  be  found  in  any  other  American 
work  in  its  field.  It  should  be  read  by  all  persons  who  are  concerned 
with  this  subject.  James  Ford. 

Bondham,  R.     Le  mat   social  et  ses  remedes.      (Paris:    Societe  Mutuelle 
D'Edition.     1920.     Pp.  381.) 

In  discussing  the  problem  of  poverty  the  author  illustrates  with  condi- 
tions existing  in  various  countries,  makes  an  analysis  of  causes  and  pre- 
sents a  program  of  reform.  The  practical  subjection  of  the  masses,  that 
is,  lack  of  opportunity  on  their  part,  is  considered  the  outstanding  cause 
of  poverty.  The  writer  believes  that  this  inequality  is  due  largely  to 
existing  inheritance  laws  and  would  meet  the  situation  with  provisions 
for  a  measurable  equalization  of  inheritance  within  stipulated  population 
districts.  Such  a  reform  should  greatly  reduce  the  social  menace  of  con- 
centrated wealth.  Education  and  the  conservation  of  the  human  elements 
are  also  stressed.  Civilization  is  not  necessarily  secure  and  without  re- 
form we  will  not  enjoy  that  "capillary  attraction"  which  will  safeguard 
society  against  deterioration.  G.  B.  M. 

Boyle,  J.  E.     Rural  problems  in  the  United  States.     The  national  social 
science  series.     (Chicago:    McClurg.     1921.     Pp.  142.     $1.) 

Chapin,  F.  S.     Field  work  and  social  research.      (New  York:    Century. 
1920.     Pp.  xi,  224.     $1.75.) 

As  a  practical  handbook  for  persons  engaged  in  social  research  this 
study  is  most  valuable.  It  is  presented  in  simple  form  and  is  also  very 
readable.  It  states  the  principles  that  should  govern  an  examination  of 
source  material;  it  supplies  a  long  list  of  the  most  important  common 
documentary  sources  and  it  gives  the  student  an  excellent  idea  as  to  meth- 
ods of  organizing  the  field  work  necessary  for  a  social  investigation;  it 
outlines  the  principles  on  which  a  valid  investigation  must  be  based;  it 
presents  simple  schedules  for  field  work  and  briefly  discusses  the  prob- 
lems connected  with  the  compilation  and  analysis  of  the  data  gathered. 
Case  work,  sampling,  and  complete  enumeration  are  each  discussed  as 
one  of  the  techniques  of  field  work.  Unfortunately,  the  discussion  of 
case  work  is  not  entirely  adapted  to  the  actual  problem  of  the  investiga- 
tor in  a  large  proportion  of  the  case  work  studies  made  for  purposes  of 
social  investigation.  The  author  would  probably  have  been  more  suc- 
cessful if  he  had  been  more  original  in  his  presentation  of  this  problem. 
Although  only  a  few  formulas  are  presented  the  novice  will  find  it  diffi- 
cult to  give  them  practical  application.  They  could  easily  have  been 
demonstrated  and  the  method  made  entirely  clear.  A  short  analysis  is 
made  of  the  method  used  in  conducting  a  number  of  typical  investigations. 
The  selected  references  given  at  the  end  of  the  various  chapters  are  very 
helpful  as  collateral  reading,  both  for  the  student  and  the  investigator. 
The  author  brings  the  investigator  to  the  point  where  the  method  of  in- 
terpreting the  facts  needs  to  be  ascertained  but  leaves  him  to  complete 
this  study  in  other  books.  George  B.  Mangold. 


1921]  Social  Problems  and  Reforms  535 

Collis,  E.  L.  and  Greenwood,  M.  The  health  of  the  industrial  worker. 
(Philadelphia:    Blakiston.     1921.     Pp.  xix,  450.     $7.) 

Darrow,  C.  Crime  and  punishment.  Edited  by  Seba  Eldridge.  (New 
York:    Crowell.     1921.) 

Douglas,  P.  H.  American  apprenticeship  and  industrial  education.  Co- 
lumbia University  studies  in  history,  economics,  and  public  law,  vol.  XCV, 
no.  2.     (New  York:   Longmans.     1921.     Pp.  348.) 

Gini,  C.  Problemi  sociologist  delta  guerra.  (Bologna:  Nicola  Zanichelli. 
1921.     Pp.  390.) 

Gleason,  A.  Workers'  education.  American  and  foreign  experiments. 
(New  York:  Bureau  of  Industrial  Research,  289  Fourth  Ave.  1921. 
Pp.  64.     50c.) 

Hudson,  J.  W.  The  truths  we  live  by.  (New  York:  Appleton.  1921. 
Pp.  x,  307.     $3.) 

Husslein,  J.  C.  Evolution  and  social  progress.  (New  York:  P.  J.  Kenedy 
&  Sons.     1920.     Pp.  viii,  287.) 

Lichtenberger,  A.  La  crise  actuelle  de  la  domesticite.  (Paris:  Musee 
Social.     1921.     Pp.  26.) 

Loughran,  E.  W.  and  Madden,  M.  R.,  compilers.  Outline  study  of  immi- 
gration and  Americanization.  (Warren,  R.  I.:  Ward  McDermott  Press. 
1921.     Pp.  19.     30c.) 

Miller,  L.  D.  Directory  of  social  agencies.  Formerly  the  New  York 
charities  directory.  Thirteenth  edition.  (New  York:  Charity  Organiza- 
tion society,  105  E.  22d  St.     1921.     Pp.  liii,  407.     $2.) 

Milnes,  N.    Child  welfare.    (New  York:    Dutton.    1921.    Pp.  243.    $2.35.) 

Morris,  J.  van  L.  Employee  training:  a  study  of  education  and  training 
departments  in  various  corporations.  First  edition.  (New  York:  Mc- 
Graw-Hill.    1921.     Pp.  xxiii,  311.     $3.) 

Rathenau,  W.  The  new  society.  Authorized  translation  by  Arthur  Wind- 
ham.    (New  York:    Harcourt,  Brace  &  Co.     1921.     Pp.  vi,  147.) 

Robertson,  J.  Housing  and  the  public  health.  English  public  health  series. 
(New  York:    Funk  &  Wagnalls.     1920.     Pp.  159.     $1.50.) 

Rowntree,  B.  S.  and  Stuart,  F.  D.  The  responsibility  of  women  workers 
for  dependants.     (Oxford:    Clarendon  Press.     1921.     Pp.  65.) 

Sims,  N.  L.  The  rural  community.  (New  York:  Scribner's.  1920.  Pp. 
xxiii,  916.) 

Smyth,  W.  H.  Technocracy,  first  and  second  series.  Social  universals. 
(Berkeley,  Calif.:   Author,  Fernwald.     1921.     Pp.  66.) 

Sneddon,  D.  S.  Sociological  determination  of  objectives  in  education. 
(Philadelphia:    Lippincott.     1921.     Pp.  322.) 

Annotated  subject  index  and  order  list  of  books  and  pamphlets,  including 
government  reports  on  maternity  and  child  welfare  in  England  and  Scot- 


536  Reviews  and  New  Books  [September 

land.    A.  R.  C.  circular  no.  1011.     (Washington:    American  Red  Cross. 
1920.     Pp.  181.) 
Bulletin  of  information.     (New  York:   Bureau  of  Personnel  Administration. 
17  West  47th  St.     1921.     Pp.  23.) 

The  church  and  industrial  reconstruction.  By  the  Committee  on  War  and 
the  Religious  Outlook.     (London:   Bell  &  Sons.     1921.     3s.  6d.) 

Cost  of  health  service  in  industry.  Research  report  no.  37.  (New  York: 
Nat.  Indus.  Conference  Board.     1921.     Pp.  33.) 

Directory  of  family  social  work  societies  of  the  United  States  and  Canada; 
together  with  a  selected  list  of  foreign  societies.  (New  York:  American 
Assoc,  for  Organizing  Family  Social  Work.     1921.     Pp.  31.) 

Report  of  special  commission  to  investigate  maternity  benefits.  House  no. 
1835.      (Boston:  State  House.     1920.     Pp.  92.) 

Insurance  and  Pensions 

NEW    BOOKS 

Arnold,  R.  R.  Workmen's  compensation  law  of  Georgia.  (Atlanta:  Har- 
rison Co.     1920.    Pp.  51.    $2.) 

Bament,  W.  N.  Co-insurance.  An  address  delivered  before  the  one  hun- 
dred and  fifty-fourth  stated  meeting  of  the  Insurance  Society  of  New 
York.     (New  York:    Insurance  Soc.     1921.     Pp.  22.) 

Doring,  H.  Versicherung  und  Luftverkehr,  Preisgekronte  Abhandlung. 
Veroffentlichungen  des  Deutschen  Vereins  fiir  V  ersicherungs-Wissen- 
schaft.     (Berlin:    Mittler.     1921.     Pp.  96.     24  M.) 

Hatch,  H.  A.  Experience  of  American  employers  favorable  to  unemploy- 
ment compensation.  (New  York:  Am.  Labor  Legis.  Rev.  1921.  Pp. 
23.) 

Lynch,  J.  M.  Sickness  in  industry  as  a  cause  of  poverty — and  a  remedy 
therefor.  Ninth  report  of  the  committee  on  health.  (New  York:  N.  Y. 
State  Federation  of  Labor.     1920.     Pp.  19.) 

Moir,  H.  Life  assurance  primer.  A  textbook  dealing  with  the  practice  and 
mathematics  of  life  assurance,  for  advanced  schools,  colleges,  and  uni- 
versities. Third  edition,  revised  and  enlarged.  (New  York:  Spectator 
Co.     1921.     Pp.  vii,  230.) 

Mutual  relief  associations  among  government  employees  in  Washington,  D. 
C.     Bull.  282.     (Washington:    Bureau  of  Labor  Stat.     1921.     5c.) 

Problems  and  solutions:  associateship  examinations,  parts  I  and  II,  1915- 
1919.     (New  York:   Actuarial  Soc.  of  America.     1921.     Pp.  v,  133.) 

Progress  of  the  contractual  plan  of  old  age  annuities.  Carnegie  Foundation 
for  the  Advancement  of  Teaching.     1921.     Pp.  52.) 

Statistical  tables  compiled  from  annual  statements  covering  business  of 
19W.     (Albany:   N.  Y.  Insurance  Dept.     1921.     Pp.  20.) 


! 


1921]  Socialism  and  Cooperative  Enterprises  537 

Socialism  and  Co-operative  Enterprises 
The  Social  Interpretation  of  History.     A  Refutation  of  the  Marxian 
Economic  Interpretation   of  History.      By   Maurice  Williams. 
(Brooklyn,  N.  Y. :    Privately  printed  by  the  author,  87  Norman 
Ave.     1920.     Pp.  222.) 

This  little  volume  has  unusual  interest  as  a  personal  document;  not 
that  its  service  can  be  so  narrowly  defined,  for  it  contains  a  great  deal 
of  penetrating  criticism  of  Marxian  theory  and  much  more  effective 
criticism  of  that  army  of  disciples  who  have  outdone  and  often  undone 
their  master.  It  is  a  sinister  comment  to  see  trains  and  banners  of  the 
Russian  reds  plastered  with  huge  portraits  of  Marx  and  then  note  the 
scathing  anathamas  by  the  best  known  of  Marx's  interpreters. 

One  may  question  a  little  Mr.  Williams'  confidence  in  his  "basic  law 
of  evolution,"  and  the  finality  attributed  to  it.  Now  and  then,  one 
would  like  to  substitute  for  this  law  some  term  like  "available  human 
nature."    But  this  does  not  seriously  impair  the  excellence  of  the  study. 

For  more  than  twenty-five  years  the  author  was  a  devout  and  un- 
questioning Marxian.  The  reactions  of  the  war  and  the  part  played 
in  it  by  socialists  led  Mr.  Williams  to  a  searching  reconsideration  of 
the  theories  and  practices  which  had  so  long  held  his  loyalty.  He  had 
accepted  the  definitions,  formulas,  and  logic  of  socialist  exposition. 
The  vibrations  of  war  created  such  confusion  among  the  leaders  about 
the  world  that  no  dogma  was  left  unshaken.  This  was  the  opportunity 
for  "revaluing  the  values."  Mr.  Williams  has  made  skilful  use  of  it. 
A  good  instance  is  in  the  third  chapter,  on  State  Socialism.  Here 
we  have  a  leading  editorial  writer  in  the  New  York  Call,  reading  a 
lesson  to  Norman  Hapgood.  There  are  three  pages  of  the  most  fa- 
miliar orthodox  severities  patronizingly  administered,  but  hardly  a 
year  of  war  experience  was  required  to  upset  this  complacent  dogma- 
tism. It  appeared  that  none  differed  more  on  fundamentals  than  the 
very  elite  of  socialist  expositors. 

The  author  sees  this  party  strife  as  a  result  of  pretended  loyalty  to 
Marxian  principles  and  their  total  abandonment  in  practice.  Through 
seventeen  short  and  pithy  chapters,  he  exposes  these  inconsistencies. 
On  specific  questions  like  "reform  legislation" ;  its  utility  or  dis-utility 
to  socialism,  he  shows,  for  example,  how  the  veteran  Kantsky  differs 
from  Hillquit,  with  other  instances  just  as  telling.  The  author  is  at 
his  best  in  his  analysis  and  use  of  the  cooperative  movement  in  its  rela- 
tion to  Marx.  A  lucid  distinction  between  labor  copartnership  and 
consumer's  cooperation  is  made  and  adhered  to.  Marx's  resolution  at 
the  Geneva  Conference  is  quoted.  "We  recommend  workmen  to  em- 
bark on  cooperative  production  rather  than  cooperative  stores.  The 
latter  touch  only  the  surface  of  the  economic  system  of  today,  the  first 


538  Reviews  and  New  Books  [September 

strikes  at  its  foundation."  What  a  comment  on  this  judgment  is  the 
total  history  of  the  two  movements!  The  one  is  a  record  of  failure, 
the  other  at  least  of  relative  and  growing  success.  Yet  Mr.  Williams 
is  not  deceived  into  any  romantic  idealizing  of  consumers'  cooperation. 
He  subjects  this  (p.  144  et  seq.)  to  most  intelligent  criticism  with 
fruitful  suggestions  as  to  its  relation  to  socialism. 

"The  differences  in  the  relative  success  of  the  Socialist  party  and 
Consumer  Cooperative  is  explained  by  the  fact  that  the  Consumer  Co- 
operative did  not  have  to  repudiate  any  theoretical  principles  in  working 
out  its  practical  program.  The  time  that  the  "Marxists"  spent  in 
fighting  each  other  over  the  inconsistency  between  their  theory  and 
practice,  the  members  of  the  cooperative  spent  in  building  up  their 
organizations  and  in  extending  their  influence." 

The  book  is  to  be  heartily  recommended. 

John  Graham  Brooks. 

Cambridge,  Mass. 

NEW    BOOKS 

Ammon,   A.     Die   Hauptprobleme   der  Socialisierung.      (Leipzig:    Quelle. 
1921.     Pp.  111.) 

Bernstein,  E.    My  years  of  exile:  reminiscences  of  a  socialist.     Translated 
by  Bernard  Miall.     (London:    Leonard  Parsons.     1921.     15s.) 

Brailsford,  H.  N.     The  Russian  workers'  republic.     (New  York:    Harper. 
1921.     Pp.  x,  274.     $2.50.) 

Claessens,  A.     The  logic  of  socialism.     (New  York:    Rand  School  of  Soc. 
Sci.     1921.     Pp.  51.     15c.) 

Cole,  G.  D.  H.     Guild  socialism:  a  plan  for  economic  democracy.     (New 
York:    Stokes.     1920.     Pp.  202.     $1.60.) 

Eucken,    Pi.      Der    Sozialismus    und    seine    Lebensgestaltung.      (Leipzig: 
Philipp  Reclam,  Jr.     1921.) 

Gerathewohl,   F.     St.   Simonistische   Ideen   in   der  deutschen  Literatur. 
(Miinchen:    Birk.     1920.     2  M.) 

Glasier,  J.  B.     William  Morris  and  the  early  days  of  the  socialist  move- 
ment.    (New  York:    Longmans.     1921.     Pp.  ix,  208.     $2.25.) 

Haldane,  Lord.     The  problem  of  nationalisation.     With  an  introduction  by 
R.  H.  Tawney,  and  H.  J.  Laski.     (London:  Allen  &  Unwin.     1921.     Is.) 

Hyndman,  H.  M.     The  evolution  of  revolution.     (New  York:   Boni  &  Live- 
right.     1921.     Pp.  406.) 

Mr.  Hyndman,  now  in  his  eightieth  year,  was  one  of  the  first  and  re- 
mains among  the  last  of  the  British  Marxian  socialists.  The  founder  of 
the  Social  Democratic  Federation  has  lived  to  see  his  own  generation  pass 
from  the  stage  and  to  see  the  younger  radicals  drift  away  either  to  the 
Labor  party  on  the  right  or  to  the  syndicalist  groups  on  the  left.     And  to 


1921]  Socialism  and  Cooperative  Enterprises  539 

the  last,  although  he  "ventures  to  differ"  from  Marx  on  minor  points, 
Mr.  Hyndman  remains  true  to  the  faith. 

He  gives  us  in  this  book  a  survey  of  social  evolution  from  primitive 
communism  to  the  bolshevik  dictatorship.  The  steps  by  which  a  great 
human  community  moves  upward  from  one  stage  to  another  in  the  evo- 
lutionary process,  are  known  as  revolutions.  He  believes  that  the  domi- 
nant forces  in  this  process  are  economic,  although  he  expressly  disavows 
the  "complete  determinist"  position.  A  genuine  revolution  can  only  take 
place  when  social  and  economic  conditions  are  ripe.  Conditions  were  not 
ripe  for  socialism  in  Russia,  so  when  the  Czar  fell  he  only  gave  place  to 
a  "Communist  Ivan  the  Terrible." 

The  author's  mature  scholarship  and  wide  experience  give  to  the  vol- 
ume an  unusual  value,  and  we  can  therefore  pardon  such  defects  as  the 
involved  sentences  and  the  rather  obvious  failure  to  take  into  consider- 
ation the  work  of  contemporary  economists  and  sociologists,  particularly 
in  the  field  of  social  origins.  G.  B.  L.  Arner. 

Laidler,  H.  W.  The  history  of  socialism.  Edited  by  Seba  Eldridge. 
(New  York:    Crowell.     1921.) 

LeRossignol,  J.  E.     The  sophistry  of  socialism.     (New  York:    Cromwell. 

i92i.)  ,       j.  y  „ 

Loria,  A.  Karl  Marx.  Translation  with  foreword  by  E.  and  C.  Paul. 
New  York:    Seltzer.     1920.     Pp.  163.) 

This  brilliant  critical  essay  was  written  to  commemorate  the  centenary 
of  the  founder  of  modern  socialism.  The  English  translation  is  unusually 
good,  although  the  foreword  by  the  translators  is  long  and  tedious.  It  is 
interesting  to  note  that,  writing  before  the  bolshevist  coup  d'etat,  Loria 
expressly  points  out  the  syndicalist  error  in  Marxian  interpretation  on 
which  the  theory  of  bolshevism  is  based.  While  Marx  does  appeal  to 
force  as  the  midwife  of  an  old  society  pregnant  with  a  new  one,  he  is 
very  careful  to  show  that  a  long  evolutionary  process  must  come  first  and 
that  the  old  order  must  disintegrate  and  lose  its  vitality  before  a  sudden 
revolution  can  succeed.  G.  L.  A. 

Muckle,  F.  Die  grossen  Sozialisten.  II.  Saint  Simon,  Pecqueur,  Buchez, 
Blanc,  Rodbertus,  Weitling,  Marx,  Lassalle.  (Leipzig:  Teubner.  1920. 
3.50  M.) 

Mueller,  O.  Der  Sozialismus  in  Deutschland.  (Munich:  Volksverein- 
Verlag.     1920.     6  M.) 

Price,  M.  P.  My  reminiscences  of  the  Russian  revolution.  (London: 
Allen  &  Unwin.     1921.     18s.) 

Raine,  C.  E.,  and  Luboff,  E.    Bolshevik  Russia.     (London:    Nisbet  &  Co. 

1920.  Is.) 

Rignano,  E.  Per  una  riforma  socialista  del  diritto  successorio.  (Bologna: 
Nicola  Zanichelli.     1920.     Pp.  167.     6.50  1.) 

Travers-Borgstroem,  A.     Mutualism:  a  synthesis.     (London:    Macmillan. 

1921.  Pp.  xxvi;  97.     4s.  6d.) 

Weeks,  R.  W.  Socialism  of  Jesus.  (Girard,  Kans. :  Appeal  to  Reason. 
1921.    Pp.  64.    25c.) 


540  Reviews  and  New  Books  [September 

Woolf,  L.   S.     Socialism    and   cooperation.      (London:     National   Labour 

Press.     1911.     3s.  6d.) 
Co-partnership.     Report  of  the  London  Co-partnership  Congress,  October, 

1920.     (London:   Labour  Co-partnership  Assoc.     1920.    Pp.  33.    2s.  6d.) 

Statistics  and  Its  Methods 
The  Problem  of  Estimation.  A  Seventeenth  Century  Controversy  and 
Its  Bearing  on  Modern  Statistical  Questions,  Especially  Index 
Numbers.  By  Correa  Moylan  Walsh.  (London:  P.  S.  King 
and  Son,  Ltd.  1921.  Pp.  144.  6s.) 
The  opening  chapter  of  this  book  adds  another  link  to  the  already 
lengthy  chain  of  evidence  that  there  is  nothing  new  under  the  sun.  The 
author  shows  that  nearly  three  hundred  years  ago,  mathematicians 
were  already  discussing  the  same  problems  which  are  puzzling  the 
statisticians  of  today.  At  that  time,  Galileo  and  Nozzolini  had  an 
intricate  discussion  concerning  the  following  question:  "If  a  horse 
worth  100  crowns  is  estimated  by  one  person  at  1,000  crowns  and  by 
another  at  10  crowns,  which  of  these  two  estimates  is  the  less  erroneous, 
or  are  they  equally  erroneous?"  Nozzolini  contended  that  the  estimate 
of  10  crowns  was  equally  as  far  astray  as  an  estimate  of  190  crowns. 
Galileo,  on  the  contrary,  took  the  position  that  the  estimates  of  10 
crowns  and  1,000  crowns  represented  equal  errors.  Mr.  Walsh  points 
out  that  the  controversy  was  really  over  the  use  of  the  arithmetic  or 
geometric  average.  Galileo  apparently  had  the  better  of  the  argument 
and  established  the  fact  that  the  geometric  average  is  the  correct  one 
to  use  in  connection  with  estimates.  Present-day  statisticians  have  often 
assumed  that  the  average  adapted  to  estimates  is  also  applicable  to 
observations.  The  author  points  out  that  the  two  things  are  entirely 
different  in  their  nature.  When  numerous  estimates  are  plotted  as  a 
frequency  graph,  they  give  a  curve  greatly  skewed  to  the  right,  while 
observations  yield  a  symmetrical  curve  instead.  The  arithmetic  mean 
of  observations  approaches  the  correct  result,  but  this  average  is 
highly  erroneous  when  applied  to  estimates. 

This  discussion  serves  as  an  introduction  to  a  searching  analysis  of 
the  nature  and  uses  of  different  types  of  averages.  The  principles  set 
forth  have  been  so  carefully  worked  out  that  one  needs  to  be  well  pre- 
pared indeed  before  he  takes  issue  with  Mr.  Walsh. 

The  third  chapter  is  devoted  to  price  indices  and  takes  up  in  detail 
questions  of  the  applications  of  the  various  types  of  averages  to  this 
problem.  The  nature  and  merits  of  weighting  are  also  discussed  and 
the  importance  thereof  is  strongly  emphasized.  The  conclusions 
reached,  concerning  the  best  index  number  for  use  in  measuring  changes 
in  the  purchasing  power  of  money  are  largely  in  harmony  with  those 


1921]  Statistics  and  Its  Methods  541 

presented  by  Professor  Irving  Fisher  at  the  Annual  Meeting  of  the 
American  Statistical  Association  in  December,  1920. 

The  author  does  not  hesitate  to  take  to  task  vigorously  those  statis- 
ticians whose  reasoning  seems  to  him  to  be  careless  or  unsound.  It 
appears  to  the  reviewer  that  at  least  one  such  criticism  is  ill  founded. 
Professor  Edgeworth  is  quoted  as  saying:  "It  is  with  the  index  num- 
bers as  with  conduct;  in  order  to  form  a  just  judgment,  we  must  al- 
ways look  to  the  underlying  idea  and  purpose."  Mr.  Walsh  flatly  de- 
nies the  truth  of  this  assertion  and  says:  "In  averaging  price  varia- 
tions, the  purpose  or  object  is  given;  it  is  to  measure  changes  in  the 
exchange-value  or  purchasing  power  of  money."  The  thought  thus 
stated  is  adhered  to  throughout  the  book.  Is  it  not  true,  however,  that 
Professor  Edgeworth  is  correct  in  his  assertion  and  that  the  idea  of 
confining  index  numbers  of  prices  to  one  use  only  limits  their  applica- 
tion to  much  too  narrow  a  field?  Index  numbers  are  required  for  the 
purpose  of  measuring  construction  costs,  wages,  average  prices  of  con- 
sumers' goods,  and  hundreds  of  other  things,  and  there  seems  no  justifi- 
cation for  overemphasizing  the  importance  of  the  particular  form  of 
index  best  adapted  to  measuring  changes  in  the  general  purchasing 
power  of  money,  for  are  we  sure  that  because  that  particular  index 
best  serves  the  last-mentioned  purpose,  it  is  also  the  ideal  one  for  each 
of  the  other  uses?  Mr.  Walsh  seems  to  present  no  evidence  sufficient 
to  establish  his  contention  in  this  regard. 

Although  a  book  so  vigorously  written  is  certain  to  clash  with  the 
views  of  some  statisticians,  there  will,  nevertheless,  presumably  be  few 
who  will  not  be  impressed  by  the  masterly  manner  in  which  the  whole 
subject  of  price  indices  is  handled,  and  who  will  not  find  the  book 
stimulating  as  well  as  interesting. 

Willford  I.  King. 

NEW    BOOKS 

Brenier.  Essai  d'atlas  statistique  de  I'Indo-Chine  frangaise.  (Paris: 
Agence  Economique,  41,  Avenue  de  l'Opera.     1921.     12.50  fr.) 

Brown,  W.,  and  Thomson,  G.  H.  The  essentials  of  mental  measurement. 
(New  York:    Macmillan.     1921.     Pp.  x,  216.     $7.) 

Danos,  G.  I/anarche  economique  et  les  statistiques  du  commerce  exterieur. 
(Paris:   Gauthier-Villars.     1921.     Pp.  88.) 

Drachsler,  J.  Intermarriage  in  New  York  City:  a  statistical  study  of  the 
amalgamation  of  European  peoples.  Columbia  University  studies  in  his- 
tory, economics  and  public  law,  no.  213.     (New  York:   Longmans.     1921. 

Haley,  T.  S.  Infant  mortality.  Results  of  a  field  study  in  Akron,  Ohio, 
based  on  births  in  one  year.  (Washington:  Children's  Bureau.  1920. 
Pp.  118.) 


542  Reviews  and  New  Books  [September 

Insolera,  F.  Lezioni  di  statistica  metodologica.  (Turin:  Treves.  1921. 
Pp.  190.     24  1.) 

Linhart,  G.  A.  A  new  and  simplified  method  for  the  statistical  interpre- 
tation of  biometrical  data.     (Berkeley:   Univ.  of  California  Press.     1920.) 

Loewy,  A.    Mathematik  des  Geld-  und  Zahlungsverkehrs.     (Leipzig:   Tueb- 

ner.     1920.     11  M.) 
Mitchell,  W.  C,  Macaulay,  F.  R.,  King,  W.  I.,  and  Knauth,  O.  W.    The 

income  of  the  United  States.     (New  York:   Harcourt,  Brace  &  Co.     1921. 

$1.) 
Niceforo,  A.     La  misura  della  vita.     (Torino:    Fratelli  Bocca.     Pp.  xii, 

515.     22  1.) 
Sandow,  T.   H.,  compiler.      Census  statistics  1920   compiled  from   official 

records.   (Wilkes-Barre,  Pa. :  Author,  27  W.  Jackson  St.   1920.   Pp.191.) 

Virgilii,  F.     Statistics.     Eighth  Edition.      (Milan:     Hoepli.     1920.     6  1.) 

Wilder,  H.  H.  A  laboratory  manual  of  anthropometry.  (Philadelphia: 
Blakiston.     1920.     Pp.  193.     $3.) 

Annual  report  of  the  Director  of  the  Census  to  the  Secretary  of  Commerce 
for  the  fiscal  year  ended  June  SO,  1920.  (Washington:  Dept.  Commerce. 
1920.     Pp.  51.) 

Annual  statement  of  the  trade  and  commerce  of  Saint  Louis  for  the  year 

1920.  (St.  Louis,  Mo.:    Merchants'  Exchange,  Eugene  Smith,  secretary. 

1921.  Pp.  258.) 

Befolkningsrbrelsen  aren  1917  och  1918.  (Helsingfors:  Statsradets  Tryc- 
keri.     1921.     Pp.  191.) 

A  study  of  the  movement  of  population  in  Finland  during  the  years 
1917  and  1918. 

Births,  deaths,  and  marriages,  England  and  Wales.  Part  I.  Report  of  the 
Registrar-General  for  1919.  Part  II.  Abridged  life  tables.  (London: 
H.  M.  Stationery  Office.     1921.     7s.,  Is.  6d.) 

Boston  statistics,  1920;  with  memorable  sites  and  buildings.  (Boston:  Sta- 
tistics Dept.,  City  Hall.     1921.     Pp.  83.) 

Graphic  and  statistical  sales  helps.  (Chicago:  A.  W.  Shaw  Co.  1921. 
Pp.  178.) 

Contains  production  data  in  wholesale  and  retail  trade  and  statistics 
of  costs  in  various  branches  in  industry. 

Industrial  survey  in  selected  industries  in  the  United  States,  1919.  PreA 
liminary  report.  Bulletin  of  the  United  States  Bureau  of  Labor  Statistics, 
no.  265.     (Washington:   Supt.  Docs.     1921.     Pp.  509.) 

L'inegalite  devant  la  mort  d'apres  les  statistiques  de  la  ville  de  Paris.  Ef- 
fets  de  la  situation  sociale  sur  la  mortalite.  (Paris:  Tenin.  1920.  Pp. 
54.) 

Manuel  statistique  de  la  Republique  Tchecoslovaque.  I.  (Prague:  L'Of- 
tice  de  Statistique  d'Etat.     1920.     Pp.  102.) 

Mortality  statistics,  1919.  Bull.  144.  (Washington:  Bureau  of  the  Census. 
1920.     Pp.  94.) 


1921]  Statistics  and  Its  Methods  543 

The  official  year-booh  of  New  South  Wales,  1919.  (Sydney:  Bureau  of 
Statistics.     1920.     Pp.  664.) 

Resumen  anual  de  estadistica  municipal  (ano  XVII,  1919);  resume  de  sta- 
tistique  municipale.  (Uruguay:  Direccion  de  Censo  y  Estadistica  de 
Montevideo.     1920.     Pp.  304.) 

Seventy-seventh  annual  report  on  the  vital  statistics  of  Massachusetts;  for 
the  year  1918.  (Boston:  Office  of  the  Secretary,  State  House.  1920. 
Pp.  252.) 

Sixty-second  annual  report  of  the  corporation  of  the  Chamber  of  Commerce 
of  the  state  of  New  York  for  the  year  1919-1920.  In  three  parts.  (New 
York:   Press  of  the  Chamber  of  Commerce.   1920.   Pp.  xxxv,  335,  328,  81.) 

South  Dakota  agricultural  statistics,  1920,  (Pierre:  State  Tax  Commis- 
sion.    1920.     Pp.  4.) 

Statistical  abstract  of  the  state  of  Washington.  (Olympia:  Bureau  of  Sta- 
tistics and  Immigration.     1920.     Pp.  63.) 

Statistical  data  compiled  and  published  by  the  Bureau  of  Crop  Estimates, 
1868-1920.  Department  circular  150.  (Washington:  Dept.  Agri.  1921. 
Pp.  64.) 

Statistical  record  of  the  progress  of  the  United  States,  1800-1920,  and 
monetary,  commercial,  and  financial  statistics  of  principal  countries. 
(Washington:    Bureau  of  Foreign  and  Domestic  Commerce.     1921.) 

Statistics  of  common  carriers.  A  preliminary  abstract  for  the  year  ended 
December  81,  1919.  (Washington:  Interstate  Commerce  Commission, 
Bureau  of  Statistics.     1921.     Pp.  172.) 

Statistics  of  municipal  finances.  Thirteenth  annual  report  for  city  and 
town  fiscal  years   ending   between   November  80,  1918,   and  March   8\1, 

1919.  Public  Doc.  no.  79.     (Boston:   State  House,  Commissioner  of  Cor- 
porations and  Taxation.     1920.     Pp.  307.) 

Statistics  of  railways  in  the  United  States.  Thirty-second  annual  report 
of  the  Interstate  Commerce  Commission  year  ended  December  81,  1918. 
(Washington:     Interstate   Commerce   Commission,   Bureau    of   Statistics. 

1920.  Pp.  803.) 

Statistics  relating  to  the  sale  of  intoxicating  liquor.  (London:  H.  M.  Sta- 
tionery Office.     1921.     Pp.  132.     2s.) 

Survey  of  pupils  in  the  schools  of  Bakersfield,  California.  ( Whittier,  Cal. : 
Whittier  State  School.     1920.     Pp.  43.) 

The  twentieth  financial  and  economic  annual  of  Japan.  (Tokio:  Dept.  of 
Finance.     1920.     Pp.  197.) 

Yearbook  of  the  state  of  Colorado,  1920.  (Denver:  Colorado  State  Board 
of  Immigration.     1920.     Pp.  248.) 

Yearbook  of  the  state  of  Indiana  for  the  year  1920.  (Indianapolis:  Leg. 
Ref.  Bureau.     1921.     Pp.  1197.) 


DOCUMENTS,  REPORTS,  AND  LEGISLATION 

Industries  and  Commerce 
From  the  United  States  Tariff  Commission  has  been  received  in  the  series 
of  Tariff  Information  Surveys  a  revised  edition  of  the  Article  in  Paragraph 
102  of  the  Tariff  Act  of  1913  relating  to  the  Ferroalloy  Industries  (Wash- 
ington, 1921,  pp.  160);  also,  Tariff  Information  Series  No.  22,  Census  of 
Dyes  and  Coal-Tar  Chemicals  (1921,  pp.  95);  and  The  Japanese  Cotton 
Industry  and  Trade  with  Special  Reference  to  Comparative  Costs  and  Com- 
petition between  Japan  and  the  United  States  (1921,  pp.  162). 

From  the  Federal  Trade  Commission  has  been  received: 

Summary  of  Report  of  the  Federal  Trade  Commission  on  Commercial 
Feeds  (Washington,  March  29,  1921,  pp.  15). 

Summary  of  Report  on  Combed  Cotton  Yarns  (April  14,  1921,  pp.  8). 

Summary  of  Report  on  the  Pacific  Coast  Petroleum  Industry,  Part  I 
(April  7,  1921,  pp.  19). 

The  Department  of  Commerce  has  issued  the  nineteenth  edition  of  List 
of  Publications  of  the  Department  Available  for  Distribution  (Washington, 
May  16,  1921,  pp.  85). 

Corporations 

Recent  Amendments  of  the  New  York  Public  Service  Commissions 
Law  in  Relation  to  Franchises  and  Municipal  Contracts.  The  Public 
Service  Commissions  law  of  New  York  as  first  enacted  in  1907,  provided 
for  two  districts  and  two  corresponding  commissions  of  five  members  each. 
The  first  district  comprised  the  city  of  New  York,  and  the  second,  the  rest 
of  the  state.  Each  commission  had  complete  jurisdiction  of  the  public  utili- 
ties in  its  own  territory  except  that  there  were  special  provisions  for  com- 
panies operating  in  both  districts,  and  that  the  telephones  for  the  entire 
state  were  placed  under  the  second  district.  In  the  first  district  the  com- 
mission had  charge  not  only  of  ordinary  regulation,  but  also  acted  in  be- 
half of  the  city  of  New  York  in  administering  the  construction  and  oper- 
ation of  rapid  transit  railroads  under  the  provisions  of  the  Rapid  Transit 
act.  This  general  plan  of  organization  was  continued  till  1919,  when  it 
was  modified  in  the  first  district,  but  was  left  intact  in  the  second.  The 
first  district  commission  was  abolished,  and  in  its  place  two  commissions 
were  created:  the  Public  Service  Commission  with  a  single  commissioner 
and  three  deputies,  and  the  Transit  Construction  Commission  with  one 
commissioner  and  a  deputy.  The  first  continued  the  ordinary  regulatory 
functions  over  rates,  capitalization,  and  service,  while  the  second  assumed 
the  administrative  duties  in  behalf  of  the  city  of  New  York  under  the 
Rapid  Transit  act. 

The  reorganization  in  1921,  following  the  complete  change  in  state  po- 


1921]  Corporations  545 

litical  control,  has  been  more  far-reaching  and  has  permitted  the  new  ap- 
pointment of  a  full  quota  of  commissioners  throughout  the  state.  Even  the 
long  honored  division  into  two  districts  was  abolished,  together  with  the 
three  existing  commissions.  In  their  place,  two  new  commissions  were  cre- 
ated: the  Public  Service  Commission  of  five  members,  and  the  Transit  Com- 
mission of  three  members.  The  latter  has  jurisdiction  only  over  railroads, 
street  railroads,  stages  and  omnibus  lines  in  the  city  of  New  York,  but  is 
vested  with  both  regulatory  powers  and  the  administration  of  the  Rapid 
Transit  act.  It  is  charged  also  with  the  extra-ordinary  duty  of  formulating 
and  putting  into  effect,  a  plan  for  reorganizing  the  street  railways  in  the 
city  of  New  York.  The  new  Public  Service  Commission  has  jurisdiction  over 
railroads,  street  railroads  and  stage  and  omnibus  lines  in  the  rest  of  the 
state  outside  of  the  city  of  New  York,  and  over  the  other  utilities  through- 
out the  state,  including  the  city  of  New  York. 

There  is  no  clear  reason  underlying  the  new  demarcation  between  com- 
missions. There  was  sense  in  the  former  division  between  the  first  and 
second  districts,  also  some  justification  in  the  first  district  in  separating 
the  regulatory  functions  from  the  administrative  duties  under  the  Rapid 
Transit  act.  But  only  political  considerations  can  account  for  the  present 
grouping  of  the  single  Transit  Commission  restricted  to  the  city  of  New 
York,  endowed  with  both  regulatory  duties  and  the  administration  of  the 
Rapid  Transit  act,  and  a  commission  with  state  wide  regulatory  power 
over  all  utilities  except  transit.  The  new  alignment  requires  extensive  sepa- 
ration of  departments  and  confusing  division  of  records.  But  its  chief  diffi- 
culty is  that  the  technical  employees  realize  that  this  shifting  is  all  tem- 
porary and  that  there  will  be  a  further  shuffle  with  the  next  change  in  po- 
litical power,  and  then  another,  and  another, — that  the  commissions  have 
become  political  footballs,  and  not  organizations  to  do  serious  public  work. 
The  repeated  changes  in  personnel  and  organization  have  raised  havoc  with 
the  exceptionally  high  order  of  ability  and  enthusiasm  of  the  original  techni- 
cal staffs.  They  have  driven  a  large  proportion  of  the  good  men  out  of  the 
service,  and  have  reduced  most  of  the  rest  to  mere  job  holders.  Only  a 
person  who  has  been  in  close  contact  with  the  commissions  since  their  be- 
ginning can  understand  the  tragic  decadence  of  the  promiseful  organiza- 
tions started  under  Governor  Hughes. 

Prior  to  the  recent  amendments,  the  provisions  relating  to  rate  regulation 
had  varied  considerably  between  the  different  kinds  of  utilities.  Thus  the 
commissions  had  full  power  over  rates  of  street  railways  previously  fixed 
by  statutory  authority,  but  in  case  of  gas  and  electric  companies  they  were 
limited  upward  to  the  maximum  fixed  by  statute.  Further,  if  a  company 
filed  new  schedules,  especially  when  its  rates  had  not  previously  been  fixed 
by  the  commission,  the  latter  had  the  power  to  suspend  the  schedules  of 


546  Documents  and  Reports  [September 

a  transportation  company  until  their  reasonableness  could  be  determined,  but 
did  not  have  such  powers  over  gas  and  electric  companies  and  other  utilities. 

These  differences  were  never  justified  and  have  properly  been  eliminated. 
Under  the  revised  law,  the  commissions  have  full  power  to  increase  or  de- 
crease rates  of  all  utilities  without  regard  to  statutory  restrictions,  also  to 
suspend  new  tariffs  filed  by  any  utility  pending  a  determination  of  the 
reasonableness  of  the  proposed  rates. 

These  changes,  both  in  the  matter  of  introducing  uniformity  and  extend- 
ing the  power  of  the  commissions,  mark  a  distinct  advance.  The  only  doubt 
as  to  their  full  desirability  appears  in  the  80  cent  gas  law  applying  to  the 
city  of  New  York,  which  has  thus  been  indirectly  repealed.  This  statutory 
rate  has  been  under  litigation  as  confiscatory,  and  its  enforcement  has  been 
enjoined  by  the  United  States  District  Court.  Doubtless  its  validity  would 
have  been  brought  before  the  Supreme  Court  of  the  United  States,  but  the 
amendment  of  the  law  may  now  prevent  or  substantially  affect  such  final 
adjudication.  The  responsibility  of  determining  the  reasonableness  of  the 
80  cent  rate  is  now  likely  to  pass  for  the  most  part  to  the  new  Public  Ser- 
vice Commission  with  power  to  fix  new  rates. 

The  most  far-reaching  change  in  the  law  is  the  extension  of  the  com- 
missions' power  even  over  rates  fixed  by  franchises  and  contracts  between 
cities  and  companies.  Although  this  applies  uniformly  to  all  classes  of 
utilities,  it  has  significance  chiefly  as  to  street  railways,  which  have  been 
limited  extensively  throughout  the  state  by  franchises  to  a  maximum  five 
cent  fare;  the  other  utilities  either  have  no  franchise  limitations  or  most  of 
them  have  rates  in  force  much  below  the  franchise  maximum.  Under  the 
so-called  Quinby  decision,  the  Court  of  Appeals  of  the  state  of  New  York 
held  that  the  commissions  could  not  grant  higher  rates  than  those  fixed  by 
franchise  on  the  ground  that  they  had  not  been  given  such  power  by  the 
legislature,  but  the  scope  of  this  decision  was  substantially  limited  in  sub- 
sequent decisions.1  In  some  instances  temporary  agreements  have  been 
made  between  the  cities  and  the  street  railway  companies  for  higher  fares. 
In  a  number  of  municipalities,  however,  especially  in  the  city  of  New  York, 
a  five  cent  fare  is  still  in  force  and  will  furnish  the  immediate  occasion  for 
testing  the  constitutionality  of  this  special  extension  of  power. 

The  scope  of  this  new  power  is  not  only  practically  limited  to  street 
railways,  but  its  constitutionality  is  here  much  more  doubtful.  In  case  of 
other  utilities,  the  local  grants  have  been  based  only  on  general  statutory 
authority,  while  the  street  railway  franchises  since  1875  have  been  granted 
under  Article  III,  Section  18,  of  the  state  constitution,  which  requires  the 
consent  of  the  local  authority  to  construction  or  operation  of  a  street  rail- 
road in  the  streets  of  a  municipality.     Street  railway  franchises,  therefore, 

i  See  John  Bauer,  "Control  of  Public  Utility  Rates  in  the  State  of  New  York," 
American  Economic  Review,  Dec,  1920,  p.  872. 


1921]  Corporations  547 

rest  upon  independent  constitutional  grounds  and  to  that  extent  are  be- 
yond control  of  the  legislature. 

The  specific  constitutional  question  in  cases  where  a  five  cent  fare  was 
fixed  in  a  street  railway  franchise  under  the  direct  constitutional  provision 
that  there  be  no  construction  or  operation  except  by  consent  of  the  local 
authorities,  is  whether  the  legislature  can  subsequently  abolish  this  restric- 
tion and  still  leave  the  privilege  of  operation  at  a  higher  rate  of  fare  ?  Since 
the  presumption  is  that  the  local  consent  would  not  have  been  granted  ex- 
cept on  the  condition  of  the  five  cent  fare,  can  the  legislature  therefore  dis- 
regard the  condition  and  leave  intact  the  privilege  of  operation? 

This  constitutional  question  has  also  a  practical  counterpart.  When 
franchises  were  issued,  far-reaching  privileges  were  granted  to  the  com- 
panies, usually  including  a  long  term  of  right  to  operation.  The  only 
safeguards  against  possible  abuse  of  the  privileges  were  the  restrictions  in 
the  grants,  especially  the  five  cent  fare  limitation.  It  is,  of  course,  true 
that  a  permanent  rate  of  fare  fixed  by  franchise  is  not  a  desirable  way  of 
protecting  the  public;  nor  is  a  long  term  or  perpetual  right  a  reasonable 
privilege  granted  to  the  companies.  The  practical  question,  therefore,  is 
whether  the  past  agreements  should  now  be  modified  by  legislation,  or 
whether  they  were  not  better  left  to  the  cities  and  companies  for  the  ne- 
gotiation of  new  terms.  If  the  companies  cannot  operate  under  their 
franchise  restrictions,  should  they  not  have  been  referred  to  the  cities  for 
revision  of  their  agreements,  so  that  by  negotiation  they  would  have  been 
compelled  to  give  up  unjustified  privileges  in  return  for  the  removal  of  un- 
due restrictions  ?  The  common  belief,  however,  is  that  they  have  studiously 
avoided  renegotiation  of  franchise  terms.  In  previous  meetings  of  the 
legislature,  they  sought  the  extension  of  the  commissions'  power  over  rates 
fixed  by  franchises,  and  they  supported  the  present  amendments.  Pre- 
sumably, therefore,  through  this  action  they  expect  to  obtain  higher  fares 
without  sacrificing  advantages   granted  in  their   franchises. 

The  extension  of  the  commissions'  power  to  increase  street  railway  rates 
over  the  maximum  fixed  by  franchise  or  contracts  has  special  application  to 
the  city  of  New  York.  In  regard  to  ordinary  franchises  with  fare  restric- 
tions, the  situation  is  the  same  as  in  other  municipalities  of  the  state,  and 
this  covers  practically  all  the  surface  lines.  Besides  ordinary  franchises, 
however,  the  city  of  New  York  has  entered  also  into  actual  contracts  for 
construction  and  operation  of  railroads,  provided  for  by  special  legislative 
action.  Under  the  Rapid  Transit  act,  the  city  has  invested  about  $300,- 
000,000  in  subways  and  has  leased  the  lines  for  operation  to  street  railway 
companies,  granting  them  extraordinary  privileges,  and  allowing  them  large 
returns  on  their  own  investment,  but  fixing  a  five  cent  fare  and  no  more  as 
a  condition  of  operation.     It  appears  as  an  owner  of  the  railroads,  having 


548  Documents  arid  Reports  [September 

invested  its  money  in  the  properties  and  as  a  proprietor,  having  leased  them 
to  other  companies  on  fixed  conditions.  Further,  it  entered  into  the  con- 
tracts under  specific  legislative  authorization.  It  raises,  therefore,  not 
only  the  question  of  constitutional  consent  as  in  the  ordinary  franchises 
granted  since  1875,  but  also  the  question  of  impairment  of  contract  under 
the  Constitution  of  the  United  States. 

The  new  law,  as  particularly  applied  to  the  city  of  New  York,  has  created 
the  Transit  Commission,  which  has  sole  jurisdiction  over  transportation  in 
the  city.  Besides,  without  regard  to  franchise  or  contract  restrictions,  it  is 
directed  to  make  a  general  investigation  of  street  railway  conditions  and 
prepare  a  plan  for  reorganization,  giving  consideration  to  possible  unifica- 
tion of  all  the  properties  into  a  single  system.  This  plan  shall  first  be  sub- 
mitted to  the  city  of  New  York  and  the  companies  for  criticism  and  sug- 
gested changes.  Then,  after  the  criticisms  and  suggestions  have  been  taken 
into  consideration,  the  plan  shall  again  be  submitted  to  the  city,  and  if  the 
latter  does  not  approve,  shall  be  put  into  effect  by  the  commission  itself, 
provided  that  it  has  been  accepted  by  the  companies. 

This  extreme  power  of  formulating  a  plan  of  reorganization  and  putting 
it  into  effect  without  the  final  approval  of  the  city,  manifestly  invades  not 
only  the  ordinary  franchises  but  the  city's  rapid  transit  contracts.  The 
commission  may  thus  annul  the  contracts  and  abrogate  all  existing  fran- 
chises, and  enter  into  new  agreements  with  the  companies,  fixing  new  con- 
ditions and  terms  of  operation.  As  a  state  commission,  therefore,  it  would 
act  as  the  local  authority  in  granting  franchises  and  making  contracts  for 
the  city  of  New  York. 

This  power,  of  course,  is  extraordinary  and  to  the  lay  mind,  also  prob- 
ably to  most  lawyers,  it  is  difficult  to  see  how  it  can  possibly  stand  under 
the  provision  of  the  Constitution  of  the  United  Sates  safeguarding  con- 
tracts. Unless  the  city  should  approve  the  final  plan  formulated  by  the 
commission,  it  will  probably  carry  the  issue  to  the  Supreme  Court  of  the 
United  States.  Doubtless  it  will  fight  to  the  limit  the  right  of  the  com- 
mission to  modify  contracts  or  to  enter  into  new  agreements  in  its  behalf. 
The  law  is  defended  partly  as  an  exercise  of  the  police  power,  as  merely  a 
logical  extension  of  the  state's  right  to  regulate  rates  of  public  service  cor- 
porations. But  the  more  general  defense  lies  in  the  sovereignty  of  the 
state  over  a  municipality.  The  latter,  it  is  urged,  is  entirely  a  creature  of 
the  state,  and  is  in  all  respects  subject  to  control  by  the  state.  The  legis- 
lature may  grant,  amend,  or  annul  a  city's  charter,  define  or  fix  the  local 
government,  and  establish  special  agencies  or  departments  for  carrying  out 
particular  functions.  According  to  this  view,  the  legislature  has  now  simply 
created  the  Transit  Commission  to  reorganize  the  street  railways  and  to  act 
in  full  capacity  for  the  city  of  New  York  as  an  agency  for  the  particular 
purpose. 


1921]  Corporations  649 

It  is  beyond  the  scope  of  this  review  to  discuss  in  detail  the  constitutional 
questions  raised  by  the  law,  and  these  are  many.  The  state,  of  course,  has 
and  exercises  great  powers  over  the  cities.  But  may  it  not  give  specific 
authorizations  to  a  city  for  expenditure  of  municipal  funds  under  contract 
with  a  private  corporation  for  a  fixed  period,  and  thus  divest  itself  of  con- 
trol over  the  subject  matter  of  the  contract  during  such  limited  time?  Al- 
though, undoubtedly,  it  may  designate  the  local  agency  for  carrying  out 
any  particular  municipal  function,  can  it  in  fact  create  a  state  agency  with 
quasi-judicial  power  to  act  in  behalf  of  a  city  in  purely  contractual  mat- 
ters against  the  opposition  of  the  elected  officials  of  the  municipality? 

Most  of  the  operating  companies  are  in  the  hands  of  receivers,  and  sooner 
or  later  general  reorganization  will  be  inevitable.  This,  the  writer  is  fully 
convinced  and  has  urged  for  over  two  years,  should  provide  for  a  unified 
street  railway  system,  including  all  facilities  in  the  city,  subway,  elevated, 
and  surface,  based,  however,  upon  a  valuation  which  not  only  is  fair  to  the 
public  as  to  actually  existing  investment,  but  which  is  low  enough  so  that 
it  can  be  permanently  sustained  by  the  earnings  and  will  establish  credit 
for  immediately  necessary  improvements  and  extensions.  Besides  the  chaos 
incident  to  the  present  general  insolvent  condition  of  the  companies,  the 
city  is  in  need  of  immediate  further  extensions  of  the  rapid  transit  lines, 
but  the  necessary  funds  are  not  available  under  present  circumstances.  The 
city  has  not  sufficient  borrowing  power  under  the  debt  limit  and  the  com- 
panies have  no  credit  at  all.  The  reorganization,  therefore,  must  have  chief 
regard  for  the  creation  of  credit  and  must  limit  the  valuation  accordingly. 

Although  the  Transit  Commission  is  directed  to  put  into  effect  a  plan  of 
reorganization  and  to  fix  a  valuation  for  the  purpose  it  is  without  power  to 
compel  the  companies  by  its  own  direct  authority  to  accept  the  plan.  Mani- 
festly, therefore,  it  will  have  to  negotiate  and  it  will  be  badly  handicapped 
in  its  negotiation  by  not  having  the  right  to  discontinue  if  a  proper  valu- 
ation and  other  desirable  conditions  are  not  accepted  by  the  companies.  The 
latter,  of  course,  will  struggle  for  the  largest  valuation  possible  to  save 
and  revitalize  their  present  mass  of  securities,  and  they  will  be  greatly 
aided  in  this  struggle  by  the  fact  that  the  commission  must  execute  a  plan. 

The  writer  believes  that  a  desirable  system  of  unified  operation  would 
have  been  better  obtained  by  untrammeled  negotiation  between  the  city  and 
the  companies.  Such  negotiation  would  almost  certainly  have  come  about 
with  the  passage  of  certain  political  exigencies,  particularly  when  the  com- 
panies once  came  to  realize  that  they  could  expect  no  relief  through  legis- 
lative or  judicial  action,  and  that  they  could  not  further  avoid  a  financial 
show-down  with  the  city  in  discussing  the  rapid  transit  contracts  and  fran- 
chises. In  such  negotiations  the  city  would  not  be  hampered  by  any  legis- 
lative mandate  or  by  general  regulatory  and  quasi-judicial  responsibility. 
It  could  proceed  with  consideration  only  to  its  duty  to  the  public  and  would 


550  Documents  and  Reports  [September 

thus  probably  succeed  in  keeping  down  the  valuation  to  an  amount  which 
could  be  permanently  sustained  by  the  earnings. 

There  is  thus  little  probability  that  the  transportation  deadlock  and  con- 
fusion are  likely  to  be  cleared  away  very  soon.  The  situation,  of  course, 
has  been  complicated  by  political  cross-purposes,  lack  of  agreement  upon 
constructive  municipal  policies,  unjust  characterization  of  the  city  adminis- 
tration, befogging  of  issues  by  the  companies'  campaign  of  publicity,  lack 
of  understanding  by  most  of  the  news  and  editorial  writers  of  the  city,  and, 
apparently,  by  the  political  and  legislative  activity  of  the  companies  to  ob- 
tain relief  without  revision  of  contracts  and  franchises. 

John  Bauer. 

New  York  City. 

The  California  Legislative  Report  on  Public  Utilities.  Pursuant  to 
Senate  Concurrent  Resolution  20.  (Sacramento:  Calif.  State  Printing 
Office.  1921.  Pp.  6.)  The  summarized  findings  of  this  legislative  com- 
mittee are  of  more  than  usual  interest  in  view  of  the  recent  programs  of 
utility  regulation  in  other  states. 

Probably  because  it  has  been  necessary  to  permit  increases  in  utility 
rates  in  recent  years  there  has  been  a  tendency  to  assume  that  competition 
in  connection  with  the  furnishing  of  utility  service  is  desirable.  Motor 
busses  have  been  run  in  competition  with  the  street  cars  in  Des  Moines. 
In  Illinois  motor-bus  lines  have  been  established  in  competition  with  inter- 
urban  lines  and  the  interurban  stations  have  been  used  by  the  passengers 
of  the  motor-bus  lines,  the  time  schedule  being  arranged  so  that  the  motor 
busses  leave  a  few  minutes  before  the  departure  of  the  interurban  cars. 

About  1907  when  many  state  public  utility  commissions  were  established 
they  were  very  popular  partly  because  they  made  rather  general  reductions 
in  public  utility  rates  at  that  time.  Recently,  however,  with  increases  in 
utility  rates  there  has  arisen  a  desire  to  curtail  or  abolish  state  control  of 
utilities  and  to  increase  the  control  over  them  by  local  authorities.  In 
Iowa  there  is  no  state  public  utilities  commission;  bills  providing  for  such 
a  commission  failed  to  become  law  in  the  last  session  of  the  legislature.  The 
Iowa  League  of  Municipalities  has  gone  on  record  to  the  effect  that  it  will 
"exert  all  legitimate  efforts  to  prevent  the  creation  of  any  public  utility 
commission  in  the  state  of  Iowa,  and  that  this  organization  hereby  expresses 
its  unalterable  opposition  to  the  establishment  of  any  commission  author- 
ized to  control  or  regulate  any  local  utility."  In  Illinois  legislation  has 
been  pending  for  some  time  which  would  abolish  the  Illinois  Public  Utili- 
ties Commission  and  provide  for  an  Illinois  Commerce  Commission,  leaving 
the  regulation  of  utilities  to  local  authorities.  It  does  not  now  appear 
probable  that  this  bill  will  become  law,  without  fundamental  modifications. 
In  Arkansas  where  there  has  been  some  sort  of  central  control  of  utilities 


1921]  Corporations  551 

for  twenty  years  they  have,  under  the  new  governor,  abolished  the  Arkan- 
sas Corporation  Commission  and  provided  for  local  control  of  utilities. 

The  California  legislative  committee  made  an  investigation  of  public  utili- 
ties in  that  state  in  response  to  complaints  concerning  the  public  utility 
law  and  regarding  the  activities  of  the  State  Railroad  Commission  which 
has  control  over  the  utilities  in  that  state.  The  summarized  statements  of 
the  report  deal,  among  other  things,  with  the  following  important  issues. 
1.  Regulated  monopoly  in  the  public  utility  field.  2.  The  amendment  to  the 
California  constitution,  pending  before  the  legislature,  permitting  munici- 
palities to  withdraw  from  the  jurisdiction  of  the  State  Commission.  3.  Re- 
cent advances  in  utility  rates.  4.  The  "cost  plus"  fallacy  in  rate  making. 
5.  Bringing  the  work  of  the  State  Commission  closer  to  the  people  and  in- 
creasing the  effectiveness  of  state  control. 

The  committee  is  distinctly  in  favor  of  regulated  monopoly  in  the  utility 
field.  In  the  proposed  legislation  which  has  been  pending  in  Illinois  it  is 
provided  that  companies  forming  bus  lines  should  not  be  required  to  obtain 
a  certificate  of  convenience  and  necessity  before  establishing  such  lines  in 
competition  with  interurban  electric  roads.  The  California  legislative  com- 
mittee states  that  "competition  in  public  utility  service  is  fundamentally 
wasteful."  It  does  not  favor  local  control  of  public  utilities.  Among  the 
arguments  against  permitting  a  municipality  to  withdraw  from  the  juris- 
diction of  the  state  commission,  the  committee  points  out  that  it  would  work  a 
great  hardship  upon  consumers  outside  municipalities.  The  committee  be- 
lieves that  whatever  desire  there  may  be  on  the  part  of  municipalities  to 
withdraw  has  been  due  to  the  advance  in  utility  rates  but  the  committee 
believes  that  for  that  reason  alone  withdrawal  should  not  be  permitted. 
"For  if  municipalities  were  permitted  to  withdraw  and  should  lower  rates, 
and  we  accept  the  proposition  that  the  utility  company  should  receive  a 
^fair  return,'  then  it  becomes  evident  that  consumers  outside  municipalities 
would  be  compelled  to  make  good  their  reduction." 

The  committee  justifies  the  recent  advances  in  utility  rates  by  pointing 
out  that  the  advance  in  prices  of  commodities  and  materials  used  by  utili- 
ties has  been  much  greater  than  the  increase  in  utility  rates.  It  is  stated 
that  while  oil  advanced  180  per  cent  and  skilled  labor  60  per  cent  the 
electric  rates  in  the  corresponding  period  were  advanced  but  36  per  cent, 
gas  rates  but  18  per  cent;  that  while  gross  revenues  increased  during  the 
years  1916  to  1919,  36  per  cent,  net  revenue  increased  but  10  per  cent. 

The  committee  points  out  that  it  has  been  openly  charged  that  the  State 
Commission  is  fixing  rates  on  a  cost  plus  basis,  and  states  that  it  finds 
that  the  facts  in  no  wise  justify  such  a  conclusion;  that  the  State  Com- 
mission "does  not  in  any  sense  'guarantee'  anything";  that  in  fixing  a  rate 
the  commission  proceeds  to  find  "the  fair  value  of  the  property  of  the 
utility  used  and  useful  in  service  of  the  public."     That  it  then  puts  its 


552  Docwments  and  Reports  [September 

accountants  to  work  "analyzing  and  checking  up  the  operating  expenses." 
It  then  "fixes  a  fair  return  on  the  value  of  the  property  and  fixes  the  rate 
accordingly."  Out  of  "that  fair  return  must  come  interest  on  bonded  in- 
debtedness and  borrowed  money,  amortization,  and  losses  before  dividends 
can  be  paid."  If  the  "fair  return  happens  to  pay  interest  on  the  outstand- 
ing bonds  and  stock  of  the  utility,  the  company  is  fortunate.  Otherwise 
it  is  unfortunate.  Whether  or  not  that  fair  return  will  pay  a  dividend  to 
the  stockholders  or  interest  on  outstanding  bonds  is  not  taken  into  con- 
sideration by  the  commission." 

The  committee  recognizes  the  fact  that  local  intelligence  concerning 
utilities  ought  to  be  utilized  in  a  program  of  state  control  and  it  recom- 
mends that  the  State  Commission  have  a  representative  in  each  community. 
The  committee  is  outspoken  in  its  advocacy  of  control  by  a  central  state 
body,  because  of  "the  utter  impossibility  of  the  general  run  of  municipali- 
ties being  able  to  fix  a  fair  return,  owing  to  the  lack  of  proper  facilities 
for  determining  that  fair  return."  The  report  points  out  that  very  little 
of  the  property  of  many  of  the  utilities  is  to  be  found  in  any  one  munici- 
pality, and  thus  if  local  authorities  are  in  control  there  is  "danger  of  poli- 
tics entering  into  the  question  to  the  exclusion  of  fairness." 

C.    O.    RUGGLES. 

Ohio  State  University. 

Labor 
The  United  States  Railroad  Labor  Board  (Chicago)  has  issued  Rules  for 
Reporting  Information  on  Labor  Employees,  Together  with  a  Classification 
and  Index  of  Steam  Railroad  Occupations  (pp.  320).  It  is  stated  that  this 
classification  will  serve  as  a  basis  for  establishing  a  uniform  terminology 
and  a  general  understanding  of  the  classes  of  positions  on  American  rail- 
roads. 

The  Federal  Bureau  of  Labor  Statistics  has  issued  the  following  bulle- 
tins: 
No.  278,  Wages   and   Hours   of  Labor   in   the  Boot   and  Shoe   Industry: 

1907-1920  (Washington,  1921,  pp.  177). 
No.  279,  Hours  and  Earnings  in  Anthracite  and  Bituminous  Coal  Mining 
(April,   1921,  pp.   114).     The  statistics  for  anthracite  relate  to 
the  years  1919  and  1920,  and  for  bituminous  to  the  year  1919. 
No.  280,  Industrial  Poisoning  in  Making  Coal-Tar  Dyes  and  Dye  Inter- 
mediates, by  Dr.  Alice  Hamilton  (April,  1921,  pp.  87). 
No.  283,  History  of  the  Shipbuilding  Labor  Adjustment  Board,  1917  to 
1919,  by  W.  E.  Hotchkiss  and  H.  R.  Seager   (May,   1921,  pp. 
107). 

The  Women's  Bureau  of  the  United  States  Department  of  Labor  has  is- 


1921]  Money,  Prices,  Credit,  cmd  Barikmg  558 

sued  Bulletin  No.  15,  entitled  Some  Effects  of  Legislation  Limiting  Hours 
of  Work  for  Women  (Washington,  1921,  pp.  26). 

The  Federal  Bureau  of  Mines  has  published  Technical  Papers  275,  280, 
and  288,  by  W.  W.  Adams,  entitled  respectively  Quarry  Accidents  in  the 
United  States  During  the  Calendar  Year  1919  (Washington,  1921,  pp.  66)  ; 
Accidents  at  Metallurgical  Works  in  the  United  States  During  1919  (pp. 
21);  and  Coal  Mine  Fatalities  in  the  United  States  in  1920  (pp.  112). 

The  following  documents  relating  to  labor  have  been  received: 

Seventeenth  Biennial  Report  of  the  Colorado  Bureau  of  Labor  Statistics, 
1919-1920  (Denver,  1920,  pp.  61). 

Thirty-seventh  Annual  Report  of  the  Department  of  Labor  of  Michigan 
(Lansing,  1920,  pp.  545). 

Seventeenth  Biennial  Report,  Labor  and  Compensation,  1919-1920,  Ne- 
braska (Lincoln,  1920,  pp.  96). 

Thirteenth  Biennial  Report  of  the  Bureau  of  Labor,  Nero  Hampshire,  for 
the  Fiscal  Period  Ended  August  31,  1920  (Concord,  1920,  pp.  192). 

Annual  Report  of  the  Department  of  Labor  and  Industries  of  Massachu- 
setts for  the  Year  Ending  November  30,  1920  (Boston,  pp.  132). 

Annual  Report  of  the  Statistics  of  Labor  for  the  Year  Ending  November 
30,  1920,  by  the  Department  of  Labor  and  Industries,  Massachusetts  (Bos- 
ton, pp.  68,  146,  72). 

Ninth  Biennial  Report  of  the  Bureau  of  Labor  of  Oregon  (Salem,  pp. 
117). 

Labor  Lares  of  the  State  of  Wisconsin  and  Orders  of  the  Industrial  Com- 
mission (Madison,  1920,  pp.  341). 

Seventh  Annual  Report  of  the  Industrial  Accident  Board,  Massachusetts 
(Boston,  1920,  pp.  138). 

Money,  Prices,  Credit,  and  Banking 
Report  of  the  Massachusetts  Special  Commission  on  the  Necessaries 
of  Life  (1921.  Pp.  125).  This  is  a  valuable  study  of  the  relative  cost 
of  living  in  Massachusetts  by  months,  from  1910  to  1920  inclusive.  The  in- 
vestigation covered  most  of  the  cities  of  the  state  and  is  undoubtedly  the 
most  thorough  regional  study  of  the  cost  of  living  that  has  been  made.  The 
commission  used  the  same  percentage  weights  for  food,  clothing,  shelter, 
fuel,  and  sundries  that  are  used  by  the  National  Industrial  Conference 
Board;  namely,  the  average  of  six  budgetary  studies.  The  food  index  was 
composed  of  the  relative  retail  prices  of  thirty-seven  food  commodities 
weighted  according  to  the  1901  budgetary  study  of  the  United  States  Bureau 
of  Labor  for  the  North  Central  States.  This  1901  weighting  scale  was  not 
only  used  by  the  Food  Administration  during  the  war  but  was  found  to  be 
approximately  accurate  from  separate  investigations  made  by  the  commis- 
sion itself.     The  clothing  items  are  weighted  in  a  manner  that  seems  accu- 


554 


Documents  and  Reports 


[September 


rate  but  for  which  the  source  is  not  given,  as  is  also  the  case  with  fuel  and 
sundries.  Presumably  the  commission  based  these  weights  largely  upon 
an  investigation  of  its  own,  although  this  is  not  explicitly  stated.  The 
housing  index  is  based  upon  a  wide  variety  of  houses  throughout  the  state. 
The  movement  of  the  cost  of  living  from  1913  on  is  shown  by  the  follow- 
ing table: 

Table  1.— Relative  Cost  of  Living,  1913—1920 
(1913  =  100) 


1913 

1914 

1915 

1916 

1917 

1918 

1919 

1920 

Jan. 

94.9 

101.8 

102.9 

105.7 

119.6 

144.6 

167.5 

192.0 

Feb. 

94.2 

101.8 

102.1 

106.3 

121.1 

147.0 

164.7 

190.8 

Mar. 

99.2 

101.6 

101.0 

106.7 

122.7 

145.7 

164.7 

103.4 

Apr. 

99.6 

100.4 

101.0 

108.2 

126.3 

145.9 

167.0 

196.3 

May 

99.4 

100.1 

101.5 

108.7 

127.5 

148.7 

169.1 

200.3 

June 

100.3 

100.6 

101.4 

110.3 

131.0 

152.4 

170.3 

199.7 

July 

100.8 

102.1 

101.7 

109.9 

129.3 

155.1 

171.5 

202.6 

Aug. 

100.6 

103.1 

101.4 

110.1 

130.0 

157.6 

174.6 

198.5 

Sept. 

100.2 

103.3 

102.2 

112.1 

133.1 

161.3 

173.1 

200.1 

Oct. 

101.0 

104.1 

103.2 

113.6 

137.1 

164.2 

179.9 

194.9 

Nov. 

101.0 

103.2 

103.9 

116.2 

138.2 

165.0 

184.5 

191.3 

Dec. 

100.8 

102.7 

103.5 

117.5 

139.6 

166.1 

184.7 

183.9 

Reduced  to  a  December  1914  basis  this  was  a  15.6  per  cent  less  increase 
for  June  1920  than  the  figures  of  the  United  States  Bureau  of  Labor  Sta- 
tistics for  Boston  alone  and  an  18.4  per  cent  smaller  increase  for  Decem- 
ber 1920. 

A  comparison  of  the  relative  increases  of  the  various  major  items  throws 
much  light  upon  the  question  of  the  correspondence  between  the  general 
price  level  and  that  of  specific  groups  of  prices. 


Table  2. — Relative  Price  Movement  of  Different  Groups  of  Commodfties,  1913-1920 

(1913  =  100) 


Total    cost 

of  living 

Food 

Clothing 

Shelter 

Fuel 

Sundries 

January, 

1913 

94.9 

98.2 

99.7 

100.0 

104.3 

100.0 

July 

M 

100.8 

102.2 

99.7 

100.0 

97.8 

100.0 

January, 

1914 

101.8 

102.1 

101.5 

103.5 

101.9 

100.0 

July 

« 

102.1 

103.3 

101.7 

103.5 

97.3 

100.0 

January, 

1915 

102.9 

103.2 

105.8 

104.1 

101.0 

100.0 

July 

« 

101.7 

100.7 

106.8 

104.1 

96.4 

100.0 

January, 

1916 

105.7 

105.5 

114.5 

105.3 

101.3 

102.0 

July 

M 

109.9 

112.4 

121.2 

105.3 

101.0 

104.0 

January, 

1917 

119.6 

126.2 

137.7 

103.1 

113.2 

110.0 

July 

M 

129.3 

142.9 

145.0 

103.2 

114.7 

117.0 

January, 

1918 

144.6 

155.8 

176.5 

111.7 

125.3 

134.0 

July 

« 

155.1 

165.2 

201.3 

108.2 

132.1 

151.0 

January, 

1919 

167.5 

180.1 

221.5 

118.4 

143.7 

155.0 

July 

K 

171.5 

182.2 

235.8 

115.5 

145.8 

163.0 

January, 

1920 

192.0 

200.9 

286.2 

131.0 

154.2 

175.9 

July 

« 

202.6 

216.9 

280.9 

139.4 

172.1 

185.0 

December,  1920 

183.9 

179.6 

226.0 

151.7 

189.9 

192.0 

1921]  Money,  Prices,  Credit,  and  Banking  555 

This  indicates  a  great  disparity  in  the  price  movements  of  the  various 
items.  Thus  by  July,  191 8,  shelter  had  increased  only  8.2  per  cent  over  its 
1913  base,  while  food  had  increased  65.2  per  cent,  clothing  101.2  per  cent 
and  the  total  cost  of  living  55.1  per  cent.  By  January  1920  food  had  in- 
creased 100.9  per  cent,  clothing  186.2  per  cent,  and  the  total  cost  of  living 
92  per  cent,  whereas  shelter  had  risen  only  31  per  cent.  Shelter  rose  rapidly 
in  the  latter  part  of  1920 — while  the  prices  of  food  and  clothing  fell  rap- 
idly in  the  same  period.  Due  to  this  smaller  increase  in  rents  for  Massa- 
chusetts, the  index  of  food  prices  exceeds  the  cost  of  living  index  by  from 
ten  to  fifteen  points  throughout  the  period  of  price  increase.  The  rapid 
fall  in  food  prices,  however,  left  their  index  at  the  close  of  1920  slightly 
below  the  cost  of  living  index.  It  is  probable,  however,  that  the  increase  in 
rents  was  much  less  in  Massachusetts  than  in  the  rest  of  the  country,  and 
that  therefore  food  prices  would  be  a  more  accurate  index  of  the  general 
cost  of  living  elsewhere  than  they  were  in  Massachusetts.  This  is  largely 
due  to  the  fact  that  there  was  in  that  state  a  considerable  "oversupply"  of 
houses  at  the  beginning  of  the  war  due  to  the  housing  boom  of  the  earlier 
years.  This  naturally  served  both  to  retard  and  lessen  the  increase  in  rents. 
Despite  the  relatively  little  building  during  the  last  three  years,  the  total 
number  of  dwellings  in  Massachusetts  increased  19.2  per  cent  during  the 
decade  1910-1920,  while  the  population  increased  only  14.6  per  cent.  The 
reports  of  an  actual  housing  shortage  therefore  do  not  seem  to  square  with 
the  facts  in  so  far  as  Massachusetts  is  concerned.  It  is  interesting  to  note 
that  in  many  communities  where  the  population  actually  decreased  and  the 
number  of  dwellings  increased,  rents  nevertheless  rose  generally. 

The  study  is  distinctly  useful  and  it  is  to  be  hoped  both  that  Massachu- 
setts will  continue  it  and  that  other  sections  of  the  country  will  initiate  in- 
vestigations of  their  own.  That  economic  research  comes  high,  however,  is 
indicated  by  the  fact  that  the  commission  making  this  report  spent  nearly 
$40,000 — most  of  which  was  apparently  for  this  investigation. 

Paul  H.  Douglas. 

University  of  Chicago. 

A  Report  of  the  Committee  on  Rural  Credits  has  been  issued  by  the 
Ontario  Department  of  Agriculture,  dated  November,  1920  (pp.  46).  The 
report  is  signed  by  W.  T.  Jackman,  Thomas  MacMillan  and  M.  H.  Staples, 
who  have  evidently  spent  some  time  and  effort  to  good  advantage  in  in- 
vestigating the  problem  of  rural  credits  for  the  Province  of  Ontario. 

In  general,  the  committee  discusses  the  use  and  importance  of  credit  both 
to  the  business  man  and  the  farmer.  It  explains  the  use  of  both  short-time 
and  long-time  credit  and  indicates  the  inadequacy  of  the  present  credit 
facilities.  This  inaedquacy  lies,  first,  in  the  fact  that  Canadian  and  other 
banks  are  organized  to  serve  commercial  rather  than  agricultural  interests 


556  Documents  and  Reports  [September 

and,  second,  that  the  period  of  commercial  short-time  loans  is  entirely  too 
short  for  the  farmer  who  must  have  at  least  six  months  credit.  Long-time 
credit  is  inadequate  in  that  it  is  entirely  unorganized  and  that  there  is  an 
altogether  insufficient  amount  of  funds  for  long-time  investment  in  parts  of 

the  province.  y         ij  ■  J  vi;i 

The  report  reviews  the  situation  in  other  countries  and  indicates  how 
European  as  well  as  American  states  have  solved  the  problems  both  of 
short-time  and  long-time  loans  to  farmers.  The  Manitoba  acts  of  1917 
are  examined  with  care  and  it  is  plain  that  the  committee  favors  legislation 
very  much  along  the  lines  pursued  in  her  sister  province. 

Their  recommendations  following  the  Manitoba  plan  are  as  follows:  (1) 
the  creation  of  the  new  institution  for  furnishing  short-time  advances  to 
farmers,  the  funds  to  be  obtained  largely  from  the  savings  of  farmers  as  a 
class.  They  advocate  the  payment  of  interest  on  savings  at  the  rate  of 
4  per  cent,  the  savings  being  guaranteed  by  the  provincial  government.  The 
savings  institution  would  be  located  in  Toronto.  (2)  The  organization  of 
rural  credit  societies  throughout  the  province  by  farmer  share-holders  who 
would  hold  all  the  stock  of  the  society.  These  societies  would  be  managed 
by  a  board  of  nine  members,  six  to  be  chosen  by  the  farmers  and  the  other 
three  by  organizations  or  associations  "best  calculated  to  understand  and 
promote  the  welfare  of  the  agricultural  interests."  The  method  of  distribut- 
ing the  funds  from  the  central  association  to  the  locals  is  not  thoroughly 
worked  out  but  it  is  suggested  that  it  might  be  done  through  one  or  more  of 
the  chartered  banks  in  Toronto. 

For  mortgage  credits  the  committee  proposes  the  organization  of  the  land 
mortgage  bank  with  a  capital  stock  of  $500,000  subscribed  and  taken  by 
farmers.  The  operation  of  the  bank  follows  in  general  the  lines  of  the 
federal  land  banks  of  the  United  States  except  that  the  short-term  credit 
societies  will,  in  Ontario,  take  the  place  of  the  farm  loan  association  of  the 
United  States. 

In  all  instances  the  committee  discourages  government  enterprise  or  par- 
ticipation in  the  rural  credit  scheme  except,  perhaps,  in  the  inauguration 
of  the  mortgage  bank.  They  feel  that  both  short  and  long-term  credit  as- 
sociations for  farmers  should  be  in  the  farmers'  hands  and  should  not  be 
subsidized  by  the  government. 

The  only  novel  provision  in  the  committee's  recommendation  is  the  co- 
operation between  the  long-term  and  short-term  credit  institutions.  The 
committee  believes  that  the  problems  are  similar  in  character  and  that  over- 
head organization  will  be  minimized  if  the  one  institution  joins  hands  with 
the  other.  On  the  whole  the  report  is  very  well  written  and  is  an  excellent 
summary  of  the  rural  credit  situation. 

Alexander  E.  Cance. 


1921]  Public  Finance  557 

The  following  documents  relate  to  banking: 

Seventh  Annual  Report  of  the  Federal  Reserve  Board,  covering  operations 
for  the  year  1920  (Washington,  1921,  pp.  639).  This  contains  the  several 
reports  of  the  twelve  federal  reserve  banks. 

Annual  Report  of  the  Superintendent  of  Banks  of  Alabama  for  the  Fiscal 
Year  Ending  September  80,  1920  (Montgomery,  pp.  136). 

Thirty-first  Annual  Report  of  the  Commissioner  of  the  Banking  Depart- 
ment of  Michigan,  1919   (Lansing,   1920,  pp.  677). 

Annual  Report  of  the  Superintendent  of  Banks  of  New  York,  Relative  to 
the  Savings  and  Loan  Associations,  Land  Bank  of  the  State  of  New  York 
and  Credit  Unions,  for  1919  (Albany,  1920,  pp.  630). 

Annual  Report  of  the  Treasurer  and  State  Bank  Examiner  of  Georgia, 
1919   (Atlanta,  pp.  256). 

Public  Finance 

The  following  state  documents  on  taxation  have  recently  appeared: 

First  Annual  Report  of  the  Tax  Commission  of  Illinois  (Springfield, 
March  1,  1920,  pp.  224). 

Seventh  Report  to  the  Legislature  by  the  Tax  Commission  of  Kansasl 
(Topeka,  January  11,  1921,  pp.  55). 

Seventh  Biennial  Report  of  the  Minnesota  Tax  Commission  (St.  Paul, 
1920,  pp.  272). 

Report  of  the  Special  Revenue  Commission  to  the  Governor  of  New 
Mexico  (Santa  Fe,  November  23,  1920,  pp.  324). 

Report  of  Hearings  of  the  New  Mexico  Special  Revenue  Commission  held 
at  Santa  Fe,  August,  1920  (pp.  204). 

Sixth  Annual  Report  of  the  South  Carolina  Tax  Commission  for  1920 
(Columbia,  pp.  120). 

The  Annual  Report  of  the  Tax  Commission  of  South  Dakota,  1919-1920 
(Pierre,  pp.  115). 

Twelfth  Annual  Report  of  the  Tax  Commissioner  of  Texas  for  1920 
(Austin,  pp.  118). 

Bulletin  No.  23,  Taxation  of  Inheritances  in  Virginia  (Richmond,  State 
Tax  Board,  1920,  pp.  34). 

Law  Relating  to  Income  Tax,  Delaware,  published  by  authority  of  George 
M.  Fisher,  state  treasurer   (Dover,   1920,  pp.   17). 


PERIODICALS 

The  Review  is  indebted  to  Robert  F.  Foerster  for  abstracts  of  articles  in  Italian 
periodicals,  and  to  R.  S.  Saby  for  abstracts  of  articles  in  Danish  and  Swedish  peri- 
odicals. 

Theory 

(Abstracts  by  Walton  H.  Hamilton) 
Ballentine,  A.  A.    Corporate  personality  and  income  taxation.    Harvard  Law  Rev., 
Apr.,  1921.    Pp.  19.    A  study,  in  terms  of  the  problem  of  income  taxation,  of  the 
difficulties  of  public  control  incident  to  the  legal  conception  of  a  corporation  as 
a  personalized  entity. 

Bernard,  L.  L.  The  misuse  of  instinct  in  the  social  sciences.  Psych.  Rev.,  Mar., 
1921.  Pp.  14.  "The  future  control  of  the  human  race  and  its  civilization  lie 
not  through  selective  breeding  of  the  higher  social  qualities  .  .  .  but  through  their 
transmission  by  social  contact  and  control.  The  overwhelming  pressures  upon 
the  character-forming  process  .  .  .  come  from  the  accumulated  social  environ- 
ment." 

Bodenhafer,  W.  B.  The  comparative  role  of  the  group  concept  in  Ward's  "Dy- 
namic Sociology"  and  contemporary  American  sociology.  Am.  Journ.  Soc,  May, 
1921.  Pp.  28.  A  "contrast  between  a  pioneer  social  science,  without  a  social  psy- 
chology, and  a  later  social  science,  with  a  more  or  less  adequate  social  psychology." 
An  incidental  discussion  of  the  individualistic  assumptions  of  the  courts. 

Cannan,  E.  Early  history  of  the  term  "capital."  Quart.  Journ.  Econ.,  May,  1921. 
Pp.  13.  An  account  of  the  several  uses  to  which  the  term  capital  was  put  in  pre- 
industrial  and  early  industrial  society. 

Collingswood,  R.  H.  Croce's  "Philosophy  of  History."  Hibbard  Journ.,  Jan.,  1921. 
Pp.  16.  A  criticism  of  the  thesis  that  "all  is  progress;  'every  change  is  a  change 
from  the  good  to  the  better.'  There  is  no  such  thing  as  decadence;  what  appears 
to  be  so  is  really  progress,  if  only  you  look  at  it  from  the  right  point  of  view." 

Dawson,  C.  On  the  development  of  sociology  in  relation  to  the  theory  of  progress. 
Sociol.  Rev.,  Apr.,  1921.  Pp.  19.  "In  the  militant  world-state  of  Islam,  in  the 
pacific  social  culture  of  China,  in  the  free  communion  of  the  Hellenic  cities,  and 
in  the  life  of  mediaeval  Christendom  with  its  common  spiritual  unity  and  its  in- 
finite diversity  of  local  and  civic  forms,  we  may  find  not  only  more  instruction, 
but  more  inspiration  for  the  future  of  our  civilization  than  in  all  the  Utopias  that 
philosophers  and  poets  have  ever  dreamed." 

Ely,  R.  T.  Luck  and  chance  in  success  and  failure.  Administration,  May,  1921. 
Pp.  8.  A  running  survey  of  the  "relative  roles  played  by  conjecture  and  economic 
merit  in  economic  success  or  relationship  between  conjecture  and  economic  de- 
merit in  economic  failure." 

Gainford,  L.  The  coal  problem.  Contemp.  Rev.,  June,  1921.  Pp.  7.  A  plea  against 
a  pooling  of  wages  on  the  grounds  of  expediency  and  natural  economic  law. 

Garrett,  G.  The  wage  curve.  New  Repub.,  June  22,  1921.  Pp.  3.  "The  problem 
of  business  is  not  how  to  liquidate  wages,  but  how  to  liquidate  labor  costs,  which 
may  be  done  by  increasing  the  use  and  efficiency  of  high-power  tools,  by  improv- 
ing its  methods  of  production  and  distribution,  and  by  eliminating  innumerable 
forms  of  gross  economic  waste." 


1921]  Theory  559 

Huxley,  J.  The  inheritance  of  modifications.  Nation  and  Athenaeum,  Feb.  26, 
1921.  Pp.  3.  "The  evidence  .  .  .  points  ...  to  the  complete  .  .  .  non-inherit- 
ability  of  modifications.  ...  In  spite  of  generations  of  bad  sanitation,  over-work, 
disease,  and  illiteracy,  the  germ-plasm  securely  locked  away  within  the  body's 
transitory  casket,  possesses  the  power  of  budding  out  individuals  capable  of  the 
fullest  development,  both  physical  and  mental." 

Johns,  C.  D.  The  relation  of  economics  to  history.  Southwestern  Pol.  Sci.  Quart., 
Mar.,  1921.  Pp.  8.  "Little  is  to  be  gained  ...  in  attempting  to  restrict  the  sub- 
ject-matter of  either  within  too  narrow  limits." 

Kantor,  J.  R.  A  tentative  analysis  of  the  primary  data  of  psychology.  Journ.  of 
Phil.,  May  12,  1921.  Pp.  16.  An  interesting  and  valuable  epitome  of  the  "new 
psychology"  by  a  behaviorist. 

King,  W.  I.  Earned  and  unearned  income.  Ann.  Am.  Acad.,  May,  1921.  Pp.  8. 
"The  attempt  to  divide  incomes  into  categories  designated  as  'earned'  and  'un- 
earned' seems  to  serve  no  practical  purpose.  .  .  .  This  classification  appears  to 
have  been  devised  ...  in  an  effort  to  stigmatise  the  institution  of  private  prop- 
erty." 

Kleene,  G.  A.  Liefmann's  Grundsatze  der  Volkswirtschaftslehre.  Quart.  Journ. 
Econ.,  May,  1921.  Pp.  8.  An  appraisal  of  a  reputed  departure  from  established 
theory.  "On  the  whole  there  is  little  reward  for  the  pain-cost  of  going  through 
its  fifteen  hundred  pages." 

Knight,  F.  H.  Cost  of  production  and  price  over  long  and  short  periods.  Journ. 
Pol.  Econ.,  Apr.,  1921.  Pp.  32.  "Decreasing  cost  with  increasing  output  is  a 
condition  incompatible  with  stable  competition  in  the  industry." 

Lederer,  E.  Social  evolution  during  war  and  revolution.  Pol.  Sci.  Quart.,  Mar., 
1921.  Pp.  21.  "The  whole  world  is  shown  to  be  one  united  territory  in  an  eco- 
nomic sense.  As  a  whole  it  has  entered  into  a  social  evolution  which  human 
power  may  perhaps  be  too  weak  to  check." 

Lynd,  R.  The  animal  called  man.  New  Statesman,  Apr.  23,  1921.  Pp.  2.  A  review 
of  Graham  Wallas'  The  Social  Heritage. 

Malinowski,  B.  The  primitive  economics  of  the  Trobriad  Islanders.  Econ.  Journ., 
Mar.,  1921.  Pp.  16.  "The  analysis  of  the  natives'  own  economic  conceptions  of 
value,  ownership,  equivalence,  commercial  honor  and  morals  opens  a  new  vista  of 
economic  research." 

Moore,  H.  L.  Generating  cycles  of  products  and  prices.  Quart.  Journ.  Econ.,  Feb., 
1921.  Pp.  25.  "The  major  features  of  economic  cycles  are  traceable  to  three 
primary  laws:  (1)  the  law  of  the  generating  cycle  of  raw  materials  .  .  .;  (2)  the 
law  of  demand  for  raw  materials  .  .  .;  and  (3)  the  law  of  competitive  price 
..."    A  correlation  of  crop  yields  and  crop  prices. 

Muscio,  B.  Psychology  as  behaviorism.  Monist,  Apr.,  1921.  Pp.  20.  A  protest 
against  Watson's  narrowing  of  the  province  of  psychology  to  behaviorism. 

Northcott,  C.  H.  A  science  of  society.  Edinburgh  Rev.,  Apr.,  1921.  Pp.  16.  "The 
younger  generation  of  sociologists,  trained  in  the  statistics  of  correlation  as  well 
as  in  the  special  social  sciences,  are  hopeful  of  establishing  .  .  .  definite  tenden- 
cies among  social  phenomena  from  which  prevision  may  become  increasingly  pos- 
sible." 


560  Periodicals  [September 

Russell,  B.  Industry  in  undeveloped  countries.  Atlantic,  June,  1921.  Pp.  19. 
"The  development  of  industrially  backward  countries  is  in  no  degree  desirable, 
but  it  is  unavoidable.  ...  If  it  is  done  by  foreign  nations,  it  involves  oppres- 
sion. ...  If  it  is  done  by  the  backward  nation  itself,  it  involves  a  very  intense 
militarism.     It  is  probably  better  done  communistically"  than  capitalistically. 

Ryan,  J.  A.  The  proper  functions  of  the  state.  Catholic  World,  May,  1921.  Pp. 
12.  "The  object  of  civil  legislation  is  the  national  welfare  of  the  community  and 
of  its  individual  members;  in  order  that  they  may  live  in  peace  and  justice,  with 
a  sufficiency  of  those  goods  which  are  necessary  for  physical  conservation  and 
comfort,  and  with  those  moral  conditions  which  are  required  for  private  well- 
being  and  public  prosperity." — Suarez. 

Sellars,  R.  W.  The  requisites  of  an  adequate  naturalism.  Monist,  Apr.,  1921. 
Pp.  22.  The  older  naturalism  was  dominated  "almost  entirely  by  the  exact  sci- 
ences with  their  stress  upon  quantities."  It  was  non-evolutionary.  It  "did  not 
enough  recognize  the  reality  of  mind  and  of  those  human  organizations  and  events 
for  which  mind  is  pivotal."  "An  adequate  naturalism  must  reckon  without  con- 
descension with  biology,  psychology,  and  sociology." 

Shadwell,  A.  Capitalism,  III.  Edinburgh  Rev.,  Apr.,  1921.  Pp.  16.  "The  dis- 
tribution of  wealth  goes  far  more  by  the  value  of  services  rendered,  in  the  esti- 
mation of  the  community,  and  is  therefore  less  unjust  than  appears  on  the  sur- 
face. The  great  gains  do  not  go  to  the  capitalists  as  such.  They  go  to  the  mental 
capital  thrown  into  the  enterprise." 

Sheldon,  W.  H.  Professor  Dewey,  the  protagonist  of  democracy.  Journ.  of  Phil., 
June  9,  1921.  Pp.  11.  "All  the  emphasis  of  democracy  today,  and  of  Professor 
Dewey,  its  protagonist,  ...  is  actually  in  favor  of  the  lower,  material  needs,  the 
judgment  of  the  masses,  the  standards  of  the  unskilled.  It  will  if  unchecked  tend 
to  bring  humanity  down  to  the  level  of  its  least  developed  members,  and  is  thus 
directly  against  progress." 

Speranza,  G.  The  newest  freedom.  Hibbard  Journ.,  Apr.,  1921.  Pp.  7.  "All  the 
inventions  and  discoveries  of  our  times  have  not  changed  and  cannot  change  hu- 
man nature."  There  is  "deep  within  the  consciousness  of  us  all  .  .  .  an  appre- 
hension lest  the  multiplication  of  things,  manufactured  things,  should  suddenly 
overwhelm  us  and  our  whole  life." 

Splawn,  \V.  M.  W.  A  review  of  the  minimum  wage  theory  and  practice.  South- 
western Pol.  Sci.  Quart.,  Mar.,  1921.  Pp.  33.  A  "review  of  the  theory  of  the 
minimum  wage,"  "a  short  account  of  how  it  has  operated  in  other  states,"  and 
a  detailed  study  of  its  operation  in  Texas. 

Swinny,  S.  H.  The  sociological  schools  of  Comte  and  Leplay.  Sociol.  Rev.,  Apr., 
1921.  Pp.  7.  "Comte's  aim  was  social  progress  and  Leplay's  social  peace.  .  .  . 
Comte  was  a  republican,  an  ardent  champion  of  the  workers.  .  .  .  Leplay  was  a 
conservative  .  .  .  yet  with  a  deep  sympathy  for  the  people.  .  .  .  The  one  was  a 
man  of  towered  cities  with  their  great  traditions  of  civilization,  the  other  of  the 
countryside  with  its  simple  pieties." 

Taussig,  F.  W.  7*  market  price  determinate?  Quart.  Journ.  Econ.,  May,  1921. 
Pp.  18.  "In  a  host  of  transactions  it  is  doubtful  whether  there  can  be  said  to  be 
in  any  accurate  sense  an  equilibrium  of  demand  and  supply."  Economic  inquiry 
must  give  attention  to  variations  as  well  as  to  general  tendencies. 


1921]  Economic  History  (United  States)  561 

Tawney,  R.  H.  The  coal  problem.  Contemp.  Rev.,  June,  1921.  Pp.  11.  "The  as- 
sumption sedulously  fostered  by  the  mine  owners  and  the  government  is  that,  as 
long  as  the  mine-owners  are  allowed  to  make  what  money  they  can  out  of  the 
industry,  it  will  be  conducted  with  economy  and  efficiency.  That  assumption  has 
an  overwhelming  mass  of  evidence  against  it." 

Tufts,  J.  H.  Judicial  lata  making  exemplified  in  industrial  arbitration.  Columbia 
Law  Rev.,  May,  1921.  Pp.  11.  An  account  of  the  development  of  the  principles 
underlying  the  decisions  of  the  Hart,  Schaffner,  and  Marx  court  of  arbitration; 
a  statement  of  the  problem  of  giving  a  content  to  the  terms  "fair  wages"  and 
"fair  profits." 

Usher,  A.  P.  Justice  and  poverty.  Am.  Journ.  of  Soc,  May,  1921.  Pp.  16.  "The 
life  of  the  slum  is  dominated  by  the  grim  necessity  for  rearing  large  families  as  a 
provision  for  old  age."  Even  if  poverty  cannot  be  abolished  it  need  not  be  a 
condition  of  abject  misery  unrelieved  by  prospects  of  ultimate  achievement  of  a 
decent  standard  of  living." 

Williams,  L.  H.  Prince  Kropotkin's  philosophy  in  the  light  of  today.  Hibbard 
Journ.,  April,  1921.  Pp.  8.  "Kropotkin  idealizes  'the  people' — the  common,  in- 
conspicuous, lazy,  long-suffering,  unlovely  people.  The  people  have  not  originated 
ideas.  But  they  have  been  the  first  to  take  action  upon  such  ideas  as  gripped 
their  hearts." 

Young,  H.  The  disintegration  of  liberalism.  Contemp.  Rev.,  April,  1921.  Pp.  7. 
"Before  the  war  traditional  liberalism  never  had  any  constructive  theory  of  its 
own  as  to  the  manner  in  which  productive  toil  ought  to  be  organized,  or  the 
proportions  in  which  its  produce  ought  to  be  enjoyed."  It  took  refuge  in  laissez 
faire,  a  policy  which  can  no  longer  be  even  moderately  successful.  "It  must  equip 
itself  with  a  theory  and  a  program  as  to  industrial  organization  and  the  rela- 
tions of  capital  and  labor." 

The  status  of  capital.  New  Statesman,  April  30,  1921.  Pp.  2.  A  consideration,  in 
terms  of  the  coal  industry,  of  the  validity  of  the  theory  of  profits  as  a  reward 
for  "the  risks  of  industrial  enterprise." 

Economic  History  (United  States) 
(Abstracts  by  Amelia  C.  Ford) 
Bradlee,  F.   B.  C.     The  Boston  and  Maine  Railroad.     Essex  Inst.   Hist.     Collec- 
tions, Oct.,  1920.    Pp.  2*.     Sketches  the  history  of  this  railroad.    Continued  in  the 
January  and  April  numbers. 

Butts,  R.  Q.  The  Quick  family  in  America.  Indiana  Mag.  of  Hist.,  Mar.,  1921. 
Pp.  32.  Contains  material  as  to  land  prices,  methods  of  farming,  transporta- 
tion, and  living  conditions,  in  pioneer  days  in  Indiana. 

Hitchcock,  C.  N.  "The  Brass  Check":  a  study  of  American  journalism,  by  Upton 
Sinclair.  Journ.  Pol.  Econ.,  Apr.,  1921.  Pp.  13.  Analyzes  the  problem  of 
journalism;  considers  Mr.  Sinclair's  book  is  wrong  in  emphasis  and  inadequate 
in  the  reform  proposed;  suggests  as  an  alternative  the  gradual  creation  of  a 
real  journalistic  professionalism,  similar  to  that  in  medicine  and  law,  to  solve  the 
problem  of  technique;  as  this  is  developed,  the  problem  of  control  would  become 
progressively  less  pressing. 

Johnson,  C.  R.    The  struggle  in  North  Dakota.    New  Repub.,  Mar.  9,  1921.     Pp.  3. 


562  Periodicals  [September 

Summarizes  the  events  in  the  fight  for  control  between  the  Nonpartisan   League 
and  its  opponent  since  November,  1920,  giving  arguments  and  plans  of  both  sides. 

Koht,  H.  Die  neueste  Sozialpolitik  in  North  Dakota.  Archiv  f.  d.  Geschichte  des 
Sozialismus,  IX  Jahrg.,  2-3  Heft,  1921.  Pp.  12.  A  sympathetic  account  of  the 
origin  and  achievements  of  the  Nonpartisan  movement  in  North  Dakota. 

Morris,  O.  S.  What  is  happening  in  North  Dakota?  Nation,  Mar.  9,  1921.  Pp.  3. 
Describes  the  bitter  struggle  last  winter  between  the  Bank  of  North  Dakota  and 
its  opponents,  and  the  present  situation. 

Putnam,  G.  G.  Salem  vessels  and  their  voyages.  Essex  Inst.  Hist.  Collections, 
Apr.,  1921.  Pp.  24.  A  journalistic  account  of  various  deep-water  voyages  made 
by  Salem-built  ships. 

Schmidt,  L.  B.  The  internal  grain  trade  of  the  United  States,  1860-1890.  Iowa 
Journ.  of  Hist,  and  Pol.,  Apr.,  1921.  Pp.  50.  "Shows  the  extent  to  which  the 
manufacturing-commercial  East  and  the  cotton-growing  South  had  by  1890  given 
way  to  the  food-producing  West  in  the  production  of  grain,  thus  illustrating  that 
territorial  division  of  labor  upon  which  the  growing  volume  of  internal  trade 
depended." 

Schuxtze,  E.  Die  amerikanische  Automobil-Industrie.  Zeits.  f.  Sozialwis.,  Sept.- 
Oct,  1920. 

.  Die  toeltwirtschaftliche  Uebermacht  der  Vereinigten  Staaten.  Blat- 
ter f.  Vergleichende  Rechtswis.,  Jan.-Mar.,  1921.  Pp.  11.  Outlines  the  financial 
growth  of  the  United  States,  with  especial  discussion  of  the  situation  during  and 
since  the  war. 

Alaska j  America's  greatest  territorial  possession,  and  its  opportunities.  The 
Americas,  Apr.,  1921.  Pp.  7.  Describes  Alaska's  present  development  and  future 
possibilities  in  regard  to  natural  resources,  trade,  and  the  tourist  business.  Il- 
lustrated. 

Book  of  Terre  Haute,  1921.  Pp.  20.  This  is  published  by  the  Chamber  of  Com- 
merce and  sets  forth  the  commercial  condition  and  prospects  of  that  city. 

Documents  relating  to  a  proposed  Swiss  and  German  colony  in  the  western  part  of 
Virginia  (1730).  Va.  Mag.  of  Hist,  and  Biog.,  Apr.,  1921.  Pp.  8.  Gives  the 
economic  reasons  why  such  a  -colony  shculd  be  established  in  the  Mississippi 
valley. 

Publications  of  the  Nebraska  State  Historical  Society.  Vol.  XIX,  1919.  Pp.  357. 
Devoted  to  the  early  history  of  the  state;  contains  five  papers  dealing  with  early 
settlers  and  settlements  and  two  on  the  Swedes  and  Bohemians  in  Nebraska. 

State  Historical  Society  of  Iowa  Publications.  The  Palimpsest,  Jan.,  1921.  Con- 
tains an  article  on  early  cabins  in  Iowa.  Feb.,  1921.  Devoted  to  roads  under 
the  titles:  "The  old  military  road,"  "Phantoms  on  the  old  road,"  "Along  the 
military  road." 

Economic  History  (Foreign) 

Barker,  J.  E.     Coal,  the  Empire's  life.     United  Empire,  May,  1921. 

Bianciii,  J.  Present  economic  conditions  in  Guatemala.  Econ.  World,  Apr.  16, 
1921. 


1921]  Agricultural  Economics  563 

Boissonnade,  P.    Le  mouvement  commercial  entre  la  France  et  lea  ties  Britanniques 
au  XVIe  siecle.    Rev.  Historique,  July-Aug.,  1920. 

Buek,  M.  C.    Depression  after  Napoleonic  Wars.    Economica,  May,  1921. 

Carli,  F.     The  control  of  industry  in  Italy.     Econ.  Journ.,  June,  1921. 

Cihak,  G.     La  legislazione  sociale  nella  Ceco-Slovacchia  dopo  la  guerra.     Rev.  In- 
tern., Apr.,  1921.     Pp.  8. 

Duncalf,  F.     The  peasant's  crusade.    Am.  Hist.  Rev.,  Apr.,  1921.     Pp.  15. 

Feis,  H.     The  industrial  situation  in  Great  Britain  from  the  armistice   to  the  be- 
ginning of  1921.     Am.  Econ.  Rev.,  June,  1921.     Pp.  16. 

Funck,  B.     Die  staatlichen  und  wirtschaftlichen  Aussichten  des  Zionismus.     Kolo- 
niale  Rundschau,  Apr.,  1920. 

Gestaldio.      Die    Sozialisierung    des    Kohlenbergbaues.      Ein    Vortrag.      Sehmollers 
Jahrb.,  Heft  1,  1921. 

Grunbehg,  C.    Die  Kommunistische  Zeitschrift  und  andere  Urkunden  aus  den  Jahren 
1847-1848.    Archiv  f.  d.  Geschichte  des  Sozialismus,  IX  Jahrg.,  2-3  Heft,  1921. 

Halphen,  L.     L' agriculture  et  la  propriety  rurale  dans  I'empire  carolingien.     Rev. 
Hist.,  Sept.-Oct.,  1920. 

