CHAPTER XIX

MONEY AND THE MONETARY SYSTEM OF THE

UNITED STATES

The Disadvantages of Barter-The Nature and Functions of

Money-Money a Standard of Value-Also of Deferred Pay-

ments-Prices and the Value of Money Vary Inversely-

Stability of Value Necessary to a Good Money-Various Com-

modities Have Served as Money-Qualities of a Good Money-

The Rôle of the Government in Regulating the Monetary Sys-

tem-Coinage and the Printing of Paper Money-The Three

Kinds of Money: Standard-Token-Credit-Gresham's Law

-Illustrated from Monetary History of the United States-

Application to Present Monetary System-The Adoption of the

Gold Standard in Europe-Its Adoption Outside of Europe-

Monetary History of the United States-The Gold Standard

Law-Present Monetary System of the United States-Main-

tenance of Parity of Value Between Gold Coin and Gold

Bullion-Between Gold and Silver Coin-Between Gold Coin

and Paper Money-The Gold Reserve The National Bank

Notes-Stability of the Gold Standard-Defects in Monetary

System of the United States-The Function of Token Money

-Are Half-cent Pieces Needed?-The Useless Silver Hoard-

Objections to Sale of Silver Dollars as Bullion-Remedy

Advocated-References for Collateral Reading

CHAPTER XX

CREDIT AND BANKING

PAGE

322

The Nature of Credit-Book Credit-Description of Banking

Business-The Bank of England-The Check System-Checks

and Drafts-Money and Credit-Importance of Deposits to

Banks-Forms of Bank Loans-Collateral Loans-Call and

Time Loans-Banks Lend Their Credit-By Means of Deposit

Accounts-Or Bank Notes-Interest on Bank Loans Paid for

Control over Capital-Gold Coin is Capital-Credit Is Not

Capital but It Does Work of Standard Money-Limitations on

Use of Bank Credit-Short-time Loans-Competition Tends to

Adjust Bank Rate of Interest to the General Rate-Should

Banking be Regulated?-Argument for Free Banking-Counter-

argument-History of the National Banking System-The

Present Law-National Bank Notes-Protection of Depositors
-Defects in System-Federal Reserve Act-Federal Reserve
Board: Its Powers and Duties-Other Regulations-Bond Pur-
chase Provision-Amendments Advocated-Statistics of Bank-
ing Institutions-Conclusion-References for Collateral Reading 341

CHAPTER XXI

FOREIGN EXCHANGE AND SOME UNSETTLED

MONETARY PROBLEMS

The Nature of Foreign Exchange-International Credits and Debits
-Sterling Exchange The Gold Points-The Rate of Sterling
Exchange-Controlling Rate of Exchange Through the Rate

