orders against the existing stock of goods of any and whatever kind. Society does not every year consume the goods it produces in that year. In other words, the formation of income belongs to exchange. Income is simply the price paid for labor-service, for the use of property or for undertaker's service. Monopoly incomes, like monopoly prices, result from natural or individual advantages, from legal restrictions, etc. Such incomes are called rent.

Coming to the question of what determines the share which each economic group obtains of the yield of society's productive undertakings, his treatment is in many respects original. He starts out with a discussion of profits, then takes up rent and interest, and, last of all, wages.

He follows Walker in treating profits as a phenomenon quite analogous to rent. Neither profits nor rent enters into cost of production, and therefore into price, but both are determined by prices. Profits, like rent, is a natural phenomenon. As long as human wants continue to change, prices will be variable, and it is upon variations in prices that profits, in the narrow sense of the term, ultimately rest. The real opposition then in distribution is between the interests of laborers and of capitalists. The more the one obtains, caeteris paribus, the less there is left for the other. Wages and interest are both price phenomena and, therefore, subject to the general law of prices. The application of this law, however, is rendered, in Philippovich's opinion, practically impossible in the case of the former owing to the fact that labor-service is not to be separated from the person of the laborer. For this reason, the principles regulating the supply of labor-services are very largely of a non-economic character.

Touching the scientific explanation of the phenomenon, interest, our author criticises the views advanced by Böhm-Bawerk, Wieser and Menger, respectively, and formulates for himself the "productivity" theory, in a modified form. His treatment of this question (p. 244) is too summary to do justice either to his own theory or to the theories of his opponents. Bearing upon this point, as upon many others, Walker's views are quoted with approval.

Philippovich looks to statistics for further light upon the difficult problem of distribution. On the basis of some very interesting tables which he gives of the distribution of income in various countries, he concludes that no real economic progress can be expected from a mere altered system of distribution, but that any proposal having for its object a radical social reform, to be effective, must include some plan by which the proportion between the total product and the number of individuals, among whom this product is to be divided, shall be altered for the better. It is not enough for socialism to show that it offers a more

equitable system of distribution than that at present exists; it must also give promise of decided advances on the side of production before it merits serious consideration.

IV. Consumption. The second half of the fourth book of the Volks. wirthschaftslehre treats of the use of goods. What interests us especially is that which Philippovich has to say in regard to the position occupied by consumption in a general system of economics. In general, he says, consumption directs the course of production and determines the amount that shall be produced (p. 283). But, on the other hand, at any given time the prevalent distribution of income is the starting point determining the direction the demand for consumption-goods shall take. As human wants, and consequently the prices of goods are constantly changing, consumption is in a dynamic condition. Production must constantly be taking on new forms to meet the changing demand. Thus, economic life consists of a continual readjusting of the supply and of goods to a constantly varying demand for goods. Under normal conditions this adjustment of supply to a varying demand proceeds smoothly enough. Such slight losses and friction as it entails are readily overlooked. Let, however, some unexpected element, such as a radical change in the productive methods employed, enter the field and there ensues what is called a commercial crisis. This starts usually in some particular department of industry, but spreads rapidly until the whole economic organism is more or less seriously involved. Commercial crises are thus simply the results of a failure on the part of production to accommodate itself promptly to the demands of a variable consumption. They are inseparably bound up in our present "anarchistic" economic organization and may be expected to recur with greater or less regularity as long as this system is retained and consumption continues to be dynamic.

Perhaps the most interesting portion of Professor Philippovich's work to the foreign reader is found in the last part of his last book, where he speaks of the rôle at present played by economics in German politics. He gives a most interesting review of the evolution of the party program of the social democrats (pp. 324-327) and shows how their demands in the field of practical politics have little by little modified themselves to keep pace with the vast social reforms inaugurated by Bismarck and being followed out to their logical conclusions under Caprivi.

Under the title of "Social Reform Parties" he distinguishes three distinct directions: the liberal, the conservative and the direction followed by the church parties. These are all opposed on the one hand to the laissez faire policy advocated by the extreme individualists, and, upon the other, to the fundamental tenets held by the social

democrats. He characterizes the liberal reform party in the words of Brentano, its "scientific leader." It demands, upon the one hand, a retention of the existing institutions of private property and the freedom of contract, but, on the other, such interference and regulation from the side of the government as shall protect the weak and encourage the organization of the various industrial groups and classes that they may take a more active and direct part in industry so that competition may be really, as well as nominally, free.

The conservative social-reform party owes its origin to the writings of Rodbertus-Jagetzow. Its most prominent representatives at present are Adolph Wagner and Stöcker. Its direction may be characterized as socialistic in that it advocates an extension of the functions assumed by the State, in various directions, and recognizes taxation as a legitimate means to be employed for the purpose of equalizing the incomes of different classes in society, but it by no means deserves to be confused, as by some writers, with socialism proper.

The church party is divided into (1) Protestant, and (2) Catholic. Both of these look for social reform rather in the general moral regeneration of society than in any sweeping change in the existing political order. They differ principally in the amount of importance they ascribe to the State as an organ in effecting social reform.

Philippovich is careful to maintain his judicial tone in this part of his work, but from various indications the reader is justified in assuming that he himself takes a somewhat eclectic view of the various movements having social reform for their object.

