matter and it is not, we hope, as fully under wise control as it will be later.

The following statement of an ingenious writer will aid in developing a sense of relativity in human affairs:

In order to understand the light which the discovery of the vast age of mankind casts on our present position, our relation to the past, our hopes for the future . . . . let us imagine the whole history of mankind were crowded into twelve hours and we are living at noon of the long human day. . . . . For over eleven and one-half hours there is nothing to record. We know of no persons or events: we only infer that man was on the earth, for we find his stone tools, bits of his pottery, and some of his pictures of mammoth and bison. At twenty minutes before twelve the earliest vestiges of Egyptian and Babylonian civilization begin to appear. The Greek literature and philosophy to which we owe so much are not seven minutes old. At one minute before twelve Lord Bacon wrote his advancement of learning and not one-half a minute has elapsed since man first began to use the steam engine to do his work for him.

QUESTIONS

1. Precisely what is meant by money economy? Wherein does it differ from barter economy? from credit economy? It has been said that the difference between money economy and credit economy is merely a difference of degree, whereas the difference between money economy and barter economy is a difference of kind. Is this true?

2. Can you cite any cases of barter being used today? What difficulties of a system of barter are overcome by the use of money? Does "money" necessarily mean the use of gold and silver? Have other things been used as money?

3. It has been said that the exchange functions of money are to serve as (a) a medium of exchange; (b) a standard (common denominator) of value; (c) a standard for deferred payments. Explain why each of these functions is useful, and cite cases where money performs each of these functions.

4. A buys 1,000 bushels of wheat from B at $1 a bushel. B accepts in payment a note for $1,000 payable with interest two years from date. Two years later A pays B the $1,000 with interest agreed. Which of the three money functions does money perform in the course of these transactions? 5. To what extent would contemporary industrial methods be possible if the device of money had never been adopted as a means of facilitating exchange? Could the exchange system be as complex as it is today if we depended upon barter alone? Would the productive process be as efficient? Would we have large-scale production? railroads? specialization? machine industry?

6. Make a list of the qualities of a satisfactory money metal. In terms of the functions of money, show the significance of each quality you have listed.

7. What reasons can you assign for having subsidiary coin? For having paper money?

8. Some persons have argued for having a coin called a half-cent. Is there anything to be said for the project? Why do we have $1,000 bills?

9. What is standard money in the United States? What is the monetary unit? Is the unit actually current as coin, or is it a mere definition? 10. In the days of the California gold discoveries different individuals and firms coined their own gold pieces. Is there any reason for prohibiting such a practice and reserving the right of coinage to the government?

II. Why stamp a device on coins? Why mill the edges of coins? 12. Much is said of the desirability of a stable money. What does this mean? Why is it desirable?

13. Explain these phrases:

"Money is condensed property."

"Money permits the organization of consumption and production." "Money facilitates capital accumulation."

"Production for sale, not for use."

14. Define credit. What is the basis of credit? Distinguish between credit and credit instruments.

15. What is meant by book credits? checks? promissory notes? drafts? bills of exchange? the bank note? bonds? stocks? mortgages? public credit? personal credit? mercantile credit? industrial credit?

16. Show how each of these credit devices may perform money functions. What is meant by the statement that we are now in the stage of credit economy?

17. "The full development of credit depends upon (1) the stability of social conditions; (2) the existence of a sound money." Why? 18. Some of the alleged advantages of credit are that: a) It utilizes small savings.

b) It furnishes a strong motive for saving.

c) It transfers capital to more productive uses.

d) It offers to persons of recognized capacity, but without adequate means of their own, an opportunity to engage in work for which they are fitted.

e) It makes possible great enterprises.

f) It saves social energy by providing a cheap medium of exchange. Some of the alleged disadvantages are that:

a) It may promote extravagance.

b) It may transfer wealth to less productive hands.

c) It may overstimulate prices.

d) It may make unsound speculation easier to accomplish and may result in crises.

Explain how credit may produce each of these alleged effects.

19. Is credit capital? Does it add to the sum total of productive instruments or does it merely make possible a better utilization of instruments already existing? Does it quicken the productive process?

20. Henry T. Crouch of Erie buys $1,275 worth of wheat from T. C. Craig of Detroit.

a) Suppose settlement to be effected with a wheat bill of exchange (also called a sight draft) and write out the substance of the bill which would be used.

b) Suppose settlement to be made with a check. Write out a fascimile (in substance).

c) Suppose settlement to be made with a bank draft. Write out a facsimile (in substance).

21. "However great the volume of credit exchanges, however extensive the use of credit may become in a community, sales for direct money payment can never be fully displaced." Why not?

22. "It is crop-moving time. Since farmers do not use checks, more money will be needed for a time." Why? Why "for a time"?