CONTENTS

of Interest-Influence of Prices-Three-cornered Exchanges

-When Standards Differ-A Country's Gold Supply Regulates

Itself The United States Should Normally Export Gold-

Unsettled Monetary Problems-Demand and Supply in Re-

lation to Gold-Three Different Kinds of Demand-The Arts

Demand-The Monetary Demand-The Reserve Demand-The

Supply of Gold-Explanation of Table-Conclusion-Measuring

the Value of Money or the Level of Prices-Other Methods-

Relation Between Level of Prices and Value of Money Illus-

trated-Price Statistics-Discussion of Chart-International

Bimetallism-Triumph of Gold Standard-The Free Silver

Agitation-Future of the Gold Standard-Influences Steady-

ing the Value of Gold-The Multiple Standard-References for

Collateral Reading

XV

PAGE

371

389

CHAPTER XXII

THE TARIFF QUESTION

Foreign and Domestic Trade Compared-Peculiarities of Foreign

Trade Principle Controlling Foreign Trade-The Policy of

Protection-The Advantages of Free Trade-Arguments for

Protection-The Infant-industry Argument: Special Form-

General Form-The Home-market Argument-Origin of

Present Tariff System-The Wages Argument-The Vested-

interests Argument-The Political Argument-The Under-

wood Tariff-Burden of High Duties—The Making of a

Tariff-Weakness of Arguments for Protection for United

States To-day-Obstacles to Change-Present Status of Tariff

Question in the United States-Protection v. Conservation-

Interest of Producers in Free Trade-Retaliatory Tariffs-

Tariff Cause of Political Corruption-Present Outlook-Refer-

ences for Collateral Reading

CHAPTER XXIII

LEGAL AND NATURAL MONOPOLIES

Importance of the Monopoly Problem-Public Legal Monopolies
Merits of Post-office-Private Legal Monopolies in the United
Kingdom-In the United States-The Patent System-Argu-
ments for and against Patents Discussion of Arguments—
Reforms Proposed-Present Status of Patent Law-Labels and
Trade-marks-Copyright-Defects in Present Law-Impor-
tance of Natural Monopolies-Natural Monopolies of Situation
-The Anthracite Coal Combination-Future Policy-Other
Natural Monopolies of Situation-Natural Monopolies of Organ-
ization-The Business of Supplying Water-The Gas and
Electric Light Monopolies-The Street-railway Monopoly-
Reasons for Combination-Advantages of Combination-The
Telephone Monopoly-Monopoly Renders More Convenient
Service Possible-Methods of Fixing Rates-Monopoly Profits
of Street Railways in the United States-Of Other Municipal
Monopolies The Solution of the Municipal Monopoly Prob-
lem-Arguments for Public Ownership-Arguments Against
Public Ownership Other Considerations-The Situation in

the United States and Abroad-Method of Regulating Mu-

nicipal Monopolies Obstacles to be Overcome in the United

States-References for Collateral Reading

PAGE

407

CHAPTER XXIV

RAILROAD PROBLEM IN THE UNITED STATES

National Monopolies of Organization-Circumstances Making the

Railroad Business Monopolistic-Progress Toward Railroad

Concentration in the United States-Federal Legislation-

Discrimination in Rates: Among Commodities-Among Lo-

calities Among Persons-Motives for Such Discrimination-

Railroads and Trusts-Monopoly Profits Enjoyed by the Rail-

roads Failure of State Regulation-The Interstate Com-

merce Act of 1887-Defects in Act-Amendments to Inter-

state Commerce Act-The Short-lived Commerce Court-

Discriminations Now Prevented-Arguments for National

Ownership and Operation of Express and Telephone Busi-

nesses- -Arguments for National Ownership and Operation of

Railroads-Arguments Against-Other Considerations-Fur-
ther Amendments Needed-The Future-References for Col-
lateral Reading .

432

CHAPTER XXV

TRUST PROBLEM IN THE UNITED STATES

Definition of a Trust-Motives Behind Trust Movement-The

Early Trusts-History of the American Trusts-Circum-

stances Favoring Organization of Trusts-The Rôle of the

Promoter-Facts as to Business Success of the Trusts-The

Highly Successful Trusts-Reasons for This Success: Efficient

Organization-Economy in Sale of Products-Saving in Cross

Freights-Better Adjustment of Production to Demand—

Other Reasons-Illegitimate Practices of the Trusts-The

Standard Oil Company's Advantages in Transportation-Dis-

crimination in Prices-Unfair Methods of Competition Charged

Against the National Cash Register Company-Conclusion

as to Public Policy-The Trusts and the Tariff-Other

Evils: Over-capitalization-Political Corruption-Monopolistic

Prices Obstacles to Solution of the Trust Problem in the

United States-The Sherman Anti-trust Act-Its Provisions

-Anti-trust Act of Ohio-Difficulty of Enforcement-The

Changed Attitude of the Supreme Court-The Bureau of Cor-

porations Legislation of 1914: The Federal Trade Commis-

sion Act-Aims at Prevention Rather Than Punishment-The

Clayton Act-Results of New Legislation-Further Legisla-

tion Advocated-Resale Prices-Importance of Trade Commis-

sion-Federal Incorporation Desirable-Transfer of Control

over Business Enterprise to the Federal Government That

Would Result-Control Through Alterations in the Tariff—

Dumping "-Price Regulation as a Final Remedy-Regula-

tion, Not Prohibition, Desirable-Consumers' Power to Pro-
tect Themselves-References for Collateral Reading

