Knowledge that Transforms

THE TERM universal discount, abbreviated u.d., is used to indicate that a percentage discount (or a percentage bounty if the discount is negative) applies to all payments. Thus, payments for wholesale, retail, and producer goods, payments for capital stock, bonids, debts, dividends, interest, rent, and taxes, payments for wages, salaries, and fees; in short, all transfers of funds where the control of the funds is also transferred are included. Transfers of funds where storage is intended and the control of the funds is not altered, as in the case of bank demand deposits for example, would not be considered payments and would not carry the u.d. It is shown that in a model economic system roughly representative of a free economy the u.d. adjusted according to a simple formula removes instability. There is reason to believe without reference to this particular model that the same u.d. adjustment would be a powerful stabilizing influence under actual conditions. Fortunately, since the adjustment would raise (lower) prices when they are tending upward (downward) there would apparently be no serious policing problem in the enforcement of the u.d. adjustment. Since the u.d. changes prices, wages, rents, interest, fees, taxes, etc. all by the same ratio, there is no direct effect of the u.d. on real income as measured currently. Stating it differently, those with unchanging monetary reserves are not directly affected by the u.d. Consequently the introduction of the u.d. for stabilization purposes would involve significant loss only to those who persist in contributing to instability. Conversely only those contributing to stability would be rewarded. The latter would aid sections of an economy that are hard pressed by business-cycle changes. For example, during a rising price level the shrinkage of real income of those on a fixed money income would be reduced. With the u.d. method, such devices as ordinary price control, control of investment, tax-rate variation during the phases of the business cycle, active monetary policy, government spending, would be unnec-

THE purpose of the article is to examine with data the idea that there is a close connection between the velocity of circulation of cash balances and the short-term rate of interest. This connection may be stated as follows: The marginal convenience of holding cash balances diminishes the greater the volume of cash held and will fall to a very low level if the volume continues to increase; the short-term rate of interest must reflect the marginal convenience of holding cash; otherwise, if it is higher than the marginal convenience, lending of cash will take place; if lower, cash will be acquired through the sale of short-term assets. The relation of the marginal convenience of holding cash to the velocity of circulation would seem to take the form of a J curve. The examination of selected data concerning cash balances held by large manufacturing companies and the short-term interest rate in the United States during 1919 to 1940 seem to bear out this relationship to a fair degree.

IN A discussion in this Journal of the estimation from time series of economic relations such as demand and supply equations, G. Tintner developed a technique based on multivariate methods of statistical analysis, the economic relations being identified with the linear relations existing (within the limits of observational error) among the economic variables considered. In the present note a more precise analysis of the same type is adopted in which some of the limitations of Tintner's procedure are avoided. Some data on demand and supply relations for cotton yarn, recently collected and discussed elsewhere by K. S. Lomax, are reanalyzed to illustrate the proposed method. This example is also used to show how the accuracy of the elasticities determined from the equations may be assessed by the construction of confidence regions>' within which the true values are likely to lie.

В статье на основе эмпирических данных определяется форма производственной функции компании-производителя газа в ситуации равновесия на рынке или при небольших отклонениях от него. Анализ основывается на статистических данных о функционировании 25 компаний, обеспечивавших в период проведения исследования предложение газа во французской экономике.

THE great American who has departed from us was much more than an economist. But vast realm over which he held sway and intellectual climate of epoch that nourished his thought have been admirably surveyed in this journal,' and I shall confine myself to Fisher's pureLy scientific work in our field. This will restrict our subject. But it will not lower itat least, it could do so only through my own fault. For whatever else Fisher may have been-social philosopher, economic engineer, passionate crusader in many causes that he believed to be essential to welfare of humanity, teacher, inventor, businessman-I venture to predict that his name will stand in history principally as name of this country's greatest scientific economist. I shall restrict my task still further. Mr. Sasuly, who has been a close collaborator of Fisher's, has presented a vivid and adequate picture of his statistical work and in particular has set forth historical importance of The Making of Index Numbers and of Fisher's most original contribution to statistical method, Distributed Lag. I am not going to repeat what he has written. It is theorist only, not statistician, who will be considered in what is to follow. Nevertheless, statistician cannot be entirely elimintated even from section of Fisher's activities with which I propose todeal. For throughout and from start, Fisher aimed at a theory that would be statistically operative, in other words, at not merely quantitative but also numerical results. His work as a whole ideally fits program of the advancement of economic theory in its relation to statistics and mathematics and of unification of theoretical-quantitative and empirical-quantitative approach.2 Considering date of his first book, we must look upon him as most important of pioneers