It has of late years become so generally the custom among German professors of economics, when they have arrived at a certain stage in their academic careers, to embody their economic views into a more or less complete "system," that the literary market is fairly overstocked with this particular class of works. The general reading public is in the habit of passing by these manuals in silence. They help to fill up the shelves of those who pride themselves upon having "complete" libraries, and for the rest their existence is justified in that they are of great service to the students of the particular professor who happens to be their author; but it is seldom that they deserve to be classified among the real contributions to our science. In this review I hope to have made it clear that the “ Volkswirthschaftslehre" of Professor Philippovich is calculated to take a position in many respects unique among German economic text-books, and that it is deserving of much more than a merely local attention. In the present unsettled state of political economy, when every day is bringing forth new ideas and new conceptions which only gradually fall into their proper perspective with reference to older theories and

older ways of thinking, it is no wonder that many of us feel some little confusion; we wonder where we really are and whither our science is actually tending. To such this new book of Philippovich is a positive boon. In it the author has made a conscientious and conspicuously successful attempt to place the new theories of the Austrian school in their proper light with reference to the older classical theories. Here the reader will find reproduced, in a remarkably compact and logical form, the best that contemporary Austrian and German thought and research have contributed to our science. A careful study of the "Volkswirthschaftslehre” cannot therefore be too strongly recommended to American economic students.

Vienna.

H. R. SEAGER.

RECENT WORKS ON MONETARY PROBLEMS.

The Silver Situation in the United States. By F. W. TAUSSIG, LL. B., Ph. D., Professor of Political Economy in Harvard University. Pp. 133. New York: G. P. Putnam's Sons. 1893.

Das internationale Währungsproblem und dessen Lösung. Von THEODOR HERTZKA. Pp. 136. Leipzig: Duncker und Humblot. 1892.

These two monographs, covering in part the same ground, viz., the use of silver as a medium of exchange, are of uncommon interest at this moment, when "silver" has become a burning question. Professor Taussig's book was originally published by the American Economic Association as No. 1 of Volume VII. of its publications; and in its present revised shape forms one of the "Questions of the Day" series. The first part is devoted to a careful delineation of silver legislation and its effects, beginning with 1878. The circulation of coin and notes, the concurrent effects of industrial changes such as the annual moving of the crops, and alternating eras of commercial depression and activity, the tendency of silver currency to find the vaults of the Treasury through the channels of taxation-all these complex reactions are scientifically traced, and their causes skilfully analyzed. The author's conclusions, that the issues under the BlandAllison Act were not excessive, and that a complete theory of prices is dependent primarily on the volume of credit paper rather than upon the amount of actual currency, are eminently sound and sane. No less true is his verdict upon the excessive issues under the Act of 1890. The most interesting topic at the present time is the discussion of the question how a gold premium may eventually be reached. Here Professor Taussig shows that it may come in different ways, either preceded by speculation and inflation, or without any such

economic antecedent, merely through an unfavorable balance of trade and heavy drafts upon the Treasury's gold holdings. That such a gold premium is not improbable in the near future, recent events have demonstrated. Especially threatening is this calamity in view of our relatively increased imports of late, and the recent Australian crisis. Our late experience seems also to confirm Professor Taussig's acute estimate of the amount of gold held in this country. His guess seems to have been more accurate than the optimistic official estimates. The scheme of ex-Secretary Fairchild for the free coinage of silver up to the point where the Treasury accumulations of silver shall amount to a certain fixed sum, seems to meet the mild approval of the author as a possible advantageous compromise, political and financial. Such a scheme is now certainly without much political value, as it is so palpably a veiled cessation of silver coinage, that the "silver men" certainly would not accept it unless the limit were placed at a figure so dangerously high that the plan would lose all economic advantage. The other part of the book is devoted to a theoretic consideration of bimetallism. But of this, more anon.

Dr. Hertzka's brochure merits attention for several reasons: first and foremost, its propositions seem to offer the only possible ground for any further proceedings of the Brussels Conference, now temporarily adjourned, as Dr. Hertzka informs us by letter, to look into his proposals; and, second, because it is an utterance from an Austrian economist who seems to have the confidence of the Austrian government, whose recent action in regard to the gold standard is of peculiar importance at the present juncture. Hertzka's plan was transmitted through the American Minister at Vienna to the cabinet of the last Administration in October, but the pending presidential campaign deferred any decisive action thereupon at that time. In essence, the plan outlined by Hertzka is to secure an international agreement between a sufficient number of important commercial States to base their currency upon a joint metallic basis of gold and silver whose ratio by weight is to be the same for all the participating States. It is suggested that a ratio by weight of nine units of silver to one unit of gold would be an approximation to the desired system. At the present (gold) value of silver this would constitute about twosevenths of the value of the metallic basis in silver and five-sevenths in gold. It will be seen that no attempt is made to regulate the values of the two metals, as proposed by the various bimetallist schemes. Hertzka is absolutely skeptical as to the permanency or even the possibility of international bimetallism. Even Wolowski's modified scheme of an alternative standard, Hertzka shows, assumes falsely that the values of gold and silver will fluctuate about a fixed