450

CONTENTS

CHAPTER XXVI

GOVERNMENT EXPENDITURES AND GOVERNMENT

REVENUES

Scope of Discussion-Government Expenditures Are Designed

to Promote the General Welfare-Public v. Private Expendi-

tures-Division of Governmental Functions in the United

States-Division of Expenditures-Relative Importance of

Public and Private Expenditures in the United States-

Sources of Public Revenue-Revenue from Public Lands-

From Public Industries-Definition of Special Assessments-

Revenues from Loans-War Loans-Industrial Loans-De-

ficiency Loans-Restrictions on Borrowing Power in the

United States-Revenues from Gifts-Definition of a Fee-

Definition of a Tax-Taxes Should Be Paid by Each in Pro-

portion to His Ability-The "Equal Sacrifice" Theory-Prin-

cipal Taxes Imposed in the United States-Tax Provisions

of the Federal Constitution-The Shifting and Incidence of

Taxes The Incidence of Customs and Excise Taxes-Property

and Poll Taxes-Evasion of the Personal Property Tax-

Evidence of Such Evasion-Incidence of a Perfect General

Property Tax-Analysis of a General Property Tax-Tax on

Land Paid by Landowner-Circumstances Obscuring This

Fact-Capitalization of Land Taxes-An Example-An Old

Land Tax Becomes Burdenless-A New Land Tax May In-

volve Confiscation of Property-Taxes on Buildings Paid by

Occupiers-Tax on Mortgages Paid by Borrowers-Injustice

of a Partial Tax on Personal Property-Corporation Taxes-

The Incorporation Tax-Franchise Taxes-The Capital Stock

Tax-Advantages of This Tax-Gross Receipts Taxes-Net

Income Taxes Special Franchise Taxes-Their Resemblance

to Land Taxes-Liquor License Taxes-Inheritance Taxes-

References for Collateral Reading.

CHAPTER XXVII

PRESENT TAX SYSTEM OF THE UNITED STATES

Practical Aspects of Taxation-The Tariff System of the United

States Customs and Internal Revenue Duties Compared-

The Present Internal Revenue System-Stamps as Means of

Collection-The Income Tax-The General Property Tax-

Unequal Assessments-Abandonment of General Property

Tax for State Revenue-Disadvantages of General Property

Tax-Sources of Revenue of New York State-Corporation

Taxes-Changes Proposed-The Special Franchise Tax-In-

heritance Taxes in the United States-And Abroad-Justifi-

cation of Progressive Rates-Inheritance Taxes Impose Lit-

tle Burden on Heirs-Tendency to Discourage Saving Ques-

tionable The Income Tax of the United Kingdom-Extent

of Evasions-Its Importance and Convenience as a Source

of Revenue-Income Taxes in the United States-Former

Income Taxes-The Income Tax Amendment of 1913-The

Amended Federal Income Tax Law of 1916-Taxation and

Distribution-Land and Special Franchise Taxes Paid out

of Funded Incomes-Commodity and Business Taxes-In-

xvii

PAGE

484

heritance, Income and General Property Taxes-References

for Collateral Reading

CHAPTER XXVIII

REFORM OF TAX SYSTEM OF THE UNITED STATES

Considerations Bearing on Proposed Tax Reforms-Suggestions as

to Federal Tax System-Reform of State Taxation-General

Property Tax Should Be Abolished-Inheritance Taxes Should

Be Extended-The Best Kinds of Corporation Taxes-Eva-

sion of Taxation by Non-residents-The High License Sys-

tem Should Be Extended-The Real Estate Tax Should Be

Subdivided into a Land Tax and a Buildings Tax-Historical

Reasons for Private Property in Land in Europe-In the

United States-The Present Land Problem-Extent of Ab-

sentee Landlordism in the United States-George's "Progress

and Poverty "-Objections to the Single Tax-It Would

Involve Confiscation-Difficult to Administer-Desirable Re-

forms in the Present System of Land Ownership-The Prob-

lem in Cities-They Must Acquire More Land-Rigid Regu-

lation Necessary-Larger Share of Tax Burden Should Fall

on the Land-Conclusion-Special Franchise Taxes-License

Taxes-Comparison of Proposed with Present System-Con-

clusion-References for Collateral Reading

CHAPTER XXIX

THE LABOR MOVEMENT

-

An

PAGE

. 512

Practical Application of Theory of Wages-Disadvantages of

Wage-earners in Bargaining - Counter-considerations

Illustration-Labor Organizations in the United States-

Present Strength of Labor Organizations-History of British

Law with Reference to Organizations-The Law in the United

States-Organizations Now Liable to Damage Suits-Col-

lective Bargaining-Objections of Employers-Conclusion-

Strikes and Lockouts-Anthracite-coal Strike of 1902-Rea-

sons for Violence, Intimidation and Boycotting-Plans for

Avoiding Strikes: Trade Arbitration - Voluntary Public'

Arbitration Compulsory Investigation Advocated Compul-

sory Arbitration-The New Zealand System-Other Experi-

ments-The Use of the Injunction in Labor Disputes-Legal

Justification-An Example-Objections to Such Use-Remedies

Proposed The Influence of Trade Unions on Wages-Open

Unions Not Monopolies-Closed Unions May Be Monopolies-

Other Purposes of Trade Unions-Mutual Insurance Indus-

trial Democracies-Labor Legislation-Public Policy Advo-

cated-The Industrial Relations Commission-References for

Collateral Reading

531

548

CHAPTER XXX

LABOR LEGISLATION

Reasons for Labor Legislation-In Case of Children-In Case of
Women-In Case of Men-Labor Legislation in the United