Ledeeer,  E.    Social  evolution  during  war  and  revolution.    Pol.  Sci.  Quart.,  Mar.,  1921. 

Met,  C.  V.    Felipe  II  y  el  problema  economico  Espanol.     Rev.  Nacional  de  Eco- 
nomia,  IX,  28,  1921. 

Pezet,  F.  A.    The  present  economic  conditions  in  Peru.    Econ.  World,  Apr.  9,  1921. 

Porte,  M.     L'industrie  hydro-electrique  en  France.     Rev.  d'Econ.  Pol.,  Mar.-Apr., 
1921. 

Ricol.    Le  riforme  du  partage  successoral.     Ref.  Soc,  May,  1921. 

Rostovtzeff,  M.     The  foundation  of  social  and  economic  life  in  Egypt  in  hellen- 
istic  times.     Journ.  of  Egyptian  Arch.,  July,  1920. 

Singh,  St.  N.     The  Indian  economic  conference.     Wealth  of  India.,  Mar.,  1921. 

Economic  relations  of  Poland.    Commerce  Mo.,  June,  1921. 

The  economic  resources  and  relations  of  Poland.     Econ.  World,  June  1921. 

La  gestion  economica  del  Estado  en  el  ultimo  sexenio.    Rev.  Nacional  de  Economia, 
IX,  28,  1921. 

The  international  financial  conference  at  Brussels  and  its  lessons.     Round  Table, 

Dec,  1920. 
Sweden.    Mag.  of  Wall  Street,  Apr.  30,  1921. 
Uebersicht  iiber  die  Organisationsentwicklung  in  Industrie  und  Handel.     Kartell- 

Rundschau,  Heft  i,  1921. 

Agricultural  Economics 

(Abstracts  by  A.  J.  Dadisman) 
Arctowski,  H.    Agriculture  and  landownership  in  Poland.     Geog.  Rev.,  Apr.,  1921. 
Pp.  11.    The  needs  for  agrarian  reform  and  provision  of  the  Land-Reform  bill  of 
1920  are  given.    Nine  maps  and  four  tables. 


56±  Periodicals  [September 

Cakrjaa,  G.  La  riforma  dei  contratti  agrari.  Riv.  Intern.,  Mar. -Apr.,  19-21.  Pp. 
11.  A  study  of  the  parliamentary  problem  of  reforming  agrarian  contracts  in 
Italy.  The  contracts  themselves  are  reviewed  and  their  advantages  and  short- 
comings set  forth. 

Cooper,  ML  R.  and  Washbvrx.  R.  S.  Cost  of  producing  wheat.  U.  S.  Dept.  Agri. 
Bull.  943,  Apr.,  19-21.  Pp.  59.  A  detailed  study  of  the  costs  of  wheat  produc- 
tion on  4S1  farms  in  six  wheat  producing  states. 

Hibbasd,  B.  H.  and  Black,  J.  D.  Farm  leasing  systems  in  Wisconsin.  Wis.  Sta. 
Research  Bull.  47,  Oct.,  1920.  Pp.  60.  A  detailed  study  of  the  lease  contracts 
used  in  Wisconsin.  Business  summaries  of  different  systems  are  given.  Eleven 
tables  and  three  figures. 

Ho—or,  A.     Farmers'  cooperative  associations.     Am.  Boon.  Rev.,  June,  19-21.     Pp.  6. 

Mackxix,  T.  Marketing  by  federations.  Wis.  Sta.  Bull.  322,  Dec,  19-20.  Pp.  24. 
A  study  of  the  Wisconsin  cheese  federation,  with  articles  or*  incorporation  and 
by-laws  appended. 

Mackux,  T.  Cooperation  applied  to  marketing  by  Kansas  farmers.  Kan.  Sta. 
Bull.  224,  Oct.,  1920.  Pp.  61.  A  discussion  of  principles  of  cooperative  marketing 
from  data  from  801  organizations.  Statistics  of  cooperation  and  methods  of  or- 
ganization are  given.     Fourteen  tables. 

Marsh,  A.  R.  The  relation  /  future  contract*  on  the  cotton  exchanges  to  the 
American  cotton  industry.     Eeon.  World,  June  4.  1991.     Pp.  4.     An  argument  in 

favor  of  future  contracts  on  cotton  exchanges. 

Mead,  E.  How  L'alifornia  is  helping  p  tuple  own  farms  and  rural  homes.  Cal.  Sta. 
Bull.  221,  Aug.,  1920.  Pp.  88.  The  circular  gives  advantages,  progress,  and  gen- 
eral conditions  of  land  settlement.     Durham  and  Delhi  settlements  are  described. 

McCoxxel,  J.  W.  Cotton  growing  in  the  empire.  United  Empire,  Apr.,  1921.  Pp. 
1^.  The  importance  of  cotton,  and  methods  and  possibilities  of  increasing  its 
production. 

McKerrow,  H.  B.  Cotton  frowima  -within  the  Empire.  United  Empire,  June,  1921. 
Pp.  4.  The  present  situation  and  suggestions  for  improvement  of  cotton  pro- 
duction in  Africa. 

Powell,  G.  H.  Fundamental  principles  of  cooperation  in  agriculture.  Cal.  Sta. 
Cir.  -222,  Oct.,  1920.     Pp.  24.     A  consideration  of  several  basic  principles. 

Ste.  Marie,  J.  A.  Farm  business  in  Quebec.  Dom.  of  Can.  Dept.  of  Agr.  Bull.  96, 
Mar.,  19-20.  Pp.  16.  A  study  of  the  farm  business  from  survey  records  on  149 
farms   from  6  counties  in  Quebec.     Five  tables  and  three  charts. 

Wixkexwerder.  H.  Forest  resources  and  problems  of  the  Pacific  Coast.  Pacific 
Rev.,  June,  1921.  Pp.  13.  A  plea  for  immediate  protection,  investigation,  edu- 
cation and  legislation  to  conserve  the  rapidly  decreasing  forests.  Statistical  data 
showing  acreage  and  production  are  presented. 

.      Agricultural    conditions    and    labour    agreements    in    Denmark    and 

9m  len.  Intern.  Lab.  Rev.,  Apr.,  1921.  Pp.  22.  A  detailed  study  of  the  im- 
portance of  agriculture,  size  of  holdings,  agricultural  population,  including  col- 
lective labor  agreements,  in  the  two  countries. 

.     France:  the  reorganization  of  cooperative  agriculture  credit.     Intern. 


1921]  Railways  and  Transportation  565 

Rev.  Agri.  Econ.,  Oct.,  1920.  Pp.  14.  The  organization  of  regional  mutual  agri- 
cultural credit  banks  and  business  done  since  1921.  Long,  short  and  medium  term 
loans  are  discussed. 


.      Germany:   cooperative   dairies  during    the  war.     Intern.   Rev.    Agri. 

Econ.,  Nov.,  1920.     Pp.  18.     The  financial  status  and  amount  of  business  by  co- 
operative dairies  1912-1918. 

.      Germany:   agricultural   cooperative    societies   for   purchase   and  sale 


during  the  war.     Intern.  Rev.  Agri.  Econ.,  Oct.,  1921.     Pp.  16.     The  development 
of  cooperative  societies  since  1914,  shown  statistically  in  17  tables. 

.     Germany:   miscellaneous  agricultural  cooperative  societies  during  the 


war.  Intern.  Rev.  Agri.  Econ.,  Jan.-Feb.,  1921.  Pp.  10.  Data  are  presented  on 
the  development,  capitalization,  work  accomplished,  and  profits  and  losses  at  the 
societies.     Four  pages  of  tables. 

Great  Britain   and  Ireland:   profit  sharing    in   agriculture.      Intern. 


Rev.  Agri.  Econ.,  Jan.-Feb.,  1921.     Pp.  22.     A  study  of  types  of  profit-sharing 
and  the  basic  principles  involved. 

.     The  official  and  voluntary  organization  of  agriculture.     Intern.   Rev. 


Agri.  Econ.,  Mar.,  1921.     Pp.  13.     Types  of  agricultural  organizations,  their  de- 
velopment and  operation  in  Belgium. 

Railways  and  Transportation 

(Abstracts  by  Julius  H.  Parmelee) 

Aishton,  R.  H.  How  railways  are  making  economies.  Ry.  Rev.,  May  21,  1921. 
Pp.  3.  Summary  of  twelve  points  in  the  railway  economy  program,  prepared 
by  the  president  of  the  American  Railway  Association. 

Allix,  G.  Les  resultats  de  1920, — rdseau  d'Orleans.  Journ.  des  Trans.,  May  21, 
June  18,  1921.     Pp.  4,  3. 

Boeckel,  R.  Can  freight  rates  come  down?  Independent,  May  21,  1921.  Pp.  4. 
High  rates  tend  toward  decentralization  of  industry. 

Bcell,  D.  C.  Educating  the  practical  railroad  men.  Proc.  Pacific  Ry.  Club,  Apr., 
1921.     Pp.  5. 

Byham,  H.  E.  The  situation  of  the  railroads.  Milwaukee  Employes'  Mag.,  July, 
1921.    Pp.  5.    Statement  of  president  of  C.  M.  &  St.  P.  before  Senate  Committee. 

Cahdler,  C.  M.  Public  utility  regulation  in  Georgia.  Railroad  Herald,  June,  1921. 
Pp.  4.     By  the  chairman  of  the  Georgia  Railroad  Commission. 

Cook,  C.  C.  Piece-work,  bonus  systems,  and  higher  efficiency.  Ry.  Age,  June  3, 
1921.    Pp.  2. 

Cunningham,  W.  J.  The  railroads  under  government  operation.  Quart.  Journ. 
Econ.,  Feb.,  1921.  Pp.  53.  This  first  article  in  a  series  deals  with  results  for 
1918. 

Daggett,  S.  University  education  for  the  railroad  man.  Proc.  Pacific  Ry.  Club, 
Apr.,  1921.     Pp.  8.    The  college  of  economics. 

Dunn,  S.  O.  What  has  happened  to  the  railroads?  Am.  Rev.  of  Rev.,  May,  1921. 
Pp.  5.     Railway  revenues,  expense*,  and  traffic  since  the  increase  in  rates. 


566  Periodicals  [September 

Elliott,   H.     Reducing   the   railroads'  waste   line.     Traffic   Club   Bull.,   May,   1921. 

Pp.  3. 
Emerson,  H.    How  material  costs  affect  railway  income.     Ry.  Rev.,  June  4,  1921. 

Pp.  4.     Based  on  equated  locomotive  day,  and  illustrated  with  charts. 

.     A  radical  analysis  of  railway  operations.     Ry.  Rev.,  May  14,  1921. 

Pp.  7.  Railway  performance  reduced  to  the  average  per  equated,  or  normal, 
locomotive  day  basis. 

Fish,  J.  C.  L.  University  education  for  the  railroad  man.  Proc.  Pacific  Ry.  Club, 
Apr.,  1921.     Pp.  7.    The  engineering  school. 

Graham,  R.  K.  Reclamation  a  by-product  of  the  railway  business.  Ry.  Rev., 
June  4,  1921.     Pp.  6.    Scrap  reclamation  methods;  illustrated. 

Hanson,  F.  E.  How  sincerely  do  railroads  want  college  men?  Ry.  Age,  July  16, 
1921.    Pp.  2.    Advocates  broad  policy  of  recruiting  and  training  for  railway  work. 

Heineck,  K.  Die  europaischen  Eisenbahnen  und  der  Krieg.  Archiv  f.  Eisenbahnw., 
May-June,  1921.  Pp.  42.  Review  of  wartime  administration  of  railways  in 
central  empires,  allied  countries,  and  neutral  lands. 

Hutchins,  F.  L.  A  graphic  study  of  federal  and  private  railroad  management. 
Annalist,  Apr.  25,  1921.    Pp.  2. 

.    An  interesting  study  in  railway  efficiencies.     Ry.  Rev.,  June  4,  1921. 

Pp.  3.     Charts  relating  to  tonnage,  number  of  cars,  loading,  etc. 

Laut,  A.  C.  The  only  solvent  railroad  in  North  America.  Independent,  June  18, 
1921.     Pp.  3.    An  interview  with  President  Beatty  of  the  Canadian  Pacific. 

Liesse,  A.  La  journee  de  huit  heures  et  les  conditions  du  travail  dans  I'industrie 
des  chemins  de  fer.     L'Econ.  Fran?.,  June  18,  1921.     Pp.  3. 

.    Le  projet  sur  le  nouveau  regime  des  chemins  de  fer.    L'Econ.  Fran?., 

Apr.  16,  1921.    Pp.  3. 

Lisman,  F.  J.  Remedies  for  wastes  in  railway  operation.  Ry.  Age,  July  9,  1921. 
Pp.  5.     Heavier  loading,  less  accounting,  greater  labor  efficiency,  required. 

McClellan,  W.  The  larger  railroad  problem.  Yale  Rev.,  July,  1921.  Pp.  14. 
Coordination  of  all  forms  of  transportation;  consolidation  of  railways;  government 
guarantees. 

Macdonald,  C.  M.  Freight  claims,  their  cause  and  prevention.  Proc.  New  Eng. 
R.  R.  Club,  April  12,  1921.     Pp.  10. 

Newlands,  A.  The  Scottish  railways:  a  sketch  of  their  growth  and  recent  develop- 
ments.    Ry.  Gaz.  (London),  May  13-June  24,  1921.     A  series  of  seven  articles. 

Parmelee,  J.  H.  Coal  and  the  railway  situation.  Coal  Rev.,  May  18,  1921.  Pp.  3. 
The  relationship  between  coal  movement  and  railway  traffic  and  prosperity. 

.     The   cost  of   transportation  in  relation   to   other  cost  factors.    :  Ry. 

Age,  May  6,  1921.  Pp.  2.  Trend  of  average  receipts  per  ton  mile  compared 
with  commodity  index  numbers  since  1913. 

Payen,  E.  Les  compagnies  frangaises  de  chemins  de  fer  en  1920.  L'Econ.  Franc, 
June  11,  25,  1921.     Pp.  4,  3.     I,  Gross  earnings.     II,  Expenses  and  the  deficit. 

.     Une  grande  compagnie  de  chemin  de  fer  de  18S3  a  1920.     L'Econ. 

Franc.,  June  4,  1921.     Pp.  2.     Historical  review  of  the  Reseau  de  L'Est. 


1921]  Commerce  567 

Payne,  J.  L.  Government  and  private  operation  in  Canada.  Ry.  Age,  July  15, 
1921.  Pp.  3.  Comparison  of  results  in  1919  for  the  Canadian  National  Railways 
and  the  Canadian  Pacific. 

Peschaud,  M.  The  French  railway  strike  of  May,  1920.  Ry.  Gaz.  (London),  Apr. 
29,  1921.     Pp.  8. 

Plant,  L.  G.     The  organization  of  fuel  economy.     Ry.  Rev.,  May  28,  1921.     Pp.  7. 

Pomerene,  A.  Our  recent  federal  railroad  legislation.  Am.  Law  Rev.,  May-June, 
1921.     Pp.  29.     Analysis  of  the  Transportation  act. 

Reeve,  C.  A.  The  future  of  the  railways.  Brokers'  Mag.  (London),  Apr.,  1921. 
Pp.  7.    The  railway  problem  in  England. 

Riggs,  E.  G.    Motor  trucks  vs.  railroads.     Forum,  June,  1921.     Pp.  10. 

Sperry,  H.  M.  The  trend  of  railway  earnings  shown  in  charts.  Ry.  Age,  June  10, 
1921.    Pp.  3. 

von  Stieler,  K.     The  German  state  railways.     Forum,  May,  1921.     Pp.  8. 

Thom,  A.  P.  Reconstruction  of  transportation.  Forum,  Dec,  1920.  Pp.  10.  Un- 
derlying principles  of  Transportation  act. 

Willard,  D.  The  railroads  on  a  sound  basis.  World's  Work,  June,  1921.  Pp.  7. 
Steps  leading  to  Transportation  act  of  1920. 

Winger,  G.  T.     What  the  railroads  need.    Ry.  Rev.,  May  7,  21,  1921.    Pp.  4,  5. 

Argentine  railway  results.  Statist,  July  2,  1921.  Pp.  2.  Traffic  and  earnings, 
1920-21. 

The  Railways  bill,  1921.  Ry.  Gaz.  (London),  May  13,  1921.  Pp.  2.  Summary  of 
proposed  government  bill  for  reorganizing  and  regulating  the  British  railways. 

Railways  of  the  United  States.  Mod.  Trans.  (London),  July  2,  1921.  Pp.  2. 
Abstract  from  report  on  land  transportation  to  Congress  of  International  Chamber 
of  Commerce  at  London. 

Statistique  des  chemins  de  fer  allemands,  pour  Vexercice,  1917-1919.  Rev.  Gen.  des 
Chemins  de  Fer,  Apr.,  1921.    Pp.  2.    With  statistical  tables. 

Die  wurttembergischen  Staatsbahnen  in  den  Jahren  1917  und  1918.  Archiv  f.  Eisen- 
bahnw.,  May-June,  1921.     Pp.  9. 

Commerce 

(Abstracts  by  Harry  R.  Tosdal) 
Boyle,  J.  E.     Marketing  of  agricultural  products.     Am.  Econ.   Rev.,  June,  1921. 

Pp.  7. 
Clark,  F.  E.    Criteria  of  marketing-efficiency.    Am.  Econ.  Rev.,  June,  1921.     Pp.  7. 

Crohn-Wolfgang,  H.  F.  Die  baltischen  Randstaaten  und  ihre  handelspolitische 
Bedeutung.  Schmollers  Jahrb.,  Heft  1,  1921.  A  study  of  conditions  in  the  Baltic 
states  and  their  commercial  relations,  particularly  with  Germany. 

Glines,  F.  S.  China  trade.  Stone  &  Webster  Journ.,  June,  1921.  Pp.  7.  Suggests 
that  increased  trade  with  China  should  be  based  upon  development  of  industrials 
and  public  utilities. 

Hobson,  C.  K.    Measurement  of  the  balance  of  trade.    Economica,  May,  1921.    Pp. 


568  Periodicals  [September 

15.     Attempts  to  apply  various  methods  to  estimate  of  "invisible"  items  affecting 
trade  balance  of  Great  Britain. 

Joshi,  R.  M.  India  and  imperial  preference.  Journ.  Indian  Econ.  Soc,  Dec,  1920. 
Pp.  12.  Discussion  regarding  future  financial  policy  to  be  adopted  by  the  new 
Indian  government,  with  special  reference  to  imperial  preference. 

Maini,  A.  D.  Organization  international  del  commercio.  Rev.  de  Econ.  Argentina, 
Feb.-Mar.,  1921.  Pp.  26.  Describes  the  organization  and  policies  of  the  Inter- 
national Chamber  of  Commerce,  the  work  of  the  first  International  Congress,  and 
discusses  the  advisability  of  Argentina's  entrance. 

Miller,  W.  L.  Government  aid  in  foreign  trade.  Pol.  Sc.  Quart.,  June,  1921.  Pp. 
15.  Brief  description  of  methods  of  foreign  trade  promotion  as  practiced  by  prin- 
cipal governments. 

Partington,  T.  B.  British  trade  possibilities  in  China.  United  Empire,  May,  1921. 
Pp.  13.  Chinese  market  "in  regard  to  ordinary  domestic  needs  should  be  and 
has  every  possibility  of  being  four  times  the  value  of  the  United  States  and  eight 
times  that  of  the  United  Kingdom."  Gives  unduly  optimistic  description  of  op- 
portunities for  British  trade. 

Payen,  E.  Le  coton  en  1920.  L'Econ.  Franc.,  May  28,  1921.  Pp.  2.  Brief  sta- 
tistical analysis  of  1920  cotton  market. 

.    Le  cuivre  et  ses  prix  en  1920.    L'Econ.  Fran?.,  Mar.  26,  1921.    Pp.  2. 

Statistical  study  of  copper  production  and  prices  during  1920. 

Price,  H.  B.     Grain  standardization.     Am.  Econ.  Rev.,  June,  1921.     Pp.  4. 

Vaughan,  F.  L.     Report  on  the  grain  trade.     Am.  Econ.  Rev.,  June,  1921.     Pp.  5. 

Weld,  L.  D.  H.  The  meat-packing  investigation:  a  reply.  Quart.  Journ.  Econ., 
May,  1921.  Pp.  19.  Criticism  of  Dr.  Virtue's  article  on  the  Federal  Trade  Com- 
mission's "Report  on  the  Meat  Packing  Industry,"  which  appeared  in  the  August 
1920  issue  of  the  Quarterly  Journal  of  Economics. 

Yves-Guyot.  L'industrie  et  le  commerce  britanniques  en  1920.  Journ.  des  Econ., 
Mar.  15,  1921.  Pp.  19.  Review  of  principal  British  industries  and  commerce  in 
1920;  largely  statistical. 

Canada's  trade  with  the  United  States  and  the  rate  of  exchange  between  the  two 
countries.  Econ.  World,  Apr.  9,  1921.  Pp.  2.  Statistical  survey  of  trade  between 
United  States  and  Canada  over  period  of  years.  Canada  carries  on  as  much  trade 
with  the  United  States  as  with  the  rest  of  the  world  combined. 

The  trade  of  the  United  States  with  Latin  America  in  1920.  Econ.  World,  Apr.  23, 
1921.  Pp.  4.  Resume  of  trade  with  Latin-America,  by  countries,  during  1920. 
Trade  with  Latin-America  increased  44  per  cent  over  1919,  rising  from  20  per 
cent  to  25  per  cent  of  total  trade  of  the  United  States. 

Trade  with  Holland  and  its  colonies — opportunities  offered  by  the  Utrecht  Fair. 
Americas,  May,  1921.  Pp.  8.  Discussion  of  trade  with  Holland  and  its  colonics 
as  affected  by  the  war. 

Public  Utilities 

(Abstracts  by  Charles  S.  Morgan) 
Arnold,  B.  J.     The  relation  of  steam  roads  to  rapid  transit  development.     Journ. 
Western  Soc.  Enggs.,  May,  1921.     Pp.  3.     There  should  be  a  better  correlation 


1921]  Public  Utilities  569 

than  there  is  at  present  of  the  rapid  transit  facilities  furnished  by  steam  roads 
with  those  furnished  by  other  agencies. 

Ashfield,  Lord.  The  problem  of  the  fare.  Nineteenth  Cent.,  June,  1921.  Pp.  19. 
A  searching  analysis  of  the  fare  problem,  particularly  with  reference  to  the 
relative  merits  of  the  flat  and  the  differential  fare.  Each  community  presents  its 
own  problems;  no  one  scheme  of  fares  is  possible. 

Ballard,  F.  W.  A  specific  method  for  determining  street  lighting  costs.  Amer. 
City,  May,  1921.  Pp.  2.  Description  of  method  developed  by  New  York  PubUc 
Service  Commission  in  Elmira  rate  case.  This  method  is  held  to  be  of  general 
application. 

Benedict,  L.  I.  Some  recent  judicial  rulings  as  to  the  rate  base.  Amer.  Gas  Assoc. 
Monthly,  Feb.,  1921.  Pp.  3.  A  review  of  recent  decisions  in  which  the  courts  re- 
affirm their  preference  for  present  value,  based  on  cost  of  reproduction,  over  in- 
vestment or  cost  as  basis  of  valuation. 

Boyd,  A.  W.  Rent  regulation  under  the  police  power.  Mich.  Law  Rev.,  Apr.,  1921. 
Pp.  9.     A  critical  review  of  recent  legislation  on  this  subject. 

Burke,  W.  H.  Impairing  and  repairing  street  railway  rates.  Stone  &  Webster 
Journ.,  June,  1921.  Pp.  11.  A  review  of  familiar  arguments  pointing  to  the 
necessity  of  maintaining  street  railway  rates  at  their  present  comparatively  high 
level. 

Douglas,  P.  H.  The  Seattle  municipal  street-railway  system.  Journ.  Pol.  Econ., 
June,  1921.  Pp.  23.  An  interesting  statement  of  the  circumstances  accompanying 
Seattle's  adoption  of  municipal  ownership  of  its  street  railways.  Aside  from  the 
purchase  price,  which  appears  to  have  been  excessive,  reasonable  success  has  at- 
tended this  venture  to  date. 

Fogg,  O.  W.  The  gas  situation  today.  Amer.  Gas  Assoc.  Monthly,  May,  1921.  Pp. 
7.  A  good  brief  statement  by  the  secretary  of  American  Gas  Association  of  the 
needs  of  the  gas  industry  to-day. 

E.  C.  G.  Public  utility  valuations  and  rates.  Mich.  Law  Rev.,  June,  1921.  Pp.  4. 
The  numerous  cases  here  cited  show  tendency  for  commissions  to  rely  principally 
on  original  cost  or  "prudent  investment"  as  the  basis  of  valuation,  while  the 
courts  continue  to  attach  greater  weight  to  the  cost  of  reproduction  basis. 

Ingebsoll,  R.  V.  New  York's  new  traction  program.  Nat.  Munic.  Rev.,  June,  1921. 
Pp.  3.  The  new  transit  commission  for  New  York  City,  while  possessed  of  a 
much  needed  concentration  of  authority,  is  held  not  to  be  sufficiently  representa- 
tive of  the  city  and  its  interests. 

Kemp,  A.  N.  Tendencies  in  utility  financing.  Elec.  World,  Apr.  30,  1921.  Pp.  2. 
The  large  capital  requirements  of  public  utilities  must  be  met  principally  from 
the  sale  of  bonds. 

Knowlton,  A.  E.  Railway  valuation  in  Connecticut.  Elec.  Ry.  Journ.,  May  21,  28. 
Pp.  '4,  9.  Description  of  methods  used  in  arriving  at  valuation  of  electric  rail- 
way properties  in  Connecticut  without  the  usual  elaborate  detail  work. 

Montgomery,  H.  L.  Effect  of  rates  on  service.  Gas  Age,  May  25,,  1921.  Pp.  4. 
A  discussion  of  the  use  of  the  Doherty  three  part  rate  as  a  means  of  conserving 
the  natural  gas  supply  and  of  securing  its  most  efficient  utilization. 


570  Periodicals  [September 

Phillips,  A.  I.  Gas  progress  related  to  b.  t.  u's.  Gas  Age,  April  25,  1921.  Pp.  4. 
A  discussion  of  the  technical  problems  involved  in  the  future  of  the  gas  industry, 
with  particular  reference  to  the  standards  of  service  which  it  is  thought  desirable 
to  maintain. 

Perry,  J.  A.  The  public's  interest  in  utility  development.  Public  Service  Manag., 
July,  1921.    Pp.  2.     The  public's  interest  demands  a  liberal  treatment  of  utilities. 

Rhoads,  C.  B.  The  police  power  as  a  limitation  upon  the  contractual  right  of  public 
service  corporations.  (Univ.  of)  Pa.  Law  Rev.,  May,  1921.  P.  23.  The  contracts 
between  public  service  corporations  and  the  public  and  those  between  public  ser- 
vice corporations,  insofar  as  they  involve  the  "general  welfare,"  are  subject  to  the 
exercise  of  the  police  power  of  the  state.  A  still  further  broadening  of  this  con- 
cept is  predicted. 

Semenza,  G.  Sul  progetto  di  legge  Bianchi  per  la  socializzazione  dell'  industria 
ellettrica.    Riv.  di  Pol.  Econ.,  Jan.,  1921. 

Shaw,  W.  A.  Establishing  rates  for  service  rendered  by  public  utilities  by  contract. 
Amer.  City,  June,  July,  1921.  Pp.  3,  4.  A  review  of  Illinois  cases  which  are  held 
to  have  established  the  principle  that  a  municipality  can  not  by  contract  with  a 
utility  limit  the  state's  control,  through  the  police  power,  of  rates  charged. 

Simpson,  J.  Legal  aspects  of  natural  gas  supply.  Gas  Age,  May  25,  1921.  Pp.  3. 
Review  of  recent  cases,  particularly  of  those  involving  the  distribution  of  the  di- 
minishing supply  of  natural  gas. 

Thomas,  E.  H.  The  Seattle  municipal  car  lines.  Stone  &  Webster  Journ.,  June, 
1921.  Pp.  4.  The  Seattle  lines,  after  receiving  a  substantial  increase  in  rate  of 
fare  and  relief  from  taxes  of  various  kinds,  are  now  producing  satisfactory  re- 
sults financially. 

Wilson,  J.     Water  rates  in  small  cities  and  villages.     Amer.  City,  May,  1921.     Pp. 

3.  Need  for  more  scientifically  developed  rate  systems  to  secure  a  more  equitable 
distribution  of  cost. 

Atlanta  waterworks  a  losing  proposition.     Public  Service  Manag.,  July,  1921.     Pp. 

4.  One  of  numerous  analyses  of  like  purport. 

Commission's  powers  widened.  Elec.  Ry.  Journ.,  Apr.,  30,  1921.  P.  1.  Recent  legis- 
lation gives  Minnesota  Railroad  and  Warehouse  Commission  control  over  rates 
of  electric  railways  and  provides  for  optional  indeterminate  franchise.  Cities 
retain  control  over  service. 

Extent  of  the  constitutional  right  to  a  review  of  rate  orders  of  public  utilities  com- 
missions.    Pa.  Law  Rev.,  Jan.,  1921. 

Features  of  the  new  Paris  franchise.  Elec.  Ry.  Journ.,  May  7,  1921.  Pp.  3.  An 
extended  description  of  lease,  not  yet  accepted  by  all  parties  in  interest,  under 
which  the  now  publicly  owned  electric  railways  are  to  be  operated  by  private 
agency.  A  guaranteed  return  to  the  lessee  and  a  reward  for  increased  business 
and  for  operating  economies  are  provided. 

Improved  service  to  five  hundred  communities.  Elec.  World,  May  28,  1921.  Pp.  6. 
Interesting  description  of  activities  of  one  of  the  large  syndicates  in  the  utility 
field.  Many  inefficient  plants  have  been  abandoned  and  a  grouping  of  the  gener- 
ating plants  has  been  accomplished. 


1921]  Accounting  571 

Method  used  in  New  Jersey  valuation,  Elec.  Ry.  Journ.,  Apr.  23,  1921.  Pp.  4.  A 
detailed  account  of  the  methods  used  by  representatives  of  the  New  Jersey  State 
Valuation  Commission  in  determining  the  valuation  of  the  properties  of  the  Public 
Service  Railway  of  New  Jersey. 

Publicity  trail  blazers.  Amer.  Gas  Assoc.  Monthly,  June-July,  1921.  Pp.  10.  An 
account  of  the  work  of  the  state  "committees  on  public  utility  Information," 
agencies  created  by  the  utility  companies  to  secure  an  effective  general  presenta- 
tion of  their  case. 

Rate  changes — current  list  no.  $5;  Amer.  Gas  Assoc.  Monthly,  June-July,  1991. 
Pp.  5.  One  of  a  series  of  similar  summaries,  published  at  frequent  intervals,  of 
current  changes  in  gas  rates  in  American  cities. 

Service-at-cost  results  in  Montreal.  Elec.  Ry.  Journ.,  Apr.  23,  1921.  P.  1.  Con- 
densed graphical  representation  of  results  obtained. 

Utilities  commission  re-created.  Elec.  Ry.  Journ.,  Apr.  23,  1921.  P.  1.  In  order  to 
expedite  its  work  the  Kansas  Public  Utilities  Commission,  whose  functions  were 
taken  over  by  the  Kansas  Court  of  Industrial  Relations,  has  been  re-established. 

Accounting 
(Abstracts  by  Martin  J.  Shugrue) 
Bloor,  W.  F.     Value  of  graphics  in  an  accounting  system.    Journ.  Account.,  June, 
1921.  Pp.  7. 

Bonbright,  J.  C.  Earning  power  as  a  basis  of  corporate  capitalization.  Quart. 
Journ.  Econ.,  May,  1921.  Pp.  9.  The  object  of  this  article  is  to  show  that  a 
certain  widely  accepted  principle  of  corporation  finance — the  principle  that  capi- 
talization should  be  based  on  earning  capacity  rather  than  on  actual  cost — is  not 
only  unsound  in  theory  but  is  also  vicious  in  its  practical  application. 

Bbundage,  P.  F.  Distinctive  feature*  of  cotton  goods  accounts.  Journ.  Account., 
Apr.,  1921.  Pp.  8.  Accounting  requirements  for  the  manufacture  and  conver- 
sion of  cotton  goods  are  distinctly  different  from  those  of  other  manufacturing 
businesses. 

Brunton,  J.  Depreciation  and  reserves.  Journ.  Inst.  Bankers,  May,  1921.  Pp.  4. 
Brief  consideration  of  the  problem  of  depreciation  and  reserves  in  connection  with 
analyzing  balance  sheets   from  the  viewpoint  of  an  English  banker. 

Dfscoteaux,  G.  N.  Accounting  for  the  nail  and  tack  industry.  Journ.  Account., 
May,  1921.  Pp.  7.  Describes  the  different  departments  of  an  actual  plant  and 
outlines  the  main  features  of  the  cost  system. 

GAaEis,  A.  L.  Foreign-exchange  arbitrage  in  joint  accounts.  Journ.  Account.,  May, 
1921.  Pp.  7.  Explains  the  bookkeeping  necessary  to  take  care  of  certain  foreign 
exchange  transactions  and  illustrates  the  material  with  forms  and  calculations. 

Hale,  R.  L.  The  "physical  value"  fallacy  in  rate  cases.  Yale  Law  Journ.,  May, 
1921.  Pp.  22.  A  carefully  prepared  critical  statement  of  the  various  valuation 
doctrines.     Supplemented  with  numerous  references  and   footnotes. 

Macmahon,  A.  G.  Accounting  for  a  modern  hotel.  Journ.  Account.,  Apr.  1921. 
Pp.  9. 

Obcutt,  B.  S.    Overturn  sales  tax  on  commodities.    Journ.  Account.,  May,  1921.    Pp. 


572  Periodicals  [September 

8.  Points  out  reasons  why  a  sales  tax  could  be  more  easily  administered  than 
the  present  system  and  why  it  would  have  many  other  advantages.  Answers  many 
practical  objections  of  opponents. 

Pedigo,  D.  E.  Branch  accounting  for  packing  industries.  Journ.  Account,  Apr., 
1921.  Pp.  7.  A  presentation  of  the  accounting  classification  required  for  sales, 
purchases,  operating  expenses,  assets  and  liabilities. 

Putnam,  G.  E.  Joint  cost  in  the  packing  industry.  Journ.  Pol.  Econ.,  Apr.,  1921. 
Pp.  11.  A  report  of  the  Federal  Trade  Commission  on  the  meat  packing  industry 
condemns  as  unsound  the  cost  methods  of  the  packers.  This  article  is  the  vigo- 
rous reply  of  a  man  connected  with  Swift  &  Company,  Chicago. 

Rintoul,  P.  Some  note3  for  bank  agents  upon  the  examination  of  a  balance  sheet. 
Scottish  Bankers  Mag.,  Apr.,  1921.  Pp.  15.  Useful  but  not  new  generalizations 
and  observations  of  a  Scotch  accountant. 

Root,  M.  J.    Receivership  accounting.    Journ.  Account.,  Apr.,  1921.     Pp.  11. 

Thorxtox,  F.  \V.  Some  accounting  anomalies  of  tax  laics.  Journ.  Account.,  June, 
1921.  Pp.  4.  Considers  some  of  the  unexpected  effects  of  the  income  tax  and 
profits  tax  law  that  have  not  received  general  recognition,  although  they  have 
led  to  unfortunate  results  in  many  cases. 

Turtle,  G.  R.  Accounting  for  crude  petroleum  producers.  Journ.  Account.,  Apr., 
1921.  Pp.  9.  Deals  with  the  activities  of  the  two  principal  classes  of  crude 
petroleum  companies,  namely  those  engaged  in  producing  crude  oil  and  those 
developing  or  prospecting  oil  lands. 

Williams,  C.  B.  Treatment  of  overhead  when  production  is  below  normal.  Journ. 
Account.,  May,  1921.  Pp.  7.  Proposes  that  overhead  should  be  considered  like 
investment  in  plant  and  equipment  from  the  standpoint  of  a  reasonably  long 
period  of  time  rather  than  from  the  standpoint  of  a  single  month  or  year.  This 
involves  distributing  overhead  expense  upon  the  basis  of  normal  production. 

American  Institute  of  Accountants,  May  examinations.  Journ.  Account.,  June, 
1921.     Pp.  16. 

Translating  a  balance  sheet  into  words  of  one  syllable.  Annalist,  May  2,  1921.  Pp. 
2.  An  analytical  key  set  of  ratios  which  will  facilitate  the  interpretation  of 
financial  statements.  Shows  three  examples  and  compares  various  factors  on  a 
percentage  basis  for  each  of  them. 

Labor  and  Labor  Organizations 
(Abstracts  by  David  A.  McCabe) 
Altmeyer,  A.  J.     Industrial  accident  frequency  in  Wisconsin,  1915  to  1920.     Mo. 
Labor  Rev.,  June,  1921.     Pp.  6. 

Antoxopoulo,  H.  D.  Notes  sur  la  protection  Ugale  du  travail  des  femmes.  Rev. 
de  L'Institut  Soc,  Mar.,  1921.  Pp.  17.  Labor  legislation  should  be  based  much 
more  on  the  principle  of  protection  of  the  economic  interests  of  the  woman 
worker;  the  differentiation  between  the  sexes  should  not  be  carried  beyond  the 
limits  absolutely  necessary  for  the  protection  of  the  function  of  maternity. 

Askwith,  Lord.  The  International  Labour  Office.  Nineteenth  Cent.,  June,  1921. 
Pp.  11.     The  methods  of  the  office  are  bureaucratic  rather  than  informative. 


1921]  Labor  and  Labor  Organizations  578 

Ave-Lallemant,  T.  M.  The  collective  labor  contract.  Am.  Econ.  Rev.,  June,  1921. 
Pp.  15. 

Baker,  B.  Catching  up  with  "the  soviet  idea."  Weekly  Rev.,  Apr.  30,  1921.  Pp.  2. 
Unfavorable  criticism  of  the  price-fixing  feature  of  the  agreements  made  by  the 
New  York  Engravers'  local  union  and  their  employers. 

Bernstein,  E.  The  German  Works  Council  act  and  its  significance.  Intern.  Lab. 
Rev.,  Feb.,  1921.    Pp.  13. 

Blanshard,  P.  The  class  struggle  in  a  ball-room.  New  Repub.,  May  4,  1921. 
Pp.  2.    The  arbitration  proceedings  in  the  Rochester  clothing  industry. 

Bramsnas,  C.  V.  Fredens  sociale  Problemer.  Nat.  Ok.  Tids.,  No.  5,  6,  1920.  Pp. 
34.  An  analysis  of  the  social  problems  after  the  war,  particularly  those  con- 
cerned with  labor. 

Bruere,  R.  W.  The  new  trend  in  labor.  New  Repub.,  July  13,  1921.  Pp.  3.  Com- 
ment on  resolutions  adopted  by  the  1921  convention  of  the  American  Federation 
of  Labor. 

Carli,  F.  The  control  of  industry  in  Italy.  Econ.  Journ.,  June,  1921.  Pp.  8.  Re- 
sults of  the  seizure  of  factories  by  the  workers  and  the  degree  of  participation  in 
control  now  proposed. 

Carpenter,  N.  William  Benbow  and  the  origin  of  the  general  strike.  Quart.  Journ. 
Econ.,  May,  1921.    Pp.  10.    Largely  biographical. 

Chenerv,  W.  L.  Wage  principles.  Survey,  May  14,  1921.  Pp.  2.  The  principle  of 
the  living  wage  is  ignored  in  wage  readjustments. 

Clark,  L.  D.     Federal  labor  legislation.     Mo.  Labor  Rev.,  Apr.,  1921.     Pp.  7. 

Cole,  G.  D.  H.  Labour  organization  from  a  labour  point  of  view.  Outlook  (Lon- 
don), May  21,  1921.  Pp.  2.  Solution  of  the  labor  problem  depends  upon  labor 
equipping  itself  for  the  exercise  of  political  power  and  the  control  of  industry. 
A  reply  to  Industrial  and  political  labour  by  V.  Fisher  in  issue  of  May  14. 

Collis,  E.  L.  Industrial  health:  its  value  in  public  health  service.  Intern.  Journ. 
Public  Health,  Mar.-Apr.,  1921.  Pp.  17.  Emphasizes  need  of  investigation  of 
the  inter-relations  of  individual  health  and  the  functioning  of  labor  in  industry. 

Corbino,  O.  M.  Lo  spirito  anti-industriale  in  Italia.  Rif.  Soc,  Mar.-Apr.,  1921. 
Pp.  16. 

Crowther,  S.  How  to  handle  wage  cuts.  System,  May,  1921.  Pp.  6.  Based  on  a 
study  of  the  policies  of  76  employers;  advocates  paying  labor  always  the  same 
purchasing  power  for  the  same  effort. 

Dalhoff,  J.  Krigsaarenes  Lonpolitik.  Nat.  Ok.  Tids.,  No.  1,  1921.  Pp.  37.  A 
study  of  the  Danish  government's  wage  policy  during  the  war  and  after. 

Davis,  J.  J.  How  to  avoid  strikes.  Am.  Rev.  Rev.,  July,  1921.  Pp.  3.  Plea  for 
voluntary  commissions  for  mediation  and  arbitration,  by  the  Secretary  of  Labor. 

Fisher,  V.  Industrial  and  political  labour.  Outlook  (London),  May  14,  1921. 
Pp.  2.  The  collapse  of  the  triple  alliance  reveals  that  labor  has  little  chance  of 
acquiring  political  dominance  in  Great  Britain. 

Frankel,  E.  Labor  absenteeism.  Journ.  Pol.  Econ.,  June,  1921.  Pp.  13.  Measure- 
ment, extent,  and  suggested  methods  of  reduction. 


574  Periodicals  [September 

Gainsford,  Lord,  and  Tawkey,  R.  H.  The  coal  problem.  Contemp.  Rev.,  June, 
1921.  Pp.  17.  Statement  of  the  owners'  side  in  the  British  coal  strike  by  one 
of  them;  followed  by  an  unfavorable  criticism  of  the  policies  of  the  owners  and 
the  government  by  Mr.  Tawney. 

Gay,  E.  F.  Is  state  intervention  necessary  to  prevent  unemployment?  Am.  Lab. 
Legis.  Rev.,  June,  1921.    Pp.  6.     Answers  in  the  affirmative. 

Glaser,  A.  Industrial  councils  in  Austria.  Charity  Organ.  Rev.,  May,  1921.  Pp.  6. 
The  workers'  councils  have  been  busied  chiefly  with  wages  and  dismissals  and  have 
as  yet  secured  little  participation  in  the  conduct  of  the  business. 

Gow,  C.  R.  The  responsibility  of  organized  labor  for  the  stagnation  in  the  build- 
ing industry.  Stone  &  Webster  Journ.,  Apr.,  1921.  Pp.  24.  Instances  of  union 
restrictions  which  increase  the  cost  of  building. 

Greek,  W.  D.  The  labour  crisis:  the  labour  party  and  the  state.  Fortn.  Rev.,  May, 
1921.  Pp.  8.  Unfavorable  criticism  of  the  leadership  of  the  labor  party;  it  does 
not  control  the  mass  of  English  workingmen. 

Gregory,  C.  H.  The  international  labor  organization  of  the  League  of  Nations. 
Am.  Journ.  Intern.  Law,  Jan.,  1921.  Pp.  9.  Sees  tendencies  which  would  en- 
danger our  economic  interests  if  the  United  States  should  enter. 

Hapgood,  P.  Paternalism  versus  unionism  in  mining  camps.  Nation,  May  4,  1921. 
Pp.  2. 

Haynes,  G.  E.  The  negro  and  the  immigrant.  Survey,  May  14,  1921.  Pp.  2.  The 
restriction  of  immigration  will  continue  the  movement  toward  the  use  and  train- 
ing of  negro  labor  begun  during  the  war. 

Hewitt,  E.  P.  Trade  union  law  and  suggested  amendments.  National  Rev.,  June, 
1921.    Pp.  6.    Would  greatly  curtail  the  rights  of  trade  unions  in  British  law. 

Hewlett,  M.  The  labour  crisis:  some  misgivings.  Fortn.  Rev.,  May,  1921.  Pp.  6. 
Labor  lacks  civic,  common  and  moral  sense. 

Huggins,  W.  L.  A  few  of  the  fundamentals  of  the  Kansas  Industrial  Court  act. 
Journ.  Am.  Bar  Assoc,  June,  1921.  Pp.  6.  Exposition  of  the  legal  principles  on 
which  the  law  is  based,  by  the  presiding  judge  of  the  court,  who  was  also  author 
of  the  bill. 

Jouhaux,  L.  The  Economic  Labour  Council  in  France.  Intern.  Lab.  Rev.,  Feb., 
1921.  Pp.  9.  The  inquiries  conducted  by  the  Council,  which  was  organized  on  the 
initiative  of  the  General  Confederation  of  Labor  and  is  representative  of  techni- 
cal workers,  cobperators,  civil  servants  and  organized  labor,  have  led  it  to  favor 
the  nationalization  of  industry  and  its  control  by  the  associated  producers  and 
consumers. 

Kelly,  E.  T.  and  Haskins,  M.  L.  Foundations  of  industrial  welfare.  Economica, 
May,  1921.  It  should  be  undertaken  cooperatively,  not  by  the  management  alone; 
the  welfare  worker  should  be  directed  by  a  committee  representative  of  the 
workers  and  the  management. 

Krause,  L.  Collective  contracts  and  task  work  in  Germany.  Am.  Fed.,  June,  1921. 
Pp.  3.  The  exact  regulation  of  output  and  wages  by  collective  agreements,  bind- 
ing at  law,  has  removed  the  opposition  of  the  workers  to  task-work  and  piece-work. 

Laski,  H.  J.  Six  weeks  of  struggle.  Survey,  May  28,  1921.  Pp.  2.  Issues  and  de- 
velopments in  the  British  coal  strike. 


1921]  Labor  and  Labor  Organizations  575 

.     The  British  coal  strike.     Nation,  Apr.,  27,  1921.     Pp.  2. 


La  Sobsa,  S.  II  lavoratore  pugliese.  Note  di  sociologia  e  di  folklore.  Riv.  Ital.  di 
Soc,  July-Sept.,  1920.     Pp.  29. 

Lovejoy,  A.  O.  Profit-sharing  and  industrial  peace.  Intern.  Journ.  Ethics,  Apr., 
1921.  Pp.  24.  Finds  fatal  weaknesses  in  types  of  profit-sharing  that  are  intended 
to  increase  the  employer's  profits;  holds  that  an  equal  division  of  all  profits  be- 
tween employer  and  workers  would  substantially  advance  industrial  peace. 

McGill,  N.  P.  Trend  of  child  labor  in  the  United  States,  1913  to  1920.  Mo.  Labor 
Rev.,  Apr.,  1921.     Pp.  12. 

Mahaim,  E.  International  labour  law.  Intern.  Lab.  Rev.,  Mar.,  1921.  Pp.  4. 
Favorable  review  of  the  possibilities  before  the  International  Labor  Conference. 

Maylandeb,  A.     Labor  unrest  in  Italy.     Mo.  Labor  Rev.,  June,  1921.     Pp.  23. 

Michels,  R.  Ueber  die  Versuche  einer  Besetzung  der  Betriebe  durch  die  Arbeiter 
in  Italien  {September,  1920).  Archiv  f.  Socialwis.,  Heft  2,  1921.  Pp.  36.  In- 
terpretative account  of  the  seizure  of  factories  by  Italian  workers. 

Mondet,  N.  La  greve  des  mineurs.  Journ.  des  Econ.,  May  1921.  Pp.  8.  Critical 
account  of  the  British  coal  strike  up  to  the  end  of  April. 

Morley,  F.     The  collapse  of  the  triple  alliance.     Nation,  May  18,  1921.     Pp.  3. 

Moses,  E.  B.     The  photo-engravers  in  the  courts.    Survey,  June  4,  1921.     Pp.  3. 

Olivetti,  G.  L'approvigionamento  di  materie  prime  alle  Industrie  in  riparazione  dei 
danni  di  guerra.     Riv.  di  Pol.  Econ.,  Jan.,  1921.     Pp.  19. 

Osborn,  E.  B.  The  labour  crisis:  the  coal  strike.  Fortn.  Rev.,  May,  1921.  Pp.  15. 
Unfavorable  criticism  of  the  course  of  the  union  leaders. 

Petkow,  P.  Une  loi  nouvelle  sur  la  conscription  du  travail.  Rev.  d'Econ.  Pol., 
Mar.-Apr.,  1921.  Pp.  3.  The  Bulgarian  law  of  June,  1920,  providing  for  the 
drafting  of  young  men  and  women  for  industrial  training  and  labor  for  the  state. 

"Politicus."  British  labour  and  the  bolshevik  danger.  Fortn.  Rev.,  June,  1921. 
Pp.  15.  Cites  statements  and  actions  to  show  that  the  British  labor  movement 
is  controlled  by  a  minority  aiming  at  revolution. 

.     The   coal  trouble  and    the   delusions   of   labour.     Fortn.   Rev.,   May, 

1921.     Pp.  15. 

Ragazzoxi,  G.  II  nuovo  diritto  italiano  del  lavoro.  Riv.  delle  Soc.  Commerciali, 
Dec,  1920.  Pp.  8.  Among  the  new  social  laws  of  Italy  the  most  important  creates 
a  Ministry  of  Labor,  incorporating  the  Labor  Bureau  with  its  adjuncts,  the  ad- 
ministration of  the  social  insurance  laws,  the  national  labor  exchanges  and  the 
central  statistical  office. 

Riddell,  W.  R.  Labor  legislation  in  Canada.  Minn.  Law  Rev.,  Jan.,  Mar.,  1921. 
Pp.  11,  11. 

Soule,  G.  Good  union  or  bad?  Nation,  June  8,  1921.  Pp.  2.  A  favorable  appraisal 
of  the  Amalgamated  Clothing  Workers. 

Soutter,  F.  W.  The  first  fight  for  labour  representation.  Nineteenth  Cent.,  June, 
1921.  Pp.  18.  Autobiographical  account  of  unsuccessful  attempt  to  secure  the 
election  of  a  labor  man  to  the  British  Parliament  in  1869. 


576  Periodicals  [September 

Stoddard,  W.  L.  The  open  shop — a  memorandum.  Indus.  Manag.,  June,  1921. 
Pp.  2.     Favorable  to  the  open  shop. 

Thomas,  R.  The  International  Labour  Office.  Quart.  Rev.,  Jan.,  1921.  Pp.  16. 
Description  of  the  organization  and  work  of  the  office,  by  the  Director. 

Tufts,  J.  A.  Judicial  law  making  exemplified  in  industrial  arbitration.  Columbia 
Law  Rev.,  May,  1921.  Pp.  8.  Based  on  the  author's  experience  as  an  arbitrator 
in  the  men's  ready-made  clothing  industry  in  Chicago. 

Warbasse,  A.  D.     Workers'  status  in  cooperatives.    Survey,  June  4,  1921.     Pp.  2. 

Warner,  A.    Enter  the  labor  press.     Nation,  June  1,  1921.     Pp.  3. 

Watkins,  G.  S.    Analysis  of  labor  turnover.    Administration,  July,  1921.     Pp.  9. 

White,  L.  D.  Organization  of  public  employees.  Am.  Pol.  Sci.  Rev.,  May,  1921. 
Pp.  6.     British  and  French  law  and  proposed  legislation. 

Whitney,  A.  L.     Labor  unrest  in  Belgium.     Mo.  Labor  Rev.,  Apr.,  1921.     Pp.  8. 

Young,  H.  A.  Labour  in  India.  Edinburgh  Rev.,  Apr.,  1921.  Pp.  14.  The  char- 
acter of  the  workers,  the  conditions,  and  the  causes  of  the  recent  strikes. 

Conciliation  and  arbitration  in  Great  Britain.  Intern.  Lab.  Rev.,  Mar.,  1921.  Pp. 
20.  The  development  of  arbitration  during  the  war,  the  provisions  of  the  In- 
dustrial Courts  act,  1919,  and  the  operation  of  the  act. 

Employment  in  the  British  building  trade.  Intern.  Lab.  Rev.,  Apr.,  1921.  Pp.  8. 
Deals  with  the  government's  proposals  for  the  absorption  of  labor  into  the  build- 
ing trades  and  the  refusal  of  the  unions  to  agree  to  these  proposals. 

Industrial  arbitration  and  conciliation  in  Italy.   Intern.  Lab.  Rev.,  Apr.,  1921.  Pp.  11. 

The  industrial  situation  in  Australia.  Round  Table,  Mar.,  1921.  Pp.  11.  Develop- 
ments in  governmental  arbitration. 

Labor  unrest  in  Germany.    Mo.  Labor  Rev.,  Apr.,  1921.    Pp.  15. 

Labor  unrest  in  Spain.    Mo.  Labor  Rev.,  May,  1921.    Pp.  12. 

National  stoppage  of  work  in  coal  mines.  Lab.  Gaz.  (London),  Apr.,  May,  June, 
1921.    Pp.  3,  3,  2. 

Present  day  labor  litigation — statutes.    Yale  Law  Journ.,  May,  1921.    Pp.  7. 

Regulation  of  employment  conditions  in  soviet  Russia.  Intern.  Lab.  Rev.,  Mar., 
1921.    Pp.  7. 

Unemployment  and  the  industrial  situation.  Round  Table,  Mar.,  1921.  Pp.  23. 
Causes  of  and  suggested  remedies  for  unemployment  in  England. 

Workers'  control  in  Italy:  the  government  proposal.  Intern.  Lab.  Rev.,  Mar.,  1921. 
Pp.  14. 

Works  councils  and  arbitration  tribunals  in  the  Czecho-Slovakian  mining  industry. 
Intern.  Lab.  Rev.,  Apr.,  1921.    Pp.  5. 

Money,  Prices,  Credit,  and  Banking 
(Abstracts  by  C.  A.  Phillips) 
Adams,  L.  R.     The  "Par  Clearance  Case"  decision.     Journ.   Am.  Bankers  Assoc., 
June,  1921.    Pp.  3.    The  probable  effect  of  the  decision  will  be  that  both  member 


1921]  Money,  Prices,  Credit,  and  Banking  577 

and  non-member  banks  will  be  given  the  right  to  charge  reasonable  exchange  on 
checks  returning  through  federal  reserve  banks  or  other  channels. 

Anderson,  B.  M.  New  banking  and  credit  methods  used  in  handling  the  economic 
crisis  of  the  past  year.  Econ.  World,  May  14,  1921.  Pp.  2.  Special  reference  to 
the  work  of  creditors'  committees. 

Anderson,  B.  M.  and  Hepburn,  A.  B.  Federal  reserve  gold  and  rediscount  policy. 
Annalist,  July,  1921.  Pp.  2.  The  rediscount  rate  should  be  kept  above  the  market 
rate;  the  present  abnormally  high  federal  reserve  ratio  is  no  justification  for 
reducing  rediscount  rates. 

Chandler,  H.  A.  E.  Some  fundamental  factors  in  foreign  exchange  fluctuations. 
Econ.  World,  May,  21,  1921.    Pp.  6. 

Cross,  S.  H.  Commercial  banking  in  Belgium.  Econ.  World,  Apr.  30,  1921.  Pp.  3. 
A  snapshot  picture  of  present  banking  conditions  and  practices. 

Edwards,  G.  W.  A  standardized  American  letter  of  credit.  Trust  Companies,  June, 
1921.  Pp.  4.  The  principles  governing  the  relations  between  bankers  and  mer- 
chants under  letters  of  credit. 

Fisher,  I.  A  reply  to  an  adverse  A.  B.  A.  report.  Journ.  Am.  Bankers  Assoc, 
June,  1921.  Pp.  4.  A  trenchant  criticism  in  which  the  author's  plan  of  stabiliz- 
ing the  dollar  is  defended. 

.    Will  prices  drop  to  prewar  levels?    Am.  Rev.  Rev.,  July,  1921.    Pp.  3. 

Higher  wholesale  prices  are  in  prospect  for  two  or  three  years. 

Gephart,  N.  F.  Business  revival  and  the  rediscount  rate.  Econ.  World,  June  4, 
1921.    Pp.  4.    The  rediscount  rate  is  protective  and  not  determinative. 

Gide,  C.  Es  deseable  la  vuelta  del  franco  a  la  par?  Rev.  Econ.  Argentina,  Feb.- 
Mar.,  1921.    Pp.  11. 

Hammett,  C.  E.  Trust  departments  in  national  banks.  Bankers'  Mag.,  June, 
1921.    Pp.  8. 

Hibbard,  B.  H.    Stabilization  of  prices.    Am.  Econ.  Rev.,  June,  1921.    Pp.  6. 

Howard,  H.  F.  The  Imperial  Bank  of  India.  Econ.  Journ.,  June,  1921.  Pp.  24. 
Banking  conditions  in  India  with  particular  reference  to  the  Imperial  Bank, 
which  is  an  amalgamation  of  the  presidency  banks. 

Kent,  F.  I.  International  financial  relationships.  Administration,  May,  1921.  Pp. 
9.     Allied  indebtedness  ought  to  be  partly  cancelled. 

Latour,  C.  C.    Paper  money  and  Europe's  trade.     Annalist,  June  20,  1921.     Pp.  2. 

Magee,  J.  D.  Return  the  paid-in  capital  of  the  federal  reserve  banks.  Journ.  Pol. 
Econ.,  June,  1921.  Pp.  9.  It  would  be  favorable  to  an  unhampered  rediscount 
policy  and  the  entrance  of  state  banks  into  the  system. 

Miller,  A.  C.  Federal  reserve  discount  policies  and  prices.  Trust  Companies, 
June,  1921.    Pp.  3.    The  elements  of  a  sound  rediscount  policy. 

— .     Federal  reserve  policy.     Am.  Econ.  Rev.,  June,  1921.     Pp.  SO. 

Oakwood,  J.  The  continuing  gold  stream.  Annalist,  July  11,  1921.  Pp.  2.  Virtu- 
ally all  the  free  gold  in  the  world  is  flowing  to  the  United  States. 

Preston,  H.  H.     The  federal  farm  loan  case.    Journ.  Pol.  Econ.,  June,  1921.     Pp. 


578  Periodicals  [September 

21.     Operation  of  the  system;  history  and  issues  of  the  suit;  desirable  modifica- 
tions of  the  law. 

Prudden,  R.  F.  The  bank  credit  investigator.  Bankers'  Mag.,  June,  1921.  Pp.  11. 
Duties  of  credit  manager;  division  of  responsibility;  filing  systems  in  use;  the 
credit  folder;  sources  of  information. 

Rist,  C.  Les  banques  d'e"mission  et  Vapres-guerre.  Rev.  d'Econ.  Pol.,  Mar.-Apr., 
1921.     Pp.  2. 

Robbins,  K.  N.  Future  of  the  farm  mortgage  business.  Trust  Companies,  June, 
1921.  Pp.  5.  Federal  farm  loan  banks  represent  a  twentieth  century  populism 
that  will  be  repudiated. 

Roberts,  G.  E.  Dollar  currency  in  international  trade  and  credit.  Com.  and  Finan. 
Chronicle,  July  9,  1921.  Pp.  2.  Sterling  exchange  is  regaining  lost  ground.  We 
lack  a  set  of  acceptance  dealers  and  exchange  experts  of  international  vision. 

Rottxand,  E.  Le  mouvement  des  prix  dans  divers  pays.  L'Econ.  Franc.,  May  1'4, 
1921.     Pp.  3. 

Stbakosch,  Sir  H.  A  central  banking  system  for  the  Empire.  Bankers'  Mag. 
(London),  June,  1921.  Pp.  11.  Urges  the  establishment  of  a  central  bank  in 
each  of  the  dominions  as  a  means  of  strengthening  the  economic  bonds  of  the 
Empire. 

.     The  South  African  reserve  bank.    Econ.  Journ.,  June,  1921.     Pp.  7. 

Videla,  R.  Origenes  del  peso  hispano-americano.  Rev.  de  Econ.  Argentina,  Feb.- 
Mar.,  1921.    Pp.  36. 

Wamsley,  W.  F.  Can  Germany  make  exchange  help  foot  her  bills?  Annalist,  July 
4,   1921.     P.   1.     Predicts  a  recurring  clash  of  banking  writs. 

The  checking  of  currency  inflation  in  Germany.  Journ.  Commerce,  July  6,  1921. 
Pp.  2.  Momentary  cessation  of  inflation  has  not  meant  a  cessation  of  the  in- 
crease in  the  floating  debt. 

Les  operations  de  la  Banque  de  France  pendant  Vannee  1920.  L'Econ.  Franc.,  Apr. 
9,  1921.     Pp.  3. 

Progress  of  banking  in  Great  Britain  and  Ireland  during  1920.  Bankers'  Mag. 
(London),  June,  1921.     Pp.  7. 

Public  Finance 

(Abstracts  by  Charles  P.  Huse) 
Adams,  T.  S.    Should  the  excess  profits  tax  be  repealed?    Quart.  Journ.  Econ.,  May, 
1921.     Pp.  32.     A  study  of  its  history,  theory  and  working  leads  to  the  conclusion 
that  it  should  be  repealed. 

Alfama,  M.    Le  billet  de  rente.    Nouvelle  Rev.,  Nov.,  1920.    Pp.  26. 

Anderson,  B.  M.  Procedure  in  paying  the  German  indemnity.  Chase  Econ.  Bull., 
Apr.  90,  1921.  Pp.  21.  Germany  must  first  reestablish  the  gold  standard  and 
then  by  heavier  taxation  accumulate  bank  credits  to  be  turned  over  to  the  allies. 

Badulesco,  M.  V.  Le  prtlevement  sur  le  capital  en  Allemagne.  Rev.  Sci.  et  Legis., 
Finan.,  Jan. -Mar.,  1921.  Pp.  54.  Gives  the  text  of  the  law  taxing  capital,  its 
history,  and  an  explanation  of  its  provisions. 


1921]  Public  Finance  579 

Cabiati,  A.  /  probabili  effeti  della  tassa  del  12%  sull'  importo  globale  dell'  esporta- 
zione  tedesca.     Rif.  Soc,  Mar.-Apr.,  1921.     Pp.  21. 

Chandler,  H.  A.  E.  Influence  of  public  finance  in  world  business.  Commerce  Mo., 
July,  1921.  Pp.  10.  Great  expenditures  are  likely  to  upset  business  by  encourag- 
ing inflation  of  the  currency  and  by  using  up  the  savings  of  the  people. 

Chenery,  C.  T.  Partnership  vs.  corporation  in  federal  taxation.  Annalist,  Mar.  28, 
1921.  Pp.  2.  Gives  figures  to  show  the  heavier  tax  burden  on  the  corporate 
form  of  industry. 

Chlepner,  B.  S.  Le  nouveau  regime  fiscal  de  VAllemagne.  Rev.  de  l'Inst.  de  Soc, 
Mar.,  1921.  Pp.  31.  The  new  German  constitution  provides  for  much  greater 
centralization  in  fiscal  matters. 

Clark,  A.  B.  The  tax  problem  in  Manitoba.  Bull.  Nat.  Tax  Assoc,  May,  1921. 
Pp.  4.     Manitoba  relies  too  much  on  taxes  upon  real  property. 

Cross,  S.  H.  The  Belgian  budget  for  1921  and  the  public  debt  of  Belgium.  Econ. 
World,  June  25,  1921.  Pp.  2.  Though  a  large  deficit  is  shown  for  1921,  the 
writer  believes  that  Belgian  thrift  will  eventually  restore  the  balance  in  her 
finances. 

Davenport,  F.  M.  Preparing  a  foundation  for  a  real  tax  system.  Bull.  Nat.  Tax 
Assoc,  Apr.,  1921.  Pp.  4.  Suggests  specific  improvements  in  the  New  York 
tax  system. 

Deole,  C.  S.  The  Indian  budget  for  1921-1922.  Journ.  Indian  Econ.  Soc,  Mar., 
1921.     Pp.  10.     Increased  military  expenditures  require  additional  taxes. 

DeVries,  M.  American  valuation  vital  to  industrial  preparedness.  Protectionist, 
June,  1921.  Pp.  11.  Rapid  fluctuations  in  foreign  exchange  and  prices  make  the 
change  necessary. 

Fairchild,  F.  R.  The  case  against  the  sales  tax.  Bull.  Nat.  Tax  Assoc,  June,  1921. 
Pp.  6.     Doubts  whether  we  need  the  revenue  from  this  tax. 

Fairchild,  F.  R.  and  Haig,  R.  M.  7*  increase  in  the  value  of  capital  income/ 
Bull.  Nat.  Tax  Assoc,  Apr.,  1921.  Pp.  5.  Gives  the  decision  and  discusses  the 
question  from  various  points  of  view. 

Eraser,  Sir  D.  D.  The  maturing  debt.  Journ.  Royal  Statis.  Soc,  Jan.,  1921.  Pp. 
45.    Suggests  measures  that  will  make  easier  the  funding  of  the  maturing  debt. 

Fret,  M.  F.  Taxation  of  profits  derived  from  sale  of  capital  assets  of  estates: 
Trust  Companies,  May,  1921.  Pp.  3.  Injustice  would  be  prevented  by  allowing 
losses  to  offset  profits  over  a  longer  period  than  at  present  is  permitted. 

Gini,  C.  Problemes  financiers  d'apres  guerre.  I.  Dettes  publiques  et  charges 
fiscales.  Scientia,  No.  CX-6,  1921.  Pp.  20.  Considers  repudiation,  paper  money 
and  forms  of  taxation. 

Haig,  R.  M.    How  shall  we  get  the  money?    Journ.  Am.  Bankers  Assoc,  Apr.,  1921. 

Pp.  4.    Outlines  the  financial  situation  and  discusses  various  plans  of  tax  revision. 
Hamburg,  A.  M.     Exemption  of  state  and  municipal  securities  from  federal  income 

taxation.    Va.  Law  Rev.,  Dec,  1920. 
Higy,  C.     Die  Wertzuwachssteuer  in  der  Schweiz.     Zeitschr.  f.  Schweizerische  Sta- 

tistik  u.  Volkwirtsch.,  Heft  1,  1921.     Pp.  21.     Describes  the  methods  used  by  the 

different  Swiss  cantons  in  taxing  increases  in  realty  values. 


580  Periodicals  [September 

Jeze,  G.  L'emprunt  dans  les  rapports  internationaux.  Rev.  Sci.  et  Legis.  Finan., 
Jan.-Mar.,  1921.  Pp.  32.  A  historical  study  of  the  treatment  of  debts  in  the 
case  of  annexation  or  separation. 

Kelley,  A.  C.  Federal  taxation  of  income  from  the  production  of  minerals.  Journ. 
Pol.  Econ.,  Apr.,  1921.  Pp.  28.  Present  methods  of  valuation  result  in  much 
loss  to  the  federal  treasury. 

Liesse,  A.  L'amortissement  des  fonds  d'Etat.  L'Econ.  Franc.,  Apr.  23,  1921.  Pp.  3. 
Discusses  various  methods  of  amortisation. 

.  La  question  des  reparations :  une  appreciation  allemande  de  la  ca- 
pacity 4conomique  de  I'Allemagne.  L'Econ.  Franc.,  Apr.  9,  1921.  Pp.  3.  Examines 
the  calculation  of  Germany's  ability  to  pay  made  by  M.  Alfred  Lansburgh. 

Lotz,  W.  Der  Briissler  Internationale  Finanzkonf erenz  von  1920.  II.  Schmollers 
Jahrb.,  Heft.  1,  1921.  Pp.  20.  Though  plans  for  reconstruction  were  not  adopted, 
the  conference  was  noteworthy  as  a  step  toward  greater  cooperation. 

Minnis,  S.  E.  Double  taxation  in  Holland,  Norway,  Switzerland  and  Italy.  Journ. 
Comp.  Legis.  and  Intern.  Law,  Jan.,  1921. 

Mom,  H.  Taxation  of  life  insurance.  Econ.  World,  May  7,  1921.  Pp.  3.  The 
many  different  taxes  reduce  dividends  to  policy  holders  by  over  17  per  cent. 

Orctjtt,  B.  S.  Overturn  sales  tax  on  commodities.  Bull.  Nat.  Tax  Assoc,  June, 
1921.    Pp.  7.    Favors  the  tax. 

Page,  T.  W.  Difficulties  of  tariff  revision.  Journ.  Am.  Bankers  Assoc,  Apr.,  1921. 
Pp.  5.     Deals  with  such  questions  as  American  valuation  and  dumping. 

Powell,  T.  R.     Taxation  of  things  in  transit.    Va.  Law  Rev.,  Dec,  1920,  Jan.,  1921. 

Rafter,  J.  R.  The  essential  features  of  the  so-called  emergency  tariff  act.  Econ. 
World,  June  11,  1921.  Pp.  2.  Distinguishes  the  temporary  from  the  permanent 
parts. 

Ross,  N.  F.  What  are  distributable  profits  for  taxation  purposes?  Annalist,  May 
9,  1921.    Pp.  1.    Shows  need  of  careful  definition  by  Congress. 

Sears.  J.  B.  The  literature  and  problems  of  public  school  finance.  Educ.  Admin, 
and  Supervision,  Mar.,  1921.     Pp.  17. 

Taussig,  F.  W.  The  difficulties  of  the  country's  tariff  problem  under  existing  inter- 
national conditions.  Econ.  World,  June  4,  11,  1921.  Pp.  5.  Tariff  should  be 
stable,  to  give  certainty  in  business,  and  low,  to  prevent  commercial  warfare  and 
unfriendliness. 

Warming,  J.  Husleielovens  gradvise  Aflosning  af  Vdrdistigningsskat.  Nat.  Ok. 
Tids.,  No.  1,  1921.  Pp.  41.  Proposes  an  unearned  increment  tax  in  the  form  of 
a  certain  proportion  of  increases  in  rent. 

Yves-Guyot.  Le  pire  des  emprunts.  Journ.  des  Econ.,  May  15,  1921.  Pp.  39.  A 
warning  against  the  issue  of  legal  tender  paper  money. 

Imperial  preference  and  the  Australian  tariff  of  1920.  Commerce  Mo.,  June,  1921. 
Pp.  12.  Australian  tariff  history  reveals  a  steady  growth  of  protection  with  in- 
creasing preference  to  the  United  Kingdom. 

The  intricacies  of  the  British  income  tax.  Bull.  Nat.  Tax  Assoc,  Apr.,  1921.  Pp.  7. 
Shows  that  difficulties  are  inherent  in  the  nature  of  the  tax  itself. 


1921]  Population  and  Migration  581 

The  personal  tax  offset  under  the  Wisconsin  income  tax  law.  Bull.  Nat.  Tax  Assoc, 
May,  1921.     Pp.  5.     Argues  in  favor  of  repealing  the  present  offset. 

Taxation  and  public  expenditure.  Annals  Am.  Ac.  Pol.  and  Soc.  Sci.,  May,  1921. 
Pp.  314.  Articles  on  the  finances  of  the  United  States,  France  and  Peru,  the 
income,  excess  profits,  sales  and  inheritance  taxes,  and  on  budgetary  procedure 
and  administrative  organization. 

Population  and  Migration 
(Abstracts  by  A.  B.  Wolfe) 
Ccshing,  S.     The   distribution  of  population  in  Mexico.     Geog.   Rev.,  Apr.,   1921. 
Pp.  16.     An  illuminating  exposition  of  the  influence  of  elevation  and  rainfall  on 
the  geographical  distribution  of  rural  and  urban  population  in  Mexico. 

Darwin,  L.  Population  and  civilization.  Econ.  Journ.,  June,  1921.  Pp.  8.  Civi- 
lization depends  on  wealth,  racial  stock  and  tradition.  All  of  these  would  be 
improved  by  birth  control  in  the  lower  classes  and  a  higher  birthrate  in  the  bet- 
ter stocks. 

Du  Bois,  W.  B.  The  contribution  of  the  negro  to  American  life  and  culture.  Pacific 
Rev.,  June,  1921.    Pp.  5.    A  brief  survey  of  the  negro's  contributions. 

Doucet,  R.  La  population  de  Paris  et  la  crise  du  logement.  Monde  Econ.,  Apr.  23, 
1921.  Pp.  2.  The  scarcity  of  apartments  is  due  to  higher  incomes  and  living 
standards. 

East,  E.  M.  The  agricultural  limits  of  our  population.  Sci.  Mo.,  June,  1921.  Pp.  7. 
Estimates  of  our  future  population,  on  the  basis  of  agricultural  land  available. 
Some  interesting  comparative  statistics. 

Gieault,  A.  Des  consequences  morales  et  sociales  du  desequilibre  des  sexes.  Ref. 
Soc,  Apr.,  1921.  Pp.  11.  In  the  coming  years  women,  and  men  advanced  in 
age,  will  have  the  dominant  influence  in  European  societies — with  a  resulting  con- 
servatism. 

Hansen,  M.  L.  Official  encouragement  of  immigration  to  Iowa.  Iowa  Journ.  Hist, 
and  Pol.,  Apr.,  1921.    Pp.  36.     A  historical  outline,  based  on  official  documents. 

Hooten,  E.  A.  Race  mixture  in  the  United  Slates.  Pacific  Rev.,  June,  1921.  Pp. 
12.  In  the  absence  of  adequate  scientific  data  on  the  subject  of  racial  differ- 
ences in  mental  capacity,  assertions  in  regard  to  the  superiority  or  inferiority  of 
this  or  that  race  are  mischievous  and  strongly  to  be  condemned.  Intermarriage 
between  socially  inferior  and  superior  races  is  bad  for  the  offspring,  as  a  matter 
of  opportunity  and  psychology. 

Miller,  H.  A.  The  complexity  of  the  Americanization  problem.  Pacific  Rev.,  June, 
1921.  Pp.  7.  A  sure  and  well  balanced  article,  taking  up  a  number  of  points, 
often  neglected,  in  the  psychology  of  the  foreigner  in  America. 

Pearl,  R.  The  biology  of  death — the  causes  of  death.  Sci.  Mo.,  June,  1921.  Pp.  28. 
An  important  study  in  its  field.  The  different  organ  systems  have  well-defined 
lines  of  breakdown.  Emphasis  on  the  innate  biological  factors  as  contrasted  with 
environmental  factors  in  the  determination  of  the  observed  rates  of  human 
mortality. 

Pearl,  R.,  and  Reed,  L.  J.  On  the  rate  of  growth  of  the  population  of  the  United 
States  since  1790  and  its  mathematical  representation.     Proc   Nat.   Acad.   Sci., 


582  Periodicals  [September 

1920.    Pp.  13.    Rate  of  population  growth  conforms  to  a  portion  of  a  logarithmic 
parabola.    The  ultimate  limit  of  population  in  the  United  States  is  197,000,000. 

Thompson,  W.  S.  Some  phases  of  the  distribution  of  immigrants.  Pacific  Rev., 
June,  1921.  Pp.  10.  Discusses  the  factors  making  distribution  more  difficult  than 
it  was  twenty  years  ago. 

Wolfe,  A.  B.  Industrial  psychology  and  Americanization.  Pacific  Rev.,  June,  1921. 
Pp.  8.  Americanization  in  any  true  sense  cannot  be  furthered  by  propaganda 
put  out  by  open  shop  associations  and  the  like.  The  immigrant  gets  his  main  ideas 
of  America  from  his  working  conditions.  If  they  do  not  correspond  to  our  alleged 
ideals  the  immigrant  is  naturally  suspicious. 

he  probleme  de  Vimmigration  aux  Etats-Unis.  Monde  Econ.,  May  28,  1921.  Pp.  4. 
Discusses  pending  immigration  legislation,  and  the  problem  of  assimilation. 

The  migration  of  the  races.  Round  Table,  Mar.,  1921.  Pp.  31.  A  general  survey 
of  migration  and  emigration  in  modern  times,  and  a  discussion  of  the  effect  of 
the  war  on  the  attitude  of  the  people  of  the  United  States  and  the  British  colonies 
with  regard  to  immigration. 

Insurance  and  Pensions 

(Abstracts  by  Henry  J.  Harris) 
Bernhard,  E.     Die  gesetzliche  Regelung  der  Arbeitslosenversicherung  im  Ausland. 
Reichs-Arbeitsblatt    (Beilage),   Mar.    15,    1921.     Pp.   24.     Under   such   topics   as 
scope,  contributions,  benefits,  etc.,  the  plans  in  the  leading  countries  are  described. 

Blanchard,  R.  H.  and  Moore,  G.  D.  Corporate  bonding.  Proc.  Cas.  Act.  Stat. 
Soc,  Nov.,  1920.  Pp.  12.  Describes  fidelity,  public  official,  judicial,  contract, 
depository,  etc.,  bonding  business,  carried  on  by  corporations.  These  bodies  are 
subject  to  state  insurance  regulations. 

Chamberlain,  J.  P.  The  conflict  of  jurisdiction  in  compensation  for  maritime 
workers.  Am.  Labor  Legis.  Rev.,  June,  1921.  Pp.  6.  Maritime  workers  on  land, 
e.g.,  stevedores,  should  be  subjected  to  state  compensation  laws. 

Cholmeley-Jones,  R.  G.  War  risk  insurance.  Sci.  Mo.,  Mar.,  1921.  Pp.  7.  Scope 
and  work  of  the  Bureau. 

Cowles,  W.  G.  Reciprocals,  inter-insurers  and  other  mutual  insurance  organiza- 
tions. Econ.  World,  Apr.  16,  23,  1921.  Pp.  3,  3.  Legal  liability  is  uncertain  and 
has  dangerous  possibilities. 

Craig,  J.  D.     Group  health  insurance.     Proc.  Cas.  Act.  Stat.  Soc,  Nov.,  1920.     Pp. 

24.     Legal  limitations,  coverage,  selection  of  risks,  premium  rates,  classification 

of  industries,  typical  policy  forms. 
Dorn,  H.     Die  Krisis  in  der  Versicherungs-Wissenschaft.     Zeitsch.  f.  d.  ges.  Ver- 

sicherungswis.,  Apr.   1,   1921.     Pp.  4.     Plea   for  revision   of   training   courses   in 

universities. 
Flynn,  B.  D.     Review  of  actuarial  and  statistical  work  in  the  various  branches  of 

the  casualty  insurance  business.     Proc.  Cas.  Act.  Stat.  Soc,  Nov.,  1920.     Pp.  9. 

Work  has  been  of  great  value  in  compensation  insurance.     Needs  development  in 

other  lines. 
Hatch,  L.  W.     The  "maritime"  twilight  zone  from  the  standpoint  of  compensation 

administration.     Am.  Labor  Legis.  Rev.,  June,  1921.     Pp.  4.     Under  the  Jensen 


1921]  Insurance  and  Pensions  583 

and  Stewart  decisions  of  the  U.  S.  Supreme  Court,  longshoremen,  ship-repairers, 
etc.,  are  sometimes  maritime  and  sometimes  not  maritime  workers.  The  federal 
government  should  leave  these  groups  under  the  state  compensation  laws. 

Huebner,  S.  S.  Government  and  marine  insurance.  Econ.  World,  Apr.  30,  1921. 
Pp.  4.  Recommends  taxation  on  profits  instead  of  on  premiums,  encouragement 
of  syndicates,  enlargement  of  reinsurance  facilities,  and  advocates  model  law. 

Laird,  J.  M.  Non-cancellable  accident  and  health  insurance  underwriting  problems 
from  an  actuarial  standpoint.  Econ.  World,  June  18,  1921.  Pp.  3.  Last  of  three 
articles  on  the  actuarial  and  general  business  problems  of  this  new  form  of 
insurance. 

Lock,  F.  The  fire  insurance  "revelations"  of  the  Lockwood-Untermyer  investigating 
committee  in  New  York.  Econ.  World,  June  25,  1921.  Pp.  2.  Much  of  the  evi- 
dence misleading  and  some  of  it  incorrect. 

Malcolm,  E.  H.  An  official  defense  of  so-called  municipal  hail  insurance  in  Canada. 
Econ.  World,  Apr.  9,  1921.  Pp.  2.  Systems  of  state  or  municipal  hail  insurance 
are  now  in  force  in  North  Dakota,  South  Dakota,  Nebraska,  Montana,  Saskatche- 
wan and  Alberta.  The  Alberta  fund  has  lower  premiums,  has  paid  all  losses  and 
has  a  substantial  surplus. 

Mansfield,  B.  Government  and  marine  insurance.  Econ.  World,  May  21,  1921. 
Pp.  3.  Marine  insurance  being  entirely  subject  to  regulation  by  the  individual 
states,  the  uniform  bill  recently  proposed  is  recommended.  Taxation  should  be 
reformed. 

Mittermuller,  C.  Lebensversicherung  und  Geldentvertung.  Zeitsch.  f.  d.  ges.  Ver- 
sicherungswis.,  Apr.  1,  1921.  Pp.  10.  About  half  of  the  German  companies  did 
business  in  foreign  countries;  in  most  of  them  there  will  be  serious  losses  to  the 
companies.  The  German  policy  holder  is  receiving  payments  in  marks  worth  about 
one-twelfth  of  the  mark  of  1913. 

Muller,  A.  Versicherungs-mathematische  Begrifsbildung  auf  Grund  von  Realdeck- 
ungskapitalien.  Zeitsch.  f.  d.  ges.  Versicherungswis,  Apr.  1,  1921.  Pp.  14. 
Definitions  and  formulas. 

Ontwater,  O.  E.  An  American  accident  table.  Proc.  Cas.  Act.  Stat.  Soc,  Nov., 
1920.  Pp.  21.  Distribution  of  100,000  industrial  accidents  showing  nature  of  dis- 
ability, duration,  dependents,  etc.  Prepared  in  the  National  Council  of  workmen's 
compensation  insurance.     Comprehensive  piece  of  work. 

Perkins,  S.  B.  A  suggested  system  of  standard  notation  actuarial  work  in  work- 
men's compensation  insurance.  Pro.  Cas.  Act.  Stat.  Soc,  Nov.,  1920.  Pp.  21. 
Code  of  symbols. 

Rohrbeck,  W.  Die  neuen  Wege  der  Sozialpolitik  zum  wirtschaftlichen  Wiederauf- 
bau  im  Versicherungswesen.  Zeitsch.  f.  d.  ges.  Versicherungswis.,  Apr.  1,  1921. 
Pp.  16.  Readjustment  of  private  insurance  company  management  under  the  "es- 
tablishment council"  act. 

Stier-Somlo,  F.  Die  Reichsteuergesetze  und  das  Versicherungswesen:  II.  Reichsein- 
kommen-,  Kboperscliaft-,  Kapitalertrags-,  Erbschafts-,  Umsatzsteuer-,  und  Kapi- 
talfluchtgesetz.  Zeitsch.  f.  d.  ges.  Versicherungswis.,  Apr.  1,  1921.  Pp.  20.  Ex- 
planatory statement. 

Woodward,  J.   H.     Disability   benefits  in   life  insurance  policies.     Proc.  Cas.   Act. 


584  Periodicals  [September 

Stat.  Soc,  Nov.,  1920.  Pp.  14.  Description  of  prevailing  practices  in  underwrit- 
ing the  disability  hazard  as  an  incident  to  the  issue  of  life  insurance  policies. 
History  and  economic  significance. 

National  health  insurance.  Journ.  Inst.  Actuaries,  Apr.,  1921.  Pp.  5.  The  results 
of  the  first  valuation  of  the  approved  societies,  as  of  Dec.  31,  1918,  were  reported 
for  about  5000  cases,  40  per  cent  of  the  total.  The  vast  majority  showed  sub- 
stantial surpluses;  the  deficits  were  insignificant. 

Old  age  pensions  legislation  in  France.  Intern.  Lab.  Rev.,  Apr.,  1921.  Pp.  21.  Re- 
view of  laws  of  April  5,  1910,  in  force  July  3,  1911,  and  amending  acts,  on  pen- 
sions for  workmen  and  peasants.  Gives  statistics  of  operations.  Suggests  in- 
creasing the  benefits  and  contributions. 

Plant  disability  funds.  New  York  Dept.  of  Labor,  Bull.  No.  105,  Apr.,  1921.  Pp. 
16.  Analysis  of  41  funds  in  a  wide  variety  of  industries  with  over  200,000  em- 
ployees. Gives  kinds  of  benefits  provided,  management,  contributions,  disability 
covered,  membership,  etc. 

Progress  with  aviation  insurance  in  Great  Britain.  Econ.  World,  July  2,  1921. 
Pp.  3.  Describes  insurance  policies  for  personal  accident,  cargo,  damage  to 
machine  and  ground  risks. 

Report  of  committee  of  the  Bureau  of  Personal,  Accident,  and  Health  Underwriters 
on  non-cancellable  disability  insurance.  Econ.  World,  June  25,  1921.  Pp.  2. 
Summary  giving  recommendations  on  policy  coverage,  rate  of  disability,  load- 
ings, reserves,  limits  of  risk,  over-insurance,  etc. 

Survey  of  insurance  educational  work.  Proc.  Cas.  Act.  Stat.  Soc,  Nov.,  1920.  P.  1. 
Of  institutions  of  collegiate  grade,  49  have  courses  actually  in  operation;  of  these 
17  have  general  courses  only,  21  have  specialized  courses  only,  and  11  have  both 
general  and  specialized  courses. 

Pauperism,  Charities,  and  Relief  Measures 
(Abstracts  by  George  B.  Mangold) 
Borgatta,  G.     Crisi  bellica  e  crisi  postbellica.     Rif.  Soc,  Mar.-Apr.,  1921.     Pp.  29. 
An  inaugural  address  dealing  with  the  most  critical  social  problems  of  the  war 
and  post-war  periods. 

Doll,  E.  A.  Education  of  juvenile  delinquents.  Journ.  Delinquency,  Mar.,  1921. 
This  article  outlines  and  describes  various  clinical  procedures  and  methods  in  ref- 
erence to  juvenile  delinquents.  It  concludes  that  from  25  to  35  per  cent  of  the 
boys  in  reformatories  are  feeble-minded  and  that  nearly  one-half  are  borderline 
cases.  The  paper  presents  a  plan  of  education  for  these  types  of  boys  and  sug- 
gests the  utilization  of  the  mental  tests  in  planning  paroles. 

Simon,  H.  Sozialpolitik  und  Armenwes'en.  Reichs-Arbeitsblatt,  Mar.  15,  1921. 
This  article  vigorously  opposes  poor  laws  and  appeals  for  the  development  of 
constructive  welfare  movements,  both  public  and  private. 

Socialism 
Brailsford,  H.  N.    The  Russian  communist  party.    Contemp.  Rev.,  Jan.,  1921. 
Carli,  F.    L'4tat  present  du  socialisme  italien.    Bib.  Univ.  et  Rev.  Suisse,  Feb.,  1921. 
Colombins,  E.     Three  months  in  bolshevist  Russia.    Liv.  Age,  Jan.  29,  Feb.  5,  1921. 


1921]  Statistics  585 

Corbin,  J.     The  new  socialism.    No.  Am.  Rev.,  Mar.,  1921. 

Ford,  P.    Marx  and  Marxists.     Economica,  May,  1921. 

Gallomb,  J.  War  among  socialists  grows  world-wide.  The  split  in  the  socialist 
movement.     Fortn.  Rev.,  Dec,  1920,  Jan.,  1921. 

Hart,  H.     Coal  nationalization  in  England.     Pol.  Sci.  Quart.,  Dec.,  1920. 

Heimendahl,  H.  Die  Stellung  des  Sozialismus  zum  Bankwesen.  Jarhrb.  f.  Gesetzg. 
Verw.  u.  Volksw.  i.  D.  Reiche,  Heft  4,  1920. 

Holcombe,  A.  N.  The  government  of  the  Fabian  socialist  commonwealth.  Quart. 
Journ.  Econ.,  May,  1921. 

Lederer,  E.  Sozialisierung  und  Gesellschaftsverfassung.  Arehiv  f.  Socialwis.,  Band 
48,  Heft  2,  1921. 

Levi,  A.    Le  parti  socialiste  italien.    Rev.  de  L'Institut  de  Soc,  Mar.,  1921. 

Macdonald,  J.  R.     The  Georgian  socialist  republic.     Contemp.  Rev.,  Feb.,  1921. 

Mondet,  N.  La  nationalisation  de  la  marine  marchande.  Journ.  des  Econ.,  Nov. 
15,  1920. 

Olberg,  P.  Bauernr  evolution  und  Bolshewismus  {Die  Agrarfrage  in  Russland). 
Arehiv  f.  Socialwis.,  Band  48,  Heft  2,  1921. 

Onckek,  H.  Friedrich  Engels  und  die  Anfange  des  deutschen  Kommunismus.  Hist. 
Zeitsch.,  3,  27,  2,  1920. 

Rigkano,  E.  Un  programme  socialiste  liberal.  Rev.  d'Econ.  Pol.,  Jan.-Feb.,  1921. 
Pp.  1. 

Schumpeter,  J.  Sozialistische  Moglichkeiten  von  heule.  Arehiv  f.  Socialwis.,  Band 
48,  Heft  2,  1921. 

Stroomillo,  G.  Russia  and  the  Russian  workers  under  the  bolshevist  rule.  Am. 
Fed.,  May,  1921. 

Tschttdnowsky,  G.  Russische  Sozialisten  uber  den  Krieg.  Arehiv  f.  d.  Geschichte 
des  Socialismus,  Heft  2-3;  1921. 

Umbreit,  P.  The  program  of  German  socialized  industrial  management.  Annals 
Am.  Acad.  Pol.  and  Soc.  Sci.,  Nov.,  1920. 

Statistics 

(Abstracts  by  Horace  Secrist) 
Altmeyer,  A.  J.    Industrial  accident  frequency  in  Wisconsin,  1915-1920.    Mo.  Labor 
Rev.,  June,  1921.     Pp.  5. 

Auel,  C.  B.  The  unexpected  trend  in  accident  prevention.  Manag.  Engg.,  July, 
1921.  Pp.  7.  "Long  service,  good  health,  contentment,  cleanliness  and  careful- 
ness are  more  important  than  mechanical  devices." 

Bivins,  P.  A.  The  ratio  chart  and  its  applications.  I.  Indus.  Manag.,  July,  1921. 
Pp.  4.    The  first  of  a  series  of  articles  on  the  construction  and  use  of  ratio  charts. 

Bloch,  L.  Occupations  of  immigrants  before  and  after  coming  to  the  United  States. 
Quart.  Pubs.  Am.  Stat.  Assoc,  June,  1921.     Pp.  15. 

Boas,  F.     The   coefficient  of  correlation.     Quart.   Pubs.   Am.    Stat.   Assoc,   June, 


586  Periodicals  [September 

1921.    Pp.  6.     A  statement  of  the  conditions  which  influence  the  value  of  the  co- 
efficient of  correlation.     Important  in  view  of  its  use  in  a  mechanical  way. 

Bonar,  J.  The  mint  and  the  precious  metals  in  Canada.  Journ.  Royal  Stat.  Soc, 
Mar.,  1921.     Pp.  39. 

Bowley,  A.  L.  An  index  of  the  physical  volume  of  production.  Econ.  Journ.,  June, 
1921.  Pp.  10.  A  careful  review  and  criticism  of  "An  index  of  the  physical  vol- 
ume of  production"  by  E.  E.  Day,  published  by  the  Harvard  Committee  on  Eco- 
nomic Research. 

Bryant,  W.  W.  The  weather  and  cyclical  fluctuations.  Econ.  Journ.,  Mar.,  1921. 
Pp.  4.  A  critical  review  of  the  contention  of  Sir  W.  Beveridge,  that  a  15  1/3  year 
cycle  governs  the  price  of  wheat.     Maintains  yearly  data  are  inadequate. 

Carver,  H.  C.  The  mathematical  representation  of  frequency  distributions.  Quart. 
Pubs.  Am.  Stat.  Assoc,  June,  1921.    Pp.  12. 

Chaddock,  R.  E.  The  graphic  representation  of  a  frequency  distribution.  Quart. 
Pubs.  Am.  Stat.  Assoc,  June,  1921.  Pp.  4.  "Therefore,  when  calculating  the 
median,  quartiles,  etc.,  for  grouped  data,  we  should  use  the  actual  number  of 
items  instead  of  adding  one." 

Chapman,  E.  H.  Interpretation  of  a  correlation  coefficient.  Mo.  Bull,  of  Agri. 
Stat.  (Canada),  Mar.,  1921.  Pp.  3.  An  elementary  statement  of  the  meaning 
of  the  correlation  coefficient,  and  of  its  application  to  agricultural  problems. 

Claeys,  R.  L'indice  du  cout  de  la  vie  du  bureau  de  statistique  de  la  ville  d' Amster- 
dam. Rev.  d'Econ.  Pol.,  Mar.-Apr.,  1921.  A  critical  account  of  the  method  of 
computing  a  cost  of  living  index. 

Craig,  D.  R.     The  analysis  of  labor  records.     Indus.  Manag.,  May,  1921.     Pp.  3. 

Crump,  N.  E.  A  review  of  recent  foreign  exchange  fluctuations.  Journ.  Royal  Stat. 
Soc,  May,  1921.  Pp.  27.  A  review  of  the  fluctuations  during  1919  and  1920,  to- 
gether with  an  explanation  of  the  cause  to  which  they  can  be  attributed. 

Davis,  J.  S.  Recent  economic  and  financial  progress  in  Germany.  Rev.  Econ.  Stat., 
June,  1921.  Pp.  25.  Includes  treatment  of  (1)  Summary  of  economic  and  finan- 
cial position,  (2)  The  public  finances,  (3)  Currency,  prices,  and  cost  of  living, 
(4)  Foreign  exchange,  security  prices  and  private  finance,  (5)  Live  stock,  agri- 
culture, and  the  food  supply,  (6)  Coal,  iron,  and  steel,  (7)  Transport  and  com- 
munication, (8)  Foreign  trade  and  its  regulation,  (9)  General  industrial  situation. 

Fahrlander,  M.  Die  Bewegung  des  schiceizerischen  Volksvermbgens  von  1913-1919. 
Zeitschr.   f.   Schweizerische   Stat.  u.  Volkswirtsch.,   Heft   1,  1921.     Pp.   23. 

Flux,  A.  W.  The  measurement  of  price  changes.  Journ.  Royal  Stat.  Soc,  Mar., 
1921.  Pp.  49.  An  important  survey  of  the  practical  and  theoretical  problems  in 
the  measurement  of  prices,  together  with  a  comparative  analysis  of  the  various 
English  series. 

Ford,  C.  M.  Alphabetical  and  mnemonic  symbols  on  tabulating  machine  cards. 
Indus.  Manag.,  May,  1921.     Pp.  4. 

Frankei.,  E.  Labor  absenteeism.  Journ.  Pol.  Econ.,  June,  1921.  Pp.  9.  Meaning 
and  measure  of  labor  absenteeism  with  particular  reference  to  automobile  manu- 
facturing establishments,  car  building  plants,  machine  manufacturing  establish- 
ments, together  with  suggestions  for  reducing  the  amount. 


1921]  Statistics  587 

Gigon,  A.  and  Mangold,  F.  "Neue  Indexziffern,"  Erwiderung.  Zeitschr.  f. 
Schweizerische  Stat.  u.  Volkswirtsch.,  Heft  1,  1921.     Pp.  16. 

Gini,  C.    Measurement  of  inequality  of  incomes.     Econ.  Journ.,  Mar.,  1921. 

Kelley,  T.  L.  A  new  measure  of  dispersion.  Quart.  Pubs.  Am.  Stat.  Assoc,  June, 
1921.     Pp.  T. 

Lisman,  F.  J.  Remedies  for  wastes  in  railway  operation.  Ry.  Age,  July  9,  1921. 
Pp.  5.    "More  thorough  and  intelligent  cost  keeping  methods  necessary." 

Lorenz,  J.  Neue  Indexzifern.  Zeitschr.  f.  Schweizerische  Stat.  u.  Volkswirtsch., 
Heft  1,  1921.    Pp.  4. 

Newsholme,  Sia  A.  National  changes  in  health  and  longevity.  Quart.  Pubs.  Am. 
Stat.  Assoc,  June,  1921.  Pp.  31.  An  analysis  of  the  changes  in  longevity  in 
England  and  the  United  States,  with  special  emphasis  on  males  beyond  the 
fortieth  year  of  age. 

Pearson,  R.  J.  A.  A  comparison  of  pre-war  and  post-war  production  costs  in  en- 
gineering. Journ.  Royal  Stat.  Soc,  May,  1921.  Pp.  34.  Elements  entering  into 
costs  are  closely  distinguished  and  measured.     Contains  tables  and  graphs. 

Perkins,  S.  B.  A  suggested  system  of  standard  notation  for  actuarial  work  in 
workmen's  compensation  insurance.  Proc.  Cas.  Act.  Stat.  Soc,  Nov.  17,  1921. 
Pp.  21. 

Persons,  W.  M.  Fisher's  formula  for  index  numbers.  Rev.  Econ.  Stat.,  May,  1921. 
Pp.  11.  "Fisher's  formula  is  'the  best'  measure  of  general  exchange  value  if  we 
desire  to  compare  two  years  only,  and  not  a  series  of  years  each  with  the  other; 
his  correlative  formulas  for  prices,  and  quantities  are  'the  best'  only  if  we  are 
interested  in  the  same  quantities  in  both  cases.  .  .  .  The  geometric  average  with 
constant  weights  (or  weights  changed  only  occasionally)  appears  to  be  'ideally' 
better  than  Fisher's  formula  if  we  desire  to  compare  a  series  of  years  each  with 
the  other.  In  addition,  the  geometric  average  has  the  practical  advantage  that 
fewer  data"  and  half  the  labor  are  required  for  its  computation.  The  accuracy 
of  the  geometric  mean  combined  with  relative  ease  in  calculation  make  it  superior 
for  most  purposes  to  Fisher's  index." 

Raffalovich,  A.  The  note  issue  under  bolshevik  rule.  Bankers'  Mag.  (London), 
May,  1921.     Pp.  6. 

Rew,  Sir  R.  H.  The  organization  of  statistics.  Journ.  Royal  Stat.  Soc,  Jan.,  1921. 
A  statement  of  the  function  of  the  Royal  Statistical  Society  in  relation  to  sta- 
tistical data,  and  of  the  relation  of  statistics  and  statistical  organization  to  ex- 
isting social,  political,  and  economic  conditions. 

Roberts,  G.  E.  The  value  of  statistical  information.  Administration,  June,  1921. 
Pp.  4.     The  field  of  statistics  and  the  statistician  in  business  analysis. 

Sakolski,  A.  M.  Statistical  control  of  railroad  operations.  Administration,  July, 
1921.  Pp.  10.  An  account  of  the  development  of  railroad  operating  statistics  as 
worked  out  under  the  direction  of  Professor  WilLiam  J.  Cunningham  by  the 
United  States  railroad  administration,  and  a  plea  for  the  use  of  similar  units  in 
other  industries. 

Scoville,  J.  W.     How  we  plan  four  months  ahead.     Factory,  July,  1921.     Pp.  2. 

Scrutator.     Staff  organization.     Bankers'  Mag.    (London),  June,  1921.     Pp.  13. 


588  Periodicals  [September 

Secrist,  H.  The  relation  of  statistics  to  professional  work  and  industry.  Journ. 
Western  Soc.  Engg.,  June,  1921.    Pp.  9. 

Snider,  J.  L.  Security  issues  in  the  United  States:  1909-1920.  Rev.  Econ.  Stat., 
May,  1921.  Pp.  5.  "The  purpose  of  this  article  is  to  bring  together  and  interpret 
the  available  statistics  of  the  volume  of  security  issues  in  the  United  States  for 
the  period  1909-1920." 

Stevenson,  T.  H.  C.  The  incidence  of  mortality  upon  the  rich  and  poor  districts  of 
Paris  and  London.  Journ.  Royal  Stat.  Soc,  Jan.,  1921.  Pp.  17.  Critical  com- 
parison for  the  two  cities,  the  aim  being  to  determine  the  causes  of  the  differences. 

Williams,  F.  M.  The  origin  and  development  of  modern  trade  statistics.  Quart. 
Pubs.  Am.  Stat.  Assoc,  June,  1921.    Pp.  11. 

Wilson,  Sir  J.  The  world's  wheat.  Journ.  Royal  Stat.  Soc,  May,  1921.  Pp.  63.  A 
comprehensive  study  with  especial  reference  to  the  accuracy  of  the  estimates  on 
wheat  production  during  and  since  the  war  and  on  account  of  the  recent  yields 
of  exporting  countries  and  the  stocks  and  imports  of  importing  countries,  ocean 
freights,  prices  of  wheat,  etc. 

Woodward,  J.  H.  Disability  benefits  in  life  insurance  policies.  Proc  Cas.  Act. 
Stat.  Soc,  Nov.  17,  1920.     Pp.  13. 

Retail  prices  statistics:  scope  and  method  of  compilation.     Lab.  Gaz.,  Feb.,   1921. 

Pp.  4.    An  account  of  the  precise  method  used  in  collecting  and  compiling  cost  of 

living  data  in  England. 
Wholesale  prices  of  commodities  in  1920.    Journ.  Royal  Stat.  Soc,  Mar.,  1921.    Pp. 


NOTES 

The  following  names  have  been  added  to  the  membership  of  the  Ameri- 
can Economic  Association  since  the  first  of  May: 

Abels,  Mrs.  Margaret  H.,  Carroll  College,  Waukesha,  Wis. 

Atwood,  L.  L.,  213  Seventh  Ave.,  La  Grange,  111. 

Badger,  Ralph  E.,  11  Yale  Station,  New  Haven,  Conn. 

Beck,  Mrs.  B.  C,  202  Olympic  Place,  Seattle,  Wash. 

Belk  Laird,  134  So.  La  Salle  St.,  Chicago,  111. 

Berry,  R.  C,  Teton  City,  Idaho. 

Boyer,  Samuel  A.,  1319  Tennessee  St.,  Lawrence,  Kansas. 

Brigham,  Robert,  Orr's  Island,  Maine. 

Brown,  T.  H.,  79  Taber  Ave.,  Providence,  R.  1. 

Cannon,  Bernice  M.,  426  Washington  St.,  Boston,  Mass. 

Carroll,  Charles  B.,  824  Memorial  Quadrangle,  New  Haven,  Conn. 

Carson,  F.  L.,  1244  N.  Topeka  Ave.,  Wichita,  Kansas. 

Chen,  C,  Amoy  University,  Amoy,  Fukien,  China. 

Clay,  Henry,  Cedar  House,  Epping,  England. 

Clement,  C.  E.,  Department  of  Agriculture,  Washington,  D.  C. 

Culver,  Alvin  H.,  1406  N.  Y.  Life  Bldg.,  Chicago,  111. 

Deverell,  Frank  A.,  912  B.  &  O.  R.  R.  Bldg.,  Baltimore,  Md. 

Dill,  Richard  E.,  Alexandria,  Neb. 

Donald,  II.  H.,  314  West  138th  St.,  New  York  City. 

Dondo,  Mrs.  Anna  M.,  526  West  122d  St.,  New  York  City. 

