Knowledge that Transforms

Even superficial studies of the business career of John Jacob Astor emphasize its supposedly dualistic nature, and distinguish between the apparently sharply defined aspects of fortune-getting for which it stands. In fact, Astor's trading operations are frequently discussed as if they had not the slightest theoretical connection with his activities as an investor in land. It is the latter method of fortune-getting which is generally considered to afford exclusive opportunity for the appearance of an "unearned increment" (that is, gain of some sort, which cannot be attributed to the personal effort or personal ability of the beneficiary). Under the influence of this misconception, an attempt is made to distinguish between the profits arising from trade and the gains growing out of land investments on the ground that, in the one case, the size of the returns is conditioned by the degree of personal activity, whereas, in the other case, no appreciable amount of individual effort or ability is involved. Daniel Webster, for instance, in an address to the jury, when arguing against Astor's claim to lands in Putnam County, implied some such distinction between commercial exertions and land investments, in connection with the moral judgment that he passed upon Astor. True, his argument was impassioned and polemical in tone. Moreover, he was referring to a particular case of land investment characterized by certaini peculiar features. But the antithesis that he suggests is nevertheless significant-the more so, that it was designed to appeal to popular prejudices. His plea was that Astor had obtained possession of the land in dispute, not as he did that vast wealth than which no one envies him less than I do -not by fair and honest exertions in commercial enterprise, but by speculation, by purchasing up the forlorn hope of the heirs of a family driven from this country by a bill of attainder.'

During the last two or three decades, economic theory has been enriched by a continuous stream of writings, contributed from many sources. The Austrian school, originated by Menger, and developed by Wieser and Bdhm-Bawerk; the mathematical school, originated independently by Walras, in Switzerland, and Jevons, in England, and supported by Marshall, Edgeworth, Pareto, and numerous other writers, have done much to clear up the elusive mysteries surrounding the subject of value. These movements have given a special stimulus to economic literature in America, and have combined with the independent thought typified by the writings of Patten, Clark, Fetter, Carver, and others. Although the books and pamphlets which constitute this enormous mass of literature are related to each other, they have not formed any coherent or progressive whole. The writers have been related as mutual critics rather than as co-workers. So far as they have been of aid to each other, it has been through stimulus and controversy. Those who, like the present writer, believe in the fundamental value of economic theory, have derived a certain satisfaction from the great volume and vigor of these contributions from many lands, but most of us must in candor confess to disappointment that so few definitive results have been

There is a pointed and much-quoted remark of one of our postmasters-general to the effect that there are only four impor? tant objections to the establishment by the federal government of a parcels-post, similar to that of England or Germany. These, he alleged, consist of the American Express Co., the United States Express Co., the Wells Fargo Express Co., and the Adams Express Co. In fact it has been quite generally asserted by nearly all advocates of a parcels-post that the opposition on the part of private interests represented by the express companies is practi? cally the only important obstacle to immediate enactment of

THE CRISIS OF i86o AND THE FIRST ISSUE OF CLEARING-HOUSE CERTIFICATES. I. The causes of crises are so subtle in nature that any attempt to foretell fluctuations in the financial world might well be considered hazardous. No one in the opening months of the year i86o thought of doubting the continuance of the rising tide of prosperity which had begun to gather strength the year before. And yet the closing months of the year saw such a destruction of trade and credit, and the downfall of so many powerful houses, that the financial situation in New York and, indeed, throughout the United States generally, occasioned deep anxiety to the financiers of the world. This revulsion is in itself worthy of attention as a study of a financial panic; but it is of still greater historical interest to the student of credit and crises because it was the first occasion, in this country, of the issue of clearing-house certificates as a means of checking the course of liquidation. As will be shown hereafter, the panic was caused by the rupture of business relations between the North and the South, and aggravated by the suspension of normal trade relations between the East and the West. In order that the causes that occasioned the revulsion may be clearly apprehended, it will be necessary, first of all, to describe the condition of industry and agriculture in the South and West. In doing so, the inquiry will be confined to the decade I850-60.

The Interstate Commerce Commission have already intro? duced into Railway Accounts, beginning with July 1, 1907, the principle of making a fixed monthly charge for depreciation of equipment (locomotives, passenger and freight cars, work-train equipment and tools) and have furthermore suggested that the principle should be applied to track, bridges, and buildings, and minor structures. Under these circumstances, it seems desirable to set forth somewhat fully the methods of dealing with this general subject which have been developed in this country and in Great Britain during the last seventy-five years; and if possible, arrive at a fair conclusion as to the best course to adopt. Furthermore, while in some parts of the country it may be to the interest of railroad corporations to swell their operating expenses as much as possible; or in other parts of the country it may be to their interest to make the operating expenses appear as low as possible, this question of depreciation should not be considered from the standpoint of selfish or local interests, but rather from the standpoint of the broad principles involved, which apply very generally to many commercial undertakings. Nothing in this paper is intended as in any sense a reflection or attack upon the rulings of the Interstate Commerce Com? mission; but is an endeavor to co-ordinate the facts in relation to the subject and point out wherein these rules for depreciation are both unjust and unwise in their method of application.