23. Would you rather have a stock certificate or a bond? Common stock or preferred stock? A registered bond or a coupon bond?

24. "Stock certificates are evidences of ownership; bonds are evidences of indebtedness." What does this mean? What does it imply with respect to the management of a corporation?

25. "Credit, to attain its usefulness, must be capable of generalization. One of the functions of the commercial bank is that of generalizing credit." What does this mean? Is it true?

26. Enumerate the services performed by the commercial bank. 27. "Commercial banks, through the use of their own credit, can make loans and create deposits to many times the amount of their cash resources." Explain. Is any service rendered society?

28. "The savings bank and the bond house are mere financial middlemen; the commercial bank is something more; it creates through the use of its credit new resources." Is this true?

29. "The corporation, the bond house, the stock exchange, savings banks, and insurance companies unite in assembling capital for modern business enterprise." How?

30. Show in what ways each of our financial institutions contributes to making available a greater quantity of goods to apply to human

wants.

31. "The savings bank and the insurance company develop thrift." What does this mean? If true, what is its significance ?

32. Does the pawnbroker conduct a financial institution? Does the government maintain any financial institutions?

33. "The trust company has been called the omnibus of financial institutions." Why?

34. "The stock exchange contributes to a closer adjustment of production to consumption, of the world's work to the world's need." Explain in detail how it contributes to this end.

35. "Wall Street earns a reward for an indispensable service." What does "Wall Street" mean as here used? Does it render a real service?

Are its rewards in exact proportion to its service?

36. What are the chief points of difference between a corporation and a partnership?

37. Why was it that the corporation did not become a common form of business organization until the nineteenth century? What were the usual forms of organization before that time?

38. What advantages has a corporation as compared with a partnership? Are there any respects in which a partnership has advantages not possessed by a corporation?

39. A corporation has outstanding $1,000,000 of 5 per cent mortgage bonds, $10,000,000 of 7 per cent preferred stock, and $10,000,000 of common stock. Gross annual earnings are $11,950,000; total expenses for the year are $9,900,000, and depreciation of the plant amounts to 10 per cent on a valuation of $11,000,000. What is the amount available for distribution among the security-holders, and how will this amount be distributed among the holders of the different securities?

40. In the case of the corporation described in the preceding question what would be the effect upon the dividends on the common stock if all the preferred stock were converted into 5 per cent mortgage bonds? Would this be a wise move if the business were likely to fluctuate so that the amount available for distribution among the security-holders of the corporation would be cut in half?

41. In 1896 the following situation existed:

On January 1, 1897, a holding company, D, absorbs all their stock, and in 1897 D gets, in addition to the former earnings, $500,000 monopoly profits and $100,000 by saving the wastes of competition. What dividends could D pay if its capital stock were $6,000,000?

42. What is the relation between par value and market value of a stock? between par value and face value?

43. If a benevolent despot ruled industrial society and he decided that society ought to have more capital, i.e., tools, machines, etc., how would he go about getting this new capital? How would a socialistic society solve such a problem? Under a money economy what is the mechanism by which new capital is saved or brought into existence? 44. If a benevolent despot ruled society and he decided that capital ought to be shifted from industry x to industry y, how would he go about making that shift? How would it be done in a socialistic society? How is it done today? In answering this last question make clear the use of the money economy in the transaction.

45. In practice and within certain limits land, labor, and capital may be substituted, one for another. On what basis does a business man of today decide whether to use more or less of one or the other when he engages in productive enterprise? How would a society which did not use a money economy decide such a question? Is it important to society that such a question be decided?

46. Some persons believe that we should develop a society which used no money. Would there be any items of loss to society in the abandonment of mediated exchange?

47. Is money an adequate measure of effort? of utility? of welfare? 48. "In an economic system based on exchange the immediate advantage of a bargain is more likely to occupy men's minds and to determine their actions than is concern for the ultimate good which may result to society. It follows that individual advantage is always antagonistic to social advantage." Why or why not?

49. "Production for profit results in adulterated goods, shoddy, polluted justice, child labor, wars, hungry children, etc." Does production for profit, standing by itself, really result in those things? Is there anything to be said in favor of production for profit?

50. "Even from the point of view of business, prospective profit is an uncertain, flickering light." Why?

51. "We are in a competitive society, most of the serious problems of which sum up into one great and inclusive problem-how to limit the receipt of private income to the rendering of social service." Do you agree? What, if anything, are we doing about the matter? How would the socialist attempt to solve the problem? 52. "The relation between the usefulness of the work and the remuneration of it is remote and uncertain to such a degree that no attempt at formulating such a relation is worth while." As a means of seeing whether such an attempt is "worth while," make it.