doubtless think how much better it would have been if the Athenians had used the same amount of money in purchasing and the same amount of energy in producing things which would have fed their bellies or adorned their bodies. If, on the other hand, he thinks that it was a very important thing to domore important than anything else that they could probably have done with their money and their productive energy-he will say that it was thrift which built the Parthenon. The same question might be discussed with respect to the religious architecture of the Middle Ages, and the same question, of course, arises in every city of the present day when the problem of school architecture is discussed. To one who regards school architecture as a triviality the erection of magnificent and wellequipped school buildings would seem an extravagance; he would doubtless regret that so much productive power should be used in the building of such things when it might be used for the production of articles that would gratify the appetite or some other temporary desire. But to one who regards school architecture as something very important, the erection of such school buildings as some people would like to see would seem an act of thrift.

Summary. The general argument for thrift may be summarized as follows: He who saves money and invests it wisely does himself good in two ways. He gains directly by having an income in addition to his wages or his salary. He gains indirectly by making better conditions for everybody, including himself.

It is easy to see that he gains directly. To have a hundred dollars invested, even at 4 per cent, is better than not to have it. It gives him four dollars a year over and above his other income; and four dollars a year, small as it is, is not to be despised.

It is not so easy to see, but it is none the less true, that saving and wise investing make conditions better for everybody, including oneself. To save and invest, as stated above, is not to hoard. It is to buy things which are needed for pro

duction or defense instead of things which are good only for consumption or pleasure. To buy things, such as tools, machines, buildings, etc., which aid in production is to encourage the making of such things. When many people are investing in tools, many tools will be produced and industry will then be well equipped with aids to production. In short, there will be many factories well equipped with buildings, machines, and materials. That is a condition in which there is much employment.

One may buy either directly or indirectly those things which aid in production. When a farmer buys a traction engine rather than a luxurious automobile he is buying directly a thing which aids in production, rather than an article of consumption. If he has bought wisely the traction engine will aid him to grow a larger crop, which is a good thing for him. It will also increase the food supply, which is a good thing for everybody. The more farmers there are who save money and invest it in instruments which aid in production, the better production we shall have and the better the world will be fed. When a factory owner builds an addition to his factory rather than a new dwelling house, he is buying directly various things which aid in production. If he builds wisely he will add to his income, which is a good thing for him. It will also add to the productive power of the community, which is a good thing for everybody. It is a good thing especially for laborers, because it will require more laborers to run the enlarged factory than were required before it was enlarged. In short, it increases the demand for labor.

The more people there are who save their money and buy tractors, machines, factory buildings, and all other aids to production, the better the community will be supplied with all such things. The better the community is supplied with all such things, the greater its productive power and the greater the opportunities for productive employment. That is the reason why laborers always emigrate from a country where there is little saving and investing to a country where there is much saving and investing.

Indirect buying of producers' goods. But one may buy indirectly things which aid in production. When one deposits money in a savings bank, the bank will invest it. It may lend it to some farmer who wants to buy a tractor, a team, a cow, or some other aid to production. It may buy part ownership in some factory or in some other way encourage the buying of aids to production. The saver may himself buy the share in some corporation. In that case he becomes a part owner in the factory or whatever it is that the corporation owns. In all these ways and in many others one may buy indirectly all sorts of things which aid in production.

Indirect buying of such things has the same effect as direct buying. It encourages others to make the tools, machines, buildings, and other things which aid in production. Nobody would make such things unless somebody would buy and pay for them. The only people who buy and pay for them are those who save and invest, who buy fewer articles of consumption than they might buy, and who spend the money thus saved for things which aid in production. That is what it means to save and invest.

CHAPTER XIV

FORMS OF BUSINESS ORGANIZATION

Large capital necessary. The growth of machine production is the result of mechanical invention, but it has, in turn, made necessary such large aggregations of capital as to require the combined accumulations of numbers of men. In comparatively few cases does a single individual possess enough capital to equip a modern factory, railroad, steamship company, mine, or even a large mercantile house. Were it not possible to combine the capital of a number of individuals, large-scale production would be the privilege of only a few very wealthy men.

Methods of combining capital. There are three distinct methods of combining capital: one is known as the partnership; another is the corporation, or joint-stock company; and the third is the coöperative society. The partnership is a simple combination of two or more individuals in the ownership and management of a given business, in which each partner is fully responsible for the acts and liabilities of the group. The partnership is merely an enlargement of the individual. The individual who owns and operates his own business is, of course, fully responsible for all debts and obligations, and, subject to bankruptcy and homestead laws, all his property may be taken in payment of any obligation incurred in the business. Where two or more men join in a partnership each partner is responsible in the same sense and to the same extent as if he were the sole owner.

Difficulties of partnership. Obviously a partnership on these terms is possible only among men who are very intimately acquainted with one another and who have complete confidence in one another. Since each partner is fully responsible for the

acts of every other, it would be extremely hazardous, not to say foolhardy, for anyone to form a partnership with an individual with whom he was not intimately acquainted and concerning whose honesty and solvency he had the slightest suspicion. Incompetent or dishonest partners have caused the financial ruin of many an otherwise sound and capable business man.

The corporation. The modern expansion of business would hardly have been possible without some form of organization which would permit the association of larger numbers of men than are possible under a partnership. This has given rise to the corporation, or the joint-stock company. The distinguishing difference between the corporation and the partnership lies in what is known as limited liability. In a corporation the liability of each shareholder is strictly limited. The corporation may become bankrupt, but the individual members or shareholders can be called upon only for definite sums to make good the debts of the corporation. In the ordinary case each individual puts a certain sum of money into the fund. This may be lost, but he cannot be called upon for additional sums to make good further losses. In other cases, such as our national banks, the shareholder may not only lose what he has put into the fund but may be assessed an equal amount in addition. This is sometimes called double liability, but even in this case the shareholder's liability is limited and his whole property is not hazarded as it is in a partnership.

Suppose, for example, it were considered necessary to have $100,000 of capital with which to start a business. This capital may be divided into a thousand shares of $100 each. (A larger number of shares of smaller denomination or a smaller number of larger denomination may, of course, be decided upon.) These shares are represented by bits of printed paper which serve as evidence to show that the money has been put into the fund. A thousand different individuals may buy one share each, or a smaller number may each buy a different number of shares. For each $100 which any individual puts in he receives one of these bits of paper, which have come to be called