Du  Brul,  E.  F.,  Prov.  Bank  Bldg.,  Cincinnati,  Ohio. 

Ekvall,  Waldemar,  25  West  45th  St.,  New  York  City. 

Farmer,  Ralph  H.,  979  14th  Ave.,  S.  E.,  Minneapolis,  Minn. 

Fluegel,  Felix,  University  of  California,  Berkeley,  Calif. 

Gillies,  Robert  C,  1857  Ontario  Place,  N.  W.,  Washington,  D.  C. 

Gillin,  J.  L.,  University  of  Wisconsin,  Madison,  Wis. 

Ginn,  Susan  J.,  218  Tremont  St.,  Boston,  Mass. 

Glein,  Sophia  C,  10  E.  Lexington  St.,  Baltimore,  Md. 

Godfrey,  Percy  D.,  Pillsbury  Academy,  Owatonna,  Minn. 

Goodrich,  Carter  L.,  17a  Appleby  Road,  Wellesley,  Mass. 

Hefling,  Arthur  W.,  R.  4,  Burrton,  Kansas. 

Higbee,  Paul  W.,  Proctor,  Vt. 

Hilario,  Jos6  M.,  Bureau  of  Internal  Revenue,  Manila,  P.  I. 

Holt,  William  H.,  Land  Title  Bldg.,  Philadelphia,  Pa. 

Hornbeak,  S.  L.,  808  W.  Marvin  St.,  Waxahachie,  Texas. 

Hsun,  Chen  Tsung,  20,  Hakka  Straat,  Medan,  Deli,  E.  C.  Sumatra. 

Hyatt,  Alton  R.,  Lawrenceville,  N.  J. 

Irons,  V.  Earl,  Room  1203  Little  Bldg.,  Boston,  Mass. 

James,  Virginia,  Lee's  Summit,  Mo. 

Jennings,  B.  B.,  882  Fifth  Ave.,  New  York  City. 

Kamimura,  U.,  165  Broadway,  New  York  City. 

Knauth,  Victor  W.,  302  West  76th  St.,  New  York  City. 

Lee,  Tsufa  S.,  303  Fifth  Ave.,  New  York  City. 

Leland,  Simeon  E.,  University  of  Kentucky,  Lexington,  Ky. 

Leslie,  William,  University  of  California,  Berkeley,  Calif. 

Lichtenstein,  Walter,  First  National  Bank,  Chicago,  I1L 


590  Notes  [September 

Link,  Henry  C,  U.  S.  Rubber  Co.,  1790  Broadway,  New  York  City. 

Lockwood,  Jeremiah,   University  of  Pennsylvania,   Philadelphia,   Pa. 

Luthy,  George  L.,  102  Randolph  Ave.,  Peoria,  111. 

McCollough,  Elzy  V.,  Bloomington,  Ind. 

McCormick,  Robert  R.,  26  Kenmore  Place,  Brooklyn,  N.  Y. 

McKay,  J.  Gordon,  University  of  Wisconsin,  Madison,  Wis. 

Malcolm,  Philip  S.,  98  Seaside  Ave.,  Milford,  Conn. 

Mason,  Arthur  J.,  5715  Woodlawn  Ave.,  Chicago,  111. 

Merwin,  Margaret  S.  10  East  39th  St.,  New  York  City. 

Moore,  Louise,  127  S.  Hamilton  St.,  Poughkeepsie,  N.  Y. 

Morris,  Victor  P.,  650  12th  Ave.,  Eugene,  Oregon. 

Morrow,  Dwight  W.,  23  Wall  St.,  New  York  City. 

Noble,  H.  S.,  University  of  Minnesota,  Minneapolis,  Minn. 

Oppenheim,  S.  C,  State  Teachers  College,  Kirksville,  Mo. 

Oswald,  Lewis,  301  West  9th  St.,  Hutchinson,  Kansas. 

Parodi,  H.,  141  Quai  d'Orsay,  Paris,  France. 

Patterson,  S.  H.,  University  of  Pennsylvania,  Philadelphia,  Pa. 

Pearson,  Walter  W.,  Morningside,  Lombard,  111. 

Pforzheimer,  Arthur,  25  Broad  St.,  New  York  City. 

Phillips,  E.  A.,  University  of  Southern  California,  Los  Angeles,  Calif. 

Phinney,  Lucy  C,  Colorado  College,  Colorado  Springs,  Colo. 

Quisenberry,  T.  E.,  Rutter  Lindsay  &  Co.,  Chicago,  111. 

Reid,  W.,  Tuttle  Corporation,  15  Broad  St.,  New  York  City. 

Rhett,  R.  G.,  Jr.,  People's  National  Bank,  Charleston,  S.  C. 

Robertson,  Alexander  D.,  1820  Dupont  Ave.,  So.,  Minneapolis,  Minn. 

Robinson,  Henry  M.,  First  National  Bank,  Los  Angeles,  Calif. 

Rosenberg,  David  S.,  75  Fort  Washington  Ave.,  New  York  City. 

Saposnekow,  Jacob,  343  S.  4th  St.,  Brooklyn,  N.  Y. 

Schmeckebier,  L.  F.,  14'44  Belmont  St.,  Washington,  D.  C. 

Schreier,  Henry  C,  Jr.,  120  Broadway,  New  York  City. 

Schultz,  Henry,  1415  Chapin  St.,  N.  W.,  Washington,  D.  C. 

Schwartz,  Arthur,  61  Lee  Ave.,  Brooklyn,  N.  Y. 

Seeley,  W.  Parker,  245  Brooklawn  Ave.,  Bridgeport,  Conn. 

Sellew,  Gladys,  1603  E.  McMillan  St.,  Cincinnati,  Ohio. 

Snyder,  Charles  E.,  10400  Prospect  Ave.,  Chicago,  111. 

Sutcliffe,  William  G.,  Simmons  College,  Boston,  Mass. 

Swain,  Wilbur  D.,  Aberdeen,  S.  D. 

Tang,  W.  K.,  851  West  181st  St.,  New  York  City. 

Tanner,  Edna  V.,  12  E.  Bomford  St.,  Richwood,  Union  Co.,  Ohio. 

Taylor,  C.  E.,  Security  Trust  &  Savings  Bank,  Los  Angeles,  Calif. 

Taylor,  Paul  S.,  2815 y2  Channing  Way,  Berkeley,  Calif. 

Tener,  Kinley  J.,  Sewickley,  Pa. 

Thomas,  Mrs.  Adda  Grace,  Churubusco,  Ind. 

Titus,  Charles  H.,  Box  N.,  Stanford  University,  Calif. 

Victor,  Harold  R.,  2318  N.  Capitol  Ave.,  Indianapolis,  Ind. 

Williams,  A.  H.,  University  of  Pennsylvania,  Philadelphia,   Pa. 

Yavitz,  Joseph  T.,  3806  West  13th  St.,  Chicago,  111. 

Sale  of  Surplus  Stock  of  Publications  of  the  American  Economic  Associa- 
tion.    The  Secretary  has  been  authorized  to  dispose  of  the  surplus  stock  of 


1921]  Notes  591 

publications  of  the  American  Economic  Association  at  reduced  prices. 
The  reasons  for  this  action  are  the  desire  to  make  these  publications  useful; 
to  reduce  the  heavy  storage,  insurance,  and  interest  charges ;  to  convert  these 
assets  to  cash;  and  to  make  it  possible  for  the  younger  economists  to  com- 
plete their  sets  of  the  Association's  publications.  Accordingly  the  members 
of  the  Association  and  the  libraries  are  given  the  first  opportunity  to  buy 
these  publications ;  the  offers  are  open  to  them  exclusively  until  November 
1,  1921,  and  thereafter  the  general  public  will  be  permitted  to  buy  at  the 
reduced  prices.  After  March  1,  1922,  all  unsold  surplus  publications,  except 
those  reserved  as  stated  below  and  possibly  certain  single  numbers  for  which 
fairly  steady  demand  is  visible,  will  be  pulped. 
Reserved  publications : 

a.  Three  copies  of  each  number  will  be  permanently  retained  by  the 

Association. 

b.  As  far  as  possible,  ten  other  copies  of  each  number  will  be  reserved 

for  sale  only  in  complete  series. 

c.  As  far  as  possible,  ten  other  copies  of  each  number  will  be  reserved 

for  sale  only  in  complete  volumes. 
Above  these  23  reserved  copies  all  copies  of  every  number  will  be 
sold  by  single  copy  or  volume. 
The  prices  at  which  the  surplus  publications  will  be  sold  are  determined 
by  deducting  the  following  discounts  from  the  list  prices  given  for  single 
numbers  or  volumes  in  the  pages  appended  to  Vol.  XI,  No.  1,  Supplement, 
March,  1921.     In  case  you  are  interested  in  these  reduction  sales  and  have 
not  a  copy  of  that  Supplement,  the  Secretary  will  furnish  you  with  a  copy 
of  the  list  prices. 

Discounts  from  List  Prices    (Per  cent) 

Per 

Full  series         Per  volume  single  number 

First  Series,  1886-1896,  Vols.  I-XI 75                        70  65 

Economic  Studies,  1896-1899,  Vols.  I-IV...       75                        70  65 

New  Series,   1896-1899,  Vols.  I-II 75                        70  70 

Third  Series,  1900-1910,  Vols.  I-XI 75                        70  65 

Economic  Bulletin,  1908-1910,  Vols.  I-III..       75                        70  65 
Fourth  Series:  American  Economic  Review 

1911-1915,  Vols.  I-V 65                         60  50 

1916-1918,  Vols.   VI-VIII 50                        45  30 

1919-1921,   Vols.   IX-XI No  discounts 

The  above  quotations  are  for  paper  bound  copies ;  volumes  bound  in  cloth 
may  be  had  at  25  per  cent  additional.  In  filling  orders  for  bound  volumes 
time  must  be  allowed  for  binding. 

Exceptions  will  be  made  of  a  certain  few  single  numbers,  which  will  not 
be  sold  at  the  discounts  above  quoted;  but  instead  a  discount  of  30  per  cent 
will  be  allowed  from  the  list  price. 

Orders  will  be  filled  as  received,  first  come  first  served.     Address   all 


592  Notes  [September 

orders  to  Professor  R.  B.  Westerfield,  Secretary,  Yale  Station,  New  Haven, 
Conn. 

In  the  notice  of  the  discounts  allowed  for  the  publications  of  the  Ameri- 
can Economic  Association  published  in  the  June  number  there  is  a  typo- 
graphical error  in  the  discount  allowed  for  the  Third  Series,  Single  Copies. 
The  discount  should  be  65  per  cent  instead  of  5  per  cent. 

Second  Karelsen  Prise  Essay  Competition.  The  subject  of  the  essays 
of  the  second  prize  essay  competition  to  be  conducted  by  the  American 
Economic  Association  will  be  "The  relations  of  capital  and  labor."  What 
is  expected  is  a  working  plan  for  division  of  profits  or  bonus  in  the  conduct 
of  an  industrial  plant  of  small  or  moderate  size,  some  plan  or  suggestion 
which  will  give  the  employee  a  share  of  the  profits  or  a  voice  in  the  manage- 
ment or  any  other  incentive  to  do  his  job  well,  and  which  will  be,  if  possible, 
an  application  of  the  Golden  Rule.  Three  prizes  will  be  offered  for  the 
most  meritorious  essays:  first  prize,  $1,000;  second  prize,  $500;  and  third 
prize,  $250. 

Any  American  citizen  is  eligible  to  compete.  It  is  particularly  hoped  that 
the  officers  of  labor  unions  and  employers'  associations  will  bring  this  contest 
to  the  attention  of  their  members  and  employees  and  that  many  from  these 
industrial  groups  will  enter  the  contest. 

The  essays  are  to  be  submitted  in  typewritten  form  on  or  before  Septem- 
ber 1,  1922,  to  the  Secretary  of  the  American  Economic  Association,  New 
Haven,  Connecticut.  Each  is  to  be  signed  with  a  pseudonym,  which  should 
also  be  written  on  a  sealed  envelope  containing  the  real  name  and  address 
of  the  writer.  No  definite  length  is  prescribed  for  the  essays;  but  it  is 
expected  that  each  will  constitute  a  small  monograph  of  some  80  to  100 
typewritten  pages  (7,500  to  25,000  words).  The  successful  papers  will 
become  the  property  of  the  American  Economic  Association,  and  it  is 
expected  that  they  will  be  published  as  a  supplement  to  the  American 
Economic  Review,  or  in  some  other  way.  Further  particulars  of  the  contest 
will  be  given  in  the  September  number  of  the  Review  and  in  circulars  from 
the  Secretary's  office.  All  inquiries  regarding  the  contest  should  be  addressed 
to  the  Secretary  of  the  American  Economic  Association,  Yale  Station, 
New  Haven,  Connecticut. 

The  judges  who  will  determine  the  award  of  the  prizes  will  be  persons 
of  national  reputation  and  representative  of  different  social  and  economic 
groups. 

The  national  convention  of  The  Society  of  Industrial  Engineers  will  be 
held  at  Springfield,  Mass.,  October  5-7.  The  main  subject  will  be  "Indus- 
trial Stability,"  covering  production,  distribution  and  sales,  finance  account- 
ing and  personnel. 

The  Fourteenth  Annual  Conference  of  the  National  Tax  Association  will 


1921]  Notes  593 

be  held  at  the  Mount  Pleasant  Hotel  at  Bretton  Woods  station  in  the  White 
Mountains,  September  12-16. 

The  Tenth  Annual  Convention  of  the  Investment  Bankers  Association  of 
America  will  be  held  in  New  Orleans,  November  1-2. 

The  International  Free  Trade  Congress  will  meet  at  Amsterdam,  Sep- 
tember 13-16. 

Notice  has  been  received  of  the  formation  in  England  of  the  University 
Labour  Federation.  The  objects  of  this  federation  are  to  coordinate  labor 
thought  and  political  effort  in  the  universities,  to  define  and  express  a  policy 
on  national  and  international  questions,  and  to  develop  university  opinion 
on  labor  and  socialist  questions.  Membership  is  open  to  all  graduates  and 
students  of  universities,  colleges,  and  similar  organizations.  The  secretary 
is  A.  Henderson,  Trinity  Hall,  Cambridge,  Eng. 

The  Institute  for  Research  in  Land  Economics  has  been  organized  for 
the  purpose  of  studying  problems  relating  to  landed  property.  Dr.  R.  T. 
Ely  is  director. 

The  State  University  of  Iowa  has  begun  the  issue  of  a  periodical  en- 
titled Journal  of  Business. 

Professor  W.  M.  W.  Splawn,  University  of  Texas,  and  President  Bizzell 
of  Texas  Agricultural  and  Mechanical  College,  have  in  preparation  a  text 
on  economics  for  secondary  schools. 

The  National  Child  Labor  Committee  has  recently  published  a  volume 
entitled  Child  Welfare  in  Tennessee  (pp.  620).  Professor  C.  E.  Allred  of 
the  University  of  Tennessee  assisted  with  the  "Rural  Life"  section  of  the 
report.     This  deals  largely  with  economic  conditions  in  that  state. 

Harper  &  Bros,  announces  the  preparation  of  a  Life  Insurance  Library, 
edited  by  Dr.  John  A.  Stevenson,  vice  president  of  the  Equitable  Life  Insur- 
ance Society  of  New  York  City,  and  Griffin  Lovelace,  director  of  the  School 
of  Life  Insurance  Salesmanship,  Carnegie  Institute  of  Technology. 

The  pubtication  department  of  the  League  of  Nations,  Geneva,  has 
issued  a  catalogue  of  the  publications  issued  by  the  League.  Among  these 
is  to  be  noted  the  Verbatim  Report  of  the  International  Financial  Confer- 
ence, published  in  five  volumes,  and  also  Currencies  After  the  War. 

The  article  by  Professor  Seligman,  Economists  of  the  United  States,  pre- 
pared for  the  Cambridge  History  of  American  Literature,  has  been  re- 
printed as  a  separate. 

In  the  Bulletin  of  the  British  Library  of  Political  Science  (London 
School  of  Economics  and  Political  Science,  Clare  Market,  London,  W.  C.  2), 
is  a  two  page  bibliography  of  Sir  Josiah  Child. 


594  Notes  [September 

The  announcement  has  been  made  of  the  early  publication  of  The  Labor 
Age,  supported  by  the  Labor  Publication  Society  (Room  931,  70  Fifth 
Avenue,  New  York  City).  The  Labor  Age  is  an  evolution  from  The  So- 
cialist Review,  published  since  December,  1919,  by  the  Intercollegiate  So- 
cialist Society. 

The  first  issue  of  Management  Engineering,  a  new  magazine  published 
by  the  Ronald  Press  Company,  appeared  in  July.  Mr.  Lee  Galloway  is 
the  editor  in  chief  of  this  periodical,  which  is  designed  to  cover  the  manage- 
ment side  of  production  and  act  as  a  complement  to  Administration. 

Publication  of  The  Americas,  by  the  National  City  Bank  of  New  York, 
was  discontinued  with  the  July  issue. 

New  York  University  has  established  a  school  for  the  study  of  oriental 
commerce  and  politics.  This  will  be  headed  by  Dr.  Jeremiah  W.  Jenks. 
Mr.  Charles  Hodges  will  act  as  assistant  director. 

Dr.  Frederick  L.  Hoffman,  third  vice-president  and  statistician  of  the 
Prudential  Insurance  Company,  has  joined  the  Mulford  Biological  Explora- 
tion of  the  Amazon  Basin  which  left  for  the  west  coast  of  South  America 
early  in  June.  Dr.  Hoffman's  work  relates  to  the  health,  longevity,  accli- 
matization, and  sanitary  progress  of  the  regions  visited,  particularly  as 
regards  American  residents  who  are  temporarily  or  permanently  settled 
under  the  conditions  of  tropical  life. 

The  Library  Association  (Stapley  House,  33  Bloomsbury  Square,  W.  C. 
1,  London,  England)  has  issued  The  Subject  Index  to  Periodicals,  1917- 
1919;  Historical,  Political  and  Economic  Sciences.  This  contains  over 
12,000  entries  selected  from  over  400  English  and  foreign  periodicals.  The 
material  is  clearly  arranged,  but  the  references  to  periodicals  published  on 
the  Continent  are  not  abundant.  German  periodicals  do  not  appear  to  be 
included  in  this  issue    (496  columns,  £l,   Is.). 

"Wila"  Wiener  Literarische  Anstalt  announces  the  publication  of  a  col- 
lection of  classical  works  relating  to  economics  edited  by  Dr.  Othmar 
Spann,  professor  of  political  economy  at  the  University  of  Vienna.  Among 
the  volumes  which  will  appear  are:  Versuche  iiber  eine  Theorie  des  Geldes, 
published  in  1816,  by  Dr.  H.  Lieser;  selections  from  the  writings  of  Thomas 
Aquinas ;  and  the  principal  works  of  Francois  Quesnay. 

The  Forschungsinstitut  fiir  Sozialwissenschaften,  in  Cologne,  announces 
the  publication  of  Kblner  Vierteljahrshefte  fiir  Sosialzvissenschaften,  to  be 
published  by  Duncker  &  Humblot,  Munich  and  Leipzig  (40  marks). 

A  meeting  of  the  American  Statistical  Association  was  held  in  New  York 
City  on  June  17,  for  the  discussion  of  commercial  research  and  business 
policies. 


1921]  Notes  595 

The  University  of  Chicago  Press  announces  a  new  work,  Law  and  Busi- 
ness, to  be  published  in  three  volumes.  The  first  volume  has  already  ap- 
peared, price,  $4.50.  The  material  of  these  books  has  been  developed  in 
actual  class-room  work  in  the  School  of  Commerce  and  Administration  of 
the  University  of  Chicago. 

Frank  Tannenbaum's  book,  The  Labor  Movement,  Its  Conservative  Func- 
tions and  Social  Consequences,  has  just  been  published  by  G.  P.  Putnam's 
Sons,  New  York  City. 

Professor  F.  M.  Taylor,  of  the  University  of  Michigan,  has  completed 
a  new  edition  of  his  textbook,  Principles  of  Economics,  published  by 
the  Ronald  Press  Company. 

Successful  Family  Life  on  the  Moderate  Income  is  the  title  of  a  new 
book  by  Mrs.  Mary  Hinman  Abel.  There  is  the  following  sub-heading: 
"Its  Foundation  in  a  Fair  Start.  The  Man's  Earnings.  The  Woman's 
Contribution.  The  Cooperation  of  the  Community."  The  book  is  published 
by  J.  B.  Lippincott  Company,  Philadelphia. 

From  the  Oxford  University  Press  in  England  has  been  received  the 
announcement  of  a  new  series  called  "Economic  and  Social  History  of 
the  World  War,  British  Series,"  and  published  on  behalf  of  the  Carnegie 
Endowment  for  International  Peace.  Two  of  the  first  volumes  to  appear  will 
be  Allied  Shipping  Control,  by  J.  A.  Salter,  and  War  Government  of  the 
British  Dominions,  by  Arthur  Berriedale  Keith. 

Risk,  Uncertainty  and  Profit,  by  Frank  H.  Knight,  published  by  Houghton 
Mifflin  Company,  is  one  of  the  Hart,  Schaffner  &  Marx  Prize  Essays  in 
Economics. 

D.  Appleton  &  Company  is  the  publisher  of  a  book  by  Professor  Robert 
Riegel  of  the  University  of  Pennsylvania,  entitled  Merchant  Vessels. 

Dr.  James  E.  Boyle  is  the  author  of  a  college  textbook  entitled  Agricul- 
tural Economics,  published  by  J.  B.  Lippincott  Company. 

A  volume  of  essays  by  Professor  Harold  J.  Laski  has  appeared  under 
the  title  The  Foundations  of  Sovereignty  and  Other  Essays.  The  publisher 
is  Harcourt,  Brace  &  Company. 

The  Engineers  and  the  Price  System  is  the  title  of  a  new  book  by  Thor- 
stein  Veblen,  published  by  B.  W.  Huebsch,  Inc. 

P.  S.  King  &  Son,  London,  are  the  publishers  of  Prices  and  Wages:  An 
Investigation  of  the  Dynamic  Forces  in  Social  Economics,  by  Percy  Wallis 
and  Albert  Wallis. 


596  Notes  [September 

Appointments  and  Resignations 

Dr.  James  P.  Adams,  of  the  University  of  Michigan,  has  been  appointed 
assistant  professor  in  the  Brown  University  economics  departmenl. 

Mr.  Charles  W.  Alexander  has  been  appointed  instructor  in  accounting 
and  business  organization  at  Tufts  College. 

Professor  C.  E.  Allred,  of  the  University  of  Tennessee,  will  be  absent 
from  the  university  during  the  first  semester  of  the  coming  year,  doing  re- 
search work  in  agricultural  economics. 

Dr.  John  B.  Andrews,  secretary  of  the  American  Association  for  Labor 
Legislation,  conducted  a  course  in  labor  problems  and  labor  legislation  at 
the  summer  session  of  the  University  of  California. 

Dr.  Ralph  E.  Badger,  of  Sheffield  Scientific  School,  Yale,  has  been  ap- 
pointed assistant  professor  in  the  department  of  economics,  Brown  Uni- 
versity. 

Mr.  John  Burton  Baker  has  been  appointed  instructor  in  accounting  in 
the  department  of  economics  at  the  Massachusetts  Institute  of  Technology. 

Mr.  William  Whipple  Bennett,  has  been  appointed  instructor  for  the 
coming  year  at  Princeton  University. 

Mr.  J.  Douglas  Brown,  formerly  a  fellow  in  economics  at  Princeton,  has 
been  appointed  instructor  at  that  university  for  the  coming  year. 

Mr.  William  Burgess  of  Morris  Heights,  Pennsylvania,  Vice-President 
and  Executive  Commissioner  of  the  United  States  Potters'  Association,  has 
been  appointed  by  President  Harding  a  member  of  the  United  States  Tariff 
Commission. 

Mr.  Lawrence  W.  Conant  has  been  appointed  instructor  in  business  man- 
agement in  the  department  of  economics  at  the  Massachusetts  Institute  of 
Technology. 

Mr.  George  Darlington  has  been  appointed  assistant  instructor  in  ac- 
counting in  the  University  of  Nebraska. 

Mr.  George  R.  Davies,  who  for  the  past  two  years  has  been  assistant 
professor  at  Princeton,  has  accepted  a  professorship  in  sociology  at  the 
University  of  North  Dakota. 

Mr.  E.  Gaylord  Davies,  instructor  in  accounting  in  the  University  of 
Nebraska,  has  been  appointed  instructor  in  the  same  subject  in  Columbia 
University. 

Miss  Jean  S.  Davis  has  been  appointed  instructor  in  economics  in  Vas- 
sar  College. 

Dr.  Herbert  M.  Diamond  has  been  appointed  assistant  director  of  the 


1921]  Notes  597 

Wall  Street  Division  of  New  York  University  School  of  Commerce.  Dr. 
Diamond  was  formerly  connected  with  the  State  Child  Welfare  Commis- 
sion of  Connecticut.  In  addition  to  his  executive  work,  Dr.  Diamond  will 
teach  courses  in  economics  and  industrial  history. 

Professor  G.  S.  Dow,  of  Baylor  University,  taught  in  the  first  summer 
term  at  the  University  of  Texas. 

Mr.  Hugh  M.  Fletcher  has  resigned  his  position  as  assistant  professor 
at  the  University  of  Kansas  to  become  a  preceptor  in  economics  at  Prince- 
ton University. 

Miss  Evelyn  S.  Gibson  has  been  appointed  assistant  in  economics  at 
Vassar  College. 

Mr.  M.  G.  Glaeser,  formerly  instructor,  has  now  been  appointed  assis- 
tant professor  in  economics  at  the  University  of  Wisconsin. 

Mr.  Everett  W.  Goodhue  has  resigned  his  professorship  of  economics  at 
Colgate  to  accept  an  appointment  at  Dartmouth  College  as  professor  of 
economics. 

Mr.  Frank  D.  Graham,  formerly  at  Dartmouth,  is  now  assistant  pro- 
fessor of  economics  at  Princeton  University. 

Dr.  Anton  de  Haas,  who  during  the  past  year  has  been  professor  of  for- 
eign trade  in  the  Graduate  School  of  Business  Administration  of  New  York 
University,  on  leave  of  absence  from  the  University  of  Rotterdam,  Hol- 
land, has  resigned  his  position  at  Rotterdam  University  and  has  accepted 
a  permanent  appointment  at  New  York  University. 

Professor  Max  S.  Handman,  of  the  University  of  Texas,  spent  the  sum- 
mer in  Roumania  investigating  Roumanian  economic  history. 

Mr.  Joseph  Bradley  Hubbard  has  resigned  his  position  as  special  expert 
for  the  United  States  Tariff  Commission  to  join  the  staff  of  the  Harvard 
Committee  on  Economic  Research. 

Mr.  J.  Hugh  Jackson  has  resigned  his  position  as  assistant  professor  of 
accounting  in  the  Harvard  Graduate  School  of  Business  Administration  to 
become  director  of  professional  training  for  Price,  Waterhouse  &  Company, 
56  Pine  Street,  New  York  City. 

Mr.  Charles  P.  Johnson,  holder  of  the  Procter  fellowship  in  economics  at 
Princeton  for  the  past  year,  has  been  appointed  an  instructor. 

Professor  V.  S.  Lanfear  of  the  University  of  Texas,  has  been  granted 
leave  of  absence  for  1921-1922  to  pursue  graduate  work  in  economics  at 
Columbia. 


598  Notes  [September 

Dr.  Ray  W.  Leffler,  of  Dartmouth  College,  has  been  appointed  assistant 
professor  of  political  economy  in  Yale  University. 

Dean  J.  E.  Le  Rossignol,  of  the  University  of  Nebraska,  was  on  the 
staff  of  The  Weekly  Review  in  New  York  during  the  months  of  July  and 
August. 

Dr.  H.  C.  Link  is  now  in  charge  of  the  educational  and  training  work  of 
the  United  States  Rubber  Company. 

Mr.  Thomas  O.  Marvin,  who  was  recently  appointed  one  of  the  mem- 
bers of  the  United  States  Tariff  Commission  has  been  made  Vice  Chairman 
of  the  Commission. 

Dr.  Blaine  F.  Moore,  professor  of  political  science  of  the  University  of 
Kansas,  is  working  for  the  United  States  Tariff  Commission  on  problems 
connected  with  foreign  tariffs. 

Professor  B.  Mukherjee  has  been  appointed  as  reader  in  economics  in  the 
University  of  Lucknow.  Professor  Mukherjee  was  assistant  to  the  Minto 
professor  of  economics  in  the  University  of  Calcutta  from  1914  to  1917, 
and  professor  of  economics  in  the  Diocesan  College  for  Girls,  Calcutta, 
from  1917  to  1921. 

Professor  C.  T.  Murchison  has  resigned  his  position  as  assistant  profes- 
sor of  economics  in  New  York  University  to  become  associate  professor  of 
business  economics,  University  of  North  Carolina. 

Dr.  Milton  N.  Nelson,  of  the  University  of  Illinois,  has  been  appointed 
instructor  in  marketing  at  the  University  of  Minnesota. 

Miss  Mabel  Newcomer,  associate  professor  in  the  department  of  eco- 
nomics, Vassar  College,  has  been  granted  a  year's  leave  of  absence. 

Mr.  Christopher  J.  O'Leary,  Jr.,  has  resigned  his  position  as  instructor 
in  economics  at  Tufts  College  to  enter  business  with  the  American  Woolen 
Company. 

Dr.  Hervey  W.  Peck  has  been  appointed  associate  professor  of  eco- 
nomics at  the  University  of  Vermont.  Dr.  Peck  will  have  charge  of  the 
courses  in  public  finance,  private  finance  and  money  and  banking. 

Mr.  Selig  Perlman,  formerly  instructor,  has  now  been  appointed  assis- 
tant professor  in  economics  at  the  University  of  Wisconsin. 

Mr.  Harold  W.  Pike  has  been  appointed  assistant  instructor  in  economics 
in  the  University  of  Nebraska. 

Mr.  Edward  Grosvenor  Plowman  has  been  appointed  instructor  in  eco- 
nomics at  the  Massachusetts  Institute  of  Technology. 

Professor  Ralph  L.  Power,  of  Boston  University,  who  has  been  at  the 


1921]  Notes  599 

College  of  William  and  Mary  this  year  on  leave  of  absence,  has  severed 
connections  with  both  institutions  to  be  with  the  University  of  Southern 
California  in  Los  Angeles. 

Dr.  Howard  H.  Preston,  associate  professor  of  business  finance  in  the 
College  of  Business  Administration  at  the  University  of  Washington,  taught 
in  the  summer  session  of  the  State  University  of  Iowa. 

Dr.  H.  Bruce  Price  has  resigned  his  position  as  instructor  in  political 
economy  at  Yale,  to  accept  a  position  as  assistant  professor  of  political 
economy  at  the  University  of  Minnesota.  Dr.  Price  has  made  a  special 
study  of  agricultural  economics,  and  his  work  at  the  University  of  Minne- 
sota will  be  in  this  field,  with  special  attention  to  the  problems  of  marketing 
agricultural  products. 

Mr.  John  J.  Reighard,  of  the  firm  of  Thompson  and  Worley,  Financial 
Accountants,  has  been  appointed  assistant  professor  of  accounting  at  the 
University  of  Minnesota. 

Mr.  T.  Bruce  Roff,  assistant  professor  of  economics  at  the  University 
of  Oklahoma,  has  been  made  associate  professor  of  economics  at  the  Uni- 
versity of  Missouri. 

Professor  G.  B.  Roorbach,  of  the  Harvard  Graduate  School  of  Business 
Administration,  was  engaged  during  the  summer  months  for  the  United 
States  Tariff  Commission  on  an  analysis  of  imports. 

Dr.  A.  M.  Sakolski  has  become  a  member  of  the  editorial  board  of  The 
Savings  Bank  Monthly  Journal. 

Professor  Skinner  of  the  department  of  foreign  trade,  College  of  Busi- 
ness Administration  of  the  University  of  Washington,  left  on  the  tenth  of 
August  for  Canton  Christian  College,  China.  A  year's  leave  of  absence 
from  the  University  of  Washington  has  been  granted  Professor  Skinner  in 
order  that  he  may  take  the  position  as  head  of  the  department  of  eco- 
nomics at  Canton  Christian  College.  Professor  Skinner  is  certified  as  a 
representative  of  the  University  of  Washington,  College  of  Business  Ad- 
ministration; the  Chamber  of  Commerce,  Port  of  Seattle;  China  Club,  and 
Pacific  Ports  in  the  interests  of  better  relations  between  the  Northwest  and 
China.  He  is  taking  slides  with  him  and  will  travel  through  China  in  the 
fulfillment  of  his  interests. 

Mr.  Earl  S.  Sparks,  formerly  assistant  at  the  University  of  Texas,  has 
been  appointed  instructor  in  economics  at  Tufts  College. 

Dean  Frank  T.  Stockton,  of  the  University  of  South  Dakota,  taught 
public  finance  and  labor  problems  during  the  past  summer  session  at  the 
University  of  Minnesota. 


600  Notes  [September 

Professor  T.  L.  Vaughan,  of  Brown  University,  taught  during  the  sec- 
ond summer  term  at  the  University  of  Texas. 

Mr.  Clarence  Wiley  has  been  appointed  instructor  in  economics  at  the 
University  of  Texas. 

Mr.  T.  R.  Williamson  has  been  appointed  assistant  professor  of  eco- 
nomics in  the  department  of  economics  and  sociology  at  Smith  College. 

Professor  A.  B.  Wolfe,  of  the  University  of  Texas,  taught  in  the  second 
summer  term  of  the  University  of  Colorado. 

Professor  A.  J.  Wooster,  of  Tufts  College,  worked  during  the  summer 
months  for  the  United  States  Tariff  Commission  on  the  subject  of  indus- 
trial unemployment. 

Karl  Menger  died  February  26,  1921. 


The 
American  Economic  Review 

VOL.  XI  DECEMBER,  1921  No.  4 

THE  FAILURE  OF  THE  MERCHANT  MARINE  ACT  OF  1920 

At  an  expense  of  approximately  four  billion  dollars  the  United  States 
now  has  a  sea-going  steam  merchant  fleet  second  only  to  Great  Britain's 
and  three  times  as  great  as  that  of  France  or  Japan  which  stand  third 
and  fourth  on  the  list.1  In  1914  our  flag  flew  over  only  725,000  gross 
tons  of  steamers  registered  for  foreign  trade,2  fully  one  half  of  which 
was  engaged  in  essentially  coastwise  services  to  the  Gulf  and  Caribbean 
or  between  Atlantic  and  Pacific  ports,  whereas  on  July  1,  1921,  10.6 
million  tons  were  so  documented.3  Having  become  possessed  of  a  large 
merchant  fleet,  it  was  generally  recognized  after  the  armistice  that 
something  must  be  done  to  keep  it.  The  inevitable  and  lengthy  hear- 
ings were  held,  and  a  Merchant  Marine  act  of  thirty-nine  sections  was 
finally  enacted  by  Congress  and  approved  by  the  President  on  June  5, 
1920.4 

In  outlining  the  purpose  of  the  new  legislation,  the  preamble  states 
"That  it  is  necessary  for  the  national  defense  and  for  the  proper  growth 
of  its  foreign  and  domestic  commerce  that  the  United  States  shall  have 
a  merchant  marine  of  the  best  equipped  and  most  suitable  types  of 
vessels  sufficient  to  carry  the  greater  portion  of  its  commerce  and 
serve  as  a  naval  and  military  auxiliary  in  time  of  war  or  national  emer- 
gency, ultimately  to  be  owned  and  operated  privately  by  citizens  of  the 
United  States ;  and  it  is  hereby  declared  to  be  the  policy  of  the  United 
States  to  do  whatever  may  be  necessary  to  develop  and  encourage  the 
maintenance  of  such  a  marine."  More  specifically  the  act  proposes  to 
aid  our  shipping  (1)  by  restoring  the  policy  of  private  ownership  and 
operation  temporarily  abandoned  by  the  war  (Section  5)  ;  (2)  by  a 
loan  fund  to  give  financial  assistance  in  the  building  of  approved  types 
of  ships  (Section  11)  ;  (3)  by  partial  exemption  from  excess  and  war 
profits  taxes  of  approved  types  of  vessels  built  in  American  yards  (Sec- 
tion 23);  (4)  by  (implied)  mail  subsidies  (Section  24)  ;  (5)  by  limit- 
ing special  joint  rail  and  water  rates  to  American  ships  (Section  28)  ; 

i  Lloyd's  Register,  June  30,  1920. 

2  Annual  Report  of  Commissioner  of  Navigation,  1920. 

3  American  Documented  Sea-Going  Merchant   Vessels  500  Gross   Tons  and  Over, 
July  1,  1921,  pp.  41,  53. 

*  Public  Statutes,  No.  261,  66th  Congress  (H.  R.  10,378). 


602  E.  S.  Gregg  [December 

(6)  by  making  ship  mortgages  prior  to  maritime  liens;  and  (7)  by 
discriminating  tonnage  and  customs  duties,  conditioned  upon  the  abro- 
gation of  existing  commercial  treaties  (Section  34?). 

The  act  has  now  been  in  force  for  more  than  a  year,  and  perform- 
ance can  be  placed  against  purpose  and  certain  suggestions  may  be 
offered.  No  attempt  will  be  made  to  treat  many  minor  features  of  the 
long  act  or  the  parts,  such  as  Section  6  5  on  which  an  adequate  judg- 
ment can  not  yet  be  passed. 

The  disposal  of  our  zcar-tonnage. 

Our  merchant  marine  is  still  predominately  government  owned.  On 
July  1,  1921,  the  Shipping  Board  possessed  7.2  million  gross  tons  of 
steel  ships  (the  wooden  tonnage  has  perhaps  been  finally  disposed  of) 
out  of  a  total  of  11.5  million,  or  64  per  cent. 

Some  critics  blame  the  Board  for  failure  to  sell  to  American  citizens 
7.2  million  gross  tons  of  ships  within  one  or  two  years.  A  fair-minded 
observer  must  admit  that  private  companies  could  not  possibly  have 
absorbed  so  much  tonnage  in  such  a  brief  time.  On  the  other  hand,  it 
is  equally  evident  that  many  more  ships  might  have  been  sold,  and  a 
summary  of  the  various  schemes  adopted  shows  the  indecision  of  the 
Board,  which  even  Section  5  of  the  Merchant  Marine  act  has  been  un- 
able to  overcome. 

The  first  sales  of  government  owned  steel  ships  were  announced  on 
June  17,  1919,  the  prices  ranging  from  $210  to  $225  a  deadweight 
ton,  on  terms  of  25  per  cent  cash,  71/]  per  cent  in  six  months,  71  o  per 
cent  in  twelve  months,  and  the  remaining  60  per  cent  in  installments 
over  four  years.6  The  prices  were  at  least  $10  to  $25  a  ton  above  the 
average  cost  to  the  government,  were  $30  to  $50  over  the  reproduction 
costs  in  American  yards,  and  were  around  $75  above  what  similar  ton- 
nage was  bringing  in  Great  Britain.  The  Board  asked  too  much  to 
attract  the  established  companies  and  the  initial  payment  of  one  half 
to  three  quarters  of  a  million  dollars  was  almost  prohibitive  for  new 
organizations.  On  February  10,  1920,  the  Board  allowed  a  10  per 
cent  deduction  for  ships  one  year  old,  an  additional  one  per  cent  for 
each  additional  vear  of  a  vessel's  life  for  the  following  five  years,  and 
5  per  cent  each  year  thereafter,  by  which  the  price  of  one-year-old 
boats  was  reduced  to  $180-$203  a  ton,  and  two-year-old  boats  to  $178- 
$200  a  ton,  etc.7  Two  weeks  later  (February  25),  a  new  scheme,  which 
was  really  a  bare  boat  charter  with  option  to  purchase,  was  adopted. 
The  terms  of  sale  were  2t{>  per  cent  cash  and  payments  at  the  rate  of 

s  This  section  provides   for  the  estahlishment  of  necessary  services. 

«  New  York  Times,  June  17,  1919. 

7  Journal  of  Commerce,  February  10,  1920. 


1921]  Failure  of  the  Merchant  Marine  Act  of  1920  603 

$8.30  a  deadweight  ton  a  month  until  50  per  cent  of  the  total  was  paid, 
the  remainder  to  be  in  equal  installments  within  five  years  of  the  date 
of  sale.8  The  low  initial  payment  and  the  opportunity  to  meet  the 
various  installments  from  earnings  were  expected  to  act  as  an  induce- 
ment to  buyers.  Sales  were  stimulated,  but  the  scheme  was  weak  in  that 
the  decline  in  rates,  which  had  already  begun,  soon  made  it  impossible 
to  earn  the  monthly  payments.  This  situation  was  recognized  a  few 
weeks  later  (April  1)  and  the  rate  was  reduced  to  $5  a  ton  a  month.9 
Less  than  a  month  later  (April  27)  another  plan  was  tentatively  put 
forward,  by  which  payments  were  to  be  10  per  cent  in  cash,  5  per  cent 
every  six  months  for  two  years,  and  the  remainder  in  equal  semi-annual 
installments  over  a  period  of  10  or  12  years.10  On  May  18,  an  an- 
nouncement was  made  that  sales  would  be  temporarily  suspended,  pend- 
ing the  drawing  up  of  a  new  form  of  sale  and  a  revision  of  the  agree- 
ments under  which  private  companies  were  operating  Shipping  Board 
tonnage.  The  announcement  was  unnecessary,  as  the  shipping  depres- 
sion was  proving  an  automatic  stop  to  sales.  In  less  than  a  year  the 
terms  of  sale  were  radically  changed  five  times,  a  procedure  calculated 
to  reduce  sales  to  a  minimum,  quite  apart  from  the  question  of  price. 

Section  5  was  designed  to  give  courage  to  the  Board;  Congress  di- 
rected it  to  sell  the  war  tonnage  "as  soon  as  practicable,  consistent 
with  good  business  methods  and  the  objects  and  purposes  to  be  at- 
tained by  this  act."  Two  months  later  (August  IT)  the  basic  prices 
were  reduced  to  $160-$175  per  deadweight  ton  for  coal-burning  vessels 
and  to  $175-$185  a  ton  for  oil-burners.11  Three  days  later  (August 
20)  a  10  per  cent  discount  for  cash  was  allowed.12  But  the  Board  was 
behind  the  market.  A  week  before  the  Skinner  and  Eddy  Corporation, 
which  built  more  merchant  tonnage  than  any  other  American  yard  dur- 
ing our  participation  in  the  war,  had  sold  two  of  its  10,400  dead- 
weight ton  steamers,  exactly  similar  to  many  it  had  built  for  the  Board, 
for  $144  a  deadweight  ton.13 

The  reductions  were  of  no  avail.  By  the  middle  of  the  summer  char- 
ter rates  had  slumped  25  to  50  per  cent  from  those  at  the  beginning  of 
the  year.  The  companies  which  had  bought  tonnage  under  the  earlier 
schemes  were  complaining  that  later  concessions  acted  as  an  insur- 
mountable handicap  to  them,  and  that  anyway  they  could  not  meet 
their  payments.     New  companies  were  not  attracted  into  a  business  of 

s  Journal  of  Commerce,  February  25,  1920. 
9  Journal  of  Commerce,  April  1,  1920. 
io  Journal  of  Commerce,  April  27,  1920. 
ii  New  York  Times,  August  17,  1920. 

12  New  York  Times,  August  20,  1920. 

13  Journal  of  Commerce,  August  10,  1920. 


604  E.  S.  Gregg  [December 

rapidly    dwindling    profits.     The    Board    was    left    with    its    tonnage. 

It  is  impossible  to  determine  exactly  how  many  government  ships 
have  been  sold  permanently.  The  Board's  list  of  sales  cannot  be 
trusted  because  it  is  made  up  almost  entirely  of  promises  to  purchase. 
The  payment  of  so  much  a  deadweight  ton  a  month  really  amounted  to 
a  bare  boat  charter  and  when  earnings  fell  off,  the  ships  naturally 
were  turned  back  to  the  Board.  Many  new  companies  have  lately  gone 
bankrupt  and  their  vessels  have  reverted  to  the  government.  There  is 
no  way  to  tell  whether  the  payments  on  vessels  "sold"  will  ever  be  met. 
In  perhaps  a  dozen  cases  the  entire  price  was  paid  in  cash.  In  gen- 
eral the  sales  were  on  paper ;  at  one  time  it  was  announced  that  one 
hundred  steel  vessels  had  been  sold  to  one  corporation,  a  transaction 
that  only  the  federal  reserve  system  could  handle  readily  as  the  amount 
involved  was  close  to  $100,000,000. 

While  admitting  that  all  the  war-built  and  acquired  tonnage  could 
not  have  been  disposed  of  within  one  year  or  within  three  years,  the 
conclusion  is  forced  upon  one  that  the  Shipping  Board  frittered  away 
its  best  opportunities  and  that  even  the  moral  support  of  Section  5 
of  the  Merchant  Marine  act  was  not  sufficient  to  give  it  courage.  It  is 
perhaps  as  well.  Only  the  present  severe  depression  is  likely  to  make 
the  Board  write  off  an  equitable  part  of  the  high  construction  costs  as  a 
war  loss  which  the  country  as  a  whole  should  bear  and  not  a  few  ad- 
venturous and  well-meaning  companies. 

The  construction  loan  fund. 

Section  11  provides  "That  during  a  period  of  five  years  from  the  en- 
actment of  this  act  the  board  may  annually  set  aside  out  of  the  reve- 
nues from  sales  and  operations  a  sum  not  exceeding  $25,000,000,  to  be 
known  as  its  construction  loan  fund,  to  be  used  in  aid  of  the  construc- 
tion of  vessels  of  the  best  and  most  efficient  type  for  the  establishment 
and  maintenance  of  service  on  steamship  lines  deemed  desirable  and 
necessary  by  the  board.  The  board  shall  use  such  funds  to  the  extent 
required  upon  such  terms  as  the  board  may  prescribe  to  aid  persons, 
citizens  of  the  United  States,  in  the  construction  by  them  in  private 
shipyards  in  the  United  States  of  the  foregoing  class  of  vessels.  No 
aid  shall  be  for  a  greater  sum  than  two  thirds  of  the  cost  of  the  vessel 
or  vessels  to  be  constructed."  This  section  is  inoperative  because  the 
Shipping  Board  is  losing  money  and  is  likely  to  for  the  next  few  years. 
A  deficit  of  $513,000,000  was  shown  in  the  Board's  balance  sheet  at 
the  end  of  the  fiscal  year  1920. 14  Later  figures  show  a  loss  of  $18,925,- 
000  from  direct  operations  between  March  1  and  September  23.,  1920, 

i*  Fourth  Annual  Report  of  the  U.  S.  Shipping  Board,  1920,  p.  261. 


1921]  Failure  of  the  Merchant  Marine  Act  of  1920  605 

without  considering  depreciation  and  overhead,15  and  the  recently  ap- 
pointed chairman  has  stated  that  current  operating  losses  are  ap- 
proximately $20,000,000  a  month.  The  care  of  the  idle  ships  alone 
is  costing  $550,000  a  month.  With  a  world  surplus  of  tonnage,  which 
was  plainly  to  be  foreseen  at  the  time  of  the  passage  of  the  act,  few 
companies  will  be  in  the  market  for  ships  and  the  Board  will  have  no 
net  profits  to  set  aside. 

Exemption  from  excess  profits  taxes. 

Section  23  provides  that  the  net  earnings  from  ships  operated  un- 
der the  American  flag  may  be  allowed  as  a  deduction  for  the  purpose 
of  ascertaining  net  income  for  taxation  purposes,  provided  the  amount 
so  deducted  be  invested  in  approved  types  of  ships  built  in  American 
yards,  two  thirds  of  the  cost  of  the  vessel  to  be  paid  for  out  of  the 
ordinary  funds  or  capital  of  the  company.  This  section  has  given  aid 
not  so  much  to  shipping  as  to  large  oil  companies.  Up  to  January  1, 
1921,  thirty-nine  vessels,  totalling  453,000  deadweight  tons  and  rep- 
resenting an  investment  of  over  $75,000,000  had  come  under  the  pro- 
visions of  the  act.  Of  the  total,  thirty-one  of  376,000  tons  were  tank- 
ers ordered  by  the  large  oil  companies  before  the  act  was  approved.10 
So  far  as  can  be  determined  not  a  vessel  has  been  exempted  which  was 
ordered  after  the  provision  became  effective.  The  result  has  been  that 
the  Treasury  has  lost  approximately  $25,000,000  and  that  certain  com- 
panies which  had  already  decided  to  spend  that  amount  plus  any  taxes 
they  might  have  had  to  pay,  saved  not  only  that  amount  but  the  taxes 
likewise.  Little  aid  will  be  given  by  this  section  to  shipping  or  shipbuild- 
ing in  the  near  future;  the  earnings  from  ship  operation  are  likely  to 
be  in  red  figures. 

Mail  subsidies. 

Section  24  provides  "That  all  mails  of  the  United  States  shipped  or 
carried  on  vessels  shall,  if  practicable,  be  shipped  or  carried  on  Ameri- 
can built  vessels  documented  under  the  laws  of  the  United  States.  .  .  . 
The  Board  and  the  Postmaster  General,  in  aid  of  the  development  of 
a  merchant  marine  adequate  to  provide  for  the  maintenance  and  ex- 
pansion of  the  foreign  and  coastwise  trade  of  the  United  States  and 
of  a  satisfactory  postal  service  in  connection  therewith,  shall  from  time 
to  time  determine  the  just  and  reasonable  rate  to  be  paid  for  such  ser- 
vice and  the  Postmaster  General  is  hereby  authorized  to  enter  into  con- 
tracts within  the  limits  of  appropriations  made  therefor  by  Congress." 

is  Journal  of  Commerce,  January  19,  1921. 

16  E.  S.  Gregg,  "The  Crux  of  our  Shipping  Problem,"  Journal  of  Political  Econ- 
omy, June,  1921,  and  "Vicissitudes  in  the  Shipping  Trade  1870-1920,"  Quarterly 
Journal  of  Economics,  August,  1921. 


606  E.  S.  Gregg  [December 

The  bulk  of  our  overseas  mail  is  now  carried  under  the  provision  of 
the  act  of  1872,  which  allows  5  cents  per  ounce  for  first  class  matter 
and  8  cents  per  pound  for  other  classes,  regardless  of  distance.  For- 
eign vessels  receive  approximately  35  cents  and  4^  cents  a  pound  (4 
francs,  and  50  centimes  per  kilogram)  respectively  for  letters  and  for 
other  mail.  Four  steamship  companies,  three  to  the  West  Indies  and 
one  to  Australia,  are  operating  by  contract  under  the  act  of  1891,  the 
rate  of  compensation  being  based  upon  mileage  and  class  of  vessel,  the 
volume  of  mail  not  affecting  the  rate.  The  provisions  of  both  of  these 
acts  are  superseded  by  Section  24  of  the  Merchant  Marine  act  and  if 
the  section  is  interpreted  liberally  by  the  Shipping  Board  and  the 
Postmaster  General,  and  if  Congress  makes  the  necessary  appropria- 
tions, substantial  aid  may  be  given  to  certain  lines.  As  yet  no  contract 
has  been  made  under  the  act  and  Congress  will  have  to  decide  the  old 
vexing  question:  to  what  extent  are  the  advantages  of  having  mail  car- 
ried in  American  ships  worth  subsidies? 

The  question  of  joint  rail  and  water  rates. 

Section  28  provides  that  a  common  carrier  can  not  make  a  special 
joint  rail  and  water  export  rate  except  for  American  vessels.  There 
are  special  export  rates  on  grain,  iron  and  steel  products,  differentials 
in  favor  of  Boston,  as  compared  with  New  York,  and  a  complex  rate 
structure  to  aid  Southern  and  Pacific  ports.  It  should  be  pointed  out 
that  any  limiting  of  the  differential  enjoyed  by  various  ports  would  not 
only  not  greatly  aid  shipping  but  would  actually  be  destructive  of 
foreign  trade.  Further,  it  is  probable  that  foreign  shipping  companies 
will  always  cut  their  rates  to  enable  them  to  get  cargo ;  in  the  past 
they  have  always  been  ready  to  meet  any  reduction.  And  in  the  third 
place,  the  American  steamship  services,  private  and  Shipping  Board, 
are  not  adequate,  nor  do  they,  particularly  the  latter,  give  the  efficient 
and  certain  services  that  are  absolutely  essential  to  successful  for- 
eign trade. 

The  Interstate  Commerce  Commission  granted  a  ninety-day  exten- 
sion before  the  clause  went  into  effect.  On  July  25,  the  chairman  of 
the  Board  asked  the  Commission  to  certify  a  further  extension  to  Janu- 
ary 1,  1921,  which  was  granted17  and  also  an  indefinite  extension  on 
December  10.18  While  Germany's  experience,  especially  with  the  Ger- 
man Levant  Line,  has  demonstrated  that  special  joint  rail  and  water 
rates  can  materially  aid  shipping,  the  situation  in  the  United  States  is 
basically  different.  It  would  seem  very  unwise  to  try  to  enforce  the 
section  today. 

«  ]\Tew  York  Times,  July  25,  1920. 

is  A  letter  from  the  secretary  of  the  Board  in  answer  to  an  inquiry. 


1921]  Failure  of  the  Merchant  Marine  Act  of  19W  607 

Federal  ship  mortgages  legislation. 

Investors  of  the  United  States  have  never  been  greatly  attracted  by 
shipping  securities  or  bonds  secured  by  mortgages  on  ocean-going  ves- 
sels. The  reasons  are  clear.  We  have  had  little  foreign  shipping  during 
the  last  fifty  years,  and  sea-going  ships  being  subject  to  the  legal  sys- 
tems of  the  foreign  countries  they  touch  are  liable  to  large  indebtedness 
for  supplies  and  repairs  acquired  abroad.  The  maritime  liens,  which 
protect  the  furnisher  of  supplies  or  services  abroad,  have  been  and  are 
superior  to  a  mortgage  on  the  ship.  Further,  ship  mortgages  in  this 
country  were  formerly  regulated  by  state  laws,  which  in  many  cases 
were  conflicting.  Since  a  mortgage  is  not  a  maritime  contract  and 
since  federal  courts  sitting  in  admiralty  have  no  jurisdiction  over  non- 
maritime  matters,  the  mortgage  was  left  to  the  varying  procedures  of 
the  different  states  for  foreclosure. 

But  while  ship  mortgage  bonds  have  been  without  standing  in  the 
eastern  money  markets,  they  have  prestige  in  the  Great  Lakes  region. 
Twenty  years  of  successful  experience  have  convinced  investors  in 
Cleveland,  Detroit,  and  other  centers  of  the  fundamental  soundness  of 
maritime  investments  for  inland  waters.  In  this  region  the  mortgage 
deeds  of  trust  have  been  so  drawn  that  adequate  safeguards  are  set  up 
against  the  moral  hazards  involved. 

Section  29,  designated  the  Ship  Mortgage  act,  purposes  by  legisla- 
tion to  accomplish  for  deep-sea  mortgages  what  the  Great  Lakes  plan 
has  been  able  to  do  through  laborious  experiments  for  our  inland  ship 
securities.  Heretofore,  repair  yards  and  ship-supply  men  were  pro- 
tected by  a  maritime  lien  which  gave  them  precedence  over  general 
creditors,  and  this  is  still  true  if  the  vessel  contracts  debts  in  foreign 
ports.  A  repair  yard  had  also  the  right  to  detain  a  vessel  upon  which 
repairs  had  been  made  under  a  promissory  lien  until  payment  of  the 
bill  for  repairs.  The  order  of  priority  under  the  Merchant  Marine  act 
is  (1)  "preferred  liens";  (2)  other  maritime  liens,  if  incurred  before 
recording,  etc.  of  a  mortgage;  (3)  "preferred  mortgages";  and  (4)  all 
other  mortgages.  The  "preferred  liens"  are  for  (1)  torts,  as  dis- 
tinguished from  liens  growing  out  of  contracts,  i.e.  as  for  collision 
claims;  (2)  wages  of  stevedores,  if  directly  employed  by  the  vessel; 
(3)  wages  of  the  crew;  (4)  general  average;  and  (5)  salvage.  All 
other  liens  arising  out  of  contracts  are  inferior  to  these  "preferred 
liens."  The  "preferred  mortgages"  are  those  made  in  accordance  with 
the  provisions  of  the  act. 

While  the  Ship  Mortgage  act  was  designed  mainly  to  aid  the  Ship- 
ping Board  in  the  disposal  of  its  tonnage,  it  is  capable  of  wider  use. 
Court  interpretations  will  doubtless  change  the  meaning  of  some  sec- 
tions, but  it  is  generally  agreed  that  the  ship  mortgagee  is  now  well 


608  E.  S.  Gregg  [December 

protected.  The  effects  of  the  act  to  date  are  not  noticeable,  but  should 
become  increasingly  important.  Now  that  tonnage  values  are  fairly 
stable,  the  greatest  drawback  to  ship  mortgage  securities  is  that  they 
are  not  well  known  by  the  investing  public.  If  private  capital  and 
initiative  are  to  take  over  the  government  owned  tonnage,  (and  our 
shipping  problem  can  never  be  solved  satisfactorily  unless  they  do)  the 
present  ship  mortgage  legislation  should  make  easier  the  financing  of 
the  undertaking. 

Discriminating  tonnage  and  customs  duties. 

The  United  States  took  the  first  step  away  from  the  system  of  dis- 
criminating duties  on  ships  and  products  in  a  commercial  convention 
framed  with  Great  Britain  some  months  after  the  Treaty  of  Ghent  in 
1815.  In  1818,  under  the  provisions  of  the  Navigation  act  of  the  pre- 
ceding year,  discriminating  duties  on  trade  with  the  Netherlands, 
Prussia,  Hamburg,  and  Bremen  were  abandoned.  One  by  one  treaties 
of  reciprocity,  now  numbering  thirty  or  forty,  were  negotiated  with  all 
the  maritime  nations,  and  the  policy  initiated  by  the  Act  of  March  3, 
1815  was  made  complete. 

Section  34  of  the  Merchant  Marine  act  directed  the  President  to 
abrogate  as  much  of  the  existing  commercial  treaties  and  conventions 
as  restrict  the  United  States  in  the  placing  of  discriminating  dutic. 
If  such  sections  of  commercial  treaties  are  nullified  two  sections  of  the 
Tariff  act  of  1913  automatically  come  into  effect  whereby  a  discrimi- 
nating duty  of  10  per  cent  ad  valorem  is  imposed  against  goods  im- 
ported in  foreign  vessels  and  a  discount  of  5  per  cent  on  all  the  duties 
imposed  by  the  act  is  allowed  on  those  articles  brought  in  by  American 
vessels.19 

On  September  24,  1920,  the  President  declared  that  he  would  not 
take  steps  to  annul  the  treaties.20  Regardless  of  the  constitutional 
questions  involved  in  the  refusal  of  the  executive  to  carry  out  a  section 
of  an  act  after  he  had  apparently  approved  the  whole,  one  must  ap- 
plaud his  decision.  While  existing  commercial  treaties  are  not  perfect, 
it  would  be  an  act  of  folly  to  scrap  them  and  begin  over  again  with  the 
discriminations  and  counter  discriminations  that  they  superseded.  His- 
tory shows  very  plainly  that  such  methods  are  beneficial  only  when  the 
other  countries  do  not  retaliate,  which  they  always  do.  It  is  to  be 
hoped  that  section  34  is  dead  beyond  resuscitation. 

is  Section  IV  J,  subsections  1  and  7. 

20  Journal  of  Commerce,  September  25,  1920. 


1921]  Failure  of  the  Merchant  Marine  Act  of  1920  609 

Conclusions  and  suggestions. 

The  Merchant  Marine  act  of  1920  misses  the  central  point  at  issue: 
the  speedy  establishment  of  our  shipping  on  a  basis  which  will  enable 
it,  through  private  ownership  and  operation,  to  compete  successfully 
with  the  fleets  of  other  countries.  It  is  a  conglomeration  of  anachron- 
isms, such  as  the  imposition  of  discriminating  duties ;  and  of  theoretical 
plans  out  of  touch  with  the  facts  of  the  situation,  such  as  the  con- 
struction loan  fund  and  the  exemption  from  excess  profits  taxes.  It 
bears  marks  of  having  been  written  hurriedly  in  a  hodge-podge  way  and 
of  ignoring  the  imminent  depression  in  shipping,  the  signs  of  which 
were  plainly  visible  at  the  time.  The  most  constructive  feature  is  the 
new  legislation  concerning  ship  mortgages  but  this  presupposes  a  plan 
of  action  to  be  worked  out  with  its  aid. 

How,  then,  shall  our  shipping  be  established  on  a  basis  which  will 
enable  it  through  private  ownership  and  operation  to  compete  with  the 
fleets  of  other  countries?  By  the  courageous  interpretation  of  section 
5  to  mean  the  sale  of  the  emergency-built  and  acquired  ships  at  $30  to 
$40  a  deadweight  ton  when  new  and  5  per  cent  less  for  each  year  of 
age.  This  plan  seems  necessary  because  (1)  shipping  has  paid  nor- 
mally an  average  of  only  5  per  cent  a  year;  (2)  the  returns  in  the  next 
few  years  are  likely  to  be  considerably  less;  (3)  operation  under  the 
American  flag  is  more  expensive  than  under  other  registries;  (4)  our 
competitors  at  present  have  a  great  advantage  in  that  their  invest- 
ment is  much  less  per  ship;  and  (5)  ships  now  bring  only  $30  to  $40 
a  ton  in  the  market. 

(1)  In  the  ten  years  before  the  war  over  fifty  representative  British 
cargo  steamship  companies,  which  owned  each  year  an  average  of  1.7 
million  gross  tons,  or  over  twice  as  much  as  was  registered  for  foreign 
trade  under  our  flag  in  1914,  distributed  as  dividends  on  their  paid-up 
capitalization  an  average  of  4.8  per  cent.  The  earnings  after  depre- 
ciation on  all  the  capital  tied  up  in  the  business  were  6.05  per  cent  and, 
if  5  per  cent  of  the  original  cost  of  the  vessels  had  been  set  aside  for 
depreciation,  the  net  profits  for  other  allocation  would  have  been  re- 
duced to  5.25  per  cent.  In  the  eight  years  1906  to  1913  over  twenty 
representative  British  passenger  companies,  which  owned  each  year  an 
average  of  3.9  million  gross  tons,  an  amount  larger  than  any  country's 
total  merchant  fleet  with  the  exception  of  Great  Britain  and  the  United 
States,  distributed  only  6.04  per  cent  on  the  paid-up  capitalization.21 
While  these  figures  may  be  somewhat  low  since  rates   from   1900   to 

21 E.  S.  Gregg,  "The  Crux  of  Alien  Shipping  Problem,"  Journal  of  Political 
Economy,  June,  1921. 


610  E.  S.  Gregg  [December 

1911  were  at  the  low  level  of  a  half  century,22  we  are  faced  with  a  ship- 
ping depression  similar  to  that  which  began  in  1900  and  lasted  to  1911. 

(2)  Nor  will  shipping,  after  the  spectacular  earnings  of  the  war 
period,  earn  more  in  the  near  future  because  there  are  afloat  15.8  mil- 
lion gross  tons  of  steamers  more  than  the  43.1  million  tons  in  1913, 
with  an  additional  6.2  million  tons  building,  and  at  the  same  time  the 
amount  of  cargo  moving  is  only  four  fifths  as  much  as  before  the  war. 
Heretofore,  a  surplus  of  a  few  hundred  thousand  tons  of  ships  above 
the  current  trade  requirements  has  been  sufficient  to  cause  a  slump  last- 
ing from  five  to  eleven  years.  With  a  third  more  tonnage  to  do  four 
fifths  as  much  work  as  in  1913,  it  seems  impossible  to  escape  the  con- 
clusion that  shipping  is  facing  some  of  the  most  unremunerative  years 
it  has  ever  known. 

(3)  In  the  past  the  relatively  low  return  on  shipping  failed  to  at- 
tract much  American  capital  into  maritime  enterprises — witness  the 
725,000  gross  tons  under  our  flag  registered  for  foreign  trade  in  1914 — 
partly  because  the  cost  of  operation  under  American  registry  was 
higher  than  under  other  flags.  American  ships  are  today  handicapped 
in  this  respect,  though  there  are  still  some  meticulous  souls  who  profess 
to  doubt  the  statement.  Wages,  which  comprise  nearly  one  sixth  of  the 
total  cost  (direct  operating  expenses,  excluding  port  charges  and 
agency  fees  which  vary  greatly  with  different  routes,  and  I6V2  Per  cen^ 
fixed  charges  as  specified  below)  of  running  an  ordinary  7500  dead- 
weight ton  freighter  costing  $50  a  ton  are  from  15  to  85  per  cent 
higher  for  American  than  for  foreign  ships.23  Repairs  (which  have  to 
be  estimated  roughly  and  which  take  up  about  one  eighth  of  the  total) 
and  food  (one  twelfth)  are  more  expensive  for  our  vessels  because  the 
United  States  is  a  high  cost  country  in  the  main  except  where  large 
scale  production  and  distribution  are  possible.  It  is  almost  impossible 
to  determine  exactly  the  difference  in  each  case  because  of  fluctuating 
foreign  exchanges. 

(4)  The  greatest  drawback,  however,  is  in  fixed  charges.  American 
companies  which  bought  ships  at  around  $200  a  ton  find  that  over  half 
of  the  costs  of  operation  are  fixed  charges  which  have  to  be  met  whether 
the  ships  run  or  not,  as  compared  with  about  25  per  cent  for  their 
competitors.  In  the  table  below,  the  cost  of  running  an  ordinary  7500 
deadweight  ton  cargo  vessel  in  the  trans-Atlantic  trade  is  divided  into 
fixed  charges  and  direct  operating  expenses.  The  former  includes  in- 
surance, 4I/0  per  cent ;  depreciation,  5  per  cent,  and  interest  on  the 
capital  tied  up,  7  per  cent.     The  latter  is  made  up  as  follows :    wages 

22  E.  S.  Gregg,  "Vicissitudes  in  the  Shipping  Trade,  1870-1020,"  Quarterly  Jour- 
nal of  Economics,  August,  1921. 

23  Nautical  Gazette,  May  7,  1921. 


1921] 


Failure  of  the  Merchant  Marine  Act  of  1920 


611 


$46,000  per  year,  food  $22,000,  repairs  $30,000,  stores  $15,000,  and 
fuel  $110,000.  These  figures  are  necessarily  estimates,  but  they  have 
been  checked  with  actual  records  and  are  fairly  accurate  in  the  aggre- 
gate. No  attempt  has  been  made  to  estimate  port  charges  or  admin- 
istrative outlay. 


Cost  of  Operating  a  7,500  DWT   U.  S.  Coal-Burning  Steamer 
in  the  Transatlantic  Trade. 


I 

%   fixed 

Cost   per   DWT 

Total  cost 

16y2%     fixed 

Operating 

Total 

charges 

charges 

expenses 

of   total 

$200 

$1,500,000 

$247,500 

$223,000 

$470,500 

53 

175 

1,312,500 

216,563 

223,000 

439,000 

49 

150 

1,112,500 

185,625 

223,000 

1U8,625 

45 

125 

937,500 

154,688 

-'23,000 

377,688 

41 

100 

750,000 

123,750 

223,000 

346,750 

36 

75 

562,500 

92,813 

223,000 

315,813 

30 

50 

375,000 

61,875 

223,000 

284,875 

22 

25 

187,500 

30,938 

223,000 

253,938 

12 

If  an  American  steamer  must  earn  $200,000  a  year  for  fixed  charges 
as  against  $90,000  for  its  competitors,  it  can  not  successfully  compete 
in  ordinary  times. 

The  British  steamship  companies  mentioned  above  paid  less  than  $35 
a  deadweight  ton  for  their  steamers  before  the  war.  While  the  ships 
bought  in  the  last  few  years  have  increased  their  average,  that  average 
today  is  certainly  not  more  than  $50  a  ton.  Individual  companies  are 
better  off:  the  Empire  Transport  Company,  Ltd.,  which  has  a  fleet 
totalling  over  100,000  deadweight  tons,  carries  its  vessels  on  the  books 
at  $11  a  ton.24 

It  does  not  seem  possible  that  American  yards  in  the  near  future  will 
be  able  to  build  as  cheaply  as  their  competitors.  Shipbuilding  from 
year  to  year  is  of  insufficient  volume  to  justify  mass  production.  The 
argument  that  the  per  unit  cost  in  our  yards  is  less  than  in  Britain, 
because  ships  are  turned  out  more  rapidly  on  this  side  of  the  Atlantic, 
is  bunkum  from  the  shipowner's  standpoint.  A  premium  on  speed  of 
output  has  occurred  less  than  half  a  dozen  times  in  fifty  years  and  only 
twice  in  the  last  twenty  years :  during  the  Boer  war  and  the  late  war. 

(5)  Tonnage  values  are  at  pre-war  levels.  An  ordinary  7,500  to 
10,000  deadweight  ton  cargo  vessel  could  be  purchased  for  approxi- 
mately $35  a  ton  before  the  war ;  a  9,250  deadweight  ton  ship,  not  yet 
completed  by  a  British  yard,  has  been  sold  for  £9  4s.  a  ton,  which  equals 
$35  with  sterling  converted  at  $3.70.  Two  small  vessels  have  been  dis- 
posed of  at  $42  a  ton,  ships  of  small  sizes  generally  bringing  a  slightly 
higher  price  per  ton  because  more  costly  to  build.     The  passenger  ves- 

ziNauticus,  December  11,  1920. 


612 


E.  S.  Gregg 


[December 


sel  Cap  Polonio,  19,500  gross  tons,  practically  new  and  of  desirable 
size  and  type,  a  star  ship  in  the  South  American  service  of  the  Hamburg 
South  American  Line,  brought  only  £7  14s.  a  gross  ton  at  a  recent 
sale,  or  $28.  The  table  below  gives  details  of  characteristic  ship  sales 
as  reported  by  F airplay  from  July  14  to  August  11,  1921.  Sterling  is 
converted  at  $3.70. 


Ship  Sales 


Price  per 

Gross 

Dead- 
weight 

Year 
Built 

Sold  by 

Bought  by 

Deadweighl 

Ton 

Ship 

DoU 

Sterling 

lars 

Marsal  (Nor.) 



2.550 

1921 

A./S  Nordsjoenjjohn    Harrison, 

£11     8s. 

42 

Christiania 

Ltd. 

Mascot   (Br.) 

1,820 

3,100 

1921 

— 

— 

11     6 

42 

Brann  (Nor.) 

1,830 

3,050 

1914 

Skibs,  A/S 
Braat,  Ghent 

Russians 

10  10 

39 

Friedrichsruh 

8,332 

7,480 

1905 

Shipping    Con- 

— 

9  14 

37 

(Br.) 

troller 

(Building) 

— 

9,250 

1921 

Furness    S.    B. 

Sota  y  Aznar, 

9     4 

34 

(Br.) 

Co. 

Bilbao 

Mapelmore 

4,330 

7,350 

1916 

Johnson  Line, 

— 

8     4 

30 

(Br.) 

Ltd. 

Neath   Abbey 

1,945 

3,150 

1907 

Melrose     Abbey,  Russians 

7  18 

29 

(Br.) 

Shipping  Co.  | 

Tintern   Abbey 

1,809 

3,150 

1909 

Melrose     Abbey  Russians 

7  18 

29 

(Br.) 

Shipping  Co. 

iCap    Polonio 

19,500 

9,500 

1914 

Shipping    Con- 

Hamburg  S. 

7  142 

282 

(Br.)2 

troller 

American    S. 
S.  Co. 

Betzdorf    (Br.) 

2,135 

'4,000 

1920 

Shipping    Con- 
troller 

— 

7  10 

28 

Weilburg    (Br.) 

2,135 

4,000 

1920 

Shipping    Con- 
troller 

— 

7  10 

28 

lOrotava    (Br.) 

2,064 

3,140 

1921 

Shipping    Con- 
troller 

— 

6  16 

25 

iSesostris   (Br.) 

7,228 

11,700 

1915 

Shipping    Con- 
troller 

Dutch 

6  12 

24 

iDanzig  (Br.) 

4,080 

5,600 

1920 

Shipping    Con- 
troller 

— 

6  12 

24 

lAmasis  (Br.) 

7,224 

11,850 

1914 

Shipping    Con- 
troller 

Sota  y  Aznar 
Bilbao 

5  10 

20 

iSchwarzenfels 

8,325 

12,300 

1915 

Shipping    Con- 

Nitrate Pro- 

5    2 

19 

(Br.) 

troller 

ducers  S.  S. 
Co. 

iBremen   (Br.)s 

11,540 

10,200 

1896 

Shipping    Con- 
troller 

4     62 

162 

Akenside  (Br.) 

2,425 

4,300 

1904 

Quayside  Ship- 
ping Co. 

Greeks 

4     2 

15 

i  Schwaben 

5,098 

8,000 

1906 

Shipping    Con- 

W.  R.  Smith  & 

3  12 

13 

(Br.) 

troller 

Sons,  Cardiff 

Iluntscastle 

5,528 

6,900 

1902 

— 

— 

2    4 

8 

(Br.) 

General    Dego- 

3,534 

5,750 

1899 

Soc.   Maritime 

Greeks 

2     4 

8 

utte   (Belg.) 

Bdge.,   Ghent 

i  Ex-German. 


Passenger  vessel,  price  per  gross  ton. 


1921] 


Failure  of  the  Merchant  Marine  Act  of  1920 


613 


If  the  government  owned  tonnage  is  sold  for  $30  to  $40  a  ton  when 
new,  the  disadvantage  in  the  costs  of  operation  will  largely  be  over- 
come and  the  burden  of  supporting  through  taxation  the  continuing 
losses  of  the  Shipping  Board  will  be  obviated.  The  ships  will  eventu- 
ally have  to  be  disposed  of  at  around  this  figure  after  years  of  cumu- 
lative deficits.  It  is  wiser  to  stop  the  drain  upon  the  Treasury  as  soon 
as  possible.  Furthermore,  instead  of  giving  aid  to  particular  com- 
panies, as  is  the  case  with  mail  subsidies,  partial  exemption  from  taxes, 
etc.,  this  method  would  come  nearer  distributing  the  assistance  equally. 
Every  fair  minded  observer  admits  that  a  large  part  of  the  four  bil- 
lion dollars  spent  by  the  government  for  ships  should  be  written  off  as 
war  cost.  As  the  President  said  in  his  recent  message  before  Congress, 
"In  the  emergency  of  war  we  have  constructed  a  tonnage  equalling  our 
largest  expectations.  Its  war  cost  must  be  discounted  to  the  actual 
values  of  peace  and  the  large  difference  charged  to  war  emergency." 
The  "actual  values  of  peace"  are  around  $35  a  deadweight  ton.  If 
our  government  owned  ships  are  disposed  of  at  this  figure,  we  may  con- 
tinue to  keep  what  ships  we  need.  If  a  less  direct  method  is  tried,  slow 
and  expensive  failure  seems  inevitable. 

However,  upon  analysis  it  is  evident  that  all  of  our  war-built  ships 
should  not,  in  the  interest  of  economy  and  of  a  well-rounded  merchant 
fleet,  be  maintained.     The  principal  types  may  be  divided  as  follows  :25 

Shipping  Board  Tonnage — By  Types. 


■■"-■ 

Millions    of 
gross  tons 

Percentage  of 
total 

Cargo,  7,000  to  10,000  DWT... 
Cargo,  10,000  DWT  and  over.. 

Cargo,  under  5,000  DWT 

Cargo,  5,000  to  7,000  DWT. . . . 

2.7 
1.6 
1.1 
0.6 
0.6 
0.6 

7.2 

38 

22 
16 
8 
8 

8 

Total    

100 

In  the  first  place,  there  are  too  many  steamers  under  5,000  dead- 
weight tons.  In  May,  nearly  half  of  the  number  of  vessels  tied  up 
were  of  this  size.26  These  vessels  are  better  adapted  for  use  in  the  re- 
stricted waters  of  the  Baltic,  North  Sea,  and  Mediterranean  than  in 
American  waters  with  the  exception  of  a  few  dozen  in  Gulf  and  Carib- 

25  The  totals  are  approximate.  Percentages  given  in  the  Shipping  Board  Register 
of  Ships,  May  1,  1921,  were  applied  to  data  referred  to  in  note  3.  Passenger  vessels 
under  10,000  gross  tons  were  included  as  cargo.  The  wooden  vessels  are  taken  as 
sold,  according  to  the  recent  announcement. 

26  Journal  of  Commerce,  May  31,  1921. 


614  E.  S.  Gregg  [December 

bean  services.  And  they  are  not  especially  fitted  for  European  coastal 
service,  because  they  draw  too  much  water.  They  were  built  broad- 
waisted  and  of  deep  draft  to  secure  a  maximum  cargo  capacity  on  the 
short  length  that  could  be  brought  from  the  Lakes  to  the  Atlantic. 
If,  after  Americans  have  purchased  the  few  that  they  need,  foreigners 
will  not  buy  all  of  them,  those  unsold  should  be  scrapped.  It  has  been 
costing  the  Board,  on  an  average,  $757  a  month  to  care  for  an  idle 
ship,  and  there  are  over  300  small  ones  idle ! 

In  the  second  place,  there  are  too  many  cargo  carriers  between  7,000 
and  10,000  tons.  Vessels  of  this  size  and  type  are  fitted  mainly  for 
tramp  service.  After  many  trying  and  expensive  experiences,  we  may 
eventually  succeed  in  becoming  operators  of  regular  cargo  line  ser- 
vices, but  we  should  face  the  fact  that  our  national  economy  unfits  us 
for  tramp  ship  operators.  Consequently,  many  of  the  large  tramps 
should  be  disposed  of  on  the  most  advantageous  terms  which  general 
condition  and  sound  business  practice  will  permit. 

The  other  classes  mentioned  above  seem  more  adapted  to  our  needs. 
At  present  very  few  of  the  medium  sized  ships  are  tied  up.  Tankers 
we  need  in  increasing  numbers,  as  we  shall  have  to  depend  more  on 
overseas  sources  for  our  oil  supplies.  There  are  many  intangible  and 
collateral  benefits  derived  from  the  maintenance  of  passenger  services, 
which  we  can  not  well  forego. 

But  the  discussion  so  far  has  not  taken  account  of  the  fact  that  ap- 
proximately one  fourth  of  the  world's  tonnage  is  unemployed,  and  that 
scarcely  a  ship  in  service  is  making  a  profit,  with  the  exception  of 
motorships  and  liners  in  established  services  protected  by  conference 
agreements.  What  should  be  done  with  the  Board's  tonnage  while  the 
depression  lasts  is  a  different  question  from  what  should  be  done  even- 
tually. It  is  obviously  true  that  only  a  few  of  the  1,450  government 
owned  vessels  could  be  sold  today  at  around  $30  a  ton.  What  should 
be  done  with  the  rest  while  the  depression  lasts? 

The  answer  is  efficient  operation  which  can  at  least  minimize,  if  not 
eliminate  the  large  losses.  Where  is  the  privately  owned  steamship  com- 
pany that  can  make  a  profit  in  dull  times  when  its  crews  are  fed  on 
grape  fruit  and  heart  of  lettuce  salad  with  mayonnaise  dressing?  Or 
whose  ships  are  left  in  obscure  ports  for  months  without  orders?  Or 
whose  foreign  agents,  acting  also  for  competitors,  favor  the  latter? 
Or  whose  directors  believe  that  low-priced,  ignorant  employees  are  the 
most  efficient?  The  Shipping  Board  is  the  largest  enterprise  of  its 
kind  in  the  world;  even  the  Peninsular  and  Oriental  Steamship  Com- 
pany, the  largest  private  combination,  owns  or  controls  only  one  fourth 
the  total  tonnage  of  our  government  fleet,  and  its  organization  lias  been 
built  up  through  generations.     The  best  talent  of  the  country,  at  what- 


1921]  Failure  of  the  Merchant  Marine  Act  of  1920  615 

ever  price,  would  be  a  good  investment  for  the  Board.  But  second  to 
efficient  administration  and  operation  is  the  problem  of  interesting  and 
training  private  operators  who  must  be  relied  on  to  take  over  the  ships 
from  the  government.  Many  citizens  who  are  unfamiliar  with  ships 
must  be  attracted  to  their  operation  if  the  seven  million  tons  are  to  be 
transferred  to  private  ownership.  But  those  who  are  unacquainted 
with  ships  are  not  efficient  operators.  The  solution  of  this  dilemma  is 
not  clear.  In  either  case,  it  calls  to  mind  an  old-fashioned  snipe  hunt 
with  the  taxpayer  holding  the  bag  out  in  the  illimitable  darkness. 

The  present  operating  agreements  are  on  the  basis  of  a  fee  for  every 
ship  handled,  plus  a  small  percentage  of  the  gross  receipts,  a  method 
which  does  not  give  incentive  to  efficiency.  There  is  a  premium  on  get- 
ting cargo,  but  not  on  lowering  expenses.  If  new  operators  are  not 
paid  well  enough  they  will  not  become  interested  in  ships,  and  if  they 
are  paid  regardless  of  efficiency  the  government  suffers  doubly. 

The  ideal  solution  would  be  a  bare  boat  charter,  with  all  the  burdens 
of  operation  borne  by  the  operator,  but  this  is  impractical  today  be- 
cause a  rate  of  even  five  cents  a  deadweight  ton  a  month  will  not  allow 
a  profit  commensurate  with  the  risks  taken.  If  the  present  plans  of 
letting  out  the  ships  on  this  basis  are  carried  out,  we  may  look  for  the 
American  flag  to  disappear  from  nearly  every  important  trade  route. 
It  is  doubtful  if  100  ships  could  be  chartered  today  at  five  cents  a  ton 
a  month.  The  use  of  the  proposed  bare  boat  charter  plan  would  be 
equivalent  to  pulling  in  our  ships  from  the  routes  where  they  have  be- 
gun to  establish  themselves  at  the  very  time  when  our  competitors  are 
making  every  effort  to  get  control.  To  keep  our  ships  going  in  most 
of  the  present  trades  will  cost  money  even  with  the  most  efficient  oper- 
ation, but  not  so  much  as  if  we  abandoned  everything  built  up  in  the 
last  three  years.  Having  committed  ourselves  so  far,  it  will  be  cheaper 
to  carry  on  than  to  pull  in  all  our  lines. 

These  suggestions  are  offered  for  what  they  are  worth.  There  is 
much  opinion  in  them,  which  some  may  think  is  not  justified  either  by 
the  facts  or  by  common  sense.  But  if  intelligent  discussion  is  provoked, 
something  will  have  been  accomplished.  Economists  are  strangely  silent 
on  this  question  which  approaches  that  of  naval  disarmament  in  im- 
portance for  the  taxpayer. 

E.  S.  Gkegg. 

New  York  City. 


CYCLES  OF  STRIKES 

There  are  two  aspects  to  economic  dynamics :  one,  the  rhythmic  move- 
ments of  the  business  cycle;  the  other,  economic  evolution.  The  rela- 
tion between  economic  evolution  and  the  increasing  tendency  toward  in- 
dustrial strife  has  a  voluminous  literature.  It  is  the  purpose  of  this 
article  to  point  out  the  effect  of  the  cyclical  movements  of  industry  on 
strikes. 

This  study  covers  the  period  1881-1919.  The  strike  data  for  the 
years  1881-1905  were  taken  from  the  Twenty -first  Annual  Report  of 
the  Commissioner  of  Labor.  No  general  strike  statistics  are  available 
for  the  United  States  for  the  years  1906-1914,  and  for  these  years 
Canadian  strike  statistics  were  made  use  of  to  indicate  the  general 
movement  of  strikes.  The  figures  for  this  period  may  be  found  in  the 
Labour  Gazette,  February,  1917,  p.  111.  The  Canadian  figures  are 
for  the  number  of  employees  affected  by  both  strikes  and  lockouts.  In 
1915  the  Bureau  of  Labor  Statistics  began  to  publish  data  pertaining 
to  strikes  in  the  United  States  and  has  continued  to  do  so  since.  The 
figures  for  the  years  1915-1919  are  taken  from  the  Monthly  Labor 
Review  for  April,  1916,  April,  1917,  and  June,  1920.1  In  the  first  is- 
sue of  the  Review  a  limited  amount  of  strike  data  are  given  for  the 
year  1914  but  no  satisfactory  figures  are  given  for  "number  of 
strikers." 

The  price  relatives  used  are  the  index  numbers  of  the  Aldrich  report 
and  of  the  Bureau  of  Labor  Statistics. 

The  actual  figures  for  the  number  of  strikers  for  each  year  were 
reduced  to  index  numbers  by  using  the  figures  for  1901-1905  as  the 
base.  The  nine  year  gap  in  the  American  figures  was  filled  in  with 
Canadian  index  numbers,  the  number  of  Canadian  strikers  for  1901- 
1905  being  again  used  as  the  base.  In  this  manner  the  Canadian  rela- 
tives for  the  years  1906-1914  were  adjusted  to  the  American  relatives. 
In  order  to  compare  the  strike  relatives  with  the  price  relatives  the 
two  sets  of  index  numbers  were  reduced  to  a  comparable  basis  by  con- 
structing new  index  numbers  using  for  each  series  its  standard  devia- 
tion as  the  base.  The  resulting  relatives  are  plotted  in  Chart  1  and 
the  figures  may  be  found  in  Table  I. 

Two  types  of  movements  may  be  observed  from  the  chart,  the  long- 
run,  secular  movements  and  the  short-run,  cyclical  movements.  It  will 
be  noticed  that  the  long-run,  secular  trends  of  the  two  curves  move  in 
opposite  directions  from  1881  to  1897.     While  the  secular  trend  of  the 

i  The  figures  for  "number  of  strikers"  for  1915-1919  are  an  understatement  of  the 
facts.  The  number  of  persons  involved  was  reported  for  only  64  per  cent  of  the 
strikes  occurring  in  these  years. 


1921] 


Cycles  of  Strikes 


617 


strike  series  is  upward,  the  long-run  trend  of  prices  is  downward.  On 
the  other  hand  from  1898  to  1919  the  secular  trends  of  the  two  curves 
are  in  the  same  direction.  If  now  the  short-run,  cyclical  fluctuations 
are  observed,  it  becomes  evident  that  the  oscillations  do  not  seem  to  cor- 
respond for  the  falling  price  period,  while  for  the  rising  price  period 


618  Alvin  H.  Hansen  [December 

the  correspondence  is  considerable.  This  suggests  that  the  comparison 
of  the  two  series  may  be  facilitated  by  splitting  the  period  under  con- 
sideration into  two  parts,  one  the  period  of  falling  prices  from  1881 
to  1897,  the  other  the  period  of  rising  prices  from  1898  to  1919. 

It  may  be  assumed  as  a  working  hypothesis  that  the  cyclical  move- 
ment of  strikes  will  not  be  the  same  in  a  period  in  which  the  secular 
trend  of  prices  is  downward  as  it  is  in  a  period  in  which  the  secular 
trend  of  prices  is  upward.  In  the  period  of  long-run  falling  prices 
labor  is  on  the  defensive.  A  disproportionate  part  of  the  struggle  of 
labor  is  directed  against  the  reduction  of  wages,  the  lengthening  of 
hours,  and  the  worsening  of  conditions  generally.  With  regard  to 
wages,  especially,  labor  is  battling  to  hold  what  it  has  already  gained. 
Now  it  is  apparent  that  the  greatest  pressure  in  the  direction  of  re- 
duction of  wages  will  be  applied  in  periods  of  business  depression.  It 
therefore  follows  that  in  a  period  in  which  the  secular  trend  of  prices 
is  downward  the  struggle  between  labor  and  capital  may  be  expected  to 
become  most  severe  and  the  number  of  strikers  greatest  in  the  years  of 
depression.  It  may  be  noted  as  a  matter  of  fact  that  the  percentage 
of  strikes  against  reduction  of  wages  was  twice  as  great  in  the  depres- 
sion years  of  1883-85  and  1893-97  as  in  the  relatively  prosperous  years 
of  1881-82  and  1886-92. 

On  the  other  hand  when  the  general  trend  of  prices  is  upward  we 
may  expect  to  find  labor  becoming  aggressive.  Employers  are  no  longer 
trying  to  reduce  wages;  they  are  endeavoring  to  prevent  wage  increases. 
Thus  we  find  that  the  percentage  of  strikes  against  reduction  of  wages 
for  the  rising  price  years  of  1899  to  1905  was  less  than  one-fifth  as 
great  as  the  percentage  of  strikes  against  reduction  in  the  depression 
years  of  the  falling  price  period.  When  the  general  trend  of  prices  is 
upward  and  the  cost  of  living  is  mounting  labor  cannot  afford  to  be 
satisfied  with  a  defensive  struggle  to  retain  what  it  has  already  se- 
cured. It  must  take  the  offensive.  The  struggle  between  labor  and 
capital  now  becomes  most  bitter  in  the  years  of  prosperity.  For  this 
there  are  two  reasons :  first,  it  is  in  the  prosperous  years  that  prices 
and  living  costs  rise;  and  second,  the  large  profits  accruing  in  years  of 
prosperity  give  rise  to  a  contest  over  its  distribution. 

If  the  foregoing  hypothesis  is  correct  we  may  expect:  (1)  that  the 
fluctuations  in  the  number  of  strikers  will  correlate  inversely  with  the 
business  cycle  when  the  secular  trend  of  prices  is  downward,  (2^  that 
the  fluctuations  in  the  number  of  strikers  will  correlate  directly  with  the 
business  cycle  when  the  secular  trend  of  prices  is  upward. 

An  effort  was  made  to  verify  the  above  hypothesis.  Consider  first 
the  period  1881-1897  during  which  the  secular  trend  of  prices  was 
downward.    In  order  to  compare  the  cyclical  fluctuations  of  strikes  and 


1921] 


Cycles  of  Strikes 


619 


prices  it  was  necessary  to  eliminate  the  secular  trends.  This  was  done 
by  the  method  of  moments.  The  resulting  figures  were  thrown  into 
relatives  by  using  the  standard  deviations  of  each  series  as  the  base. 
The  index  numbers  thus  obtained  may  be  found  in  Table  I.  The  rela- 
tives are  plotted  together  in  Chart  2.  It  should  be  noted  that  the 
strike  series  is  inverted. 


The  price  series  is  assumed  to  be  representative  of  the  movements  of 
the  business  cycle.  What  then  is  the  relation  between  the  oscillations 
of  strikes  and  the  fluctuations  of  prices  and  the  business  cycle?  It 
will  be  observed  that  some  correlation  quite  clearly  obtains  between  the 
two  series.  The  correlation  is  inverse  since  the  signs  have  been  reversed 
in  plotting  the  strike  series.  To  test  the  correlation  further  the  Pear- 
sonian  coefficient  was  calculated.  The  coefficient  is  —.338.  It  must  be 
admitted  that  this  is  not  an  entirely  convincing  coefficient.  Ths  evi- 
dence is  sufficient,  however,  to  point  to  the  conclusion  that  in  falling 
price  periods  strike  movements  tend  to  increase  in  periods  of  depres- 
sion and  to  decrease  in  periods  of  prosperity. 

Consider  now  the  rising  price  period  from  1898  to  1919.  The  tre- 
mendous increase  in  both  prices  and  strike  activity  during  the  war 
years  was  of  course  abnormal.  The  period  from  1898  to  1914  can 
therefore  be  analysed  to  greater  advantage  by  itself,  apart  from  the 


620 


Alvin  H.  Hansen 


[December 


war  years.  The  secular  trends  for  the  curves  were  eliminated  by  find- 
ing the  lines  of  regression  by  the  method  of  moments.  The  resulting 
relatives  were  reduced  to  comparable  figures  by  dividing  the  deviations 
from  the  average  of  each  series  by  its  respective  standard  deviation. 
The  results  are  given  in  Table  I  and  the  curves  are  plotted  in  Chart  3. 
A  considerable  degree  of  direct  correlation  is  evident.  The  Pearsonian 
coefficient  is  -f~-494.  The  conclusion  is  further  substantiated  by  the 
fact  that  the  tremendous  increase  in  prices  and  prosperity  during  the 
war  years  brought  a  corresponding  increase  in  strike  activity. 


The  hypothesis  outlined  above  therefore  appears  to  be  borne  out  to 
a  considerable  extent  by  the  facts.  Strikes  correlate  inversely  with 
the  business  cycle  in  periods  of  long-run  falling  prices,  while  they  cor- 
relate directly  with  the  business  cycle  in  periods  of  long-run  rising 
prices. 


1921] 


Cycles  of  Strikes 


621 


Table  I 


Price 

Strike 

Price 

Strike 

Price 

Strike 

Relatives 

Relatives 

Relatives 

Relatives 

Relatives 

Relatives 

1881-1919 

1881-1919 

1    1881-1897 

1881-1897 

1898-1914 

1898-1914 

1881 

+  .02 

—  .61 

—  .44 

—  .32 

1882 

+  -11 

—  .58 

+1.11 

—  .25 

1883 

-j-  -02 

—  .58 

+  .89 

—  .32 

1884 

—  .17 

—  .58 

—  .44 

—  .53 

1885 

—  .36 

—  .52 

—2.00 

—  .18 

1886 

—  .38 

—  .13 

—1.56 

+2.28 

1887 

—  .36 

—  .34 

—  .67 

+  .74 

1888 

—  .32 

—  .61 

+  .44 

—1.16 

1889 

—  .32 

—  .45 

+  .89 

—  .18 

1890 

—  .38 

—  .32 

+  .89 

+  .53 

1891 

—  .38 

—  .39 

+1.56 

.00 

1892 

—  .53 

—  .51 

+  .67 

—1.02 

1893 

—  .53 

—  .46 

+1.11 

—  .77 

1894 

—  .72 

+  .02 

—  .67 

+2.35 

1895 

—  .81 

—  .32 

—  .44 

—  .07 

1896 

—  .92 

—  .48 

—1.11 

—1.30 

1897 

—  .92 

—  .25 

—  .44 

+  .14 

1898 

—  .85 

—  .48 

— 2.24 

—1.09 

1899 

—  .64 

—  .29 

—  .50 

—  .31 

1900 

—  .41 

—  .15 

+1.47 

+  .23 

1901 

—  .47 

—  .15 

+  .14 

+  .15 

1902 

—  .38 

+  .10 

+  .47 

+  1.15 

1903 

—  .34 

+  .06 

+  .33 

+  .96 

1904 

—  .38 

—  .18 

—  .76 

—  .13 

1905 

—  .28 

—  .49 

—  .19 

—1.50 

1906 

—  .13 

—  .10 

+  .83 

+  .14 

1907 

+  .04 

+  .18 

+2.10 

+1.24 

1908 

—  .13 

—  .11 

—  .40 

—  .04 

1909 

—  .02 

—  .32 

+  .17 

—  .98 

1910 

+    11 

—  .22 

+  .97 

—  .60 

1911 

.00 

+  .01 

—  .85 

+  .31 

1912 

+  .13 

+  .27 

—  .05 

+1.39 

1913 

-t-  -17 

+  .25 

—  .19 

+1.23 

1914 

+  .13 

—  .55 

—1.27 

—2.17 

1915 

+  .19 

—  .04 

1916 

+  .94 

+1.65 

1917 

+2.61 

+1.12 

1918 

+3.25 

+1.10 

1919 

+3.76 

+5.39 

University  of  Minnesota. 


Alvin  H.  Hansen. 


THE  COST  OF  LIVING  AS  A  FACTOR  IN  RECENT  WAGE  AD- 
JUSTMENTS IN  THE  BOOK  AND  JOB  BRANCH  OF 
THE  CHICAGO  PRINTING  INDUSTRY 

Note:  The  author  acted  as  consulting  statistician  for  the  Franklin-Division  of  the 
Franklin-Typothetae  of  Chicago  during  the  various  wage  adjustments  of  1919-1921. 
He  desires  it  to  be  understood  that  any  opinions  expressed  reflect  his  own  views  and 
are  not  in  any  way  to  be  identified  with  those  of  the  Franklin-Division. 

The  adjustment  of  wages  in  American  industry  during  both  the 
period  of  price  inflation  due  to  war  causes  and  the  more  recent  period 
of  price  deflation  has  been  a  difficult  problem.  The  varying  purchasing 
power  of  the  dollar  has  been  responsible  for  considerable  of  the  indus- 
trial unrest  with  which  industry  has  had  to  deal. 

In  a  current  article  in  the  International  Labour  Review,  which  re- 
views experience  with  the  adjustment  of  wages  to  the  cost  of  living  in 
various  countries  from  1914-1921,  the  statement  is  made  that  "in  the 
United  States  relatively  few  examples  exist  of  the  automatic  adjust- 
ment of  wages  to  the  cost  of  living."1 

In  this  connection,  the  experience  of  the  book  and  job  branch  of  the 
printing  industry  in  Chicago  with  the  adjustment  of  wages  to  the  cost 
of  living  during  these  trying  years  of  extreme  price  fluctuations  is  of 
interest  because  it  involved  the  adjustment  of  fixed  wage  scales  in  long 
time  contracts  between  employing  printers  and  various  printing  trade 
unions.  Furthermore,  it  covered  a  period,  1916-1921,  during  which 
there  was  a  steady  increase  in  the  cost  of  living  up  to  June,  1920,  fol- 
lowed by  a  substantial  decrease. 

The  cost-of-living  principle  which  was  the  basis  for  these  adjustments 
has  of  late  been  subject  to  severe  criticism.  The  Executive  Council 
of  the  American  Federation  of  Labor  reported  at  the  1921  Convention 
at  Denver,  Colorado,  in  part  as  follows : 

The  practice  of  fixing  wages  solely  on  a  basis  of  the  cost  of  living  is  a 
violation  of  the  whole  philosophy  of  progress  and  civilization  and,  further- 
more, is  a  violation  of  sound  economic  theory  and  is  utterly  without  logic 
or  scientific  support  of  any  kind.2 

The  purpose  of  this  article  is  not  to  defend  the  use  of  the  cost-of-living 
principle  as  a  factor  in  wage  adjustments,  but  simply  to  describe  how  it 
worked  out  as  a  basis  for  stabilizing  the  workman's  dollar  in  one  in- 
dustry when  it  was  actually  put  to  the  test. 

Book  and  job  printing  is  an  important  Chicago  industry.  Next  to 
New  York,  Chicago  is  the  largest  printing  center  in  the  United  States. 

i  International  Labour  Review,  July-August,  1921,  p.  164,  published  by  Inter- 
national Labour  Office,  League  of  Nations,  Geneva. 

2  The  American  Pressman,  August,  1921,  p.  22.  (Journal  of  the  International 
Pressmen  and  Press  Assistants'  Union.) 


1921]  Cost  of  Living  m  Wage  Adjustments  623 

Those  employers  in  the  book  and  job  branch  of  the  printing  industry  of 
Chicago  who  deal  with  unions  control  approximately  55  to  60  per  cent 
of  the  production.  They  employ  upwards  of  3,500  compositors,  1,800 
pressmen,  2,400  feeders,  1,000  bookbinders,  and  several  hundred  bindery 
women  totalling  somewhere  between  9,000  and  10,000  employees.  The 
annual  mechanical  payroll  in  1919  amounted  to  $10,000,000  or  over.3 
The  annual  value  of  product  has  been  estimated  at  over  $30,000,000. 4 

A  majority  of  the  employers  who  deal  with  the  unions  are  members 
of  the  Franklin-Division  of  the  Franklin-Typothetae  of  Chicago,  an 
employing  printers'  organization  subsidiary  to  the  Franklin-Typothe- 
tae, the  parent  body  or  trade  organization.5  It  is  through  this  Frank- 
lin-Division that  the  printing  trade  unions  have  negotiated  their  con- 
tracts for  the  past  six  years.6 

The  printing  trade  unions  with  which  the  employing  printers  usually 
deal  are  the  Typographical  Union  which  embraces  in  its  membership 
composing  room  employees,  those  who  set  type  either  by  hand  or  ma- 
chine ;  the  Pressmen's  Union  which  is  made  up  of  those  pressroom  em- 
ployees who  make  ready  and  operate  the  printing  presses;  the  Press 
Assistants'  or  "Feeders'  "  Union  which  includes  those  pressroom  em- 
ployees who  feed  the  paper  into  the  presses ;  and  the  Bookbinders' 
Union  which  embraces  in  its  membership  the  forwarders,  finishers,  cut- 
ters and  other  skilled  employees  in  the  bindery.7  The  nature  of  the 
work  of  compositors  and  pressmen  especially  is  such  that  it  requires 
a  high  degree  of  skill  and  intelligence.  Some  of  the  operations  in  the 
bindery  also  come  under  this  category.  As  a  rule  a  large  percentage  of 
the  employees  in  the  different  mechanical  departments  of  printing  estab- 
lishments are  of  American  stock  or  at  least  were  born  in  the  United 
States.  The  high  level  of  intelligence  among  printing  trades  employees 
and  the  common  racial  background  with   their  employers   are   factors 

3  Transcript  of  Arbitration  Proceedings.  Franklin-Division  of  the  Franklin- 
Typothetae  of  Chicago  vs.  Typographical  Union  No.  16,  Pressmen's  Union  No.  3, 
Franklin  Union  No.  4>  Bookbinders  <§•  Paper  Cutters'  Union  No.  8,  Chicago,  April 
18,  1921,  p.  16. 

4  60  per  cent  of  1914  U.  8.  Census  of  Manufactures  figures  for  Chicago. 

s  The  Typothetae  Division,  which  is  composed  of  employing  printers  who  maintain 
open  shops,  also  is  subsidiary  to  the  parent  body.  By  this  form  of  organization  it 
is  possible  for  employing  printers  who  differ  fundamentally  on  methods  of  labor 
control  to  get  together  on  common  ground  in  the  parent  body  which  confines  its 
activities  to  the  improvement  of  business  methods  and  the  development  of  high 
trade  standards. 

s  The  Franklin-Division  was  organized  in  1915  and  superseded  the  Chicago  Em- 
ploying Printers  Association  which  had  previously  dealt  with  the  unions  for  several 
years. 

7  The  bindery  women  frequently  have  a  separate  local  union.  This  is  the  case  in 
Chicago. 


624  Francis  H,  Bird  [December 

which  should  be  borne  in  mind  in  an  examination  of  the  collective  bar- 
gaining process. 

In  1916  the  Franklin-Division  of  the  Franklin-Typothetae  of  Chi- 
cago entered  into  five-year  contracts  with  Typographical  Union  No. 
16,  Pressmen's  Union  No.  3,  and  Franklin  Union  No.  4,  the  Feeders' 
Union,  which  were  to  expire  in  the  fall  of  1921.  At  the  same  time  a 
three-year  contract  was  entered  into  with  Bookbinders'  and  Paper  Cut- 
ters' Union  No.  8,  which  through  renewals  also  came  to  extend  over 
the  same  five-year  period. 

