Knowledge that Transforms

During the last year much attention has been given to the dominant position of New York City in our banking system. The extent of the control exercised by New York has been and is so great that several important changes that are taking place have escaped general notice. That the position of New York City as a banking center has undergone a change in the last few years is shown by the facts: (i) that a smaller amount of cash is being withdrawn from there each fall for crop-moving purposes; (2) that a relatively smaller amount of cash is held by the New York banks than in former years; (3) that New York holds relatively less of the reserve funds of the entire country than in the past; (4) that the total banking resources of New York have been growing less rapidly than those of other parts of the country; and (5) that strong banking centers are rapidly being developed in other sections. The rest of the United States is apparently becoming more and more independent of New York for cash and for the financing of relatively small enterprises. With the financing of large ventures and with the general question of extension of credit this paper does not deal. That the fall movement of cash out of New York is less than in former years is a fact which few people seem to have noticed. Probably very few indeed are aware that the net movement during the fall months is now in the other direction. Several years ago this movement was carefully analyzed, for the years I899-I9O8 inclusive, by Professor E. W. Kemmerer in his report to the National Monetary Commission.' He averaged the movement for this period and found a definite flow of money out from New York each fall-a movement averaging $3,434,000 in the thirty-eighth week of the year (the latter part of September) when it was at its maximum. The maximum movement into New York he found to be $6,895,000 and to occur in the latter part of January.

Business men measure prosperity by the demand for their products. Indeed, rising prosperity is nothing more nor less than an increased demand for goods. If we can determine the source of this extra demand we have put our finger on the source of prosperity. Conversely, industrial depression is a general shrinkage of demand for commodities. If we can discover why demand contracts, the cause of industrial depression is revealed. It is my contention that this extra demand for goods is primarily for promotion purposes. In other words, it is a demand for capital goods to enlarge industries and to establish new ones. The activity of promotion in England is best measured by the applications for capital in the London market.' Less satisfactory promotion data are available for the United States-listings of stocks and bonds on the New York Stock Exchange.2 For recent years, however, computations have been made of the new securities issued in the United States.3 Promotion moves in cycles. For example, promotion, as evidenced by the capital applications in the London market, increased from i867 to a maximum in i873, decreased from i874 to i876; increased from i877 to i88i, decreased from i882 to i885; increased from i886 to i889, decreased from i890 to i893; increased from i894 to i900, decreased from i90i to I903; increased from I904 to I905, decreased in i906. The cyclical movement is very apparent throughout this entire period. Because promotion takes the cyclical form there are corresponding movements in credit, prices, production, transportation, commerce, wages, employment, and so on. The combination of all these movements is recognized as a prosperity cycle. Unprogressive countries in which there is little promotion do not have these

Many and varied factors have been assigned as the cause of crises. Some writers, it seems, have mistaken effect for cause. Others have singled out one factor as the cause, ignoring others of equal or greater importance. Still others have recognized the com? plexity of a crisis situation and given recognition to many factors, but one places emphasis on one, another on another. Indeed it is probable that the problem in connection with crises now is not altogether the development of new theories. We have theories in abundance. Instead, it is to determine the degree of truth in each, for most theories of crises appear to have some scientific foundation, and then to determine the relative importance of each. After this has been done there remains the task of combining these theories into a harmonious whole. The situation would be less complicated if writers on the subject of crises avoided the use of vague or poorly defined terms.

In the absence of very definite records the earliest history of Spanish commerce and industry remains a subject for speculation and inference. As far back as twenty and thirty centuries before Christ, some manner of trade and commerce seems to have existed in what is at the present date the Spanish peninsula.' There is, however, nothing approaching definiteness in this regard until nearly ten centuries before the Christian era, when it was recorded that King Solomon's "ships went to Tarshish . ... every three years once . . . bringing old and silver.' 2 The same chronicle speaks of another king of Judea who for some iniquity was by the act of God frustrated in his plans of an expedition to Tarshish.3 But perhaps of greater importance were the Phoenician merchants who first opened the trade of the Mediterranean sea and visited the Spanish provinces most frequently.4 They are said to have taken possession of what is now western Andalusia in the tenth century B.C., and there is little doubt of their having explored the coasts of the Spanish peninsula during the later centuries. It is true that the Phoenician merchants of this period were primarily engaged in piracy, but they were not satisfied by capturing men and merchandise only. They established trading-posts and warehouses at Algeciras, Malaga, Cadiz, and Seville and named the peninsula Span or Spania, which means hidden.5 The Phoenicians, like the agents of the Judean rulers, visited the shores of Spain for the gold, silver, copper, and tin that were found there. According to Diodorus it was this abundance of gold and silver that furnished Carthage with the sinews of war against Rome at a later period.6 But the precious metals were by no means the sole products of Spain. Wine, wool, cloth, and

Granted that unemployment insurance is necessary, is it possible? For many years this question was asked by most authoritative students of the subject, and the answer was not always favorable. Various experiments were made by municipalities and voluntary organizations in different countries, and some of them suffered a dismal failure. The establishment of a national compulsory unemployment insurance system in Great Britain through the National Insurance Act of I9II seems to settle the abstract question of possibility. Surely that which exists is possible, aside from the degree of success it may have or failure it may suffer. But the very fact of this prolonged iscussion, through almost two decades, of the general timidity in making experiments, inthe face of the rapid development of other forms of social insurance, and of the failure of several of these experiments-though the word "failure" could not be applied to any other steps in this field of social legislation-is evidence that there are special difficulties in the path of unemployment insurance which are not met with in the case of accidents or disease. In what do these difficulties consist? It is the theory of insurance science that any risk may be insured provided there is any regularity at all about its occurrence. It is the pride of that famous English insurance institution, Lloyds, that it offers to insure against any risk, even of an unusual kind, which does not seem to manifest any regularity. Unemployment is a risk. It demonstrates a fair degree of regularity both in its dependence upon trade and in its time fluctuations, whether in annual or longer cycles. When the whole problem was investigated very thoroughly by the Imperial Statistical Office of Germany, in I906, the conclusion was reached that there were no insurmountable t chnical obstacles for the development of an unemployment insurance system. The real difficulty was stated to be the absence of a simple test of unemployment. With comparatively few exceptions, the presence or absence of an accidental injury may be easily determined. It is

Louis; the channel of the Mississippi River between St. Louis and the Gulf composes the remainder of the route. Beginning at Lake Michigan and the mouth of the Chicago River, in the very heart of the city of Chicago, the route follows the Chicago River for 6.25 miles from Lake Michigan to Robey Street, the Chicago Sani? tary and Ship Canal for 32.35 miles to the junction with the Des Plaines River and the Illinois and Michigan Canal at Joliet,1 the Des Plaines River for 15.73 miles to the junction of the Kankakee,2 the Illinois River for 273 miles to the Mississippi, and the Mississippi for 1,332 miles3 to the Gulf of Mexico.4 The total distance between Chicago