A DISCUSSION OF THE PRINCIPLES OF MONEY AND BY EARL DEAN HOWARD PROFESSOR OF FINANCE IN NORTHWESTERN UNIVERSITY SCHOOL OF COMMERCE; IN COLLABORATION WITH JOSEPH FRENCH JOHNSON DEAN OF NEW YORK UNIVERSITY SCHOOL OF COMMERCE, ACCOUNTS AND FINANCE; MODERN BUSINESS VOLUME V ANFORD LIBRARV DE BOWER-ELLIOTT COMPANY CHICAGO-NEW YORK W EDITOR'S PREFACE This volume discusses questions in which the American people have been forced by events to take a deep and personal interest. The rise of prices and resultant increase in the cost of living since 1897 have provoked universal discussion and even called forth proclamations of disapproval from mayors, governors and other public men. The panic of 1907, which caused the temporary suspension of cash payments by many banks in the United States, is now recognized to have been mainly due to the defects of the American banking system. It is doubtful if any other scientific questions have been the subject of so much popular debate as those which are treated in this volume on Money and Banking. It goes without saying that no man is fit to plan the digging of a tunnel or the construction of a railroad, to mend a clock or repair an automobile, unless he has had a certain amount of scientific training. In mechanics the world recognizes the need and practical value of science. In finance the same need exists, but it is not yet generally acknowledged. Everybody thinks he understands the money question, or that it is not worth understanding, and the average man is inclined to think that the business of banking is so simple that if our banks have in any way fallen short of their duty, the men who manage them must either be very ignorant of their business or very selfish and speculative in their methods. As a matter of fact, the science of money and credit, while almost as exact in its nature as mathematics, is one of the most difficult in the whole field of economics. and the business or profession of banking, which is founded upon that science and should be conducted in accordance with its principles, is one demanding the keenest and clearest brain. Industry furnishes the red blood of the economic organism. Trade and commerce are its circulatory system. Finance is its nervous system. If the banker is incompetent and fails in the performance of his task, the entire business world is paralyzed. In the present volume the effort has been made to give the reader in the clearest possible language a scientific knowledge of money and credit and an accurate description and analysis of the various banking systems with which the world is now having experience. The subject is difficult and no reader can expect to get enlightenment from this book unless he is willing to think as he reads. If he will do that, I feel certain that he will quickly grasp all the principles expounded and in the end discover that many business problems which have perplexed him have been made easy of solution. The editor cannot too strongly advise that this volume be read carefully by the general business man. The banker, of course, should understand the subject. If he does not, he is conducting his business by rule of thumb, and is courting disaster. But the business man should not think that Money and Banking are matters with which he is not concerned. On the contrary, they treat of matters which immediately concern him. The relation of money to the upward and downward swings of prices is something which the average business man does not perceive, yet it is something which he ought to understand, for his prosperity often depends on causes |