According  to  these  contracts  the  base  scale  for  day  work  per  week 
for  the  Typographical  Union  was  set  at  $25.00  until  May  1,  1919,  when 
it  was  to  become  $26.00,  this  wage  to  continue  until  the  expiration  of 
the  contract  in  1921 ;  the  base  scale  for  the  Pressmen's  Union  was  set 
at  $26.00  until  June  1,  1919,  when  it  was  to  become  $27.00,  this  to 
continue  until  the  expiration  of  the  contract  in  1921 ;  the  base  scale 
for  the  Feeders'  Union  was  set  at  $18.50  to  continue  until  the  expira- 
tion of  the  contract  in  1921 ;  and  the  base  scale  of  the  Bookbinders' 
Union  was  set  at  $22.00  until  October  1,  1918,  when  it  was  to  become 
$23.00,  continuing  until  the  expiration  of  the  contract  in  the  fall  of 
1919.8 

These  scales  were  set  after  several  months  of  preliminary  negotiation 
between  the  different  unions  and  the  Franklin-Division  and  as  will  be 
observed  from  the  data  in  Table  1  resulted  in  an  increase  of  $1.00  in 
the  basic  scale  of  each  union.  The  scales  set  were  among  the  highest 
existing  in  any  printing  center  at  the  time.  It  is  quite  evident  from 
the  fact  that  long  time  contracts  were  entered  into  at  a  relatively  small 
increase  in  basic  wage  scales  that  neither  the  employers  nor  the  unions 
anticipated  the  fluctuations  in  the  purchasing  power  of  the  dollar  which 
were  to  follow.  It  should  be  noted  that  the  differential  between  the 
base  wage  scales  of  the  Pressmen's  and  the  Feeders'  Union  was  $7.50. 
This  differential  was  based  on  difference  in  skill  and  responsibility  in 
the  two  pressroom  occupations.  It  is  also  important  to  note  that  the 
base  scale  of  the  Feeders  was  considerably  lower  than  that  of  the  Com- 
positors and  Bookbinders. 

A  year  passed  during  which  the  cost  of  living  rose  perceptibly  in 
Chicago  as  in  other  industrial  centers.  Whereas  the  family  budget  in- 
dex number  according  to  the  U.  S.  Bureau  of  Labor  Statistics  in  De- 
cember, 1916  for  Chicago  was  119.5  on  a  1914  base,  in  December,  1917 
it  had  risen  to  141. 8. 9  The  employers  felt  the  first  reaction  from  the 
increase  in  the  cost  of  living  from  the  Feeders'  Union — the  union  with 
the  lowest  scale.     Its  officials  requested  a  conference  with  the  scale  com- 

s  Transcript  of  Arbitration  Proceedings,  etc.     April  18,  1921,  pp.  61-66. 
»U.  S.  Bureau  of  Labor  Statistics,  Monthly  Labor  Review,  July,  1921,  p.  106. 


1921] 


Cost  of  Living  m  Wage  Adjustments 


625 


Table  1. — November  1916  Wage 

Adjustment   (>> 

ew  Contracts) 

oq 

fa 

>  a! 

Wage 
increase 

Total  wage 

Wage  index 
number 
1916  base 

too 

s  M 

o.9 

Purchasing 
power  of 
1916  contract 
wage  dollar 

Printing  Pressmen's  Union  No.  3. 

Franklin   Union    (Feeders)    No.  4 

Bookbinders'    and    Paper    Cutters' 

Union  No.  8   (Edition  Binders) 

$24.00 
25.00 
17.50 

21.00 

$1.00   I   $25.00 
1.00        26.00 
1.00   1     18.50 

1 
1.00   |     22.00 

100     |     1001    1     $1.00 
100           100            1.00 
100           100            1.00 

1                1 
100          100            1.00 

i  U.  S.  Bureau  of  Labor  Statistics,  family  budget  index  number  of  December, 
1916,  for  Chicago  was  119.5  on  a  1914  base  of  100.  This  index  number  is  given  the 
value  of  100  on  a  December  1916  base  in  the  above  table. 

mittee  of  the  Franklin-Division  early  in  December,  1917,  at  which  a 
demand  was  made  for  a  $5.00  increase.  The  employers  while  they  were 
protected  by  the  1916  contract,  in  consideration  of  the  upward  trend 
of  prices  made  a  counter  offer  of  a  $1.00  increase.  Without  waiting 
for  further  negotiations,  although  a  date  for  another  conference  in  a 
few  days  had  been  set,  the  Feeders  resorted  to  "direct  action"  and 
struck  illegally.  They  returned  to  work  almost  immediately,  however, 
as  the  employers  proposed  a  war  bonus  of  $2.50  which  they  accepted.10 
Thus  by  "direct  action"  the  Feeders  forced  the  employers  to  increase 
their  wages  $1.50  over  the  original  offer  of  $1.00. 

The  Franklin-Division  having  granted  a  war  bonus  to  the  Feeders 
proceeded  within  the  next  week  to  grant  similar  war  bonuses  of  $2.50 
to  the  other  unions.  The  change  in  the  various  wage  scales  through  the 
granting  of  the  war  bonuses  is  shown  in  Table  2.  In  this  first  adjust- 
ment of  the  original  contract  scales  no  systematic  method  of  securing 
reliable  cost-of-living  data  as  a  basis  was  followed.  The  war  bonus  of 
$2.50  was  a  compromise  between  the  Feeders'  demand  for  $5.00  backed 
up  by  "direct  action"  and  the  employers'  original  offer  of  $1.00.  Con- 
sidering the  fact  that  $2.50  was  more  representative  of  the  actual  18 
per  cent  increase  in  the  cost  of  living  between  1916  and  1917  in  Chi- 
cago measured  in  Feeders'  wages  than  either  the  Feeders'  demands  or 
the  employers'  offer,  it  was  a  reasonable  amount  for  both  sides  to  finally 
compromise  upon.  Moreover,  since  the  Feeders  had  been  given  a  war 
bonus,  it  was  sound  business  policy  to  grant  similar  bonuses  to  the 
other  unions. 

The  cost  of  living  continued  to  rise  and  a  few  months  after  the  em- 

io  Before  the  National  War  Labor  Board,  Chicago  Franklin  Union  No.  4  of  the 
I.  P.  P.  $  A.  U.  vs.  Franklin  Division  of  the  Franklin-Ti/pothetae  of  Chicago, 
Docket  No.  105.  Argument  and  Statement  of  Facts  in  Opposition  to  the  Demand 
of  the  Chicago  Franklin  Union  No.  4  for  a  Wage  Increase  of  $5.00  per  Week.  Levy 
Mayer  of  Counsel,  Chicago,  August  26,  1918,  pp.  4-5. 


626 


Francis  H.  Bird 


[December 


Table  2. — December  1917  Wage   Adjustment 


o  ® 


03  "2 


Us 


7>   15  °  ® 


Typographical  Union  No.  16.... 
Printing  Pressmen's  Union  No.  3 
Franklin  Union  (Feeders)  No.  4 
Bookbinders'  and  Paper  Cutters' 
Union  No.  8  (Edition  Binders) 


$135.00 
26.00 
18.50 

22.00 


$2.50 
2.50 
2.50 


$27.50 
28.50 
21.00 


110.0 
109.6 
113.5 


2.50  I     24.50  I   111.3 


118.61 
118.6 
118.6 

118.6 


$.927 
.924 
.957 

.938 


i  U.  S.  Bureau  of  Labor  Statistics,  family  budget  index  number  of  December  1917 
for  Chicago  was  141.8  on  a  1914  base  of  100.  The  index  number  in  the  table  is 
141.8,  transferred  from  a  1914  to  a  1916  base. 

pickers  had  adjusted  wages  in  May,  1918,  newly  elected  officials  of  the 
Feeders'  Union  wTaited  on  the  Franklin-Division  with  an  ultimatum  of 
a  $5.00  increase  in  wages  or  strike.  The  scale  committee  of  the  Frank- 
lin-Division in  view  of  the  illegal  strike  of  the  Feeders,  the  previous 
December,  refused  to  yield  to  their  demands  and  on  June  3  the  Feeders 
struck  illegally  for  the  second  time.  After  a  strike  of  ten  days  the 
Feeders  returned  to  work  under  an  arrangement  by  which  the  adjust- 
ment of  the  difficulty  was  left  to  the  National  War  Labor  Board,  if  a 
satisfactory  agreement  with  the  employers  could  not  be  reached  within 
three  days.11 

Failing  of  settlement  locally  by  the  parties  to  the  controversy  the 
case  came  up  before  the  War  Labor  Board  during  the  summer  months 
and  the  Board  rendered  a  decision  on  September  27,  1918,  in  part  as 
follows : 

The  Board  finds  that  the  index  of  the  Bureau  of  Labor  Statistics  for  cost 
of  living  in  Chicago,  Illinois,  shows  percentage  increase  since  the  date  of 
the  wage  adjustment  between  the  parties  to  this  controversy  in  December, 
1917,  is  16.2  per  cent  and  the  award  following  is  based  solely  upon  this 
consideration. 

1. — Wages.  The  wages  of  all  members  of  Franklin  Union  No.  4  of  the 
International  Printing  Pressmen  and  Assistants'  Union  employed  by  the 
Franklin-Division  of  the  Franklin-Typothetae  of  Chicago  shall  be  increased 
by  the  sum  of  three  dollars  and  fifty  cents   ($3.50)   per  week. 

2. — Retroactive  Pay.  This  award  shall  be  retroactive  to  the  date  upon 
which  the  individual  members  of  Franklin  Union  No.  4  returned  to  work 
following  the  submission  of  this  case  to  the  National  War  Labor  Board  on 
June  12,  1918. 

********** 

4. — Period  of  Award.  The  rates  herein  fixed,  except  as  changed  by  minor 
readjustments,  shall  remain  in  force  during  the  war;  provided,  however, 
that  on  the  first  day  of  February,  1919,  and  at  the  end  of  each  six  months' 
period  thereafter,  should  conditions  materially  change,  making  a  readjust- 


ii  Ibid.,  p.  6-14. 


1921] 


Cost  of  Living  m  Wage  Adjustments 


627 


inent  by  this  Board  equitable,  application  may  be  made  to  the  Board  by 
either  party.12 

********** 

By  this  decision  the  Feeders  received  a  second  war  bonus  amounting 
to  $3.50  which  the  National  War  Labor  Board  arrived  at  by  comparing 
the  U.  S.  Bureau  of  Labor  Statistics  family  budget  index  number  of 
141.8  for  Chicago  for  December,  1917  with  the  index  number  for  Aug- 
ust, 1918,  which  was  164.9.  The  increase  of  16.2  per  cent  on  the  1917 
base  was  applied  to  the  Feeders'  wages  of  $21.00  as  adjusted  in  De- 
cember, 1917  and  the  amount  obtained,  $3.50,  awarded  as  an  additional 
cost-of-living  war  bonus  retroactive  to  June  12,  1918. 13 

No  sooner  had  the  award  in  the  Feeders'  case  been  handed  down  than 
the  other  unions  requested  that  the  employers  grant  them  additional 
war  bonuses  also.  After  a  series  of  conferences  substantial  bonuses 
were  given  the  compositors  and  pressmen  effective  October  21,  1918 
which  closely  approximated  the  16  per  cent  increase  in  the  cost  of  liv- 
ing used  in  adjusting  the  Feeders'  wages.  The  Binders  were  also 
granted  a  bonus  retroactive  to  July  25,  1918.  As  in  the  case  of  the 
previous  war  bonuses  it  will  be  observed  that  the  granting  of  these 
bonuses  was  brought  about  by  "direct  action"  on  the  part  of  the  Feed- 
ers.    The  wage  adjustments  of  1918  are  shown  in  detail  in  Table  3: 


Table  3. — June  to 

October  Wage 

Adjistment,   1918 

Previous 
wage 

Wage 
increase 

CD 
Ctt 

m 
"3 

0 

Q;    L,    Cy 

1-1  S"" 
a>  5  «o 

«  °£ 

Cost  of  living 

index  number 

1916  base 

Purchasing 

power  of 
1916  contract 
wage  dollar 

Typographical   Union   No.    16.... 
Printing  Pressmen's  Union  No.  3 
Franklin   Union   (Feeders)    No.  4 
Bookbinders'   and   Paper   Cutters' 
Union  No.  8  (Edition  Binders) 

$27.50 
28.50 
21.00 

24.50 

$5.00 
5.00 
3.50 

3.50 

$32.50 
33.50 
24.50 

28.00 

130.0 
128.8 
132.4 

127.2 

138.1     |     $.942 
138.             .933 
138.             .959 

138.      J       .921 

iU.  S.  Bureau  of  Labor  Statistics,  family  budget  index  number  of  August  1918 
for  Chicago  was  164.9  on  a  1914  base  of  100.  This  figure  for  August  1918  was 
especially  prepared  by  the  U.  S.  Bureau  of  Labor  Statistics  for  the  War  Labor 
Board.  The  index  number  in  the  table  is  164.9,  transferred  from  a  1914  to  a  1916 
base. 

The  upward  trend  of  prices  continued.  In  January,  1919,  the 
Feeders  met  with  their  employers  to  request  another  readjustment  of 
wages,  on  the  basis  of  the  award  of  the  National  War  Labor  Board, 

12  National  War  Labor  Board,  Docket  105,  Finding  in  re  Franklin  Union  No.  4 
vs.  Franklin-Division  of  the  Franklin-Typothetae  of  Chicago. 

is  Before  the  National  War  Labor  Board,  Docket  No.  105.  Appeal  from  the  Ex- 
aminer's Interpretation  of  the  Award  of  September  27,  1918.  Levy  Mayer  of  Coun- 
sel, Chicago,  October  9,  1918.     P.  3. 


628  Francis  H.  Bird  [December 

which  provided  that  at  intervals  of  six  months  during  the  war,  either 
party  might  appeal  to  the  board  for  a  readjustment  of  wages  if  con- 
ditions had  been  materially  changed.  While  the  armistice  had  been 
signed  the  previous  November,  the  Feeders  claimed  that  technically 
the  war  was  not  over  and  the  War  Labor  Board  still  had  jurisdiction. 
The  request  of  the  Feeders  was  followed  by  a  joint  communication 
signed  by  the  Compositors,  Pressmen,  Feeders  and  Bookbinders,  refer- 
ring to  the  War  Labor  Board  award  and  asking  for  an  increase  in 
wages. 

A  series  of  conferences  followed  between  the  scale  committee  of  the 
Franklin-Division  and  the  joint  scale  committee  of  the  four  unions, 
which  resulted  in  the  drafting  of  a  supplemental  agreement  of  Feb- 
ruary 3,  1919  to  the  1916  contracts,  which  bound  all  the  parties  to  the 
agreement  to  "jointly  and  separately  live  up  to  all  the  terms  and  con- 
ditions set  forth  therein."14  Under  this  agreement,  the  Compositors,' 
Pressmen's  and  Bookbinders'  Unions  each  received  an  increase  of  $3.50 
a  week  and  the  Feeders  an  increase  of  $4.00  a  week.  The  supplemental 
agreement  provided  that  there  should  be  no  more  wage  adjustments 
during  the  life  of  the  different  contracts,  in  the  following  language : 

It  is  further  agreed  that  this  agreement  shall  be  in  force  and  remain  in 
effect  for  the  full  period  of  the  existing  contract,  and  there  shall  be  no 
further  changes  in  the  matter  of  hours  of  labor  or  rate  of  compc  nation  dur- 
ing the  remaining  period  of  the  existing  contracts.15 

The  wage  adjustment  of  February  3,  1919,  differed  from  previous 
adjustments  in  that  the  Feeders  for  the  first  time  secured  a  wage  in- 
crease through  constitutional  processes.  They  did  not  resort  to  direct 
action  tactics  as  they  had  done  in  the  past.  Where  previously  the 
Feeders  had  secured  increases  which  had  led  to  the  granting  of  war 
bonuses  to  the  other  unions,  on  this  occasion  through  concerted  action 
the  unions  brought  about  all  adjustments  at  one  and  the  same  time. 
By  entering  into  a  joint  agreement  the  Compositors,  Pressmen  and 
Binders  virtually  underwrote  the  Feeders  thereby  guaranteeing  the  em- 
ployers protection  against  "direct  action."  The  increase  in  the  cost 
of  living,  approximately  5  per  cent  since  the  last  adjustments,  was  an 
important  factor  in  determining  the  wage  increases  granted.  Also  a 
factor  of  weight  was  the  agreement  of  the  various  unions  not  to  ask 
for  any  further  wage  increases  during  the  life  of  the  various  contracts. 
The  wage  adjustments  of  February  3,  1919  are  shown  in  detail  in 
Table  4.  Since  a  wage  increase  at  a  specified  date  provided  for  in  the 
1916  contracts  of  some  of  the  unions  was  absorbed  in  the  cost-of-living 
adjustment  at  the  nearest  specified  date  to  that  on  which  the  contract 

1*  Transcript  of  Arbitration  Proceedings,  etc.,  April  18,  1921,  pp.  72-82. 
is  Ibid.,  p.  79. 


1921] 


Cost  of  Living  vn  Wage  Adjustments 


629 


wage  increase  was  due,  in  Table  4  and  in  the  tables  that  follow,  al- 
lowance has  been  made  in  each  case  in  computing  the  wage  index  num- 
ber, for  the  increase  provided  by  original  contract,  in  terms  of  the 
purchasing  power  of  the  1916  dollar  at  each  date. 

Table  4. — February  3,   1919,   Wage   Adjustment 


Typographical  Union  No.  16 ... . 
Printing  Pressmen's  Union  No.  3 
Franklin  Union  (Feeders)  No.  4 
Bookbinders'  and  Paper  Cutters' 
Union  No.  8  (Edition  Binders) 


<D 

S^<B 

t»3 

to 

&J0 

:>s| 

?►? 

6C? 

?  ScD 

& 

£.5 

03 

"S   ®03 

fc 

O 

gH" 

o.S 

$33.50 

$3.50 

$36.00 

144.0 

144.1* 

33.50 

3.50 

37.00 

142.3 

144.1 

24.50 

4.00 

28.50 

154.0 

144.1 

28.00 

3.50 

31.50 

136.61 

144.1 

"no* 

$.999 

.987 
1.068 

.947 


1  In  this  table  and  in  the  tables  that  follow  in  computing  the  wage  index  number 
of  the  Bookbinders,  allowance  has  been  made  for  the  dollar  increase  as  of  October 
1,  1918,  already  provided  for  in  the  1916  contract. 

2  U.  S.  Bureau  of  Labor  Statistics,  family  budget  index  number  of  December 
1918  for  Chicago  was  172.2  on  a  1914  base  of  100.  This  index  number  in  the  table 
is  172.2  transferred  from  a  1914  to  a  1916  base. 

The  trend  of  prices  continued  upward.  In  the  early  summer  of  1919, 
the  unions  were  making  joint  demands  upon  the  employers  for  another 
cost-of-living  wage  adjustment — this  in  spite  of  the  fact  that  they  had 
agreed  only  five  months  before  not  to  ask  for  further  wage  increases 
during  the  life  of  the  various  contracts.  Possibly  in  making  demands 
at  this  time,  the  unions  were  taking  full  advantage  of  their  strategic 
position.  The  Chicago  printing  industry  was  beginning  to  recover  from 
the  slump  which  it  had  experienced  prior  to  and  during  the  war.  The 
employers  were  running  their  plants  full  capacity,  consequently  they 
desired  to  avoid  labor  troubles  as  much  as  possible.  In  making  their 
demands,  the  unions  were  evidently  governed  more  by  their  strategic 
position  than  by  the  actual  increase  of  2  per  cent  in  the  cost  of  living 
since  the  last  adjustments.  The  Compositors  asked  for  an  increase  of 
$12.00  a  week,  or  33-1/3  per  cent  over  their  existing  wages,  the  Press- 
men $11.00  or  29.7  per  cent,  the  Feeders  $15.50  or  54.4  per  cent  and 
the  Bookbinders  $23.50  or  74.6  per  cent.  Three  weeks  of  heated  con- 
ferences followed  between  the  scale  committee  of  the  Franklin-Division 
and  the  joint  scale  committee  of  the  different  unions.  The  employers 
refused  flatly  to  consider  the  exorbitant  demands  of  the  unions  but 
finally  agreed  to  adjust  wages  once  more  on  the  basis  of  changes  in 
the  cost  of  living. 

For  the  first  time  both  sides  were  represented  by  statisticians.  The 
unions  at  first  attempted  to  base  their  case  on  the  increase  in  whole- 
sale prices  for  the  United  States  as  a  whole  from  1914  to  date,  using 


630  Francis  H.  Bird  [December 

the  United  States  Bureau  of  Labor  Statistics  wholesale  price  index 
number  of  202  on  a  1913  base  of  100.  They  finally  agreed  to  use  re- 
tail prices  as  the  basis  for  the  adjustment  and  the  statisticians  for 
both  sides  were  in  accord  that  the  United  States  Bureau  of  Labor  Sta- 
tistics family  budget  index  number  for  Chicago  was  the  most  accurate 
available.  The  Bureau  reported  that  the  index  number  for  Chicago  for 
June,  1919  as  compared  with  the  December,  1914  base  of  100  was 
174.47.  The  employers  in  turn  agreed  to  apply  this  index  number  to 
the  1914  wage  of  each  union  and  increase  the  existing  wages  by 
amounts  necessary  to  equal  the  wages  which  would  be  obtained  if  the 
1914  wages  for  the  different  unions  were  multiplied  by  174.47.  This 
method  was  finally  adopted  in  working  out  the  adjustments  except  that 
at  the  request  of  the  union  representatives,  the  total  cost-of-living  in- 
crease to  which  the  unions  were  entitled  was  distributed  in  such  a  way 
that  the  lower  paid  employees  received  a  larger  increase  than  the  higher 
paid.  As  the  actual  cost-of-living  computations  showed  that  each  union 
was  entitled  to  an  average  spread  increase  of  $4.91,  and  as  three  of  the 
unions  were  granted  a  $5.00  increase  and  one  of  the  unions  a  $5.50  in- 
crease, the  employers  gave  the  unions  at  this  time  an  average  spread  of 
21^/2  cents  more  than  the  cost-of-living  figures  showed.16  The  em- 
ployers insisted,  moreover,  that  a  definite  method  of  wage  adjustments 
at  stated  intervals  be  provided  for  the  remaining  duration  of  the  1916 
contracts.  They  recognized  the  futility  of  expecting  an  immediate 
period  of  price  stabilization,  but  they  desired  to  get  away  from  the 
haphazard  methods  of  adjusting  wages  to  changes  in  the  cost  of  living, 
which  they  had  hitherto  followed,  and  to  arrange  for  future  wage  ad- 
justments, if  any,  at  certain  specified  intervals. 

As  a  result  a  supplemental  agreement  was  entered  into  between  the 
Franklin-Division  and  the  various  unions  under  date  of  August  25, 
1919,  which  contained  an  automatic  cost-of-living  adjustment  clause 
providing  for  the  adjustment  of  wages  upwards  or  downwards  at  inter- 
vals of  six  months  during  the  duration  of  the  different  contracts,  if  the 
cost-of-living  figures  for  Chicago,  reported  by  the  United  States  Bureau 
of  Labor  Statistics  showed  a  change  of  5  per  cent  in  either  direction. 
Under  no  condition  were  the  base  wage  scales  set  forth  in  the  supple- 
mental agreement  to  be  reduced.  The  method  of  wage  adjustment  was 
specifically  stated  in  the  supplemental  agreement  as  follows : 

Unless  it  can  be  shown  by  the  cost-of-living  figures  of  the  United  States 
Department  of  Labor,  Bureau  of  Statistics,  that  during  the  six  months' 
period  from  the  date  this  contract  is  effective,  and  at  intervals  of  six  months 
thereafter,  the  cost  of  living  has  increased  5  per  cent  or  more,  then  and 
then  only  shall  the  officers  of  the  unions  herein  represented  have  the  right 

is  Transcript  of  Arbitration  Proceedings,  etc.,  April  18,  1921,  pp.  123-130. 


1921] 


Cost  of  Living  in  Wage  Adjustments 


631 


to  ask  for  a  further  readjustment  for  the  wage  scales  herein  set  forth,  pro- 
vided, that  the  percentage  of  increase  shall  apply  only  to  the  1914  scales, 
the  same  basis  as  has  been  used  to  work  out  present  scales,  as  embodied  in 
this  agreement,  and,  further  provided,  that  should  the  cost  of  living  for  one 
of  the  six  months'  periods  decrease  by  an  amount  equal  to  or  exceeding  the 
increases,  then  any  increases  above  the  amount  now  granted  in  this  agree- 
ment may  be  decreased  in  the  same  projjortion,  provided  that  no  figures 
shall  reduce  the  scales  below  those  set  forth  in  this  agreement.17 

The  wage  adjustments  of  August  25,  1919,  are  shown  in  detail  in 
Table  5.18 


Table  5. — August  25,  1919,  Wage  Adjustment 

Previous 
wage 

03 

w 

a)  i 

Ml 

0) 

to 

S3 

"3 

c 

Wage  index 
number 
1916  base 

Cost  of  living 

index  number 

lftlfi  base 

Purchasing 
power  of 
1916  contract 
wage  dollar    : 

Typographical    Union   No.    16 |  $36.00 

Printing  Pressmen's  Union  No.  3      37.00 
Franklin   Union    (Feeders)    No.  4|     28.50 
Bookbinders'   and   Paper   Cutters' 

Union  No.  8   (Edition  Binders)!     31.50 

$5.00 
5.00 
5.50 

5.00 

$41.00 
42.00 
34.00 

36.50 

158.11 
155.91 
183.7 

L59.2 

1462 
146 
146 

146 

$1,082 
1.067 
1.258 

1.090 

i  In  this  table  and  in  the  tables  that  follow  allowance  has  been  made  in  computing 
the  wage  index  numbers  for  the  Compositors  and  Pressmen,  for  the  dollar  increase 
already  provided  for  as  of  May  1  for  the  one  union  and  June  1,  1919,  for  the  other 
in  their  1916  contracts. 

2  U.  S.  Bureau  of  Labor  Statistics,  family  budget  index  number  of  June  1919  for 
Chicago  was  174.5  on  a  1914  base  of  100.  *This  index  number  in  the  table  is  174.5, 
transferred  from  a  1914  to  a  1916  base. 

The  trend  of  the  cost  of  living  continued  upward.  As  the  date  of 
expiration  of  the  first  six  months'  period  provided  for  in  the  August 
25,  1919,  agreement  approached,  it  was  quite  evident  that  the  unions 
would  have  grounds  for  asking  for  another  wage  adjustment  as  the 
cost  of  living  had  meanwhile  increased  more  than  5  per  cent  on  the 
1914  base.  Early  in  February,  1920,  the  scale  committee  of  the  Frank- 
lin-Division held  conferences  with  the  joint  scale  committee  of  the  dif- 
ferent unions  to  determine  under  the  cost-of-living  clause  of  the  August 
25,  1919,  supplemental  agreement  just  what  the  new  adjustments  in 
wages  were  to  be.  Much  of  the  tenseness  and  heated  argument  which 
were  so  characteristic  of  former  conferences  of  this  kind  was  lacking. 
Both  sides  had  assembled  at  a  specified  time  to  adjust  wages  by  a  speci- 
fied method  on  the  basis  of  specified  data.  Statisticians  were  employed 
by  both  sides  and  it  was  jointly  agreed  that  the  best  available  United 
States  Bureau  of  Labor  Statistics  cost-of-living  data  at  that  time  were 
the  retail  food  prices  for  Chicago  as  of  January  15,  1920,  which  the 

17  Supplemental  Agreement  to  the  Supplemental  Agreement  of  February  3,  1919 
to  the  Original  Contracts. 
is  At  this  time  the  contract  with  the  Bookbinders  was  extended  for  one  year. 


632  Francis  H.  Bird  [December 

U.  S.  Bureau  of  Labor  Statistics  reported  as  being  97  per  cent  higher 
than  in  1914.  On  the  basis  of  the  97  per  cent  figure,  and  following  the 
same  practice  as  previously  requested  by  the  unions — the  lower  paid 
receiving  a  larger  proportion  than  the  higher  paid — a  flat  average 
spread  increase  of  $5.00  was  granted  to  the  various  crafts.  This  was 
not  following  the  method  exactly  which  was  prescribed  by  contract,  but 
the  departure  was  by  mutual  agreement.  By  this  method,  the  actual 
cost-of-living  computation  showed  that  each  union  was  entitled  to  an 
average  spread  increase  of  $4.93.  The  employers  settled  by  granting 
each  union  a  $5.00  increase.  A  supplemental  agreement  was  entered 
into  between  the  employers  and  the  various  unions  jointly,  which  pro- 
vided for  the  new  wage  adjustment  and  incorporated  in  detail  a  de- 
scription of  the  statistical  method  which  had  been  used  in  working  out 
the  adjustment.  Because  it  is  unusual  a  portion  of  this  supplemental 
agreement  is  reproduced  below: 

It  is  hereby  mutually  agreed  by  all  parties  that,  according  to  the  best 
United  States  Bureau  of  Labor  Statistics  figures  available  to  our  statisticians, 
as  provided  in  the  supplemental  contract,  the  increased  cost  of  living  shown 
by  these  figures  for  the  period  from  June  15,  1919  to  January  15,  1920,  on 
a  1914  base  shows  an  increase  of  22.53  which  percentage  of  increase  is  to 
be  applied  to  the  1914  scale  of  wages  of  the  above  named  unions  according 
to  their  original  contracts,  which  are  now  in  full  force  and  effect  in  deter- 
mining the  scale  of  wages  effective  February  25,  1920. 

It  is  mutually  agreed  by  the  parties  above  mentioned  that  in  lieu  of  the 

percentage  increase  shown  above  applied  to  the   1914  scale  of  each  union, 

a  flat  increase  of  $5.00  per  week  shall  be  applied  to  the  scale  of  journeymen 

of  each  of  the  four  unions. 

********** 

It  is  further  understood  and  agreed  that  the  increase  on  the  basic  wage 
effective  on  and  after  February  25,  1920  is  based  and  granted  on  the  United 
States  Bureau  of  Labor  Statistics  retail  food  cost-of-living  figures  which 
show  the  increase  on  January  15,  1920  over  December,  1914.  for  Chicago 
to  be  97  per  cent  or  22.53  points  over  74.47  per  cent,  the  United  States 
Bureau  of  Labor  Statistics  cost-of-living  familv  budget  figures  used  in  the 
Wage  Adjustment  of  August  25,  1919  and  which  showed  the  increase  in 
the  cost  of  living  measured  by  the  family  budget,  from  December,  1914  to 
June,  1919.  It  is  understood  that  the  cost-of-living  figure  used  in  this  wage 
adjustment  is  97  per  cent  on  a  1914  base.19 

The  wage  adjustments  of  Februarv  25,  1920  are  shown  in  detail  in 
Table  6. 

On  August  25,  1920,  another  six  months  period  of  rising  prices  had 
elapsed,  and  again  a  wage  adjustment  was  arrived  at  which  became  ef- 
fective as  of  that  date  and  which  was  incorporated  in  still  another  sup- 
plementary agreement.     On  this  occasion  the  statisticians  representing 

is  Supplemrvfnl  Agreement  to  Supplemental  Agreement  of  August  25,  1919,  effec- 
tive February  25,  1920. 


1921] 


Cost  of  Living  in  Wage  Adjustments 


633 


Table  6. — February  25, 

L920,  Wage   Adjustment 

•si 

.2e 

>  60 
0>   03 

PL,  ^ 

o 

03  o 

£.2 

be 

eS 

"3 
o 

a  ®  * 

fl.o  <p 

:gas 

J*  .a 

a 

Purchasing 
power  of 
1916  contract 
wage  dollar 

Typographical  Union  No.   16.... 
Printing  Pressmen's  Union  No.  3 
Franklin  Union   (Feeders)   No.  4 
Bookbinders'   and   Paper   Cutters' 
Union  No.  8  (Edition  Binders) 

$41.00 
42.00 
34.00 

36.50 

$5.00 
5.00 
5.00 

5.00 

$46.00 
47.00 
39.00 

41.50 

177.2 
174.3 
210.8 

181.0 

167.81 
167.8 
167.8 

167.8 

$1,056 
1.038 
1.256 

[     1.078 

i  U.  S.  Bureau  of  Labor  Statistics,  family  budget  index  number  of  December  1919 
for  Chicago  was  200.6  on  a  1914  base  of  100.  The  index  number  in  the  table  is 
200.6,  transferred  from  a  1914  to  a  1916  base.  This  December  1919  figure  was  not 
available  at  the  time  the  wage  adjustment  occurred,  but  is  used  here  as  showing  the 
actual  status  of  the  cost  of  living  at  that  date. 

both  sides  reported  that  the  best  available  United  States  Bureau  of 
Labor  Statistics  data  on  cost  of  living  for  Chicago  were  the  complete 
family  budget  figures  reported  as  of  June  15,  1920.  The  union  repre- 
sentatives agreed  that  these  were  the  best  figures  available  and  as  they 
showed  an  increase  of  114.6  per  cent  over  the  1914  base,  the  wage  ad- 
justment at  this  time  was  arrived  at  through  the  use  of  this  figure.  In 
addition,  an  increase  of  3  per  cent  on  the  1914  base  was  allowed  the 
unions  because  the  United  States  Bureau  of  Labor  Statistics  had  ren- 
dered a  belated  report  on  the  cost  of  living  in  Chicago  as  measured  by 
the  complete  family  budget  as  of  December  15,  1919,  which  gave  a 
figure  of  100.6  per  cent  as  compared  with  1914.  Since  a  figure  of 
97  per  cent  had  been  used  in  the  February,  1920,  adjustment,  the  em- 
ployers made  allowance  during  the  ensuing  six  months'  period,  for  the 
discrepancy  of  3  per  cent  when  the  August,  1920  adjustments  were 
worked  out. 

In  terms  of  dollars  and  cents,  the  actual  cost-of-living  computations 
for  the  six  months'  period  under  consideration  showed  that  each  union 
was  entitled  to  an  average  spread  increase  of  $3.85.  The  employers 
added  65  cents  to  the  $3.85  when  they  took  into  account  the  3  per  cent 
discrepancy  of  the  preceding  six  months'  period.  This  made  $4.50. 
In  response  to  the  appeal  of  the  union  representatives  that  the  trend 
of  the  cost  of  living  was  still  upward,  the  employers  added  50  cents 
more,  making  a  total  of  $5.00  average  spread  increase  granted  to  each 
union.  These  wage  increases  were  incorporated  in  another  joint  sup- 
plemental agreement.  While  the  cost-of-living  figures  were  used  as  a 
basis  for  this  adjustment,  the  fact  that  the  employers  granted  an  aver- 
age spread  of  50  cents  more  than  the  figure  required,  is  evidence  that 
the  unions  used  the  bargaining  power  which  they  possessed  at  the  time 


634 


Francis  H.  Bird 


[December 


to  secure  an  increase  over  and  above  what  the  terms  of  their  agreement 
provided  for.20 

The  wage  adjustments  of  August  25,  1920,  are  shown  in  detail  in 
Table  7 :21 

Table  7. — August  25,  1920  Wage  Adjustment 


M 


BO  5 


"_    = 


s      C_ 

o  «>  u  ® 


Typographical  Union  No.  16 ...  . 
Printing  Pressmen's  Union  No.  3 
Franklin  Union  (Feeders)  No.  4 
Bookbinders'  and  Paper  Cutters' 
Union  No.  8   (Edition  Binders) 


$46.00 
47.00 
39.00 

41.50 


$5.00 
5.00 
5.00 

5.00 


£51.00 
52.00 
44.00 


196.8 
193.0 
237.8 


46.50  I  203.2 


179.61 
179.6 
179.6 

179.6 


$1,095 
1.075 
1.324 

1.131 


1  U.  S.  Bureau  of  Labor  Statistics,  family  budget  index  number  of  June  1920  for 
Chicago  was  214.6  on  a  1914  base  of  100.  The  index  number  in  the  table  is  214.6, 
transferred  from  a  1914  to  a  1916  base. 

During  the  next  six  months  period,  August  25,  1920,  to  February 
25,  1921,  for  the  first  time  the  trend  of  prices  was  downward.  On  the 
first  of  February,  1921,  the  scale  committee  of  the  Franklin-Division 
at  a  conference  with  the  joint  scale  committee  of  the  various  unions, 
asked  for  a  readjustment  of  wages  downward,  in  accordance  with  the 
terms  of  the  supplemental  agreement  of  August  25,  1919.  From  the 
employers'  point  of  view,  this  was  the  first  test  of  the  principle  under- 
lying the  agreement  for  the  adjustment  of  wages  downward  as  well  as 
upward.  The  statistician  representing  the  employers  introduced  the 
United  States  Bureau  of  Labor  Statistics  figures  which  showed  that 
the  complete  family  budget,  cost-of-living  figures  for  Chicago  as  re- 
ported for  December  15,  1920,  evidenced  a  decrease  from  the  family 
budget  figures  of  111.6  per  cent  for  June,  1920,  which  was  used  for  the 
basis  for  the  August,  1920,  adjustment,  to  93.3  per  cent  for  December 
15,  1920,  over  the  1911  base.  Following  the  statistical  method,  which 
was  previously  used,  he  showed  that  the  employers  were  entitled  to  a 
flat  average  spread  decrease  of  $1.65  effective  February  25,  1921. 22 

The  unions  this  time  had  engaged  the  services  of  an  economist  from  a 
near-by  university  to  represent  them  as  statistician.  He  agreed  that 
the  cost-of-living  figures  introduced  by  the  employers'  statistician  were 
the  most  complete  and  accurate  available.  He  then  introduced  charts 
to  show  that  wages  always  lag  behind  prices  during  periods  of  price  in- 
flation and  that  while  the  employers  had  adjusted  wages  on  the  basis 
of  increases  in  the  cost  of  living  at  specified  periods,  the  unions  had 

20  Transcript  of  Arbitration  Proceedings,  etc.,  April  18,  1921,  pp.  170-175. 
-1  At   this  time  the  Bookbinders  extended  their  contract  for  six  months. 
^Transcript  of  Arbitration  Proceedings,  etc.,  April  19,  1921,  pp.  331-332. 


1921]  Cost  of  Living  m  Wage  Adjustments  635 

had  to  carry  the  burden  of  increasing  prices  between  the  dates  of  the 
readjustments.  The  unions  used  this  statistical  presentation  as  a 
basis  for  an  argument  that  wages  should  remain  unchanged  for  the  next 
six  months  period  to  compensate  for  what  they  had  lost  in  purchasing 
power  of  wages  between  the  periods  of  wage  adjustments.  The  em- 
ployers in  turn  maintained  that  a  certain  amount  of  lag  was  inevitable 
in  the  adjustment  of  wages  upward,  but  that  the  same  lag  would  ap- 
pear in  an  adjustment  of  wages  downward.  That  is,  since  wages  were 
to  be  readjusted  downward  at  specific  periods,  the  unions  would  get  the 
benefit  of  the  drop  in  the  cost  of  living  during  any  period  preceding 
the  date  of  adjustment. 

Unable  to  move  the  employers  with  the  lag  argument,  the  statistician 
for  the  unions  retired.  The  unions  then  tried  to  pick  a  technical  flaw 
in  the  wording  of  the  cost-of-living  clause  in  the  August  25,  1919,  sup- 
plemental agreement.  They  attempted  to  twist  the  wording  of  this 
clause  to  show  that  the  employers  were  not  entitled  to  a  wage  reduc- 
tion as  of  February  25,  1920,  because  the  employers  had  asked  for  an 
average  spread  reduction  of  $4.65  which  was  less  than  the  last  average 
spread  increase  of  $5.00. 

After  several  weeks  of  argument  with  almost  daily  conferences,  which 
at  times  threatened  to  end  in  a  declaration  of  open  warfare,  at  a  joint 
session  lasting  from  one  noon  until  6  o'clock  the  next  morning,  it  was 
decided  to  settle  the  controversy  by  arbitration  under  terms  of  an  arbi- 
tration agreement  which  were  finally  acceptable  to  both  sides.  This 
agreement  was  entered  into  under  date  of  March  17,  1921.  An  arbi- 
tration board  was  set  up  with  the  dean  of  a  well-known  school  of  com- 
merce as  the  impartial  chairman.  The  position  taken  by  the  employers 
before  this  arbitration  board,  is  shown  by  the  following  abstracts  from 
their  brief: 

The  employers,  who  constitute  the  plaintiff  in  this  proceeding,  submit 
that  the  construction  of  this  clause  of  the  contract  as  above  outlined,  is 
abundantly  sustained  not  only  by  the  broad  purpose  for  which  it  was  in- 
serted, the  testimony  of  witnesses  who  drafted  and  submitted  the  contract, 
but  furthermore,  by  the  method  of  its  application  in  the  granting  of  the 
two  increases  of  wages  which  took  place  between  August  25,  1919,  and  Feb- 
ruary 25,  1921.  If  this  is  not  the  only  sensible  and  intelligent  construction 
of  this  clause,  the  employers  are  at  a  loss  to  understand  what  such  con- 
struction can  be.  The  clause,  as  said  before,  was  framed  by  the  employers 
who  certainly  are  the  best  qualified  to  state  what  its  intent  was.  Further- 
more, the  evidence  stands  uncontradicted  in  the  record  that  the  Unions 
clearly  so  understood  the  meaning  of  this  clause  during  the  whole  period 
since  August  25,  1919.  What  caused  the  Unions  to  contend  otherwise  on  or 
about  February  25,  1921,  is  no  mystery.  It  is  revealed  in  the  decline  in  the 
cost-of-living  figures  reported  by  the  United  States  Department  of  Labor 
in  December,   1920,  which  if  applied  as  the  contract  says  it  must  be  ap- 


636  Francis  H.  Bird  [December 

plied,  would  result  in  a  reduction  in  the  wages  of  these  four  major  Unions, 
as  above  indicated. 

It  was  only,  however,  when  the  Unions  came  face  to  face  with  a  situation 
clearly  covered  in  the  contract  pointing  to  a  reduction  in  the  wages  that 
they  suddenly  became  imbued  with  a  mysterious   ambiguity  and  confusion 

in  its  terms. 

********** 

The  very  conditions  under  which  most  contracts  of  this  character  are 
drafted,  and  particularly  the  one  in  controversy  here,  make  impossible  the 
exercise  of  the  same  degree  of  care  as  is  found  in  the  drafting  of  contracts 
in  ordinary  commercial  affairs.  They  are  usually  drafted  and  signed  under 
pressure  and  without  the  assistance  of  experienced  and  competent  drafts- 
men, and  it  is  never  conceived  that  said  contracts  will  be  subjected  to  the 
excessive  technical  scrutiny  which  is  employed  in  the  consideration  of 
ordinary  commercial  agreements. 

They  are  intended  simply  to  embody  a  broad  basic  principle  of  adjustment 
of  acute  controversies  and  when  they  have  accomplished  this  they  have 
served  the  only  purpose  for  which  they  are  formed.  In  this  very  contract 
of  August  25,  1919,  the  evidence  shows  that  it  was  signed  on  a  hot  sum- 
mer's night,  or,  rather  at  2  o'clock  in  the  morning  on  August  25,  1919. 
For  four  or  five  weeks  prior  to  this  time  there  had  been  many  protracted  and 
more  or  less  bitter  negotiations,  and  finally,  when  everybody  was  almost  at 
the  point  of  exhaustion,  an  agreement  embodying  the  suggestions,  first  of 
this  side  and  then  of  the  other  side,  was  thrown  together  and  when  pre- 
sented to  the  joint  body  was  signed  with  a  great  sense  of  relief. 

There  was  no  difference  of  opinion  at  that  time,  however,  either  upon 
the  part  of  the  employers  or  of  the  Unions,  as  to  what  was  the  fundamental 
intent  and  purpose  of  the  clause  in  question.23 

In  presenting  their  case  the  employers  introduced  witnesses  and  a 
series  of  charts  which  traced  step  by  step  the  statistical  method  fol- 
lowed in  the  wage  adjustments  from  1916  on. 

The  case  for  the  unions  was  presented  by  economic  counsel  from  a 
well  known  private  statistical  organization  of  Washington,  D.  C.  The 
counsel  did  not  stress  the  wording  of  the  cost-of-living  clause  as  a  basis 
for  his  argument,  but  built  up  his  case  on  the  "lag"  principle  to  which 
reference  has  been  made.  He  also  set  up  a  hypothetical  family  budget 
as  a  measure  for  a  fair  wage,  and  emphasized  the  importance  of  re- 
muneration for  skill.24 

On  May  5,  1921,  the  arbitration  board  handed  down  a  unanimous 
decision  to  the  effect  that  there  should  be  an  average  spread  reduction 

23  Before  an  Arbitration  Board  Franklin-Division  of  the  Franklin-Typothetae  of 
Chicago  vs.  Typographical  Union  No.  16,  Pressmen's  Union  No.  3,  Franklin  Union 
No.  4>  Bookbinders'  and  Paper  Cutters'  Union  No.  8,  Brief  and  argument  for  re- 
duction in  Wages  in  accordance  with  Supplemental  Agreement  of  August  25,  1919. 
Chester  Arthur  I>egg,  Attorney,  F.  H.  Bird,  Consulting  Statistician,  Chicago,  April 
20,  1921,  pp.  23-26. 

24  Transcript  of  Arbitration  Proceedings,  etc.,  April  22-23,  1921,  pp.   822-890. 


1921]  Cost  of  Living  m  Wage  Adjustments  637 

in  the  basic  scales  of  wages  of  the  various  unions  of  $4.35  a  week.  The 
board  stated  that,  if  it  had  based  its  award  strictly  on  the  terms  of  the 
different  agreements,  the  reduction  on  the  basis  of  the  cost-of-living 
figures  would  have  been  $4.65.  It  did,  however,  make  an  allowance  of 
an  average  spread  of  30  cents  a  week  to  compensate  for  lost  purchasing 
power  in  wages  during  the  periods  of  rising  prices  due  to  the  fact  that 
wages  were  adjusted  each  time  on  the  basis  of  a  cost-of-living  index 
number  for  a  date  ten  weeks  earlier.  In  arriving  at  this  30  cents, 
due  allowance  was  made  for  the  over  payments  of  the  employers  at  the 
different  periods  over  and  above  what  the  cost-of-living  figures  re- 
quired. 

The  board  disposed  of  the  "lag"  principle  upon  which  the  unions 
had  based  most  of  their  claim  that  wages  should  not  be  reduced,  in  the 
following  language: 

The  present  application  of  the  contract  of  1919  would,  therefore,  require 
an  average  reduction  of  $4.65,  in  the  absence  of  strong  considerations  to  the 
contrary.     Are  there  any  such  considerations  ? 

(5)  It  has  been  urged  that  the  previous  adjustments  made  every  six 
months  under  the  agreement  of  1919  were  not  proper  and  adequate,  that 
the  employees  did  not  get  all  they  were  entitled  to  under  such  previous 
adjustments,  and  that,  therefore,  wages  ought  not  now  to  be  reduced. 

This  argument  was  developed  at  length  by  counsel  for  the  Unions.  It 
rests  upon  the  assumption  that  there  has  been  a  "lag"  between  the  wage 
advances  and  the  cost  of  living.  That  is,  it  is  argued  that  wages  were  ad- 
vanced only  once  every  six  months,  whereas  the  level  of  commodity  prices 
was  advancing  regularly  day  by  day.  Therefore,  it  was  urged  that  this  so- 
called  "lag"  should  now  be  compensated  by  maintaining  wages  at  the  pres- 
ent level. 

The  Board  has  given  careful  and  earnest  attention  to  this  argument.  We 
find  that  the  so-called  lag  naturally  divides  itself  into  parts ;  first,  the  six 
months'  period,  during  which  wages  remain  fixed,  while  prices  may  be 
fluctuating  either  upwards  or  downwards ;  second,  the  ten  weeks  period  be- 
tween the  date  of  the  wage  adjustments  (in  February  or  August)  and  the 
date  for  which  the  index  number  is  announced  (as  of  December  15  or 
June  15). 

The  Board  does  not  feel  that  any  importance  can  be  attached,  for  pur- 
poses of  this  decision,  to  the  six  months'  jDeriod.  It  rests  this  decision  upon 
the  following  grounds: 

(a)  It  was  not  contemplated  by  the  agreement  of  1919  that  wages  would 
always  correspond  to  the  penny  with  the  cost  of  living.  This  is  shown  by 
the  fact  that  the  agreement  provides  there  shall  be  no  readjustment  of 
wages  whatever,  at  the  expiration  of  the  six  months'  periods,  unless  the  cost 
of  living  has  increased  or  decreased  by  at  least  5  per  cent. 

(b)  Such  a  "lag,"  if  any  exists,  cannot  be  definitely  ascertained,  com- 
puted, or  measured,  since  the  Department  of  Labor  announces  the  index 
figure  only  once  every  six  months. 

(c)  Such  a  theory  could  be  admitted,  only  if  it  could  work  both  ways. 
But  it  is  evident  that  if,  during  any  six  months'  periods,  the  cost  of  living 


638  Francis  H.  Bird  [December 

should  go  down  rather  than  up,  the  theory  could  not  be  applied.  For 
wages  would  remain  at  the  same  point  for  the  six  months'  period,  even 
though  the  cost  of  living  declines.  Thus,  the  employer  would  have  paid 
wages  to  the  employees  during  the  period,  in  excess  of  the  cost  of  living. 

But  there  is  no  way  by  which  this  overpayment  could  be  recouped  to  the 
employer.  The  employees  could  not  be  compelled  to  dig  down  into  their 
own  pockets  to  make  this  up  to  the  employer.  Nor  would  it  be  feasible  to 
reimburse  the  employer  by  permitting  him  to  reduce  wages,  for  the  suc- 
ceeding six  months,  to  a  point  lower  than  would  be  justified  by  the  cost 
of  living  figure.  To  do  this  would  lower  and  undermine  the  employees' 
standard  of  life. 

Obviously,  the  lag  theory,  insofar  as  it  concerns  the  six  months  interval 
between  wage  adjustments,  could  not  apply  both  ways.  It  could  not  work 
when  living  costs  are  going  down.     Therefore,  it  is  inadmissible. 

(6)  However,  the  Board  is  inclined  to  attach  some  importance  to  the 
ten-week  period,  between  the  dates  of  the  various  semi-annual  wage  adjust- 
ments, and  the  dates  to  which  the  cost  of  living  figures  apply.  During  each 
of  these  ten-week  periods  referred  to,  that  is,  from  December  15  to  Febru- 
ary 25,  1920,  and  from  June  15  to  August  25,  1920,  wages  were  being  paid 
based  on  the  index  number  for  the  previous  six  months'  period.  Therefore, 
it  may  be  said  that  the  wage  adjustments  did  not  completely  compensate 
the  employees  for  the  increased  cost  of  living. 

This  was  through  no  intent  nor  design  upon  the  part  of  anyone.  It  was 
the  natural  and  inevitable  result  of  the  fact  that  the  wage  adjustments  were 
made  ten  weeks  later  than  the  date  to  which  the  index  number  applied. 
True,  this  arrangement,  including  the  date  of  the  semi-annual  adjustments, 
was  made  by  mutual  agreement.  But  it  was  probably  not  anticipated,  in 
1919,  that  the  increase  in  the  cost  of  living  would  be  so  marked,  nor  so 
rapid.  Ordinarily,  this  "lag"  during  a  ten-week  period  might  not  prove 
important.     But  in  1919  and   1920  prices  were  rising  rapidly.25 

It  will  be  observed  that  by  resorting  to  arbitration  the  employers 
finally  obtained  a  substantial  wage  reduction  under  the  cost-of-living 
adjustment  clause  in  the  August  25,  1919  supplemental  agreement,  but 
not  until  two  months  after  it  was  due.  Furthermore  the  reduction  was 
based  on  the  December,  1920,  Chicago  family  budget  index  number  of 
193.3  which  by  May,  1921  had  dropped  to  178.4.26  Whereas  during 
the  periods  of  adjustment  of  wages  upward  the  employers  admitted 
their  obligations  to  the  unions  promptly  and  without  question,  when  a 
period  arrived  during  which  the  unions  were  under  obligations  to  the 
employers  they  attempted  to  ignore  their  contractual  obligations  but 
did   finally   agree    to    a    settlement    through    arbitration.      In    the   last 

25 Decision  of  the  Arbitration  Board,  Ralph  E.  Heilman,  Chairman,  Franklin  Di- 
vision of  Franklin-Typothetae  of  Chicago  vs.  Typographical  Union  No.  16,  Printing 
Pressmen's  Union  No.  3,  Franklin  Union  No.  4>  Bookbinders'  and  Paper  Cutters' 
Union  No.  8,  May  5,  1921,  pp.  (i-9. 

so  U.  S.  Bureau  of  Labor  Statistics,  Monthly  Labor  Review,  July,  1921,  p.  106.  By 
September,  1921  the  index  number  had  dropped  to  175.3.  U.  S.  Bureau  of  Labor 
Statistics,  Advance  Sheet  No.   1245,  released  October  24,   1921. 


1921] 


Cost  of  Living  in  Wage  Adjustments 


639 


analysis,  however,  wage  adjustments  both  upward  and  downward  on 
the  basis  of  changes  in  the  cost  of  living  were  accomplished  in  ac- 
cordance with  the  provisions  of  the  cost-of-living  clause  of  August  25, 
1919  supplemental  agreement. 

The  wage  adjustments  brought  about  by  the  decision  of  the  arbitra- 
tion board  effective  for  a  period  of  six  months  from  May  5,  1921  are 
shown  in  detail  in  Table  8 : 

Table  8. — May  5,  1921,  Wage  Adjustment 


5  a> 
to* 


53  o 

>>  a) 


Typographical  Union  No.  16.... 
Printing  Pressmen's  Union  No.  3 
Franklin  Union  (Feeders)  No.  '4 
Bookbinders'  and  Paper  Cutters' 
Union  No.  8  (Edition  Binders) 


$51.00 
52.00 
44.00 

46.50 


$4.35 
4.35 
4.35 


$46.65 
47.65 
39.65 


4.35   I     42.15 


M 

9        9 

c  O  cS 

60  . ' 


t* 


I  3s 


180.6 
177.3 
214.3 

184.8 


to® 
SB"0 

Si 


SO       03  t. 

'3  o  'S'3 
a,  &2  « 


149.21 
149.2 
149.2 

149.2 


$1,210 
1.188 
1.430 

1.238 


i  U.  S.  Bureau  of  Labor  Statistics,  family  budget  index  number  of  May  1921  for 
Chicago  was  178.4  on  a  1914  base  of  100.  The  index  number  in  the  table  is  178.4, 
transferred  from  a  1914  to  a  1916  base. 

A  summary  table  follows  which  reviews  the  effect  of  the  different  wage 
adjustments,  from  November,  1916  to  May  5,  1921,  on  the  purchasing 
power  of  the  1916  contract  wage  dollar  of  each  union  at  the  date  of 
each  adjustment.  It  will  be  observed  that  as  a  result  of  the  different 
adjustments  the  1916  contract  wage  dollar  of  the  Typographical 
Union  had  a  purchasing  power  on  May  5,  1921,  of  $1.21 ;  of  the  Press- 
men's Union  $1,188;  of  the  Feeder's  Union  $1,430;  of  the  Binder's 
Union  $1,238.  While  the  purchasing  power  of  the  1916  contract  wage 
dollar  at  the  dates  of  the  1917  and  1918  adjustments  was  in  the 
neighborhood  of  93  to  95  cents  for  the  various  unions,  it  was  brought 
up  approximately  to  par  by  the  February  5,  1919,  adjustment  and 
from  then  on  it  was  above  par  at  the  different  dates  of  adjustments. 
It  should  be  also  observed  that  from  February  5,  1919,  on,  the  pur- 
chasing power  of  the  Feeders'  1916  contract  wage  dollar  increased 
much  more  at  the  different  dates  of  adjustment  than  did  that  of  the 
other  unions.  Eventually  the  differential  between  the  wages  of  Press- 
men and  Feeders  will  have  to  be  increased,  as  the  cost-of-living  adjust- 
ments have  brought  the  wages  of  semi-skilled  Feeders  too  close  to  the 
highly  skilled  Pressmen. 

From  an  analysis  of  the  summary  table,  the  conclusion  is  reached 
that  during  the  five  year  period  1916-1921  taken  as  a  whole,  a  period 
of  rapid  upward  price  movement  followed  by  a  downward  trend,  the 
purchasing  power  of  the  1916  wage  contract  dollar  of  the  various 
unions  maintained  an  unusual  degree  of  stabilization. 


640 


Francis  H.  Bird 


[December 


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1921]  Cost  of  Living  m  Wage  Adjustments  641 

During  the  first  two  years  of  the  period  the  wage  adjustments  were 
brought  about  by  "direct  action"  on  the  part  of  a  union  made  up  of 
the  lowest  paid  and  the  least  skilled,  who  felt  most  the  pressure  of  the 
increasing  cost  of  living.  The  other  unions  in  turn  profited.  Then  fol- 
lowed a  period  of  government  regulation  which  ended  in  the  employers 
and  the  union  finally  themselves  adopting  a  method  by  which  through 
constitutional  processes  wage  adjustments  were  made  at  specified  times 
according  to  a  specified  statistical  method  on  the  basis  of  specified  cost- 
of-living  data.  For  government  regulation  was  substituted  government 
cooperation  in  the  prompt  furnishing  of  reliable  cost-of-living  data. 

As  a  result  of  the  cost-of-living  wage  adjustment  clause  inserted  in 
the  August  25,  1919,  Supplemental  Agreement,  practically  continuous 
production  was  obtained  at  a  time  when  the  demand  for  printing  was 
enabling  employing  printers  to  get  back  on  their  feet  again  financially 
after  several  years  of  rather  slack  business  and  making  it  possible  for 
them  to  grant  substantial  increases  in  wages. 

It  was  a  time  when  other  industries  were  experiencing  expensive  shut- 
downs because  of  labor  trouble  principally  due  to  the  depreciation  of 
the  purchasing  power  of  money  wages.  Cessation  of  production  dur- 
ing this  period  would  have  been  costly  to  both  employers  and  employees 
in  the  Chicago  printing  industry.  They  succeeded,  however,  in  stabiliz- 
ing conditions  by  substituting  for  "rule  of  thumb"  collective  bargain- 
ing, a  more  accurate  method  based  on  a  process  of  investigation  of  the 
facts  at  specified  intervals.  True,  when  the  facts  showed  that  the  em- 
ployers were  entitled  to  a  reduction  in  wages  the  unions  resisted,  but 
they  eventually  capitulated  when  the  facts  were  reviewed  by  an  arbitra- 
tion board. 

What  will  happen  in  the  Chicago  printing  industry  when  the  five  year 
contracts  expire  in  November,  1921,  it  is  impossible  to  predict.  The 
employers  are  under  pressure  to  produce  at  lower  costs.  This  the 
unions  must  recognize. 

While  collective  bargaining  wherever  it  exists  is  fundamentally  the 
pitting  of  the  economic  power  of  organized  employers  against  that  of 
organized  employees,  if  it  is  possible  to  base  the  bargain  on  the  in- 
vestigation and  acknowledgment  of  facts  on  an  issue  such  as  changes 
in  the  cost  of  living,  why  is  it  not  possible  to  follow  the  same  method 
in  approaching  the  production  issue? 

In  the  past,  American  trade  unionism  has  made  its  bargain  with  em- 
ployers to  a  large  extent  on  the  basis  of  getting  what  it  had  power  to 
get  regardless  of  the  effect  on  the  employers.  This  program  of  expedi- 
ency and  opportunism  undoubtedly  has  obtained  results.  But  can  not 
farsighted  union  leaders  see  that  there  is  a  limit  to  which  they  can 


642  Francis  H.  Bird  [December 

force  employers  in  their  continual  drive  for  higher  wages  and  shorter 
hours  without  consideration  of  their  production  problems? 

No  system  of  wage  adjustment  can  be  successful  over  a  period  of  time 
unless  it  recognizes  the  fundamental  principle  of  payment  for  results. 
One  reason  for  the  open  shop  movement  in  the  United  States  is  the 
protest  of  employers  against  restriction  of  output  with  its  excessive 
cost  of  production.  Would  it  not  be  a  constructive  step  on  the  part 
of  trade  union  leaders  to  permit  the  adoption  of  production  standards 
as  part  of  the  collective  bargaining  process,  these  standards  to  be  ar- 
rived at  on  the  basis  of  investigation  of  scientific  production  methods? 
The  old  slogan  of  a  "fair  day's  work  for  a  fair  day's  pay"  is  after  all 
the  nub  of  what  ought  to  be  accomplished  through  collective  bargain- 
ing and  what  could  be  accomplished  if  the  parties  to  the  bargain 
adopted  the  right  approach. 

Fkaxcis  H.  Bird. 

Chicago,  Illinois. 


THE  ECONOMIC  BASIS  FOR  BUSINESS  REGULATION 

I.   TJie  tendency  to  combination. 

The  phrase  "affected  with  a  public  interest"  appears  very  commonly 
in  American  court  opinions ;  out  of  it  arise  the  controls  of  business, 
both  quasi-public  and  private,  that  constitute  the  state's  protection  of 
the  economic  interests  of  the  public.  These  forms  of  prescription  are 
necessary  because  of  economic  illness.  We  cannot  here  discuss  the 
symptoms  which  lead  to  the  administering  of  one  rather  than  another 
form  of  legal  surveillance ;  it  must  be  sufficient  to  point  out  that  both 
prices  and  standards  of  service  are  regulated.  But  it  may  be  noted  that 
public  utility  regulations  are  positive  and  compulsory  and  regulations 
of  private  business  merely  negative  and  prohibitive.  The  phrase  is  the 
statement  of  a  business  condition  in  which  it  seems  necessary  for  the 
state  to  protect  the  interests  of  consumers. 

There  are  those  who  do  not  concur  that  this  economic  regulation  is 
really  remedial;  they  justify  their  dissent  on  the  grounds  that  business 
is  more  prosperous  and  that  the  interests  of  consumers  are  sufficiently 
protected  by  competition.  And  when  it  is  pointed  out  that  in  many 
businesses  competition  is  not  present  as  a  matter  of  fact,  they  still  con- 
tend that  potential  competition  is  a  sufficient  safeguard,  that  if  prices 
rise  too  high  or  service  standards  sink  too  low,  some  one  will  perceive 
these  conditions  and  offer  better  service  at  the  old  price  or  equal  service 
at  a  lower  price  and  that  this  will  always  happen.      It  is  a  kind  of  law. 

But  it  would  seem  plain  enough  that  only  under  conditions  of  per- 
fectly free  competition  will  producers  allow  the  actual  market  supply  of 
goods  and  services  to  coincide  with  the  supply  it  is  possible  to  bring  into 
the  market. 

For  the  present  we  may  identify  "producers"  with  "sellers"  for  the 
producer  must  also  dispose  of  his  goods  and  become  a  seller;  and  it  is  in 
his  selling  and  not  his  producing  nature  that  those  traits  are  found 
which  make  it  necessary  to  institute  controls  that  favor  the  consumers 
of  his  products.  In  his  role  as  a  seller  he  exhibits  a  set  of  dispositions 
entirely  inutile — perhaps  even  pernicious — to  him  as  a  producer;  so 
that  the  situation  is  covered,  however  disagreeable  its  implied  ethics 
may  be,  by  saying  that  the  whole  interest  of  sellers,  as  sellers  only,  is 
in  the  highest  possible  net  profit.  While  he  is  actuated  by  purely 
acquisitive  motives  it  is  the  constant  effort  of  the  business  manager  to 
control  supply  so  that  he  may  control  one  of  the  elements  of  the  price 
equilibrium. 

If  the  business  manager  in  his  role  as  salesman  is  able  to  dominate 
his  business  organization  so  that  its  policy  is  directed  toward  the  con- 
trol of  supply;   and   if  it  does   actually  restrict   supply,   even  in   the 


644  Rexford  G.  Tugwell  [December 

slightest  degree,  the  normal  result  is  that  the  price  rises  and  profits  are 
greater.  It  will  be  objected  that  there  is  a  limit  to  this  and  that  the 
business  may  find  its  sales  so  restricted  by  the  higher  price  that  its 
profits  are  reduced  instead  of  augmented ;  this  of  course  may  happen, 
but  it  may  not ;  and  the  fact  that  a  business  has  the  power  to  experi- 
ment thus  with  the  machinery  of  the  market  is  sufficient  indication  of 
the  need  of  control.  Furthermore,  it  is  just  this  limitation  of  the  sup- 
ply of  necessities  that  may  cause  the  great  harm  to  the  public  interest. 
It  may  be  true  that  the  business  gained  nothing  from  the  restriction  of 
the  supply ;  but  this  fact  does  not  absolve  it  from  the  charge  of  having 
harmed  the  public  interest  if  it  has  reduced  the  supply  of  those  things 
upon  which  people  depend  for  their  sustenance  and  happiness.  So  that 
even  the  most  orthodox  laissez  faire  believer,  who  would  trust  fully  to 
the  benevolence  of  freely  competing  forces  and  who  feels  that  economic 
justice  is  to  be  expected  to  eventuate  most  often  from  their  operation, 
has  come  to  accept  the  real  logic  of  the  saying  that,  when  competition 
is  not  free  and  when  supply  is  limited  in  the  interest  of  total  net  profit, 
there  is  a  harm  to  consumers. 

This  point  is  made  clear  by  Professor  Clay  who  remarks  that  the 
essence  of  competition  is  in  "the  possession  of  an  alternative  and  the 
exercise  of  choice  by  one  party  to  the  contract  of  sale ;  monopoly  is  the 
abolition  of  the  alternative  and  power  of  choice."1  And  in  another 
standard  text  book  of  economics2  the  situation  just  commented  on  is 
characterized  by  saying  that  the  law  regards  competition  as  one  of 
the  main  pillars  of  our  present  social  order  because  it  is  so  apparent 
that  competing  producers  cannot  increase  profits  (at  the  expense  of 
consumers)  by  limiting  supply.  This  same  passage  goes  on  to  describe 
the  reaction  of  the  monopolist  to  his  new-found  power  when  he  is  freed 
from  the  restrictions  of  competition :  "The  monopolist  will  normally 
endeavor  to  fix  his  output  at  such  a  point  that,  given  the  existing  state 
of  demand,  he  will  secure  the  highest  possible  net  returns."* 

John  Stuart  Mill,  in  saying  that  "neither  law  nor  opinion  should 
prevent  an  operation  beneficial  to  the  public  from  being  attended  with 
as  much  private  advantage  as  is  compatible  with  full  and  free  compe- 
tion,"4  would,  by  implication,  not  deny  that  legal  regulation  ought  to 
be  invoked  when  the  advantage  to  one  party  of  a  business  transaction 
is  not  determined  by  "full  and  free  competition"  but  by  monopoly  in 
some  degree. 

President  Hadley  remarked :     "There  can,  I  think,  be  no  reasonable 

i  Henry  Clay,  Economics  for  the  General  Reader,  p.  263. 

2  Ely,  Outlines  of  Economics,  ch.  XII. 

a  Ibid.,  p.  201. 

*  John  Stuart  Mill,  Principles  of  Economics   (Ashley  ed.),  p.  709. 


1921]  The  Economic  Basis  for  Business  Regulation  645 

doubt  that  the  world  is  far  better  served  under  this  competitive  system 
than  under  any  other  system  of  industrial  regulation  which  has  hitherto 
been  tried.  The  effect  has  been  so  marked  that  modern  law — the  Eng- 
lish first  and  the  continental  afterward — has  gradually  adjusted  itself 
to  the  conception  that  prices  should  be  let  alone  wherever  competition 
can  regulate  them ;  that  a  price  obtained  in  open  market,  without  fraud 
or  artificial  monopoly,  is  ipso  facto  a  fair  price.  .  .  ."5  But  here 
again  there  arises  a  question  of  fact  as  to  the  existence  of  the  "open 
market."  The  inescapable  conclusion  is  that  a  price  fair  to  consumers 
cannot  be  reached  where  there  is  not  perfect  and  free  competition;  and 
that  when  the  business  situation  which  once  justified  the  basing  of  legal 
principles  on  the  economics  of  free  competition  has  passed,  the  law 
ought  to  be  changed  to  take  account  of  the  new  situation. 

We  may  restate  our  first  conclusion,  reiterated  again  and  again  by 
economists,  that  monopolists,  by  their  control  of  the  supply,  may  con- 
trol price.6  If  competition  were  perfectly  free  such  a  situation  could 
not  possibly  arise.  But  businesses  important  enough  to  be  regulated  are 
in  their  very  nature  businesses  operating  under  conditions  of  decreasing 
costs.  "The  greater  the  extent  to  which  plant  and  machinery  can  be 
used,  the  more  concentrated  the  industry  and  the  smaller  the  area  on 
which  a  given  volume  of  production  can  be  turned  out,  the  more  prob- 
able is  the  tendency  to  lessening  cost  and  increasing  return."7  This  is 
a  situation  more  likely  to  be  true  in  such  standard,  stable,  every-day 
goods  and  services  as  are  likely  to  be  designated  for  regulation  (under 
the  phase  of  the  general  police  power  which  protects  the  economic  in- 
terests of  the  public  as  contrasted  with  its  interests  in  health,  safety, 
morals,  and  order)8  than  in  any  other  sort  of  business  imaginable. 
And  in  such  businesses  the  economic  motive  is  best  realized  by  extending 
sales  and  accepting  low  profits  per  unit  in  the  interest  of  the  large 
total  profits  remaining  when  total  expenses  are  subtracted  from  total 
receipts. 

The  managers  of  these  classes  of  business  do  not  always  apprehend 
that  their  acquisitive  interest  may  be  served  by  rate-fixing  bodies  which 
force  them  against  their  desires  into  large-scale  service  and  the  taking 
of  a  small  profit  per  unit.     But  such  is  the  reality  of  things.9 

6  A.  T.  Hadley,  Freedom  and  Responsibility,  p.  117. 

s  Taussig,  Principles  of  Economics,  vol.  I,  p.  199,  for  instance:  "A  monopolized 
commodity  will  be  sold,  by  a  person  doing  business  for  gain,  on  such  terms  as  will 
yield  the  largest  net  revenue." 

7  Ibid.,  p.  191. 

8  For  a  discussion  of  these  phases  of  the  police  power  see  Ernst  Freund,  The 
Police  Power,  in  the  Cyclopaedia  of  American  Government,  p.  706  ff. 

9  Ibid.,  vol.  II,  p.  110:  "Increasing  returns  in  the  strict  economic  sense  are  a 
usual  characteristic  of  these  industries." 


646  Rexford  G.  Tugzeell  [December 

Another  element  to  be  considered,  however,  is  the  elasticity  or  in- 
elasticity of  demand,  which,  in  the  case  of  necessities  such  as  are  likely 
to  be  regulated,  operates  in  general  to  strengthen  the  desire  of  business 
managers  for  higher  rates,  offsetting  the  gains  to  be  made  by  the  de- 
creasing costs  of  larger  outputs.  The  demand  is  a  highly  inelastic  one 
until  rates  are  very  much  reduced,  when  a  great  strengthening  of  de- 
mand is  felt.  The  curve  of  elasticity  would  fall  off  sharply  in  its  upper 
reaches  in  the  case  of  any  necessity  but  would  tend  to  flatten  out  lower 
down  in  the  scale.  "The  consumers'  demand  (for  necessities)  tends  to 
be  inelastic.  But  as  the  most  imperative  needs  are  met  his  demand  for 
more  of  any  commodity  acquires  a  greater  degree  of  elasticity."10 

It  might  seem  desirable  to  the  business  seeking  only  the  highest  pos- 
sible net  returns  to  meet  only  this  inelastic  demand  of  the  more  well- 
to-do  customers  and  not  to  reduce  rates  to  the  point  where  large  num- 
bers of  purchasers  would  be  called  into  the  market  as  the  curve  flattened 
out  and  new  classes  of  consumers  were  brought  in  under  the  influence  of 
a  much  reduced  rate.  It  is  just  this  reluctance  to  make  sharp  reduc- 
tions, call  in  large  numbers  of  new  purchasers  and  accept  low  per  unit 
profits  which  justifies  regulation. 

Total  profits  of  the  business  need  not  be  less  with  wise  regulation; 
but  they  will  be  gained  by  low  per  unit  profits  rather  than  high  per 
unit  profits  on  greatly  restricted  sales.  The  public  interest  in  the  wide 
dissemination  of  the  product  of  the  business  at  a  low  price  is  thus 
served  and  at  the  same  time  the  business  need  not  in  the  least  be  in- 
jured. Of  course,  the  regulating  body  may,  by  design,  cut  into  and 
eliminate  a  part  of  the  net  return  earned  by  reductions  in  price  and 
large  consequent  sales,  but  it  need  not  if  its  main  purpose  is  only  to 
secure  the  public  right  to  lowered  rates  and  to  hold  business  to  its  duty 
to  serve  efficiently. 

In  businesses  with  a  tendency  to  increasing  returns  or  decreasing 
costs  coupled  with  an  inelastic  demand  for  the  product,  combination  of 
competing  units  is  in  the  long  run  inevitable,  if  for  no  other  reason, 
simply  because  of  the  economies  to  be  gained  by  operations  on  a  large 
scale  and  the  losses  from  plant  duplication.  But  there  is  another  rea- 
son, equally  compelling,  for  the  coming  in  of  combination — the  fact  that 
combination,  because  combinations  control  supply,  makes  price  con- 
trol possible  and  frees  the  business  manager  from  price  competition. 

In  any  case,  in  the  business  of  supplying  necessities  to  the  public, 
combination  is,  in  the  nature  of  things,  to  be  expected ;  and  when  there 
is  combination  there  is  a  lessening  of  competition  to  the  extent  of  the 
coming  in  of  combination.  If  combination  is  purely  to  take  advantage 
of  large-scale  economies,  price  will  be  very  materially  reduced  by  the 

10  William   E.   Weld,  India's  Demand  for    Transportation. 


1921]  The  Economic  Basis  for  Business  Regulation  647 

business's  own  volition.  But  if,  at  any  time,  the  business  should  stop 
its  movement  toward  expansion  and  the  continual  reduction  of  price 
which  brings  in  new  purchasers,  and  should  use  the  power  it  possesses 
over  price,  the  public  may  well  be,  as  the  courts  put  it,  "oppressed."11 
Where  the  one  force  causes  combination  the  other  may  enter;  and  the 
full  effects  of  the  economies  of  large-scale  business  are,  therefore,  not 
necessarily  passed  on  to  consumers  unless  there  is  a  consumers'  control 
of  the  business. 

II.   The  conflict  of  interests. 

The  economic  interest  of  the  business  manager  consists  in  the  largest 
possible  net  return  on  the  investment  of  the  business ;  the  interest  of  con- 
sumers consists  in  the  cheapest  and  widest  dissemination  of  goods12  pos- 
sible. The  conflict  between  these  interests  is  apparent  in  the  stating. 
But  it  is  often  said  that  the  business  manager,  in  seeking  the  highest 
net  return  for  his  business,  at  the  same  time,  though  incidentally,  se- 
cures the  wide  and  cheap  dissemination  of  goods  and  services  desired  by 
the  consumer.  As  he  moves  in  the  service  of  his  own  interest,  does  the 
producer  also  serve  the  interest  of  the  consumer? 

The  answer  to  this  question  seems  to  lie  in  the  theoretical  discussion 
of  the  mechanism  by  which  the  business  secures  the  highest  net  return 
for  itself — limitation  of  supply.  When  supply  is  limited,  the  demand 
for  the  good  or  service  must  adjust  itself  to  the  supply  through  the 
price  equation.  A  limited  supply  means  higher  prices ;  and  higher 
prices  mean  a  restriction  in  use.  If  there  were  free  competition  this 
could  not  be  true.  Supplies  would  be  furnished  to  meet  the  demand  at 
a  price  which  covered  the  cost  of  production  with  a  small  margin  of 
profit.  And  as  demand  expanded  and  production  increased,  the  cost 
of  production  would  fall  and  prices  would  be  driven  lower  by  competi- 
tion. With  free  competition  there  would  be  no  restriction  of  supply 
and  no  raised  prices ;  with  combination  these  things  are  possible. 

With  the  inevitable  tendency  to  combination  under  the  influence  of 
decreasing  costs,  it  seems  almost  as  inevitable  that  there  should  be  a 
control  of  prices  that  harms  the  consumer.  It  is  inherent  in  the  very 
nature  of  modern  business.  And  there  is  a  separation,  therefore,  of  the 
interests  of  producer  and  consumer — that  is  to  say  of  seller  and  buyer. 
With  an  "open  market,"  free  bargaining  and  no  restriction  or  manipu- 
lation, both  parties  to  a  bargain  normally  benefit  because  one  wants 
what  the  other  possesses  and  willingly  gives  up  something  for  it  which 
is  desired  (or  which  represents  something  desired)  by  the  other  party  to 
the  bargain.     The  only  compulsion  is  this  mutual  inclination  of  each 

li  Ratcliff  v.   Union  Stockyards  Co.,  74  Kans.  1. 
12  Goods  used  in  this  sense  include  services. 


648  Rexford  G.  Tugwell  [December 

for  the  property  of  the  other.  But  when  markets  are  not  open  and  bar- 
gaining is  not  free,  one  party  to  the  business  contract  gains  something 
at  the  other's  expense. 

Perfectly  free  competition  and  complete  monopoly  are  equally  rare 
phenomena;  neither  is  descriptive  of  most  business  situations.  But 
the  tendency  to  decreasing  costs  as  production  is  enlarged  leads  to 
combination  for  the  pupose  of  effecting  the  economies  of  large  scale 
business.  In  the  pursuit  of  these  economies  a  partial  control  of  supply 
may  give  the  business  an  incidental  power  over  price.  There  is  noth- 
ing to  prevent  the  combination  which  gained  its  power  legitimately 
enough  in  the  lowering  of  production  expense  per  unit,  from  using  it 
for  another  purpose — the  restriction  of  supplies  and  the  control  of 
price — thus  securing  to  itself  gains  at  the  expense  of  the  actual  and 
potential  consumers  of  its  product. 

If  the  question  should  arise:  why  is  it  necessary  to  secure  a  wide 
and  cheap  dissemination  of  the  goods  and  services  generally  thought 
of  as  necessities,  it  need  only  be  stated  in  answer  that  these  goods  and 
services  furnish  the  materials  of  the  environment  in  which  children  grow 
and  in  which  men  and  women  live,  that  our  conduct  toward  one  another 
and  toward  the  groups  in  which  we  live  is  fundamentally  affected  by  the 
state  of  bodily  and  spiritual  nourishment  to  which  we  have  been  ad- 
justed and  in  which  we  now  find  ourselves.  The  importance  of  goods 
and  services  of  this  necessitous  character  can  hardly  be  exaggerated. 
The  problems  of  the  conflict  of  interests  in  the  market  are  important 
not  alone  to  the  persons  directly  concerned,  but  to  all  of  us.  And 
this  is  not  alone  because  we,  like  others,  cannot  escape  the  common 
needs  and  desires  which  compel  us  to  use  the  same  goods  and  the  same 
services  as  other  men,  but  also  because,  even  though  we  may  not  suffer 
because  of  economic  disadvantage,  we  still  cannot  avoid  living  in  the 
same  communities  with  those  who  do  and  in  the  long  run  cannot  escape 
a  common  responsibility  for  the  social  arrangements  which  make  pos- 
sible the  exploitation  of  consumers  by  the  purveyors  of  necessities. 

When  the  market  is  viewed  as  a  social  mechanism  rather  than  as  a 
private  one,  and  the  reasons  why  it  must  be  social  and  cannot  be  private 
are  clearly  envisaged,  the  problems  of  price  and  service  control  attain 
a  new  importance.  Consider,  for  instance,  the  relationship  of  the  price- 
fixing  process  to  the  income  (the  real  income  in  the  satisfactions  got 
from  using  goods  and  services)  of  the  persons  in  the  community.  One 
of  the  fundamental  reasons  for  the  stressing  of  that  phase  of  economics 
which  has  to  do  with  the  apportionment  of  income,  has  to  do  with  men's 
struggles  to  provide  themselves  with  more  generous  quantities  of  goods 
and  services.  But  this  can  never  be  successful  so  far  as  higher  wages 
are  concerned,  for  instance,  so  long  as  higher  wages  are  thought  of  as 


1921]  The  Economic  Basis  for  Business  Regulation  649 

increasing  the  expenses  of  production  and  as  an  incentive  to  the  man- 
agers of  business  to  use  whatever  monopoly  powers  they  possess  to 
raise  prices.  The  struggle  is  futile.  No  more  of  the  satisfactions  of 
life  come  out  of  it  for  the  wage  workers.  But  when  the  problem  is  at- 
tacked with  the  idea  of  restoring  the  consumers'  power  in  bargaining,  a 
beginning  has  been  made  in  securing  to  men  as  consumers  more  gen- 
erous supplies  of  those  satisfaction-yielding  goods  about  which,  in  re- 
ality, the  whole  industrial  struggle  revolves. 

The  controls  which  arise  under  the  conception  of  the  existence  of  a 
public  interest  in  business  transactions,  are,  in  reality,  economic  weap- 
ons of  the  consumers,  though  the  results  are  achieved  through  the 
agency  of  the  theoretically  impartial  state.  It  is  conceived  by  some 
persons  that,  by  such  interference  in  the  interest  of  consumers,  the  state 
violates  its  rule  of  impartiality ;  but  this  view  identifies  impartiality 
with  inactivity.  To  be  impartial  in  this  case  the  state  must  act.  There 
is  a  separation  of  the  interests  of  producers  and  consumers ;  the  insti- 
tution of  public  controls  is  a  recognition  of  this  conflict  of  tendencies 
and  a  way  of  protecting  the  right  of  consumers  to  a  certain  standard 
of  living. 

The  courts  have  moved  steadily  in  this  direction.  A  long  list  of 
businesses  formerly  private  have  become  public  utilities  under  the  com- 
mon law;  and  the  courts  have  shown  a  disposition  to  permit  regulations 
of  businesses  by  legislative  statute  under  the  police  power  to  a  greater 
and  greater  extent.  There  is  some  evidence  that  the  courts  have  felt 
themselves  running  counter  to  accepted  economic  opinion,  which  they 
took  to  be  laissez  faire;  and  there  is  some  defiance  in  their  attitudes  as 
they  have  extended  the  scope  of  market  interference.  It  may  be  seen, 
for  instance,  in  Judge  Pound's  words : 

"While  in  theory  it  may  be  said  that  the  building  of  houses  is  not  a 
monopolistic  privilege;  that  houses  are  not  public  utilities  like  railroads 
and  that  if  the  landlord  turns  one  off  another  may  take  him  in;  that 
rents  are  fixed  by  economic  rules  and  the  market  value  is  a  reasonable 
value;  that  people  often  move  from  one  city  to  another  to  secure  bet- 
ter advantages;  that  no  one  is  compelled  to  have  a  home  in  New  York; 
that  no  crisis  exists ;  that  to  call  the  legislation  an  exercise  of  the  police 
power  when  it  is  plainly  a  taking  of  private  property  for  private  use 
without  compensation  is  a  mere  transfer  of  labels  which  does  not  affect 
the  nature  of  the  legislation,  yet  the  legislature  has  found  that  in  prac- 
tice the  state  of  demand  and  supply  is  at  present  abnormal;  that  no1 
one  builds  because  it  is  unprofitable  to  build;  that  there  are  those  who 
seek  the  uttermost  farthing  from  those  who  choose  to  live  in  New  York 
a?id  pay  for  the  privilege  rather  than  go  elsewhere;  and  that  profiteer- 
ing and  oppression  have  become  general.     It  is  with  this  condition  and 


650  Rexford  G.  Tugwell  [December 

not  with  economic  theory  that  the  state  has  to  deal  m  the  existing  emer- 
gency."1* 

Such  constraint  could  only  arise  from  the  conception  that  economic 
theory  has  nothing  to  do  with  such  facts  as  Judge  Pound  cites.  It  hap- 
pens, however,  that  economic  theory  is  broad  enough  to  include  mo- 
nopoly as  well  as  laissez  faire  and  to  account  for  its  effects  in  the 
market.  Economists  know  there  is  a  separation  of  interests;  and  that 
monopoly  powers  may  be  exercised  to  the  harm  of  consumers ;  and  they 
know  too  that  the  application  of  the  remedy  would  be  more  clearly 
understood  if  the  economic  principles  really  involved  in  regulation  were 
more  widely  apprehended.  It  is  the  modern  tendency  toward  combina- 
tion, toward  larger-scale  business,  under  the  compulsion  of  the  principle 
of  decreasing  costs — and  the  use  of  the  power  thus  gained  for  exploi- 
tative purposes  that  poses  the  problem  of  control.  And  the  purpose 
of  control,  therefore,  is  to  remove  this  possibility  of  exploitation.  It  is 
not,  as  some  imagine,  to  interfere  with  the  tendency  toward  combina- 
tion which  may  be  set  down  as  inevitable ;  but  merely  to  make  sure  that 
a  power  gained  adventitiously  by  business  is  not  used  to  the  detriment 
of  those  whom  the  business  serves. 

III.   The  discovery  of  monopoly. 

The  disadvantage  of  consumers  in  dealing  with  the  purveyors  of  the 
goods  and  services  they  need  gives  rise  to  what  the  courts  call  the  pub- 
lic interest  in  business ;  this  appears  from  the  analysis  of  the  conflict 
of  interests  in  the  market.  And  the  cause  of  this  economic  harm  to 
consumers  lies  in  the  influence  of  monopoly  upon  price.  But  whether 
there  is  monopoly  in  a  market,  with  its  concomitants  of  restriction  of 
supply  and  control  of  price,  cannot  be  determined  by  investigation  of 
less  than  the  whole  of  a  market  situation.  By  this  it  is  meant  that  in- 
vestigations of  business  units  as  such  cannot  reveal  the  presence  of 
monopoly  unless  the  relations  of  the  business  to  the  whole  of  the  market 
can  be  revealed.  By  looking  at  the  business  itself  a  judgment  of  its 
monopoly  powers  cannot  be  arrived  at.  The  total  need  for  the  good 
or  service,  the  total  possible  and  actual  supply  of  it,  and  the  part  the 
particular  business  plays  in  the  whole  process  is  the  only  possible  basis 
for  judgment. 

Legal  preoccupation  has  usually  been  with  single  business  units  be- 
cause cases  often  come  before  the  courts  in  that  way.  It  is  said  that 
this  or  that  business  is  a  monopoly  and  suit  is  brought  against  it.  The 
judicial  opinion  has  to  do  with  the  particular  business  in  question.  This 
is  one  reason  for  the  failure  of  the  anti-trust  acts  to  secure  the  public 

13  People  ex  rel  Durham  Realty  Corp.  v.  La  Fetra:  from  a  transcript  of  the 
original  opinion  of  Judge  Pound.     (Italics  are  the  author's.) 


1921]  The  Economic  Basis  for  Business  Regulation  651 

interest  in  business.  It  has  been  assumed  that  only  if  a  business  was  big 
enough  actually  to  monopolize  or  if  a  conspiracy  between  business  units 
could  be  proved  was  there  sufficient  reason  for  public  action ;  and  even 
then  action  could  be  only  repressive. 

There  is  a  different  theory  altogether  implied  in  regulation  under 
the  police  power  and  under  public  utility  law  as  it  has  come  to  be  ap- 
plied under  the  rule  of  the  phrase  "affected  with  a  public  interest." 
And,  indeed,  the  way  of  regulation,  if  it  is  really  to  secure  the  public 
interest,  should  not  be  the  way  of  dissolution  and  suppression  of  par- 
ticular organizations  engaged  in  business.  The  good  or  service  should 
be  the  basis  for  regulation.  The  sovereign  state  should  be  perfectly  im- 
personal toward  the  business  unit.  It  should  remember  that  what  the 
public  interest  demands  is  the  wide  dissemination  and  the  cheap  avail- 
ability of  necessities.  And  the  means  of  regulation  to  secure  this  public 
interest  are  to  this  end  and  not  to  the  end  of  breaking  up  some  really 
serviceable  business  unit  engaged  in  dealing  in  the  good  or  service.  The 
part  the  business  plays  will  only  be  touched  in  following  up  the  stream 
to  its  source.    And  there  may  be  more  than  one  source. 

Confusion  of  the  business  with  the  function  it  serves  has  made  a  dif- 
ference in  our  theory.  It  is  the  business  that  has  been  stressed;  it  is 
the  function  that  ought  to  have  been  stressed.  Production  is  organized 
fundamentally  about  the  supplying  of  the  needs  of  society ;  regulation 
is  interested  also  in  the  free  flow  of  the  instruments  which  meet  these 
needs.  It  is  not,  except  incidentally,  interested  in  the  persons  or  organ- 
izations that  supply  them. 

Suppose  an  investigation  of  the  supplies  of  a  certain  necessity  sus- 
pected of  having  been  monopolized;  suppose  also  a  monopoly  situa- 
tion to  be  suspected  because  of  strange  rises  in  the  price  or  sudden  short- 
ages in  the  supply  of  it ;  suppose  further  that  there  are  found  within  a 
given  market  five  businesses  supplying  it.  The  investigating  body  con- 
cerned with  regulation  goes  to  each  business  in  turn  and  investigates 
thoroughly  its  processes  and  methods.  Nothing  irregular  is  discovered. 
May  it  therefore  be  concluded  that  there  is  no  monopolization  of  the 
product?  No  restriction  of  supply?  No  control  of  price?  There  is 
no  monopoly.  But  that  the  product  is  monopolized  appears  from  the 
movements  of  the  price  of  the  product. 

One  definition  of  monopoly  is :  ".  .  .  single-handed  control  over  the 
total  supply."14  But  this  kind  of  monopoly  has  been  shown  by  investi- 
gation not  to  be  present.     Is  there  another  type  of  monopoly? 

There  is,  for  instance,  this  one:  "Absolute  monopolies  are  those  in 
which,  by  law  or  ownership  of  all  the  sources  of  supply,  the  holder's 
control  is  complete.  Industrial  monopolies  are  those  in  which  the  con- 
14  Taussig,  Principles  of  Economics,  vol.  II,  p.  107. 


652  Rexford  G.  Tugwell  [December 

trol  over  the  supply,  while  not  complete,  is  yet  effective  enough  to  bring 
about  a  state  of  things  different  from  that  of  competition,  in  which, 
even  though  there  be  no  legal  or  natural  restriction,  the  nature  of  the 
operations  is  such  that  competition  is  wholly  removed,  or  operative  only 
to  a  limited  degree."15 

Here  is  a  definition  of  monopoly  that  may  take  account  of  our  sup- 
posed situation.  One  of  the  five  businesses  may  control  such  a  prepon- 
derance of  the  supply  that  the  others  will  submit  tacitly  to  its  leader- 
ship ;  there  may  be  a  gentlemen's  understanding,  wholly  without  con- 
spiracy. Either  of  these  or  any  one  of  many  other  ways  may  have  been 
taken  to  gain  the  result. 

But  for  the  justification  of  regulation,  if  its  justification  lies  in  a 
harm  to  the  public  interest,  there  need  be  no  conformity  of  the  mo- 
nopoly to  any  definition.  The  essential  thing  is  the  emergent  effect  on 
prices  and  standards  of  service.  Monopoly  begins  to  explain  price  as 
soon  as  there  is  any  restriction  of  competition  whatever  from  any  cause; 
and  when  there  is  restriction  the  law  of  competitive  price  ceases  to  be 
of  value  as  an  explanation. 

The  harm  to  consumers  arises  out  of  a  separation  of  interests  and  a 
power  of  sellers  over  prices ;  it  begins  to  appear  whenever  there  is  any 
monopoly  influence  on  prices.  Taussig  calls  this  "industrial"  monop- 
oly. There  are  reasons  why  this  is  not  a  really  descriptive  term ;  but 
they  need  not  be  discussed  here.  The  important  thing  for  the  present 
purpose  is  to  see  that  consumers  may  be  harmed  in  their  economic  in- 
terest by  agencies  amenable  to  no  other  controls  than  those  being  im- 
posed under  the  rule  of  their  classification  as  "affected  with  a  public 
interest." 

IV.  The  power  of  substitution. 

It  might  very  well  be  argued,  and  often  is,  that  the  consumer  has  an- 
other defense  than  public  regulation,  one  much  more  easily  brought  into 
play  and  involving  no  expensive  and  bothersome  interference  with  busi- 
ness— the  power  of  substitution.  If  the  prices  of  goods  and  services 
rise  too  high,  it  might  be  said,  there  are  a  great  variety  of  others;  and 
these  others  may  even  be  less  costly.     Why  not  substitute? 

This  may  often  be  done,  it  is  true;  and  sometimes  consumers  are  not 
only  as  well  off  for  the  change  but  actually  better  off.  Instances  are 
plentiful.  The  expense  of  providing  meat  for  the  family  table  has  risen 
greatly  in  recent  years  and  foods  have  been  substituted  which  have  a 
better  physiological  effect  and  are  cheaper.  Meat  was  necessary  in 
the  diet  of  out-door  workers;  it  is  much  less  necessary  in  more  sedentary 
factory  occupations.     Here  was  a  case  where  a  clear  gain  resulted  from 

is  Ibid.,  vol.  II,  p.  107. 


1921]  The  Economic  Basis  for  Business  Regulation  653 

the  substitution  process.  But  there  seems  to  be  no  guarantee  that  such 
a  gain  will  result  in  every  case.  Nor,  when  artificial  control  of  price 
enters,  is  there  any  indication  in  the  price  curve  of  the  exhaustion  of 
resources  or  of  other  basic  reasons  why  consuming  habits  ought  to  be 
forced  to  a  change.  If  rising  prices  were  a  sure  indication  that  land 
of  a  less  productive  sort  is  being  forced  into  use  to  supply  our  appe- 
tites and  that  it  is  becoming  more  difficult  to  produce  because  of  the 
obstructions  placed  in  the  way  by  nature,  then  the  rise  in  price  would 
be  doing  a  service  in  forcing  many  people  to  turn  wholly  or  in  part  to 
other  sources  of  satisfaction.  But  when  price  merely  represents  an 
arbitrary  limitation  of  supply,  a  conscious  withholding  from  the  market, 
it  does  not  measure,  as  it  otherwise  would,  any  decline  in  production  ad- 
vantage.    It  has  nothing  to  do  with  the  niggardliness  of  nature. 

There  seems  to  be  no  defensible  reason  why  consumption  habits  should 
be  compelled  to  change  so  that  some  one,  or  even  a  group  of  persons, 
may  gain  a  profit.  The  power  of  substitution  is  a  real  weapon  of  man 
against  the  parsimonies  of  earth;  but  in  a  well-organized  social  group, 
consumers,  it  would  seem  by  any  canons  of  ethics,  ought  not  to  be  left 
without  other  recourse  than  this  against  the  artificial  manipulations  of 
prices  which  are  a  part  of  the  executive  scheme  of  modern  businesses. 

We  may  inquire  what  are  the  limitations  within  which  consumers  may 
invoke  the  power  of  substitution  harmlessly.  When  dietitians  agree 
that  milk  is  a  necessity  for  growing  children  and  that  there  is  no  ef- 
fective substitute  known,  we  may  presume  that  there  would  be  a  posi- 
tive harm  in  the  substitution  for  milk  of  other  food  materials.  Like- 
wise when  the  family  kitchen  is  equipped  with  facilities  for  cooking  with 
gas,  there  is  a  harm  in  invoking  the  power  of  substitution  against  high 
rates  for  gas  and  turning  to  coal  or  electric  ranges.  It  involves  ex- 
pensive re-equipment  of  the  domestic  plant — so  expensive  that  a  gas 
company  might  figure  on  a  very  little  less  use  of  gas  with  some  slight 
increase  in  rates.  When  one  is  compelled  to  go  on  a  journey,  there  is 
no  really  good  substitute  for  the  railway  train  which  runs  directly  to 
the  destination.  There  are  reasons  why  substitution,  though  in  many 
cases  a  real  and  effective  weapon,  ought  not  to  be  used  as  an  instru- 
ment by  consumers  in  coercing  the  purveyors  of  necessities.  Certain 
limits  designate  themselves :  they  may  be  formulated  somewhat  as  fol- 
lows: 

1.  The  limit  set  by  the  natural  productivity  of  the  region  of  the 
market.  Society  ought  not,  by  reason  of  artificial  limitation  of  supply, 
to  be  forced  to  substitute  for  the  materials  nature  assists  us  most  in 
producing,  those  which  she  assists  us  less  in  producing. 

2.  The  limit  set  by  the  state  of  the  industrial  arts.  Comparable  with 
the  limitations  fixed  by  nature  are  those  set  by  our  state  of  advance- 


654  Rexford  G.  Tugwell  [December 

ment  in  civilization.  In  fact  we  have  come  so  far  in  productive  effi- 
ciency and  no  farther.  By  reason  of  humanly  restricted  supplies  we 
ought  not  to  have  to  choose  things  produced  under  such  difficult  con- 
ditions of  technique  as  would  add  to  their  expense. 

3.  The  limit  set  by  expert  definition  of  what  is  desirable  in  the  cir- 
cumstances in  which  we  find  ourselves.  If  fresh  eggs  are  prescribed  by 
the  physician  for  the  invalid,  or  milk  for  children  by  the  dietitian,  or 
a  certain  number  of  cubic  feet  of  air  space  per  individual  by  the  hous- 
ing expert,  substitution  ought  not  to  be  invoked  to  change  the  reasoned 
judgment  of  the  expert  in  these  definite  social  adjustments. 

But  if,  as  a  part  of  the  nature  of  our  developing  economic  system, 
there  is  this  control  of  supplies  and  consequent  increase  of  prices  when 
the  consumer  is  under  rigorous  compulsion  to  buy,  the  power  of  substi- 
tution, however  harmful  in  the  long  run,  would  necessarily  have  to  be 
resorted  to  if  there  did  not  exist  as  a  remedy  the  power  of  the  state  to 
regulate  business  in  the  interest  of  the  economic  welfare  of  its  citizens. 
The  conditions  we  have  described  create  a  public  interest  in  the  busi- 
ness. The  courts  will  recognize  as  valid  a  legislative  statute  fixing 
prices  or  regulating  service  in  such  a  business ;  or,  if  the  business  can  be 
shown  to  possess  certain  likenesses  to  other  businesses  already  public 
utilities,  it  may  be  regulated  under  the  common  law  without  legislative 
statute,  simply  by  a  case  being  brought  in  the  courts,  and  judicial 
recognition  of  the  nature  of  the  business  being  gained.  This,  however, 
is  a  rare  modern  procedure.  For  the  most  part,  regulations  are  made 
by  legislative  authority  under  the  economic  interest  phase  of  the  police 
power. 

V.  The  difficulties  of  regulation. 

It  has  been  one  objection  to  the  regulation  of  business  that  the  diffi- 
culties encountered  are  so  great  as  to  make  the  expense  of  regulation 
greater  than  the  savings  to  consumers.  Whether  or  not  this  is  so,  there 
is  a  great  deal  of  regulation  under  way;  enough  so  that  it  is  clearly  a 
part  of  our  politico-economic  system.  And  the  nature  of  the  difficulties 
encountered  may  be  analyzed. 

The  price-fixing  body,  if  it  is  not  to  incur  the  penalties  for  the  dis- 
regard of  economic  forces,  must,  in  practice,  calculate  the  necessary  or 
desirable  supply  first  and  then  proceed  to  the  fixing  of  a  price  which 
will  bring  in  that  producer  whom  economists  call  marginal — the  pro- 
ducer who  rounds  out  the  supply :  this  supposing  there  is  more  than  one 
producer  in  the  single  market.  If  there  be  but  one  producer  a  price 
must  be  allowed  which  will  still  cover  the  expenses  of  production  of  the 
dearest  portion  of  the  supply.  If  all  of  it  is  produced  under  the 
same  conditions,  the  expense  of  producing  every  unit  will  be  the  same; 


1921]  The  Economic  Basis  for  Business  Regulation  655 

but  if  there  are,  for  instance,  a  number  of  plants  and  the  output  of  all  of 
them  is  needed,  it  will  be  necessary  to  fix  a  price  which  will  cover  the  ex- 
penses of  production  for  the  goods  turned  out  by  the  least  efficient  of 
them.  And  this  is  a  true  instance  in  the  sense  that  it  illustrates  the 
lack  of  uniformity  in  conditions  of  production.  No  two  plants  are  quite 
alike ;  no  two  firms  operate  under  quite  the  same  advantages  or  difficul- 
ties. But  it  is  the  least  efficient  plant,  the  firm  with  the  greatest  diffi- 
culties, which  fixes  the  price  that  must  be  allowed.  This  is  so  because 
the  part  of  the  supply  produced  in  this  way  is  needed  quite  as  much  as 
the  part  produced  under  favorable  conditions  (and  less  expense)  if  the 
full  supply  is  to  be  forthcoming. 

There  can  be  only  one  price  in  a  market  at  one  time :  this  is  an  axiom 
of  economics.  And  if  this  price  is  to  be  fixed  with  any  idea  of  bringing 
in  the  needed  supply,  the  most  expensive  part  of  its  production  must  be 
allowed  for. 

This  most  expensive  part  is  the  marginal  supply.  It  is  true  that 
there  will  be  a  profit,  possibly  a  large  one,  on  the  infra-marginal  por- 
tions produced  under  the  more  favorable  conditions.  But  this  cannot 
be  avoided  so  long  as  industry  is  privately  operated.  And  even  if  in- 
dustry were  not  privately  operated,  this  surplus  would  still  appear, 
though  it  would  not  be  disbursed  to  private  individuals  as  dividends ; 
there  would  still  be  a  marginal  portion  and  infra-marginal  portions  as 
long  as  there  were  different  costs  of  production  per  unit  of  product. 
It  might  be  noted  in  passing  that  this  infra-marginal  profit,  or  pro- 
ducers' surplus  as  it  is  sometimes  called,  is  reachable  under  income 
taxes  so  that,  although  the  consumer  contributes  to  the  producers'  sur- 
plus, this  surplus  may  be  tapped  to  assist  in  paying  for  the  expenses  of 
government,  thus  reducing  the  taxes  consumers  would  otherwise  have  to 
pay.  The  producers'  surplus  is  the  social  fund  which  supports  civi- 
lization and  adds  to  the  richness  of  economic  life,  whether  industry  be 
privately  or  publicly  owned. 

The  determination  of  the  supply  needed  is  the  starting  point ;  and 
this  must  be  followed  by  a  study  of  comparative  producing  expenses 
to  determine  just  where  the  margin  of  production  lies.  Once  this 
margin  is  discovered  a  price  may  be  set  which  will  cover  the  marginal 
expense  and  allow  the  current  and  customary  rate  of  profit.  This 
should  serve  to  call  out  the  needed  supply.  If  it  does  not,  the  regulat- 
ing body  will  be  forced  to  raise  the  profit  incentive;  or  if  this  fails 
within  reasonable  limits,  it  may  be  forced  to  recommend  to  the  state 
that  it  take  over  and  itself  operate  the  industry. 

