The Principles of Economics Part 57

9. When gold is leaving England, the bank raises the rate of discount (interest); does this show that the quant.i.ty of money determines the rate of interest?

CHAPTER 17. THE THEORY OF TIME-VALUE

1. Give examples of a high cost for the use of wealth without the borrowing of money.

2. Give some examples of the neglect of repairs through lack of resources, and show how it involved time-value.

3. What would be some of the first effects on production if interest on money loans fell to one half its present rate?

4. Which is the more important for the rate of interest, the amount of money in the banks or the amount of goods in the country?

5. How would the rate of interest be affected if the amount of money were doubled at once?

NOTE.--In an interesting article on "Prestige Value," by L.

M. Keasbey, in _Quarterly Journal of Economics_, May, 1903, has been developed one phase of the thought in Sec. II, proposition 2.

The very active recent discussion of "the interest problem"

has done much to clarify economic theory; but almost the entire recent literature of the subject (as seen from our point of view) is based on a defective concept of capital.

See in _Quarterly Journal of Economics_, Vol. XVII, pp.

163-180 (November, 1902), article ent.i.tled "The 'Roundabout Process' in the Interest Theory," the author's criticism of Bohm-Bawerk's _Positive Theory_. All the recent "marginal productivity" interest theories are at fault, we venture to say, in trying to derive income from capital instead of deriving the amount of capital from rent.

CHAPTER 18. RELATIVELY FIXED AND RELATIVELY INCREASABLE FORMS OF CAPITAL

1. Why not raise seals in California and fruit in Alaska?

2. Has the rainfall any relation to the density of population?

3. Has the isothermal line any relation to the number of millionaires?

4. What physical reasons account for the greatness of ancient Egypt, of Venice, of Holland, of England, of the United States?

5. Is all land useful? Is all land wealth?

6 Is there a different term for land that is wealth and land that is not?

7. Are there different economic terms for hewn and unhewn blocks of stone? What makes the difference?

NOTE.--A meritorious though fragmentary essay to rethink the old conception of natural resources and to express them in new terms, is _Natural Economy_, by A. H. Gibson, 1901, reviewed by the writer in _Journal of Political Economy_, March, 1902.

CHAPTER 19. SAVING AND PRODUCTION AS AFFECTED BY THE RATE OF INTEREST

1. The savings of the people of the United States are nearly a billion dollars a year. What and where are they?

2. What are the main social conditions necessary to saving?

3. What influence has commercial morality on saving?

4. Do savings-banks and insurance companies stimulate saving, or do they exist because of a disposition to save?

5. What influence has the formation of joint-stock companies on saving?

6. Will you save more or less if the rate of interest falls?

7. Distinguish between h.o.a.rding and saving.

8. A woman cut the wool from a sheep's back, spun and wove it by old hand-methods, and within twenty-four hours wore the dress made of it. Is more or less time needed in production with the best machinery and processes?

9. Ricardo said that on account of the cheapness of food in America there was less temptation to employ machines than in England, where food was high. What is the fact about this temptation in America?

NOTE.--The older abstinence theory of interest is given by F. A. Walker, _Political Economy_, Secs. 87-93. A noteworthy advance was the able article, by T. N. Carver, in _Quarterly Journal of Economics_, Vol. VIII, p. 40 (1893), "The Place of Abstinence in the Theory of Interest." A number of writers have written (fallaciously, in our judgment) on the "fallacy of saving," arguing that the capital-market easily becomes glutted; the contrary view is well presented by Ca.s.sel, _The Nature and Necessity of Interest_ (1903), pp. 96-157, in chapters on what he calls "The Demand for Waiting," and "The Supply of Waiting."

CHAPTER 20. LABOR AND CLa.s.sES OF LABORERS

1. Is dancing labor? Is the dancing of a dancing-master labor? If he would rather dance than eat, is it labor?

2. Enumerate some kinds of labor necessary to produce bread.

3. "Washing of clothes is unproductive labor; therefore as little of it should be done as possible." Criticize the argument.

4. Would you say that differences in ability at manual trades are due to practice or to native talent? If to both, in what proportion?

5. Do sons usually follow the father's trade? Is it more or less common than formerly for them to do so?

6. Do you know from personal observation whether a Mexican, a German, or an American, is the best workman?

7. What important personal traits are needed to make a man an efficient market-gardener?

8. Which would be of the greatest economic advantage, to increase by 50% the intelligence, the physical strength, or the integrity of the workers of this country?

CHAPTER 21. THE SUPPLY OF LABOR

1. Has the principle of the survival of the fittest any influence on the population of America?

2. What limits the number of wild rabbits? Of tame pigeons? Do the same influences act in the case of men?

3. What other influences affect population?

4. What relation is there between population and mountains, temperature and water-supply?

5. It has been said that the supply of labor is fixed by biologic laws.

Is it therefore not subject to economic influences?

6. What application do you think the principle of diminishing returns has to the question of population?