The  determination  of  the  needed  supply  involves  difficult  social  meas- 
urements, as  such  regulating  bodies  as  state  utilities  commissions  and 
the  Interstate  Commerce  Commission  have  had   occasion   to   discover. 


656  Rexford  G.  Tugicdl  [December 

There  arises  at  the  very  beginning  an  almost  insuperable  difficulty. 
Who  is  to  say  how  much  of  any  good  or  service  is  needed?  Shall  the 
figures  of  past  consumption  be  taken  as  a  guide?  Or  shall  new  and 
more  ideal  conditions  be  forecast  and  consumption  needs  be  estimated 
in  the  new  environment?  This  is  merely  the  contrast  between  expert 
judgment  and  mass  judgment.  If  one's  bias  is  toward  democracy  in 
the  determination  of  living  standards,  deductions  from  the  statistics  of 
past  consumption  will  be  sufficient ;  but  if  one  feels  that  most  people  are 
ill-prepared  to  assume  the  responsibility  of  social  living,  that  they  live 
unwisely  and  too  well  (or  too  poorly),  he  will  not  care  to  be  guided  by 
past  experience.     He  will  desire  a  new  set  of  criteria. 

So,  it  may  be  seen,  there  are  difficulties  even  in  the  determination  of 
what  is  needed,  of  how  great  a  supply  is  desirable,  quite  aside  from  all 
the  difficulties  involved  in  accuracy  of  judgment  as  to  what  will  happen 
when  consumers  are  faced  with  new  conditions.  There  is  probably  no 
one  answer  to  this  question,  but  it  may  be  suggested  that  unless  a 
regulating  commission  is  prepared  to  enforce  its  desires  upon  consumers 
as  well  as  upon  producers,  it  has  no  other  alternative  than  to  be  guided 
by  the  facts  of  past  consumption  by  these  same  consumers.  For  their 
habits  and  predilections  will  not  greatly  change  in  any  short  period. 

There  is  one  large  guiding  principle  left  for  it :  that  it  must  con- 
stantly endeavor  to  have  price  really  represent  the  favor  in  which  cer- 
tain goods  and  services  are  held  by  nature.  This  principle  has  been  re- 
ferred to  before.  Price,  under  a  purely  competitive  regime,  would  be 
representative  of  the  advantage  or  disadvantage  of  producing;  under 
the  influence  of  monopoly,  price  ceases  to  represent  anything  of  the 
sort.  It  becomes  the  tool  of  the  monopolist.  Regulation  will  not  be 
successful  that  does  not  perceive  and  hold  to  a  system  of  prices  which 
represents  this  natural  determination. 

The  difficulties  of  regulation  are  therefore  twofold ;  to  see  that  the 
necessary  supply  is  provided,  involves  a  study  of  consumption  habits 
under  various  conditions ;  and  to  see  that  price  does  not  vary  greatly 
from  the  norm  that  it  would  follow  naturally,  involves  study  of  pro- 
ducing expenses  under  various  other  conditions.  These  two  principles 
may  conflict  and  may  require  delicate  adjusting;  but  the  controlling 
principle  would  usually  be  the  attempt  to  force  consumption  habits  as 
gently  as  possible  into  the  channels  of  least  cost,  using  price  as  the 
lever.  For  people  will  gradually  abandon  expensive  consumption  in 
favor  of  cheaper ;  only  there  is  the  danger  that  certain  consumptions 
are  more  expensive  not  because  of  less  aid  from  nature  but  because  of 
manipulation  of  the  market  by  monopolists.  For  this  process  of  adjust- 
ment and  insurance  against  exploitation,  the  regulating  commission  is 
a  ready  instrument.     And  in  following  this  principle,  although  the  com- 


1921]  The  Economic  Basis  for  Business  Regulation  657 

mission  may  be  the  cause  of  change  in  consumption  habits,  the  change 
will  not  be  one  which  the  commission  merely  believes  to  be  desirable. 
It  makes  no  war  on  the  predilection  and  choice  of  people  except  such 
as  is  determined  for  it  by  outside  forces.  It  does  not  say  to  people: 
this  or  that  good  is  not  desirable  for  you.  It  simply  says,  in  effect: 
if  you  insist  on  using  expensive  goods  you  will  have  to  pay  a  high  price. 
Then  there  enters,  as  the  defense  of  consumers,  the  power  of  substitu- 
tion.   And  these  are  the  legitimate  uses  of  this  power. 

Such  a  commission  begins  its  work  by  instituting  a  regular  service 
for  the  reporting  of  prices  and  the  volumes  of  trade  at  these  prices ;  it 
thus  arrives  at  a  notion  of  the  behavior  of  its  constituency  in  given  situ- 
ations. When  an  adequate  body  of  such  statistics  has  been  built  up 
it  has  authority  for  its  estimate  of  future  consumption  at  different 
prices  under  the  assumption  that  vagaries  of  taste  will  average  out  in 
the  long  run  and  that  consumers  are  fairly  consistent  in  their  consum- 
ing behavior.  The  study  of  production  costs  has  to  be  similarly  be- 
gun by  insistence  on  uniform  accounting  methods  and  standardized  re- 
ports. And  this  precedure  is  made  difficult  by  the  growing  importance 
in  expanding  industries  of  the  phenomenon  of  joint  expenses  and  of  the 
changing  proportions  of  direct  and  indirect  expenses  in  the  whole  vol- 
ume of  expense;  but  it  can  be  accomplished  by  the  taking  of  infinite 
pains. 

The  process  of  price  regulation  itself  begins  with  the  estimation  of 
needed  supplies  based  on  consumption  statistics ;  the  regulating  body 
must  then  allow  a  price  which  will  bring  in  the  whole  of  that  supply. 
In  doing  this  accurately,  it  will  be  found  that  the  lines  of  the  natural 
determination  of  price  are  being  followed ;  and  when  actual  expenses  of 
production  rise,  prices  will  rise  and  consumption  will  be  lessened.  It 
might  be  said  that  a  commission  charged  with  price  fixing  need  therefore 
only  consider  the  expense  of  producing  the  supply  and  that  the  principle 
of  the  adjustment  of  price  to  natural  determination  will  follow;  but  this 
might  or  might  not  be  true.  Price  fixing  is  a  human  procedure  and  the 
results  of  departure  from  the  natural  norm  though  sure  and  costly  are 
not  immediately  apparent.  Consumers  might  very  conceivably  bring 
pressure  to  bear  to  keep  down  the  price  of  what  are  considered  neces- 
sities. The  principle  for  this  reason  has  to  be  kept  in  mind  as  the 
ultimately  most  important ;  although  the  immediate  reason  for  price 
fixing  is  usually  reaction  from  the  arbitrary  exploitation  of  consumers. 

The  commission  form  of  regulation  has  been  referred  to ;  and  as  a 
general  rule  it  seems  superior  to  the  method  of  fixing  prices  in  the 
statutes  of  legislatures  because  of  the  inflexibility  of  a  price  fixed  once 
and  for  all.  Inflexibility  might  very  easily  defeat  the  aims  of  price 
fixing.  A  commission  with  power  to  regulate  may,  from  time  to  time, 
at  indefinite  intervals  and  as  often  as  need  be,  readjust  rates  to  con- 


658  Rexford  G.  Tug-well  [December 

form  to  changing  conditions  of  expense  in  producing  or  of  habits  of 
consuming;  or  to  shif tings  of  particular  prices  relative  to  the  general 
level  of  price  movements.  And  all  of  these  seem  necessary  to  really  suc- 
cessful regulation. 

The  objection  to  regulation  so  often  made,  that  the  expense  of  regu- 
lating is  greater  than  the  savings,  has  been  referred  to.  This  may  very 
well  be  a  valid  objection  unless  the  functions  of  a  regulating  commis- 
sion are  performed  with  care  and  accuracy  and  with  a  sure  knowledge 
of  the  results  desired.  It  is  sometimes  urged  as  a  failure  of  democracy 
that  it  blunders  into  and  through  whole  social  policies  without  adequate 
study  and  evaluation  and  without  any  sufficiently  definite  conception 
of  the  results  that  are  desired. 

The  Sherman  Anti-trust  act  and  the  Clayton  act  cannot  be  said  to 
have  been  highly  successful  as  we  review  their  results.  The  regulation 
of  businesses  affected  with  a  public  interest,  a  method  of  control  be- 
coming more  and  more  important,  is  another  attempt  to  make  the  nec- 
essary contact  of  politics  with  industry ;  its  protagonists  feel  it  to  be 
conceived,  in  contrast  with  the  anti-trust  acts,  both  more  constructively 
and  less  repressively  and  to  have  a  greater  chance  for  success.  But 
that  chance  ought  to  be  discussed  thoroughly  and  weighed  well  before 
embarkation  on  the  policy  is  begun.  It  is  perhaps,  too  late  for  that; 
the  policy  is  already  in  wide-spread  operation.  But  the  aims  and  diffi- 
culties still  to  be  defined  and  met  are  many  and  more  discussion  is 
needed.  The  legislatures  have  shown  a  disposition  to  apply  the  rule  of 
regulation  piecemeal  and  haphazard  in  emergency  situations  with  a  re- 
mainder of  half-hearted  regulation  after  the  emergency  has  passed, 
rather  than  any  desire  to  consider  well  and  extend  the  policy  experi- 
mentally to  determine  its  advantages  and  its  dangers.  This  can  hardly 
be  said  to  be  good  statesmanship.  And  the  courts,  in  betraying  a 
defiant  attitude  toward  what  they  call  "economic  theory,"  have  given 
the  impression  sometimes  that  such  regulations  of  modern  business  as 
they  approve  are  contrary  to  accepted  economic  opinion.  But  it  is 
economics,  as  a  matter  of  fact,  that  provides  the  theoretical  basis  for 
such  regulations.  The  tendency  to  increasing  returns  in  certain  mod- 
ern industries  is  not  a  new  dynamic  generalization ;  nor  is  it  only  re- 
cently that  economists  have  discovered  that  competition  is  not  always 
present  in  the  market  to  protect  consumers.  When  it  is  not  present 
and  buyers  are  subjected  to  "oppression,"  there  exists  a  situation — 
and  an  economic  situation — in  which  the  state  not  only  may  legitimately 
interfere  in  the  public  interest,  but,  indeed,  must  interfere,  if  serious  and 
widespread  consequences  in  restricted  consumption  and  lowered  morale 
are  not  to  be  incurred. 

Rexford  G.  Tugwell. 

Columbia  University. 


COMMUNICATION 

Wages,  Budgets,  Cost  of  Living 

The  leading  article  in  the  September  number  of  the  American  Economic 
Review  asks  the  question,  "Were  real  wages  higher  at  the  conclusion  of 
the  war  than  they  were  at  its  beginning?"  and,  as  its  finding,  declares  that 
"the  purchasing  power  of  the  established  week's  work"  in  1918  was  less 
than  in  1915  and  that  "American  labor,  as  a  whole"  was  compelled  during 
the  war  "to  run  faster  in  order  to  stay  in  the  same  place." 

This  conclusion  may  be  wholly  tenable  but,  I  submit,  it  is  by  no  means 
proved  by  the  budget  data,  index  numbers  and  wage  statistics  presented  for 
that  purpose.  Another  study  in  the  same  issue  of  the  Review1  gives  timely 
caution  against  accepting,  without  qualification,  the  very  budget  figures 
which  are  there  employed  to  set  up  a  theoretical  living  cost  for  wage  com- 
parisons. 

In  an  article  entitled  "What  is  the  Cost  of  Living?"2  I  pointed  out,  many 
years  ago,  some  of  the  difficulties  involved  in  answering  this  question  and 
in  the  use  of  such  material.  "That  any  one  particular  sum  can  ever  be  estab- 
lished as  the  average  cost  of  living  is  as  little  to  be  expected  as  that  the 
physiologist  will  be  able  to  determine  the  invariable  minimum  quantity  and 
quality  of  food  necessary  to  sustain  human  life;  there  are  too  many  modi- 
fying circumstances — age,  sex,  race,  habits,  climate,  etc. — that  certain  limits 
are  set  to  every  investigation  although,  within  those  limits,  valuable  results 
may  be  obtained." 

From  practical  experience  in  negotiating  wage-scale  contracts,  princi- 
pally in  the  printing  trades,  and,  in  four  or  five  instances,  taking  them 
through  original  and  appellate  arbitration  proceedings,  perhaps  I  can  open 
up  certain  viewpoints  not  always  visible  on  the  surface. 

1.  It  goes  without  arguing  that  what  is  in  dispute  in  these  labor  contro- 
versies is  "real  wages"  as  disinguished  from  mere  money  payments  regard- 
less of  what  the  money  will  buy.  The  rapidly  increasing  costs  of  all  the 
things  needed  for  the  worker's  household  accentuated  the  inadequacy  of 
pre-war  wage  scales  and,  in  seeking  their  revision,  or  asking  for  bonuses, 
the  labor  spokesmen  properly  stressed  the  price  movements  as  evidence  that 
their  earnings  were  actually  shrinking.  In  a  few  negotiations,  the  trades 
unions  consented  to  insert  in  their  agreement  a  variable  wage  conditioned 
upon  index  number  changes  but,  as  a  rule,  they  refused  unyieldingly  to 
do  so,  clearly  foreseeing  that,  in  time,  price  reduction  would  mark  reversal 
of  the  situation  and  invite  demand  for  lower  wages  which  such  a  scale  would 
enforce  automatically. 

2.  There  is  no  accepted  standard  index  number  but,  on  the  contrary,  sev- 
eral such  numbers  differing  from  one  another  although,  of  course,  moving  in 

i  "Family  Budgets  and  Wages,"  p.  447. 

2  Charities  Review,  April,  1892,  then  edited  by  Dr.  John  H.  Finley. 


660  Victor  Rosewater  [December 

the  same  direction.  Price  variations  from  place  to  place  are  considerable; 
it  is  impossible  to  apply  an  average  to  localities  as  widely  separated,  and  as 
variant,  as  New  York,  Chicago,  New  Orleans  and  San  Francisco;  and  in 
each  controversy,  one  side  or  the  other  or  both  are  always  certain  its  con- 
ditions are  exceptional. 

3.  The  standard  of  living,  as  reflected  in  budget  data,  is  also  variable. 
There  is  no  standard  workman's  family,  in  size,  in  number  of  income-con- 
tributing members,  in  number  of  dependents,  their  ages,  their  health,  their 
mode  of  living,  their  requirements  for  clothing  or  personal  adornment,  recre- 
ation, etc.  Obviously,  the  standard  of  living  differs  as  between  dif- 
ferent classes  of  wage  workers,  i.e.,  skilled  and  unskilled,  in  reality,  ac- 
cording to  the  money  they  have  to  spend;  and  more  than  that,  it  differs 
greatly  within  the  same  class  and  within  the  same  craft.  Yet  each  wage 
scale  is  fixed  uniformly  for  all  the  workmen  who  come  under  it,  married  and 
single,  young  and  old,  alert  and  slow,  intelligent  and  stupid.  It  takes  no 
cognizance  of  character  of  wife  and  children,  who  may  be  thrifty  or  ex- 
travagant and  wasteful,  helpful  or  a  drag.  The  theoretical  budget  repre- 
sents average  minimum  living  costs  of  the  head  of  a  family  supporting  a 
wife  and  three  children  with  no  other  resources  or  income  and  no  outside 
help.  Plainly,  the  wage  barely  sufficient  for  this  theoretical  workman  will 
mean  a  much  easier  time  for  the  unmarried  or  childless  worker,  or  the 
family  whose  expenditures  are  met  by  several  sharing  them.  The  labor 
unions,  themselves,  recognize  this  palpable  difference  when  they  grant  a 
greater  strike  benefit  to  married  than  to  unmarried  members  and  so  also  do 
our  lawmakers  when  they  accord  married  men  greater  income-tax  exemp- 
tion than  single  men  and  raise  the  exemption  limit  still  further  for  each 
dependent  child. 

4.  Shortage  of  labor  supply,  and  consequent  more  insistent  demand  for 
labor  at  higher  wages,  induce  previous  dependents,  or  part-time  workers,  to 
become  full-time  wage  earners.  That  is  to  say,  under  such  conditions,  other 
members  of  the  workmen's  household  contribute  to  the  family  income  in 
addition  to  the  greater  earnings  of  the  regular  workers  enjoying  full  time 
and  over-time  and  extra  time  at  extra  pay.  In  the  printing  trades,  for  ex- 
ample, compositors  are  required  to  "give  out"  their  over-time  (which  is 
compensated  at  one  and  one-half  rate)  whenever  they  accumulate  eight 
hours,  but,  with  no  one  to  take  their  places  during  the  war,  the  rule  was 
a  dead-letter  much  of  the  time.  For  this  period,  there  was  no  "unemploy- 
ment" whatever. 

5.  The  percentages,  according  to  which  the  weighted  index  numbers  are 
constructed  as  showing  the  relative  outlay  of  the  average  workman's  house- 
hold for  food,  clothing,  etc.,  cannot  be  applied  as  fixed  figures,  espec- 
ially in  a  time  of  constantly  and  rapidly  changing  prices  and  money  wages. 
It  is  notorious  that  working  men,  and  others  for  that  matter,  coming  into 
an  unforeseen  increase  in  the  pay-check,  launch  into  unaccustomed  expendi- 


1921]  Wages,  Budgets,  Cost  of  Living  661 

tures  and  indulge  themselves  and  their  families  generously  in  comforts  and 
luxuries  not  before  enjoyed,  such  as  automobiles,  musical  instruments,  new 
furniture,  larger  or  better  living  quarters,  furs,  silk  shirts,  more  costly  foods, 
etc.,  quite  in  disproportion  to  the  budget  ratios.  In  a  word,  higher  wages, 
more  luxuries,  higher  living  costs,  less  disposition  to  retrench. 

6.  Even  for  index-number  wage  computations,  to  stop  with  the  year  1918 
can  not  furnish  a  true  picture  because  the  peak  of  wage  increases  was  not 
reached  till  1919  and  1920,  and  price  levels  began  immediately  thereafter 
to  recede  in  advance  of  wage  reductions. 

7.  Whether  comparative  "hourly  wages"  is  a  more  reliable  criteriou  than 
"total  weekly  earnings"  will  depend  upon  the  viewpoint — whether  of  the 
worker  or  of  the  employer.  Hourly  wages  might  suggest  that  the  man's 
time  is  compensated,  irrespective  of  how  much  work  he  turns  out,  and  that 
he  should  put  in  just  the  number  of  hours  (or  other  units  of  time)  neces- 
sary to  give  him  a  total  wage  equal  to  his  cost  of  living  according  to  his 
family  budget.  The  employer,  however,  does  not  count  the  hours  or  days, 
except  for  the  output  of  the  labor  performed  in  that  period  of  time.  A 
higher  hourly  wage  may  yield,  by  comparison,  smaller  results  through 
slackened  effort,  or  inefficiency,  or  substitution  of  less  capable  workmen  for 
those  called  into  the  ranks  for  the  war,  and  the  unit  of  cost  be  pushed  up  in 
larger  ratio  than  the  real,  or  even  the  money,  wage.  It  was  not  uncom- 
mon for  compositors  to  institute  what  they  called  a  "production  strike"  to 
enforce  demands  without  openly  breaking  a  scale  contract — by  means  of  a 
sort  of  gentleman's  agreement,  to  slow  down  to  the  "dead  line"  and  thus 
increase  the  cost  to  "the  office"  as  notice  to  "come  across."  As  a  humorous 
incident  in  one  such  case,  a  fast  operator,  unable  to  reduce  his  speed,  was 
caught  turning  in  a  "lineage,"  much  less  than  the  "clock"  on  his  machine 
registered,  to  avoid  being  suspected  of  breaking  faith  with  his  confederates 
with  whom  he  had  agreed  to  undertake  a  production  strike.  It  has  been 
many  times  developed  that  total  pay-roll  costs  in  particular  establishments 
during  the  war  increased  in  proportion  to  output  in  a  noticeably  greater  de- 
gree than  the  wage  scale  increase. 

8.  To  the  employer,  there  are  other  labor  cost  factors  besides  wages — in- 
dustrial accident  insurance,  sickness  and  vacation  allowances,  retirement 
pensions,  group  life  insurance  premiums,  prosperity  bonuses — all  taking 
money  and  perhaps  saving  an  expense  to  the  workman,  but  never  calculated 
as  contents  of  the  pay  envelope.  Equally  important  to  the  employees,  and 
often  still  more  costly,  are  the  shop  practices  or  rules  that  make  the  work 
more  expensive  to  produce,  the  artificial  demarcation  of  jurisdiction  be- 
tween different  crafts,  the  requirement  of  excessive  crews  to  man  certain 
machinery,  protecting  a  "stint"  for  a  full-pay  journeyman  that  can  as  well 
be  performed  by  an  unskilled  person  or  by  an  apprentice — all  tending  to 
create  "jobs"  or  compel  high-priced  overtime. 

9.  The  fact  should  not  be  overlooked,  moreover,  that  each  class  of  labor, 


662  Victor  Rosewater  [December 

whenever  possible,  takes  advantage  of  its  strategic  position  to  advance  its 
own  rank  relative  to  other  classes.  In  the  days  of  direst  shortage,  com- 
mon labor  often  exacted  higher  wages  than  artisans  possessing  skill  ac- 
quired only  by  years  of  training.  It  is  of  record  for  one  city,  not  likely 
to  be  alone  in  this  respect,  that  electrical  wiring  men,  who  at  the  outbreak 
of  the  war  were  receiving  $4.00  a  day,  as  against  brick-layers  earning 
$6.00  a  day,  at  the  close  were  getting  $10.00,  the  same  as  the  bricklayers; 
the  wage  increase  for  one  was  150  per  cent  and  for  the  other  only  66  per 
cent.  In  many  areas,  the  customary  $3-a-week  differential  of  newspaper 
compositors  above  job  office  compositors  was  eliminated  and,  here  and  there, 
stereotypers  and  pressmen,  previously  paid  below  compositors,  brought 
themselves  to  the  same  level.  On  one  occasion,  I  was  waited  on  by  a  dele- 
gation of  mailers,  who  rank  as  the  bundle-wrappers  and  shipping  clerks  of 
the  publishing  industry,  insisting  that  what  they  were  doing  was  as  neces- 
sary and  as  vital  to  the  getting  out  of  the  newspaper  as  the  task  of  the 
highest  compensated  worker  and  entitled  them  to  the  same  pay.  The  point 
I  wish  to  make  is,  that  the  relative  wages  of  various  classes  of  workmen  are 
subject  to  change  according  to  the  condition  of  the  labor  supply  without 
reference  to  the  index  number  or  the  family  budget. 

The  crux  of  the  matter,  then,  is  this:  Whatever  refinement  of  definition 
we  may  resort  to,  wages,  in  reality,  measure,  and  must  always  measure, 
the  worker's  share  of  the  product.  Without  a  product  to  divide,  there  can 
be  no  share  for  anyone;  a  greater  share  of  the  same  product  for  one  factor 
means  a  smaller  share  for  some  one  else ;  an  increased  product  alone  makes 
it  possible  to  increase  the  share  of  labor  without  decreasing  any  other  share, 
and  may  possibly  permit  all  the  distributive  shares  to  be  increased.  Modern 
trades  union  policy,  however,  strenuously  objects  to  piece  work,  or  to 
speed  or  production  bonuses — it  presents  some  good  arguments  for  its 
contention.  The  problem,  therefore,  is  to  raise  the  whole  level  of  efficiency 
and  this  must  be  accomplished,  in  the  future  even  more  than  in  the  past, 
by  more  complete  industrial  organization,  by  more  effective  harnessing  of 
natural  forces  and  greater  utilization  of  natural  resources,  by  efficiency 
methods,  improved  machinery,  economical  shop  lay-outs,  by  saving  carry- 
ing costs  through  attention  to  correct  geographical  location  of  industry,  by 
thorough  vocational  training,  by  health  preservation  measures  and  sane 
recreations  to  keep  the  man  power  in  prime  condition,  and,  above  all,  by  in- 
culcating a  stronger  sense  of  mutual  obligation  and  moral  responsibility. 
To  the  extent  that  the  wage  worker  contributes  to  industrial  progress,  he 
has  a  right  to  demand  his  full  share  of  the  accruing  benefits,  and  to  be  ad- 
vanced, and  not  merely  forever  kept  where  he  is  by  wage  adjustment  and 
readjustment  to  an  index  number  computed  upon  an  artificial  aggregation 

of  cost-of-living  figures. 

Victor  Rosewater. 

Omaha. 


REVIEWS  AND  NEW  BOOKS 

General  Works,  Theory  and  Its  History 
Our  Economic  Organization.     By  Leon  C.  Marshall  and  Leverett 
S.  Lyon.     (New  York:    The  Macmillan  Company.      1921.     Pp. 
x,  503.     $1.88.) 

The  main  purpose  of  this  new  book  in  the  field  of  elementary  eco- 
nomics is  to  present  in  systematic  fashion  the  structure  of  economic 
society  under  the  spur  of  competition.  The  treatment  is  necessarily 
brief  on  account  of  the  large  number  of  topics  to  be  covered,  and  also 
on  account  of  the  requirements  of  an  elementary  text  book.  The  ap- 
proach is  functional.  The  authors  frankly  say  in  their  preface  the 
purpose  is  to  present  economic  organization  in  its  functional  aspect, 
to  show  in  some  detail  not  so  much  what  the  organization  is  as  how  it 
operates.  "The  distinguishing  feature  of  the  volume  is  the  effort  to 
depict  social  structures  in  terms  of  what  they  do.  The  functions,  the 
uses,  the  work,  of  banks,  of  business  organization,  of  government,  of 
education,  and  of  other  multitudinous  agencies  which  together  make  up 
our  want  gratifying  machine,  are  the  matters  with  which  the  book  is 
concerned." 

Our  economic  organization  is  compared  to  a  machine  with  parts, 
articulation  of  parts,  motive  power,  and  control  or  guidance.  No  one 
claims  that  the  machine  at  all  times  or  perhaps  at  any  time  works  per- 
fectly. There  are  still  many  defects.  Some  parts  are  not  well  adapted 
to  their  uses;  parts  rattle,  jam  and  squeak;  too  much  or  perchance  at 
times  too  little  motive  power  is  applied;  and  at  times  (business  depres- 
sions) the  whole  machine  seems  to  break  down.  Despite  the  defects, 
however,  the  machine  functions  and  is  surprisingly  well  adapted  to  its 
purpose  of  producing  goods  in  quantity,  of  producing  them  at  right 
times,  and  of  getting  them  into  the  hands  of  consumers  with  some  ac- 
curacy and  comparatively  little  difficulty.  The  real  test  of  any  good 
machine  is  that  it  be  designed  for  its  purpose  and  that  it  accomplish  that 
purpose  at  as  low  a  cost  as  possible  under  the  conditions  which  prevail 
at  the  time.  Our  economic  machine  appears  to  fulfill  these  conditions. 
On  this  point,  indeed,  many  earnest  students  of  economics  honestly 
doubt  the  truth  of  the  above  statement.  They  see  glaring  faults  of 
economy  and  justice,  and  take  decided  exception  to  the  proposition  that 
the  present  economic  organization  is  adapted  to  its  purpose.  Possibly 
in  the  past,  it  is  said,  but  certainly  not  today. 

The  book  at  the  outset  rather  assumes  human  wants  and  the  goods 
to  gratify  those  wants.  Its  interest  lies  in  the  field  of  processes.  The 
aim  is  to  start  the  student  in  elementary  economics  with  a  study  of 
our  want  gratifying  machine,  to  show  him  how  this  machine  has  come 


664<  Reviews  and  New  Books  [December 

to  be,  and  how  it  serves  its  purpose  in  apportioning  our  social  resources, 
viz :  labor  power,  capital,  acquired  knowledge  and  natural  resources  to 
the  production  and  sale  of  goods.  Although  this  approach  to  eco- 
nomics is  somewhat  new  and  rather  unorthodox,  nevertheless  there  is 
much  to  be  said  in  its  favor.  It  serves  at  the  outset  to  develop  an  in- 
terest in  economics  in  the  mind  of  the  student,  a  thing  much  to  be  de- 
sired. Again  it  introduces  the  student  to  something  with  which  he  is 
a  bit  familiar,  instead  of  very  early  in  the  course  dropping  him  down 
into  the  midst  of  an  elusive  exposition  of  marginal  utility  and  marginal 
cost.  In  describing  for  the  student  our  present  system  of  economic 
organization  it  better  prepares  him  to  grasp  the  difficulties  of  termin- 
ology and  theory  on  which  the  organization  is  based.  There  is  no  at- 
tempt to  expound  principles.  All  that  is  left  to  be  taken  up  at  a  later 
point  in  the  course.  Those  who  have  taught  elementary  economics  will 
appreciate  the  difficulty  of  interesting  and  holding  the  students  when 
they  are  plunged  at  the  outset  into  the  midst  of  the  complexities  of 
utility,  value,  and  prices.  This  book  goes  far  to  solve  that  most  diffi- 
cult problem  of  arousing  student  interest  in  the  course.  It  is  emi- 
nently practical,  readable,  suggestive,  and  as  such  merits  consideration. 

The  topics  discussed  in  the  book  are  in  the  main  those  of  Professor 
Marshall's  more  pretentious  work  Readings  in  Industrial  Society.  The 
first  two  chapters  on  human  wants  and  social  resources  aim  to  show 
the  reasons  for  any  form  of  economic  organization.  Then  follow  six 
chapters  on  English  industrial  history  which,  as  the  authors  state,  "are 
not  'historical'  in  any  orthodox  sense  of  the  term.  They  are  a  some- 
what more  extended  view  of  the  problem  at  issue."  The  remainder  of 
the  book  is  taken  up  with  a  functionalized  description  of  the  economic 
organization  of  the  United  States.  There  are  four  chapters  on  speciali- 
zation, two  on  machine  industry,  three  on  business  organization,  three 
on  the  province  of  the  enterpriser,  two  each  on  money  and  financial  or- 
ganization and  the  utilization  of  natural  and  human  resources,  and 
one  on  planning,  guiding,  and  controlling. 

It  is  clear  that  what  should  be  included,  what  should  be  excluded, 
where  the  emphasis  should  be  placed  is  largely  a  matter  of  choice,  and  is 
somewhat  dependent  upon  the  purpose  the  authors  have  in  mind.  Not 
all  topics  which  quite  fall  within  the  scope  of  the  book  can  be  equally 
well  treated,  especially  if  the  work  is  elementary  in  character.  It 
may  be  a  source  of  disappointment  to  certain  readers  that  the  authors 
have  done  little  more  than  to  suggest  or  imply  at  some  points  in  their 
discussion  the  motive  forces  of  organization.  We  find  comparatively 
little  on  gain-seeking,  prices,  competition,  property,  contract,  and  the 
necessities  for  interdependence. 

The  book  does  not  pretend  to  cover  the  entire  field  of  economics.     It 


1921]  General  Works,  Theory  and  Its  History  665 

is  designed  merely  as  an  introductory  text  and  can  well  be  combined 
with  some  one  of  the  standard  works  on  the  Principles  of  Economics. 
As  a  stimulating,  attractive,  readable  book  it  is  a  great  success.  The 
authors  should  be  complimented  on  making  available  this  material  on 
economic  organization  in  such  a  clear  and  teachable  form.  The  prac- 
tical questions  at  the  end  of  each  chapter  are  helpful  and  suggestive, 
and  add  a  good  deal  to  the  teachable  qualities  of  the  book. 

Everett  W.  Goodhue. 
Dartmouth  College. 

NEW    BOOKS 

Ansiaux,   M.      Traite   d'economie   politique.      Vol.    I.      L 'organisation    eco- 
nomique.     (Paris:    Giard.     1920.     Pp.  390.     20  fr.) 

A  study  of  the  existing  industrial  organization  as  a  basis  for  a  future 
discussion  of  markets,  prices  and  incomes  is  the  purpose  of  this  volume. 
Illustrative  material  is  drawn  from  Belgium,  Great  Britain,  Germany  and 
the  United  States  in  addition  to  France.  The  dominant  characteristic  of 
modern  industry  is  found  to  be  the  steady  advance  of  concentration.  The 
study  of  this  movement,  its  advantages,  limitations  and  enactments  for 
its  regulation  or  repression,  fills  the  major  portion  of  the  book.  There 
is  preliminary  discussion  of  wants,  goods  and  services,  of  division  of 
labor,  of  natural  resources,  capital  and  similarly  familiar  matters  in  the 
first  seven  chapters. 

Following  chapters  are  devoted  to  a  discussion  of  competition  and 
monopoly,  of  the  movement  toward  concentration  and  its  various  forms. 
The  final  chapters  cover:  home  industries;  agriculture;  marketing;  rail- 
roads; and  banking  and  financial  institutions,  always  from  the  viewpoint 
of  the  greater  or  less  degree  of  concentration  and  the  elimination  or  the 
persistence  of  the  small  establishment.  The  book  thus  presents  a  pains- 
taking and  wide  ranging  examination  of  facts  and  a  discussion,  usually  in 
terms  familiar  enough,  of  the  principles  which  they  illustrate.  The 
author's  interest,  however,  lies  not  in  the  description  of  modern  industrial 
conditions  but  their  study  and  analysis  as  a  basis  for  his  theoretical 
writings.  C.  E.  Persons. 

Carver,   T.   N.     Principles  of  national   economy.      (Boston:    Ginn  &  Co. 
1921.     Pp.  773.     $3.00.) 

Chapman,  S.  J.     Outlines  of  political  economy.      (New  York:    Longmans. 
1921.     Pp.  xvi,  463.     $2.25.) 

Costantini,    E.      Economia   politico.      Third    edition.       (Milan:     Vallardi. 
1921.     6.50  1.) 

Diehl   and   Mombert.     Ausgetvahlte  Lesestiicke  sum  Studium  der  politi- 
schen  Oekonomie.     Second  edition.     (Karlsruhe:    Braun.     1920.     12  M.) 

Fairchild,  H.  P.,  editor.     Social  science.      (Philadelphia:    American  Edu- 
cational Institute,  Inc.     1921.     Pp.  xix,  487.) 

Hughes,  R.  O.     Economic  civics.     (Boston:    Allyn  &  Bacon.     1921.     Pp. 
xv,  331.     $1.25.) 


QQ6  Reviews  and  New  Books  [December 

Knight,  F.  H.  Risk,  uncertainty  and  profit.  (Boston:  Houghton  Mif- 
flin.    1921.     Pp.  xiv,  381.     $3.) 

Laski,  H.  J.  The  foundations  of  sovereignty  and  other  essays.  (New 
York:    Harcourt.     1921.     Pp.  xi,  314.     $3.50.) 

Contains  a  chapter  on  the  early  history  of  the  corporation  in  England. 

Lee,  J.  Plain  economics :  an  examination  of  the  essential  issues.  (London: 
Pitman.     1921.     3s.  6d.) 

Lord,  A.  R.  The  principles  of  politics.  An  introduction  to  the  study  of  the 
evolution  of  political  ideas.  (London:  Oxford  Univ.  Press.  1921.  Pp. 
306.) 

Mannstaedt,  H.  Cassels  theoretische  Sozialokonomie  und  die  Kritik  Eul- 
enburgs.  Zeitschrift  fur  Sozialwissenschaft,  XI,  11  and  12.  (Leipzig: 
Deichert.     1920.     Pp.  16.) 

Scott,  J.  W.    Karl  Marx  on  value.    (New  York:    Macmillan.    1921.    $1.40.) 

Sommer,  L.  Die  osterreichischen  Kameralisten.  (Wien:  Konegen.  1920. 
24  M.) 

Taussig,  F.  W.  Principles  of  economics.  Vol.  I.  Third  edition  revised. 
(New  York:    Macmillan.     1921.     Pp.  xxiii,  545.) 

Taylor,  F.   M.     Principles   of   economics.      (New   York:     Ronald.      1921. 
Pp.  ix,  577.) 
To  be  reviewed. 

Truchy,  H.  Cours  d'economie  politique.  Vol.  I.  Paris:  Recueil  Sirey. 
1919.     Pp.  xii,  458.) 

This  book,  intended  primarily  for  students,  is  planned  on  a  more  gen- 
erous scale  than  is  customary  in  American  texts.  This  first  volume  gets 
no  farther  than  the  discussion  of  price.  There  is  an  introductory  sec- 
tion defining  the  subject.  Book  I  deals  with  general  conceptions:  as 
wants,  value,  labor,  and  population  questions.  Book  II  contains  a 
lengthy  discussion  of  the  organization  of  production ;  labor  supply,  agri- 
culture, large-scale  production,  markets,  transportation,  insurance,  and 
cooperation.  Book  III  covers  money,  banking  and  price.  Theoretical 
matters :  e.g.,  the  marginal  utility  theory  of  value,  are  given  a  brief  and 
summary  treatment  by  comparison  with  the  comprehensive  presentation 
of  matter  descriptive  of  modern  industry.  Theory  is  subordinated  to 
practical  matters. 

Interest  attaches  to  the  discussion  of  the  population  problem  in  France. 
After  a  sympathetic  presentation  of  the  theories  of  Malthus,  there  is  a 
study  of  the  movement  of  population  since  1800  showing  a  general  ten- 
dency of  birth  rates  to  fall  in  all  countries.  This  tendency  is  especially 
strong  in  France  due  to  the  large  proportion  of  small  merchants,  small 
industries  and  the  numerous  peasant  proprietors.  The  decline  of  re- 
ligious sanctions;  the  growth  of  a  purely  materialistic  view  of  life,  and 
the  political  instability  and  wars  in  France  in  the  nineteenth  century  all 
contributed  to  the  growth  of  a  practice  of  following  the  line  of  least  re- 
sistance,  and    avoiding   parental   responsibilities. 

Though  the  author  feels  that  the  situation  is  a  dangerous  one  he  is  not 
sanguine  that  significant  gains  can  be  made  through  legislation,  because 


1921]  Economic  History  and  Geography  667 

of  the  difficulty  of  changing  established  customs  and  general  conceptions. 
He  urges  greater  efforts  to  improve  the  general  health — specifically 
through  a  strong  attack  on  such  evils  as  tuberculosis  and  alcoholism. 

C.  E.  Persons. 

Veblen,  T.     The  engineers  and  the  price  system.      (New  York:    Huebsch. 
1921.     Pp.  169.     $1.50.) 

Minutes  of  proceedings  of  the  Political  Economy   Club,  1899-1920  (Lon- 
don).    Vol.  VI.     (New  York:    Macmillan.      1921.     Pp.  xxvi,  464.     $7.) 

Economic  History  and  Geography 
The   Industrial  State.      By   E.    L.   Bogart    and    G.    M.    Thompson. 
(Springfield,  111:   Illinois  Centennial  Commission.    1920.   Pp.  553.) 

Measured  in  terms  of  social  and  industrial  changes,  the  quarter  of  a 
century,  or  thereabouts,  covered  by  this  volume  was  one  of  the  most 
important  periods  of  our  history.  "Not  only  in  Illinois,  but  through- 
out the  United  States  as  a  whole,  this  period  was  one  of  extraordinary 
economic  expansion,  of  exploitation  of  natural  resources,  and  of  un- 
bridled competition.  It  offered  rich  rewards  to  the  energetic,  the  dar- 
ing, and  the  far-sighted  business  man."  On  the  side  of  labor  "Trade- 
unionism  was  striving  to  establish  itself  and  in  this  era  of  struggle 
made  large  use  of  the  strike  and  similar  methods  incident  to  the  early 
stages  of  the  labor  movement."  In  fact,  the  years  covered  by  this 
volume — from  1870  to  1893 — formed  a  transition  period  in  the  in- 
dustrial and  social  life  of  the  country.  So  they  did  with  the  state  of 
Illinois,  as  the  authors  have  pointed  out  in  their  volume.  Industry 
passed  out  of  the  old  order  which  prevailed  in  Civil  War  times  and  be- 
fore into  the  order  which  exists  today.  Forms  of  industry,  types  of 
enterprise,  attitude  towards  social  life  and  the  state  changed  materially. 
In  the  case  of  Illinois,  the  state  until  this  time  "had  ranked  as  an  agri- 
cultural state,  standing  high  among  the  states  of  the  union  in  almost 
every  branch  of  farming.  Its  expansion  along  these  lines  still  went  on 
apace.  But  in  addition  to  agriculture  the  state  began  now  to  de- 
velop concurrently  other  lines  of  industry."  This  was  notably  the 
case  with  coal,  petroleum,  manufactures,  railroad  building  and  com- 
merce. "Industry  was  thus  diversified,  cities  were  established,  and  the 
interests  of  the  people  of  Illinois  expanded  and  broadened."  Mean- 
while, the  social  and  political  life  of  the  people  experienced  notable 
changes. 

The  student  who  is  acquainted  with  the  general  economic  movements 
in  the  United  States  finds  these  movements  traced  in  this  volume  with 
special  reference  to  Illinois.  The  authors  have  drawn  upon  the  great 
quantities  of  material  in  the  libraries  of  that  state,  they  have  thor- 
oughly  documented   their  work,   and   have   quoted   liberally    from    the 


668  Reviews  and  New  Books  [December 

authorities  to  illustrate  and  expound  the  development.  This  type  of 
study  deserves  special  commendation  because  it  is  in  a  field  where  so 
little  research  has  been  done. 

The  volume  falls  into  two  parts :  the  first,  covering  something  over 
two  hundred  pages,  deals  with  political  and  social  history ;  the  re- 
mainder of  the  volume  is  concerned  with  industrial  growth.  The  open- 
ing chapter  is  a  study  of  the  constitution  of  1870.  Then  follow  chap- 
ters on  "Some  Aspects  of  Social  Life  in  Illinois,"  "Liberal  Republican- 
ism," "The  Farmers'  Movement,"  "Greenbackism  and  Democratic  Re- 
organization," "Republicanism  at  the  Wheel,"  and  "The  Political  Ma- 
chine in  Operation."  Chapter  VIII,  credited  to  Miss  Agnes  Wright 
Dennis,  deals  with  the  changing  social  attitude  under  the  title  of  "New 
Forces  Astir."  Although  followed  by  another  section  on  "Art  and 
Letters,"  this  chapter  serves  as  a  connecting  link  between  the  political 
and  economic  portion  of  the  volume.  In  his  portion  of  the  volume  Pro- 
fessor Bogart  has  studied  the  development  of  cereal  crops,  animal  in- 
dustry, business  development,  financial  problems,  railroad  transporta- 
tion, waterways,  the  growth  of  commerce  and  manufactures,  the  labor 
movement,  and  the  development  of  the  mineral  wealth  of  the  state. 

Although  in  most  respects  the  volume  is  an  admirable  treatment  of 
the  subject  matter  the  treatment  is  somewhat  uneven.  Necessarily  in 
a  collaborative  work  there  must  be  a  certain  amount  of  duplication. 
From  the  reviewer's  point  of  view,  the  volume  loses  something  of  its 
value  by  the  separation  of  the  political  and  economic  portions.  In 
some  places  the  collaborators  have  covered  the  same  ground  with  little 
reference  to  the  work  done  by  the  other.  This  comment  applies  to 
chapters  V,  VI,  VIII,  XIX  and  XX,  and  to  some  extent  to  other  por- 
tions of  the  volume.  In  this  connection  one  wishes  the  authors  had 
linked  more  thoroughly  the  general  movements  with  those  in  Illinois. 
Also  the  student  wishes  the  authors  had  given  a  more  thorough  study 
to  the  legislative  history  of  the  state.  The  shortcoming  in  this  re- 
spect is  indicated  in  part  by  the  fact  that  whereas  abundant  use  has 
been  made  of  newspaper  and  periodical  material,  a  relatively  small 
amount  of  information  is  drawn  from  state  documents. 


Washington  University. 


Isaac  Lippincott. 


The  N on-Partisan  League.  By  Andrew  A.  Bruce.  (New  York:  The 
Macmillan  Company.  1921.  Pp.  viii,  284.  $3.) 
Many  articles  and  not  a  few  books  have  been  written  concerning  the 
Non-Partisan  League,  the  sponsor  for  the  socialistic  experiment  which 
is  termed  the  "new  day"  in  North  Dakota.  Many  of  these  publications, 
however,  give  only  the  facts  favorable  to  the  movement.  The  present 
volume  is  an  exception  to  this  rule  and  should  be  read  along  with  the 


1921]  Economic  History  and  Geography  669 

volume  on  the  same  subject  by  Herbert  E.  Gaston,  reviewed  by  the 
present  writer  in  the  issue  of  this  magazine  for  September  1920. 

Professor  Bruce  of  the  law  school  of  the  University  of  Minnesota  was 
formerly  justice  of  the  Supreme  Court  of  North  Dakota  and  dean  of 
the  law  school  of  the  State  University  and  so  writes  from  first-hand 
knowledge  of  the  genesis  and  development  of  the  League  both  in  North 
Dakota  and  in  the  adjoining  states.  The  book  is  a  thorough  analysis 
of  an  interesting  experiment  in  state  socialism  and  is  a  substantial  and 
critical  piece  of  work  because  its  conclusions  are  based  on  an  intimate 
knowledge  of  the  facts. 

Professor  Bruce  brings  out  in  successive  chapters  the  development 
of  the  League  from  its  inception  in  1915  to  the  present  time.  He 
shows  that  at  first  it  was  a  movement  ostensibly  for  the  betterment  of 
the  condition  of  the  farming  classes ;  that  it  was  a  protest  against  un- 
fair grain  grading,  trading  in  options,  and  control  of  grain  and  cattle 
markets  by  outside  business  interests ;  and  that  it  developed  into  a 
socialistic  political  party  founded  on  discontent  and  aiming  at  the 
advancement  of  the  political  and  financial  fortunes  of  its  leaders  and 
the  destruction  of  the  middleman,  the  industrial  entrepreneur  and  the 
so-called  capitalistic  classes. 

The  program  of  the  League  involves  state-owned  grain-elevators, 
warehouses,  cold-storage  plants,  creameries,  stockyards,  cheese  fac- 
tories, a  state-owned  bank,  a  large  extension  of  rural  credits,  a  home 
building  scheme,  state  hail  and  fire  insurance,  the  exemption  of  farm 
improvements  from  taxation,  and  generally  speaking  the  destruction  of 
the  middleman.  Such  a  program  requires  millions  of  dollars  for  its 
execution  and  this  is  to  be  furnished  by  the  state.  This  mixture  of 
business  and  politics  has  not  worked  out  well,  as  is  shown  in  the  failure 
of  the  Bank  of  North  Dakota  to  function  as  designed  and  in  the  failure 
of  the  numerous  banks  in  the  state.  Banking  and  politics  are  poor 
bed-fellows. 

A  more  serious  indictment  perhaps  is  the  interference  by  the  League 
with  the  courts  and  the  educational  system  of  North  Dakota.  The 
control  of  the  judiciary  meant  that  the  social,  constitutional,  and  eco- 
nomic views  of  the  League  would  be  favored.  This  means  that  the  judge 
is  not  a  judge  but  a  representative,  and  that  his  function  is  not  to  ad- 
minister the  established  law,  leaving  it  to  the  legislatures  and  the  con- 
stitutional amendments  to  change  the  law  and  to  keep  it  responsive  to 
the  growing  needs  of  the  age. 

Reports  made  to  the  North  Dakota  legislature  of  1921  disclosed  the 
actual  insolvency  of  the  Bank  of  North  Dakota  and  of  the  Scandi- 
navian American  Bank  of  Fargo.  Along  with  this  was  the  failure  of  the 
effort  to  sell  the  state's  industrial  bonds,  and  although  these  have  since 


670  Reviews  and  New  Books  [December 

been  sold,  the  belief  at  present  seems  to  be  that  the  Non-Partisan 
finances  are  in  a  hopeless  state  of  collapse.  Politically  the  League  may 
continue  for  a  brief  period,  but  the  North  Dakota  farmer  is  beginning 
to  realize  that  wild-cat  schemes,  if  unsuccessful,  must  be  paid  for  by 
increased  taxes,  that  political  hucksters  make  poor  business  managers, 
and  that  the  majority  of  the  proposed  state-owned  industries  must  fail 
because  the  success  of  every  business  depends  on  skillful  and  efficient 
management. 

Professor  Bruce  shows  quite  conclusively  that  even  if  all  the  griev- 
ances complained  of  were  real  there  was  little  need  of  the  Non-Partisan 
League  as  a  political  party.  North  Dakota  is  purely  an  agricultural 
state  and  the  farmer  in  the  long  run  gets  what  legislation  he  needs  be- 
cause the  prosperity  of  the  state  depends  on  his  prosperity.  The  real 
issues  have  been  beclouded  and  there  has  been  too  much  calling  of 
names.  Economic  questions  ought  to  be  settled  by  arguments  based 
on  facts.  Vast  and  expensive  enterprises  even  if  financed  by  a  sovereign 
state  are  doomed  to  failure  unless  wisely  managed  and  based  on  sound 
economic  principles. 

George  M.  Janes. 

Washington  and  Jefferson  College. 

NEW    BOOKS 

Adams,  L.  E.  W.  A  study  in  the  commerce  of  Latium,  from  the  early  iron 
age  through  the  sixth  century,  B.C.  Smith  College  classic  studies,  no.  2. 
(Northampton,  Mass.:    Smith  College  Library.     1921.     Pp.  84.     75c.) 

Alvord,  C.  W.  The  Illinois  country,  1678-1818.  The  centennial  history 
of  Illinois,  vol.  I.      (Chicago:    McClurg.      1920.     $2.) 

Bakeless,  J.     The  economic  causes  of  modern  wars:  a  study  of  the  period 
1878-1918.     (New  York:   Moffat,  Yard  &  Co.     1921.     Pp.  ix,  265.     $4.) 
The  David  A.  Wells  prize  essay  of  Williams  College. 

Beable,  W.  H.  Commercial  Russia.  (New  York:  Macmillan.  1921. 
Pp.  278.    $3.) 

Bell,  J.  C,  Jr.  Opening  a  highway  to  the  Pacific,  1838-181^6.  Columbia 
University  studies  in  history,  economics,  and  public  law,  vol.  XCVI,  no.  1. 
(New  York:    Longmans.     1921.     Pp.  209.     $2.25.) 

Although  the  material  for  the  main  thesis  begins  with  1838,  the  author 
has  inserted  several  preliminary  chapters  covering  the  earlier  history  of 
the  Far  Northwest  including  "Discovery  and  Exploitation,"  "Diplomacy 
Determines  the  Status  of  Oregon,"  "British  and  American  Fur  Traders," 
and  "Missionary  Colonists."  Dr.  Bell  states  that  his  study  has  grown 
"out  of  a  wish  for  more  light  on  one  early  phase  of  this  expansion."  His 
purpose  is  to  study  "the  hopes  and  fears  and  ideas  of  a  definite  and,  in  its 
way,  articulate  group  of  the  American  community,"  namely,  farmers  and 
mechanics  who  were  inspired  by  the  migratory  traditions  of  their  fore- 
fathers.    The  point  of  view  in  this  thesis  is  that  of  social  history  rather 


1921]  Economic  History  and  Geography  671 

than  that  of  "narrow,  political,  personal,  or  economic  history."  After 
considering  preliminary  matters  the  author  devotes  chapters  to  the 
"Spread  of  the  Oregon  Fever"  (1838-1843),  "Agrarian  Discontent  in 
the  Mississippi  Valley"  (1840-1845),  "The  Journey  to  the  Western 
Coast"  (1843-1846),  and  "Settlement  in  the  Willamette  Valley"  (1840- 
1846).  There  is  a  concluding  chapter  on  "The  Interplay  of  Sentimental 
and  Economic  Forces."  The  following  are  some  of  the  conclusions: 
"The  moment  favorable  to  .  .  .  exploitation  by  American  farmers  came, 
not  when  settlers  had  rilled  the  unoccupied  lands  in  the  States,  but  when 
the  farmers  had  overproduced  their  available  market,  and  had  no  other 
place  so  attractive  to  which  they  could  go."  The  politicians  failed  to 
understand  the  movement,  or,  at  least,  they  did  not  give  it  very  accurate 
expression;  they  were  of  the  opinion  that  "the  remedy  for  existing  hard- 
ships could  only  be  had  at  the  expense  of  other  nations  rather  than  by  co- 
operation with  them  in  the  upbuilding  of  new  and  mutually  beneficial 
trades."  The  author  is  of  the  opinion  that  in  all  probability  the  mi- 
gration would  have  taken  place  even  if  there  had  been  no  agitation  over 
British  relations  in  the  Northwest. 

Isaac  Lippincott. 

Bowman,  I.  The  new  world:  problems  in  political  geography.  (Yonkers- 
on  Hudson,  N.  Y.:    World  Book  Co.     1921.     Pp.  vii,  632.     $6.) 

Brawley,  B.  A  social  history  of  the  American  negro.  (New  York:  Mac- 
millan.     1921.     Pp.  xv,  420.     $4.) 

Butler,  J.  G.,  Jr.  Fifty  years  of  iron  and  steel.  (Cleveland,  Ohio.:  The 
Penton  Press.      1920.      Pp.   158.) 

The  past  fifty  years  have  seen  a  remarkable  growth  of  the  iron  and 
steel  business  of  the  country.  It  is  interesting  to  have  this  story  told  by 
an  "eye-witness  of  iron  and  steel  development  from  the  conversion  of 
the  first  barrel  of  Lake  Superior  ore  to  a  period  when  over  sixty  mil- 
lion tons  came  down  from  the  Lakes  and  other  millions  are  smelted  at 
the  Upper  Lakes."  Mr.  Butler  was  a  contemporary  of  the  men  who 
built  up  the  modern  industry ;  he  knew  many  of  them  personally ;  he 
was  an  observer,  and  often  a  participant,  in  the  introduction  of  many  of 
the  modern  improvements.  He  speaks,  therefore,  from  first  hand  infor- 
mation. Much  of  his  volume  is  reminiscent,  giving  intimate  information 
about  men  and  affairs.  The  main  portion  of  his  book  covers  an  address 
delivered  before  the  American  Iron  and  Steel  Institute.  He  has  appended 
a  number  of  pages  on  "The  Early  History  of  the  Use  and  Manufacture 
of  Iron  and  Steel,"  "American  Steel  in  the  World  War,"  and  "Iron  and 
Steel  Industries  in  War  Work  and  Financing."  I.  L. 

Butts,  A.  B.     Public  administration  in  Mississippi.     Centenary  series,  vol. 
III.     (Jackson,  Miss.:    Mississippi  Historical  Society.     1919.     Pp.  278.) 
Chapter  3   is  entitled  "Guaranteeing  Bank  Deposits,"   and  chapter  4 
deals  with  "Taxation." 

Caro,  G.  Sozial-  und  Wirtschaftsgeschichte  der  Juden  im  Mittelalter  und 
in  der  Neuzeit.  Vol.  II,  Das  spatere  Mittelalter.  (Leipzig:  Fock. 
1920.     30  M.) 

Clapham,  J.  H.  The  economic  development  of  France  and  Germany,  1815- 
1914.     (New  York:    Macmillan.     1921.     Pp.  xi,  420.     $6.) 


672  Rctiezcs  and  New  Books  [December 

Cleland,  R.  G.  The  Mexican  year  book  for  1920.  (Los  Angeles,  Cal. : 
The  Mexican  Year  Book  Pub.  Co.     1921.     $7.50.) 

Einstein,  L.     Tudor  ideals.     (New  York:   Harcourt.     1921.     Pp.  xiii,  358.) 

Hazard,  B.  E.  The  organization  of  the  boot  and  shoe  industry  in  Massa- 
chusetts. Harvard  economic  studies,  vol.  XXIII.  (Cambridge:  Harvard 
Univ.  Press.     Pp.  x,  271.     $3.50.) 

Hearnshaw,  F.  J.  C,  editor.  Macmillan' s  historical  atlas  of  modern  Eu- 
rope.    (London:    Macmillan.     1920.     Pp.  ix,  30.     6s.) 

Hobson,  J.  A.  The  economics  of  reparation.  (London:  Allen  &  Unwin. 
1921.     Is.) 

Keith,  A.  B.  War  government  of  the  British  Dominions.  Carnegie  En- 
dowment for  International  Peace,  economic  and  social  history  of  the 
world  war.    (London:    Oxford  Univ.  Press.    1921.    Pp.  xvi,  353.    10s.  6d.) 

Kuno,  Y.  S.  What  Japan  wants.  (New  York:  Crowell.  1921.  Pp.  154. 
$1.) 

Lane,  W.  D.  Civil  war  in  West  Virginia.  (New  York:  Heubsch.  1921. 
Pp.   128.     50c.) 

The  introduction  to  this  story  of  the  industrial  conflict  in  the  coal  mines 
is  by  John  R.  Commons. 

Lenz,  A.  Der  Wirtschaftskampf  der  Vblker  und  seine  Internationale 
Regelung.      (Stuttgart:    Enke.     1920.     Pp.   315.) 

Lincoln,  E.  E.  List  of  references  in  economics  2.  Economic  history  of 
Europe  since  1800,  and  of  the  United  States.  (Cambridge,  Mass.:  Har- 
vard Univ.     1920.     Pp.  145.) 

This  is  a  revision  and  extension  of  the  references  originally  prepared 
by  Professor  E.  E.  Day  for  use  in  connection  with  the  courses  in  Euro- 
pean and  American  economic  history  at  Harvard  College. 

Lipson,  E.  The  history  of  the  woollen  and  worsted  industries.  (New 
York:    Macmillan.     1921.     Pp.  x,  273.     $4.) 

Mager,  F.  Kurland.  Eine  allgemeine  Siedlungs-,  Verkehrs-  und  Wirt- 
schaftsgeographie.     (Hamburg:   Friederichsen.     1920.     Pp.  231.     40  M.) 

Mackinson,  J.  The  social  and  industrial  history  of  Scotland  from  the 
union  to  the  present  time.  (New  York:  Longmans.  1921.  Pp.  viii, 
298.     $6.) 

Mitchell,  B.  The  rise  of  cotton  mills  in  the  South.  Johns  Hopkins  Uni- 
versity studies  in  historical  and  political  science,  series  XXXIX,  no.  2. 
(Baltimore,  Md. :    Johns  Hopkins  Press.     1921.     Pp.  281.) 

Mitscherlich,  W.  Skizze  einer  Wirtschaftsstufentheorie.  (Jena:  Welt- 
wirtschaftliches  Archiv.     1921.     Pp.  70.) 

The  author,  a  professor  at  the  University  of  Breslau,  notes  in  the 
economic  evolution  of  the  Teutonic  and  Romance  nations  four  distinct 
stages.  The  first  epoch  constitutes  the  production  and  the  distribution  of 
goods  in  most  primitive  forms;  men  earn  their  living  by  hunting  or  fish- 
ing* °y  primitive  agriculture  or  by  cattle-breeding,  and  in  doing  so  they 
are  strictly  regulated  by  the  community.     The  soil  is  a  common  posses- 


1921]  Economic  History  and  Geography  673 

sion  of  the  clan  or  of  large  patriarchal  families;  only  a  few  movable 
things  are  the  property  of  individuals.  This  is  the  stage  of  a  simple 
common  economy. 

In  the  next  stage  men  aspire,  besides  the  spirit  of  community,  to  an 
equal  measure  of  personal  self-development.  Their  actions  are,  how- 
ever, still  controlled  by  corporations:  guilds,  fraternities,  village  com- 
munities and  such  organizations.  Private  property  has  very  much  in- 
creased but  its  use  is  controlled  and  directed  by  these  corporations;  the 
will  of  the  single  economic  entity  is  accordingly  bound.  No  one  pro- 
duces on  a  larger  scale  than  his  social  position  requires;  the  scope  of  re- 
quirements of  the  different  strata  of  society  is  based  on  custom.  Here 
agriculture,  crafts,  commerce,  and  shipping,  are  developed  as  indepen- 
dent, but  small,  organizations.  We  have  here  an  era  of  simple  corpora- 
tive economy. 

The  third  stage — that  of  individualism — makes  each  person  responsible 
for  himself,  economically.  Encouraging  activity  and  initiative,  this 
epoch  gives  rise  to  wholesale  dealing  in  agriculture  and  industry  as  well 
as  in  commerce  and  transportation,  and  inspires  capitalistic  enterprise. 
The  catch-words  of  free  competition  and  of  everyone's  right  to  lead  his 
own  economic  life  are  now  heard ;  the  rights  of  private  property  become 
sharply  prominent;  the  world  of  capitalism  comes  into  existence. 

The  fourth  stage  binds  the  now  developed  single  economies  progres- 
sively by  corporations  of  a  public,  a  semi-public  and  a  private  character. 
Public  corporative  economy  exists  in  factories  belonging  to  the  state  or 
the  commune;  semi-public  in  enterprises  liable  to  state  control,  as  the 
coal  syndicate  and  Kalitrust  in  Germany,  labor  relationships  between 
capitalists  and  workmen ;  private  ones  in  trusts,  companies,  trade  unions, 
leagues  and  concerns.  Even  single  factories  are  regulated  in  a  corporative 
way,  officials  and  workmen  being  granted  power  and  joint-authority  (shop 
stewards  and  works  councils,  instituted  by  law  in  Germany  and  Austria). 
So  a  more  complicated  system  of  control  by  corporations  is  beginning. 
All  social  groups  are  now  inclined  to  the  corporative  spirit.  Some  of 
these  form  groups  which  have  intercourse  with  each  other.  Thus  the 
community  attains  again  stronger  influence  and  private  property  is  again 
limited  in  favor  of  the  rights  of  the  totality.  An  evolution  begins  which 
seems  to  aim  at  overcoming  private  capitalism  by  means  of  social  capital. 

It  may  be  added  that  this  new  development  is  shown  for  England  in 
C.  Delisle  Burns'  book  Government  and  Industry  (London:  Allen  & 
Unwin.     1921.) 

E.   ScHWIEDLAND. 

Vienna. 

Moreland,  W.  H.  India  at  the  death  of  Akbar.  (London:  Macmillan. 
1920.     Pp.  xi,  328.     12s.) 

Morgan,  R.  B.,  editor.  Readings  in  English  social  history  from  contempo- 
rary literature.  Vol.  I,  From  pre-Roman  days  to  A.D.  1272.  Vol.  II, 
A.D.  1272-1485.  (New  York:  Macmillan.  1921.  Pp.  xv,  117;  xi, 
108.     $1.40  each.) 

Morris,  H.  L.  Parliamentary  franchise  reform  in  England  from  1885  to 
1918.  Columbia  University  studies  in  history,  economics  and  public  law, 
vol.  XCVI,  no.  2.     (New  York:    Longmans.     1921.     Pp.208.     $2.25.) 


674  Reviews  and  New  Books  [December 

Mortara,  G.  Prospettive  economiche.  (Castello:  Soc.  Tip.  Leonardo  da 
Vinci.     1921.     Pp.  341.) 

Nichols,  G.  A  Salem  shipmaster  and  merchant:  the  autobiography  of 
George  Nichols.     (Boston:    The  Four  Seas  Co.     1921.     Pp.  127.) 

O'Brien,  G.  The  economic  history  of  Ireland  from  the  union  to  the  famine. 
(New  York:    Longmans.     1921.) 

Obst,  E.  Wirtschaftsgeographische  Studien  in  der  europaischen  Turkei. 
(Leipzig:    Teubner.      1920.) 

Oneal,  J.  The  workers  in  American  history.  Fourth  edition  revised  and 
enlarged.  (New  York:  Rand  School  of  Social  Science.  1921.  Pp. 
208.     $1.) 

Rathenau,  W.  The  new  society.  (New  York:  Harcourt.  1921.  Pp. 
vi,  147. 

Dr.  Rathenau  is  not  only  one  of  the  most  distinguished  publicists  of 
the  new  Germany,  but  as  the  head  of  the  Allgemeine  Electrizitatsgesell- 
schaft  he  is  one  of  its  foremost  captains  of  industry.  In  an  earlier  study, 
Die  neue  Wirtschaft,  he  urged  the  unification  and  standardization  of  the 
whole  of  German  industry  and  commerce  in  one  great  trust  and  a  great 
intensification  of  the  application  of  science  and  mechanism  to  production. 
In  the  present  book  he  first  reviews  the  social  and  economic  situation  in 
Germany  and  draws  a  very  unattractive  picture  of  the  nation  of  the 
future  if  present  tendencies  are  continued.  He  is  scathing  in  his  criti- 
cism of  German  imperialism.  The  German  people  he  believes  are  "high 
in  qualities  of  intellect  and  heart.  Ethics  and  mentality  normal.  Origi- 
native will  power  and  independent  activity,  weak."  Under  Prussian 
domination,  Germany  like  Faust,  "was  lured  away  from  its  true  path, 
cast  off  by  the  Earth  Spirit,  astray  among  witches,  brawlers  and 
alchemists."  The  whole  spirit  of  the  exponents  of  the  vaunted  Kultur 
is  contrary  to  the  real  German  character.  What  Germany  needs  most 
is  Bildung,  genuine  culture  with  the  courage  and  spirit  to  develop  the 
normal  tendencies  of  the  German  people. 

But  true  culture  for  the  masses  is  impossible  without  a  radical  reorgani- 
zation of  industry.  The  worker  must  be  freed  from  the  deadly  mo- 
notony of  a  single  task.  As  far  as  possible  there  should  be  interchange 
of  labor.  Every  manual  worker  should  give  a  part  of  each  day  to  in- 
tellectual work  and  as  far  as  possible  every  brain  worker  should  be  re- 
quired to  do  some  physical  labor.  A  year  of  labor  service  should  be  re- 
quired of  every  young  man.  In  spite  of  the  fact  that  Rathenau  refers 
to  the  majority  socialists  as  the  "sorry  dignitaries  of  a  day,"  these  same 
dignitaries  have  now  appointed  him  Minister  of  Reconstruction.  His 
official  career  will  be  followed  with  the  greatest  interest. 

G.  B.  L.  Arner. 

Roberts,  G.  E.  America  and  Europe.  (New  York:  National  City  Bank. 
1921.     Pp.  18.) 

Ross,  E.  A.  The  Russian  bolshevik  revolution.  (New  York:  Century  Co. 
1921.     Pp.  xvi,  301.     $3.) 

de  Sanchez,  J.  A.  M.     Reparations.     The  contract  made  by  Germany  and 


1921]  Economic  History  and  Geography  675 

her  ability  to  fulfill  it.     (New  York:    French  Commission  in  the  U.  S.,  65 
Broadway.     1921.     Pp.   16.) 

Stenton,  F.  M.  Documents  illustrative  of  the  social  and  economic  history 
of  the  Dane  law.     (London:   Milford.     1921.     31s.  6d.) 

Stoddard,  L.  The  new  world  of  Islam.  (New  York:  Scribner's.  1921. 
Pp.  362.     $3.) 

Chapter  VII  is  entitled  "Economic  Change,"  and  Chapter  IX,  "Social 
Unrest  and  Bolshevism." 

Ulens,  R.  Le  Condroz:  sa  population  agricole.  Contribution  a  V etude  de 
I'histoire  enonomique  et  sociale.  (Brussels:  Lamertin  &  Hayez.  1921. 
Pp.  209.) 

Verhulst,  L.  La  Lorraine  beige.  (Brussels:  Lamertin  &  Hayez.  1920. 
Pp.  218.) 

Vinogradoff,  P.  The  growth  of  the  manor.  (London:  Allen  &  Unwin. 
1921.      12s.  6d.) 

Volz,  W.  The  economic-geographical  foundations  of  the  Upper  Silesian 
question.     (Breslau:     Chamber  of  Commerce.      1921.     Pp.  91.) 

Wiedenfeld,  K.  Ein  J  ahrhundert  rheinischer  Montan-Industrie.  (Bonn: 
Marcus  &  Weber.     1921.) 

Woolf,  L.  Economic  imperialism.  (New  York:  Harcourt.  1920.  Pp. 
iii.     $1.) 

Contains   chapters    on   economic   imperialism   in   Africa,   and   economic 
imperialism  in  Asia. 

Wright,  J.  M.  The  free  negro  in  Maryland,  16SJf-18G0.  Columbia  Uni- 
versity studies  in  history,  economics  and  public  law,  vol.  XCVII,  no.  3. 
(New  York:   Longmans.     1921.     Pp.  362.     $4.) 

Arguments  about  Upper  Silesia.  I.  Upper  Silesia  and  the  changes  in  the 
iron  industry  of  Europe  caused  by  the  treaty  of  Versailles.  II.  Pless  and 
Rybnik,  integral  elements  within  the  organism  of  Upper  Silesian  industry. 
(Breslau:  East-Europe  Institute,  Mining  and  Metallurgical  Section. 
1921.     Pp.  27.) 

Commercial  and  industrial  situation  of  Hungary.  (London:  King.  1921. 
Is.  3d.) 

Commercial  and  industrial  situation  in  Sweden  at  the  close  of  1920.  (Lon- 
don:   King.     1921.     Is.) 

Commercial  situation  in  Siam  at  the  close  of  1920.  (London:  King.  1921. 
Is.  3d.) 

Economic,  financial  and  industrial  conditions  in  Finland  at  the  close  of 
1920.      (London:    King.     1921.     Is.) 

Economic  and  financial  situation  of  Egypt.     (London:    King.      1921.     Is.) 

Economic  situation  in  Sxcitzerland  in  April,  1921.  (London:  King.  1921. 
Is.  9d.) 

Hamburg  in  seiner  politischen,  wirtschaftlichen  und  hulturellen  Bedeutung. 
(Hamburg:    Friederichsen.     Pp.   170.      15   M.) 


676  Reviews  and  New  Books  [December 

Industrial-economic  conditions  in  the  United  States.  Bulletin  no.  1.  (New 
York:    National   Industrial   Conference   Board.      1921.      Pp.    18.) 

Organisation  des  regions  economiques.    (Paris:   Imprimerie  nationale.    1921.) 

The  place  of  the  United  States  in  a  world  organization  for  the  maintenance 
of  peace.  The  Annals,  vol.  XCVI,  no.  185.  (Philadelphia,  Pa.:  Am. 
Academy  of  Pol.  and  Soc.  Science.     1921.) 

Political  and  economic  report  of  the  committee  to  collect  information  on 
Russia.     (London:    King.     1921.     2s.) 

Report  of  the  Secretary  of  the  Treasury  to  the  President  on  the  Second 
Pan    American    Financial    Conference    at     Washington,    January    19-21f, 

1920.  (Washington:    Inter-American  High  Commission,  Treasury  Dept. 

1921.  Pp.  176.) 

The  statesman's  year-book.  Statistical  and  historical  annual  of  the  states 
of  the  world  for  the  year  1921.  (New  York:  Macmillan.  1921.  Pp. 
xliv,  1544.     $7.50.) 

Agriculture,  Mining,  Forestry,  and  Fisheries 

NEW    BOOKS 

Adams,  R.  L.  The  marvel  of  irrigation:  a  record  of  a  quarter  century  in 
the  Turlock  and  Modesto  irrigation  districts.  Second  edition.  (San 
Francisco,  Cal. :    Anglo  &  London  Paris  National  Bank.     1921.     Pp.  71.) 

Boyle,  J.  E.  Agricultural  economics.  (Philadelphia,  Pa.:  Lippincott. 
1921.     Pp.  448.     $3.) 

The  title  of  this  book  does  not  convey  an  accurate  notion  of  its  con- 
tents. It  is  not  a  textbook  of  agricultural  economics,  but  a  collection  of 
twenty-six  essays  on  matters  relating  to  farming,  farm  life  and  agricul- 
tural commerce.  The  essays  cover  a  wide  range  of  topics  from  land 
tenure  to  cold  storage,  the  agricultural  press,  the  county  agent  and  back 
again  to  the  food  supply.  While  the  topics  discussed  are  arranged  in 
semi-logical  order,  no  attempt  has  been  made  to  develop  the  subject  of 
agricultural  economics  systematically  or  comprehensively  or  to  treat  it 
as  a  coherent  whole.  The  author  states  his  purpose  as  threefold:  "(O 
to  interest  the  reader  in  the  subject  of  agricultural  economics;  (2)  to 
point  out  by  a  few  simple  illustrations  the  most  significant  problems  in 
the  field;  (3)  and  finally  to  stimulate  thinking  and  discussion  which  may 
help  towards  a  solution  of  these  problems."  He  disclaims  any  setting 
forth  of  "ready-made  remedies  for  the  problems"  or  the  formulation  of 
"laws  and  principles,"  or  the  presentation  of  many  "new  facts  to  the 
reader."  The  reviewer  is  of  the  opinion  that  the  author  has  fairly  ac- 
complished purpose  number  2,  has  kept  any  handmade  solutions  well  con- 
cealed, and  in  most  cases  has  presented  secondhand  facts  rather  than 
principles. 

It  is  inevitable  in  a  book  of  this  sort  that  the  chapters  be  of  unequal 
merit.  Several,  such  as  chapter  II;  "Anarchy  of  Agriculture";  chapter 
III,  "Land  Speculation";  chapter  IV,  "'Back  to  the  Land'  Movement"; 
chapter  V,  "Land  Tenure" ;  chapter  VI,  "Economic  Condition  of  the 
P'armer" ;  chapter  VII,  "Agricultural  Labor"  are  largely  quotations  com- 


1921]  Agriculture,  Mining,  Forestry,  and  Fisheries  677 

piled  from  various  sources,  sometimes  strung  together  with  little  logical 
connection.  The  chapter  on  "Speculation,"  however,  shows  careful  origi- 
nal study  and  is  very  well  written.  Chapter  XVII  on  the  "Grain  Trade" 
also  stands  out  favorably,  although  no  new  facts  are  presented. 

The  author  presents  a  great  many  statistics  from  numerous  sources. 
A  generous  bibliography,  a  long  list  of  questions  on  the  text  and  a  few 
questions  "suggested  by  the  text"  are  appended  to  each  chapter.  Un- 
suitable as  a  text,  the  book  will  doubtless  find  a  place  as  a  supplementary 
reference  book  for  students  in  college  courses  in  agricultural  economics, 
and  on  the  shelves  of  students  of  rural  problems,  as  well  as  on  those  of 
practical  men  of  agricultural  affairs. 

A  criticism  of  the  typography  is  in  order.  The  type  of  the  main  body 
of  the  book  is  clear  and  well  leaded,  but  the  great  number  of  paragraph 
titles  in  black-face  type  mar  the  beauty  of  some  pages.  The  insertion 
of  long  and  frequent  quotations  in  small  type  in  the  body  of  the  text  is 
a  serious  mistake;  it  strains  the  eye,  annoys  the  reader,  detracts  from  the 
beauty  of  the  work  and  in  great  measure  breaks  into  the  continuity  of 
the  text.  The  first  hundred  pages  are  particularly  offensive  in  this  re- 
spect. 

Alexander  E.  Cance. 
Massachusetts  Agricultural  College. 

Brossard,  E.  B.    Some  types  of  irrigation  farming  in  Utah.     (Logan,  Utah: 
Utah  Agri.  College  Experiment  Station.     1920.     Pp.  140.) 

Clark,  M.  B.     Mineral  resources  of  the   United  States  in  1920.      (Wash- 
ington:   U.  S.  Geological  Survey.     1921.     Pp.  121.) 

Cobb,  J.  N.     Pacific  salmon  fisheries.     Bureau  of  Fisheries,  doc.  no.  902. 
Third  edition.     (Washington:    Supt.  Docs.     1921.     Pp.  268.     35c.) 

Coelho   de   Souza,  W.   W.     Possibilites  de   la   culture  cotonniere  dans   le 
Bresil.     (Rio  de  Janeiro:    Bureau  d'lnformation.     1920.) 

Colvin,  C.     Summary  record  of  project  in  vocational  agriculture.     Bull.  no. 
18.     (Springfield,  111.:    Board  for  Vocational  Education.     1921.     Pp.  18.) 

Fisher,  C.  B.     The  Farmers'  Union.     Studies  in  economics  and  sociology, 
no.  2.     (Lexington,  Ky.:    Univ.  of  Kentucky.     1920.     Pp.  81.     $1.) 

In  the  three  chapters  into  which  this  study  is  divided,  the  author  has 
discussed  "The  Origin  and  Development  of  the  Farmers'  Educational 
and  Cooperative  Union  of  America,"  "Cooperative  Activities  of  the  Farm- 
ers' Union,"  and  "The  Legislative  Program  of  the  Farmers'  Union." 
Mr.  Fisher  had  access  to  minutes  of  the  mass  meetings  of  national  and 
state  organizations,  and  to  various  papers  and  pamphlets  of  the  farmers' 
societies ;  from  these  sources  chiefly  he  gathered  the  material  for  his 
study.  His  monograph  contains  extensive  quotations  from  these  docu- 
ments. The  author  is  of  the  opinion  that  "the  present  tendency  on  the 
part  of  the  Union  is  to  develop  state  exchanges,  or  cooperative  wholesale 
houses.  .  .  ."  and  that  "this  venture  has  greatly  systematized  cooper- 
ative purchasing  and  it  promises  to  become  one  of  the  most  profitable  co- 
operative attempts  yet  made."  All  local  cooperative  stores  furnish  the 
necessary  capital  and  make  their  purchases  through  the  exchange;  thus 
the  latter  centralizes  the  demand  of  the  local  stores  and  thereby  is  able 


678  Reviews  and  New  Books  [December 

to  obtain  various  advantages  in  making  purchases.  Under  the  influence 
of  the  Union,  cooperative  manufacture  has  been  undertaken  on  a  limited 
scale;  this  includes  "pickle  factories,  flouring  mills,  phosphate  plants, 
packing  plants,  creameries,  implement  factories,  tobacco  factories,  etc." 
As  a  rule,  however,  interest  of  farmers  in  these  enterprises  tends  to  de- 
cline, partly  due  to  the  tax  on  the  managerial  ability  of  the  owners,  and 
partly  due  to  the  disappearance  of  the  evils  which  led  to  the  founding  of 
the  manufacture;  in  this  event  the  association  loses  its  chief  stimulant. 
Many  of  the  manufacturing  enterprises  are  not  "all  100  per  cent  co- 
operative," due  to  the  fact  that  it  has  often  been  necessary  for  "a  few 
individuals  to  stand  for  any  deficit  that  might  be  incurred,  or  even  to 
furnish  most  of  the  capital,  which  facts  tend  to  cause  the  undertaking 
soon  to  lose  any  of  the  cooperative  traits  that  it  may  have  once  pos- 
sessed." Thus  the  author  is  of  the  opinion  that  cooperative  manufacturing 
enterprises  among  farmers  should  be  avoided  except  "in  simple  processes, 
as  creameries,  cotton  gins,  etc." 

Isaac  Lippincott. 
Washington  University. 

Getman,  A.  K.  High  school  department  of  vocational  agriculture.  Bull, 
no.  703.     (Albany:    Univ.  of  the  State  of  New  York.     1920.     Pp.  32.) 

Gilbert,  C.  G.  and  Pogue,  J.  E.  America's  power  resources :  the  economic 
significance  of  coal,  oil  and  water-power.  (New  York:  Century.  1921. 
Pp.  xiv,  325.     $2.50.) 

Janicki,  S.  The  history  and  present  conditions  of  the  oil  industry  in- 
Galicia.     (London:    Polish  Press  Bureau.     1921.     Pp.  40.     2s.  6d.) 

Johnson,  O.  R.  Cost  of  producing  wheat  and  oats  in  Missouri:  1920.  Uni- 
versity of  Missouri  circular  100.  (Columbia,  Mo.:  Agri.  Experiment 
Station.     1920.     Pp.  4.) 

Leake,  H.  M.  The  bases  of  agricultural  practice  and  economics  in  the 
United  Provinces,  India.  (Cambridge,  Eng.:  Heffers  &  Son.  1921.  Pp. 
277.) 

Leith,  C.  K.  The  economic  aspects  of  geology.  (New  York:  Holt.  1921. 
Pp.  xiii,  457.    $5.) 

Author  is  professor  of  geology  in  the  University  of  Wisconsin  and  was 
Mineral  Adviser  to  the  Shipping,  War  Trade,  and  War  Industries  Boards. 

MacBoyle,  E.  Mines  and  mineral  resources  of  Plumas  County.  (Sacra- 
mento, Cal.:    State  Mining  Bureau.     1921.     Pp.  ii,  88.     50c.) 

Macklin,  T.  Efficient  marketing  for  agriculture:  its  services,  methods, 
and  agencies.     (New  York:    Macmillan.     1921.     Pp.  xviii,  418.) 

Oates,  M.  B.  and  Revnoldson,  L.  A.  Standards  of  labor  on  the  hill  farms 
of  Louisiana.  Department  of  Agriculture,  bull.  961.  (Washington:  Of- 
fice of  Farm  Management  and  Farm  Economics.     1921.     Pp.  27.     10c) 

Pietsch,  M.   Die  Baumtcolle.    (Leipzig:    Bitterling.    1920.    Pp.  118.    6  M.) 

Ridgley,  D.  C.  The  geography  of  Illinois.  (Chicago:  Univ.  of  Chicago 
Press.     1921.     Pp.  xvii,  385.) 


1921]  Manufacturing  Industries  679 

Roesler,  M.     The  iron-ore  resources  of  Europe.     Bull.  706.     (Washington: 
U.  S.  Geological  Survey.     1921.     Pp.   152.     40c.) 

Spurr,  J.   E.,  editor.     Political  and  commercial  geology   and  the   zvorld's 
mineral  resources.     (New  York:    McGraw-Hill.     1920.     Pp.  x,  562.     $5.) 

This  book  consists  of  a  series  of  short  monographs  prepared  by  special- 
ists and  under  the  general  editorship  of  Mr.  Spurr  who  also  has  con- 
tributed the  final  chapter  bearing  the  rather  striking  title — Who  owns  the 
earth?  There  are  thirty-two  chapters  in  all  and,  excepting  the  last,  each 
is  concerned  with  a  consideration  of  a  single  mineral.  Petroleum  is 
given  first  place  in  the  make-up  of  the  volume,  followed  by  coal  and 
iron.  Next  are  discussed  those  metals  essential  in  the  manufacture  of 
steel.  The  major  metals,  other  than  iron,  are  then  treated,  followed 
by  the  fertilizer  minerals;  and  finally  the  precious  metals  come  in  for 
consideration. 

The  work  as  a  whole  is  designed  to  show  the  relation  of  geology  to 
industry  and  trade.  The  chapters  are  well  written  and  contain,  within  a 
relatively  small  space,  the  most  up-to-date  information  regarding  the 
geographical  distribution  of  the  minerals  considered  and  the  ownership 
of  the  sources  of  supply.  A  number  of  the  authors  are  impressed  with 
the  necessity  of  a  country  securing  control  of  the  sources  of  raw  ma- 
terials, especially  of  the  minerals,  if  it  wishes  to  strengthen  its  political 
power.  A  number  of  well-chosen  illustrations  add  substantially  to  the 
usefulness  of  the  volume.  An  interesting  feature  of  the  work  is  that  the 
authors  do  not  profit  financially  from  its  sale  but  the  royalties,  it  is  an- 
nounced, are  to  be  "assigned  to  an  institution  of  learning  to  finance  fur- 
ther studies  along  the  lines  followed  in  this  volume." 

Avard  L.  Bishop. 

Thompson,  J.  W.     Petroleum  laws  of  all  America.     Bureau  of  Mines,  bull. 
206.      (Washington:    Dept.  of  Interior.     1921.     Pp.  vii,  645.     40c.) 

Commercial  atlas  of  America.     (New  York:    Rand,  McNally.      1921.     Pp. 
lii,  166.     $35.) 

Live  stock  and  animal  products  statistics,  1020.      (Ottawa,  Canada:     Do- 
minion Bureau  of  Statistics,  Internal  Trade  Branch.     1921.     Pp.  67.) 

World  atlas  of  commercial  geology.     Pt.  I.  Distribution  of  mineral  produc- 
tion.    (Washington:    U.  S.  Geological  Survey.     1921.) 
Useful,  with  excellent  maps. 

Manufacturing  Industries 

Manufacturing  Industries  in  America.  By  Malcolm  Keir.  (New 
York :  The  Ronald  Press  Company.  1920.  Pp.  vi,  324.  $3.00.) 
Professor  Keir  points  out  in  his  preface  that  hitherto  books  on 
manufacture  have  been  either  highly  technical  treatises  on  some  par- 
ticular industry,  or  interesting  descriptions  of  some  of  the  unique  fea- 
tures of  manufactures.  Thus  he  felt  that  there  was  a  need  for  a  book 
which  would  satisfy  the  desire  of  "men  actively  engaged  in  manufac- 
turing" who  wish  "to  know  their  own  business  in  all  its  aspects."     The 


680  Reviews  and  Nexv  Books  [December 

author  would  hardly  claim  that  his  book  fully  accomplishes  this  pur- 
pose for  it  is  concerned  with  only  a  limited  number  of  our  leading 
manufactures,  and  the  treatment  is  for  the  purpose  of  showing  growth, 
and  causes  and  effects  of  growth.  Within  this  field,  however,  Profes- 
sor Keir  has  performed  his  task  remarkably  well.  He  has  a  facility  for 
picking  out  essential  conditions  and  for  presenting  them  in  concise  and 
interesting  form.  He  is  in  command  of  a  vast  fund  of  concrete  infor- 
mation about  the  industries  he  discusses  and  he  uses  care  in  selecting 
the  pertinent  facts  for  illustration. 

The  volume  contains  chapters  on  "The  Resources  of  the  United 
States  and  Their  Relation  to  Opportunity,"  the  "Development  of 
Manufacturing,"  in  which  the  author  gives  a  brief  survey  of  the  manu- 
facturing growth  of  the  country,  "The  Localization  of  Industry,"  in 
which  chapter,  in  addition  to  the  stereotyped  reasons  for  localization 
the  author  adds  as  factors  chance,  monopoly,  family  control,  shop  as- 
sociation, prestige,  and  others.  A  chapter  is  devoted  to  the  "Unap- 
preciated Tin-Peddler — His  Services  to  Manufactures."  The  groups  of 
industries  treated  in  the  volume  are:  iron  and  steel,  cotton  manufac- 
tures, wool  manufactures,  leather,  shoes,  and  paper.  Chapter  XI  is  de- 
voted to  "Miscellaneous  Industries."  In  this  section  several  pages  each 
are  given  to  the  manufacture  of  cement,  bricks,  pottery,  glass,  food 
products,  clothing,  wood,  and  ship  building.  From  this  summary  it 
will  appear  that  some  of  our  greatest  industries  have  either  been  omit- 
ted, or  at  best  treated  in  only  summary  manner.  Professor  Keir  does 
not  discuss  the  regulation  of  industry,  nor  the  labor  movement  in  its 
relation  to  manufactures. 

Scattered  through  the  volume  are  statements  which  are  sometimes 
obscure,  sometimes  contradictory.  For  example,  on  page  30  is  the 
statement  that  "We  are  more  or  less  startled,  therefore,  when  we  come 
to  realize  that  throughout  all  the  colonial  period  of  our  history,  there 
was  little  manufacturing  of  any  kind  within  our  borders ;  and  we  are 
slow  to  believe  that  until  1830  only  cotton  and  iron  manufacture  had 
made  much  progress  in  our  country  .  .  ."  and  a  similar  statement  is 
made  in  the  summary  to  the  chapter  on  page  59.  Yet  on  page  39,  com- 
menting on  manufactures  in  colonial  New  England,  the  author  refers  to 
shipbuilding  and  related  industries,  and  to  those  that  supplied  the  ship 
trade,  in  terms  which  indicate  that  such  industries  were  of  considerable 
importance.  Thus,  "The  iron  industry  was  one  of  these,  furnishing 
nails,  bells,  cannon,  shot,  and  anchors,  and  it  is  significant  that  Massa- 
chusetts led  all  the  other  colonies  in  iron  manufacture  for  a  hundred 
years  after  1650."  In  the  same  paragraph,  Professor  Keir  refers  to 
the  "big  cooperage  industry,"  and  to  the  manufacture  of  various  food 
products  and  clothing  to  supply  sailors  and  ship  trade.     Similar  state- 


1921]  Manufacturing  Industries  681 

ments  which  conflict  with  this  thesis  are  found  on  pages  35,  40,  89,  222, 
not  to  mention  others.  The  author  is  probably  not  making  clear 
whether  he  has  in  mind  home-made  manufactures,  factory  manufac- 
tures, or  manufactures,  by  whatever  system,  for  the  market  instead  of 
for  household  consumption. 

The  reviewer  would  also  take  exception  to  such  statements  as  "In  a 
new  country,  where  soil  and  climate  permit,  the  first  activity  to  which 
men  turn  their  attention  is  farming"  (p.  31)  ;  in  this  connection  it  is 
worthy  of  note  that  over  vast  areas  in  our  own  land,  even  where  "soil 
and  climate"  permitted,  lumbering,  mining,  fur  trading,  and  ranching, 
if  that  may  be  regarded  as  separate  from  farming,  have  been  the 
pioneer  activities,  and  these  enterprises  were  often  of  considerable 
magnitude.  What  is  true  of  the  United  States  holds  likewise  for  new 
countries  beyond  our  borders. 

Such  statements  as  the  following  given  in  explanation  of  our  growth 
startle  the  reader:  "The  mere  size  of  the  United  States  then  is  a 
factor  in  its  favor"  (p.  10)  ;  and  "the  highest  degree  of  opportunity 
is  attained  in  a  large,  wealthy  country  with  a  scanty  population"  (p. 
11).  Possibly  the  author  means  by  "wealthy"  great  stores  of  unde- 
veloped resources,  and  by  "opportunity"  that  there  are  few  persons 
to  compete  for  these  resources.  But  to  the  economist,  as  well  as  to  the 
ordinary  reader,  these  terms  more  often  have  another  meaning.  State- 
ments of  this  kind,  however,  are  not  numerous,  and  do  not  impair  the 
value  of  Professor  Keir's  excellent  chapters  on  the  industries  he  has 
discussed. 

Isaac  Lippincott. 

Washington  University. 

NEW    BOOKS 

Ayre,  W.  Organization  for  ship  production:  a  paper  read  before  the  North 
East  Coast  Institution  of  Engineers  and  Shipbuilders.  (New  York:  G.  E. 
Stechert.     1921.     Pp.  50.     $1.) 

Backert,  A.  O.,  editor.  The  A  B  C  of  iron  and  steel;  with  a  directory  of 
the  iron  and  steel  works  and  their  products  of  the  United  States  and 
Canada.  Fourth  edition.  (Cleveland,  O.:  Penton  Pub.  Co.  1921.  Pp. 
1,  408.     $5.) 

Ballard,  M.  The  relation  between  shipbuilding  production  prices,  and  the 
freight  market;  read  before  the  North  East  Coast  Institution  of  Engi- 
neers and  Shipbuilders.    (New  York:   G.  E.  Stechert.    1921.    Pp.34.    $1.) 

Gamble,  T.,  compiler.  Naval  stores;  history,  production,  distribution  and 
consumption.    (Savannah,  Ga. :   Review  Pub.  &  Prtg.  Co.    1921.    Pp.286.) 

Janowsky,  K.  Zwei  Studien  iiber  die  Textilindustrie  in  der  Tschecho- 
Slowakei  und  in  Deutsch-Osterreich.  (Vienna:  Holzel.  1920.  Pp.  109. 
60  K.) 


682  Reviews  and  New  Books  [December 

Directory  of  Illinois  manufacturers.  Edited  by  P.  M.  Walker  and  compiled 
by  D.  MacLean.  (Chicago:  Illinois  Manufacturers'  Assoc.  1920.  Pp. 
1309.     $10.) 

Fifty  years  of  glass  making,  1869-1919.  (Pittsburgh,  Pa.:  Macbeth-Evans 
Glass  Co.     1920.     Pp.  93.) 

Lumber,  lath,  shingles,  etc.  Census  of  Industry,  1918.  (Ottawa,  Canada: 
Dominion  Bureau  of  Statistics.     1920.     Pp.  xi,  35.      10c.) 

Report  on  productive  industries  of  the  commonwealth  of  Pennsylvania  for 
1916-1919.  (Harrisburg:  Dept.  of  Internal  Affairs,  Bureau  of  Sta- 
tistics and  Information.      1920.     Pp.   878.) 

Swift  and  Company  yearbook:  covering  the  activities  for  the  year  1920. 
(Chicago:    Swift  &  Co.     1921.     Pp.  72.) 

Transportation  and  Communication 
The  Electric  Railway  Problem.     By  Delos  F.  Wilcox.     (New  York: 
The  Author.     1921.     Pp.  xx,  789.) 

This  is  an  analytical  report  prepared  by  Dr.  Delos  F.  Wilcox  for 
the  Federal  Electric  Railways  Commission  appointed  May  31,  1919, 
to  investigate  street  railway  conditions  which  had  reached  a  critical 
state  and  had  assumed  national  significance  because  of  the  necessity 
of  service  in  many  cities  during  the  war. 

The  commission  held  one  hearing  in  New  York  City  and  a  series  of 
hearings  in  Washington.  It  thus  accumulated  a  huge  volume  of  evi- 
dence, personal  opinion,  discussion,  statistical  statements,  and  docu- 
ments, which  greatly  overlapped,  and  required  a  comprehensive  and 
systematic  analysis  to  present  the  significance  of  the  mass  of  material. 
Dr.  Wilcox  was  engaged  by  the  commission  to  prepare  such  an  analysis 
which  is  contained  in  the  present  volume.  Unfortunately  the  commis- 
sion was  inadequately  financed  and  found  itself  unable  to  publish  Dr. 
Wilcox's  report,  although  arrangements  were  made  for  the  publication 
of  the  commission's  proceedings  and  various  supplementary  documents. 
Believing  that  his  report  should  be  made  available  to  institutions  and 
individuals  interested  in  street  railway  problems,  Dr.  Wilcox  has  pub- 
lished the  work  at  his  own  expense  and  has  thus  performed  a  great 
service.  His  analysis,  in  the  acknowledgment  of  the  commission,  repre- 
sents "a  complete  and  masterful  study  of  the  whole  electric  railway 
problem." 

The  failure  to  publish  Dr.  Wilcox's  report  is  particularly  unfortun- 
ate since  it  tends  to  support  a  widely  prevailing  feeling  that  the  investi- 
gation was  furthered  as  part  of  a  country-wide  propaganda  by  street 
railway  interests  for  an  increase  in  fares,  to  bring  national  pressure 
upon  local  communities  to  remove  franchise  and  contractual  restric- 
tions upon  fares — not  a  serious  inquiry  to  determine  the  facts  and  to 


1921]  Transportation  and  Communication  683 

discover  unbiassed  solutions  of  the  different  problems.  Dr.  Wilcox's 
report  completely  disposed  of  such  propaganda  efforts  and  presented 
the  materials  from  the  standpoint  of  desirable  public  policy.  The  feel- 
ing, therefore,  prevails  among  serious  students  of  street  railway  policy 
that  the  failure  to  publish  the  report  was  perhaps  not  altogether  dis- 
sociated from  the  conflict  of  views  of  Dr.  Wilcox  and  the  people  who 
had  engineered  or  attempted  to  engineer  the  active  scope  and  purpose 
of  the  investigation. 

It  is  impossible  within  the  limits  of  this  review  to  give  an  adequate 
summary  of  this  comprehensive  and  voluminous  report.  Dr.  Wilcox 
covers  in  54  chapters,  plus  appendix  and  index,  an  analysis  not  only  of 
the  commission's  proceedings  and  statements  filed,  but  supplements  such 
data  with  further  facts  and  studies  which  were  required  for  adequate 
presentation  of  the  problems.  The  central  point  of  the  analysis  relates 
to  questions  connected  with  impairment  of  credit  including  a  dis- 
cussion of  the  causes  and  the  means  of  restoration.  Among  the  causes 
are  over-capitalization  and  its  various  attending  financial  mismanage- 
ments ;  failure  of  the  companies  to  take  advantage  of  possible  economies 
of  operation ;  hostility  of  the  public  due  to  unsocial  attitude  of  the 
management;  the  increase  in  cost  of  operation;  competition  of  auto- 
mobiles and  jitneys;  restrictions  upon  fares  particularly  by  franchise 
and  contracts. 

The  chief  methods  of  relief  for  the  restoration  of  credit  are  discussed 
under  proposals  to  remit  taxes,  paving  obligations,  and  other  municipal 
charges ;  limiting  automobile  competition  and  particularly  placing 
jitney  service  under  public  regulation;  financial  reorganization  of  the 
companies ;  use  of  public  credit ;  better  methods  of  cooperation  between 
companies  and  employees ;  the  increase  in  fares,  particularly  the  use 
of  the  zone  system;  and  the  feasibility  of  the  so-called  "cost  of  ser- 
vice" contracts. 

In  all  the  discussions,  Dr.  Wilcox  quotes  the  opinions  of  the  princi- 
pal witnesses  before  the  commission,  presents  the  more  important  sta- 
tistical and  documentary  data  and  offers  such  conclusions  as  seem  to 
him  reasonable  on  the  basis  of  all  available  information. 

Dr.  Wilcox  has  little  expectation  that  vital  reorganization  of  the 
street  railway  management  is  possible  without  ultimate  municipal  or 
public  ownership  and  operation.  This  is  offered  as  the  only  final  so- 
lution ;  everything  else  is  futile  or  temporary,  as  fundamentally  incon- 
sistent with  the  underlying  public  interest  in  local  transportation.  He 
recognizes,  however,  the  difficulties  confronted  by  municipal  ownership 
and  operation  and  realizes  that  this  solution  is  in  most  cases  not  im- 
mediately available,  having  to  wait  particularly  for  far-reaching 
changes  in  law  and  constitution  and  the  possibility  of  financing  the 
policy. 


684  Reviews  and  New  Books  [December 

Perhaps  a  valid  criticism  of  the  analysis  is  the  rather  persistent  pre- 
sentation of  facts  from  the  standpoint  of  public  ownership  and  opera- 
tion. If  the  investigation  was  engineered  in  part  as  propaganda  for 
street  railway  interests,  Dr.  Wilcox  at  least  gives  grounds  for  the 
countercharge  that  his  analysis  is  a  somewhat  disguised  brief  for  mu- 
nicipal ownership  and  operation.  Any  important  general  solution  that 
may  be  offered  is,  of  course,  a  matter  of  opinion  and  involves  the  ques- 
tion of  soundness  of  judgment  which  cannot  be  conclusively  measured. 
Personally,  I  believe  Dr.  Wilcox  over-stresses  the  factors  which  he  thinks 
inevitably  lead  to  municipal  ownership  and  operation  and  rather  glosses 
over  the  difficulties.  The  fundamental  trouble  in  the  street  railway 
situation  undoubtedly  has  been  the  deep-seated  conflict  of  public  and 
private  interests,  but,  I  believe,  in  many  instances  or  most  cases  this 
can  be  settled  or  the  area  of  conflict  greatly  limited  by  organization 
other  than  the  author's  proposal. 

Undoubtedly  every  city  should  be  free  to  determine  its  own  trans- 
portation policy  and  all  arbitrary  legal  restrictions  upon  the  introduc- 
tion of  public  ownership  and  operation  should  be  removed.  With  free- 
dom for  "self  determination"  many  cities  undoubtedly  would  adopt  Dr. 
Wilcox's  idea,  but  other  equally  desirable  or  for  particular  instances 
even  superior  ways  may  be  available  to  reach  the  financial  stability  and 
organization  consistent  with  the  public  interest.  The  limit  of  space, 
however,  does  not  permit  more  concrete  discussion  of  such  other  pos- 
sibilities. 

The  obstacles  to  Dr.  Wilcox's  goal  are  admittedly  great,  conse- 
quently there  must  be  open  mind  to  the  possibility  of  other  methods. 
The  local  conditions  are  so  various,  particularly  there  are  so  many  dif- 
ferent psychological  factors  in  the  public  attitude,  also  so  many  tech- 
nical and  financial  entanglements,  that  the  insistence  upon  a  single 
form  of  organization  to  meet  all  cases  has  at  least  the  appearance  of 
doctrinaire  opinion,  and  challenges  disagreement.  Dr.  Wilcox  may  be 
right,  but  he  speaks  with  considerably  greater  certainty  than  seems  to 
be  warranted  by  the  great  confusion  of  elements  which  affect  the 
problem. 

John  Bauer. 

New  York  City. 

NEW    BOOKS 

Gengenbach,  E.  Common  sense  vs.  prohibition  in  railroad  rates,  192*1. 
American  national  economics,  series  no.  3.  Third  edition.  (Washington: 
John  Byrne  &  Co.,  715   14th  St.,  N.  W.      1921.      Pp.  40.     25c.) 

Lethem,  R.  The  interpretation  of  tariffs.  (Chicago:  The  Traffic  Service 
Corporation.     1921.     Pp.  1,  152.) 


1921]  Trade,  Commerce  and  Commercial  Crises  685 

MacElwee,  R.  S.  and.  Ritter,  A.  H.  Economic  aspects  of  the  Great 
Lakes-St.  Lawrence  ship  channel.  (New  York:  Ronald.  1921.  Pp. 
291.     $4.) 

McVey,  F.  Le  R.  Railway  transportation;  some  phases  of  its  history, 
operation  and  regulation.  (Chicago,  111.:  Lincoln  Inst,  of  Business. 
1921.     Pp.  406.     $3.) 

Ouspensky,  G.  I.  Future  Russian  railroad  construction.  Its  scope  and 
manner  of  realization.  (New  York:  Youroveta  Home  &  Foreign  Trade 
Co.     1921.     Pp.  51.) 

Powell,  F.  W.  The  railroads  of  Mexico.  (Boston:  The  Stratford  Co.,  12 
Pearl  St.     1921.     Pp.  vii,  226.     $2.) 

Pratt,  E.  A.  British  railways  and  the  great  war.  In  10  parts.  (London: 
Selwyn  &  Blount.     1921.     3s.  6d.  each.) 

Riegel,  R.  Merchant  vessels.  (New  York:  Appleton.  1921.  Pp.  x, 
257.     $4.) 

"This  is  one  of  a  'Shipping  Series'  designed  as  a  basis  for  instruction 
in  the  various  phases  of  the  steamship  business."  Part  1  deals  with 
construction,  types,  and  uses  of  merchant  vessels,  and  Part  2,  the  meas- 
urement of  merchant  vessels. 

Salter,  J.  A.  Allied  shipping  control:  an  experiment  in  international  ad- 
ministration. Carnegie  Endowment  for  International  Peace,  economic  and 
social  history  of  the  world  war,  vol.  I.  (London:  Oxford  Univ.  Press. 
1921.     Pp.  xxiii,  369.     10s.  6d.) 

Sharfman,  I.  L.  The  American  railroad  problem:  a  study  in  war  and  re- 
construction.    (New  York:    Century.     1921.     Pp.  xiii,  474.     $3.) 

Smith,  A.  R.,  compiler.  Port  of  New  York  annual.  (New  York:  Smith's 
Port  Pub.  Co.,  5  South  St.     1920.     Pp.  526.     $5.) 

Marketing  live  stock  by  motor  truck.  Bull.  no.  8.  (Akron,  Ohio:  Firestone 
Tire  &  Rubber  Co.     1921.     Pp.  45.) 

Municipal  trolley  operation  in  New  York  City.  (New  York:  Municipal 
Reference  Library.     1921.     Pp.  3.) 

Railroad  talks  based  on  Pennsylvania  System  practices.  Vol.  I.  (Phila- 
delphia, Pa.:    Y.  M.  C.  A.,  Pennsylvania  Railroad  Branch.     1920.) 

Record  of  American  and  foreign  shipping,  New  York,  1921.  (New  York: 
American  Bureau  of  Shipping.     1921.     Pp.   1296.) 

Trade,  Commerce,  and  Commercial  Crises 

NEW    BOOKS 

Bernhardt,  J.  A  statistical  survey  of  the  sugar  industry  and  trade  of  the 
United  States,  1918  and  1919.  (New  York:  U.  S.  Sugar  Equalization 
Board.     1920.     Pp.  113.) 

The  problem  of  the  Sugar  Equalization  Board  was  that  of  increasing 
and  controlling  supplies  while  holding  down  prices.  The  organization 
provided  to  do  this  work  and  the  means  adopted,  are  adequately  described 
in  Mr.  Bernhardt's   Government  Control  of  Sugar,  recently  reviewed  in 


686  Reviews  and  New  Books  [December 

these  pages.  That  volume  was  essentially  a  narrative;  the  Statistical 
Survey  presents  the  data  justifying  the  policies  adopted.  It  is  a  book 
of  evidence,  without  detailed  analysis  of  the  general  considerations  in- 
volved in  the  solution  of  the  main  problem.  Detailed  tables  are  included 
and  diagrams  are  effectively  used. 

The  essential  first  step  was  the  inventory  of  existing  supplies  of  sugar, 
and  an  estimate  of  expected  seasonal  increments.  This  involved  also  the 
building-up  of  figures  on  refiners'  receipts  and  meltings,  and  of  distribu- 
tion from  American  sources  of  supply.  Here  it  was  necessary  to  pioneer. 
Whereas,  in  other  fields,  the  bringing  together  of  existing  data  frequently 
served  the  purpose  of  the  board,  it  was  now  found  necessary,  for  control 
purposes,  to  build  up  complete  weekly  figures  of  all  receipts  of  sugar,  by 
"ports  and  kinds."  This  was  the  first  time  such  a  record  had  been  ob- 
tained from  the  sugar  refining  industry.  Accurate  information  on  distri- 
bution was  equally  essential  as  a  basis  for  applying  the  restrictive  regu- 
lations imposed  on  sugar  consumers.  Figures  were  therefore  prepared 
showing  the  destination  of  sugar  shipments,  and  the  distribution  of  sugar 
moving  among  various  classes  of  consumers.  The  statistical  measurement 
of  the  demand  side  of  the  market  called  for  patience,  care,  ingenuity  and  a 
high  degree  of  cooperation.  The  tables,  reproduced  at  length,  testify  to 
the  care  with  which  the  details  were  considered.  A  brief  chapter  dis- 
cussing the  exports  of  refined  sugar  disclosed  the  rigid  limitation  of  ex- 
ports in  1918,  only  the  countries  associated  with  the  United  States  in  war 
receiving  appreciable  quantities  of  the  refined  product. 

Standing  alone,  the  Statistical  Survey  gives  an  incomplete  picture. 
There  is  needed  an  explanatory  discussion  of  the  machinery  and  policies 
of  the  organization  using  the  figures.  This  the  narrative  provided.  Taken 
together,  Mr.  Bernhardt's  studies  present  a  most  satisfactory  story  of 
price  regulation  in  the  sugar  industry. 

Homer  B.  Vanderblue. 

Booth,  W.  H.    Foreign  trade  and  the  interior  bank.     (New  York:  Guaranty 
Trust  Co.     1920.     Pp.  18.) 

Erdman,  H.  E.     The  marketing  of  whole  milk.     (New  York:    Macmillan. 
1921.     Pp.  xvi,  333.     $4.) 

Hermberg,  P.     Der  Kampf  um  den  Weltmarkt.     (Jena:    Fischer.     1920. 
Pp.  135.) 

Der  Kampf  um  den  Weltmarkt  presents  in  convenient  form  a  large 
amount  of  statistical  fact  concerning  world  trade  during  the  period  prior 
to  1913.  The  first  part,  consisting  of  nine  general  tables,  gives  sta- 
tistics concerning  distribution  of  trade  among  the  commercial  nations  of 
the  world,  the  individual  tables  referring  to  general  exports,  participa- 
tion of  various  nations  in  total  exports  apportioned  according  to  chief 
commodities.  The  second  part,  consisting  of  five  tables,  deals  particu- 
larly with  the  participation  of  the  commercial  peoples  of  the  world  in  the 
trade  of  five  market  areas,  namely,  Europe,  Central  and  South  America, 
the  British  Empire,  Asiatic  lands,  the  French  colonies  and  African  coun- 
tries. The  material  is  carefully  collected  from  original  sources  and  much 
care  has  been  taken  in  selection  of  sources  and  presentation  of  data, 
but  no  interpretations  or  conclusions  are  given.  Altogether,  within  its 
narrow  field,  it  is   a  useful  collection  of  material,  the  interpretation   of 


1921]  Trade,  Commerce  and  Commercial  Crises  687 

which   will   furnish  to  the   student   of   economic   and   commercial   history 
much  material  for  study  and  reflection.  Harry  R.  Tosdal. 

Hough,  B.  O.,  compiler.  American  Exporter  export  trade  directory.  (New 
York:    Johnston  Export  Pub.  Co.     1921.     Pp.   1036.     $10.) 

Lindsay,  S.  McC,  editor.  American  foreign  trade  relations:  a  series  of 
addresses  and  papers  presented  at  the  annual  meeting  of  the.  Academy  of 
Political  Science,  December  9-10,  1920.  Proceedings,  vol.  IX,  no.  2. 
(New  York:  Columbia  Univ.,  Academy  of  Pol.  Sci.  1921.  Pp.  186. 
$1.50.) 

Macklin,  T.  Efficient  marketing  for  agriculture:  its  services,  methods, 
and  agencies.      (New  York:    Macmillan.      1921.     Pp.  xviii,   118.) 

Notz,  W.  F.  and  Harvey,  R.  S.  American  foreign  trade.  (Indianapolis, 
Ind.:   Bobbs-Merrill.     1921.     Pp.  xv,  593.     $5.) 

The  complete  title  of  the  book,  American  Foreign  Trade  as  Promoted 
by  the  W ebb-Pomerene  and  Edge  Acts  with  Historical  References  to  the 
Origin  and  Enforcement  of  the  Anti-trust  Laws,  indicates  much  more 
clearly  the  scope  and  content  of  the  work  than  the  cover  title.  Part  I, 
consisting  of  seventeen  pages,  is  a  brief  resume  of  the  evolution  of  trade 
policy,  chiefly  public  policy  toward  industrial  combination.  Part  II  is  a 
restatement  of  the  history  of  the  origin  and  enforcement  of  American 
anti-trust  laws,  adding  but  little  to  previous  works  except  a  brief  exam- 
ination of  the  work  of  the  Federal  Trade  Commission.  Part  III,  en- 
titled "Cooperation  the  Watch-word  in  World  Trade,"  aims  to  show,  on 
the  basis  of  brief  examination  of  the  development  of  combination  in 
various  countries  before  the  war,  that  foreign  trade  has  been  promoted 
by  combination  and  that  some  sort  of  combination  has  emerged  in  major 
countries  from  the  war  as  a  necessity,  the  conclusion  being  drawn  that 
development  of  American  foreign  trade  requires  cooperation  and  com- 
bination. Part  IV,  together  with  the  appendix  of  documents  and  ma- 
terial relative  to  export  combinations,  constitutes  undoubtedly  the  most 
valuable  part  of  the  work,  furnishing  a  careful  examination  of  the  Webb- 
Pomerene  law  and  a  reprint  of  the  articles  of  several  export  associations. 
The  legal  phases  are  stressed  and  the  advantages  for  business  are  pointed 
out,  but  there  is  no  serious  attempt  to  appraise  the  law  and  its  operation 
from  an  economic  standpoint.  Parts  V  and  VI,  upon  the  Edge  act  and 
compacts  in  world  commerce,  are  briefly  treated. 

The  specific  criticisms  which  the  reviewer  would  make  of  the  work  are 
first  that  of  the  four  hundred  pages  of  text  over  one-fourth  is  taken  up 
by  historical  account  of  trust  regulation  which  has  its  connection  with 
the  passage  of  the  Webb-Pomerene  Law,  to  be  sure,  but  which  has  little 
reason  for  inclusion  in  a  book  advertised  as  "a  practical  and  basic  guide- 
book of  American  trade  extension."  While  the  time  may  be  ripe  for  re- 
examination of  our  policy  toward  industrial  combination,  the  need  is  for 
much  more  thorough  analysis  than  is  attempted  by  the  authors.  In  the 
second  place,  the  authors  venture  little  of  scientific  criticism,  the  short 
chapter  upon  the  subject  consisting  mainly  of  extracts  from  public  ut- 
terances. The  impression  may  easily  be  secured  that  the  study  of  ex- 
port combinations  has  not  been  approached  without  prejudice. 

Harry  R.  Tosdal. 


688  Reviews  and  New  Boohs  [December 

Schmidt,  E.  W.  Die  agrarische  Exportzvirtschaft  Argentiniens,  ihre  Ent- 
wichlung  und  Bedeutung.     (Jena:    Fischer.     1920.     Pp.  xv,  286.     35  M.) 

Schwedtman,  F.  C.  The  development  of  Scandinavian- American  trade  re- 
lations. Foreign  commerce  series,  no.  5.  (New  York:  National  City 
Bank.     1921.     Pp.   125.) 

The  American  silk  trade,  season  1919-1920.  (New  York:  Silk  Assoc,  of 
America.     1920.    Pp.  5.) 

Annual  report  of  the  trade  of  Canada  (imports  for  consumption  and  ex- 
ports), fiscal  year  ended  March  31,  1920.  (Ottawa,  Canada:  Dominion 
Bureau  of  Statistics.     1921.     Pp.  1394.     90c.) 

Royal  Commission  on  the  sugar  supply.  Second  report.  (London:  King. 
1921.     3d.) 

Wholesale  food  markets  of  London.  Fourth,  fifth  and  final  reports  of  the 
Departmental  Committee  on  Food  Markets.    (London:    King.    1921.    4d.) 

Accounting",    Business    Methods,    Investments,   and    the 

Exchanges' 

NEW    BOOKS 

Babson,  R.  W.  Enduring  investments.  (New  York:  Macmillan.  1921. 
$1.50.) 

.      Malting  good   in   business.      (New   York:     Revell.      1921. 

Pp.  175.     $1.25.) 

Bell,  S.     Accounting  principles.     (New  York:    Macmillan.     1921.) 

Bell,  W.  H.     Accountants'  reports.     (New  York:    Ronald.     1921.) 

Bonnett,  C.  E.  Employers'  associations  in  the  United  States.  (New 
York:    Macmillan.      1921.     $4.) 

Bordeaux,  L.  Les  nouvelles  legislations  immobilizes  et  hypothecates. 
(Paris:    Dalloz.     Pp.  xiv,  418.) 

Bourbeau,  M.  La  Bourse  des  Valeurs  de  Paris  pendant  la  guerre  (191^- 
1920).  (Paris:  Librairie  Generale  de  Droit  et  de  Jurisprudence.  1921. 
Pp.  384.     25  fr.) 

This  work,  though  written  largely  from  a  legal  standpoint,  contains 
important  data  relating  to  the  status  of  the  Paris  Bourse  and  the  pre- 
vailing methods  of  distributing  and  liquidating  securities  in  France.  The 
author  analyzes  the  French  government  decrees  closing  the  Bourse  at 
the  outbreak  of  the  war  and  imposing  a  moratorium  together  with  the 
other  regulations  for  liquidating  uncompleted  Bourse  transactions.  Of 
more  importance  for  American  readers  is  the  narrative  relating  to  the 
French  securities  market  before  and  during  the  European  war.  For  more 
than  a  decade  before  the  war,  security  prices  on  the  Paris  Bourse  had 
been  declining.  Foreign  issues,  moreover,  were  taking  precedence  in 
speculative  transactions  over  domestic  securities.  Because  of  the  red 
tape  in  effecting  exchange  transactions  due  to  the  monopoly  of  the  syndi- 
cate of  the  agents  de  change,  the  French  banks  and  their  agencies  had 
gradually  developed  independent  methods  of  marketing  securities. 


1921]         Accounting,  Business  Methods  and  the  Exchanges  689 

The  Paris  Bourse  was  closed  by  order  of  the  government  on  July  31, 
1914,  and  remained  closed  until  September  30,  1915.  When  it  reopened, 
transactions  were  limited  in  scope,  and,  as  in  New  York  and  London, 
prices  were  regulated  and  controlled  through  government  agencies.  Ac- 
cordingly, the  speculative  market  (marche  a  terme)  was  not  opened  un- 
til January  2,  1920.  The  principal  motive  for  the  reopening  of  the 
Bourse  in  1915  was  the  need  of  assistance  on  the  part  of  the  agents  de 
change  in  the  flotation  of  the  government  loans. 

The  French  government,  like  the  British,  prohibited  new  capital  flota- 
tions in  the  Paris  market  not  directly  or  indirectly  assisting  the  prosecu- 
tion of  the  war,  thus  excluding  all  foreign  issues,  and  endeavored  to 
mobilize  foreign  securities  with  a  view  to  supporting  franc  exchange. 
Unfortunately,  investments  had  been  encouraged  before  the  war  in  Rus- 
sian, Turkish  and  Balkan  securities  which  were  almost  worthless  as  a 
means  of  establishing  French  credits  in  neutral  markets.  The  French, 
moreover,  did  not  favor  securities  in  foreign  currencies.  For  this  reason 
several  American  railroads  were  required  to  place  their  issues  on  the 
Paris  market  in  franc  denominations.  Though  some  of  these  securities 
were  resold  to  American  bankers  and  reconverted  into  dollar  bonds,  the 
bulk  of  them  remained  in  Paris  and  could  not  be  used  for  the  "pegging" 
of  exchange. 

The  author,  like  so  many  financial  writers  of  the  day,  "takes  his  fling" 
at  the  policy  of  inflation.  He  notes  that  France  was  particularly  guilty 
"in  arbitrarily  multiplying  the  instruments  of  purchasing  power — and 
thereby  driving  out  good  money  and  propagating  the  lamentable  illusion 
of  prosperity  through  an  excessive  fiduciary  currency"  (pp.  314-315). 
To  this  he  ascribes  a  large  part  of  the  fictitious  rise  in  the  market  value 
of  many  securities. 

The  most  interesting  and  instructive  section  of  Dr.  Bourbeau's  book  is 
the  discussion  of  the  need  and  the  possibilities  of  Bourse  reform  in  an 
appendix  entitled  "The  Reorganization  of  the  Paris  Market."  The  old 
arrangement  granting  the  syndicate  of  seventy  agents  de  change  a  mo- 
nopoly of  transactions  executed  on  the  floor  (parquet)  of  the  Bourse  is 
obsolete  and  ineffective.  As  a  result,  the  bulk  of  security  transactions 
are  not  executed  on  the  parquet,  and  speculation  is  encouraged  more  than 
discouraged  by  the  severe  listing  restrictions  enforced  by  the  French  gov- 
ernment through  the  syndicate.  Because  of  their  peculiar  monopoly  cov- 
ering certain  classes  of  transactions,  the  agents  de  change  (who  are  sup- 
posed to  act  as  mere  intermediaries)  take  advantage  of  the  opportunities 
to  speculate  on  their  own  account  and  to  "rig  the  market."  The  author 
thinks  that  the  best  plan  for  reform  should  favor  the  interests  of  the  con- 
sumer and  he  quotes  from  Bastiat  that  "the  consumer's  interest  is  identi- 
cal with  the  interest  of  humanity"  (p.  382).  What  connection  Bastiat's 
dictum  has  with  effective  stock  exchange  reform  in  Paris  or  elsewhere, 
the  reviewer  confesses  himself  as  entirely  ignorant. 

A.  M.  Sakolski. 

Cambon,    V.       L'industrie    organisee     d'apres     les     methodes     americaines. 
(Paris:    Payot.     1920.     Pp.  268.      16  fr.) 

Campbell,  H.  B.     Legal  aspects  of  the  transfer  of  securities.     (New  York: 
Doubleday,  for  Investment  Bankers  Assoc,  of  America.     1920.     Pp.  100.) 


690  Reviews  and  New  Books  [December 

Carlioz,  J.  Le  gouvernement  des  entreprises  commer dales  et  industrielles. 
(Paris:    Dunod.     1921.     Pp.  vi,  319.     28  fr.) 

Cole,  W.  M.  Bookkeeping,  accounting  and  auditing.  (Chicago:  Lincoln 
Inst,  of  Business.     1921.     Pp.  479.     $3.) 

Previously  published  under  title  Accounting  and  auditing  by  the  Cree 
Pub.  Co.  in  1910. 

Cole,  W.  M.  The  fundamentals  of  accounting.  With  the  collaboration  of 
Anne  Elizabeth  Geddes.  (Boston:  Houghton  Mifflin.  1921.  Pp.  xi, 
434.     $3.50.) 

Collver,  C.  Industrial  securities,  an  outline.  (New  York:  Doubleday. 
1921.     Pp.  xiv,  115.) 

This  volue  is  one  of  a  series  published  by  the  Education  Committee  of 
the  Investment  Bankers  Association  of  America.  It  contains  a  syllabus 
of  topics  with  references  to  collateral  reading  and  explanatory  comment; 
of  special  value  are  the  chapters  on  Analysis  of  Income  Accounts,  and 
Special  Financial  Standards.  At  the  end  of  the  volume  there  is  a  bibli- 
ography. 

Cox,  W.  E.  Cost  accounting  for  retail  fuel  dealers.  Bull.  no.  138.  (Seat- 
tle, Wash.:    Univ.  of  Washington  Press.     1920.     Pp.  63.     $1.) 

Cunningham,  E.  H.  Bookkeeping  and  elementary  accounting.  (Portland, 
Me.:    Author.     1920.     Pp.  409.) 

Duncan,  C.  S.  Business  studies.  I,  Stock  records  and  perpetual  inventory 
(pp.  16)  ;  II,  Methods  of  paying  salesmen  (pp.  26)  ;  III,  Problems  of 
sales  management  and  sales  conferences  (pp.  19);  IV,  The  broken  pack- 
age room  (pp.  20).  (New  York:  Bureau  of  Business  Research  of  the 
Southern  Wholesale  Grocers'  Association.    1921.) 

Elbourne,  E.  T.  Factory  administration  and  cost  accounts.  (London: 
Longmans.      1921.     45s.) 

Esquivel  Obregon,  T.  Latin-American  commercial  law.  With  the  collabo- 
ration of  E.  M.  Bourchard.  (New  York:  The  Banks  Law  Bk.  Co. 
1921.     Pp.  xxiii,  972.     $10.) 

Fox,  I.  P.  One  thousand  xvays  and  schemes  to  attract  trade.  Gathered 
from  actual  experiences  of  successful  merchants.  (Boston:  The  Spatula 
Pub.  Co.     1921.     Pp.  195.     $1.50.) 

Garber,  O.  Txventieth  century  bank  accounting :  a  treatise  on  modern  bank- 
ing as  illustrated  in  the  business  transactions  which  accompany  this  text. 
(Cincinnati,  O.:    South- Western  Pub.  Co.     1921.     Pp.  79.     60c.) 

Greenwood,  W.  J.  American  and  foreign  stock  exchange  practice,  stock 
and  bond  trading,  and  the  business  corporation  latcs  of  all  nations.  First 
American  edition.  (New  York:  Financial  Books  Co.  1921.  Pp.  xxi, 
1048.) 

de    Haas,  J.   A.      Business   organisation   and  administration.      (New   York: 

Gregg  Pub.  Co.     1921.     Pp.  ix,  353.     $1.60.) 
Hall,   S.    R.      The   advertising   handbook:   a    reference    work    covering    the 

principles    and    practice    of    advertising.       (New    York:      McGraw-Hill. 

1921.     Pp.  ix,  743.     $5.) 


1921]         Accounting,  Business  Methods  and  the  Exchanges  691 

Hamilton,  G.  R.  Introduction  to  shoe  store  management.  In  collabora- 
tion with  F.  R.  Briggs,  and  others.  (Boston:  Retail  Shoe  Salesman's 
Inst.      1921.     Pp.  xi,  209.) 

Harrison,  G.  C.  Cost  accounting  to  aid  production.  A  practical  study  of 
scientific  cost  accounting.  (New  York:  Engineering  Mag.  Co.  1921. 
Pp.  xvi,  234.     $7.50.) 

In  a  number  of  articles  appearing  in  Industrial  Management  between 
October,  1918,  and  March,  1920,  which  have  been  revised  and  elaborated 
to  form  the  present  volume,  the  author  not  only  shows  that  cost  account- 
ing should  be  more  concerned  with  making  intelhgent  forecasts  than  in 
recording  past  events,  but  also  demonstrates  how  such  a  thing  is  pos- 
sible in  many  instances.  Numerous  quotations  from  historical,  philosophi- 
cal and  general  references  add  stimulus  and  interest,  although  in  some 
cases  the  point  of  these  illustrations  is  somewhat  far-fetched.  Some 
twenty-two  charts  and  diagrams  are  used  to  good  advantage  on  the  whole, 
but  a  few  might  have  been  a  little  less  complicated  and  would  have  ac- 
complished the  same  purpose.  The  book  is  decidedly  worth  while  and 
should  interest  the  manufacturer  as  well  as  the  engineer  and  accountant. 
Its  arrangement,  however,  is  not  suitable  for  classroom  purposes  and  could 
not  be  used  to  advantage  by  the  teacher  except  for  collateral  reading. 

M.  J.  Shugrue. 

Ivey,  P.  W.  Principles  of  marketing :  a  textbook  for  colleges  and  schools  of 
business  administration.     (New  York:    Ronald.     1921.     Pp.  351.     $3.) 

Jevons,  H.  S.  The  economics  of  tenancy  law  and  estate  management,  being 
a  course  of  public  lectures  delivered  in  the  University  of  Allahabad,  Feb- 
ruary to  April,  1921.  Bull.  no.  17.  (Allahabad,  India:  The  University, 
Economics  Dept.     1921.     Pp.   114.) 

Kales,  A.  M.  Estates,  future  interests,  and  illegal  conditions  and  restraints 
in  Illinois,  1920.  A  treatise  on  estates  and  future  interests  with  an  his- 
torical introduction.  Second  edition,  enlarged.  (Chicago:  Callaghan  & 
Co.     1920.     $12.) 

Kitson,  H.  D.  The  mind  of  the  buyer:  a  psychology  of  selling.  (New 
York:    Macmillan.     1921.     Pp.  210.) 

Korzybski,  A.  Manhood  of  humanity :  the  science  and  art  of  human  engi- 
neering.    (New  York:    Dutton.      1921.     Pp.  xiii,  264.     $3.) 

Lagerquist,  W.  E.    Investment  analysis.     (New  York:    Macmillan.     1921.) 

Lahy,  J.  M.  Le  systeme  Taylor  et  la  physiologie  du  travail  professionnel. 
(Paris:    Gauthier-Villars.      1921.     Pp.  216.) 

Lichtner,  W.  O.  Time  study  and  job  analysis.  (New  York:  Ronald. 
1921.     Pp.  397.     $6.) 

McCormick,  H.  H.  and  Wilber,  C.  H.  The  salesman's  rights  under  the 
federal  and  state  laws  as  applied  to  interstate  commerce.  (Chicago: 
Authors,  Ashland  Block.     Pp.  30.     $1.50.) 

Mc Johnston,  H.  Business  correspondence.  (New  York:  Alexander  Ham- 
ilton Inst.     1921.     Pp.  xv,  322.) 


692  Reviews  and  New  Books  [December 

McKay,  C.  W.  Telephone  rates  and  values.  (Boston:  Cornhill  Pub.  1921. 
Pp.  245.     $4.50.) 

McLaughlin,  R.  P.  Oil  land  development  and  valuation.  (New  York: 
McGraw-Hill.     1921.     Pp.  viii,  196.     $3.) 

McMath,  J.  C.  Speculation  and  gambling  in  options,  futures  and  stocks  in 
Illinois.     (Chicago:    G.  I.  Jones.     1921.     Pp.  xxxvi,  70.) 

McMichael,  S.  L.  Long  term  land  leaseholds,  including  ninety-nine  year 
leases.     (Cleveland,  O. :    Author.     1921.     Pp.190.) 

Manly,  J.  M.  Better  advertising :  a  practical  manual  of  the  principles  of 
advertising.      (Chicago:    F.  J.  Drake  &  Co.      1921.     Pp.   157.) 

Meyer,  H.  H.  B.,  chief  bibliographer.  List  of  references  on  landlord  and 
tenant,  with  special  reference  to  recent  rent  increases.  (Washington: 
Library  of  Congress,  Division  of  Bibliography.      1920.     Pp.  9.) 

Moore,  W.  C.  Wall  Street,  its  mysteries  revealed,  its  secrets  exposed,  to- 
gether with  a  complete  course  of  instruction  in  speculation  and  investment 
and  rules  for  safe  guidance  therein.  (New  York:  Author.  1921.  Pp. 
144.) 

Munson,  E.  L.  The  management  of  men.  (New  York:  Holt.  1921.  Pp. 
795.     $6.) 

Musick,  W.  L.  Practical  bookkeeping  and  accounting.  (Chicago:  Uni- 
versal Textbook  Co.     1921.     Pp.  242.) 

Oberg,  E.  V.  Modern  apprenticeships  and  shop  training  methods.  (New 
York:    The  Industrial  Press.     1921.     Pp.  ix,  118.     $1.) 

Putney,  A.  H.  Commercial  laxo  and  interstate  commerce,  legal  forms. 
(Chicago:    Lincoln  Inst,  of  Business.     1921.     Pp.  v,  467.     $3.) 

Rietz,  H.  L.,  Crathorne,  A.  R.  and  Rietz,  J.  C.  Mathematics  of  finance. 
(New  York:    Holt.     1921.     Pp.  xii,  280.) 

Contains  chapters  on  interest,  annuities,  valuation  of  bonds,  mathematics 
of  depreciation,  the  operation  of  funds  in  building  and  loan  associations, 
theory  of  probability  with  special  reference  to  its  application  in  insurance, 
and  the  valuation  of  life  insurance  policies. 

Russell,  T.  H.  Salesmanship  and  advertising.  Real  estate,  by  G.  W. 
Kirkman.     (Chicago:    Lincoln  Inst,  of  Business.     1921.     Pp.  328.     $3.) 

Sakolski,  A.  M.  Elements  of  bond  investment.  (New  York:  Ronald. 
1921.     Pp.  158.     $2.) 

The  author  of  this  little  volume  limits  his  discussion  to  modern  finan- 
cial investment,  which  he  considers  to  be  "surrendering  of  purchasing 
power  to  another,  with  a  view  to  obtaining  a  profit  in  addition  to  the 
amount  surrendered"  (p.  3),  and  still  further,  as  the  title  of  the  volume 
indicates,  to  corporate  bonds.  The  treatment  throughout  the  book  is 
brief  and  not  intended  to  be  exhaustive.  It  is  a  "first  book"  in  bond  in- 
vestment. Bonds  are  classified  into  national  government,  state,  county 
and  municipal  bonds,  and  railroad,  public  utility,  and  industrial  bonds. 
Each  type  is  briefly  described  and  the  important  investment  considerations 
noted.     There  is  a  short  bibliography  at  the  end  of  each  chapter.     The 


1921]         Accounting,  Business  Methods  and  the  Exchanges  693 

chapter  on  financial  statements  contains  a  good  outline  of  those  parts  of 
accounting  theory  most  essential  to  an  understanding  of  corporate  affairs 
in  their  relation  to  investment  bonds. 

Stanley  E.  Howard. 

Sakolski,  A.  M.  Railroad  securities;  a  course  of  study  with  references. 
(New  York:  Doubleday  for  Investment  Bankers  Assoc,  of  America. 
1921.     Pp.   105.) 

This  volume  belongs  to  the  series  referred  to  above  under  Collver,  and 
is  a  complement  to  the  volume  on  Railroad  Securities  by  Dr.  Sakolski 
noted  above.  Like  the  other  volumes  in  the  series  it  contains  a  guide  to 
the  reading  with  references  and  bibliography.  Some  of  the  chapter 
headings  are:  Classes  of  railroad  securities,  Equipment  trust  certificates, 
Physical  factors  underlying  investment  values,  Analysis  of  traffic,  Rail- 
road financial  statements,  Railroad  capitalization,  Railroad  receivership, 
Railroad  reorganization,  and  Marketing  of  railroad  securities.  The  ap- 
pendices contain  the  principal  provisions  of  the  Transportation  act  of 
1920,  and  an  analysis  of  savings  bank  laws  with  reference  to  railroad 
investments. 

Shidle,  N.  G.  Finding  your  job.  (New  York:  Ronald.  1921.  Pp.  200. 
$2.) 

Sikes,  C.  S.  Railway  accounting.  Part  I.  (Chicago:  La  Salle  Extension 
Univ.   1920.     Pp.  x,  140.) 

Spencer,  W.  H.  Law  and  business.  Vol.  I.  Introduction.  Edited  by 
L.  C.  Marshall.  (Chicago:  Univ.  of  Chicago  Press.  1921.  Pp.  xv, 
611.     $4.50.) 

Todman,  F.  S.  Wall  Street  accounting.  (New  York:  Ronald.  1921.  Pp. 
352.     $6.) 

Tolman,  M.  Positions  of  responsibility  in  department  stores  and  other  re- 
tail selling  organizations ;  a  study  of  opportunities  for  women.  (New 
York:    The  Bureau  of  Vocational  Information.     1921.     Pp.   126.) 

Watkins,  G.  P.  Electrical  rates.  (New  York:  Van  Nostrand  Co.  1921. 
Pp.  228.) 

Accountants'  index:  a  bibliography  of  accounting  literature  to  December, 
1920.  (New  York:  American  Inst,  of  Accountants.  1921.  Pp.  1578. 
$15.) 

Consolidated  tables  of  bond  values.  Pocket  edition.  (Boston:  Financial 
Pub.  Co.     1921.     Pp.  751.) 

Showing  net  returns  from  2.90  to  15  per  cent  on  bonds  and  other  re- 
deemable securities  paying  interest  semi-annually. 

Costs,  merchandising  practices,  advertising  and  sales  in  the  retail  distribu- 
tion of  clothing.     Six  vols.     (New  York:    Prentice-Hall.     1921.) 

Issued  by  the  Northwestern  University  School  of  Commerce,  Bureau 
of  Business  Research,  in  cooperation  with  the  National  Association  of 
Retail  Clothiers. 

Foremanship:  the  standard  course  of  the  United  Y.  M.  C.  A.  Schools.  Vol. 
IV.     (New  York:    Assoc.  Press.     1921.     Pp.  218.     $9.) 


694  Reviews  and  New  Books  [December 

Operating  expenses  in  retail  jewelery  stores  in  1920.  Operating  expenses 
in  the  wholesale  grocery  business  in  1920.  Bureau  of  Business  Research 
bulls,  no.  27  and  26.  (Cambridge,  Mass.:  Harvard  Univ.  Press.  1921. 
Pp.  46;  27.     $1.  each.) 

The  preparation  and  use  of  financial  statements.  (Chicago:  Manufacturers' 
Assoc,  76  W.  Monroe  St.     1921.     Pp.  19.) 

Wills,  estates,  and  trusts.     (New  York:    Ronald.     1921.     $8.) 

Capital  and  Capitalistic  Organization 
The  Financial  Policy  of  Corporations.     By  Arthur  Stone  Dewing. 

I,   Corporate  Securities    (pp.    154)  ;   II,   Promotion    (pp.    173)  ; 

III,  The  Administration  of  Income  (pp.  164)  ;  IV,  Expansion  (pp. 

234)  ;  V,  Failure  and  Reorganization  (pp.  196).     Separate  index 

for  each  volume  and  a  general  index  covering  all  five  of  them. 

(New  York:    Ronald  Press  Company.     1920.     $12.00.     There  is 

a  manual  of  problems  to  be  used  with  these  volumes,  published  in 

1921.) 
Professor  Dewing's  five-volume  contribution  to  the  literature  of  cor- 
poration finance  will  undoubtedly  receive  a  warm  welcome  both  by 
academic  students  and  teachers  and  by  practical  financiers  and  other 
business  men.  The  materials  used  in  the  compilation  of  this  work  have 
been  carefully  handled,  well  organized,  and  presented  in  an  interesting 
language  and  in  a  suggestive  as  well  as  a  descriptive  style.  The  state- 
ments of  fact  in  the  body  of  the  text  are  abundantly  substantiated  by 
footnote  references  and  the  footnotes  contain  also  many  concrete  in- 
stances illustrative  of  the  principles  and  facts  stated  in  the  text.  The 
manual  of  problems  contains  material  well  calculated  to  facilitate  the 
work  of  giving  thorough  instruction. 

In  volume  I — Corporate  Securities — common  and  preferred  stocks, 
bonds  secured  by  pledge  of  specific  property,  bonds  secured  by  credit, 
equipment  obligations  and  convertible  issues  are  described  and  to  some 
extent  judged  from  the  investor's  point  of  view.  The  author  seems  to 
consider  that  the  investing  public  and  financial  writers  have  been  in- 
clined to  overrate  bonds  secured  by  pledge  of  specific  property  as  com- 
pared with  bonds  secured  by  credit,  as  debentures.  To  quote:  "...  a 
default  in  the  interest  or  principal  of  debenture  bonds  precipitates 
failure  and  receivership.  In  the  final  reorganization,  securities  are 
given  a  preference  according  to  their  relative  priorities ;  and  the  ques- 
tion whether  a  security  does  or  does  not  possess  a  lien  on  specific  prop- 
erty is  more  a  legal  fiction  than  a  matter  of  practical  consideration" 
(p.  78).  Similarly  one  gets  from  the  discussion  of  preferred  stocks 
(chap.  6)  the  impression  that  these  securities  are  not  as  desirable  for 
investment  purposes  as  is  commonly  supposed. 


1921]  Capital  and  Capitalistic  Organization  695 

The  author  proceeds  at  once  to  a  discussion  of  the  forms  of  corporate 
capitalization,  with  little  or  no  attention,  by  way  of  introduction,  to 
the  nature,  history  and  legal  status  of  the  corporation.  In  other  words, 
these  volumes  are  not  to  be  considered  "elementary"  in  the  sense  of 
"introductory."  It  is  assumed  that  the  reader  has  acquired  either  from 
observation  and  experience  or  from  reading  and  lectures,  or  from  both, 
a  foundation  body  of  information  regarding  the  forms  of  business  or- 
ganization. 

At  the  outset,  there  is  recognized  the  importance  of  a  clear  use  of  the 
terms  "capital,"  "capitalization,"  and  "capital  stock."  The  first,  ac- 
cording to  Professor  Dewing,  consists  of  actual  property,  that  is,  as- 
sets, used  in  the  business.  This  is  a  use  of  the  word  which  accords  with 
the  custom  of  the  "street"  and  with  the  terminology  of  some  (not  all) 
theoretical  economists.  But  that  the  author  has  throughout  the  work 
restricted  the  use  of  capital  to  this  meaning,  that  is,  of  assets,  is  not 
clear;  for  we  find  (vol.  Ill,  p.  96)  the  expression  "interest  on  capital," 
meaning  fixed  charges  arising  out  of  bond  issues. 

"Capitalization,"  to  quote  Professor  Dewing,  "is  the  sum  of  the  vari- 
ous values  by  which  the  proprietary  interests  of  a  corporation  care  to 
evaluate  the  actual  capital.  That  portion  of  the  total  capitalization 
of  a  business  which  they,  the  proprietors,  claim  represents  their  own 
personal  capital,  they  call  'capital  stock' ;  that  portion  which  they  ad- 
mit is  borrowed  from  others,  they  call  'debt'"  (p.  5).  These  words 
would  seem  to  imply  no  distinction,  so  far  as  capitalization  is  concerned, 
between  temporary  and  permanent  debt.  Capitalization,  then,  working 
from  the  definition  of  capital  already  referred  to,  is  equal  to  the  sum 
of  the  assets,  that  is,  the  "capital."  But  further  on  (p.  6)  we  find  the 
statement  that  "In  a  concrete  case,  it  is  often  difficult  to  determine  the 
exact  amount  of  capitalization,  because  much  corporate  debt  represents 
merely  temporary  borrowing  more  or  less  completely  offset  by  an  ever- 
changing  volume  of  current  assets.  The  idea,  however,  of  capitaliza- 
tion is  that  it  shall  represent  the  capital  stock  and  the  permanent  or 
funded  debt.  It  is  the  total  securities  or  representative  values  issued  by 
the  corporation  against  its  actual  property."  It  seems  to  the  reviewer 
that  either,  according  to  Professor  Dewing,  current  assets  are  not  capi- 
tal or  that  in  these  sentences  just  quoted  there  are  two  (contradic- 
tory) definitions  of  capitalization. 

In  chap.  3  of  vol.  Ill  on  The  Administration  of  Income,  in  a  discus- 
sion of  the  "cost  of  borrowed  capital,"  it  is  clear  that  the  author  there 
thinks  of  capital  as  including  very  temporary  investments  in  the  busi- 
ness. For  he  includes  among  the  forms  of  payment  for  borrowed  capi- 
tal discounts  given  and  taken  on  merchandise  sold  and  bought,  interest 
charges  paid  to  the  banks  in   the  form  either  of  interest  or  of  bank 


696  Reviews  and  Neiv  Books  [December 

discount,  and  interest  charges  paid  to  the  public  in  the  form  of  note  in- 
terest. Hence  we  must  conclude  that  the  "idea  of  capitalization," 
namely,  that  "it  shall  represent  the  capital  stock  and  the  permanent  or 
funded  debt"  only,  is  not  consistently  adhered  to,  and  that  there  is 
some  looseness  in  the  use  of  terms.  This  is  regrettable  in  a  work  which 
will  probably  be  widely  adopted  as  a  text-book.  It  creates  a  difficulty 
which  the  forewarned  instructor  may,  of  course,  overcome. 

Volume  II,  on  Promotion,  treats  of  the  task  of  the  promoter  and  the 
banker  in  the  formation  of  new  enterprises,  the  general  principles  un- 
derlying the  devising  of  the  financial  plan  are  laid  down  and  then  ap- 
plied in  turn  to  the  manufacturing,  public  utility  and  railroad  fields, 
and  the  process  of  marketing  the  new  securities  is  described. 

The  Administration  of  Income  (volume  III),  is  of  especial  interest 
to  the  accountant.  There  is  a  brief  introductory  discussion  of  account- 
ing theory  in  relation  to  corporation  finance,  and  then  more  detailed 
consideration  of  the  depreciation  problem,  the  management  of  surplus 
and  reserves,  and  the  distribution  of  profits.  It  seems  to  the  reviewer 
that  there  is  in  the  chapters  relating  to  reserves — whether  for  depre- 
ciation of  fixed  assets,  for  business  contingencies,  or  for  the  amortiza- 
tion of  bond  issues — an  unfortunate  lack  of  precision  in  the  use  of  terms. 
To  be  specific,  Professor  Dewing  sometimes  uses  the  term  "reserve  fund" 
when  all  that  he  apparently  has  in  mind  is  a  bookkeeping  "allowance" 
or  simply  a  "reserve,"  no  fund  at  all  in  the  sense  of  a  group  of  assets. 
To  quote:  "The  maintenance  of  the  physical  condition  of  the  prop- 
erty is  accomplished  through  direct  expenditures  for  small  repairs  and 
regular  contributions  out  of  earnings  to  a  reserve  fund.   .   ."  (p.  21  ).1 

Again,  referring  to  the  amortization  of  the  discount  on  an  issue  of 
bonds,  the  author  says  regarding  the  deductions  from  earnings  periodi- 
cally made  to  cover  this  item,  "it  is  not  paid  to  the  holders  of  the 
bonds  but  is  paid  into  a  reserve  fund  which  will  extinguish  the  bond 
discount  at  the  time  the  bonds  are  due"  (p.  39).  Here  is  no  fund  of 
assets  set  aside.  How  can  bookkeeping  credits  representing  earnings 
be  "paid  into"  anything?  On  page  64,  however,  Professor  Dewing  evi- 
dently has  in  mind  in  connection  with  reserves  for  business  contin- 
gencies the  maintenance  of  funds  of  assets,  for  he  says  (and  properly, 
so  far  as  corporate  policies  are  concerned)  that  a  railroad  carrying  its 

i  One  might  incidentally  ask  here  how  a  contribution  from  earnings  (which  are 
merely  increases  of  net  worth)  can  restore  the  physical  condition  of  a  deteriorated 
fixed  asset.  Is  not  the  situation  this,  that  the  deduction  from  earnings  effects  a 
marking  down  of  the  specific  asset  to  bring  its  book  value  into  approximate  accord 
with  the  facts,  and  that  the  capital  assets  of  the  whole  business  are  thereby  main- 
tained at  their  original  worth,  although  not  in  their  original  form?  Other  fixed 
assets  may  have  been  purchased  or  the  volume  of  current  assets  may  have  been 
increased. 


1921]  Capital  and  Capitalistic  Organization  697 

own  insurance  on  station  property  should  not  invest  the  "fund"  in  sta- 
tion propert}',  and  that  a  shipping  corporation  should  not  invest  its 
insurance  "fund"  in  any  kind  of  property  subject  to  the  marine  hazard. 
In  this  discussion  there  is  a  slight  departure  from  the  terminology  em- 
ployed in  the  two  cases  first  cited.  First,  there  is  a  discussion  of  the 
reserves  to  be  set  aside.  Next,  there  is  a  discussion  as  to  whether  the 
assets  of  the  corporation  as  they  then  stand  shall  be  left  undisturbed, 
or  whether  some  of  them  shall  be  set  aside  to  constitute  a  separate  fund. 
Third,  there  is  a  (to  the  reviewer)  backward  step  taken  in  the  use  of 
terms,  for  the  statement  is  made  that  "if  the  insurance  reserve  funds 
accumulate  in  considerable  amounts  there  is  always  a  temptation  to 
use  the  money  for  the  general  purposes  of  the  corporation,  where  un- 
questionably it  will  earn  more  than  in  low  interest  paying  readily 
marketable  securities."  This  is  confusing.  Is  a  "reserve  fund"  a 
"reserve"  or  a  "fund"?  Is  it  a  bookkeeping  credit  in  the  nature  of  an 
allowance  or  is  it  a  group  of  assets?  Of  course,  those  already  familiar 
with  accounting  and  with  corporation  finance  can  usually  determine 
for  themselves  the  author's  meaning  in  any  given  instance.  But  stu- 
dents approaching  the  subject  for  the  first  time,  even  if  they  have  some 
knowledge  of  accounting,  are  slow  to  comprehend  the  separate  steps  in 
the  procedure  of  making  provision  for  such  matters  as  the  replacement 
of  plant,  the  guarding  against  business  contingencies,  and  the  amorti- 
zation of  bonded  debt. 

Would  it  not  be  better  to  make  at  all  times  a  clear  distinction  be- 
tween a  fund,  meaning  assets  earmarked  for  a  special  purpose,  and  a 
mere  bookkeeping  reserve,  an  account  with  a  credit  balance?  Let  the 
word  "fund"  be  used  to  refer  to  assets  only.  Let  the  word  "reserve" 
be  used  in  the  sense  of  a  bookkeeping  allowance  on  the  credit  side  of 
the  ledger.  Let  the  two  words  not  be  used  together.  Or,  if  it  be  ob- 
jected that  terminology  in  the  field  of  banking,  for  example,  has  al- 
ready appropriated  the  word  "reserve"  for  use  in  reference  to  assets 
(in  such  phrases  as  "legal  reserves"  and  "secondary  reeserves")  let 
the  word  reserve  be  abandoned  in  dealing  with  the  problems  of  financial 
policy  here  under  discussion  and  the  word  "allowance"  be  substituted. 

In  volume  IV — Expansion — there  is  a  descriptive,  historical  and 
analytical  discussion  of  modern  big  business.  One  thing  that  renders 
this  discussion  interesting  is  the  attempt  to  make  what  the  author  calls 
the  "law  of  balanced  return"  (akin  to  the  "principle  of  diminishing  re- 
turns" and  to  the  "principle  of  proportionality")  the  foundation  of  the 
discussion.  Industrial  consolidations,  railroad  consolidations,  the  pub- 
lic utility  holding  company  and  the  several  forms  of  community  of 
interest  receive  special  attention.  With  business  expansion  comes,  of 
course,  the  need  for  more  capital  and  the  need  for  more  marketings  of 


698  Reviews  and  New  Books  [December 

securities,  and  the  meeting  of  these  needs  is  described  in  the  concluding 
chapters  of  the  volume. 

In  treating  of  Failure  and  Reorganization  in  volume  V,  the  author 
goes  below  the  surface  in  his  analysis  of  the  causes  of  failures  and 
after  outlining  reorganization  procedure  in  general,  makes  very  special 
and  detailed  application  of  these  principles  to  railroads  with  somewhat 
less  specialized  discussion  of  industrial  reorganizations. 

Stanley  E.  Howard. 

Princeton  University. 

NEW    BOOKS 

Baldwin,  D.  C.  Capital  control  in  New  York.  (Menasha,  Wis.:  George 
Banta  Co.     1920.     Pp.  xxiv,  255.) 

This  was  prepared  as  a  thesis  for  the  degree  of  doctor  of  philosophy  at 
the  University  of  Pennsylvania.  The  book  represents  an  intensive  sum- 
mary of  the  experience  of  New  York.  The  contents  may  be  summarized 
in  part  as  follows :  Part  I,  Statutory  provisions  for  the  administrative 
regulation  of  utility  capitalization  in  New  York;  Part  II,  Original  com- 
panies, with  chapters  on  Amount  of  capitalization  permissible,  Ratio 
of  stocks  to  bonds,  Methods  of  control  over  the  application  of  proceeds, 
The  commissions  and  the  investor,  and  The  commissions  and  the  courts ; 
Part  III,  Additional  capitalization  for  existing  companies;  Part  IV,  Re- 
funding and  reorganization;  Part  V,  Consolidation,  mergers  and  transfers 
of  stock. 

Geck,  A.  Die  Trustabwehrbewegung  im  deutschen  Zigarettengewerbe. 
Greifswalder  Staatswissenshaftliche  Abhandlungen,  5.  (Greifswald: 
L.  Bamberg.     1920.     Pp.  249.     20  M.) 

Parker,  J.  S.  and  Smith,  J.  B.  R.,  editors.  The  corporation  manual. 
Twenty-second  edition,  revised  to  January  1,  1921.  (New  York:  U.  S. 
Corporation  Co.     1921.     Pp.  xv,  2062.     $20.) 

Putney,  A.  H.  Corporations;  organization,  financing,  management.  (Chi- 
cago:   Lincoln  Inst,  of  Business.     1921.     Pp.  v,  408.     $3.) 

Smith,  J.  B.   R.,  editor.     New  York  laxcs  affecting  business  corporations. 

Second  edition.     (New  York:   U.  S.  Corporation  Co.,  65  Cedar  St.     1921. 

Pp.  xxii,  248.     $2.) 
Tschierschky,  S.     Zur  Reform  der  Industriekartelle.      (Berlin:    Springer. 

1921.     Pp.  96.     13.20  M.) 

Labor  and  Labor  Organizations 
The  High  Cost  of  Strikes.  By  Marshall  Olds.  (New  York:  G.  P. 
Putnam's  Sons.  1921.  Pp.  xvii,  286.  $2.50.) 
Although  the  title  indicates  that  this  book  is  to  be  a  condemnation 
of  strikes  the  reader  does  not  progress  beyond  the  first  few  pages  be- 
fore he  realizes  that  the  author  is  cutting  a  much  wider  swath  and  is 
extending  his   condemnation   to   other   activities   and  policies   of  labor 


1921]  Labor  and  Labor  Organizations  699 

unions.  Mr.  Olds  specifically  disclaims  any  hostility  to  labor  organi- 
zation (p.  xii),  but  he  refers,  in  chapters  19  and  20,  to  the  monopolistic 
form  and  predatory  point  of  view  of  the  modern  labor  group,  and  he 
urges  that  the  Sherman  Anti-trust  law  be  invoked  to  bring  about  the 
dissolution  of  "labor  monopolies."  He  would  have  them  "reduced  to  a 
size  commensurate  with  their  normal  functions  and  requirements  which 
would  be  determined  by  a  court  on  the  merits  of  each  individual  case." 
Furthermore,  while  the  discussion  applies  almost  exclusively  to  labor 
troubles  during  the  past  few  years  when  conditions  were  very  unusual, 
the  author's  strictures  upon  the  policies  and  methods  of  organized 
labor  are  generalized  as  though  they  applied  to  all  times  and  conditions. 

The  case  against  strikes  is  summarized  as  follows:  (1)  Strikes  are 
not  only  a  general  charge  on  the  industry  involved  and  on  the  country 
as  a  whole,  but  are  a  direct  and  specific  tax  upon  the  average  indi- 
vidual. They  have  increased  the  price  of  vegetables  100  per  cent, 
clothes  $20  to  $30  per  suit,  and  coal  100  to  200  per  cent.  (2)  Strikes 
cost  the  individual  much  more  in  indirect  ways,  e.g.,  steel,  coal,  rail- 
road, and  building  strikes  have  caused  a  housing  shortage  that  has 
raised  rents  in  New  York  an  average  of  $32  per  month.  (3)  The  cost 
of  strikes  is  out  of  all  proportion  to  the  number  of  workers  involved. 
"The  strike  of  only  a  few  thousand  railroad  workers  at  a  time  for  a 
few  months  raised  general  prices  over  a  billion  dollars."  (4)  Strikes 
which  compel  the  use  in  an  industry  of  more  laborers  than  are  needed 
not  only  increase  the  cost  of  that  product  but  they  increase  costs  of 
production  in  other  industries  which  are  thereby  prevented  from  se- 
curing an  adequate  labor  supply.  (5)  The  public  suffers  greatly  be- 
cause it  is  the  strategy  of  unscrupulous  leaders  to  force  intervention 
by  inflicting  maximum  injury  on  the  public.  (6)  Labor  is  injured 
most  by  strikes  since  every  workman  suffers  as  part  of  the  general 
public  and  in  addition  suffers  because  of  the  time  lost  directly  or  in- 
directly through  strikes.  (7)  In  1919  strikes  caused  a  primary  loss 
of  134,000,000  working  days  and  a  secondary  loss  probably  twice  as 
great.  (8)  The  great  bulk  of  recent  strikes  have  had  no  justifiable  aim. 
(9)  In  some  industries,  such  as  clothing,  where  strikes  seemed  notably 
successful,  the  high  wages  obtained  increased  the  price  of  the  product 
and  therefore  caused  a  cessation  of  public  buying.  This  resulted  in 
general  unemployment  in  the  industry.  (10)  The  chief  results  of  re- 
cent strikes  have  been  to  increase  the  personal  power  of  the  union 
leaders  and  to  foment  radicalism  and  labor  unrest. 

The  book  will  receive  hearty  welcome  from  poorly  informed  persons 
who  are  eager  for  available  ammunition  in  criticism  of  labor  organiza- 
tion and  its  leaders;  it  will  be  as  violently  rejected  by  professional 
labor  leaders;  while  the  student  who  is  seeking  a  thoroughgoing  analy- 


700  Reviews  and  New  Books  [December 

sis  and  a  dispassionate  consideration  of  one  of  the  most  important  eco- 
nomic problems  confronting  the  nation,  will  find  it  very  disappointing. 
The  reviewer  confesses  that  there  are  few  pages  in  the  volume  which 
do  not  contain  statements  with  which  he  disagrees. 

The  animus  of  the  author  may  be  deduced  from  his  frequent  repeti- 
tion of  such  popular  catch-phrases  as  "Lenine-Trotsky  ideals,"  "Len- 
ine-Trotsky  methods,"  and  "Lenine-Trotsky  results."  The  type  of 
"logic"  which  is  frequently  employed  is  suggested  by  the  criticism  of 
certain  strikes  which  were  inaugurated  to  secure  higher  wages  and 
shorter  hours.  The  particular  strikes  criticized,  it  is  asserted,  were 
unjustifiable  because  other  groups  of  workers,  e.g.,  teachers  and  farm- 
ers, were  at  that  time  employed,  in  the  one  case,  at  lower  wages  and, 
in  the  other,  for  longer  hours.  Such  extreme  statements  as  the  follow- 
ing are  not  likely  to  predispose  a  reader  to  accept  the  author's  con- 
clusions :  "Neither  the  President  of  the  United  States  nor  any  officer 
or  group  of  officers  in  our  entire  government  possesses  the  possibility 
of  such  power  to  injure  all  the  rest  of  the  people  as  is  possessed  and 
was  exercised  by  the  coal  union  leaders"  (pp.  159-160). 

Limitations  of  space  restrict  further  dissent  to  two  fundamental 
theses.  (1)  The  impression  is  given  that  organized  labor  domination  in 
any  industry  is  conducive  to  strikes.  This  view  is  directly  contrary  to 
the  conclusions  reached  by  many  students  of  labor  organization.  The 
comparative  infrequency  of  strikes  in  the  railroad,  printing,  brewing, 
and  certain  other  industries  is  rather  attributed  to  the  strength  of  the 
organizations  of  the  workers  in  those  industries.  The  reasons  for  such 
conclusion  have  been  set  forth  so  clearly  and  so  frequently  by  the 
Webbs  in  England,  and  by  Janes,  Weyforth,  and  others  in  America 
that  they  require  no  repetition.  The  frequency  of  strikes  among  the 
building  trades  is  due,  on  the  contrary,  to  disorganization.  The  labor 
troubles  are  chiefly  jurisdiction  disputes,  the  only  remedy  for  which,  in 
the  opinion  of  the  reviewer,  is  an  abandonment  of  the  innumerable  craft 
unions,  which  cause  disorganization  within  the  industry,  and  the  sub- 
stitution of  a  single,  all-embracing  union  of  the  industrial  type. 

(2)  It  is  asserted  (p.  76)  that  the  "primary  and  basic  and  biggest 
reason"  for  the  rise  in  the  price  level  during  and  after  the  war  "was 
strikes."  As  a  matter  of  fact  serious  labor  troubles  were  not  especially 
numerous  until  after  the  price  level  had  moved  up  considerably.  Both 
the  price  advance  and  the  "strike  mania"  were  to  a  great  extent  stimu- 
lated by  another  influence — inflation. 

The  occurrence  and  persistence  of  strikes  is  deplorable — there  is  gen- 
eral agreement  to  this,  at  least.  The  author's  suggestions  for  improv- 
ing the  situation  are:  (a)  large-minded  and  conciliatory  management; 
(b)  better  understanding  of  the  relationship  between  the  worker  and 


1921]  Labor  and  Labor  Organizations  701 

his  job;  (c)  adoption  of  a  plan  for  peaceful  adjustment  of  difficulties 
patterned  after  the  Mackenzie-King  Canadian  plan;  (d)  subject  labor 
to  the  Sherman  Anti-trust  law,  by  withdrawing  special  privileges  and 
exemptions  now  enjoyed;  (e)  make  labor  organizations  legally  respon- 
sible for  their  acts;  (f)  general  adoption  of  the  open  shop  policy. 

Nathaniel  R.  Whitney. 
University  of  Cincinnati. 

The  Labor  Movement;  Its  Conservative  Functions  and  Social  Conse- 
quences. By  Frank  Tannenbaum.  (New  York:  G.  P.  Putnam's 
Sons.     1921.     Pp.  vii,  259.     $2.) 

According  to  Mr.  Tannenbaum,  the  two  chief  causes  of  the  labor 
movement  are  the  insecurity  of  the  worker  and  his  subjection  to  the 
machine.  Repeated  changes  in  industrial  processes  have  caused  in- 
security to  become  the  one  outstanding  fact  in  the  life  of  every  indi- 
vidual. The  worker,  especially,  no  longer  enjoys  stability  in  regard 
to  his  home,  his  employment,  or  his  skill.  Moreover,  he  is  always  the 
servant  rather  than  the  master  of  the  machine.  Every  new  mechanical 
device  adds  to  the  weight  and  controlling  power  of  the  machine  which 
is  already  the  center  of  our  economic  gravity.  Control  of  the  machine 
means  the  control  of  modern  industry  so  labor  must  have  such  control 
before  it  can  gain  security.  When  labor  organizations  establish  stan- 
dard hours,  wages  and  working  conditions,  they  use  the  only  means  at 
hand  for  "stabilizing  a  dynamic  world."  The  more  union  rules  there 
are,  the  less  will  there  be  of  "freedom  of  competition,  of  change,  of 
contraction  and  expansion  in  the  present  business  world."  At  present 
"for  the  worker  all  things  are  transitory"  and  all  labor  is  routine,  me- 
chanical and  non-educational.  The  labor  movement  is  a  conservative 
force  which  resists  sudden,  ruthless  change,  exalts  the  manhood  of  the 
worker  above  his  machine,  offers  him  an  outlet  for  his  suppressed  emo- 
tions, and  gives  him  room  for  the  exercise  of  creative  activity.  The 
labor  movement  conserves  the  man.     But  it  will  destroy  capitalism. 

The  author  believes  that  the  destruction  of  capitalism  is  implicit  in 
the  growth  and  development  of  organized  labor.  Even  the  so-called 
conservative  unions,  which  claim  to  accept  the  present  system,  strike 
at  capitalism  every  time  they  lay  down  new  rules  and  secure  their  en- 
forcement. In  fact,  one  union  is  just  as  radical  as  another,  so  far  as 
the  ultimate,  inevitable  goal  of  all  unions  is  concerned.  Mere  differ- 
ences in  method  are  not  fundamental.  Unionism  of  any  kind  is  a  con- 
stant menace  to  industrial  autocracy. 

Mr.  Tannenbaum  insists  that  the  right  to  vote  should  not  depend 
upon  such  characteristics  as  sex,  color,  and  the  possession  of  property. 
In  the  industrial  democracy  of  the  future,  he  suggests  the  probability 


702  Reviews  and  New  Books  [December 

of  a  labor  qualification  for  suffrage  and  declares  that  he  sees  nothing 
undesirable  in  the  "dictatorship  of  the  proletariat"  in  a  society  where 
classes  are  abolished  and  where  all  persons  are  productive  workers. 
Parliaments,  he  believes,  will  be  organized  on  the  basis  of  industrial 
representation.  Geographical  distinctions  will  no  longer  be  of  im- 
portance. While  there  appears  to  be  close  connection  with  the  guild 
socialists  on  this  point,  the  author  severely  criticizes  the  latter  for  sup- 
plementing their  proposed  industrial  parliament  with  a  "national  parlia- 
ment." It  is  asserted  that  since  all  producers  are  consumers  as  well, 
a  single  congress  chosen  directly  by  the  various  producing  groups  will 
be  able  to  care  for  all  interests  of  the  state. 

In  an  industrial  democracy  there  will  be  no  revolutions,  because  there 
will  be  no  classes  against  which  revolts  can  be  directed.  Revolutions 
are  class  affairs.  The  time-worn  plan  of  a  uniform  wage  for  all  kinds 
of  labor  is  suggested  as  the  most  desirable  system  of  remunerating 
labor.  It  is  argued  that  labor  organizations  today  are  constantly  tend- 
ing toward  uniform  wages  for  different  employments  within  their  sev- 
eral jurisdictions. 

The  book  is  written  in  an  interesting  style  and  careful  attention  has 
been  taken  to  give  it  a  scientific  tone.  In  the  earlier  parts  it  gives 
promise  of  affording  a  well-constructed  philosophy  of  labor  organiza- 
tion. In  the  later  chapters,  the  Utopian  element  comes  strongly  to  the 
fore,  although  the  author  gives  us  to  understand  that  he  merely  throws 
out  suggestions  and  is  not  sworn  to  a  particular  outcome.  Very  few 
concrete  examples  of  union  policies  are  stated  in  illustration  of  "con- 
servative functions  and  social  consequences,"  yet  it  is  quite  evident 
that  Mr.  Tannenbaum  has  seen  unions  work  at  close  range. 

An  unusual  feature  of  the  book  is  a  publisher's  note  in  which  G.  H.  P. 
criticizes  some  of  the  policies  of  union  labor  which  cause  public  dis- 
order and  lessen  output,  and  tactfully  suggests  that  the  author  ex- 
plain to  the  public  in  another  volume  how  these  policies  can  be  justified. 
In  rebuttal,  the  author  assures  G.  H.  P.  that  the  things  which  cause 
the  latter  so  much  anxiety  are  merely  the  chips  and  refuse  which  litter 
the  ground  while  the  new  temple  of  industrial  democracy  is  in  the 
process  of  erection. 


Frank  T.  Stockton. 


University  of  South  Dakota. 


Industrial  Government.      By   John   R.    Commons   and   others.      (New 
York:   Macmillan.     1921.     Pp.  ix,  425.     $3.00.) 
This   book   is   the   joint   product    of   a   group   which    spent    several 
months  in  the  study  of  a  wide  variety  of  types  of  industrial  relation- 
ships under  the  leadership  of  Professor  Commons.      In  the  course  of 


1921]  Labor  and  Labor  Organizations  703 

their  travels,  they  visited  some  thirty  establishments,  each  selected  be- 
cause of  some  distinctive  feature  on  which  the  relations  between  the 
employers  and  the  workers  turned.  The  group  visits  were  later  fol- 
lowed up  by  individual  studies  of  particular  plans. 

The  experience  of  fifteen  of  these  concerns  is  described  in  this  book, 
each  in  a  separate  chapter.  In  addition  there  are  two  chapters  on  the 
operation  of  local  trade  agreements,  in  the  Rochester  clothing  market 
and  the  Toledo  brewing  industry,  and  one  on  the  joint  conference  coun- 
cil set  up  by  the  employers  and  four  national  unions  in  the  printing  in- 
dustry. The  eighteen  descriptive  chapters  are  followed  by  five  chap- 
ters of  "inferences,"  four  of  which  are  credited  to  authors  of  one  or 
more  of  the  descriptive  chapters.  Some  of  the  descriptive  chapters 
and  Professor  Commons'  inferences  have  been  separately  published  in 
periodicals. 

The  descriptive  chapters  on  the  experience  of  the  individual  con- 
cerns are  as  interesting  to  read  and  as  welcome  for  their  content  as  any 
equal  number  of  pages  on  employee  representation  that  the  reviewer 
has  encountered  in  many  a  day.  Ford,  Dennison,  Filene,  and,  of 
course,  Hart,  Schaffner  and  Marx  are  here.  The  history  of  the  Pack- 
ard Piano  Company  and  the  Demuth  experiments,  described  in  John 
Leitch's  "Man  to  Man,"  is  carried  down  to  date,  and  the  modification 
by  the  workers  of  an  "industrial  democracy"  established  after  the 
Leitch  pattern  in  a  Cleveland  clothing  factory  is  also  described.  Adap- 
tations from  the  old-style  scientific  management,  a  profit-sharing  plan 
that  failed  to  survive  a  wage  reduction,  and  representation  plans  that 
grew  out  of  less  formal  attempts  to  win  the  cooperation  of  the  workers 
and  are  supplemental  to  other  ties  on  which  the  employers  mainly  base 
their  faith,  add  to  the  variety  of  the  picture.  Most  of  the  stories  are 
told  in  a  colorful  and  attractive  way,  with  the  human  interest  note  well 
sustained  throughout. 

Professor  Commons'  chapter  of  inferences  is  definite  and  thought- 
provoking.  He  boldly  maintains  that  what  labor  wants  most  is  not 
participation  in  the  whole  of  management  but  security  in  a  good  job. 
The  author  of  the  chapter  on  principles  of  management,  after  what 
will  seem  to  many  an  unnecessary  lecture  on  the  functions  involved  in 
management,  excludes  both  labor  and  absentee  owners  from  the  de- 
termination of  certain  critical  decisions  and  turns  to  the  problem  of 
training  the  executives  who  come  into  personal  contact  with  the  em- 
ployees. In  another  chapter  the  possibilities  and  desirability  of  joint 
control  over  such  matters  as  wages,  individual  output,  discipline,  gen- 
eral productive  efficiency  and  distribution  of  employment  are  explored. 
This  is  a  good  piece  of  work.  The  methods  followed  in  installing  em- 
ployee representation  are  reviewed  in  still  another  chapter,  and  those 


704  Reviews  and  Neic  Books  [December 

that  are  considered  best  are  held  up  for  emulation.  There  is  also  a 
chapter  on  the  practice  of  management.  This  runs  largely  to  instruc- 
tions as  to  the  forms  which  should  be  used  in  the  personnel  department 
in  keeping  records.  The  book  would  lose  little  of  its  value  for  the  lay 
student  of  industrial  relations  if  this  chapter  were  omitted. 

D.  A.  McCabe. 

NEW    BOOKS 

Askwith,  Lord.  Industrial  problems  and  disputes.  (New  York:  Harcourt. 
1921.     Pp.  x,  491.     $5.) 

Commons,  J.  R.  and  others.     History  of  labour  in  the  United  States.     Two 
vols.     (New  York:    Macmillan.     1921.     Pp.  xxv,  623;  ix,  620.     $10.50.) 
A  reprint. 

Cotter,  A.  United  States  steel:  a  corporation  with  a  soid.  (Garden  City: 
Doubleday.     1921.     Pp.  xii,  312.     $3.) 

This  book  according  to  its  publishers  is  planned  as  an  open  and  above- 
board  presentation  of  the  development  of  a  great  business.  The  point  of 
view  of  the  author,  however,  is  that  the  corporation  is  one  enterprise  that 
endeavors  to  live  up  fully  to  the  responsibilities  it  must  perforce  assume 
to  its  employees  and  the  public  as  well  as  to  its  stockholders  and  he  be- 
lieves that  it  has  earned  the  title  of  "a  corporation  with  a  soul."  This 
point  of  view  colors  the  book  from  beginning  to  end  and  all  incidents  are 
painted  in  the  purest  white  without  even  a  shadow  of  criticism. 

The  organization,  development,  and  policies  of  the  corporation  are  out- 
lined in  some  twenty-seven  chapters.  "The  man  at  the  helm"  is  the  title 
of  the  prologue  and  the  statement  is  made  that  "the  story  of  United 
States  Steel  is  the  tale  of  how  Gary  made  his  dream  come  true."  The 
result  is  an  interesting  but  not  a  convincing  book.  One  feels  in  reading 
some  chapters  that  it  is  an  attempt  to  answer  the  "Steel  Strike  Report" 
issued  by  the  Interchurch  World  Movement.  The  idea  is  presented  that 
the  great  corporation  saved  this  country  and  even  the  world  from  being 
involved  in  a  social  revolution  by  its  firm  stand  against  compromises  with 
the  strikers.  But  that  the  strike  was  anything  more  than  an  ordinary 
one  carried  on  in  the  usual  way  by  the  unions  affiliated  with  the  Ameri- 
can Federation  of  Labor  has  never  been  proved.  The  fact  that  it  was 
termed  a  "Hunkey  strike"  may  imply  that  foreigners  are  not  human  be- 
ings and  so  need  not  be  considered.  A  movement  involving  a  large  num- 
ber of  men  must  have  some  cause  and  it  is  claimed  that  the  grievances 
were  excessive  hours  of  labor,  the  boss  system,  and  the  denial  of  the  right 
to  organize  or  to  representation.  Mr.  Cotter  implies  that  the  twelve  hour 
day  and  the  twenty-four  hour  shift  have  been  very  exceptional,  but  if  so 
why  have  even  some  of  the  stockholders  of  the  corporation  objected  to 
the  practice?  The  statement  sounds  like  a  lawyer's  plea  in  avoidance. 
One  may  add  that  the  denial  of  the  right  to  organize  and  of  union  rep- 
resentation on  the  part  of  its  workmen  is  a  curious  anomaly  coming  from 
a  corporation  representing  the  power  of  organization  and  representation 
raised  to  its  nth  power.  The  best  form  of  government  is  said  to  be  a 
benevolent  despotism  but  the  trouble  is  in  being  sure  that  it  will  be 
benevolent.     In  this  country  political  equality  and  industrial  autocracy  are 


1921]  Labor  and  Labor  Organizations  705 

opposites  and  a  house  divided  against  itself  cannot  stand.  But  it  may 
well  be  that  industrial  efficiency  and  industrial  democracy  can  work  har- 
moniously together.  The  book  is  written  in  a  picturesque  style  and  while 
perhaps  not  intended  primarily  for  the  purpose  of  propaganda  its  whole 
spirit  leads  one  to  the  conclusion  that  it  ought  not  to  be  taken  very  seri- 
ously. George  M.  Janes. 

Delonde,  C.     Capital  et  travail.     (Paris:    Perrin.     1921.     9  fr.) 

Douglas,  P.  H.  American  apprenticeship  and  industrial  education.  Colum- 
bia University  studies  in  history,  economics  and  public  law,  vol.  XCV, 
no.  2.     (New  York:    Longmans.     Pp.  348.     $3.50.) 

The  author  undertakes  to  cover  a  wide  field.  His  work  is  comprehen- 
sive in  a  topical  way  and  contains  a  mass  of  material  conveniently  ar- 
ranged. It  furnishes  a  helpful  outline  of  the  problem,  a  summary  of  what 
has  been  done,  and  an  exposition  of  the  many  inadequacies  of  present 
practice.  He  has  not,  however,  attempted  a  first-hand  intensive  study,  on 
the  ground,  of  the  systems  of  industrial  training  of  which  he  treats. 

Apprenticeship  is  given  but  73  pages,  of  which  32  pages  are  devoted  to 
apprenticeship  after  the  coming  of  the  factory  system.  The  treatment 
is  largely  concerned  with  machine-using  trades.  Not  enough  considera- 
tion is  given  to  the  trades  in  which  apprenticeship  is  still  the  normal 
avenue  of  entrance.  Experience  with  other  systems  of  industrial  educa- 
tion such  as  manual  training,  trade  and  industrial  schools,  plant  schools 
and  part-time  schools  is  also  summarized. 

The  necessity  of  vocational  training  and  the  methods  and  agencies  which 
should  be  utilized  in  this  are  given  an  important  place  in  the  solution  of 
the  problem.  There  is  a  chapter,  almost  wholly  deductive,  on  the  eco- 
nomic consequences  to  be  expected  from  proper  industrial  training.  This 
leads  to  a  brief  discussion  of  trade-union  attitudes  and  the  points  on 
which  antagonism  has  developed  in  that  quarter  against  plans  put  into 
operation  and  proposed.  A  program  with  seventeen  planks  is  offered  in 
the  final  chapter.  D.  A.  McC. 

Feis,  H.  The  settlement  of  wage  disputes.  (New  York:  Macmillan.  1921. 
$2.25.) 

Gleason,  A.     Workers'  education:  American  experiments.     Revised  edition. 

(New   York:    Bureau   of   Industrial   Research,   289   Fourth   Ave.      1921. 

Pp.  87.     50c.) 
Graham,  W.     The  wages  of  labour.      (London:    Fabian  Bookshop.      1921. 

5s.) 

Hanks,  E.  E.  Administration  of  childdabor  laws.  Part  4.  Employment- 
certificate  system,  Wisconsin.  Industrial  series,  no.  2.  (Washington: 
Dept.  of  Labor,  Children's  Bureau.     1921.     Pp.  159.) 

Hautecoeur,  L.  L' agitation  des  ouvriers  metallurgistes  en  Italic  (Paris: 
Boul.  Saint-Germain,  282.     1921.     Pp.  91.) 

Heron,  H.  The  workers' conference;  how  to  make  it  go.  (Cincinnati:  The 
Standard  Pub.  Co.     1921.     Pp.  141.) 

Howard,  E.  D.,  compiler.  The  Hart,  Schaffner  fy  Marx  labor  agreement; 
industrial  law  in  the  clothing  industry.  New  edition.  (Chicago:  Hart, 
Schaffner  &  Marx.     1920.     Pp.  xi,  97.) 


706  Reviews  and  New  Books  [December 

Hyndman,  H.  M.  and  Duke  of  Northumberland.  The  cause  of  indus- 
trial unrest.     A  debate.     (London:    Patterson  &  Manger.     1921.     3d.) 

Johnsen,  J.  E.,  compiler.     Selected  articles  on  unemployment.     Debaters' 
handbook  series.     (New  York:    H.  W.  Wilson.     1921.     Pp.  309.     $1.80.) 
This  is  a  second  edition  of  a  compilation  first  issued  in  1915.     About 
fifty  pages  of  new  matter  have  been  added. 

Johnson,  G.  F.  and  others.  The  management  and  the  worker.  (Chicago: 
A.  W.   Shaw.      1920.     Pp.   256.     $3.) 

Jones,  W.  Capital  and  labour:  their  duties  and  responsibilities.  (London: 
King.      1921.     Pp.  168.     2s.  6d.) 

Lane,  W.  D.  Civil  war  in  West  Virginia.  A  story  of  the  industrial  con- 
flict in  the  coal  mines.  Introduction  by  John  R.  Commons.  (New 
York:    Huebsch.     1921.     Pp.  128.     50c.)' 

Lowe,  B.  E.  The  international  protection  of  labor.  (New  York:  Macmil- 
lan.     1921.     $2.50.) 

Ludlam,  H.  E.  B.  Industrial  democracy  and  the  printing  industry.  (Lon- 
don:   Author,  124  Harnall  Lane,  E.,  Coventry.     1921.     Pp.  15.     3d.) 

McLean,  D.  A.  The  morality  of  the  strike.  Introduction  by  Rev.  John 
A.  Ryan.     (New  York:   P.  J.  Kenedy.     1921.     Pp.  x,  196.    $1.75.) 

Sanders,  W.  S.  The  international  labour  organisation  of  the  League  of  Na- 
tions. Fabian  tract  no.  197.  (London:  The  Fabian  Soc.  1921.  Pp. 
14.     2d.) 

Solano,  E.  J.,  editor.  Labour  as  an  international  problem.  (New  York: 
Macmillan.     1920.     Pp.  xl,  345.     $7.) 

Turmann,  M.  Problemes  sociaux  du  travail  industriel.  (Paris:  Gabalda. 
1921.     Pp.  241.     7  fr.) 

Collective  bargaining.  The  University  of  North  Carolina  Record,  extension 
series  no.  40.     (Chapel  Hill.  N.  C:    University.     1920.     Pp.  75.) 

Brief  and  arguments  with  extracts  from  articles  published  in  periodi- 
cals. 

Equal  opportunity  for  women  wage  earners;  facts  vs.  fiction.  (New  York: 
National  Consumers'  League,  44  E.  23d  St.     1920.     Pp.  10.     5c.) 

Industrial  posture  and  seating.  Special  bulletin.  (Albany.  N.  Y.:  N.  Y. 
Dept.  of  Labor.     1921.     Pp.  56.) 

The  Kansas  Court  of  Industrial  Relations.  (Topeka:  Kansas  Court  of  Ind. 
Relations.     1921.     Pp.  46.) 

Labour  turnover  in  munition  and  other  factories;  statistical  study  by  iht 
Industrial  Fatigue  Research  Board.      (London:    King.      1921.     3s.) 

Report  of  the  executive  committee  of  the  Labour  party.  (London:  Labour 
Party,  33,  Eccleston  Square,  S.  W.  1.) 

Wages,  standard  time  rates,  and  hours  of  labour  in  the  United  Kingdom  at 
81  December,  1920.     (London:    King.     1921.     2s.  6d.) 


1921]  Money,  Prices,  Credit,  and  Banking  707 

Money,  Prices,  Credit,  and  Banking 

NEW    BOOKS 

Ayres,  L.  P.  Price  changes  and  business  prospects.  (Cleveland,  O. : 
Cleveland  Trust  Co.     1921.     Pp.  27. 

Bowley,  A.  L.  Prices  and  wages  in  the  United  Kingdom,  191Jf.-1920.  The 
Carnegie  Endowment  for  International  Peace.  (London:  Oxford  Univ. 
Press.     1921.     Pp.  xx,  223.     10s.  6d.) 

Damiris,  C.  J.  Le  systeme  monetaire  grec  et  le  change.  Three  vols. 
(Paris:    Giard.     1920.     Pp.  363;  359;  238.     70  fr.  complete.) 

This  is  a  critical  study  of  the  monetary  experience  of  Greece  in  recent 
years  with  particular  reference  to  the  period  1910  to  1920  inclusive.  The 
book  is  primarily  concerned  with  the  functioning  of  the  Greek  currency 
system  under  the  famous  law  of  March  19,  1910.  After  a  brief  discus- 
sion of  the  events  leading  to  the  passage  of  this  law,  Dr.  Damiris  enters 
upon  a  careful  analysis  of  the  law  and  shows  how  remarkably  well  it 
functioned  until  Greece,  becoming  a  belligerent  nation,  was  forced  by  the 
exigencies  of  war,  to  a  policy  of  inflation  that  led  to  an  extensive  cur- 
rency depreciation  with  all  its  attendant  evils.  The  problem  of  how 
Greece  can  best  return  to  a  stable  currency  basis  is  discussed,  and  in 
this  connection  the  author  makes  a  strong  case  for  a  return  to  the  es- 
sentials of  the  law  of  1910.  The  book  is  a  scholarly  and  well-docu- 
mented account  of  an  important  recent  chapter  in  monetary  history. 

E.  W.  K. 

Gregory,  T.  E.  Foreign  exchange  before,  during,  and  after  the  war.  (Lon- 
don:   Oxford  Univ.  Press.     1921.     Pp.  116.     $1.) 

Although  this  little  book  does  not  in  any  way  pretend  to  be  an  ex- 
haustive treatment  of  the  problems  of  foreign  exchange  it  gives  an  ex- 
cellent treatment  of  fundamental  principles.  The  author  divides  exchange 
experts  at  present  into  two  camps:  those  who  believe  that  the  exchanges 
are  dislocated  because  of  inflation,  and  those  who  think  the  cause  is  to  be 
found  in  an  adverse  trade  balance.  He  defends  the  first  of  these  posi- 
tions and  maintains  convincingly  that  an  excess  of  imports  over  exports 
is  an  effect  and  not  a  cause.  As  the  author  concludes  in  the  last  chapter, 
the  lesson  can  be  very  simply  summed  up  in  two  words  and  they  are: 
Stop  inflation.  M.  J.  S. 

Hahn,  L.  A.  Volkswirtschaftliche  Theorie  des  Bankkredits.  (Tubingen: 
Mohr.     1920.     Pp.  vii,  174.     28  M.) 

Hamlin,  C.  S.  Index-digest,  federal  reserve  bulletin.  Vols.  I-VI  inclusive. 
(Washington:    Federal  Reserve  Board.     1921.     Pp.  249.) 

Hare,  Sir  L.  Currency  and  employment.  Deflation  of  the  currency,  a 
reply  to  the  anti-deflationists.     (London:   King.     1921.     Pp.  59.     2s.  6d.) 

Lehmann,  M.  Der  Begriff  des  angemessenen  Preises.  (Marburg:  El- 
wertsche.     Verlag.     1921.     25  M.) 

Matthews,  P.  W.     The  bankers'  clearing  house:  what  it  is  and  what  it  does. 

(London:    Pitman.   1921.     Pp.   168.     7s.  6d.) 
Miller   zu   Aichholz,    V.      O ester reichische    Munzpr'dgungen    1519-1918. 

(Vienna:    Miinzkabinett.      1920.      1,000  Kr.) 


708  Reviews  and  New  Books  [December 

Putney,  A.  H.  Currency,  banking  and  exchange.  (Chicago:  Lincoln  Inst, 
of  Business.     1921.     Pp.  vii,  418.) 

Radouant,  J.  Les  rapports  de  la  Banque  de  France  et  de  I'Etat  particu- 
lierement  pendant  la  guerre  de  19 1J/..     (Paris:    Rousseau.     1921.) 

Ross,  V.  A  history  of  the  Canadian  Bank  of  Commerce,  with  an  account  of 
the  other  banks  which  now  form  part  of  its  organization.  Vol.  I.  (To- 
ronto:   Oxford  Univ.  Press.     1920.     Pp.  xvi,  516.) 

This  is  an  exceptionally  interesting  volume,  attractive  in  typography 
and  the  printer's  art.  This  first  volume  deals  with  the  early  banking  his- 
tory of  Canada  and  the  five  banks  from  which  the  Canadian  Bank  of 
Commerce  had  its  origin.  The  work  is  embellished  with  many  illustra- 
tions and  appendices  containing  documentary  material.  The  illustrations 
include  well-chosen  photographs  of  early  bank  notes,  coins,  and  banking 
buildings,  provided  by  Sir  Edmund  Walker,  president  of  the  bank. 

Rushforth,  F.  V.  The  Indian  exchange  problem.  (London:  Oxford  Univ. 
Press.     1921.     Pp.  39.     $1.15.) 

This  pamphlet  contains  a  brief  exposition  of  the  theory  and  practice  of 
rupee-sterling  exchange  with  special  reference  to  the  events  which  fol- 
lowed the  introduction  in  February  1920  of  the  policy  of  creating  a  stable 
relationship  between  the  rupee  and  gold.  The  analysis  presented  here 
will  be  found  of  interest  to  students  and  to  business  men  who  have  been 
perplexed  by  the  wide  fluctuations  in  rates  which  have  been  experienced 
since  Indian  exchange  broke  away  from  its  traditional  parity  at  one 
and  four  pence  per  rupee.  M.  J.  S. 

Stoehr,  K.  F.     Der  Baukredit.     (Munich:    Schweitzer.     1921.     12  M.) 

Street,  G.  S.  On  money,  and  other  essays.  (London:  Constable.  1921. 
Pp.  227.     3s.  6d.) 

Wallenberg,  M.  M.  The  reciprocal  treatment  of  branches  of  foreign 
banks  in  different  countries.  Issued  by  the  League  of  Nations,  Provi- 
sional Economic  and  Financial  Committee.     (London  :  King.     1921.     2s.) 

Wallis,  P.  and  Wtallis,  A.  Prices  and  wages.  An  investigation  of  the 
dynamic  forces  in  social  economics.  (London:  King.  1921.  Pp.  xii, 
456.     25s.) 

The  central  thesis  of  this  work  is  that  the  normal  price  of  any  com- 
modity is  the  ratio  of  the  labor  time  required  to  produce  that  commodity 
as  compared  to  the  labor  time  necessary  to  produce  the  gold  in  the  mone- 
tary unit.  Presumably,  most  economists  would  admit  that  this  relation- 
ship tends  to  hold  true  in  a  very  rough  way.  The  authors,  however,  at- 
tempt to  prove  that  this  is  the  essential  explanation  of  commodity  prices 
and  that  other  forces,  such  as  the  stock  of  gold  on  hand  or  of  money  in 
circulation,  are  of  no  importance.  Rather  voluminous  statistical  material 
is  presented  in  an  effort  to  substantiate  this  contention.  Apparently, 
however,  the  authors  themselves  realize  that  the  evidence  is  scarcely 
sufficient  immediately  to  convince  the  skeptic,  for  a  large  part  of  the 
book  is  devoted  to  explaining  why  the  actual  figures  fail  to  correspond 
willi  I  lie  quantities  demanded  by  the  hypothesis.  Whenever  the  figures 
seem  to  verify  the  theory  set  forth,  the  proof  is  at  once  accepted  as  con- 
clusive, no  effort  being  made  to  test  the  possibility  of  the  relationship  be- 


1921]  Money,  Prices,  Credit,  and  Banking  709 

ing  due  to  other  causes.  In  the  opinion  of  the  reviewer,  the  book  adds 
nothing  of  moment  to  the  theory  of  value. 

Certain  chapters,  however,  do  contain  material  of  distinct  interest. 
The  description  of  the  national  income  and  its  division  is  clear  and  well 
presented  and  the  method  used  in  this  analysis  is  apparently  statistically 
sound.  The  widespread  tendency  of  wages  and  salaries  normally  to  ab- 
sorb about  64  per  cent  of  the  net  value  product  of  mines  and  factories 
seems  to  be  rather  definitely  established.  The  chapter  on  "Capital"  per- 
forms a  decided  service  in  emphasizing  the  point  that  modern  private 
saving  does  not  consist  in  the  storage  of  goods  but  rather  in  the  accumu- 
lation of  claims  upon  that  constantly  produced  stream  of  commodities 
and  services  commonly  known  as  the  national  dividend. 

In  the  chapter  on  "Profit  and  Unemployment,"  the  unique  theory  is  set 
forth  that  profits,  rent,  and  interest  are  only  possible  when  unemploy- 
ment prevails  and  that  the  extent  of  the  rewards  to  entrepreneurs  and 
property  owners  is  correlated  with  the  degree  of  unemployment.  The 
reasoning  used  to  bolster  up  this  theory  is  more  novel  than  convincing. 

The  final  chapter  may  well  be  commended  to  the  attention  of  those  in- 
terested in  the  technical  difficulties  necessarily  incidental  to  the  opera- 
tion of  an  industrial  democracy  or  a  socialistic  state.  The  book  closes 
with  a  suggestion  that  the  government  prevent  exorbitant  private  profits 
and  eliminate  unemployment  by  keeping  on  hand  factories  to  be  leased  to 
the  unemployed  workers  in  times  of  business  depression.  The  details  of 
this  plan  are  not  worked  out  but  are  wisely  left  to  the  ingenuity  of  the 
readers.  Willford  I.  King. 

Wiprud,  A.  C.  The  federal  farm-loan  system  in  operation.  (New  York: 
Harper.     1921.     Pp.  xix,  258.     $2.) 

Yves-Guyot  and  Raffalovich,  A.  Inflation  et  deflation.  (Paris:  Alcan. 
1921.     Pp.  278.) 

Contains  chapters  on  inflation  in  France,  going  back  to  the  time  of 
John  Law  of  England,  beginning  with  the  suspension  of  specie  payments 
in  1797  in  England,  the  United  States,  Italy,  Austria-Hungary,  Russia, 
Greece,  and  South  America.  Book  III  deals  with  the  financial  policy  of 
the  principal  countries  since  1914  in  the  use  of  credit  money.  Book  IV 
deals  with  deflation. 

Acceptances :  their  importance  as  a  means  of  increasing  and  simplifying  do- 
mestic and  foreign  trade.  (New  York:  Am.  Exchange  National  Bank. 
1921.     Pp.  106.) 

Digest  of  decisions  relating  to  national  banks,  1912-1920,  with  appendices. 
(Washington:    Comptroller  of  the  Currency.      1920.     $1.) 

How  business  with  foreign  countries  is  financed.  (New  York:  Guaranty 
Trust  Co.     1921.     Pp.  74.) 

The  law  of  banks  and  banking.  (New  York:  Financial  Pub.  Co.  1921. 
$12.) 

National  banking  under  the  federal  reserve  system.  (New  York:  National 
City  Bank.     1921.     Pp.  152.) 

Report  of  the  Federal  Trade  Commission  on  the  causes  of  high  prices  of 


710  Reviews  and  New  Books  [December 

farm    implements.      (Washington:     Federal    Trade    Commission.      1920. 

Pp.  713.) 
Report  of  the  proceedings   of  the   twenty -fifth  general   meeting  of   Crown 

Mines,   Ltd.,    held    at    Johannesburg,   May    26,    1921.      (Johannesburg, 

South  Africa:    Crown  Mines,  Ltd.     1921.     Pp.  16.) 

This   contains   a  considerable  amount  of   statistical   data  in   regard   to 

the  working  costs  of  gold  mining,  and  also  some  comment  as  to  the  rela- 
tion of  these  costs  to  the  currency  question. 
Retail  prices,  1918  to  December,  1919.     Bureau  of  Labor  Statistics,  bull. 

no.  270.     (Washington:    Dept.  of  Labor.     1921.     Pp.  498.) 

Public  Finance,  Taxation,  and  Tariff 
The  Fundamental  Principles  of  Taxation  m  the  Light  of  Modern  De- 
velopments.    By  Sir  Josiah  Stamp.     (London:    Macmillan  Com- 
pany.   1920.    Pp.  xi,  201.    10s.  6d.) 

This  book  contains  six  lectures  originally  delivered  at  University 
College,  London,  with  very  little  attempt  at  rearrangement  or  modifi- 
cation. Hence  there  is  a  tendency  to  concentrate  on  a  few  striking 
points  rather  than  to  give  an  all-around  view  of  the  subject-matter; 
hence  also  there  are  passages  in  which  the  argument  is  too  condensed 
to  be  easily  followed  by  the  reader  unless  he  is  already  well  acquainted 
with  the  subject.  In  spite  of  these  objections  the  amateur  student  of 
taxation  will  find  the  book  very  interesting,  even  amusing;  and  the 
professional  economist  will  rejoice  to  see  such  a  combination  of  sound 
theory  with  administrative  sagacity.  The  problem  of  tempering  justice 
with  expediency  in  the  distribution  of  public  burdens  is  one  of  the 
most  difficult  in  applied  economics,  and  few  of  those  who  have  tackled 
it  have  had  as  much  of  both  academic  training  and  administrative  ex- 
perience as  has  Dr.  Stamp. 

In  the  first  chapter  there  are  five  tests  suggested  for  the  measure  of 
tax-paying  ability,  viz. :  the  "time  element,"  the  "economic"  or  "pure 
income"  aspect,  the  "precarious"  or  "earned"  income  discrimination, 
"domestic  circumstances,"  and  the  "economic  surplus"  distinction. 
This  analysis  furnishes  the  framework  for  that  and  the  following 
chapter. 

It  has  occurred  to  the  reviewer  that  there  is  even  more  in  this  "time 
element"  than  the  author  thought.  Is  not  the  distinction  between 
"earned"  and  "unearned"  income  really  based  on  the  fact  that  incomes 
that  are  equal,  when  reckoned  on  an  annual  basis,  become  unequal,  if 
a  sufficient  period  of  time  be  taken?  If  we  were  accustomed  to  collect 
income  taxes  on  a  fifty-year  accounting  basis  there  would  be  little  need 
to  allow  deductions  for  possible  "precariousness  of  employment,  sick- 
ness, old  age,  and  other  infirmities,"  as  these  contingencies  would  not  be 
"possible,"  but  would  have  occurred,  and  the  income  would  actually 


1921]  Public  Finance,  Taxation,  and  Tariff  711 

have  been  reduced  by  them.  The  individual  who  depends  upon  his  own 
activities  for  his  income  resembles  in  some  respects  an  entrepreneur, 
whose  profits  may  fluctuate  from  year  to  year;  in  other  respects  he 
resembles  a  capitalist  whose  capital  is  of  limited  life,  and  whose  realized 
income  therefore  includes  a  certain  amount  of  his  principal.  If  he 
kept  as  elaborate  accounts  as  a  modern  business  corporation  does,  he 
would  be  compelled  to  establish  "reserves"  against  the  contingencies 
mentioned  above,  including  a  reserve  against  the  depreciation  of  his 
own  earning  capacity,  before  declaring  any  dividend.  But  neither  an 
individual  nor  a  business  corporation  would  need  to  set  up  any  reserves 
if  they  drew  up  their  accounts  only  at  the  expiration  of  periods  as 
long  as  the  life  of  their  capital  assets.  In  other  words,  the  natural 
accounting  period  of  a  man  working  for  his  income  is  his  life-time,  and 
it  is  only  because  we  are  compelled  for  practical  reasons  to  assess  his 
income  every  year  that  we  must  allow  him  deductions  not  allowed  to  the 
recipient  of  income  from  property.  In  this  connection  it  is  necessary 
to  state  that  the  author  seems  to  misunderstand  Professor  Taussig's 
views  on  this  matter.  I  have  been  unable  to  find  in  Taussig's  Principles 
the  two  quotations  attributed  to  him  by  Dr.  Stamp  on  his  page  179. 
On  the  other  hand,  in  volume  II,  page  490,  he  speaks  of  the  "moral 
obligation"  resting  on  the  recipient  of  an  unfounded  income,  to  save 
part  of  it,  as  a  justification  for  lesser  taxes  on  such  income;  and  on 
page  495  he  speaks  favorably  of  progressive  taxation  of  funded  in- 
come as  a  means  of  confiscating  saver's  rent. 

The  discussion  of  "Death  duties"  in  chapter  5  is  extremely  inter- 
esting, especially  the  part  that  is  concerned  with  their  effect  on  the 
formation  of  capital.  Ordinarily,  it  is  said  that  the  heir,  being  com- 
pelled to  pay  an  inheritance  tax,  will  regard  it  as  a  deduction  from 
capital  and  make  no  attempt  to  save  the  amount  from  his  subsequent 
income,  whereas  if  it  were  taken  from  him  by  an  income  tax  he  would 
economize  in  consequence.  Dr.  Stamp's  discussion  is  from  an  entirely 
different  point  of  view;  he  analyzes  the  psychology,  not  of  the  heir, 
but  of  the  decedent :  will  he  save  more,  anticipating  an  inheritance  tax, 
than  he  would  if  the  same  sum  were  taken  during  his  lifetime  by  an  in- 
come tax?  The  answer  is,  obviously,  "Yes."  Here  again  a  slight  cor- 
rection is  called  for:  opinion  in  the  United  States  has  not  hardened 
enough  against  the  federal  inheritance  tax  so  that  there  seems  to  be 
any  immediate  likelihood  of  its  repeal,  and  there  are  many  who  think 
that  the  states  alone  cannot  succeed  in  imposing  very  high  rates  on 
inheritances. 

In  the  last  chapter  the  author  takes  up  possible  ulterior  objects  of 
taxation,  such  as  suppression  of  vices,  redistribution  of  wealth,  and 
the  benefits    supposed    to   be   obtainable   through    a   protective    tariff. 


712  Reviews  and  New  Books  [December 

Here,  as  in  the  rest  of  the  book,  there  is  that  absence  of  doctrinairism, 
that  willingness  to  face  facts  and  to  allow  for  prejudices,  which  we 
have  learned  to  expect  in  Dr.  Stamp's  works.  The  reader's  regret  that 
the  book  is  so  short  will  be  tempered  by  admiration  for  the  skill  with 
which  it  is  brought  to  an  end. 

Rufus  S.  Tucker. 
Harvard  University. 

NEW    BOOKS 

Castenholz,  W.  B.  Syllabus  of  income  tax  procedure  for  1920  returns; 
digest,  formulas,  tables,  calculating  charts.  (Chicago,  111.:  La  Salle 
Extension  University.      1921.      Pp.  vii,  90.) 

Cleveland,  F.  A.  and  Lindsay,  S.  McC.  National  expenditures  and  public 
economy.  Proceedings,  vol.  IX,  no.  3.  (New  York:  Academy  of  Po- 
litical Science,  Columbia  Univ.      1921.     Pp.  208.     $1.50.) 

Huntington,  C.  W.  Enclaves  of  single  tax,  being  a  compendium  of  the 
legal  documents  involved,  together  with  a  historical  description.  (Har- 
vard, Mass.:    Fiske  Warren.     1921.     Pp.  150.) 

Kelley,  F.  E.  A  history  of  public-school  support  in  Minnesota,  1858  to 
1917.  Current  problems,  no.  12.  (Minneapolis:  Univ.  of  Minnesota. 
1921.     Pp.  ix,  103.     75c.) 

Kimber,  A.  W.  Kimber's  record  of  government  debts  and  other  foreign  se- 
curities. Fifth  annual  edition.  (New  York:  A.  W.  Kimber  &  Co.  1921. 
Pp.  ix,  542.) 

King,  C.  L.,  editor.  Taxation  and  public  expenditures.  Annals,  vol.  XCV 
(no.  181).  (Philadelphia,  Pa.:  American  Academy  of  Political  and  So- 
cial Science.     1921.     Pp.  iv,  314.) 

Lardeur,  G.  La  liquidation  des  dettes  d'avant-guerre.  (Paris:  Lib.  Soc. 
des  Juris  Classeurs.     1921.) 

de  Marce,  V.  La  cour  des  comptes  en  Italie  et  en  Allemagne.  (Paris: 
Roustan.     1920.     Pp.  32.) 

Marion,  M.  Histoire  financiere  de  la  France  depuis  1715.  (Paris:  Rous- 
seau.     1921.) 

McCleary,  J.  T.  Protection,  our  proper  permanent  policy.  (Washington: 
National  Tariff  Inst.     1921.     Pp.  544.     $3.50.) 

Meyer,  H.  H.  B.,  compiler.  List  of  recent  references  on  the  income  tax. 
(Washington:    Library  of  Congress.      1921.     Pp.  96.     20c.) 

Michener,  A.  M.  The  budget  system  of  Frankfort-on-the-Main.  (White 
Plains,  N.  Y.:    Westchester  Printing  Service.      1920.     Pp.   127.) 

Nelson,  H.  B.  The  Wisconsin  income  tax.  Commercial  education  series. 
(Madison:    Extension  Div.,  Univ.  of  Wisconsin.      1921.     Pp.   191.     $4.) 

Powell,  H.  M.  Taxation  of  corporations  and  personal  income  in  New 
York.  Vol.  I.  Corporations,  real  and  personal  property.  Fourth  edi- 
tion.    (New  York:    Boyd  Press.     1921.     Pp.  xxxviii,  548.) 


1921]  Population  and  Migration  713 

Seligman,  E.  R.  A.  The  shifting  and  incidence  of  taxation.  Fourth  edi- 
tion, revised.     (New  York:    Columbia  Univ.  Press.     1921.     Pp.  xii,  431.) 

Sells,  E.  W.  Why  not  lessen  the  evils  of  present  taxation?  (New  York: 
Haskins  &  Sells,  37  W.  39th  St.     1921.     Pp.  12.) 

Taussig,  F.  W.,  compiler.  Selected  readings  in  international  trade  and 
tariff  problems.      (Boston:    Ginn.      1921.     Pp.  600.     $3.) 

New  York  state  franchise  tax  on  business  corporations.  (New  York: 
Equitable  Trust  Co.     1921.     Pp.  30.) 

Prentice-Hall  federal  tax  service  for  1921.  Two  vols.  (New  York:  Pren- 
tice-Hall, Inc.      1921.     Pp.   1200.     $60.) 

Proceedings  of  the  National  Tax  Association  conference,  held  at  Salt  Lake 
City,  Utah,  September,  1920.  (New  York:  National  Tax  Assoc.  1921. 
Pp.  ix,  465.) 

Among  the  subjects  discussed  were:  "The  taxation  of  oil  properties," 
by  Frank  Orr;  "Recent  tax  developments  in  Western  Canada,"  by  A.  B. 
Clark;  "The  gross  sales  or  turnover  tax,"  by  M.  D.  Rothschild;  "The 
exemption  of  mortgage  interest  as  a  solution  of  the  housing  problem," 
by  R.  M.  Haig;  "Some  aspects  of  the  problem  of  uniform  state  income 
tax  legislation,"  by  H.  L.  Lutz ;  "Domicile  in  state  personal  income  tax- 
ation," by  I.  L.  Shaw,  and  a  series  of  papers  on  mine  taxation. 

A  proposal  for  government  reorganization;  published  in  the  interest  of 
national  economy.  (New  York:  National  Budget  Committee,  7  West  8th 
St.     1921.     Pp.  69.     25c.) 

Sinclair-Murray  explanatory  income  tax  returns.  (New  York:  Sinclair- 
Murray  &  Co.,  565  Fifth  Ave.      1921.     Pp.  97.     $10.) 

Prepared  in  Washington,  D.  C,  in  February,  1921,  under  the  super- 
vision of  Judge  T.  T.  Ansberry. 

Treasury  decisions  under  customs  and  other  laws.  Vol.  39,  January- June 
1921.     (Washington,  D.  C:     Supt.  of  Docs.     1921.     $1.50.) 

The  Wisconsin  income  tax.  Instructive  papers  for  home  study,  extension 
division  of  the  University  of  Wisconsin.  (Madison:  Univ.  of  Wisconsin. 
1921.     Pp.   191.) 

The  tax  law  is  taken  up  by  sections,  with  explanations  and  examples 
of  application  of  rates. 

Population  and  Migration 

NEW   BOOKS 

Bureau,  P.  L' indiscipline  des  moeurs.  (Paris:  Bloud  et  Gay.  1921. 
Pp.  608.) 

Discusses  the  depopulation  of  France. 

Caldwell,  A.  B.,  editor.  History  of  the  American  negro.  Vol.  IV.  North 
Carolina  edition.  (Atlanta,  Ga. :  A.  B.  Caldwell  Pub.  Co.  1921.  Pp. 
864.) 

Cole,  W.  I.  Immigrant  races  in  Massachusetts.  The  Greeks,  (Boston: 
Mass.  Bureau  of  Immigration.     1921.     Pp.  6.) 


714  Reviews  and  New  Books  [December 

Connor,  R.  D.  W.  Race  elements  in  the  white  population  of  North  Caro- 
lina. (Raleigh,  N.  C. :  North  Carolina  College  for  Women.  1920.  Pp. 
115.     $1.) 

Haberlandt,  M.  Die  Vblker  Europas  und  des  Orients.  (Leipzig:  Bibli- 
ographisches  Inst.     1920.     Pp.  vii,  273.     36  M.) 

Kellor,  F.  A.  The  federal  administration  and  the  alien;  a  supplement  to 
"Immigration"  and  the  future.  (New  York:  Doran.  1921.  Pp.  xiv, 
80.     50c.) 

Krebs,  N.  Die  Verbreitung  des  Menschen  auf  der  Erdoberfl'dche.  (Leip- 
zig:   Teubner.     1921.     2.80  M.) 

Kroeber,  A.  L.  and  Waterman,  T.  T.  Source  book  in  anthropology. 
(Berkeley,  Cal. :    Univ.  of  California.     1920.     Pp.  565.     $2.50.) 

Mariano,  J.  H.  The  second  generation  of  Italians  in  New  York  City. 
(Boston:    Christopher  Pub.  House.     1921.     Pp.  x,  317.     $3.) 

Meyer,  E.  C.  Infant  mortality  in  New  York  City;  a  study  of  the  results 
accomplished  by  infant-life  saving  agencies,  1885-1920.  (New  York: 
Rockefeller  Foundation,  International  Health  Board.      1921.     Pp.   135.) 

Pell,  C.  E.  The  law  of  births  and  deaths.  (London:  T.  Fisher  Unwin. 
1921.     12s.  6d.) 

Phelps,  E.  M.,  compiler.  Selected  articles  on  immigration.  The  hand- 
book series.     (New  York:    Wilson.     1921.     Pp.  xi,  370.     $1.80.) 

Pulteney,  I.  Problems  of  the  birth-rate.  A  lecture  given  at  the  Mary 
Summer  House  on  Oct.  20,  1920.  (New  York:  Macmillan.  1921.  Pp. 
12.     30c.) 

Saleeby,  C.  W.  The  eugenic  prospect.  (London:  T.  Fisher  Unwin.  1921. 
12s.  6d.) 

Steele,  G.  Infant  mortality  in  Pittsburgh :  an  analysis  of  records  for  1920 
with  six  charts.  Children's  Bureau,  bull.  no.  86.  (Washington:  Dept. 
of  Labor.      1921.      Pp.   24.) 

Social  Problems  and  Reforms 

Great  American  Issues,  Political,  Social,  Economic.     By  John  Hays 
Hammond  and  Jeremiah  W.  Jenks.     (New  York:    Charles  Scrib- 
ner's  Sons.     1921.     Pp.  258.) 
Under  four  main  heads :     I,  Problems  of  Government,  II,  Problems 
of  Labor,  III,  Problems  of  Business,  and  IV,  Remedial  Suggestions,  the 
authors  have  attempted  to  discuss  myriad   questions.     The   result   is 
what  might  have  been  anticipated.     In  256  pages  only  the  high  spots 
can  be  touched — some  with  fairy  lightness ;  steps  in  the  chain  of  reason- 
ing are  omitted:  and  an  occasional  broad  generalization  totters  with- 
out visible  support. 

As  the  outstanding  example  of  incomplete  discussion  chapter    XVI 
may  be  cited.     In  these  twelve  short  pages  the  authors  "examine  briefly 


1921]  Social  Problems  and  Reforms  715 

the  main  points"  of  socialism,  anarchism,  trade  unionism,  guild  social- 
ism, syndicalism,  and  sovietism.  However  excellent  may  be  the  selec- 
tion of  "main  points,"  it  is  questionable  whether  any  whole-hearted  so- 
cialist, anarchist,  trade  unionist,  syndicalist,  or  bolshevist  would  feel 
that  his  case  had  been  fairly  stated;  likewise  the  opponents  of  these 
gentlemen  might  consider  themselves  slighted.  Again,  in  a  rapidly 
moving  chapter  on  the  tariff,  a  whole  page  is  devoted  to  the  incidence 
of  the  burden  of  the  tax.  The  reader  learns  that  sometimes  the  con- 
sumer bears  the  tax  in  increased  prices  of  the  imported  article,  that 
other  times  the  foreign  producer  has  to  lower  his  charge  and  bear  the 
tax,  and  that  there  are  cases  in  which  both  these  events  occur.  In  this 
connection,  however,  the  authors  seem  completely  to  ignore  the  pos- 
sibility of  consumers  paying  enhanced  prices  for  the  protected  home 
product. 

It  is  not  always  possible  to  follow  the  argument  closely.  In  de- 
veloping the  proposition  that  "As  a  broad  principle  our  export  trade 
should  not  be  increased  without  reference  to  the  rate  of  increase  in  our 
domestic  trade,"  occurs  this  sentence:  "If  we  increase  their  volume 
(exports)  beyond  the  point  at  which  they  represent  chiefly  the  sale 
of  a  marginal  surplus,  our  manufacturers  will  be  under  great  pressure 
to  lower  the  cost  of  production,  in  order  to  meet  that  of  foreign  coun- 
tries, and  this  process  may  well  involve  lowering  the  wage  standard  of 
American  labor"  (p.  76).  Just  what  is  this  marginal  surplus  that  may 
with  safety  be  sold  abroad?  Is  it  not  questionable  whether  a  fight  for 
foreign  markets,  involving,  presumptively,  increased  production  in  the 
United  States  could  itself  force  down  wages? 

Wisely  the  authors  argue  that  the  standard  of  living  of  the  masses 
in  America  should  constantly,  if  necessarily  slowly,  rise  (chapter  VII). 
Later,  in  an  exposition  of  the  advantages  of  protective  tariffs,  they 
speak  of  "beneficial  influences  on  other  industries — retained  because 
of  the  increased  demands  for  goods  caused  by  the  increased  density  of 
population"  (p.  190).  Is  it  not  the  fact  that  in  the  United  States  of 
1921  increasing  density  of  population  is  one  of  the  strongest  forces 
tending  to  hold  the  standard  of  living  down?  At  least  that  is  one  of 
the  notions  in  the  heads  of  those  who  have  worked  for  restriction  of 
immigration. 

A  treatment  of  Great  American  Issues,  Social,  Political,  Economic, 
seems  incomplete  without  a  more  adequate  statement  of  the  railway 
situation,  of  the  national  fiscal  dilemma,  of  the  plight  of  the  Shipping 
Board,  and  of  the  increasing  proportion  of  tenant  farmers.  Yet  the 
authors  have  attempted  so  much  that  they  should  hardly  be  asked  for 
more.  On  the  other  hand,  this  work  has  its  elements  of  strength.  There 
is  a  decidedly  good  summary  of  the  lot  of  the  able,  conscientious  man 


716  Reviews  and  New  Books  [December 

who  enters  politics,  only  to  meet  repeated  humiliation.  The  merits  of 
the  engineer  as  material  for  public  administrative  offices  are  admirably 
set  forth.  The  general  tone  is  fair;  the  illustrations  are  interesting  and 
well  chosen  from  a  broad  range  of  facts.  The  reader  is  carried  along 
by  the  vigorous  handling  of  the  subjects.  Above  all  the  writers  suc- 
ceed in  their  main  purpose  of  impressing  the  tremendous  gravity  of  the 
present  problems  of  the  United  States. 

Frank  H.  Streightoff. 
Indiana  University. 

NEW    BOOKS 

Abel,  M.  H.  Successful  family  life  on  the  moderate  income.  (Philadel- 
phia, Pa.:    Lippincott.     1921.     Pp.  xii,  247.     $2.) 

Agar,  F.  A.  Modern  money  methods  for  the  church.  (Philadelphia,  Pa.: 
Judson  Press.     1921.     Pp.  162.     $1.) 

Andrews,  I.  O.  and  Hobbs,  M.  A.  Economic  effects  of  the  world  war  upon 
women  and  children  in  Great  Britain.  Carnegie  Endowment  for  Inter- 
national Peace,  preliminary  economic  studies  of  the  war,  no.  4.  Second 
revised  edition.  (New  York:  Oxford  Univ.  Press.  1921.  Pp.  ix,  255. 
$1.) 

Berkson,  I.  B.  Theories  of  Americanization :  a  critical  study,  with  special 
reference  to  the  Jewish  group.  (New  York:  Teachers  College,  Colum- 
bia Univ.     1920.     Pp.  viii,  226.     $3.) 

Burr,  W.    Rural  organization.     (New  York:    Macmillan.     1921.     $2.25.) 

Cestre,  C.  Production  industrielle  et  justice  sociale  en  Amerique.  (Paris: 
Garnier.      1921.      Pp.   340.) 

Chute,  C.  L.  Probation  in  children's  courts.  Children's  Bureau  publica- 
tion no.   80.      (Washington:    Dept.  of  Labor.      1921.     Pp.  32.) 

Clsoe,  C.  L.  Welfare  work  in  the  steel  industry.  (New  York:  U.  S.  Steel 
Corporation,  Bureau  of  Safety,  71   Broadway.     1920.     Pp.  45.) 

Clutton-Brock,  A.  and  others.  Essays  on  vocation.  Essays  designed  to 
meet  after-the-war  conditions,  second  series.  (New  York:  Oxford  Univ. 
Press.     1921.     Pp.  76.     $1.75.) 

Dadisman,  A.  J.  French  Creek  as  a  rural  community.  Bulletin  176. 
(Morgantown,  W.  Va. :    Agri.  Experiment  Station.     1921.     Pp.  23.) 

Davis,  M.  M.,  Jr.  Immigrant  health  and  the  community.  Americanization 
Studies.      (New  York:    Harper.      1921.     Pp.  xxvii,  481.     $2.50.) 

Devine,  E.  T.     Social  work.     (New  York:    Macmillan.      1921.) 

Earp,    E.    L.      Rural   social   organization.      (New   York:     Abingdon    Press. 

1921.     Pp.   144.) 
Eddy,  A.  J.     Property.     (Chicago:    McClurg.     1921.     Pp.  254.     $2.50.) 
Eldridge,  S.     Social  legislation  in  Illinois:  needs  and  opportunities  in  1921. 

(Rockford,  111.:    \\  .   M .  Sliimmin  &  Co.     1921.     Pp.110.     $1.50.) 

The  recommendations  made  to  the  recent  Illinois  legislature  in  the  field 

of  social  legislation  are  embodied  in  this   small  book.      The  suggestions 


1921]  Social  Problems  and  Reforms  717 

are  based  largely  on  material  coordinated  from  existing  reports  or  studies, 
but  these  are  so  extensive  that  a  considerable  array  of  recommendations 
seems  amply  justified.  The  ground  covered  includes  subjects  such  as 
feeble-rnindedness,  jails,  adult  probation,  dependent  children,  rural 
schools,  public  health,  child  labor,  minimum  wage  laws,  social  insurance, 
housing,  and  reform  in  organization  of  local  government.  The  survey 
abounds  in  practical  suggestions  but  does  not  attempt  a  complete  itemiza- 
tion of  the  various  legislative  needs.  Rather  it  presents  the  problem  in 
non-technical  English  and  expects  the  lawmakers  to  give  legal  expres- 
sion to  its  suggestions.  G.  B.  Mangold. 

Ensign,  F.  C.  Compulsory  school  attendance  and  child  labor.  (Iowa  City, 
la.:    Athens  Press.     1921.     Pp.  ix,  263.) 

Fernald,  M.  R.,  and  others.  A  study  of  women  delinquents  in  New  York 
state.     (New  York:    Century.     1921.     $5.) 

Galloway,  T.  W.  The  sex  factor  in  human  life;  a  study  outline  for  col- 
lege men.  (New  York:  American  Social  Hygiene  Assoc.  Inc.  1921. 
Pp.  142.) 

Graper,  D.  American  police  administration.  A  handbook  on  police  organi- 
zation and  methods  of  administration  in  American  cities.  (New  York: 
Macmillan.     1921.     Pp.  vii.  357.     $3.50.) 

Hayes,  E.  C.  Sociology  and  ethics;  the  facts'  of  social  life  as  the  source  of 
solutions  for  the  theoretical  and  practical  problems  of  ethics.  (New 
York:    Appleton.     1921.     Pp.  viii,  354.) 

Hendricks,  G.  P.  Handbook  of  social  resources  of  the  United  States. 
(The  American  Red  Cross:    Washington,  D.  C.     1921.     Pp.  lxx,  300.) 

This  is  a  valuable  handbook  of  organizations,  societies  and  agencies  con- 
cerned with  various  aspects  of  the  social  and  economic  organization  of  the 
United  States.     The  subject  index  of  agencies  covers  nearly  50  pages. 

Hill,  O.,  and  others.  House  property  and  its  management.  (London: 
Allen  &  Unwin.     1921.     Pp.  96.     3s.  6d.) 

Holden,  A.     The  settlement  idea.     (New  York:    Macmillan.     1921.) 

Jordan,  R.  H.  Nationality  and  school  progress:  a  study  in  Americanization. 
(Bloomington,  111.:    Public  School  Pub.  Co.     1921.     Pp.  105.) 

Kahn,  O.  H.  Pressing  problems  and  some  suggestions.  An  address  de- 
livered before  the  Traffic  Club  of  Pittsburgh,  April  28,  1921.  (New 
York:    Author,  52  William  St.      1921.     Pp.   36.) 

Lansing,  R.  Notes  on  sovereignty  from  the  standpoint  of  the  state  and  of 
the  world.  Carnegie  Endowment  for  International  Peace,  Division  of  In- 
ternational Law,  pamphlet  no.  38.  (Washington:  The  Endowment. 
1921.     Pp.  94.) 

Loomis,  F.  D.,  compiler.  Americanization  in  Chicago:  the  report  of  a  sur- 
vey made  by  authority  and  under  the  direction  of  the  Chicago  Community 
Trust.     (Chicago:    Community  Trust.     1921.     Pp.  40.) 

Lundberg,  E.  O.  and  Lenroot,  K.  F.  Illegitimacy  as  a  child-welfare  prob- 
lem.    Part  2.     A  study  of  original  records  in  the  city  of  Boston  and  in 


718  Reviews  and  New  Books  [December 

the    state    of    Massachusetts.      Children's    Bureau    publication    no.    75. 
(Washington:    Dept.  of  Labor.     1921.     Pp.  408.) 

McGill,  N.  Infant-welfare  work  in  Europe.  An  account  of  recent  ex- 
periences in  Great  Britain,  Austria,  Belgium,  France,  Germany,  and  Italy. 
Children's  Bureau  publication  no.  76.  (Washington:  Dept.  of  Labor. 
1921.     Pp.  169.) 

Nason,  W.  C.  The  organization  of  rural  community  buildings.  Farmers' 
bull.     1192.     (Washington:    Dept.  of  Agri.     1921.     Pp.  48.) 

O'Neil,  R.  K.  and  Estes,  G.  K.  Naturalization  made  easy;  what  to  do  and 
•what  to  know.  A  book  of  instruction  for  aliens  wishing  to  become  citi- 
zens of  the  United  States.  Seventh  edition,  (San  Francisco,  Cal. :  A. 
Carlisle  &  Co.     1921.     Pp.  147.) 

Reed,  A.  Z.  Training  for  the  public  profession  of  the  law.  Historical  de- 
velopment and  principal  contemporary  problems  of  legal  education  in  the 
United  States  with  some  account  of  conditions  in  England  and  Canada. 
Bulletin  no.  15.  (New  York:  Carnegie  Foundation  for  the  Advancement 
of  Teaching,  522  Fifth  Ave.     1921.     Pp.  xviii,  409.) 

Rushmore,  E.  M.  Social  workers3  guide  to  the  serial  publications  of  repre- 
sentative social  agencies.  (New  York:  Russell  Sage  Foundation.  1921. 
Pp.  174.) 

This  report  lists  the  serial  publications  and  reports  of  about  four 
thousand  institutions  and  agencies  interested  in  social  or  civic  welfare. 
The  index  is  arranged  both  alphabetically  and  according  to  subjects.  It 
simplifies  the  task  of  the  reader  in  attempting  to  discover  material  on 
particular  topics.  Under  Child  Welfare,  for  example,  more  than  three 
hundred  titles  are  presented.  Careful  efforts  were  made  to  include  only 
those  publications  that  present  a  progressive  viewpoint  so  that  students 
and  readers  might  gain  the  maximum  results  from  an  examination  of 
these  reports.  This  guide  will  prove  very  helpful  to  the  social  worker 
and  ought  to  inspire  more  effective  social  service.  G.  B.  Mangold. 

Schwarz,  O.  L.  Unconventional  ethics.  (Boston:  Stratford  Co.  1921. 
Pp.  500.     $4.25.) 

Scudder,  V.  D.  Social  teaching  of  the  Christian  year.  (New  York:  Dut- 
ton.     1921.     Pp.  268.     $2.50.) 

Snedden,  D.  S.  A  digest  of  educational  sociology.  (New  York:  Teachers 
College,  Columbia  Univ.     1920.     Pp.  iv,  264.) 

Upton,  Mrs.  S.  M.  and  Chassell,  C.  F.  A  scale  for  measuring  the  impor- 
tance of  habits  of  good  citizenship;  with  description  of  its  use  in  a  new 
report  card  at  the  Horace  Mann  School.  (New  York:  Teachers  College, 
Columbia  Univ.     1921.     Pp.  iii,  44.) 

Wallas,  G.  Our  social  heritage.  (New  Haven:  Yale  Univ.  Press.  1921. 
Pp.  307.) 

Wolff,  H.  W.  Rural  reconstruction.  (London:  Selwyn  &  Blount.  1921. 
15s.) 

Zimand,  S.  Modern  social  movements;  descriptive  summaries  and  bibliogra- 
phies. Debaters'  handbook  series.  (New  York:  Wilson.  1921.  Pp.  vi, 
260.     $1.25.) 


1921]  Insurance  and  Pensions  719 

Cleveland  hospital  and  health  survey.  (Cleveland,  O. :  Cleveland  Hospital 
Council.     1920.) 

The  Consumers'  League  of  Cincinnati,  report  for  1919  and  1920.  (Cin- 
cinnati, O. :    Social  Agencies  Building.     1921.     Pp.  11.) 

List  of  references  on  disarmament  and  cost  of  armaments  and  war.  (Wash- 
ington:   Carnegie  Endowment  for  International  Peace.     1921.) 

Report  on  a  survey  of  the  police  bureau  of  Rochester,  New  York.  (Roches- 
ter, N.  Y.:    Bureau  of  Municipal  Research,  Inc.     1921.     Pp.  22.) 

Some  newer  problems,  national  and  social.  Papers  and  proceedings  of  the 
American  Sociological  Society,  vol.  XV.  (Chicago:  Univ.  of  Chicago 
Press.     1921.     Pp.  vi,  280.     $2.) 

Standards  of  legal  protection  for  children  born  out  of  wedlock:  a  report 
of  regional  conferences.  Children's  Bureau  publication  no.  77.  (Wash- 
ington:   Dept.  of  Labor.     1921.     Pp.  158.) 

State  reconstruction  studies.  Extension  series  41,  University  of  North 
Carolina.  (Chapel  Hill,  N.  C:  Univ.  Extension  Div.  1921.  Pp.  200. 
75c.) 

Contains  chapters  on  education,  transportation,  home  and  farm  owner- 
ship, race  relationships,  organized  business. 

Training  for  rural  service.  Proceedings  of  second  rural  leadership  council, 
Wesley  Foundation,  University  of  Illinois.  (Philadelphia,  Pa.:  Bd.  of 
Home  Missions  and  Church  Extension,  Dept.  of  Rural  Work,  1701  Arch 
St.     1921.     Pp.  70.     25c.) 

University  training  for  welfare  work  in  industry  and  commerce.  Report  is- 
sued by  the  Joint  University  Council  for  Social  Studies.  (London:  King. 
1921.     6d.) 

What  is  the  Christian  view  of  work  and  wealth?  Social  problem  discussion 
series.  (New  York:  Federal  Council  of  the  Churches  of  Christ  in  Ameri- 
ca.    1920.     Pp.  94.     85c.) 

Wisconsin  mental  deficiency  survey.  Report  with  recommendations .  (Madi- 
son, Wis.:    State  Board  of  Public  Affairs.     1921.     Pp.  59.) 

Insurance  and  Pensions 
Marine  Insurance.     By  Solomon  S.  Huebner.     (New  York:    D.  Ap- 
pleton  &  Company.     1920.     Pp.  xiv,  265.     $3.00.) 

Marine   Insurance.      Its    Principles    and,    Practice.      By    William    D. 

Winter.      (New  York:    McGraw-Hill  Book  Company,  Inc.     1919. 

Pp.  xvii,  433.) 

The  appearance  of  these  two  volumes  covering  the  same  general  field 
of  study  is  an  indication  of  the  increasing  interest  in  this  country  in 
marine  insurance  and  of  the  importance  attached  to  the  subject  under 
the  present  day  conditions  of  our  commercial  life.  The  rapid  develop- 
ment of  American  foreign  commerce  during  the  great  war,  and  the 
phenomenal  growth  of  our  merchant  marine  in  the   foreign  carrying 


720  Reviews  and  New  Books  [December 

trade  during  the  same  period  are,  in  all  probability,  two  of  the  out- 
standing causes  for  our  present-day  interest  in  marine  insurance.  Be- 
cause of  the  difficulties  involved  in  forecasting  the  future  of  our  mer- 
chant marine,  it  is  impossible  to  determine,  as  yet,  whether  or  not  this 
interest  is  to  continue  for  any  considerable  period  of  time.  If  our  mer- 
chant fleet  engaged  in  foreign  trading  declines  in  size  and  in  relative 
importance  so  as  to  assume  again  the  relatively  unimportant  position 
which  it  occupied  in  the  latter  part  of  the  nineteenth  century  and  the 
earlier  part  of  the  twentieth  century,  our  immediate  interest  in  marine 
insurance  as  an  American  institution  will,  in  all  probability,  also  di- 
minish. But  if,  on  the  other  hand,  there  continues  to  remain  under 
the  American  flag  a  substantial  amount  of  tonnage  for  overseas  busi- 
ness, the  present  interest  in  this  branch  of  insurance  is  likely  to  be 
maintained  and  develop,  perhaps,  into  still  larger  proportions.  Which 
of  these  situations  will  prevail  cannot  now  be  clearly  foreseen. 

Professor  Huebner's  volume  is  written  in  the  same  easy  style  and 
has  been  prepared  with  the  same  painstaking  care  which  characterizes 
his  other  well-known  books  on  property  and  life  insurance.  A  good 
deal  of  the  material  contained  in  the  present  work  was  gathered  by  the 
author  during  his  recent  investigation  of  marine  insurance  which  was 
made  for  the  Committee  on  Merchant  Marine  and  Fisheries  of  the  House 
of  Representatives  and  for  the  United  States  Shipping  Board.  The 
substance  of  this  investigation  was  printed  in  1920  as  a  report  on  the 
status  of  marine  insurance  in  the  United  States,  and  was  commented 
upon  at  considerable  length  by  the  present  reviewer  in  the  September, 
1920,  issue  of  this  Review. 

The  present  volume  by  Professor  Huebner  is  comprehensive  in  scope 
and  covers  the  subject  in  a  thorough-going  manner,  for  it  contains  the 
bulk  of  the  essential  facts,  principles,  and  practices  within  the  field  of 
marine  insurance.  It  is  a  matter  of  common  knowledge  to  all  students 
of  the  subject,  that  the  policy  contract  in  marine  insurance  is  notably 
obscure  to  all  but  the  initiated,  and  that  it  contains  a  number  of 
clauses  whose  full  meaning  cannot  easily  be  comprehended  by  those  out- 
side of  the  profession.  The  analysis  of  the  policy  contract  and  the  ex- 
position of  the  significance  of  the  various  clauses  has  been  well  done  by 
Professor  Huebner.  There  are  about  200  pages  of  text,  and  the  bal- 
ance of  the  book  consists  of  a  well-selected  series  of  documents,  forms, 
and  agreements  illustrative  mainly  of  various  points  considered  in  suc- 
cessive chapters.  The  book  is  one  of  a  series  whose  purpose  is  to  assist 
students  and  others  who  wish  to  prepare  themselves  for  such  lines  of 
activity  as  the  export  trade,  shipping,  or  marine  underwriting. 

The  volume  by  Mr.  Winter,  a  vice  president  of  the  Atlantic  Mutual 
Insurance  Company  of  New  York,  is  the  outgrowth  of  a  series  of  lee- 


1921]  Insurance  and  Pensions  721 

tures  delivered  by  the  author  at  New  York  University  on  the  subject 
of  marine  insurance.  Broadly  speaking,  it  covers  the  same  general 
field  of  study  as  the  work  by  Professor  Huebner,  so  that  a  consider- 
able part  of  the  two  volumes  is  concerned  with  a  discussion  of  the  same 
topics.  Mr.  Winter's  book  commences  with  a  lengthy  historical  sketch 
of  marine  insurance  which  is  one  of  the  best  concise  presentations  of 
the  topic  that  we  have  read.  Another  interesting  feature  which  serves 
to  suggest  the  relationship  of  marine  insurance  to  other  fields  of  study 
is  found  in  the  first  two  chapters  which  are  concerned  respectively  with 
a  discussion  of  physical  geography  and  of  commercial  geography  in 
relation  to  marine  insurance.  Then  there  follows  a  clear  discussion  of 
the  leading  facts  and  principles  in  marine  insurance  of  the  policy  con- 
tract, and  of  other  fundamentals  of  the  subject.  The  latter  part  of 
the  volume  contains  a  series  of  carefully  selected  forms,  acts,  etc.,  which 
assist  the  reader  to  understand  more  clearly  certain  portions  of  the  text. 

In  conclusion  it  ma}7  be  added  that  both  books  are  well  adapted  for 
classroom  purposes  as  also  for  the  use  of  those  who  wish  otherwise  to 
inform  themselves  on  the  subject  of  marine  insurance. 

Avard  L.  Bishop. 

Yale  University. 

Teachers'  Pension  Systems  in  the  United  States;  a  Critical  and  De- 
scriptive Study.     The  Institute  for  Government  Research  studies 
in  administration.     By  Paul  Studensky.      (New  York:    D.  Ap- 
pleton  &  Company.     1920.     Pp.  xx,  460.     $3.00.) 
One  of  the  amazing  developments  of  American  economic  life  is  the 
fact  that  our  teachers,  presumably  one  of  the  most  intelligent  groups 
in  our  society,  should  have  embarked  so  universally  on  pension  enter- 
prises of  such  unsound  financial  structure  that  some  of  them  even  re- 
mind one  of  the  Order  of  the  Iron  Hall,  the  520  per  cent  syndicate  and 
similar  ventures.     It  must  be  said,  of  course,  that  the  intentions  of  the 
founders  of  these  pension  funds  were  altogether  praiseworthy,  but  in 
the  end  the  results  have  been  almost  as  disastrous  as  in  these  other 
cases. 

The  present  situation  of  American  teachers'  pension  funds  is  a  seri- 
ous one ;  the  school  teachers  of  San  Francisco  are  now  receiving  only 
50  per  cent  of  the  pensions  they  had  been  led  to  expect ;  the  teachers  of 
Virginia  are  now  having  their  pensions  pro-rated ;  and  even  the  Carne- 
gie Foundation,  with  expert  knowledge  at  its  disposal  all  these  years, 
now  seems  to  have  found  a  distinct  change  of  policy  unavoidable.  These 
conditions  are  typical  of  the  present  or  impending  difficulties  of  the 
greater  number  of  our  teachers'  funds,  nearly  100  in  number  and  with 
liabilities  of  nearly  half  a  billion  dollars,  for  the  greater  part  of  which 


722  Reviews  and  New  Books  [December 

there  are  no  assets.  In  view  of  such  a  history,  one  must  welcome  a 
volume  which  Avill  serve  as  a  guide  to  the  revision  of  existing  unsound 
systems  and  as  an  aid  in  the  planning  of  new  systems. 

The  author,  Mr.  Paul  Studensky,  is  well  known  in  the  field  of  pension 
research,  especially  for  his  studies  in  connection  with  the  revision  of 
the  pension  systems  of  the  state  of  New  Jersey.  Both  by  preliminary 
training  and  by  actual  contact  with  the  workings  of  representative  pen- 
sion funds,  he  is  well  fitted  for  the  preparation  of  a  critical  and  de- 
scriptive account  of  pension  funds  in  this  country. 

The  first  part  of  the  volume  is  devoted  to  a  statement  of  the  general 
aspects  of  the  pension  problem  for  teachers.  The  evolution  of  the  funds 
from  the  crude  beginnings  of  death  assessments,  through  the  long  strug- 
gle to  secure  financially  sound  systems,  is  clearly  described.  The  move- 
ment began  with  the  establishment  of  a  death  benefit  fund  in  New  York 
City  in  1869 ;  this  was  followed  by  an  old  age  annuity  association  in 
1887.  From  this  time  on,  the  chief  purpose  of  these  mutual  aid  or- 
ganizations was  the  provision  of  retirement  pensions  for  the  superan- 
nuated teacher;  by  1897  ten  pension  funds  had  been  started,  all  of 
them  voluntary  and  all  on  an  unsound  financial  basis.  By  1917  there 
were  almost  100  pension  funds  in  operation  and,  with  the  exception  of 
a  few  recently  reorganized  systems,  all  have  liabilities  far  in  excess  of 
their  assets.  They  include  nearly  one  half  of  the  teachers  in  the  United 
States  and  unless  radical  steps  are  taken,  most  of  these  teachers  are 
facing  certain  disappointment  in  their  hopes  of  support  in  old  age. 

Separate  chapters  are  given  to  each  feature  of  the  problem ;  superan- 
nuation, disability,  death  and  withdrawal  benefits  are  described  in  de- 
tail. The  important  questions  of  the  cost  of  benefits,  the  division  of 
cost  between  the  government  and  the  teacher,  the  contribution  of  the 
government  and  of  the  teacher  and  participation  in  management  are 
carefully  set  forth.  This  statement  of  the  general  features  of  the  prob- 
lem constitutes  part  one  of  the  treatise  and  takes  up  one  third  of  the 
volume.  Part  two  is  a  descriptive  account  in  brief  form  of  the  leading 
systems  of  the  present  day,  including  a  selection  of  local  and  of  state 
funds.  Particularly  useful  for  reference  purposes  is  the  appendix  which 
takes  up  the  last  third  of  the  book.  It  contains  a  collection  of  texts  of 
laws,  of  references  to  laws,  statistical  reports,  etc.,  an  excellent  bibli- 
ography and  a  few  actuarial  tables  of  value  in  connection  with  the 
subject. 

Henry  J.  Harris. 

Washington,  D.  C. 


1921]  Pauperism,  Charities,  and  Relief  Measures  723 

NEW    BOOKS 

Basye,  W.  History  and  operation  of  fraternal  insurance.  (Rochester,  N. 
Y.:    The  Fraternal  Monitor.     1919.     Pp.224.) 

The  author  is  an  ardent  advocate  of  this  method  of  securing  life,  health, 
etc.  insurance  and  enthusiastically  describes  the  benefits  to  be  derived 
from  this  type  of  mutual  protective  organization.  He  gives  the  history  of 
the  leading  societies  in  the  United  States,  the  development  of  the  feder- 
ations of  orders,  some  biographical  data  of  the  leading  personalities  in 
the  movement,  the  growth  of  state  supervision  and  the  provisions  of  the 
uniform  laws  in  force  in  most  of  the  states.  The  volume  is,  of  course, 
intended  for  the  general  reader  and  the  author's  intimate  personal  ac- 
quaintance with  actual  operations  of  the  fraternal  orders  will  undoubted- 
ly assure  it  a  wide  circulation.  Throughout  the  book,  however,  emphasis 
is  laid  on  the  need  for  a  sound  actuarial  basis  of  contributions  and 
benefits.  H.  J.  H. 

Knight,  C.  K.  The  history  of  life  insurance  in  the  United  States  to  1870, 
with  an  introduction  to  its  development  abroad.  (Philadelphia,  Pa.: 
Author.     1920.     Pp.  160.) 

McCotter,  C.  A.  What's  the  matter  with  fire  insurance?  (Indianapolis, 
Ind.:    Bobbs-Merrill.      1921.     Pp.   105.) 

Mills,  C.  M.  Plant  disability  funds.  Special  bulletin.  No.  105.  (Al- 
bany, N.  Y.:   N.  Y.  Dept.  of  Labor.     1921.     Pp.  16.) 

Richards,  K.  E.,  editor.  Workmen's  compensation  supplement  to  depart- 
ment reports  of  Pennsylvania.  Reprinted  from  volume  6.  (Harrisburg, 
Pa.:   Telegraph  Co.     1921.     Pp.  575.) 

Riegel,  R.  Insurance  principles  and  practices.  (New  York:  Prentice- 
Hall.     1921.     Pp.  450.     $4.) 

Stanley,  W.  H.  Estates,  general  and  contract;  a  comparison  of  general 
property  and  life  insurance.  (Buffalo,  N.  Y. :  Author.  1921.  Pp.  iii, 
121.) 

Stevenson,  J.  A.  Meeting  objections;  a  handbook  for  insurance  salesmen. 
(New  York:    Harper.     1921.     Pp.  95.     $1.50.) 

Lengthening  life  through  insurance  health  work;  a  study  of  the  trends  of 
mortality  among  policy-holders  in  the  Metropolitan  Life  Insurance  Com- 
pany, and  in  United  States  registration  area,  1911-1919.  (New  York: 
Metropolitan  Life  Insurance  Co.     1921.     Pp.   10.) 

The  story  of  the  National  Fire  Protection  Association  and  list  of  its  publica- 
tion. (Boston:  National  Fire  Protection  Assoc,  87  Milk  St.  1921. 
Pp.  12.) 

Unemployment  insurance  in  agriculture.  Report  of  Committee.  (London: 
H.  M.  Stationery  Office.     1921.     2d.) 

Pauperism,  Charities,  and  Relief  Measures 

NEW    BOOKS 

Abbott,  E.  and  Breckinridge,  S.  P.  The  administration  of  the  aid-to- 
mothers  law  in  Illinois.  Children's  Bureau  publication  no.  82.  (Wash- 
ington:   Dept.  of  Labor.     1921.     Pp.  176.) 


724  Reviews  and  New  Books  [December 

Gillin,  J.  L.  Poverty  and  dependency;  their  relief  and  prevention.  (New 
York:    Century.     1921.     Pp.  viii,  707.     $L) 

Comparative  growth  of  institutions,  growth  of  non-institutional  care,  child 
welfare  and  relief.    (Boston:   Mass.  Dept.  Public  Welfare.    1921.    Pp.  7.) 

The  Jewish  Agricultural  and  Industrial  Aid  Society  annual  report,  for  the 
year  1920.     (New  York:   Jewish  Agri.  and  Ind.  Aid  Soc.     1921.     Pp.58.) 

Law  providing  aid  to  dependent  children;  with  the  opinions  of  the  attorney- 
general  thereon  and  statement  of  expenditures.  (Madison,  Wis.:  State 
13d.  of  Control.     1920.     Pp.  109.) 

Socialism  and  Co-operative  Enterprises 

NEW    BOOKS 

Benedict,  B.  The  larger  socialism.  (New  York:  Macmillan.  1921.  Pp. 
243.     $2.50.) 

Gide,  C.  Consumers'  cooperative  societies.  (Manchester,  England:  Co- 
operative Union,  Ltd.,  Holyoake  House,  Hanover  St.  1921.  Pp.  viii, 
251.     7s.  6d.) 

This  is  a  translation  of  the  third  French  edition  published  in  1917. 
Among  the  topics  discussed  are  various  systems  of  sale,  the  division  of 
profits,  members,  capital,  and  types  of  consumers'  societies.  Besides  be- 
ing a  practical  manual,  Professor  Gide  makes  a  careful  contribution  to 
the  history  of  the  development  of  such  societies  and  the  part  which  they 
can  play  in  economic  life. 

Gompers,  S.  and  Walling,  W.  E.  Out  of  their  own  mouths.  A  revelation 
and  an  indictment  of  sovietism.  (New  York:  Dutton.  1921.  Pp.  xx, 
265.     $2.) 

Hillquit,  M.  From  Marx  to  Lenin.  (New  York:  Hanford  Press.  1921. 
Pp.  151.     50c.) 

Laidler,  H.  W.  British  cooperative  movement.  Second  edition.  (New 
York:    The  Cooperative  League  of  America.     1921.     Pp.  16.     5c.) 

LeRossignol,  J.  E.  What  is  socialism?  An  explanation  and  criticism  of 
the  doctrines  and  proposals  of  "scientific  socialism."  (New  York:  Crow- 
ell.     1921.     Pp.  x,  267.     $2.) 

Lloyd,  J.  G.  Guilds  and  the  salary-earner.  (London:  National  Guilds 
League.     1921.     6d.) 

Macdonald,  J.  R.  Socialism:  critical  and  constructive.  (London:  Cassell 
&  Co.     1921.     7s.  6d.) 

Pasvolsky,  L.  The  economics  of  communism.  With  special  reference  to 
Russia's  experiment.      (New  York:    Macmillan.     Pp.  xvi,  312.     $2.25.) 

Postgate,  R.  W.  The  Workers'  International.  (New  York:  Harcourt. 
1920.     Pp.  125.) 

The  first  and  longest  chapter  of  this  book  is  a  history  of  the  "First  In- 
ternational." The  author  has  had  access  to  original  sources  and  presents 
some  interesting  new  material.  The  brief  sketches  of  the  Second  and 
Third  Internationals  are  strongly  colored  by  the  author's  communist  sym- 
pathies.    There  is  an  excellent  bibliography.  G.  B.  L.  A. 


1921]  Statistics  and  Its  Methods  725 

Ross,  E.  A.  The  Russian  bolshevik  revolution.  (New  York:  Century. 
1921.     Pp.  xvi,  302.     $3.) 

Sawyer,  R.  A.,  Jr.,  compiler.  Nationalisation  of  coal  mines;  a  list  of  ref- 
erences in  the  New  York  public  library.  (New  York:  Public  Library. 
1920.     Pp.  11.     10c.) 

Spargo,  J.  The  problem  of  trading  with  soviet  Russia.  (New  York:  Rus- 
sian Information  Bureau.     1921.     Pp.  27.     25c.) 

Warbasse,  A.  D.  The  story  of  cooperation.  Pamphlet  no.  3.  Third  edi- 
tion revised.  (New  York:  The  Cooperative  League  of  America,  2  West 
13th  St.     1921.     10c.) 

Webb,  S.  and  Webb,  B.  The  consumers'  cooperative  movement.  An  up-to- 
date  critical  analysis.     (New  York:    Macmillan.     1921.) 

Woolf,  L.  S.  The  control  of  industry  by  the  people  through  the  coopera- 
tive movement.  (New  York:  Cooperative  League  of  America.  1920. 
Pp.  20.     10c.) 

Cooperative  housing  by  associations  of  consumers.  (New  York;  The  Co- 
operative League  of  America.     1920.     Pp.  16.     10c.) 

How  to  start  and  run  a  cooperative  wholesale;  a  report  of  the  committee  on 
wholesale  of  the  Second  American  Cooperative  League  of  America  Con- 
vention. (New  York:  Cooperative  League  of  America.  1920.  Pp.  10. 
10c.) 

Der  Kampf  um  die  Sozialisierung.  Grundsdtzliches  und  Materialien. 
(Berlin:    Freiheit.     1921.     Pp.  24.     2  M.) 

The  policy  of  guild  socialism.  (London:  National  Guilds  League.  1921. 
6d.) 

Statistics  and  Its  Methods 

NEW    BOOKS 

Bowley,  A.  L.  Official  statistics,  what  they  contain,  and  how  to  use  them. 
(London:    Oxford  Univ.  Press.     1921.     Pp.  64.     $1.) 

Breuer,  J.  Die  Methoden  der  H andelsstatistik.  (Paderborn:  Schoeningh. 
1920.     28  M.) 

Colajanni,  N.  Manuale  di  statistica  teorica  e  demografia.  Fourth  edition. 
(Naples:    Perro.     1920.     Pp.  369.     16  1.) 

Holland,  R.  W.  Business  statistics:  preparation,  compilation  and  presen- 
tation.    (London:    Pitman.     1921.     Pp.  93.     3s.  6d.) 

Jordan,  D.  F.  Business  forecasting.  (New  York:  Prentice-Hall.  1921. 
Pp.  424.     $4.) 

Keynes,  J.  M.  A  treatise  on  probability.  (New  York:  Macmillan.  1921. 
Pp.  xi,  466.     $6.) 

Luzzatti,  G.  Statistica  economica.  (Padova:  La  Linotipo  Edit.  Univ. 
1920.     17  1.) 

Pell,  C.  E.     The  law  of  births  and  deaths:  being  a  study  of  the  variation  in 


726  Reviews  and  New  Books  [December 

the   degree  of  animal  fertility   under  the  influence   of   the   environment. 
(London:    T.  Fisher  Unwin.     1921.     12s.  6d.) 

Tuttle,  M.  Automotive  statistics.  (Des  Moines,  la.:  Motor  List  Co. 
1921.     Pp.  80.     $10.) 

Average  heights  and  weights  of  children  under  six  years  of  age.  Children's 
Bureau  publication  no.  84.    (Washington:   Dept.  of  Labor.    1921.    Pp.  4.) 

Bureau  Central  de  Statistique  des  Pays-Bas.  (The  Hague:  Bureau  Central 
de  Stat.     1921.) 

Fourteenth  census  of  the  United  States.  1920.  Vol.  I.  Population:  num- 
ber and  distribution  of  inhabitants.  (Washington:  Bureau  of  the  Census. 
1921.     Pp.  695.) 

London  statistics.  Vol.  XXVI,  1915-1920.  Statistics  of  the  Administrative 
County  of  London,  and  of  the  public  services  carried  on  therein,  together 
with  certain  statistics  of  the  adjacent  districts.  (London:  H.  M.  Sta- 
tionery Office.     1921.     Pp.  xv,  547.     15s.) 

Municipal  statistics,  1919.  Statistics  of  urban  municipalities  having  a  popu- 
lation of  8,000  to  10,000.  (Ottawa,  Canada:  Dominion  Bureau  of  Sta- 
tistics, Finance  Branch.     1921.     Pp.  63.) 

Official  year  booh  of  the  Commonwealth  of  Australia.  No.  13.  1901-1919. 
(Melbourne:  Commonwealth  Bureau  of  Census  and  Statistics.  1921. 
Pp.  1182.) 

Preliminary  report  of  the  census,  June  1921.  England  and  Wales,  with 
tables  of  population,  including  some  figures  for  Scotland.  (London:  H. 
M.  Stationery  Office.     1921.     Is.) 

Report  on  the  collection  and  presentation  of  official  statistics.  Prepared  by 
a  committee  appointed  by  the  Cabinet.     (London:    King.     1921.     Is.) 

Statistical  abstract  for  London,  1920.  Vol.  VII.  Map.  (London:  King. 
1921.     2s?  6d.) 

Statistical  abstract,  United  Kingdom,  from  1906  to  1919.  No.  66.  (Lon- 
don:   H.  M.  Stationery  Office.     1921.     3s.  6d.) 

Statistical  report  of  infant  mortality  for  1920  in  519  cities  of  the  United 
States.  (Baltimore,  Md. :  Am.  Child  Hygiene  Assoc,  1211  Cathedral 
St.     1921.     Pp.   16.) 

Statistical  year  booh  of  Quebec,  1920.  Seventh  year.  (Quebec,  Canada: 
Provincial  Secretary's  Dept.,  Bureau  of  Statistics.     1921.     Pp.  ix,  552.) 

Statistisk  Arsbok  for  Finland  ny  serie  Adertonde  Argangen  1920.  (Hel- 
singfors:    Bureau  Central  de  Statistique.     1921.     Pp.  xxi,  290.) 

Vital  statistics  of  New  South  Wales.  Report  by  the  government  statistician 
for  the  year  1920.     (Sydney:    Bureau  of  Statistics.     1921.     Pp.  23.) 


DOCUMENTS,  REPORTS,  AND  LEGISLATION 

Industries  and  Commerce 

Report  of  the  United  States  Tariff  Commission  on  the  Wool-Grow- 
ing Industry.  This  document  is  a  continuation  of  the  study  of  the  wool- 
growing  industry  made  by  the  Tariff  Board  in  1911  and  published  in  1912 
as  part  of  its  report  on  Schedule  K.1  It  discusses  the  current  situation  of 
the  industry  both  in  the  United  States  and  in  leading  competing  countries 
as  it  has  been  affected  by  certain  influences  already  at  work  in  the  pre-war 
period  and  by  governmental  regulation  during  and  immediately  succeeding 
the  World  war. 

One  feature  of  the  Commission's  report  on  which  emphasis  is  placed  is 
the  need  of  stabilization  in  the  wool-growing  industry.  This  need  is  in- 
timately related  to  our  public  land  policy  in  the  range  states.  Sheep  raising 
is  essentially  a  pioneer  industry,  and  its  present  condition  is  primarily  the 
result  of  the  pressure  of  agriculture  and  agricultural  methods  accompanying 
the  general  growth  of  population.  The  most  serious  problem  now  confront- 
ing the  flock-master  in  the  West  is  the  gradual  homesteading  of  the  lands 
lying  between  desert  or  winter  ranges  and  the  summer  grazing  areas  in  the 
national  forests — lands  on  which  many  sheep  raisers  are  dependent  for  their 
spring  and  fall  grazing.  The  homesteading  of  this  intermediate  area  was 
stimulated  by  the  Homestead  acts  of  1909  and  1916,  allowing  the  home- 
steaders to  take  320  and  610  acres  respectively.  These  units  not  being 
sufficiently  large  to  keep  enough  live  stock  to  provide  a  living  for  a  family, 
the  laws  benefit  only  those  who  are  in  a  position  to  purchase  adjacent  land. 
Of  five  policies  for  the  stabilization  of  the  industry  given  special  considera- 
tion the  one  most  generally  favored  is  the  creation  of  grazing  commons 
and  the  extension  of  the  permit  system  now  used  by  the  Forest  Service. 

The  cost  figures  of  the  report  show  some  differences  in  accounting 
methods  between  the  Tariff  Commission  and  the  Tariff  Board.  The  latter 
obtained  the  cost  of  wool  by  deducting  the  receipts  for  mutton  from  total 
expenses,  whereas  the  Tariff  Commission  distributes  joint  expenses  accord- 
ing to  the  ratio  of  wool  to  mutton  receipts.  Another  difference,  more  ap- 
parent than  real,  is  that  the  figures  of  the  Tariff  Board  included  13  per  cent 
of  the  value  of  the  flock  for  depreciation  and  losses,  while  these  items  are 
not  covered  by  the  expense  accounts  of  the  Tariff  Commission.  The  reason- 
ing of  the  Commission  is  that  if  lambs  replace  losses  and  sales  of  old  stock, 
no  account  should  be  taken  of  them  in  the  books  because  depreciation  and 
losses  will  automatically  enter  into  the  expense  account  through  the  cost  of 
rearing  replacement  lambs.  It  is  properly  pointed  out,  however,  that  the 
Tariff  Board  included  in  its  receipts  all  lambs  raised  regardless  of  whether 

i  Report  of  Tariff  Board  on  Schedule  K  of  the  Tariff  Law,  part  I,  sections  1  and 
3,  and  part  II. 


728  Documents,  Reports,  and  Legislation  [December 

they  were  sold  or  not,  and  hence  offsetting  these  high  receipts  must  be  a 
charge  for  replacing  the  flock. 

With  respect  to  import  duties,  the  Tariff  Board  had  declared  defective 
the  method  of  levying  a  duty  on  wool  in  the  grease,  because  on  account 
of  varying  shrinkage  it  operated  to  prevent  the  importation  of  some  high 
grade  wools.  It  held,  however,  a  specific  duty  to  be  superior  to  an  ad 
valorem  one  and  favored  a  rate  based  upon  the  scoured  content  of  the  wool. 
It  also  held  that  there  is  no  longer  any  good  reason  for  distinguishing  be- 
tween class  I  and  class  II  wools.  With  these  conclusions,  assuming  duties 
to  be  imposed  upon  raw  wool,  the  Tariff  Commission  is  in  substantial  agree- 
ment. 

Abraham  Berglund. 

The  United  States  Department  of  Commerce  has  begun  to  publish  a  new 
series  of  monthly  supplements  to  the  Commerce  Reports,  entitled  Survey  of 
Current  Business.  The  first  issue  appeared  August  1,  1921.  These  supple- 
ments are  compiled  by  the  Bureau  of  the  Census,  the  Bureau  of  Foreign  and 
Domestic  Commerce,  and  the  Bureau  of  Standards.  The  total  subscription 
price  for  the  Commerce  Reports,  including  these  supplements  is  $4  per 
annum. 

The  Commerce  Reports  have  been  reorganized  and  now  appear  as  a  weekly 
service. 

From  the  federal  Department  of  Commerce  have  been  received: 
Special  Agents'  Series: 
No.  206.   Columbia:   A  Commercial  and  Industrial  Handbook,  by  P.  L.  Bell 

(1921,  pp.  423). 
No.  207,  Forest  Resources,  Lumber  Industry,  and  Lumber  Export  Trade  of 

Finland,  by  A.   H.   Oxholm   (1921,  pp.   144). 
No.  208,  Bolivia:  A  Commercial  and  Industrial  Handbook,  by  W.  L.  Schurz 

(1921,  pp.  260). 
No.  209,  Advertising  Methods   in  Japan,   China,   and  the  Philippines,  by 
J.  W.  Sanger  (1921,  pp.  107). 

From  the  United  States  Tariff  Commission  has  been  received  a  pamphlet 
showing  a  List  of  Principal  Subjects  Investigated  and  Reported  Upon  by 
the  United  States  Tariff  Commission  (Washington,  1921,  pp.  34)  ;  also, 
Wages  in  the  United  States  and  Foreign  Countries,  prepared  for  the  use  of 
the  Committee  on  Ways  and  Means  (1921,  pp.  103). 

The  Tariff  Bill,  H.  R.  7456,  has  been  published  as  House  Document  100 
(pp.   173). 

The  Federal  Trade  Commission  has  issued  a  Summary  of  its  report  on 
Shoe  and  Leather  Costs  and  Prices  (Washington,  June  10,  1921^  pp.  15). 


1921]  Industries  and  Commerce  729 

The  United  States  Geological  Survey  has  issued  a  serviceable  bulletin 
entitled  The  Iron-Ore  Resources  of  Europe,  by  Max  Roesler  (Bull.  706, 
Washington,  1921,  pp.  152;  with  plates  and  maps). 

It  is  stated  that  the  results  of  the  work  of  the  Geological  Survey  on 
mineralogical  deposits  will  be  published  in  the  form  of  an  Atlas  of  Com- 
mercial Geography.  A  companion  volume  of  this  bulletin  is  Industrial 
Aspects  of  the  Deposits  of  Iron-Ore  in  Central  Europe,  issued  as  bulletin 
703    (1921). 

The  Bureau  of  Markets  and  Crop  Estimates  of  the  United  States  De- 
partment of  Agriculture  has  prepared  a  pamphlet  on  Prices  of  Farm  Pro- 
ducts in  the  United  States,  by  G.  F.  Warren  (Bull.  999,  Washington,  1921, 
pp.  72).     This  is  abundantly  illustrated  with  charts  of  index  numbers. 

The  National  Lumber  Manufacturers  Association  has  published  a  report 
of  the  Third  American  Lumber  Congress  and  Nineteenth  Annual  Meeting, 
held  at  Chicago,  March  30,  1921  (Washington,  Southern  Bldg.,  pp.  80). 
The  Association  also  has  for  distribution  a  Statement  in  Relation  to  Lumber 
Production  and  Prices,  by  L.  C.  Boyle  (pp.  44). 

The  Associazione  fra  le  Societa  per  Azione  (Via  Lata,  4,  Rome,  Italy)  is 
issuing  a  monthly  sheet  entitled  Business  and  Financial  Report,  relating  to 
Italian  trade  and  industry.  This  report  endeavors  to  give  in  the  English 
language  as  briefly  as  possible  reliable  facts  and  figures  of  Italian  industries 
and  finance. 

The  National  Foreign  Trade  Council  (Hanover  Square,  New  York  City) 
announces  a  sale  of  its  Annual  Proceedings  at  reduced  prices  for  students 
at  educational  institutions. 

The  August  issue  of  the  Bulletin  of  the  Branch  Library  of  Political 
Science  (Clare  Market,  Kings  way,  London,  W.C.,  2)  contains  a  four  page 
bibliography  of  marketing. 

The  International  Chamber  of  Commerce,  whose  headquarters  are  in 
Paris,  has  issued  a  number  of  publications  describing  the  work  of  the  or- 
ganization and  special  pamphlets,  as  brochure  no.  1,  Export  Credits  (Paris, 
33,  Rue  Jean-Goujon). 

The  Chamber  of  Commerce,  Breslau,  Silesia,  has  prepared  a  memorandum 
entitled  The  Problem  of  Upper  Silesia  and  the  Reconstruction  of  Europe's 
Economics  (June,  1921,  pp.  21). 

Hearings  before  the  Senate  Committee  on  Agriculture  and  Forestry,  re- 
lating to  Future  Trading  in  Grain  have  been  printed  (Washington,  1921, 
pp.  485). 


730  Documents,  Reports,  and  Legislation  [December 

Corporations 
The  report  of  the  Interstate  Commerce  Commission  on  the  Consolidation 
of  Railroads,  by  William  Z.  Ripley,  which  will  appear  as  an  appendix  to 
the  reports  of  the  Commission,  has  been  printed  in  advance  (pp.  467-660, 
with  maps). 

From  the  Department  of  Transportation  and  Communication,  Chamber 
of  Commerce  of  the  United  States,  has  been  received  The  Railroad  Question 
Before  Congress  as  Viewed  from  Various  Standpoints  (Washington,  pp.  51). 
This  pamphlet  contains  a  summary  of  testimony  relating  to  operating 
revenues  and  expenses ;  reasons  for  the  high  cost  of  maintenance  and  opera- 
tion; reasons  for  diminishing  volume  of  traffic;  efficiency  of  management 
and  labor;  reduction  of  freight  and  passenger  rates;  and  statistics,  tables, 
and  graphic  charts. 

Depreciation  Charges  of  Railroad  and  Public  Utilities  is  the  title  of  a 
memorandum  filed  with  the  Depreciation  Section  of  the  Bureau  of  Accounts 
of  the  Interstate  Commerce  Commission.  This  was  prepared  by  Robert  A. 
Carter,  chairman  of  the  Committee  on  Rate  Fundamentals  of  the  American 
Gas  Association,  and  William  L.  Ransom  (New  York,  130  East  15th  St., 
pp.  108). 

The  Review  has  received  from  Francis  B.  James  a  series  of  pamphlets 
under  the  general  title  American  National  Economics.  Among  these  is  to  be 
noted  Common  Sense  vs.  Prohibition  in  Railroad  Rates,  1921,  by  Edgar 
Gengenbach  (Washington,  John  Byrne  &  Co.,  pp.  40)  ;  and  Some  Phases  of 
the  Transportation  Problem,  by  F.  B.  James  (pp.  58). 

Among  state  documents  relating  to  public  utilities  are: 

Eighth  Annual  Report  of  the  Public  Utilities  Commission  of  the  District 
of  Columbia,  1920  (Washington,  1921,  pp.  234). 

Special  Report  of  the  Department  of  Public  Utilities  Relative  to  the 
Street  Railway  Situation  in  the  Commonwealth  of  Massachusetts  was  issued 
under  date  of  April  1,  1921   (House  Doc.  1495,  pp.  21). 

Fourteenth  Annual  Report  of  the  Public  Service  Commission,  New  York, 
Second  District,  1920.     Vol.  I  (pp.  202). 

Reports  of  Decisions  of  the  Public  Service  Commission,  Second  District, 
State  of  New  York.    Vol.  IX  (New  York,  pp.  826). 

Foreign  Corporation  Laws  of  South  Dakota,  1921,  have  been  compiled 
(Secretary  of  State,  Pierre,  S.  D.,  pp.  14). 

Appendix  to  Seventeenth  Annual  Report  of  the  State  Corporation  Com- 
mission of  Virginia  for  1919,  containing  statistics  of  steam  and  electric  rail- 
ways  (Richmond,  1921,  pp.  206). 


1921]  Labor  731 

Labor 

The  federal  Bureau  of  Labor  Statistics  has  issued  bulletins : 
No.  281,  Proceedings  of  the  Seventh  Annual  Meeting  of  the  International 
Association  of  Industrial  Accident  Boards  and  Commissions.     This 
convention  was  held  at  San  Francisco,  California,  on  September 
20-24,  1920.      (Washington,  June,  1921,  pp.  447.) 
No.   285,  Minimum    Wage  Laws   of   the    United  States:   Construction   and 
Operation,  by  L.  D.  Clark  (July,  1921,  pp.  345). 
The  same  bureau  has  recently  issued  a  cyclostyled  sheet  showing  con- 
venient forms  of  Index  Numbers  of  Retail  Prices  of  the  Principal  Articles 
of  Food  in  the  United  States,  from  January,  1913,  to  May,  1921. 

The  United  States  Department  of  Labor  has  issued  large  broadsides 
containing  on  a  single  sheet  the  restrictions  upon  the  employment  of 
children  in  factories,  stores,  and  mines.  The  analysis  is  detailed  for  each 
state,  under  the  column  headings  Minimum  Wage,  Hours  of  Work  under  16, 
Night  Work  Prohibitions,  and  Requirements  for  Regular  Employment  Cer- 
tificates. 

From  the  Women's  Bureau  has  been  received  bulletin  No.  17,  Women's 
Wages  in  Kansas  (Washington,  1921,  pp.  104). 

Among  state  reports  relating  to  labor  are : 

Ninth  Annual  Report  of  the  Commissioner  of  Commerce  and  Labor  for 
the  State  of  Georgia,  for  1920  (Atlanta,  1921,  pp.  108). 

Third  Annual  Report  of  the  Department  of  Labor  of  Illinois,  1919-1920 
(Springfield,  pp.  91). 

Ninth  Biennial  Report  of  the  Bureau  of  Labor  of  Kentucky,  1918-1919 
(Frankfort,  pp.  225). 

Sixth  Annual  Report  of  the  State  Industrial  Accident  Commission  of 
Maryland,  for  1920  (Baltimore,  pp.  26). 

Annual  Report  of  the  Department  of  Labor  and  Industries,  Massachu- 
setts, 1920  (Boston,  Pub.  Doc.  104,  pp.  132). 

Report  of  the  Board  of  Conciliation  and  Arbitration  of  Massachusetts, 
1920  (Boston,  1921,  pp.  212).     This  contains  the  decisions  of  the  board. 

Report  of  the  Commissioner  of  Labor  of  Rhode  Island  for  the  Years 
1916-1919  (Providence,  1921,  pp.  287). 

Twenty-seventh  Annual  Report  of  the  Factory  Inspector  of  Rhode  Island 
(Providence,  1921,  pp.  83). 

Second  Annual  Report  of  the  Industrial  Commission  of  Virginia,  1920 
(Richmond,  1921,  pp.  47).  This  reviews  the  administration  of  the  Virginia 
workmen's  compensation  act. 

Labor  Laws  of  the  Commonwealth  of  Virginia,  published  by  the  Bureau 
of  Labor  and  Industrial  Statistics   (Richmond,  1920,  pp.  129). 


732  Documents,  Reports,  and  Legislation  [December 

Fifth  Report  of  the  Workmen's  Compensation  Department  of  Wyoming, 
1920  (Cheyenne,  pp.  166). 

The  Department  of  Labor  of  New  York  has  issued  Special  Bulletins: 
No.   106,  Court  Decisions  on  Workmen's  Compensation  Law,  January,  1920, 

to  June,  1921    (Albany,  pp.  302). 
No.   108,  Sickness  Among  New  York  Factory  Workers  in  1919  (pp.  29). 

The  Proceedings  of  the  Fifth  Annual  Industrial  Commission  of  New  York 
State,  held  at  Syracuse,  December  6-9,  1920,  have  been  compiled  (Albany, 
State  Industrial  Commission,  pp.  239). 

The  First  Annual  Report  of  the  Court  of  Industrial  Relations  of  Kansas, 
covering  operations  from  February  1,  1920,  to  November  30,  1920,  is  pub- 
lished as  a  small  pamphlet  (Topeka,  pp.  16). 

The  University  Extension  Division  of  the  University  of  Wisconsin, 
Bureau  of  Commercial  Industrial  Relations  of  the  Department  Group  and 
Community  Service,  has  issued  a  series  of  cyclostyled  notes  among  which 
may  be  noted  The  Cycle  of  Employment,  Employment  Forms  and  Routine, 
Job  Analysis,  Absenteeism,  Plant  Organs,  A  Labor  Policy  and  the  Labor 
Audit. 

The  New  Jersey  State  Chamber  of  Commerce  in  a  recent  issue  (vol. 
VIII,  no.  2)  discusses  the  subject  of  Closed  Shop  and  Open  Shop  Ter- 
minology in  a  memorandum  prepared  by  Mr.  Paul  Studensky,  Supervisor 
of  Staff. 

The  National  Association  of  Manufacturers  has  prepared  an  Open  Shop 
Encyclopedia  for  debaters   (New  York,  50  Church  Street,  1921,  pp.  248). 

Volume  I  of  the  Decisions  of  the  United  States  Railroad  Labor  Board 
with  Addenda  and  Interpretations,  1920,  has  appeared.  This  contains  a 
cumulative  index-digest  (Washington,  Gov.  Prtg.  Office,  1921,  pp.  183). 

The  Pennsylvania  Railroad  under  date  of  July  8,  1921,  presented  to  the 
United  States  Railroad  Labor  Board  a  memorandum  in  the  form  of  a 
pamphlet  entitled  Summary  of  the  Position,  Policy,  and  Purpose  of  the 
Pennsylvania  Railroad  in  Its  Dealings  with  Its  Employees   (pp.  40). 

The  Labour  Publishing  Company  (6,  Tavistock  Square,  London,  W.  C.  1) 
has  published  for  the  National  Guilds  League  the  following  pamphlets: 

Unemployment  and  Industrial  Maintenance,  by  G.  D.  H.  Cole  (pp.  16. 
6d.)  ;  Education  and  the  Guild  Idea  (pp.  19.  6d.)  ;  Guilds  and  the  Salary 
Earner,  by  J.  H.  Lloyd  (pp.  15.  6d)  ;  and  the  following  pamphlets  by  Mr. 
Cole:  Workers'  Control  in  the  Mining  Industry  (pp.  27);  Workers'  Control 
in  the  Distributive  Industry,  a  Plan  for  Cooperative  Employees  and  Shop 
Workers   (pp.  25);   Workers'  Control  for  Railwaymen  (pp.  23);   Workers' 


1921]  Money  Prices,  Credit,  and  Banking  733 

Control  in  Engineering  and  Shipbuilding,  a  Plan  for  Collective  Contract 
(pp.  14)  ;  Capitalist  Speculation  and  Workers'  Control  in  the  Textile  In- 
dustries  (pp.  23).      (Price  6d.  each.) 

Money,  Prices,  Credit,  and  Banking 

The  following  state  public  documents  relating  to  banking  have  been  re- 
ceived : 

Report  of  the  Bank  Commissioner  of  Connecticut  (Hartford,  1920,  pp. 
658). 

Fifteenth  Biennial  Report  of  the  Bank  Commissioner  of  Kansas  (Topeka, 
1921,  pp.  625). 

Reports  of  the  State  Banks,  Savings  Banks  and  Trust  Companies  of 
Louisiana,  June  21f,  1921   (New  Orleans,  pp.  126). 

Sixty-fourth  Annual  Report  of  the  Bank  Commissioner  of  Maine,  1920 
(Augusta,  1921,  pp.  151). 

Annual  Report  of  the  Commissioner  of  Banks  of  Massachusetts  for  1920. 
Part  II,  Cooperative  Banks,  Savings  and  Loan  Associations  and  Credit 
Unions  (Boston,  pp.  436). 

Annual  Report  of  the  Superintendent  of  Loan  Agencies  of  Massachusetts 
for  1920  (Boston,  Pub.  Doc.  95,  pp.  45). 

Tenth  Annual  Report  of  the  Department  of  Banking  of  Minnesota,  for 

1919  (St.  Paul,  pp.  296). 

Twenty-eighth  Annual  Report  of  the  Bureau  of  Banking,  Department  of 
Trade  and  Commerce  of  Nebraska,  for  1919-20  (Lincoln,  pp.  556). 

Annual  Report  of  the  Commissioner  of  Banking  and  Insurance  Relative  to 
Business  and  Loan  Associations,  New  Jersey,  June  SO,  1920  (Trenton,  1921, 
pp.  151). 

Fourteenth  Annual  Report  of  the  Bank  Commissioner  of  Rhode  Island, 
June  80,  1921   (Providence,  pp.  239). 

Fourteenth  Biennial  Report  of  the  Superintendent  of  Banks  of  South 
Dakota,  1919-1920  (Pierre,  pp.  628). 

Fourteenth  Annual   Report  of   the   Bank    Commissioner  of   Washington, 

1920  (Olympia,  1921,  pp.  57). 

The  Superintendent  of  Banks  of  Oregon  has  issued  a  new  edition  of 
Banking  Laws,  Revision  of  1921  (Salem,  pp.  128). 

A  similar  compilation  has  been  made  for  Michigan  in  a  pamphlet,  Laws 
Relating  to  Banking,  1919  (Lansing,  1920,  pp.  175). 

The  hearings  before  the  Joint  Congressional  Committee  on  Short-Time 
Rural  Credits,  Sixty-seventh  Congress,  First  Session,  held  April  16,  1921, 
containing  the  testimony  of  A.  A.  Elmore,  Spokane,  Washington,  have  been 
printed   (Washington,  pp.   57). 


734  Documents,  Reports,  and  Legislation  [December 

A  printing  has  also  been  made  of  the  Amendment  to  the  Farm  Loan  Act, 
hearings  on  Senate  bill  1837,  held  June  7,  1921,  by  the  House  Banking 
and  Currency  Committee  (Washington,  pp.  84). 

The  War  Finance  Corporation  is  issuing  cyclostyled  material  with  regard 
to  the  activities  of  this  board  in  considering  applications  under  the  agricul- 
tural credits  amendment  to  the  War  Finance  Corporation  act.  It  has  also 
issued  printed  circulars  containing  information  for  banks,  bankers,  or  trust 
companies  applying  for  advances  under  section  24  of  the  War  Finance 
Corporation  act. 

The  United  States  Department  of  Agriculture,  in  bulletin  no.  968,  has 
prepared  a  statement  on  Buying  Farms  with  Land-Bank  Loans,  by  L.  C. 
Gray  and  H.  A.  Turner.  This  is  a  study  based  on  the  experience  of  2700 
farmers  who  have  borrowed  money  through  the  federal  farm-loan  banks 
(Washington,  pp.  27). 

The  statement  of  Professor  Irving  Fisher  before  the  Senate  Committee 
on  Civil  Service  and  the  House  Committee  on  Reform  in  the  Civil  Service 
at  the  hearing  held  May  27,  1921,  has  been  printed  under  the  head  Reclassi- 
fication of  Salaries.  In  this,  Professor  Fisher  presents  his  conclusions  in 
regard  to  changes  in  the  purchasing  power  of  money,  with  charts  and 
diagrams. 

Public  Finance 
The  National  Budget  Committee  is  printing  brief  leaflets  on  Government 
Economy  (New  York,  7  West  8th  Street).     The  same  committee  has  pub- 
lished a  larger  pamphlet  entitled  A  Proposal  for  Government  Reorganisa- 
tion, Published  in  the  interest  of  National  Economy  (pp.  70,  25c). 

Among  the  state  documents  relating  to  taxation  are: 

Fifth  Biennial  Report  of  the  Arizona  State  Tax  Commission,  1920 
(Phoenix,  pp.  169). 

Report  of  the  Proceedings  of  the  Arizona  Tax  Conference,  Eighth  Annual 
Session,  1920  (pp.  194). 

Seventh  Annual  Report  of  the  State  Tax  Commissioner  of  Georgia,  1920 
(Atlanta,  1921,  pp.  35). 

Second  Annual  Report  of  the  Tax  Commission  of  Illinois,  1920  (Spring- 
field, 1921,  pp.  336). 

Inheritance  Tax  Law  of  Indiana  (Indianapolis,  State  Board  of  Tax  Com- 
missioners, June  1,  1921,  pp.  22). 

Third  Annual  Report  of  the  Kentucky  State  Tax  Commission,  1920 
(P'rankfort,  pp.  89). 

Report  of  the  Assessment  and  Tax  Commission  on  the  Constitutional 
Convention  of  Louisiana  (New  Orleans,  1921,  pp.  237). 


1921]  Population  735 

Message  of  Governor  Baxter  of  Maine  on  State  Finances  (Augusta,  March 
10,  1921,  pp.  30). 

Biennial  Report  of  the  Nevada  Tax  Commission,  1919-1920  (Carson 
City,  1921,  pp.  77,  20). 

Laws  Affecting  Taxation  of  the  Session  of  1921,  New  Jersey  (Trenton, 
State  Board  of  Taxes  and  Assessment,  pp.  41). 

Report  of  the  State  Tax  Commission,  North  Carolina,  1919  (Raleigh, 
1920,  pp.  427). 

Laws  Relating  to  Assessment  and  Taxation,  Oregon,  1921  (Salem,  State 
Tax  Commission,  pp.   103). 

The  federal  Internal  Revenue  Office  has  issued,  under  the  Revenue  act  of 
1918: 

Regulations  37,  Revised  January  1921,  Relating  to  Estate  Tax  (Washing- 
ton, 1921,  pp.  80)  ;  Regulations  JfS,  Part  I,  Relating  to  the  Tax  on  Admis- 
sions (pp.  117);  Part  II,  Relating  to  Tax  on  Dues  (pp.  29);  Regulations 
1^5,  Relating  to  the  Income  Tax  on  War  Profits  and  Excess  Profits  Taxes 
(pp.  342). 

The  second  edition  has  appeared  of  Sales  Tax  Laws  of  Foreign  Countries, 
printed  for  the  use  of  the  House  Committee  on  Ways  and  Means  (Wash- 
ington, pp.  40). 

The  report  of  the  Committee  on  Ways  and  Means  on  General  Tariff  Re- 
vision, submitted  by  Mr.  Fordney,  appears  as  House  Report  No.  218,  Sixty- 
seventh  Congress,  First  Session   (Washington,  pp.  55). 

Population 

The  hearings  before  the  Senate  Committee  on  Immigration  on  Emergency 
Immigration  Legislation  held  in  January  1921  have  been  printed  for  the  use 
of  the  committee ;  also  hearings  before  the  House  Committee  on  Immigration 
and  Naturalization  on  Admission  of  Aliens  in  Excess  of  Quotas,  held  June 
10,  1921. 

The  Bureau  of  the  Census  has  published  the  first  volume  of  the  reports 
of  the  fourteenth  census,  as  follows:  Fourteenth  Census  Report:  Popula- 
tion, 1920.  Vol.  I,  Number  and  Distribution  of  Inhabitants.  This  gives 
the  number  and  distribution  of  inhabitants  of  the  United  States  by  states, 
counties,  and  minor  civil  divisions.  Population  bulletins  have  also  been 
issued  for  a  number  of  states,  giving  detailed  statistics  regarding  compo- 
sition and  characteristics  of  population. 


PERIODICALS 

The  Review  is  indebted  to  Robert  F.  Foerster  for  abstracts  of  articles  in  Italian 
periodicals,  and  to  R.  S.  Saby  for  abstracts  of  articles  in  Danish  and  Swedish  peri- 
odicals. 

Theory 

(Abstracts  by  Walton  H.  Hamilton) 
Ave-Lallemant,  T.  M.     What  is  sociology?     Freeman,  Sept.  7,  1921.     Pp.  2.     A  re- 
view of  Rist's  Principles  of  Sociology. 

Barnes,  H.  E.  American  psychology.  Soc.  Rev.,  July,  1921.  Pp.  16.  A  review  of 
recent  developments  in  psychology  and  their  meaning  for  the  social  sciences. 

Bradford,  V.  Every  man  his  own  sociologist.  Soc.  Rev,,  July,  1921.  Pp.  16.  "Not 
a  few  beginnings  of  actual  surveys,  rustic  and  civic,  have  been  brought  together. 
These  need  continuing,  multiplying,  compounding,  generalizing.  The  more  the  stu- 
dents of  social  science  can  be  got  to  work  along  these  concrete  lines,  the  nearer 
we  move  to  a  living  sociology.    That  is  the  way  of  science." 

Burns,  A.  R.  Rising  and  falling  prices — and  a  remedy.  Discovery,  June,  July, 
1921.  Pp.  4,  3.  "The  attempt  to  stabilize  the  purchasing  power  of  money  is  an 
attempt  to  substitute  exactness  and  certainty  for  random  variation  and  uncer- 
tainty." A  review  of  Professor  Fisher's  scheme  for  stabilizing  the  dollar  in  terms 
of  the  function  of  the  unit  of  pecuniary  measurement  in  economic  organization. 

Eaton,  R.  M.  Social  fatalism.  Phil.  Rev.,  July,  1921.  Pp.  13.  "Fatalistic  social 
theories,  by  explaining  away  the  creative  and  destructive  actions  of  men  in  so- 
ciety, falsify  the  issue.  Sociology  ought  to  show  how  concerted  human  action  is 
possible,  rather  than  assume  its  impossibility.  Social  fatalism  is  our  excuse  for 
giving  up  one  of  the  central  problems  of  life — the  problem  of  social  control." 

Field,  G.  C.  Faculty  psychology  and  instinct  psychology.  Mind,  July,  1921.  Pp. 
14.  A  protest  against  an  uncritical  explanation  of  human  behavior  in  terms  of 
instincts.  "We  should  begin  ...  by  an  explanation,  not  of  the  instincts,  but 
of  instinctive  behavior.  And  by  behavior  I  mean  not  merely  the  physical  move- 
ments of  the  body,  but  any  kind  of  activity,  physical  or  mental." 

Friday,  D.  The  probable  trend  of  interest  rates.  The  Annals,  Sept.,  1921.  Pp.  8. 
"The  fundamental  factors  which  operate  upon  the  demand  for  capital  and  those 
which  determine  its  supply  after  a  period  of  business  depression  are  such  as  will 
inevitably  reduce  the  rate  of  interest." 

Gisborne,  F.  A.  W.  The  recoil  of  the  living  wage  in  Australia.  Nat.  Rev.,  Aug., 
1921.  Pp.  14.  "The  'failure  of  the  living  wage'  may  be  assigned  to  two  causes." 
"Morally  the  system  was  unjust  .  .  .  employers  were  compelled  to  obey  awards 
.  .  .  but  employees  could  ignore  them  .  .  .  economically  the  system  was  vicious, 
for  its  keystone  .  .  .  completely  ignored  the  influence  of  the  costs  of  production 
on  the  sale  of  commodities  and  the  obvious  fact  that  increased  wages  must  mean 
increased  prices." 

Herbert,  A.  S.  The  socialization  of  industry.  Nineteenth  Cent.,  Sept.,  1921.  Pp.  9. 
An  argument  that  wages  should  be  charged  as  a  cost,  not  against  a  particular 
firm,  but  against  the  industry  as  a  whole,  illustrated  by  the  proposal  for  a  wage 
pool  in  the  British  coal  industry. 

Hobhouse,  L.  T.    Democracy  and  civilization.    Soc.  Rev.,  July,  1921.     Pp.  11.     "The 


1921]  Theory  737 

certainty  of  eventual  catastrophe  on  the  lines  on  which  we  are  at  present  moving" 
"appears  to  germinate  with  the  'educated'  classes,  who,  apparently  in  their  dread 
of  socialism,  have  in  large  measure  turned  their  backs  on  political  freedom  and 
sought  the  idealization  which  is  necessary  to  men  in  military  glory  or  imperial 
achievement,  finding  justification  for  clan  ascendency  in  biology,  and  for  national 
domination  in  racial  psychology." 

Hoewiix,  H.  W.  The  parentage  of  invention.  Discovery,  Aug.,  1931.  Pp.  3.  A 
study,  in  terms  of  instances,  of  advances  in  "the  state  of  the  industrial  arts." 

Macaba,  C.  W.  The  industrial  crisis  and  the  remedy.  Nineteenth  Cent.,  July,  Sept., 
1921.  Pp.  9,  12.  A  review  of  the  industrial  situation  as  a  preliminary  to  the 
conclusion  that  "our  old  time  happiness  and  prosperity"  can  be  brought  back 
only  by  "our  great  captains  of  industry"  under  a  system  of  freedom  from  state 
interference. 

Marriott,  J.  A.  R.  The  industrial  outlook.  Contemp.  Rev.,  Aug.,  1921.  Pp.  10. 
"The  dividend  available  for  distribution  ...  is  limited  absolutely  by  the  product 
of  industry.  .  .  .  The  interests  of  all  economic  classes  are  absolutely  interde- 
pendent, if  not  identical."  The  essential  problem  is  "cooperation"  for  larger  pro- 
duction. 

Moore,  H.  L.  Generating  cycles  reflected  in  a  century  of  prices.  Quart.  Journ. 
Econ.,  Aug.,  1921.  Pp.  24.  A  study,  in  theory  and  in  fact,  of  the  relationships 
of  crop  cycles,  cycles  in  the  prices  of  food,  and  cycles  in  the  prices  of  manufac- 
tured goods. 

Park,  R.  E.  Sociology  and  the  social  sciences.  Am.  Journ.  Soc,  July,  Sept.,  1921. 
Pp.  21,  15.  "Sociology  is  a  point  of  view  and  method  for  investigating  the  pro- 
cesses by  which  individuals  are  introduced  into  and  induced  to  cooperate  in  some 
sort  of  corporate  existence  which  we  call  society.  Sociology  is  the  science  of  col- 
lective behavior." 

Pound,  A.  The  iron  man.  Atlantic  Mo.,  Oct.,  1921.  Pp.  8.  A  cursory  account  of 
"the  social  significance  of  the  automatic  machine." 

Rathbone,  E.  Wages  according  to  family  needs.  Hibbard  Journ.,  July,  1921.  Pp. 
12.  An  argument,  based  upon  the  facts  gathered  by  Mr.  Rowntree  and  Professor 
Bowley,  that  an  adequate  standard  of  living  can  be  guaranteed  only  by  "a  redis- 
tribution of  that  portion  of  national  wealth  which  is  allocated  to  the  payment  of 
wages,  giving  less  of  it  to  bachelors  and  childless  persons  and  more  of  it  to  fami- 
lies with  children." 

Rocca,  G.  Un  economista  agrario:  Ghino  Volenti.  Rif.  Soc,  May-June,  1921.  Pp. 
19.  A  summary  of  Valenti's  life  and  work,  with  a  complete  bibliography  of  his 
writings. 

Shadweix,  A.  The  war  of  the  mines.  Quart.  Rev.,  July,  1921.  Pp.  18.  A  critical 
study  of  competition  versus  unification  in  the  organization  of  an  industry.  At- 
tention is  given  to  the  economic  theory  of  the  proposed  wages  pool  in  the  coal 
industry. 

Steiner,  R.  Spiritual  life — civil  rights — industrial  economy.  Hibbard  Journ.,  July, 
1921.  Pp.  12.  Another  repetition  of  the  thesis  that  "the  social  problem"  is  a 
"spiritual,"  not  an  "economic"  one. 

Tufts,  J.  H.  Legal  and  social  philosophy  of  Mr.  Justice  Holmes.  Am.  Bar  Assoc. 
Journ.,  July,   1921.     Pp.  5.     A   review  of  Mr.  Justice   Holmes'   Collected  Legal 


738  Periodicals  [December 

Papers,  with  attention,  among  other  things,  to  his  views  upon  the  division  of 
consumptive  goods,  the  nature  of  property  rights,  and  the  control  of  the  instru- 
ments of  production. 

Young,  A.  A.  The  measurement  of  changes  in  the  general  price  level.  Quart. 
Journ.  Econ.,  Aug.,  1921.  Pp.  17.  A  critical  study  of  the  problem  and  a  con- 
structive attempt  to  formulate  a  method. 

The  decay  of  competition.  New  Statesman,  Aug.  13,  1921.  Pp.  2.  A  review  of  the 
Joint  Committee  (British  Labor  party)  on  the  cost  of  living  in  terms  of  the  ques- 
tion of  the  efficiency  of  competition  as  an  agency  of  economic  organization. 

Wanted:  a  monetary  policy.  New  Statesman,  Oct.  1,  1921.  Pp.  3.  A  statement  of 
"the  utter  bewilderment  of  mankind  and  their  helplessness  to  counteract  the  blind 
forces  of  the  economic  system."  The  great  needs  are  for  factual  knowledge  about 
the  price  system  and  for  a  determined  attempt  to  control  it. 

Economic  History  (United  States) 
(Abstracts  by  Amelia  C.  Ford) 
Bidwell,   P.   W.      The  agricultural   revolution    in   New  England.     Am.    Hist.    Rev., 
July,   1921.      Pp.   20.     Discusses  the   changes   in   New  England,   during   the   half- 
century  before   the  Civil  War,  in  regard   to   agricultural  technic   and   social  life, 
due  to  "two  great  new  forces,  the  home  market  and  western  competition." 

Blegen,  T.  C.  Cleng  Peerson  and  Norwegian  immigration.  Miss.  Valley  Hist.  Rev., 
Mar.,  1921.  Pp.  29.  Details  the  activities  of  Peerson  in  initiating  the  first  group 
emigration   from  Norway  to  the  United  States. 

Briggs,  J.  E.  Kasson  and  the  first  international  postal  conference.  Iowa  Journ. 
Hist,  and  Pol.,  July,  1921.  Pp.  23.  Discusses  reforms  in  our  foreign  mail  service 
between  1861  and  1868,  particularly  those  secured  by  the  international  conference 
of  1863. 

Harger,  C.  M.  Financing  the  farms'  market.  Rev.  Rev.,  Oct.,  1921.  Pp.  4.  Dis- 
cusses the  expansion  of  the  war  finance  corporation  for  the  purpose  of  financing 
agricultural  operations  and  developing  export  trade. 

Libby,  O.  G.  The  new  northwest.  Miss.  Valley  Hist.  Rev.,  Mar.,  1921.  Pp.  16. 
Describes  the  past  fur  trade  and  present  economic  resources  of  that  region 
stretching  from  the  Arctic  ocean  to  the  mouth  of  the  Missouri  river,  and  from 
Hudson  Bay  and  Lake  Superior  westward  to  the  Rockies. 

Meredith,  E.  T.  Business  and  agriculture.  No.  Am.  Rev.,  Oct.,  1921.  Pp.  9.  Ex- 
plains the  trouble  with  business  as  due  to  a  lack  of  orders  from  the  farmers,  to 
the  amount  of  four  billion  dollars. 

Morison,  S.  E.  Boston  traders  in  Hawaiian  Islands,  1789-1823.  Wash.  Hist.  Quart., 
July,  1921.  Pp.  36.  Shows  how  "sandalwood,  geography,  and  fresh  provisions 
made  the  Islands  a  vital  link  in  a  closely  articulated  trade  route  between  Boston, 
the  northwest  coast,  and  Canton." 

Schmidt,  L.  B.  The  internal  grain  trade  of  the  United  States,  1S60-1890.  (II.) 
Iowa  Journ.  Hist,  and  Pol.,  July,  1921.  Pp.  42.  Deals  with  the  principal  trans- 
portation routes  connecting  the  Middle  West  with  the  Atlantic  and  Gulf  sea- 
boards, and  the  development  of  Chicago,  St.  Louis,  and  Minneapolis  into  the 
leading  primary  grain  markets;  gives  a  map  and  tables. 


1921]  Economic  History,  Foreign  739 

Shaw,  A.  California's  farm  colonies.  Rev.  Rev.,  Oct.,  1921.  Pp.  8.  Describes 
California's  experiments  at  Durham  and  Delhi  in  the  reconstruction  of  rural  life. 

Sissox,  F.  H.  The  future  of  our  foreign  trade.  Yale  Rev.,  Oct.,  1921.  Pp.  9. 
Points  out  factors  which  will  enable  the  United  States  to  hold  a  strong  position 
in  international  commerce;  emphasizes  our  duty  to  help  in  restoration  of  Europe. 

Suffern,  A.  E.  What  shall  we  do  about  coal?  Atlantic  Mo.,  Sept.,  1921.  Pp.  4. 
Points  out  certain  conditions  of  waste  and  inefficiency  in  the  coal  industry,  and 
the  need  of  a  policy  of  regulation. 

Taylor,  S.  H.  Oregon  bound,  1853.  Oregon  Hist.  Soc.  Quart.,  June,  1921.  Pp.  44. 
Correspondence  of  S.  H.  Taylor,  telling  of  conditions  of  travel  overland  in  1853, 
and  of  prices  of  food  and  labor  in  Oregon  at  that  time. 

Yarros,  V.  S.  Contemporary  American  radicalism.  Intern.  Journ.  Ethics,  July, 
1921.  Pp.  9.  Considers  American  radicalism  is  indigenous,  scientific,  and  prac- 
tical, and  discusses  its  theories  for  the  solution  of  our  industrial  and  political 
problems. 

Petition  to  increase  power  of  Congress  over  commerce,  1785.  William  and  Mary 
College  Quart.  Hist.  Mag.,  Jan.,  1921.  Pp.  2.  Sent  by  traders  in  Alexandria  to 
the  Virginia  assembly;  sets  forth  some  of  the  disadvantages  attending  foreign 
trade,  and  hopes  the  Confederation  may  be  amended  so  as  to  give  Congress  con- 
trol over  such  commerce. 

Taxation  of  importers,  1780.  William  and  Mary  College  Quart.  Hist.  Mag.,  Jan., 
1921.  Pp.  3.  A  protest  to  the  Virginia  assembly  from  Alexandria,  declaring 
that  the  new  law  burdens  importers  unfairly  as  compared  with  the  tax  on  land- 
holders, and  recommending  strongly  that  taxes  be  levied  on  the  retailers,  "less 
valuable  members  of  Society  than  the  Importers." 

Economic  History  (Foreign) 

Cadoux,  G.  Aspects  iconomique  du  probleme  polonais.  Journ.  Soc.  Stat.  Paris, 
July,  1921.     Pp.  19. 

Cavaixi,  A.  Evoluzione  politica  e  sue  conseguenze  economiche  in  Firenze  nella  sec- 
onda  meta  del  secolo  XIV.     Riv.  Intern.,  June,  1921.     Pp.  12. 

Chessa,  F.  II  movimento  di  clause  contemporaneo  e  la  legislazione  sociale.  Riv.  di 
Pol.  Econ.,  Nos.  III-V,  1921.  Pp.  12.  Aims  and  consequences  of  social  legisla- 
tion; its  tendency  to  assume  an  international  character. 

Davis,  J.  S.  Recent  economic  and  financial  progress  in  France.  Rev.  Econ.  Stat., 
July,  1921.     Pp.  26. 

.     Recent    economic   and  financial   progress   in    Germany.      Rev.    Econ. 

Stat,  June,  1921.     Pp.  25. 

Durand,  E.  D.  A  survey  of  economic  conditions  in  Poland.  Econ.  World,  Sept. 
24,  1921. 

Ferkand-Jaco.  Les  industries  electriques  en  Chine.  Journ.  des  Econ.,  July  15, 
1921. 

Gardner,  P.  Financial  history  of  ancient  Chios.  Journ.  Hellenic  Studies,  1920, 
Part  II. 

Goppert,  H.  Die  Socialisierungsbestrebungen  in  Deutschland  nach  der  Revolution. 
Schmollers  Jahrb.,  Jahrg.  45,  Heft  2,  1921.     Pp.  35. 


740  Periodicals  [December 

Jones,  J.  H.    The  international  financial  situation.   Weltwirtsch.   Archiv,  Apr.  1,  1921. 

Kale,  V.  G.     The  gospel  of  the  Chark  Ha.    Journ.  Indian  Econ.  Soc,  June,  1921. 

Karkar,  B.  K.     Public  finance  in  ancient  India.     The  Annals,  Sept.,  1921.     Pp.  16. 

Kende,  O.  Die  Verbreitung  von  Bergbau  und  Industrie  in  Osterreich-Ungarn. 
Weltwirtsch.  Archiv,  Apr.  1,  1921. 

Marvaud,  A.    La  crise  economique  en  Espagne.    Journ.  des  Econ.,  July  15,  1921. 

Nicola,  G.  B.    /  rapporti  economics  fra  le  nazioni.     Riv.  Intern.,  May,  1921.     Pp.  7. 

Olgin,  M.  J.  Agrarian  problems  in  soviet  Russia.  New  Repub.,  Aug.  17,  1921. 
Pp.  3. 

Payen,  E.  Le  domaine  colonial  franqais,  sa  valeur  economique.  L'Econ.  Franc., 
Sept.  17,  1921. 

Raffalovich,  A.  Le  Canada  pendant  les  six  dernier es  anntes  {1914-1920).  Journ. 
des  Econ.,  July  15,  1921. 

Singh,  St.  N.     Do  we  enjoy  fiscal  freedom?     Wealth  of  India,  June,  1921. 

Sitto-Pintor,  M.  La  collaborazione  effettiva  sostituita  all'  esteriorita  del  controllo 
sulle  aziende  e  sull'  industria.  Riv.  di  Pol.  Econ.,  Nos.  III-IV,  1921.  Pp.  9. 
Reflections  on  the  newer  developments  of  the  relation  of  the  state  to  industry  in 
Italy. 

Turpeau,  J.  Situation  economique  de  la  Pologne.  Monde  Econ.,  Aug.  20,  1921. 
Pp.  2. 

du  Vivier  de  Streel.  La  situation  Economique  de  VEurope,  ses  consequences  et  ses 
remedes.     Bull.  Soc.  Beige  des  Ingenieurs,  1920,  No.  2. 

Wilcken,  U.  Alexander  der  Orosse  und  die  hellenistische  Wirtschaft.  Schmollers 
Jahrb.,  Jahrg.  '45,  Heft  2,  1921.     Pp.  67. 

Quelques  aspects  de  la  crise  Economique  en  France.  I,  La  crise  et  les  versements 
aux  caisses  d'Epargne.  II,  La  crise  et  les  comptes  des  grande  sociHis  de 
credit,  by  Lorin.  Ill,  La  crise  et  la  Bourse,  by  Bourbeau.  IV,  La  crise  et  le 
commerce  exttrieur.     Rev.  d'Econ.  Pol.,  July-Aug.,  1921. 

Reparations  and  restoration — the  internal  condition  of  Germany.  Round  Table, 
June,  1921.     Pp.  31. 

Trade  and  natural  resources  of  Jamaica.    Commerce  Mo.,  Oct.,  1921. 

Agricultural  Economics 

(Abstracts  by  A.  J.  Dadisman) 
Adams,  R.  L.    Studies  in  agricultural  economics.     Col.  Sta.  Report,  1920.     Pp.  2.     A 
summary  of  studies  of  investment  in  farm  equipment  and  comparative  costs  and 
receipts  of  crops. 

Benassi,  P.  La  participazione  agli  utili  in  agricoltura.  Riv.  Intern.,  June,  1921. 
Pp.  10.     Merits  of  various  types  of  sharing  contracts  in  agriculture. 

Bonney,  W.  L.  The  development  of  cotton- growing  in  the  Chaco  territory  of  Ar- 
gentina.    Econ.  World,  July,  1921.     P.   1.     A  brief  historical  account. 

Boss,  A.     Survey  study  of  the  progress  and  prosperity  of  northern  Minnesota  set- 


1921]  Agricultural  Economics  741 

tiers.    Minn.  Sta.  Report,  1920.    Pp.  2.    A  progress  report  giving  a  summary  from 
sixty-five  farms  for  one  year. 

de  Boyer-Montegut,  R.  Faut-il  crier  des  cooperatives  agricoles?  Ref.  Soc,  June, 
1921.  Pp.  17.  A  discussion  of  recent  developments  and  results  achieved  by  co- 
operative societies  in  France. 

Camp,  W.  R.  Forms  of  organization  for  county  and  state  farm  bureau  exchanges 
in  California.  Cal.  Sta.  Report,  1921.  Pp.  43.  Detailed  plans  of  organization 
and  development  to  date.     Articles  of  incorporation  and  by-laws  are  given. 

Handschin,  W.  F.,  Andrews,  J.  B.,  and  Rauchenstein,  E.  The  horse  and  the 
tractor.  111.  Sta.  Bull.  231,  Feb.,  1921.  Pp.  56.  An  economic  study  of  horse 
and  tractor  labor  with  tables,  charts  and  illustrations. 

Harger,  C.  M.  The  recovery  of  the  grain  farmer.  The  Annals,  Sept.,  1921.  Pp.  5. 
An  analysis  of  the  grain  farmers'  economic  situation. 

Hopkins,  J.  C.  Agriculture:  the  organized  farmers.  Can.  Ann.  Rev.  Pub.  Affairs, 
19,  1919.  Pp.  83.  A  discussion  of  agricultural  conditions,  and  history  and  de- 
velopment of  farmers'  organizations  in  Canada. 

Johnson,  O.  R.  and  Green,  R.  M.  Influence  of  capital  on  farm  organization  (in 
a  livestock  section).  Mo.  Sta.  Bull.  175,  Oct.,  1920.  Pp.  20.  A  study  of  202  farms 
from  survey  records.     Farms  are  studied  by  groups.     Nineteen  tables. 

Jones,  F.  D.  The  status  of  farmers'  cooperative  associations  under  federal  law. 
Journ.  Pol.  Econ.,  July,  1921.  Pp.  9.  A  review  of  recent  discussions  in  congress 
for  regulating  farmers'  cooperative  organizations. 

Korstain,  C.  F.  Grazing  practice  on  the  national  forests  and  its  effect  on  natural 
conditions.  Sci.  Mo.,  Sept.  1921.  Pp.  7.  The  subject  is  discussed  briefly.  Seven 
illustrations. 

Krzymowski,  R.  Oraphische  Darstellung  der  Thunenschen  Intensitatstheorie.  Fuhl- 
ing's  Lndw.  Ztg.  69,  No.  11-12.  June,  1920.  Pp.  19.  Von  Thunen's  theories  of 
intensity  of  culture  and  diminishing  returns  are  discussed.     Eight  figures. 

Mehl,  J.  M.  Cooperative  grain  marketing.  U.  S.  Dept.  Agri.  Bull.  937,  Apr.,  1921. 
Pp.  21.  A  comparative  study  of  development  and  methods  used  in  the  United 
States  and  Canada. 

Miller,  E.  M.  The  corn  crop  in  relation  to  banking.  Commerce  Mo.,  August,  1921. 
Pp.  9.  Importance  and  utilization  of  the  corn  crop;  methods  of  loans  and  obliga- 
tion of  banks  in  financing  farmers.     Three  tables. 

Myers,  W.  I.  An  economic  study  of  farm  layout.  New  York  Cornell  Sta.  Mem.  34, 
June,  1920.  Pp.  179.  A  detailed  study  of  the  farm  layout  of  53  New  York  farms, 
with  35  tables  and  94  figures. 

Nuckols,  S.  B.  and  Summers,  T.  H.  Farm  practice  in  growing  field  crops  in  three 
sugar-beet  districts  of  Colorado.  U.  S.  Dept.  Agri.  Bull.  917,  Mar.,  1921.  Pp.  52. 
Detailed  farm  practice  including  costs.     Tables,  figures  and  illustrations  are  given. 

Rew,  Sir  Henry.  The  wages  problem  in  agriculture.  Quart.  Rev.,  Jan.,  1921.  Pp. 
16.  A  discussion  of  agricultural  wage  problems  in  England  and  efforts  being  made 
to  solve  them. 

Ross,  J.  Rural  finance.  Soc.  Rev.,  July,  1921.  Pp.  9.  Need  of  credit  by  farmers 
and  problems  of  securing  it. 


742  Periodicals  [December 

Scott,  L.  Agricultural  cooperation.  Fortn.  Rev.,  Apr.,  1921.  Pp.  10.  An  argu- 
ment in  favor  of  cooperation  among  farmers  and  some  of  the  difficulties  pointed 
out. 

Shaw,  A.  California's  farm  colonies.  Am.  Rev.  Rev.,  Oct.,  1921.  Pp.  8.  How  two 
farm  colonies  have   developed  and  opportunities   for   additional  development. 

Smith,  F.  B.  Agriculture  in  South  Africa.  United  Empire,  July,  1921.  Pp.  12. 
An  historical  sketch  of  the  development  of  agriculture  in  South  Africa. 

Smith-Gordon,  L.  Agriculture  as  a  business.  Better  Business  6,  no.  1,  Nov.,  1920. 
Pp.  20.     A  discussion  of  better  business  methods  for  agriculture. 

Stewart,  J.  G.     Land  settlement  in  Denmark.     Journ  Min.  Agri.  26,  no.  11,  Feb., 

1920.  Pp.  20.     A   statement   of  methods   of  acquiring  land,   education,  stocking 
and  operating  farms. 

Wallace,  H.  C.  Effect  of  depression  on  farmers  not  understood.  U.  S.  Dept.  Agri. 
Weekly  News  Letter  8,  no.  33.  Mar.,  1921.  Pp.  4.  An  analysis  of  the  present 
agricultural  situation. 

Warren,  G.  F.  Prices  of  farm  products  in  the  United  States.  U.  S.  Dept.  Agri. 
Bull.  999,  Aug.,  1921.  Pp.  72.  A  statistical  study  of  prices  of  farm  products 
since  1791,  with  sixteen  charts  and  forty  pages  of  tables. 

Weiss,  H.  B.     Field  crop  yields  in  New  Jersey  from  1876  to  1919.     Sci.  Mo.,  Oct., 

1921.  Pp.   8.     A   discussion   of  crop   yields   and    factors   influencing   them.      Ten 
charts. 

Willard,  R.  E.,  Metzger,  H.  and  Skeem,  E.  The  cost  of  producing  wheat  and 
other  crops  in  North  Dakota  in  1920.  North  Dakota  Sta.  Bull.  144,  Jan.,  1921. 
Pp.  16.  An  analysis  of  the  cost  of  producing  crops,  data  from  estimates  and 
cost  accounts.    Eleven  tables. 

Farm  management  surveys.  Agri.  Gaz.  Canada,  no.  5,  May,  1918.  Pp.  3.  A 
summary  of  results  of  a  survey  of  113  farms  in  Ontario,  with  three  tables.  Other 
surveys  are  mentioned. 

Railways  and  Transportation 

(Abstracts  by  Julius   H.   Parmelee) 
Allen,  O.  F.     Electrification  of  French  railway  systems.     Ry.   Elec.   Engg.,  Aug., 

1921.     Pp.  3.     With  map. 
.     The  war  and  its  effect  on  French  railway  labor.     Ry.  Age,  Aug.  27, 

1921.     Pp.  4.     Illustrated. 
Allix,  G.     Les  resultats  de  1920.     Chemin  de  fer  Nord-Sud  de  Paris.     Journ.  des 

Trans.,  Aug.  13,  1921.     Pp.  3. 
.    Les  resultats  de  1920.    Roseau  de  VEst.    Journ.  des  Trans.,  July  30, 

1921.     Pp.  4.     Operating  deficit  of  157  million  francs. 
.     Les  risultats  de  1920.     Mdtropolitain  de  Paris.     Journ.  des  Trans., 


July  2,  1921.     Pp.  4.    Operating  deficit  of  nearly  eleven  million  francs. 
.    Les  resultats  de  1920.    Reseau  du  Midi.    Journ  des  Trans.,  June  18, 


1921.     Pp.  3.     Operating  deficit  of  176  million  francs. 
.    Les  resultats  de  1920.    Roseau  du  Nord.     Journ  des  Trans.,  July  16, 


1921.     Pp.  3.     Operating  deficit  of  348  million  francs. 


1921]  Railways  and  Transportation  743 

Armstrong,  G.  W.  Railroads  and  their  effect  on  business.  Annalist,  Sept.  12,  1921. 
Pp.  2.    Relation  between  freight  cars  and  loadings,  bad  order  cars,  etc.,  with  chart. 

Balch,  C.  F.  Present  freight  rates  do  not  restrain  commerce.  Ry.  Age,  Sept.  10, 
1921.     Pp.  2.     Relative  freight  rates  and  other  values,  1914,  1917,  1919,  1920. 

Barthe,  A.  La  organizacion  de  los  transportes  en  Esparha.  Rev.  Nac.  de  Econ., 
Feb.,  1921.    Pp.  9. 

Boeckel,  R.  Industry's  moving  day.  Business,  June,  1921.  Pp.  8.  Effect  of 
freight  rate  charges  on  decentralization  of  industry. 

Bonn,  A.     The  need  for  railroad  statistics.     Ry.  Age,  Aug.  20,  1921.     Pp.  2. 

Cabot,  P.  Boot,  hog,  or  die.  Atlantic  Mo.,  Aug.,  1921.  Pp.  9.  The  transportation 
problem  in  New  England  dependent  on  development  of  efficient  and  progressive 
railway  management. 

Conn,  G.  C.  A  shipper's  views  of  railway  needs.  Ry.  Age,  Oct.  1,  1921.  Pp.  4. 
Car  problems,  labor,  improved  efficiency,  etc. 

Cordeal,  E.  Manual  labor  the  drag  that  cuts  railroad  freight  earnings.  Trans. 
World,  July-Aug.,  1921.     Pp.  3. 

County,  A.  J.  The  outlook  for  financing  the  railroads  and  the  government's  rela- 
tion thereto.     Econ.  World,  Oct.  22,  1921.     Pp.  4. 

"Damon."  Peace  and  the  Bagdad  Bailway.  Fortn.  Rev.,  Oct.,  1921.  Pp.  21.  Past, 
present,  and  future  possibilities  of  Bagdad  scheme,  with  maps. 

Davis,  J.  S.  The  progress  of  railway  liquidation.  Ry.  Rev.,  July  30,  1921.  Pp.  3. 
Memorandum  by  director  general  of  railroads  on  progress  of  settlement  with 
railways. 

Dunn,  S.  O.     Why  rates  cannot  be  reduced.    111.  Central  Mag.,  July,  1921.     Pp.  5. 

Du  Puy,  W.  A.  If  I  ran  the  railroads — Ford.  Nation's  Bus.,  Nov.,  1921.  Pp.  3. 
Interview  with  Henry  Ford  on  railway  operation;  suggests  reorganization,  rede- 
signing of  equipment,  expediting  of  freight,  and  discharge  of  unnecessary  em- 
ployees. 

Gormley,  M.  J.     The  freight  situation.     Ry.  Rev.,  Aug.  27,  1921.     Pp.  3. 

Gregg,  E.  S.  Vicissitudes  in  the  shipping  trade,  1870-1920.  Quart.  Journ.  Econ., 
Aug.,  1921.  Pp.  15.  Four  shipping  depressions  described:  1873,  the  early  eighties, 
1890-1894,  1901-1904. 

Hadley,  E.  A.  The  railroad  situation,  yesterday,  today,  and  tomorrow.  Journ. 
Engg.  Club  of  St.  Louis,  Apr.-June,  1921.  Pp.  10.  "Yesterday"  extended  to 
March  1,  1920;  "today,"  to  the  present  moment;  and  "tomorrow,"  all  future  time. 

Hale,  R.  L.  The  "physical  value"  fallacy  in  rate  cases.  Yale  Law  Journ.,  May, 
1921.  Pp.  22.  Attacks  the  adoption  of  replacement  cost  less  depreciation  as  the 
measure  of  physical  value. 

Hardman,  T.  P.  Judicial  review  as  a  requirement  of  due  process  in  rate  regulation. 
Yale  Law  Journ.,  May,  1921.     Pp.  12. 

Henderson,  G.  R.  Suggestions  as  to  economics  in  railroad  operation.  Ry.  Age, 
Aug.  6,  1921.     Pp.  2. 

Howard,  J.  R.  The  farmer  and  the  railroads.  Shippers'  Advocate,  July-Aug.,  1921. 
Pp.  3.    Farm  prices  and  freight  rates. 


744  Periodicals  [December 

Hutchinson,  J.  B.  Suggestions  for  a  comprehensive  service  department.  Ry.  Rev., 
July  23,  1921.     Pp.  3. 

Johnson,  E.  R.  The  problem  of  railroad  control.  Pol.  Sci.  Quart.,  Sept.,  1921. 
Pp.  23.     Analysis  and  comment  on  federal  control  and  the  transportation  act. 

.     Transportation  problems   confronting   the  American  people.     Journ. 

Engg.  Club  of  Phila.,  July,  1921.     Pp.  3. 

Kruttschnitt,  J.  A  striking  diagram  for  railroad  stockholders.  Ry.  Age,  July  30, 
1921.  Pp.  2.  Chart  and  text  showing  changes  in  prices,  railway  wages,  and  rail- 
way freight  rates,  1900  to  1920. 

Lee,  E.  Our  unwatered  railroads — strong  moral  position  of  security  holders.  Ry. 
Rev.,  July  23,  1921.    Pp.  5. 

Leseur,  P.  Le  projet  de  loi  sur  le  regime  des  chemins  de  fer  espagnoles.  Rev.  Pol. 
et  Pari.,  Aug.  10,  1921.     Pp.  11. 

Liesse,  A.  Le  nouveau  regime  des  chemins  de  fer:  le  projet  vote  par  le  S4nat. 
L'Econ.  Franc.,  July  23,  1921.     Pp.  3. 

Lorenz,  M.  O.  Comparing  unit  costs  in  railway  operations.  Ry.  Rev.,  July  30,  1921. 
Pp.  2.     Equated  locomotive  day  equivalent  to  tractive  power  mill. 

Lovett,  R.  S.  Railroad  consolidations.  World's  Work,  Aug.,  1921.  Pp.  6.  Analysis 
of  consolidation  provisions  of  Transportation  act. 

Marriott,  J.  A.  R.  The  state  and  the  railways.  Fortn.  Rev.,  June,  July,  1921.  Pp. 
12,  13.     Chief  factors  in  British  railway  problem,  with  alternative  solutions. 

Mitchell,  J.  R.  The  imperial  government  railways  of  Japan.  Proc.  Car  Fore- 
men's Assoc,  of  Chicago,  May,  1921.  Pp.  16.  Historical  and  statistical  survey  to 
1917. 

Morse,  H.  B.  The  building  of  China's  railways.  Econ.  World,  July  16,  23,  1921. 
Pp.  2,  2. 

Neumark,  A.  J.  Need  investors  fear  railroad  consolidation?  Mag.  of  Wall  Street, 
Oct.  15,  1921.  Pp.  5.  Advantages  and  difficulties  of  proposed  tentative  consolida- 
tion plan  of  I.  C.  C,  with  map. 

Parmelee,  J.  H.  Comparative  railway  wages:  United  States  and  abroad.  Ry. 
Journ.,  Oct.,  1921.  Pp.  2.  Wage  conditions  in  Great  Britain,  France,  Canada, 
Japan,  and  other  countries. 

Parsons,  F.  The  fine  art  of  railroading.  Am.  Legion  Weekly,  Aug.  26,  1921.  Pp.  4. 
Chances  for  a  career  in  the  railway  industry. 

Payne,  J.  L.  Canadian  railway  results  in  calendar  year  1920.  Ry.  Age,  Aug.  13, 
1921.     Pp.  3.     Largest  gross  and  lowest  net  revenue  in  many  years. 

.     What  really  ails  the  railroads.     Sat.  Eve.  Post,  July  30,  1921.     Pp.  5. 

Government  regulation  has  stifled  railway  initiative. 

Riggs,  E.  G.  Increase  of  railroad  freight  rates  did  not  check  business.  Trans. 
World,  July-Aug.,  1921.  Pp.  4.  Largely  a  digest  of  opinions  from  railway  offi- 
cials. 


Roberts,  J.  W.     The  railroad  shop  vs.  the  contract  shop.     Ry.  Age,  Oct.   1,  8,  15, 
1921.     Pp.  3,  3,  3.     Accounting  differences  in  the  two  classes  of  shops. 


I 


1921]  Railways  and  Transportation  745 

Ruggles,  C.  O.  Railway  service  and  regulation  in  port  terminals.  Am.  Econ.  Rev., 
Sept.,  1921.  Pp.  9.  The  problem,  due  to  intensified  competition,  less-than-cost 
charges,  and  lack  of  coordination;  the  remedy,  unification  and  coordination  under 
effective  regulation. 

Sakolski,  A.  M.  Practical  tests  of  the  Transportation  act.  Pol.  Sci.  Quart.,  Sept., 
1921.     Pp.  15.     Rate,  labor,  and  other  features  of  Transportation  act  analyzed. 

.      Statistical    control    of    railroad    operations.      Administration,    July, 

1921.     Pp.   11.     Development  of  a  system  of  operating  railway  statistics. 

Solesses,  E.  Le  Moroc  et  ses  chemins  de  fer.  Rev.  Pol.  et  Pari.,  Sept.  10,  1921. 
Pp.  36.    Comprehensive  summary,  with  map,  of  the  railway  situation  in  Morocco. 

Sanzedi,  A.  L' imp  Oralis  ation  des  chemins  de  fer  allemands  et  ses  rSsultats  finan- 
ciers.    Rev.  Pol.  et  Pari.,  July  10,  1921.     Pp.  9. 

Simmehsbach,  B.  Beitrag  zur  Geschichte  der  Amurbahn.  Archiv  f.  Eisenbahnw., 
July-Aug.,  1921.    Pp.  12.    With  a  map  of  the  Amur  River  railway  line. 

Tinglev,  R.  H.  How  much  is  a  railroad  worth?  Annalist,  Oct.  10,  1921.  Pp.  2. 
Summary  of  railway  valuation  work  to  date. 

Van-  Metre,  T.  W.  The  railroad  predicament :  how  it  arose  and  how  to  get  out  of 
it.  The  Annals,  Sept.,  1921.  Pp.  6.  The  Transportation  act,  relations  between 
railways  and  government,  the  problem  of  railway  efficiency. 

Wamsley,  W.  F.  Railway  outlook  encouraging  for  all  industry.  Annalist,  Aug.  8, 
1921.    Pp.  2. 

Weixthal,  L.  The  Cape  to  Cairo  railway  and  river  route.  So.  African  Rys.  and 
Harb.  Mag.,  Aug.,  1921.  Pp.  11.  Three  decades  of  the  railway's  history,  1887- 
1917,  with  survey  of  present  situation.     With  map  and  illustrations. 

Wernekke.  Die  englischen  Eisenbahnen  im  Krieg.  Archiv  f.  Eisenbahnw.,  July- 
Aug.,  1921.    Pp.  13. 

Willard,  D.  Are  the  carriers  doing  their  part?  Nation's  Bus.,  July,  1921.  Pp.  2. 
Economy  and  efficiency  on  the  railways. 

Britain's  plans  for  solution  of  labor  problems.  Ry.  Age,  Aug.  20,  1921.  Pp.  2. 
Negotiations  between  British  railways  and  railway  unions  as  to  method  of  handling 
labor  matters. 

British  railways  in  1920.  Ry.  Gaz.  (London),  May  6,  1921.  Pp.  5.  Government 
lost  under  its  guarantee  £50,000,000.     Gross  receipts  largest  on  record. 

The  case  of  the  D.  T.  <§•  I.  Nation's  Bus.,  Nov.,  1921.  Pp.  2.  A  railway  president's 
point  of  view  on  Henry  Ford  as  a  railroad  operator. 

The  Ceylon  government  railways.  Ry.  Gaz.  (London),  Aug.  5,  12,  1921.  Pp.  2,  2. 
Digest  of  report  of  a  recent  investigation  by  a  British  railway  official. 

Commission  presents  tentative  consolidation  plan.  Ry.  Age,  Oct.  1,  1921.  Pp.  11. 
Abstract  of  Interstate  Commerce  Commission  report  on  railway  consolidation. 

Die  Eisenbahnen  in  Ddnemark  im  Betriebsjahr  1919-1920.  Archiv  f.  Eisenbahnw., 
Sept.-Oct.,  1921.     Pp.  19. 

Die  Eisenbahnen  des  Deutschen  Reichs,  1918  und  1919.  Archiv  f.  Eisenbahnw., 
Sept.-Oct.,  1921.    Pp.  8. 


746  Periodicals  [December 

Expenditures  of  the  railways  for  labor  and  material.  Ry.  Age,  July  30,  1921.  Pp.  4. 
Tables  and  charts  analyzing  railway  expenses  from  1912  to  1920. 

The  French  system  of  railway  premiums.  Ry.  Gaz.  (London),  Sept.  9,  1921.  Pp.  3. 
Proposed  legislation  creating  a  system  of  premiums  to  be  divided  between  the 
workers  and  the  shareholders. 

Operating  revenue  and  how  it  was  expended.  Ry.  Age,  July  30,  1921.  Pp.  4. 
July  30,  1921.  Pp.  4.  Colored  charts,  with  texts,  showing  distribution  of  railway 
revenues,  1912  to  1920. 

Baihray  operating  expenses  and  income.  Ry.  Rev.,  Sept.  3,  1921.  Pp.  2.  Analysis 
of  results,  first  six  months  of  1921. 

Re~sultats  obtenus  en  1919  sur  le  reseau  des  Chemins  de  Fer  de  I'Etat  en  France. 
Rev.  Gen.  de  Chemins  de  Fer,  Aug.,  1921.  Pp.  8.  Statistics  for  1919  of  the  state 
railway  of  France. 

Das  schwedische  Eisenbahnnetz,  1917.  Die  schwedischen  Staatsbahnen,  1917-1919. 
Archiv  f.  Eisenbahnw.,  Sept.-Oct,  1921.     Pp.  12. 

La  situation  du  maUriel  roulant  en  France  et  en  Allemagne.  Journ.  des  Trans., 
July  2,  1921.     Pp.  2.     A  before-and-after-war  comparison. 

Die  Staatseisenbahnen  und  staatlichen  Kleinbahnen  in  Niederldndisch-Indian  im 
Jahre  1918.     Archiv  f.  Eisenbahnw.,  July-Aug.,  1921.     Pp.  3. 

Terminal  costs,  not  railroad  freight  rates,  hamper  business.  Trans.  World,  July- 
Aug.,  1921.     Pp.  2. 

Twenty  systems  in  I.  C.  C.  consolidation  plan.  Ry.  Age,  Sept.  3,  1921.  Pp.  2. 
Digest  of  plan  prepared  by  Professor  William  Z.  Ripley. 

What  has  Henry  Ford  done  with  the  D.  T.  §  I.  Ry.  Age,  Sept.,  1921.  Pp.  6. 
With  map  and  statistical  tables. 

Commerce 

(Abstracts  by  Harry  R.  Tosdal) 
Austell,  F.  E.    American  trends  in  foreign  trade.     The  Annals,  Sept.,  1921.     Pp.  7. 
Statistical  analysis  of  exports  of  the  United  States  1914-1921,  with  enumeration  of 
factors  which  render  uncertain  the  future  trend  of  foreign  trade. 

Harger,  C.  M.  Financing  the  farms'  market.  Am.  Rev.  Rev.,  Oct.,  1921.  Pp.  4. 
Describes  the  steps  taken  by  the  War  Finance  Corporation  to  relieve  the  situation 
confronting  exporters  of  agricultural  products. 

Harrington,  J.  W.  Untinged  truths  of  the  dye  situation.  Annalist,  Aug.  1,  1921. 
P.  1.  Article  outlining  the  situation  in  the  dye  industry,  prompted  by  the  defeat 
of  the  Fordney  Tariff  bill  and  the  termination  of  the  arrangement  whereby  for- 
eign dyes  can  be  brought  into  this  country  through  special  licenses  issued  by  the 
War  Trade  Board. 

Hennisg,  R.  El  comercio  "Sordo  Mudo"  como  forma  primitivo  del  comercio  ex- 
terior. Rev.  Nacional  de  Econ.,  Feb.,  1921.  Pp.  9.  Historical  survey  of  "silent" 
or  "deaf-and-dumb"  commerce  in  various  countries,  in  which  are  considered  meth- 
ods of  conducting  commerce  prior  to  early  fairs  and  markets. 

Monteilhef,  J.     Foreign  trade  and  the  economic  recovery  of  France.     The  Annals, 


1921]  Public  Utilities  747 

Sept.,  1921.  Pp.  15.  Traces  war  regulation,  alternatives  of  freedom  and  pro- 
tection brought  about  by  instability  of  exchange  since  the  armistice,  and  lastly 
the  "satisfactory  results  obtained  by  the  institutions  of  economic  expansion  cre- 
ated or  reestablished." 

Page,  W.  J.     The  British  governments  revised  export   credit  plan.  Econ.   World, 

Aug.  13,  1921.     Pp.  2.     Gives  clauses  of  a  bill  recently  passed  by  the  House  of 

Commons  authorizing  the  government  to  guarantee  drafts  drawn  against  ship- 
ments of  goods  to  countries  included  in  the  scheme. 

Patton,  H.  S.  Reciprocity  with  Canada.  The  Canadian  viewpoint.  Quart.  Journ. 
Econ.,  Aug.,  1921.  Pp.  21.  Traces  reciprocity  agreements  and  trade  between 
Canada  and  the  United  States  from  1910  to  the  present. 

Righetti,  M.  II  commercio  dell'  Italia  con  FEstero.  L'Economista,  June  12,  1921. 
Pp.  2.  This  study  of  Italian  foreign  commerce  is  continued  through  several  num- 
bers of  L'Economista. 

Werner-Kautzsch.  Die  industrielle  Lage  in  Grossbritannien  in  amerikanischer 
Beleuchtung.  Natur  u.  Gesells.,  Sept.,  1921.  Pp.  7.  Principally  a  description  and 
comment  on  a  recent  article  by  Mr.  Herbert  Feis  in  the  American  Economic  Re- 
view, "The  Industrial  Situation  in  Great  Britain  from  the  Armistice  to  the  Be- 
ginning of  1921,"  June,  1921. 

Williams,  J.  H.  The  balance  of  international  payments  of  the  United  States  for 
the  year  1920.     Rev.  Econ.  Stat.,  June,  1921,  Supp.  1.     Pp.  44. 

Canada  fast  making  itself  a  self-contained  industrial  unit.  The  Americas,  July, 
1921.  Pp.  6.  Descriptive  article  showing  that  Canada  has  great  potentialities  for 
development  of  both  import  and  export  trade. 

Exports  of  farm  products  from  the  United  States.  Commerce  Mo.,  Sept.,  1921. 
Pp.  7.  Statistical  comparison  of  United  States'  exportation  of  farm  products  by 
countries  and  products  for  1920  and  1921  with  five-year  average   (1910-1914). 

The  volume  and  value  of  the  exports  of  the  United  States.  Econ.  World,  Oct.  1, 
1921.  Pp.  2.  Asserts  that  the  statement  of  a  20  per  cent  decrease  in  the  total 
value  of  exports  in  1921  as  compared  to  1920  does  not  show  the  true  status  of 
American  foreign  trade,  because  value  is  given  in  dollars  and  not  in  quantity. 
Article  aims  to  show  the  quantity  increase  or  decrease. 

Public  Utilities 
(Abstracts  by  Charles  S.  Morgan) 

Bankson,  E.  E.,  Davis,  D.  E.,  Finley,  C.  A.  Municipal  water  rates.  Journ.  Am. 
Water  Works  Assoc,  Sept.,  1921.  Pp.  25.  A  thorough  analysis  of  the  principles 
underlying  the  distribution  of  the  cost  of  municipal  water  supply  as  between  con- 
sumer and  taxpayer  and  as  between  classes  of  consumer. 

Bauer,  J.  Deadlock  in  public  utility  regulation.  I.  Collapse  of  credit.  Nat.  Munic. 
Rev.,  Sept.,  1921.  Pp.  5.  Certain  fundamental  changes  are  required  to  meet  grow- 
ing criticisms  of  commission  regulation,  the  chief  of  which  is  held  to  be  that  regu- 
lation has  resulted  in  the  gradual  destruction  of  credit  of  public  utilities.  Sug- 
gested that  commissions  make  it  possible  for  utilities  to  finance  ordinary  improve- 
ments out  of  earnings,  thereby  creating  a  surplus  which  would  restore  credit  while 
involving  no  injustice  to  the  consuming  public,  as  it  is  not  proposed  that  utilities 
be  allowed  to  earn  on  surplus  created  in  this  manner. 


748  Periodicals  [December 

Bohling,  W.  H.  What  constitutes  a  reasonable  return?  Elec.  World,  Aug.  6, 
1921.  Pp.  5.  The  prevailing  rate  of  interest  and  the  prevailing  return  on  com- 
parable enterprises  constitute  the  minimum  and  maximum  return  to  which  an 
efficiently  conducted  utility  is  entitled.     Valuable  extensive  citation  of  cases. 

Buffe,  F.  G.  Solving  the  jitney  problem.  Aera,  Oct.,  1921.  Pp.  5.  How  electric 
railways  in  Kansas  City  secured  relief  from  jitney  competition  by  plain  statement 
of  case  to  the  public. 

Clark,  H.  C.  What  are  the  costs  of  service?  Aera,  Oct.,  1921.  Pp.  5.  A  definition 
of  the  elements  of  costs  of  service  and  statement  of  the  need  for  a  full  recognition 
of  them. 

Dahl,  C.  H.  D.  Measuring  service  to  the  public.  Elec.  Ry.  Journ.,  Aug.  13,  1921. 
Pp.  2.  A  brief  comparison  of  electric  railways  of  twenty  cities  on  basis  of  car 
miles  per  mile  of  single  track,  average  fare  and  speed,  resulting  in  an  "efficiency 
index." 

Dutton,  L.  R.  Gas  service  costs  in  rate  making.  Gas  Age-Record,  Oct.  1,  1921. 
Pp.  7.  A  painstaking  explanation  of  the  factors  involved  in  construction  of  a 
satisfactory  rate  structure  in  the  gas  industry. 

Edgeeton,  E.  O.  Inflexibility  of  power  development  by  municipalities.  Elec.  World, 
Oct.  1,  1921.  Pp.  2.  Extensive  hydroelectric  projects  can  not  be  developed  ef- 
fectively by  municipalities  because  of  jurisdictional  limitations.  Private  develop- 
ment under  state  regulation  preferable. 

Emmons,  C.  D.  The  development  of  traction.  Aera,  June,  July,  1921.  Pp.  4,  5. 
Interesting  account  of  early  development  of  street  railway  transportation  and  of 
the  technical  development  of  electric  transportation. 

Eetel,  A.  D.  Traffic  and  housing  in  large  cities.  Elec.  Ry.  Journ.,  Aug.  6,  1921. 
Pp.  3.  Interesting  study  of  the  interrelation  of  local  facilities  for  transportation 
and  housing,  based  principally  on  European  experience;  discloses  close  likeness  to 
American  problem. 

Freeman,  F.  C.  Analysis  of  service  charge  items.  Gas  Age-Record,  Sept.  10,  1921. 
Pp.  5.     An  intensive  study  of  constituents  of  a  well  developed  gas  rate  structure. 

Goodwin,  W.  L.  Wanted — a  transportation  sales  manager.  Elec.  Ry.  Journ.,  Sept. 
24,  1921.  Pp.  9.  One  of  a  number  of  articles  in  this  number  devoted  to  the  need 
for  and  means  of  stimulating  the  riding  habit. 

Habkness,  D.  T.  Transit  tendencies  in  New  York  City.  Elec.  Ry.  Journ.,  Sept.  10, 
1921.  Pp.  6.  Valuable  discussion  by  member  of  new  Transit  Commission  of  his- 
torical development  of  New  York's  transportation  problem  and  of  possible  reme- 
dies therefor. 

Hurley,  E.  N.  Public  ownership  no  panacea  for  utility  service  ills  in  opinion  of 
Edwin  N.  Hurley.     Public  Service  Man.,  Aug.,  1921.     Pp.  4. 

Jackson,  W.     The  weekly  >$1  pass  in   Wisconsin.     Elec.   Ry.  Journ.,  Aug.   6,   1921. 

Pp.  3.     Two  years'  experience  in  Racine  with  this  device  for  increasing  off-peak 

traffic  shows  it  to  have  many  advantages.     "In  practice,  the  pass  acts  exactly  as  if 

fares  were  being  charged  on  a  distance  basis." 
Lewis,  E.  I.     Current  aspects  of  utility  regulation.     Nat.  Elec.  Light  Assoc.   Bull., 

Aug.,   1921.     Pp.   6.     Discussion  by   recent   chairman   of   Indiana   Public   Utilities 

Commission. 


1921]  Public  Utilities  749 

Merrill,  O.  C.  The  regulations  of  the  Federal  Power  Commission.  Stone  &  Web- 
ster Journ.,  July,  1921.  Pp.  13.  Valuable  discussion  of  certain  aspects  of  federal 
water  power  act,  particularly  with  reference  to  the  correlation  of  state  and  fed- 
eral authority.  Explanation  of  method  by  which,  in  absence  of  proper  state  regu- 
lation, excessive  earnings  are  to  be  prevented,  involving  the  possibility  in  a  few 
cases  of  amortizing  investment,  after  a  stated  period,  therefrom. 

Murphy,  E.  J.  A  study  of  traffic  ratios.  Aera,  July,  1921.  Pp.  3.  Several  in- 
teresting correlations  between  size  of  company  and  "efficiency"  of  operation  are 
developed. 

Murphy,  E.  J.  Receipts  rise  during  depression.  Aera,  Sept.,  1921.  Pp.  5.  Sta- 
tistics here  presented  for  seventy-five  city  and  interurban  railways  show  that  in- 
crease in  fares  has  offset  slight  decline  in  traffic  in  first  six  months  of  1921  as 
compared  with  corresponding  period  in  1920,  and  has  resulted  in  3.1  per  cent  in- 
crease in  net  revenue. 

O'Shaugnessy,  M.  M.,  Hoyt,  J.  San  Francisco  municipal  railways  from  two  view- 
points. Nat.  Munic.  Rev.,  Aug.,  1921.  Pp.  5.  I.  Municipal  operation  an  un- 
qualified success.  Evidence  thereof  is  cited  by  city  engineer.  II.  Unique  ad- 
vantages enjoyed  by  municipal  lines.  These,  while  well  managed  and  showing  to 
a  late  date  a  profit  from  operation,  have  not  yet  been  put  to  the  test  which  will 
come  when  less  profitable  lines  are  taken  into  the  system. 

Roos,  C.  M.  Operating  a  water  works  plant  under  state  supervision.  Journ.  Am. 
Water  Works  Assoc,  July,  1921.  Pp.  8.  A  statement  of  the  need  for  a  better 
understanding  of  the  utility  business  and  of  the  problem  of  regulation.  State  regu- 
lation is  considered  preferable  to  local. 

Rye,  A.  N.  Difficulties  of  the  smaller  electricity  supply  companies.  Electrician 
(London),  June  24,  1921.  Pp.  4.  Increased  costs,  lessened  demand  and  fixed 
maximum  rates  have  placed  these  undertakings  in  England  in  a  precarious  con- 
dition. 

Thirlwall,  J.  C.  The  urban  transportation  field  analyzed.  Elec.  Ry.  Journ.,  Oct. 
1,  1921.  Pp.  5.  An  extensive  comparison  of  the  trackless  trolley,  the  motor  bus, 
and  the  rail-borne  trolley  is  said  to  show  the  greater  economy  of  the  first  except 
where  traffic  is  heavy,  when  the  usual  type  of  trolley  is  best,  or  where  traffic 
is  very  light,  when  lower  investment  costs  of  the  motor  bus  give  it  the  advantage. 

Commission  popular  in  keystone  state.  Elec.  Ry.  Journ.,  July  30,  1921.  Pp.  4.  Brief 
description  of  work  of  Pennsylvania  Public  Service  Commission. 

Municipal  utility  (gas  and  electric)  plant  at  Holyoke,  Mass.,  proves  source  of  loss 
to  the  taxpayers.     Public  Service  Man.,  Oct.,  1921.     Pp.  4. 

Material  decrease  in  operating  ratios.  Elec.  World,  Oct.  8,  1921.  Pp.  2.  Monthly 
statistics  of  central  electric  station  industry. 

Public  Service  Railway  offers  valuation  argument.  Elec.  Ry.  Journ.,  July  6,  1921. 
P.  1.  Abstracts  from  extensive  brief  of  Public  Service  Railway  of  New  Jersey, 
showing  particularly  the  claims  made  for  non-physical  elements  of  value. 

Radical  readjustment  proposed  in  New  York  City.  Elec.  Ry.  Journ.,  Oct.  1,  1921. 
Pp.  5.  An  extended  abstract  of  important  recent  report  of  New  York  Transit 
Commission,  in  which  were  recommended  municipal  ownership  and  private  opera- 
tion, eventually  under  one  operating  company,  of  all  transportation  agencies. 


750  Periodicals  [December 

Reduced  fare  in  Cleveland.  Elec.  Ry.  Journ.,  July  23,  1921.  P.  1.  To  stimulate 
riding  habit,  fares  in  a  limited  downtown  area  have  been  reduced  to  three  cents 
and  two  and  one-half  cents  for  tickets. 

Regulations  for  jitneys.  Elec.  Ry.  Journ.,  July  9,  1921.  P.  1.  Summary  of  recent 
Connecticut  legislation  which  declares  jitneys  common  carriers  and  prescribes 
regulations  to  which  they  are  subject. 

Accounting 

(Abstracts  by  Martin  J.  Shugrue) 
"Accountant."     What  a  balance-sheet  should  show.     Finan.   Rev.   Rev.,  July-Aug., 
1921.     Pp.  15.     A  well-prepared  elementary  explanation  in  an  English  magazine 
written  for  the  benefit  of  the  investor  rather  than  the  accountant. 

Belknap,  R.  H.     Shoe-factory  accounting.     Journ.  Account.,  Sept.,  1921.     Pp.   10. 

Couchman,  C.  B.  Classification  of  surplus.  Journ.  Account.,  Oct.,  1921.  Pp.  14. 
How  surplus  should  be  classified  on  the  balance  sheet.  In  general  it  should  be 
subdivided  so  as  to  indicate  its  various  important  sources. 

Duncan,  C.  S.  Stock  turnover — a  deceptive  index.  Annalist,  Sept.  19,  1921.  P.  1. 
Throws  new  light  upon  the  significance  of  stock  turnover  in  conducting  a  business. 

Francis,  R.  A.  Cost  accounting  for  brick  manufacturing.  Pace  Student,  July,  1921. 
Pp.  3.  Presents  clearly  and  concisely  the  cost  system  of  a  brick  manufacturing 
concern. 

Freeman,  H.  C.  Some  considerations  involved  in  the  valuation  of  goodwill.  Journ. 
Account.,  Oct.,  1921.  Pp.  17.  What  goodwill  is  and  how  it  should  be  valued. 
Cites  a  number  of  court  decisions  to  illustrate  both  past  and  present,  tendencies. 

Geijsbeek,  J.  B.  Sufficiency  of  vouchers.  Journ.  Account.,  Aug.,  1921.  Pp.  12.  The 
accountant  is  often  faced  with  the  problem  as  to  whether  or  not  a  voucher  pre- 
sented to  him  is  sufficient.  Reviews  a  recent  decision  of  the  United  States  circuit 
court  of  appeals  dealing  with  this  matter. 

Kuhn,  A.  J.  Analysis  of  deposit  accounts:  determining  profit  or  loss.  Trust  Com- 
panies, Aug.,  1921.  Pp.  5.  Result  of  study  of  the  various  methods  of  cost  compu- 
tation employed  by  banks  and  trust  companies  throughout  the  United  States. 

McCluskey,  H.  C.  Anthracite  mine  accounting.  Journ.  Account.,  July,  1921.  Pp.  8. 
Lays  particular  emphasis  on  the  questions  of  capital  expenditures,  valuations  of 
coal  lands  and  leaseholds,  and  depreciation  and  amortization. 

Meyer,  E.  M.  Lumber  costs.  Journ.  Account.,  Aug.,  1921.  Pp.  7.  In  a  large  per- 
centage of  mills  an  average  cost  per  thousand  feet  or,  worse  still,  an  arbitrary 
value,  is  used.  This  article  shows  the  results  of  several  methods  of  determining 
costs. 

Porter,  G.  H.  Accounting  for  electric  alloy  and  tool  steel.  Journ.  Account.,  July, 
1921.  Pp.  15.  An  outline  of  the  accounting  classification,  forms  and  records  for 
electric  furnaces  manufacturing  high  grade  alloy  and  tool  steels. 

Prudden,  R.  F.  Bank  credit  investigator.  Bankers  Mag.,  Aug.,  1921.  Pp.  12. 
The  fourth  of  a  series  of  articles.  Takes  up  in  detail  the  analysis  of  a  credit 
statement.     A  well-illustrated  and  carefully  prepared  article. 

Reyer,  W.   C.     Accounting  for   construction  in  public  utilities.     Journ.    Account., 


1921]  Labor  and  Labor  Organizations  751 

Sept.,  1921.     Pp.  9.     Summarizes  briefly  the  general  provisions  in  accounting  for 
construction  work  of  public  utilities. 

Staub,  E.  E.  Profits  and  financing  of  manufacturing  corporations.  Journ.  Ac- 
count., Aug.,  1921.  Pp.  10.  Reasons  why  the  layman  is  confused  by  the  item 
surplus  and  has  not  complete  faith  in  public  accountants'  statements.  Proposed 
remedies  for  the  situation. 

Szepesi,  E.  Can  cost  be  standardized  in  the  wool  manufacture?  Bull.  Nat.  Assoc. 
Wool  Manufacturers,  July,  1921.  Pp.  13.  Outlines  and  illustrates  with  charts  and 
tables  the  possibilities  of  standardized  cost  control  which  would  enable  manufac- 
turers to  measure  their  costs  directly  and  accurately.  It  is  pointed  out  that  this 
method  of  cost  control  will  not  interfere  with  the  general  accounting  system  and 
will  serve  as  a  check  upon  it. 

Tregoe,  J.  H.  Standards  for  granting  credit.  The  Annals,  Sept.,  1921.  Pp.  4. 
Some  general  principles  to  be  observed  in  the  granting  of  credit. 

An  accounting  system  for  the  smaller  merchant.  Pace  Student,  Aug.,  1921.  Pp.  6. 
Outlines  an  accounting  system  which  should  prove  satisfactory  for  the  use  of 
retailers,  such  as  leather-goods  dealers,  novelty  stores,  cutlery  houses,  and  others 
selling  units  of  various  sizes  and  grades. 

The  danger  in  cost  systems.  Nation's  Bus.,  Sept.,  1921.  P.  1.  Discussion  of  how 
far  a  trade  association  may  go  in  developing  a  uniform  cost  system  for  its  mem- 
bers without  being  found  guilty  of  using  it  for  ulterior  purposes,  such  as  finding 
averages  or  otherwise  making  it  the  basis  of  price-fixing. 

Labor  and  Labor  Organizations 
(Abstracts  by  David  A.  McCabe) 

Chadbouhne,  T.  L.  Face  the  labor  issue.  Am.  Labor  Legis.  Rev.,  Sept.,  1921.  Pp.  6. 
An  appeal  for  political  action  along  progressive  lines. 

Chase,  S.  Waste  and  labor.  Nation,  July  20,  1921.  Pp.  3.  Waste  will  not  be 
eliminated  until  labor  unites  with  the  technicians  for  the  control  of  industry. 

Clynes,  J.  R.  Industrial  disputes  and  their  lessons.  Nineteenth  Cent.,  Aug.,  1921. 
Pp.  11.     Author  is  one  of  the  leaders  of  the  British  Labor  party. 

Commons,  J.  R.  Unemployment:  compensation  and  prevention.  Survey,  Oct.  1, 
1921.  Pp.  5.  Arguments  for  plan  of  compensation  embodied  in  bill  before  Wis- 
consin legislature,  by  which  employer  would  pay  fixed  sum  per  day  for  each  em- 
ployee laid-off. 

Crowther,  S.  These  workers  set  their  own  pay.  System,  July,  1921.  Pp.  5.  Fixing 
standard  times  and  rates  of  wages  under  the  joint  agreement  in  the  Cleveland 
ladies'  garment  industry. 

Dean,  J.  S.  The  fundamental  unsoundness  of  the  Kansas  Industrial  Court  law. 
Am.  Bar  Assoc.  Journ.,  July  1921.  Pp.  4.  The  law  exceeds  the  limits  of  the 
police  power  in  that  it  assumes  the  right  of  the  state  to  fix  conditions  of  employ- 
ment in  private  industry  in  the  absence  of  a  great  emergency.  The  production  of 
fuel,  food,  and  clothing  cannot  be  "invested  with  a  public  interest"  by  mere  act 
of  the  legislature. 

Douglas,  P.  H.  and  Lamberson,  F.  The  movement  of  real  wages,  1890-1918.  Am. 
Econ.  Rev.,  Sept.,  1921.     Pp.  19. 


752  Periodicals  [December 

Epstein,  A.  Have  American  wages  permitted  an  American  standard  of  living?  A 
review  of  the  important  inquiries  and  their  findings,  1890-1920.  The  Annals,  Sept., 
1921.     Pp.  22. 

Gadsby,  M.  Engineers'  report  on  industrial  waste.  Mo.  Labor  Rev.,  Sept.,  1921. 
Pp.  17. 

Gompebs,  S.  The  Denver  convention — action  and  review.  Am.  Fed.,  Aug.,  1921. 
Pp.  7. 

Greenwood,  E.  International  labor  office — what  it  has  done.  Am.  Fed.,  Sept.,  1921. 
Pp.  5.     Author  is  American  correspondent  of  the  International  Labor  Office. 

Heaton,  H.  The  basic  wage  principle  in  Australian  wages  regulation.  Econ.  Journ., 
Sept.,  1921.  Pp.  11.  The  difficulties  of  paying  a  basic  wage  to  adult  males  equal 
to  the  family  living-cost  figure  arrived  at  by  the  recent  royal  commission. 

Kalet,  A.  Effect  of  the  war  on  working  children  in  Germany.  Mo.  Labor  Rev., 
July,  1921.     Pp.  12. 

Kenagy,  H.  G.  The  prevention  of  labor  turnover.  Administration,  Oct.,  1921.  Pp. 
5.     Consideration  of  the  factors  that  are  amenable  to  control  by  the  management. 

Kbattse,  L.  Trade  union  movement  in  Germany.  Am.  Fed.,  Aug.,  1921.  Pp.  6. 
History  of  the  movement  since  the  revolution  of  November,  1918,  and  summary 
of  the  present  situation. 

Macara,  C.  W.  The  industrial  crisis  and  the  remedy.  Nineteenth  Cent.,  July,  1921. 
Pp.  9.  Chiefly  concerned  with  the  textile  industry,  emphasizes  need  of  coopera- 
tion of  employers  and  operatives.  Author  was  formerly  president  of  Federation 
of  Master  Cotton  Spinners  Associations  and  a  member  of  the  Industrial  Council 
appointed  in  1911. 

MacDonald,  J.  R.  The  conference  of  the  British  Labor  party.  Nation,  Aug.  10, 
1921.  Pp.  2.  The  decisions  of  the  June,  1921,  conference.  The  failure  of  the  coal 
strike  has  turned  British  labor  again  toward  parliamentary  action. 

Mackenzie,  W.  The  British  Industrial  Court.  Intern.  Lab.  Rev.,  July-Aug.,  1921. 
Pp.  10.     Author  is  president  of  the  court. 

Laski,  H.  J.     England's  unemployed.     Survey,  Oct.  15,  1921.     Pp.  2. 

Ledeber,  M.  Social  legislation  in  the  Republic  of  Austria.  Intern.  Lab.  Rev.,  May- 
June,  1921.  Pp.  27.  Concerned  almost  entirely  with  labor  legislation.  Author  is 
chief  of  the  Social  Welfare  Department  in  the  Austrian  Ministry  of  Social  Affairs. 

Owens,  J.  W.  Gunmen  in  West  Virginia.  New  Repub.,  Sept.  21,  1921.  Pp.  3. 
Unionization  has  ceased  to  be  the  controlling  issue;  the  present  phases  of  the 
conflict  are  due  to  the  operators'  use  of  armed  men  to  evict  the  miners. 

Picarjo,  R.  Labour  legislation  in  France  during  and  after  the  war.  Intern.  Lab. 
Rev.,  July-Aug.,  1921.     Pp.  14. 

Rockefeller,  J.  D.,  Jr.  Cooperation  in  industry.  Intern.  Lab.  Rev.,  Apr.,  1921. 
Pp.  14. 

Russell,  C.  E.     The  birth  of  trade  unionism  in  Japan.    Am.  Fed.,  Sept.,  1921.     Pp.  5. 

Ryan,  J.  A.  The  need  of  legal  standards  of  protection  for  labor.  Am.  Labor 
I.egis.  Rev.,  Sept.,  1921.  Pp.  6.  Trade  unionism,  in  face  of  industrial  autocracy 
and  belief  in  efficacy  of  "natural  laws,"  does  not  furnish  sufficient  protection. 


1921]  Labor  and  Labor  Organizations  753 

Saposs,  D.  J.  Out  of  the  beaten  path — the  Denver  convention  of  the  American  Fed- 
eration of  Labor.     Survey,  July  16,  1921.     Pp.  2. 

Scoville,  J.  W.  Cost  of  living  and  wages.  Administration,  Oct.,  1921.  Pp.  4.  Ob- 
jections to  basing  wages  upon  cost  of  living.  For  the  future  the  standard  of 
living  will  have  to  fall  because  of  declining  per  capita  production. 

Shadwell,  A.  The  labor  situation  in  Great  Britain.  Atlantic  Mo.,  Sept.,  1921. 
Pp.  11. 

Squires,  B.  M.  The  National  Adjustment  Commission.  Journ.  Pol.  Econ.,  July, 
1921.  Pp.  28.  Critical  account  of  the  working  of  the  joint  commission  plan  for 
adjustment  of  labor  terms  for  longshoremen  during  the  war  and  later  under  the 
post-war  agreement.  Criticizes  adversely  the  policy  of  the  Shipping  Board  that 
led  to  the  dissolution  of  the  Commission.  The  author  was  for  a  time  executive 
secretary  of  the  Commission. 

Smith,  F.  D.  Police  power  and  the  Kansas  Industrial  Court.  Am.  Bar  Assoc. 
Journ.,  Aug.,  1921.  Pp.  5.  The  necessity  of  uninterrupted  production  and  dis- 
tribution of  fuel,  food,  and  clothing  and  of  the  enforcement  of  reasonable  con- 
ditions of  employment  brings  the  provisions  of  the  Kansas  law  insuring  these 
things  within  the  police  power  of  the  state. 

Stecker,  M.  L.     Family  budgets  and  wages.     Am.  Econ.  Rev.,  Sept.,  1921.     Pp.  20. 

Sweet,  R.  L.  Fifty  years  without  a  strike.  Am.  Fed.,  Sept.,  1921.  Pp.  3.  Author 
is  secretary  of  a  company  which  has  been  dealing  with  a  union   for  thirty  years. 

Ta  Chen.    Labor  unrest  in  China.     Mo.  Labor  Rev.,  Aug.,  1921.     Pp.  15. 

.     Wages  and  hours  of  labor  in  five  Chinese  cities,  1917  and  1920.     Mo. 

Labor  Rev.,  Aug.,  1921.     Pp.  13.     Largely  statistical,  with  informing  comments. 

Turner,  V.  B.    Labor  unrest  in  Egypt.     Mo.  Labor  Rev.,  Aug.,  1921.     Pp.  19. 

.    Labor  unrest  in  India.     Mo.  Labor  Rev.,  July,  1921.     Pp.  20. 

Waggaman,  M.  T.    Labor  unrest  in  Canada.     Mo.  Labor  Rev.,  July,  1921.     Pp.  12. 

Warner,  A.  West  Virginia— industrialism  gone  mad.  Nation,  Oct.  15,  1921.  Pp.  2. 
Conflict  is  due  to  denial  by  employers  of  right  to  join  the  union. 

Whitaker,  C.  H.  The  building  guilds  of  England.  Nat.  Munic.  Rev.,  July,  1921. 
Pp.  5.  The  building  trades  unions  have  been  successful  with  the  contracts  they 
have  so  far  undertaken  for  the  construction  of  houses,  in  spite  of  opposition  from 
the  government.  The  author  is  editor  of  the  Journal  of  American  Institute  of 
Architects. 

Whitney,  A.  L.     Labor  unrest  in  Japan.     Mo.  Labor  Rev.,  July,  1921.     Pp.  11. 

Wolfe,  F.  E.  A  survey  of  profit-sharing  and  bonuses  in  Chicago  printing-plants. 
Journ.  Pol.  Econ.,  July,  1921.     Pp.  22. 

Yves-Guyot.  Les  salaires  et  les  prix.  Journ.  des  Econ.,  July  15,  1921.  Pp.  14. 
Raising  wages  to  correspond  with  rising  index  numbers  finally  produced  indus- 
trial stagnation  through  checking  demand  and  refusals  to  accept  the  wage  re- 
ductions that  would  make  price  reductions  possible  have  prolonged  the  depression. 
Cites  American  operatives  and  British  miners  as  examples. 

Action  towards  the  alleviation  of  unemployment.  Lab.  Gaz.  (Can.),  Aug.,  1921. 
Pp.  4. 


754  Periodicals  [December 

Action  of  various  countries  upon  decisions  of  International  Labour  Conferences. 
Lab.  Gaz.  (Can.),  Aug.,  1921.    Pp.  4. 

The  adjustment  of  wages  to  the  cost  of  living.  Intern.  Lab.  Rev.,  July-Aug.,  1921. 
Pp.  1'4.  The  principal  schemes  followed  in  the  several  industrial  countries  for 
automatic  changes  in  wages  with  changes  in  the  index  number  of  living  costs. 

Adjustment  of  wages  in  accordance  with  cost  of  living.  Lab.  Gaz.  (London),  Aug., 
1921.  Pp.  2.  Estimates  that  2,750,000  workers  in  Great  Britain  are  covered  by 
agreements  between  employers  and  unions  providing  for  automatic  adjustment 
of  wages  to  index  numbers.     Gives  summaries  of  the  principal  agreements. 

Annual  convention  of  the  American  Federation  of  labor — synopsis  of  proceedings  of 
the  forty-first  meeting,  at  Denver,  Colorado.    Lab.  Gaz.  (Can.),  July,  1921.     Pp.  9. 

Apprenticeship  in  Canada — notes  on  recent  developments  and  prevailing  practice. 
Lab.  Gaz.   (Can.),  July,  1921.     Pp.  8. 

British  coal  miners'  strike,  1921.     Mo.  Labor  Rev.,  Aug.,  1921.     Pp.  10. 

Conciliation  and  arbitration  in  collective  labor  disputes  in  France.  Intern.  Labor 
Rev.,  July-Aug.,  1921.     Pp.  13. 

Decisions  of  the  United  States  Railroad  Labor  Board  respecting  working  conditions 
and  decreases  in  rates  of  wages  for  railroad  employees.  Lab.  Gaz.  (Can.),  July, 
1921.     Pp.  10. 

Employee  representation  in  the  American  Multigraph  Company.  Mo.  Labor  Rev., 
Julv,  1921.     Pp.  4.     Two  years  of  successful  operation  under  the  Leitch  plan. 

The  end  of  the  coal  dispute.  Nation,  July  27,  1921.  Pp.  2.  The  terms  of  settle- 
ment of  the  British  coal  strike,  as  issued  by  the  Board  of  Trade,  and  the  letter 
of  the  executive  officers  of  the  Miners'  Federation  urging  acceptance  of  these 
terms  by  their  members. 

Further  action  towards  the  alleviation  of  unemployment.  Lab.  Gaz.  (Can.),  Sept., 
1921.     Pp.  4. 

The  growth  of  trade  unionism  since  1913.  Intern.  Lab.  Rev.,  July-Aug.,  1921.  Pp. 
32.    Gives  growth  by  countries;  a  list  of  sources  is  appended. 

Industrial  employment.  Special  Letter,  Oct.  8,  1921.  Committee  on  Economic  Re- 
search, Harvard  Univ.     Pp.  7. 

The  International  Labour  Office  and  the  protection  of  children.  Intern.  Lab.  Rev., 
July-Aug.,  1921.     Pp.  23. 

Recent  labor  agreements  and  decisions.  Mo.  Labor  Rev.,  July,  1921.  Pp.  17.  In- 
cludes the  June,  1921,  decisions  of  the  United  States  Railroad  Labor  Board  re- 
ducing wages. 

Symposium.  Stop-watch  time  study,  an  indictment  and  a  defense.  Bull.  Taylor 
Soc,  June,  1921.  Pp.  38.  Issue  is  whether  the  best  methods  and  standard  times 
can  be  better  determined  by  micro-motion  study  or  the  older  stop-watch  time  study. 

Trades  and  Labour  Congress  of  Canada — synopsis  of  the  proceedings  of  the  thirty- 
seventh  annual  convention.     Lab.  Gaz.   (Can.),  Sept.,  1921.     Pp.  24. 

Unemployment  survey,  1920-1921.  with  standard  recommendations.  Am.  Labor 
Legis.  Rev.,  Sept.,  1921.     Pp.  29. 

Workers'  education  in  Italy.  Intern.  Lab.  Rev.,  July-Aug.,  1921.  Pp.  11.  Deals 
largely  with  schools  for  trade  unionists  and  workers'  colleges. 


1921]  Public  Finance  755 

Public  Finance 
(Abstracts  by  Charles  P.  Huse) 
Adams,  T.   S.     Fundamental  problems  of  federal  income   taxation.     Quart.   Journ. 
Econ.,  Aug.,  1921.     Pp.  30.     Believes  33  per  cent  the  highest  practical  rate. 

Akebman,  C.  Some  aspects  of  war  finance.  Pacific  Rev.,  Sept.,  1921.  Pp.  17.  Con- 
siders the  incidence  of  the  war  burden. 

Allen,  J.  E.    Rates  and  taxes.    Fortn.  Rev.,  Mar.,  1921. 

Badulesco,  V.  V.  Le  prelevement  sur  le  capital  en  Allemagne  comme  moyen  de, 
liquidation  des  charges  financieres  de  la  guerre.  Rev.  de  Sci.  et  de  Legis.  Finan., 
Apr.-June,  1921.  Pp.  23.  Believes  this  measure  will  help  in  solving  Germany's 
financial  problems. 

Bonnard,  R.  Les  finances  locales  et  la  reforme  des  impots  locaux.  Rev.  de  Sci.  et 
de  Legis.  Finan.,  Apr.-June,  1921.  Pp.  28.  Studies  methods  of  relieving  the 
burden  which  the  war  has  placed  on  local  as  well  as  central  governments. 

Caldwell,  J.  H.  The  proposal  to  subject  income  from  state  and  municipal  securi- 
ties to  federal  income  tax.  Savings  Banks  Mo.  Journ.,  Aug.,  1921.  Pp.  5.  Be- 
lieves McFadden  amendment  should  be  altered  if  it  is  to  remove  the  evil  of  tax 
exemption. 

Cassat,  D.  B.  A  unique  solution  of  the  delinquent-tax  problem.  Am.  City,  June, 
1921.     Pp.  3. 

Chlepner,  B.  S.  Le  nouveau  regime  fiscal  de  V Allemagne.  Rev.  de  l'lnst.  de  Soc, 
May,  1921.  Pp.  36.  The  revolutionary  changes  in  Germany's  tax  system  were 
made  hastily,  have  led  to  much  fraud  and  evasion,  and  require  modification. 

Estcouet,  R.  Why  not  a  sales  tax?  South  Atlantic  Quart.,  July,  1921.  Pp.  10. 
Believes  it  is  contrary  to  existing  tax  policies. 

Fry,  W.  T.  Britons  overseas  and  the  income  tax.  United  Empire,  July,  1921. 
Pp.  4.     Explains  England's  method  of  taxing  her   subjects   residing   abroad. 

Gini,  C.  Problemes  financiers  d'apres  guerre.  Scientia,  June-Aug.,  1921.  Appear- 
ing in  three  successive  issues,  these  articles  deal  respectively  with  public  debts,  taxes 
on  capital,  and  Rignano's  project  for  heavier  inheritance  taxes  on  property  in- 
herited, not  saved,  by  the  decedent. 

Hayes,  F.  M.  How  much  inheritance  tax?  Journ.  Am.  Bankers  Assoc,  Sept.,  1921. 
Pp.  2.     A  survey  of  the  history  and  present  system  of  inheritance  taxes. 

King,  C.  L.  Taxation  that  will  not  impair  business.  The  Annals,  Sept.,  1921.  Pp.  9. 
Prefers  graduated  corporation  tax  to  sales  tax. 

Lauzanne,  S.  What  the  French  taxpayer  pays.  Annalist,  Sept.  19,  1921.  Pp.  2. 
A  useful  description  of  the  French  tax  system. 

Magni,  E.  La  pressione  delle  imposte  dirette  in  Italia.  Riv.  di  Pol.  Econ.,  No.  V., 
1921.     Pp.  18. 

Page,  T.  W.  Colonial  tariffs  a  menace  to  peace.  Am.  Rev.  Rev.,  Sept.,  1921.  Pp.  6. 
Reviews  the  existing  systems  and  makes  a  plea  for  the  open  door  policy. 

Potter,  A.  G.  Virginia-West  Virginia  debt  dispute.  Journ.  Account.,  Sept.,  1921. 
Pp.  16.  Describes  the  method  used  in  calculating  West  Virginia's  share  of  the 
debt 


756  Periodicals  [December 

Ross,  N.  F.  The  problem  of  reducing  the  tax  exempt  evil.  Annalist,  Aug.  8,  1921. 
Pp.  2.    Traces  the  history  of  the  problem  and  discusses  the  McFadden  amendment. 

Scanga,  G.  La  denuncia  del  trattati  di  commercio  e  Vapprovazione  della  nuova 
tariffa  doganale.     Tempo  Econ.,  June-July,  1921.     Pp.  3. 

Sells,  E.  W.  Why  not  lessen  the  evils  of  present  taxation?  Journ.  Account.,  Sept., 
1921.  Pp.  6.  Advocates  repeal  of  surtax  and  excess-profits  tax  and  placing  of  a 
tax  on  sales  to  the  consumer. 

Sensiki,  G.  Le  equazioni  dell'  equilibrio  economico-finanziario,  per  un  punto  dato, 
nel  caso  delle  imposte  e  in  un  regime  di  libera  concorrenza  economica.  Riv.  Ital. 
di  Soc,  Oct.-Dec,  1920.     Pp.  18. 

Staub,  W.  A.  Fallacies  of  the  sales  tax.  Journ.  Account.,  Aug.,  1921.  Pp.  10. 
Argues  against  the  tax  and  in  favor  of  reduction  of  federal  expenditures. 

Viallate,  A.     Le  mouvement  protectionniste  aux  Etats-Unis.     L'Econ.  Franc.,  Aug. 

6,   1921.     Pp.   3.     The   United   States   with  large   manufacturing   interests   should 

adopt   a  more  moderate   protectionist  policy,  if   she   wishes   to   keep   her    foreign 

markets  for  these  goods. 
Vigoeelli,   R.     La  difesa  fiscale  e  giuridica  della  piccola  proprieta.     Riv.   Intern., 

May-June,  1921.    Pp.  6,  12. 

Vines,  J.  The  international  aspect  of  tariff  legislation.  Pacific  Rev.,  Sept.,  1921. 
Pp.  11.  The  change  in  the  character  of  our  exports  now  lays  us  open  to  eco- 
nomic retaliation. 

— .      Tax    reform    proposals    at    the    Illinois    Constitutional    Convention. 

Journ.  Pol.  Econ.,  July,  1921.  Pp.  4.  Proposes  an  income  tax  with  lower  rates 
on  income  not  derived  from  property. 

Vietue,  G.  O.  New  phases  of  the  classified  property  tax.  Journ.  Pol.  Econ ,  July, 
1921.  Pp.  5.  While  adopting  a  lower  rate  for  intangible  personalty,  in  the  dif- 
ferent districts  as  the  rate  on  tangible  property  varies. 

Williamson,  K.  M.  The  literature  on  the  sales  tax.  Quart.  Journ.  Econ.,  Aug., 
1921.  Pp.  16.  A  critical  review  of  the  opinions  of  different  groups  and  different 
individuals. 

The  Emergency  Tariff  laiv.  Bull.  Nat.  Assoc.  Wool  Manufacturers,  July,  1921. 
Pp.  15.    Gives  the  history  and  text  of  the  act. 

Essential  elements  of  the  federal  revenue  and  taxation  problem.  Econ.  World,  Sept. 
10,  1921.     Pp.  3. 

Tax-exempt  securities.  Weekly  Rev.,  Aug.  13,  1921.  Pp.  2.  While  the  abolition  of 
tax-exempt  securities  would  be  desirable,  the  passage  of  the  necessary  constitu- 
tional amendment  would  probably  be  strongly  opposed  by  the  states  and  cities. 

Insurance  and  Pensions 
(Abstracts  by  Henry  J.  Harris) 
Blanck,   W.     Die    Umgestaltung    des   Geld-   und   Kapitaknarkts    und  die    dents, the 
Sachversicherung.     Zeitsch.  f.  d.  ges.  Versicherungswis.,  July,  1921.     Pp.   7.     The 
moment  that  paper  is  substituted  for  gold,  the  foundation  of  property  insurance 
is  destroyed. 
Bohmer,  P.  E.     Versicherungsgeometrie.     Zeitsch.  f.  d.  ges.  Versicherungswis.,  July, 
1921.     Pp.  14. 


1921]  Insurance  and  Pensio'ns  757 

Commons,  J.  R.  Unemployment:  compensation  and  prevention.  Survey,  Oct.  1, 
1921.  Pp.  5.  The  Huber  bill  for  the  insurance  and  prevention  of  unemployment 
(Wisconsin  legislature)  proposes:  waiting  period  3  days;  an  employee  of  6  months 
standing  when  discharged  must  be  paid  by  employer  one  dollar  a  day  for  thir- 
teen weeks,  state  pays  ten  cents  a  day  for  administration;  employers  form  mutual 
insurance  company  to  carry  risk.  Plan  offers  inducement  to  employer  to  save 
money  by  reducing  unemployment.  Author  describes  European  systems  of  un- 
employment insurance. 

Cox,  F.  J.  An  analysis  of  the  Untermyer  "disclosures"  about  fire  insurance.  Econ. 
World,  July  16,  1921.     Pp.  3.     The  criticisms  are  without  foundation. 

Dorstling,  T.  Die  Lebensversicherungsschein  als  hinkendes  Inhaberpapier.  Zeitsch. 
f.  d.  ges.  Versicherungswis.,  July,  1921.     Pp.  11. 

Doucet,  R.  Les  assurances  sociales.  Monde  Econ.  (Paris),  Sept.  1,  1921.  Pp.  3. 
Opposes  the  bill  introduced  by  the  minister  of  labor  providing  for  sickness,  in- 
validity, old  age,  maternity,  etc.,  insurance.  Contributions  put  at  ten  per  cent  of 
earnings,  paid  half  by  employer  and  half  by  insured. 

Duttman.  Die  Weiterentrcicklung  der  Invaliden-  und  Hinterbliebenen-  Versicher- 
ung.  Zeitsch.  f.  d.  ges.  Versicherungswis.,  July,  1921.  Pp.  10.  Present  situation 
of  the  carriers  a  grave  one.  Recommends  temporary  changes  in  the  law  until 
conditions  become  stabilized. 

Faiechild,  C.  W.  Fatal  defects  in  the  "reciprocal"  or  "inter-insurance"  plan  of  in- 
surance. Econ.  World,  Aug.  20,  1921.  Pp.  2.  Shows  the  dangers  involved  in 
this  system. 

Heez,  F.  Kapitalertragsteuer  und  Lebensversicherung.  Zeitsch.  f.  d.  ges.  Versiche- 
rungswis., July,  1921.  Pp.  10.  Act  came  into  force  March  31,  1920,  and  its  ap- 
plication to  life  insurance  has  produced  an  involved  state  of  affairs. 

Kisch,  W.  Einfluss  der  erhbhten  Versicherungsleistung  auf  die  Pramie,  insbeson- 
dere  bei  der  Haftpflicht-versicherung.  Zeitsch.  f.  d.  ges.  Versicherungswis.,  July, 
1921.  Pp.  9.  The  revolutionary  changes  in  the  value  of  money  mean  either  that 
the  premium  must  be  increased  or  the  contract  abrogated  in  the  case  of  liability 
insurance. 

Liesse,  A.  Un  projet  d'assurances  sociales  obligatoires.  L'Econ.  Fran?.,  July  17, 
Sept.  3,  1921.  Pp.  3,  3.  Analysis  of  the  government's  bill  with  the  conclusion 
that  it  will  result  in  nothing  but  disillusion,  like  the  retirement  law. 

McFee,  J.  R.  Credit  and  bequest  insurance.  Econ.  World,  Sept.  10,  1921.  Pp.  2. 
Where  credit  is  based  on  character  alone,  life  insurance  is  needed.  The  uncer- 
tainties connected  with  wills  make  life  insurance  a  surer  method;  a  life  policy  is 
in  effect  a  will  that  cannot  be  broken. 

Middleton,  E.  Underwriting  problems  in  connection  with  use  and  occupancy  insur- 
ance. Econ.  World,  July  30,  1921.  Pp.  3.  Business  interruption  indemnity  prob- 
lems. 

Sturm,  J.  Die  gesundheitlich  minderwertigen  Leben  und  die  Versicherungsmedizin. 
Zeitschr.  f.  d.  ges.  Versicherungswis.,  July,  1921.  Pp.  13.  Summary  of  the  ex- 
perience of  a  German  company  dealing  with  sub-standard  lives  only.  Gives  in- 
fluence of  various  disabilities;  e.g.,  tuberculosis,  war  wounds,  etc.,  on  mortality. 

Swansea,  S.  T.     Federal  income  tax  and  inheritance  tax  rulings  relating  to  life  in- 


758  Periodicals  [December 

surance.  Econ.  World,  Sept.  17,  1921.  Pp.  3.  Policy  holders,  including  the 
smallest,  pay  3%  per  cent  of  their  premiums  and  12  per  cent  of  their  dividends  in 
state  and  federal  taxes. 

Voshell,  J.  K.  The  remarkable  growth  of  industrial  life  insurance  in  the  United 
States.  Econ.  World,  July  23,  1921.  Pp.  2.  In  forty  years  the  total  policies  have 
increased  65  times  and  amount  of  insurance  has  grown  26  times,  from  one  and  one 
half  billion  to  forty  billion. 

Watson,  A.  W.  The  financial  effects  of  the  amended  unemployment  insurance  law 
proposed  by  the  British  government.  Econ.  World,  July  9,  1921.  Pp.  2.  Sum- 
mary of  Sir  Alfred  Watson's  report;  he  estimates  the  total  expenditure  proposed 
for  1921-1922  to  be  £47,070,000,  with  a  deficit  of  £16,000,000  to  be  borrowed  from 
the  treasury.     The  two  following  years  should   reduce  this. 

Committee  on  unemployment  insurance  in  agriculture.  Lab.  Gaz.  (London),  July, 
1921.  P.  1.  Summarizes  report  which  recommends  no  action  on  proposal  to  in- 
clude agricultural  workers  under  the  insurance  act.  Both  employers  and  workers 
oppose  such  insurance  whether  compulsory  or  voluntary. 

Legal  aspects  of  workmen's  compensation  insurance  in  Great  Britain.  Econ.  World, 
Aug.  27,  1921.  Pp.  3.  Judicial  interpretation  of  such  clauses  as  "in  the  course  of 
the  employment,"  etc. 

Sickness  among  New  York  state  factory  workers  in  1919.  Econ.  World,  Sept.  24, 
1921.  Pp.  3.  The  investigation  of  the  state  department  of  labor  showed  that  the 
per  capita  loss  of  working  time  was  1.1  days  in  six  months  and  the  wage  loss  was 
$4.20. 

Pauperism,  Charities,  ancLRelief  Measures 

(Abstracts  by  George   B.  Mangold) 
Becker,  J.   D.     Big  Brothers   and  Big  Sisters.     Cath.   Charities   Rev.,  June,   1921. 
Gives  an  excellent  epitome  of  the  principles  that  should  govern  all  Big  Brothers 
and  Big  Sisters  work. 

Clark,  W.  W.  Success  records  of  prisoners  and  delinquents.  Journ.  Delin.,  July, 
1921.  Presents  facts  relating  to  the  success  of  various  institutions  in  improving 
their  inmates.  The  average  success  record  for  eight  penitentiaries  and  reforma- 
tories was  73.4  per  cent,  and  for  four  industrial  schools  for  girls  69.1  per  cent. 
The  percentage  of  successful  cases  runs  considerably  higher  for  the  normal  than 
for  the  feeble-minded. 

.    Supervised  conduct  response  of  delinquent  boys.    Journ.  Delin.,  May, 

1921.  Presents  the  results  of  a  year's  observation  of  143  delinquent  boys  in  re- 
gard to  conduct-response.  Retardation,  temperament,  and  home  conditions  ap- 
parently influenced  the  results  but  little.  Sex  offences  and  race  were  factors  of 
some  importance  and  a  better  response  was  obtained  from  those  of  low  than  of 
high  mentality. 

Feugeure,  E.  L'assistance  publique  a  Paris  en  1921.  L'Econ.  Franc.,  Aug.  20,  1921. 
Brief  analysis  of  the  expenditures  in   Paris   for  philanthropic  purposes. 

Foster,  Mrs.  K.  K.  and  Burlingame,  C.  M.  A  study  of  children  in  institutions  in 
Los  Angeles.  Journ.  Delin.,  July,  1921.  Confirms  other  studies  of  a  similar  char- 
acter.    Children  in  institutions   are  not  orphans  or  half  orphans   largely,  but   in 


1921]  Statistics  759 

most  cases  both  parents  are  living.  Concludes  that  such  institutions  fail  in  part 
to  meet  the  real  needs  of  the  child  and  that  they  should  cooperate  more  closely 
with  other  social  agencies. 

Goff,  F.  H.  Evils  of  "the  dead  hand";  obsolescent  charities  and  endowments.  Trust 
Companies,  June,  1921.  An  argument  against  inflexible  charitable  endowments. 
Gives  many  instances  of  endowments  that  have  been  rendered  useless  because  of 
changed  conditions,  and  urges  methods  of  reducing  the  tyranny  of  the  "dead 
hand"  in  controlling  the  service  of  charitable  gifts. 

Report  of  annual  'meeting  of  London  Charity  Organization  Society.  Charity  Organ. 
Rev.,  June,  1921.  Contains  a  brief  statement  of  the  program  and  problems  of  the 
London  Society. 

Report  of  proceedings  at  conference  of  Charity  Organization  and  kindred  societies. 
Charity  Organ.  Rev.,  July,  1921.  Among  the  subjects  discussed  were  such  topics 
as  education  of  ex-service  men,  housing  and  day  nurseries.  There  is  a  short  but 
excellent  account  of  the  work  formerly  promoted  by  Miss  Octavia  Hill. 

Socialism  and  Co-operative  Enterprises 

Feis,  H.     Beer's  "History  of  British  Socialism."    Quart.  Journ.  Econ.,  Aug.,  1921. 

Laskine,  E.  Les  conflits  de  tendances  du  socialism  franqais.  Ref.  Soc,  June, 
1921.     Pp.  22. 

Rocco,  M.  Esperimenti  d'economia  socialista.  Riv.  di  Pol.  Econ.,  No.  V,  1921. 
Pp.  10. 

Zagohsky,  S.  L'dvolution  actuelle  du  bolchSvisme.  Rev.  d'Econ.  Pol.,  May-June, 
1921.     Pp.  26. 

The  results  of  the  economic  policy  of  communism  for  the  first  nine  months  of  1920. 
Russian  Econ.,  Jan.,  1921. 

Statistics 
(Abstracts  by  Horace  Secrist) 
Barton,  D.  M.     Women's  minimum  wages.    Journ.  Royal  Stat.  Soc,  July,  1921.     Pp. 
30.     "The  aim  of  this  paper  is  to  make  such  comparison   as  is  possible  between 
the  wages  of  women  fixed  by  trade  boards  and  enforceable  in  a  court  of  law  and 
those  voluntarily  agreed  upon  between  employers  and  employees." 

Bivins,  P.  A.  The  ratio  chart  and  its  application.  II  and  III.  Industrial  Man., 
Aug.,  Sept.,  1921.  Pp.  6,  7.  Continuation  of  the  series  of  articles  begun  in  the 
July  number  of  Industrial  Management. 

Boutroux,  P.  Travaux  statistiques  relatifs  aux  mouvements  de  nos  effectifs  pendant 
la  guerre.     Journ.  Soc.  de  Stat,  de  Paris,  June,  1921.     Pp.  10. 

Clark,  W.  The  Gantt  chart,  II.  Man.  Engg.,  Sept.,  1921.  Pp.  6.  A  continuation 
of  the  earlier  article  in  this  series. 

Davis,  R.  M.  Electrical  statistics  as  a  barometer  of  industrial  activity.  Quart.  Pub. 
Am.  Stat.  Assoc,  Sept.,  1921.  Pp.  6.  The  monthly  statistics  of  the  central  elec- 
tric station  industry,  published  in  the  Electrical  World,  indicate  changes  in  in- 
dustrial activity  in  different  sections  of  the  country  and  in  the  country  as  a  whole. 


760  Periodicals  [December 

Frickey,  E.  An  index  of  industrial  stock  prices.  Rev.  Econ.  Stat.,  Aug.,  1921. 
Pp.  14.  An  interesting  article  in  the  light  of  both  method  and  comparison  with 
other  indexes  of  stock  prices.  "In  constructing  our  indices  the  purpose  was  not 
to  measure  the  aggregate  money  cost  of  a  selected  group  of  shares  or  to  compare 
price  levels  at  widely  separated  dates;  we  desired,  rather,  to  secure  indices  rep- 
resenting as  accurately  as  possible  those  long-time  swings,  or  cyclical  movements, 
in  stock  prices  which  indicate  the  alternation  of  general  speculative  activity  and 
depression." 

Greenwood,  G.  W.  Losing  a  profit  through  averages.  Man.  Engg.,  Sept.,  1921. 
P.  1.     An  example  of  illogical  inference  from  averages. 

Hookstadt,  C.  Discussion  of  an  American  accident  table.  Mo.  Labor  Rev.,  July, 
1921.  A  description  of  a  recent  American  accident  table,  and  a  comparison  of  the 
same  with  Rubinow's  standard  accident  table. 

Kincer,  J.  B.  Computing  the  cotton  crop  from  weather  records  and  ginning  re- 
ports.    Mo.  Weather  Rev.,  May,  1921.     Pp.  5. 

Kitchin,  J.  The  position  of  gold.  Rev.  Econ.  Stat.,  Aug.,  1921.  Pp.  7.  "This 
article  will  be  an  attempt  to  look  into  the  more  immediate  future  of  the  world's 
output  of  gold  and  to  deal  with  its  consumption,  and  more  particularly  the 
amount  of  it  available  for  monetary  uses." 

Moore,  H.  L.  Generating  cycles  reflected  in  a  century  of  prices.  Quart.  Journ. 
Econ.,  Aug.,  1921.  Pp.  20.  A  mathematical  analysis  after  the  methods  of  Profes- 
sors Schuster  and  Turner  of  Sauerbeck's  index  numbers  from  1818  to  1913  from 
which  the  author  concludes  that  there  have  been  real  cycles  of  approximately  eight 
years.  The  clue  to  this  eight-year  cycle  is  found  in  the  eight-year  crop  yield  cycle 
which  Professor  Moore  has  found  characterized  the  United  States,  England,  and 
France. 

Peake,  E.  G.  The  relationship  between  the  American  and  French  exchanges  and! 
the  rates  of  interest  and  discount.  Bankers'  Mag.  (London),  Aug.,  1921.  Pp.  12. 
An  interesting  study  in  which  are  given  correlation  coefficients.  Concludes:  "(1) 
That  relationships  exist  between  the  United  Kingdom-United  States  of  America 
and  United  Kingdom-French  exchanges,  on  the  one  hand,  and  the  rate  of  interest 
on  floating  money,  the  rates  of  discount  on  three  and  six  months'  bank  bills,  and 
the  differences  between  these  rates  on  the  other.  (2)  That  relationships  exist  be- 
tween the  United  Kingdom-United  States  of  America  and  United  Kingdom-French 
exchanges.  (3)  That  peculiarities  in  these  relationships  occur,  which  could  only 
be  explained  by  those  in  intimate  touch  with  the  money  market." 

Persons,  W.  M.  Fisher's  formula  for  index  numbers.  Rev.  Econ.  Stat.,  May,  1921. 
Pp.  10. 

Reed,  L.  J.  Fitting  straight  lines.  Metron,  Apr.,  1921.  Pp.  8.  A  clear  statement 
and  solution  of  the  problem  of  fitting  a  straight  line  to  a  set  of  observed  points. 

Secrist,  H.  Statistics  and  the  scientific  method.  Administration,  Sept.,  1921.  Pp.  6. 
An  explanation  of  statistics  and  statistical  methods  in  terms  of  scientific  method. 

Sydenstricker,  E.  and  King,  W.  I.  The  classification  of  the  population  according 
to  income.     Journ.  Pol.  Econ.,  July,  1921.     A  description  and  explanation  of  the 

method   by  which  the  authors   have   developed   "anunain   scales"   from   income   and 
expenditure  records  of  South  Carolina  cotton-mill  operatives,  together  with  valu- 


1921]  Statistics  761 

able  critical  comments  on  the  practical  problems   arising  in   connection   with   the 
computation  of  family  incomes. 

Young,  A.  A.  The  measurement  of  changes  of  the  general  price  level.  Quart. 
Journ.  Econ.,  Aug.,  1921.  Pp.  17.  A  fundamental  inquiry  into  the  meaning  of 
the  expression  "the  general  level  of  prices"  and  of  the  most  appropriate  method 
of  measuring  it. 

Yui-e,  G.  U.  On  the  time-correlation  problem,  with  especial  reference  to  the  variate- 
difference  correlation  method.  Journ.  Royal  Stat.  Soc,  July,  1921.  Pp.  30.  A 
valuable  critical  review  of  the  variate-difference  method  of  measuring  correlation. 

Expresion  grafica  de  hechos  economicos.  Econ.  Argentina,  Apr.,  May,  1921.  Pp. 
16.  An  interesting  series  of  graphic  charts  and  tables  showing  among  other 
things  circulation  of  paper  money  in  Argentina,  1882-1921. 

Measuring  the  cost  of  living.    Economist  (London),  Sept.  3,  1921.     Pp.  2. 

The  thirteenth  census  of  Scotland.     Economist  (London),  Sept.  10,  1921.     Pp.  2. 

Wheat  prices.  Special  report  of  the  Federal  Reserve  Agent  at  Minneapolis,  Sept. 
26,  1921.  Pp.  6.  An  interesting  study  with  charts  of  wheat  prices  in  Minneapolis, 
and  of  the  gain  or  loss  which  results  from  holding  wheat  for  late  markets  rather 
than  selling  at  the  time  of  harvest.  , 


NOTES 

The  annual  meeting  of  the  American  Economic  Association  will  be  held 
in  Pittsburgh,  Pennsylvania,  December  27-30,  with  headquarters  at  the  Wil- 
liam Penn  Hotel.  According  to  the  tentative  plans  for  the  program,  the 
meeting  will  be  opened  on  Tuesday  afternoon,  December  27,  by  papers  on 
"The  business  cycle"  by  W.  C.  Mitchell  and  W.  M.  Persons.  At  the  evening 
session,  J.  H.  Hollander  of  the  American  Economic  Association  and  C.  W. 
Doten  of  the  American  Statistical  Association  will  deliver  presidential  ad- 
dresses. At  the  morning  session  on  Wednesday,  December  28,  "The  rad- 
road  situation"  will  be  the  subject,  with  papers  by  Walker  D.  Hines  and 
L.  G.  McPherson  and  discussion.  The  afternoon  meeting  will  begin  with  a 
paper  on  "The  nation's  finances"  by  E.  R.  A.  Seligman,  to  be  followed  by 
a  second  paper  and  discussion.  "The  labor  problem"  will  be  the  subject  of 
the  evening  session,  papers  to  be  presented  by  G.  E.  Barnett  and  W.  M. 
Leiserson.  On  Thursday,  December  29,  there  will  be  two  joint  sessions  with 
the  American  Statistical  Association.  The  subjects  will  be:  at  the  morning 
session,  "Industrial  accidents,"  E.  H.  Downey  giving  the  leading  paper; 
at  the  afternoon  session,  "The  national  income,"  papers  by  F.  R.  Macaulay 
and  Oswald  Knauth.  There  will  probably  be  Round  Tables  on  the  teaching 
of  elementary  economics,  on  marketing,  and  on  economic  theory. 

Arrangements  have  been  made  with  the  railway  officials  for  reduced  fares 
for  the  members  attending  the  annual  meeting,  provided  the  required  num- 
ber (350)  present  certificates. 

The  following  associations  will  also  meet  in  Pittsburgh  at  the  same  time: 

American  Statistical  Association. 

American  Political  Science  Association. 

American  Sociological  Society. 

American  Association  of  University  Instructors  in  Accounting. 

American  Farm  Economics  Association. 

American  Association  of  University  Professors. 

The  following  names  have  been  added  to  the  membership  of  the  American 
Economic  Association  since  the  first  of  August: 

Angus,  W.  N.,  161  West  105th  St.,  New  York  City. 

Ayres,  Colonel  L.  P.,  Cleveland  Trust  Co.,  Cleveland,  Ohio. 

Boardman,  B.,  195  Broadway,  New  York  City. 

Brizzie,  J.  F.,  923  Chestnut  St.,  Chattanooga,  Tenn. 

Buechel,  F.  A.,  Texas  Agri.  Experiment  Station,  College  Station,  Tex. 

Burney,  W.  J.,  517  E.  Washington  St.,  Iowa  City,  la. 

Cady,  T.  S.,  Fidelity  National  Bank  &  Trust  Co.,  Kansas  City,  Mo. 

Elston,  J.  S.,  Travelers  Insurance  Co.,  Hartford,  Conn. 

Englund,  E.,  Kansas  Agricultural  College,  Manhattan,  Kans. 

Evans,  Rev.  W.  W.,  Northbridge  Center,  Mass. 

Gardner,  E.  H.,  University  of  Wisconsin,  Madison,  Wis. 

Goodhue,  H.  E.,  Sherbrooke,  Quebec,  Canada. 


1921]  Notes  763 

Goodrich,  W.  S.,  282  8th  St.,  Oakland,  Calif. 

Gordon,  S.  O.,  Duanesburg,  N.  Y. 

Harvey,  Rev.  E.  D.,  Changsha,  Hunan,  China. 

Hood,  F.,  Box  832,  La  Crosse,  Wis. 

Hourwieh,  I.,  Arnold  Place  Apts.,  Dayton,  Ohio. 

Howe,  R.  B.,  231  W.  Madison  St.,  Chicago,  111. 

Huang,  K.,  24  A  Kiangse  Rd.,  Shanghai,  China. 

Hurlin,  R.  G.,  Russell  Sage  Foundation,  New  York  City. 

Jeter,  H.  R.,  505  West  5th  St.,  North  Platte,  Neb. 

Johnson,  O.  H.,  320  Niagara  St.,  Sheboygan,  Wis. 

Lee,  F.  E.,  American  Consulate  General,  Shanghai,  China. 

Leonard,  R.  H.,  Wampanoag  Mills,  Fall  River,  Mass. 

Lewisohn,  A.,  61  Broadway,  New  York  City. 

Luck,  T.  S.,  20  Kirkwood  Hall,  Indiana  University,  Bloomington,  Ind. 

McCracken,  H.  T.,  University  of  Wisconsin,  Madison,  Wis. 

Max,  W.  D.,  208  Sterling  St.,  Brooklyn,  N.  Y. 

Maynard,  H.  H.,  State  College  of  Washington,  Pullman,  Wash. 

Mertzke,  A.  G.,  University  of  Wisconsin,  Madison,  Wis. 

Noriyosha  Ota,  5  Shunzakimachi,  Fukawagawaku,  Tokyo,  Japan. 

Okinaka,  P.  T.,  102  West  123d  St.,  New  York  City. 

Piper,  C.  B.,  204  Prospect  St.,  Belmont,  Mass. 

Russel,  A.  W.,  Russel  Wheel  &  Foundry  Co.,  Detroit,  Mich. 

Smith,  H.  L.  H.,  35  Harvard  St.,  AVorcester,  Mass. 

Spruill,  C.  P.  Jr.,  Exeter  College,  Oxford,  Eng. 

Takaku,  T.,  5755  Hazel  Ave.,  West  Philadelphia,  Pa. 

Tang,  C.  T.,  535  Conklin  Place,  Madison,  Wis. 

Taylor,  E.,  Box  12,  Washington  Depot,  Conn. 

Tugwell,  R.  G.,  Hamilton  Hall,  Columbia  University,  New  York  City. 

Walters,  H.,  71  Broadway,  New  York  City. 

Wehrwein,  G.  S.,  Physics-Economics  Bldg.,  Madison,  Wis. 

Wright,  H.  R.,  5512  Hyde  Park  Boulevard,  Chicago,  111. 

Wright,  I.,  University  of  Illinois,  Urbana,  111. 

The  judges  selected  for  the  Second  Karelsen  Prize  Essay  Competition 
are: 

Representative  of  employers,  William  C.  Proctor,  president,  Proctor  & 
Gamble  Company;  Representative  of  employees,  Samuel  Gompers,  presi- 
dent, American  Federation  of  Labor ;  Socialist,  John  Spargo,  author  and 
lecturer;  Economist,  Willard  E.  Hotchkiss,  director,  National  Industrial 
Federation  of  Clothing  Manufacturers;  Public  man,  Harry  A.  Garfield, 
president,  Williams  College,  and  former  fuel  administrator.  The  subject 
for  the  essays  is  "The  relations  of  capital  and  labor."  The  terms  of  the 
contest  have  already  been  given  in  the  June  and  September  Review.  Cir- 
culars regarding  the  contest  will  be  sent  upon  application  to  the  Secretary 
of  the  American  Economic  Association,  Yale  Station,  New  Haven,  Conn. 

The  two  essays  which  won  the  Karelsen  prizes  on  "What  can  a  man 
afford?"  are  now  in  press,  and  will  shortly  be  issued  by  the  Association  as 
a  supplement. 


764  Notes  [December 

The  trustees  of  the  American  Field  Service  Fellowships  for  French  Uni- 
versities have  made  an  announcement  in  regard  to  the  conditions  for  fellow- 
ships for  1922-23.  A  circular  may  be  obtained  by  application  to  the  execu- 
tive secretary,  Dr.  I.  L.  Kandel,  522  Fifth  Avenue,  New  York,  N.  Y. 
Twenty-five  fellowships  of  the  value  of  $200  plus  10,000  francs  will  be 
awarded. 

The  second  annual  meeting  of  the  International  Chamber  of  Commerce 
will  be  held  in  Rome  during  the  week  of  Sept.  18,  1922. 

The  first  session  of  the  National  School  for  Chamber  of  Commerce  Secre- 
taries was  held  at  Northwestern  University,  Evanston,  Illinois,  July  18-30, 
1921,  under  the  joint  auspices  of  the  Chamber  of  Commerce  of  the  United 
States,  the  National  Association  of  Commercial  Organization  Secretaries, 
and  the  Northwestern  University  School  of  Commerce. 

The  American  University  at  Washington  has  established  a  new  graduate 
school  of  business  administration,  described  in  a  pamphlet  recently  pub- 
lished (1907  F  Street,  N.  W.,  Washington,  D.  C.).< 

Announcement  is  made  of  the  early  publication  in  January,  1922,  of  Rail- 
roads and  Government,  Their  Relations  in  the  United  States,  1910-1921, 
by  Professor  Frank  H.  Dixon,  of  Princeton  University. 

The  report  of  the  Librarian  of  Congress  for  1920  calls  attention  to  the 
purchase  of  the  Holker  papers  by  the  Library  of  Congress.  These  papers 
of  John  Holker,  consul  general  of  France  to  the  United  States,  number 
2000  pieces  dating  from  1777  to  1820.  The  group  is  said  to  be  of  special 
value  to  the  study  of  the  economic  history  of  the  Revolution. 

The  Library  of  Congress  has  published  A  List  of  American  Doctoral  Dis- 
sertations Printed  in  1919  (Washington,  1921,  pp.  167).  Pages  91-96  re- 
late to  social  sciences.  It  has  also  included  a  supplementary  list  of  theses 
printed  1916-1918. 

The  Charity  Organisation  Review  of  London  has  ceased  publication. 

The  United  States  Employment  Service  of  the  federal  Department  of 
Labor  is  publishing  a  monthly  bulletin  entitled  Industrial  Employment 
Survey  Btdletin. 

The  Department  of  Labor,  Ottawa,  has  begun  the  publication  of  a  bulle- 
tin entitled  Employment  (Ottawa,  Dept.  of  Labor). 

The  Division  of  Oriental  Commerce  and  Politics,  New  York  University, 
is  issuing  a  monthly  digest  of  commerce,  industry,  finance,  and  politics,  en- 
titled The  Eastern  Economist  (New  York,  90  Trinity  Place;  $1.50  per  an- 
num). 

The   Institute  of  International  Education,  419  West   117th   Street,  New 


1921]  Notes  765 

York  City,  announces  that  Professor  von  Schulze  Gaevernitz,  professor  of 
economics  in  the  University  of  Freiburg,  wishes  to  lecture  in  American  uni- 
versities during  the  winter  of  1921-22.  Lectures  will  be  given  in  the  English 
language.  Announcement  is  made  by  the  same  organization  that  Dr.  Row- 
lank  Hegedus,  professor  of  political  economy  at  the  University  of  Budapest, 
will  lecture  at  Columbia  University  during  the  winter  and  will  be  available 
for  lectures  at  other  colleges. 

Appointments  and  Resignations 

Mr.  Harlow  H.  Allen,  who  was  assistant  last  year  at  the  University  of 
Chicago,  has  been  appointed  instructor  at  the  University  of  Illinois. 

Professor  Lloyd  V.  Ballard  has  been  made  head  of  the  department  of 
economics  at  Beloit  College,  Wisconsin. 

Professor  Albert  J.  Barlow,  recently  of  the  staff  of  the  College  of  Busi- 
ness Administration  of  Boston  University,  is  conducting  courses  in  business 
administration  at  the  University  of  Virginia  during  the  absence  of  Pro- 
fessor Eldred. 

Mr.  T.  N.  Beckman  has  been  appointed  instructor  in  economic  and  social 
geography  at  Ohio  State  University. 

Dr.  Howard  Beris,  formerly  instructor  in  economics  at  the  University  of 
Cincinnati,  has  been  appointed  professor  of  law  in  the  same  institution. 

Mr.  Edward  Berman  has  been  made  instructor  in  economics  at  the  Uni- 
versity of  Illinois. 

Mr.  V.  W.  Bladen,  of  Oxford  University,  has  been  appointed  lecturer  in 
the  department  of  political  economy  at  the  University  of  Toronto. 

Mr.  T.  C.  Billig  has  been  appointed  instructor  in  economics  at  Washing- 
ton and  Jefferson  College. 

Mr.  J.  F.  Bogardus  has  been  engaged  as  instructor  in  economics  in  the 
liberal  arts  college  of  the  University  of  Cincinnati. 

Mr.  Orton  W.  Boyd  has  been  appointed  instructor  in  accounting  at  Ohio 
State  University. 

Mr.  Pembroke  H.  Brown  has  been  made  instructor  in  economics  at  the 
University  of  Illinois. 

Mr.  William  J.  Burney  has  been  appointed  instructor  in  economics  at  the 
State  University  of  Iowa. 

President  Kenyon  L.  Butterfield,  of  Massachusetts  Agricultural  College, 
is  on  leave  of  absence,  serving  on  an  Educational  Commission  organized  by 
the  Foreign  Missions  Conference  to  study  educational  needs  in  China. 


766  Xotes  [December 

Dr.  Mollie  Ray  Carroll  is  now  chairman  of  the  department  of  social 
science  in  Goucher  College. 

Professor  Clayton  D.  Carus  has  resigned  from  the  Washington  State  Col- 
lege to  take  charge  of  the  courses  in  foreign  trade  and  Latin-American  re- 
lations in  the  College  of  Commerce  and  Business  Administration  at  the  Uni- 
versity of  Southern  California. 

Professor  F.  E.  Clark,  of  Northwestern  University,  gave  courses  during 
the  summer  quarter  at  the  University  of  Chicago. 

Mr.  E.  L.  Clarke,  formerly  instructor  in  sociology  at  Ohio  State  Univer- 
sity, has  now  been  made  assistant  professor  at  the  some  institution. 

Professor  Henry  Clay  of  England  gave  a  series  of  four  lectures  in  the 
University  of  Chicago  during  the  first  week  in  July.  The  lectures  were 
arranged  through  the  department  of  political  economy  and  were  on  the 
following  topics:  English  departmental  system  of  administration;  the  in- 
dustrial situation  in  England;  relations  between  employers  and  employed  in 
England  (two  parts). 

Dr.  M.  A.  Copeland  has  accepted  a  position  as  instructor  in  economics  at 
Cornell  University. 

Professor  H.  W.  Cordell  has  been  given  the  headship  of  the  department 
of  economic  science  and  history  at  the  State  College  of  Washington,  Pull- 
man, Wash. 

Professor  Peter  C.  Crockatt,  of  the  University  of  Oregon,  has  been  absent 
on  leave  for  the  fall  term  and  has  been  finishing  his  work  for  the  doctor's 
degree  at  the  University  of  California. 

Mr.  F.  E.  Croxton,  of  Ohio  State  University,  has  been  made  instructor  in 
economics. 

Dr.  W.  W.  Cumberland,  for  the  past  year  foreign  trade  adviser  of  the 
Department  of  State,  has  now  been  appointed  administrator  of  customs  of 
the  Republic  of  Peru,  and  left  for  his  new  post  in  November. 

Miss  Agnes  Drury,  of  Ohio  State  University,  has  been  made  instructor 
in  sociology. 

Mr.  E.  T.  Dummeier,  of  the  University  of  Colorado,  has  accepted  an  ap- 
pointment as  instructor  in  rural  economics  at  Washington  State  College. 

Mr.  George  J.  Eberle,  for  many  years  statistician  and  cost  accountant  in 
the  United  States  and  Canada,  has  been  appointed  professor  of  statistics 
and  public  utilities  in  the  College  of  Commerce  and  Business  Administra- 
tion of  the  University  of  Southern  California. 

Professor  George  W.  Eckelberry  has  been  promoted  from  assistant  pro- 
fessor to  professor  of  accounting  at  Ohio  State  University. 


1921]  Notes  767 

Dr.  Wilfred  Eldred,  associate  professor  of  business  administration  at  the 
University  of  Virginia,  has  been  granted  a  year's  leave  of  absence  to  join 
the  staff  of  the  Food  Research  Institute  of  Stanford  University,  California, 
as  research  associate. 

Dr.  Richard  T.  Ely,  of  the  University  of  Wisconsin,  has  recently  given 
a  group  of  lectures  on  the  economics  of  agriculture  to  the  staff  of  the  Bureau 
of  Markets  and  Crop  Estimates  of  the  United  States  Department  of  Agri- 
culture. Dr.  Ely's  lectures  were  part  of  a  series  of  lectures  by  various 
economists  to  members  of  the  Bureau. 

Mr.  Elmer  D.  Fagan  has  been  appointed  instructor  in  agricultural  eco- 
nomics at  the  University  of  Southern  California  College  of  Commerce  and 
Business  Administration. 

Mr.  C.  R.  Fay,  Fellow  of  Christ  College,  Cambridge,  has  been  appointed 
to  a  professorship  of  economic  history  at  the  University  of  Toronto. 

Dr.  Herbert  Feis  has  been  appointed  associate  professor  of  economics  at 
the  University  of  Kansas. 

Mr.  J.  A.  Fitzgerald,  formerly  of  the  University  of  Texas,  has  been  ap- 
pointed assistant  professor  of  business  organization  at  Ohio  State  University. 

Dr.  Robert  F.  Foerster  is  devoting  the  current  academic  year  to  the  study 
of  industrial  relations  in  a  number  of  the  larger  manufacturing  and  mining 
companies. 

Professor  David  Friday,  of  the  University  of  Michigan,  has  been  elected 
president  of  the  Michigan  Agricultural  College. 

Mr.  A.  A.  Friedrich,  last  year  a  fellow  in  the  department  of  political 
economy  of  the  University  of  Chicago,  is  this  year  assistant  professor  in  the 
department  of  economics  at  Reed  College. 

Dr.  C.  L.  Goodrich  has  been  awarded  the  Amherst  Memorial  Fellowship 
and  is  engaged  in  research  on  the  bituminous  coal  industry  in  America. 

Mr.  L.  R.  Gottlieb,  editor  of  the  Bankers  Economic  Service  of  New 
York  City,  has  been  engaged  as  financial  expert  for  the  United  States 
Treasury  Department  to  make  a  study  of  foreign  financial  data  for  presen- 
tation to  the  Conference  on  Limitation  of  Armament. 

Mr.  Henry  F.  Grady  has  recently  been  appointed  to  the  faculty  of  the 
University  of  California  as  lecturer  in  foreign  trade.  Mr.  Grady  is  giving 
three  courses,  one  in  the  principles  of  foreign  trade,  one  in  foreign  sales 
methods  and  documentary  technique,  and  another  on  the  trade  of  the  Great 
Powers. 

Mr.  D.  M.  Halfant  has  been  appointed  assistant  in  the  department  of 
economics  at  the  Universitv  of  Illinois. 


768  Notes  [December 

Professor  M.  B.  Hammond,  of  Ohio  State  University,  gave  courses  during 
the  summer  quarter  at  the  University  of  Chicago. 

Mr.  George  D.  Haskell  has  been  appointed  instructor  in  economics  at 
Ohio  State  University. 

Mr.  Oscar  W.  Haussermann,  of  Herrick,  Smith,  Donald  &  Farley,  Bos- 
ton, has  been  appointed  lecturer  in  business  law  at  the  Massachusetts  In- 
stitute of  Technology. 

Mr.  Francis  W.  Hirst  of  London,  is  spending  the  fall  semester  of  1921 
at  the  University  of  California,  where  he  is  giving  a  course  on  the  financial 
and  industrial  condition  in  Europe,  and  is  also  delivering  a  series  of  lec- 
tures on  political  and  financial  conditions  in  Europe. 

Professor  W.  E.  Hotchkiss  has  returned  to  Northwestern  University  as 
professor  of  economics.  Professor  Hotchkiss  will  continue  to  serve  as  direc- 
tor of  the  National  Industrial  Federation  of  Clothing  Manufacturers. 

Mr.  Chu  Hsiao  has  been  appointed  instructor  at  the  University  of 
Missouri. 

Professor  W.  T.  Jackman  has  been  promoted  from  assistant  professor 
to  associate  professor  of  rural  economics  at  the  University  of  Toronto. 

Professor  G.  E.  Jackson  has  been  promoted  from  assistant  professor  to 
associate  professor  in  the  department  of  political  economy,  University  of 
Toronto. 

Mr.  Charles  L.  Jamison,  secretary-treasurer  of  the  A.  M.  Byers  Com- 
pany of  Pittsburgh,  has  accepted  a  lectureship  in  the  School  of  Business  at 
the  University  of  Minnesota.  Mr.  Jamison's  primary  interest  will  be  in  the 
field  of  business  organization  and  management. 

Professor  George  M.  Janes,  of  Washington  and  Jefferson  College,  con- 
ducted two  courses  at  Evansville  College  during  the  summer  quarter. 

Professor  F.  H.  Knight,  of  the  State  University  of  Iowa,  gave  courses 
during  the  summer  at  the  University  of  Chicago. 

Miss  Hazel  Kyrk  has  resigned  her  position  in  the  department  of  eco- 
nomics at  Oberlin  College. 

Dean  J.  E.  LeRossignol,  of  the  University  of  Nebraska,  was  granted  the 
degree  of  LL.D.,  honoris  causa,  by  McGill  University  on  the  occasion  of 
the  centennial  reunion  on  October  13. 

Professor  Simon  Litman,  of  the  University  of  Illinois,  is  taking  a  sab- 
batical leave  of  absence  and  is  spending  the  winter  in  San  Francisco,  where 
he  is  engaged  in  the  preparation  of  a  book  on  foreign  trade. 

Professor  F.  E.  Lumley,  of  Ohio  State  University,  has  been  given  the  rank 
of  professor  of  sociology  at  that  university. 


1921]  Notes  769 

Professor  H.  L.  Lutz,  of  Oberlin  College,  is  acting  as  editor  of  the 
National  Tax  Bulletin. 

Professor  D.  H.  Macgregor,  lately  professor  of  political  economy  in  the 
Victoria  University  of  Manchester,  has  been  elected  to  the  Drummond  chair 
of  political  economy  in  the  University  of  Oxford.  Professor  Macgregor  is 
the  author  of  Industrial  Combination  and  Evolution  of  Industry. 

Dr.  R.  M.  Maclver,  associate  professor  of  political  economy  at  the  Uni- 
versity of  Toronto,  has  been  promoted  to  a  full  professorship. 

Professor  J.  O.  McKinsey  has  returned  to  residence  at  the  University  of 
Chicago,  after  a  year's  leave  of  absence  which  he  spent  as  the  New  York 
manager  of  the  firm  of  Frazer  &  Torbet. 

Mr.  C.  E.  McNeill,  of  the  New  York  Transit  Commission,  has  been  ap- 
pointed assistant  professor  of  economics  in  the  University  of  Nebraska. 

Mr.  John  J.  Maginnis  has  been  appointed  instructor  in  agricultural  eco- 
nomics at  the  Massachusetts  Agricultural  College. 

Mr.  S.  P.  Meech  has  been  appointed  an  instructor  in  the  school  of  com- 
merce and  administration  of  the  University  of  Chicago. 

Mr.  Raymond  Miller  has  been  appointed  assistant  in  economics  at  the 
University  of  Southern  California  College  of  Commerce  and  Business  Ad- 
ministration. 

Mr.  Roland  M.  Miller,  of  the  University  of  California  staff,  has  accepted 
an  appointment  as  assistant  professor  at  the  University  of  Oregon. 

Professor  H.  A.  Millis  has  returned  to  full-time  work  at  the  University 
of  Chicago.  Last  year  he  devoted  the  greater  part  of  his  time  to  duties  in 
connection  with  his  position  as  chairman  of  the  Board  of  Arbitration  in  the 
Clothing  Industry  in  Chicago. 

Mr.  Charles  W.  Mixter  is  now  associated  with  the  production  department 
of  the  Chamber  of  Commerce  of  the  United  States,  at  Washington. 

Professor  H.  G.  Moulton,  of  the  University  of  Chicago,  was  appointed  a 
delegate  from  the  Chicago  Association  of  Commerce  to  the  conference  of 
International  Chambers  of  Commerce  in  London  the  latter  part  of  June. 
Mr.  Moulton  has  been  made  educational  adviser  of  the  Chicago  Chapter  of 
the  American  Institute  of  Banking. 

Mr.  Andrew  J.  Newman  has  resigned  his  position  as  assistant  professor 
of  economics  and  commerce  at  the  University  of  Kansas  and  is  now  in  charge 
of  the  department  of  commerce  and  business  at  Roanoke  College,  Salem, 
Virginia. 

Mr.  E.  L.  Newmarker  has  been  appointed  associate  professor  of  political 


770  Xotes  [December 

economy  at  Wake  Forest  University,  Wake  Forest,  North  Carolina,  where  he 
will  conduct  courses  in  banking,  marketing,  and  foreign  trade. 

Mr.  Saul  C.  Oppenheim  has  resigned  as  professor  of  political  science  in 
the  State  Teachers  College,  Kirksville,  Missouri,  to  accept  an  appointment 
as  instructor  in  economics  at  the  University  of  Michigan. 

Dr.  Paul  S.  Peirce,  formerly  in  the  department  of  economics  at  the  State 
University  of  Iowa  and  during  the  past  two  years  director  of  educational 
service  for  the  Central  Division  of  American  Red  Cross,  has  been  appointed 
to  a  full  professorship  of  economics  at  Oberlin  College. 

Mr.  Victor  Pelz,  last  year  a  member  of  the  economics  faculty  of  the  Uni- 
versity of  Minnesota,  is  devoting  his  time  this  year  to  research  in  marketing 
and  organization  at  the  University  of  Wisconsin. 

Dr.  B.  M.  Rastall,  of  the  San  Francisco  Chamber  of  Commerce,  is  co- 
operating with  the  University  of  California  in  its  work  in  business  admin- 
istration. During  the  present  semester,  under  the  joint  direction  of  Dr. 
Rastall  and  Mr.  Webster  R.  Robinson,  associate  in  business  administration, 
a  survey  of  the  industrial  district  of  San  Francisco  is  in  progress  for  the 
purpose  of  ascertaining  local  business  conditions. 

Mr.  Jay  L.  Reed,  assistant  cashier  of  the  Federal  Reserve  Bank  of  San 
Francisco,  is  giving  a  course  on  the  federal  reserve  system  at  the  University 
of  California. 

Mr.  T.  Bruce  Robb  has  been  made  associate  professor  of  economics  at 
the  University  of  Missouri. 

Mr.  Webster  R.  Robinson  has  recently  been  appointed  associate  in  busi- 
ness administration  at  the  University  of  California. 

Mr.  L.  C.  Sorrell  has  been  promoted  to  an  assistant  professorship  in  the 
School  of  Commerce  and  Administration  of  the  University  of  Chicago. 

Mr.  William  H.  Stead  has  been  appointed  instructor  in  economics  at 
Beloit  College. 

Mr.  Wesley  Sternberg,  of  DePauw  University,  is  now  assistant  professor 
of  economics  at  the  University  of  Kansas. 

Professor  Arthur  E.  Suffern  has  resigned  from  Beloit  College  and  is  now 
at  Columbia  University. 

Professor  Arthur  E.  Swanson  has  been  re-appointed  professor  of  business 
organization  at  Northwestern  University.  Professor  Swanson  will  continue 
his  newly  established  business  under  the  firm  name  of  Swanson  and  Ogilvie. 

Mr.  Henry  E.  Sweeney  is  devoting  this  year  to  the  field  of  accounting  in 
the  Extension  Division  of  the  University  of  Wisconsin. 


1921]  Notes  771 

Professor  CM.  Thompson,  dean  of  the  College  of  Commerce  and  Busi- 
ness Administration,  University  of  Illinois,  has  been  appointed  by  Gover- 
nor Small  on  the  Illinois  Education  Commission  which  was  created  by  the 
last  general  assembly  to  investigate  and  report  on  the  public  educational 
system  of  the  state. 

Mr.  Charles  H.  Titus,  formerly  at  Stanford  University,  is  now  instructor 
in  economics  and  history  at  Whitman  College. 

Mr.  R.  W.  Valentine,  of  the  University  of  Illinois,  has  been  given  the 
rank  of  instructor. 

Mr.  Eugene  Van  Cleef,  of  Ohio  State  University,  has  been  appointed  as- 
sistant professor. 

Professor  Homer  B.  Vanderblue,  who  during  the  past  year  has  been  acting 
as  director  of  research  for  the  Denver  Civic  and  Commercial  Association, 
has  returned  to  continue  his  duties  as  professor  of  transportation  at  the 
Northwestern  University  School  of  Commerce. 

Professor  Jacob  Viner,  of  the  University  of  Chicago,  was  granted  leave 
of  absence  for  the  autumn  quarter,  during  which  time  he  served  as  locum 
tenens  in  the  place  of  Professor  Stephen  Leacock  of  McGill  University. 

Mr.  B.  A.  Wallace,  formerly  of  the  University  of  Minnesota,  is  now  ex- 
tension agent  in  marketing  at  Ohio  State  University. 

Professor  N.  R.  Whitney,  of  the  University  of  Cincinnati,  gave  courses 
during  the  summer  at  the  University  of  Chicago. 

Mr.  R.  S.  Wilcox,  of  the  University  of  Michigan,  has  been  appointed  in- 
structor in  economics  at  the  State  College  of  Washington. 

Professor  J.  H.  Williams,  formerly  of  Northwestern  University,  gave 
courses  during  the  summer  at  the  University  of  Chicago.  Professor  Wil- 
liams is  now  at  Harvard  University. 

Mr.  E.  E.  White,  secretary  of  the  Industrial  Commission  of  Wisconsin, 
is  giving  lectures  and  research  courses  on  labor  legislation  at  the  University 
of  Wisconsin. 

Dr.  F.  E.  Wolfe  has  been  appointed  associate  professor  of  statistics  and 
business  research  in  the  College  of  Business  Administration  of  the  Uni- 
versity of  Nebraska.  Dr.  Wolfe  has  been  statistician  with  the  United 
Typothetae  in  Chicago  during  the  past  two  years. 

Miss  Helen  Wright  has  been  awarded  a  fellowship  in  absentia  in  the  de- 
partment of  political  economy  at  the  University  of  Chicago.  She  is  now 
at  the  London  School  of  Economics,  carrying  on  research  in  the  labor  field. 

Dr.  Ivan  Wright,  who  has  been  instructor  at  the  University  of  Illinois, 
has  been  made  assistant  professor. 


772  Notes  [December 

Mr.  William  Zeuch  has  been  appointed  research  assistant  in  economics  at 
the  University  of  Wisconsin.  His  field  is  unemployment  and  its  relation  to 
business  cycles. 

Dr.  Erich  W.  Zimmermann,  professor  of  commerce,  James  Millikin  Uni- 
versity, Decatur,  Illinois,  has  been  appointed  consulting  economist  of  the 
Bureau  of  Mines,  Department  of  the  Interior,  Washington,  D.  C.  Dr.  Zim- 
mermann  will  combine  his  duties  in  Washington  with  his  work  in  Decatur. 

Dr.  Frederick  S.  Crum,  assistant  statistician  of  the  Prudential  Insurance 
Company  of  America,  was  accidentally  drowned  in  the  Belgrade  Lakes, 
Maine,  September  2,  1921. 

Mr.  William  Hyde  Price,  formerly  professor  of  economics  at  Wisconsin 
and  Yale,  and  recently  in  the  Imperial  University  of  Japan,  while  on  his 
vacation  last  summer  in  the  mountains  of  Japan,  was  drowned  in  a  moun- 
tain stream. 

Professor  Henry  Carter  Adams,  one  of  the  founders  of  the  American 
Economic  Association  and  among  the  most  eminent  of  American  economists, 
died  at  Ann  Arbor,  August  11,  1921.  Born  December  31,  1851,  and  gradu- 
ated from  the  University  of  Iowa  in  1874,  he  took  post-graduate  work  at 
Johns  Hopkins  University,  and  studied  for  a  year  in  Europe.  Soon  after 
his  return,  in  1879,  he  became  a  lecturer  on  economics  at  Johns  Hopkins, 
Cornell,  and  Michigan,  but  in  1887  accepted  a  full-time  position  at  Michi- 
gan, where  he  remained  as  head  of  the  department  until  his  death.  In  the 
same  year  he  was  chosen  statistician  to  the  Interstate  Commerce  Commis- 
sion, serving  until  1911,  and  was  thus  led  to  give  a  large  part  of  his  energy 
to  problems  of  public  control,  especially  as  regards  transportation.  In  th*s 
field  he  rendered  signal  service,  both  administrative  and  theoretical,  and  he 
is  the  author  of  a  large  number  of  authoritative  publications.  He  served 
also  as  chief  of  the  Transportation  Division  of  the  Eleventh  Census,  and 
has  recently  spent  two  years  in  China  as  adviser  to  the  government  regard- 
ing railways  and  finance.  His  principal  books,  aside  from  his  writings  on 
transportation,  are  Public  Debts,  an  Essay  in  the  Science  of  Finance  (1887)  ; 
The  Science  of  Finance,  an  Investigation  of  Public  Revenues  and  Public  Ex- 
penditures (1898);  and  a  brief  treatise  on  general  economics  called  De- 
scription of  Industry  (1918).  He  also  published  many  shorter  studies,  some 
of  which  had  a  wide  influence,  especially  his  memorable  essay,  The  State  in 
Relation  to  Industrial  Action,  contributed  to  the  Publications  of  the  Ameri- 
can Economic  Association  in  1887. 


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