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(Chart 28), the actual data show two pronounced cycles from 1914 to 1917 and another from 1917 to 1921. The forecasted items show a continuously rising curve from 1914 to 1920 and a very abrupt decline only in 1921, about a year after the 1919 actual peak. In another illustration (Chart 30), which makes use of coal production data, there is no resemblance whatever between the actual data in the last four years of the series and the forecasted. In fact, the correlation is highly negative, for in practically every one of the sixteen forecasted observations the variations from one quarter to the next are in the opposite direction from that of the actual. Still another glaring example of discrepancy is illustrated in Chart 34, dealing with coffee imports. The actual series show three distinct cycles with peaks in 1911, 1920, and 1925. The forecasted data show the peaks in each instance about one year later. A similar lag appears in the low points in the forecasted data. The reader may well ask himself, "What is the practical use of a method which gives such unreliable results?"

The book is written in language to appeal to the person unacquainted with elementary statistical terms and methods.

The superficial appearance of a scientific approach claimed for this book should not blind anyone to the fact that the method described here takes more time than the results are worth. The actual work entailed may be judged from the fact that twenty-five columns of computations of addition and subtraction are necessary to resolve a time series into its three components and to reconstruct it in the form of a forecasted series.

The cyclical indicator as a method of locating trend is not superior to the less laborious free-hand method. The method of forecasting a varying secular trend by means of judgment is nothing more than an intelligent guess of little reliability and the whole procedure of projecting a time series into the future by means of the boot straps of the time series itself is of no practical use to any one interested in knowing when a peak or low point will be reached, or what may be the magnitude of secular, cyclical, or seasonal elements a year in advance. On these critical points the "approach to definite forecasting" is likely to lead one astray more often than not.

WASHINGTON, D.C.

L. H. BEAN

follow the conclusions drawn from it in Parts I and II. The data are presented in tabular form at the close of the book.

Each part of the work is commendable, but Part II is especially deserving of praise. The author shows that the issue between adherents and opponents of the trade acceptance is fundamentally one of a choice between a cash discount and a net terms trade acceptance system if the trade acceptance is to be used other than as a collection device. His conclusion on this question is typical of the soundness and clarity of his thinking which so admirably cuts through the bias of propagandists on both sides of the issue. He says in part:'

The cash-discount system is specially adapted to certain conditions and serves a useful purpose in connection with them, while the net-term system is peculiarly applicable under other conditions. Furthermore, when a survey is made of trade-acceptance development in the United States, a distinct tendency is found away from general and indiscriminate use of the instrument and toward careful consideration of its specific fields of use and the adaptation of it to these fields. . . . . Experience has demonstrated that its field of use is somewhat different than had previously been stressed and that it is of particular service in connection with the collection of accounts. Accordingly, instead of being in conflict with the present system of commercial credit in the United States, when properly analyzed it fits into and becomes an integral part of that system. . . .

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A final lesson that this study of trade acceptance principles teaches is that the fundamental factor in credit granting is the recipient of credit, and not the form in which the credit is extended or the agency by which it is measured.

Happily the faults of the book are of minor character. Punctuation is sometimes indiscriminately used, quotations and the tabular statement of terms appended are in too small type for ready perusal. The title might be qualified by the word domestic. The use of the word "commercial" rather implies the exclusion of credit practices and terms outside wholesale and retail distributive channels for consumers' goods. This implication is belied by the contents of the book. The author's style is somewhat toneless and sometimes his sentences are awkward and involved. These are merely physical and rhetorical defects.

As to defects of content. The uses and limitations of the bank acceptance are not discussed. In view of the growing importance of this instrument the omission is to be lamented. The author also fails to catch this misstatement attributed to adherents of the cash

1 See pp. 183-84.

men employed in their mill less than a quarter-year average decidedly lower than those of the full-year men, and the variability of the former group is much greater than that of the latter. Possibly to some extent the foremen give out "fatter" work to the old-timers than to the more recently hired. Ten per cent of all the weavers averaged less than 72 cents an hour, while the topmost 10 per cent earned $1.02 or more. The picture is so complex that it is not remarkable that our author does not recommend any particular figure for use in setting piece-rates.

No reference is made in the report to the possibility of employees' self-limitation of output. The histograms given, however, seem sufficiently symmetrical so that no presumption of such limitation is established.

What are the causes of these variations in earnings among plants? The differences are persistent, for the mills rank about the same in each of the two years. We might suppose that the higher-earnings shops employed, on the average, higher-grade men; but some positive evidence is forthcoming to the contrary. Our author utilizes her opportunity to study statistically the earnings of identical men as they move from one mill to another; and shows that those who changed from low-pay to high-pay shops tended to improve their earnings, and vice versa. It appears likely that the uniform piece-rates enable workmen in the better-managed and equipped shops to earn more than they did when they worked equally hard and intelligently in the other shops; and that the former mills are thus deprived of part of their "natural" competitive advantage.

UNIVERSITY OF MICHIGAN

Z. CLARK DICKINSON

Capital and Finance in the Age of the Renaissance: A Study of the Fuggers and Their Connections. By RICHARD EHRENBERG. Translated by H. M. LUCAS. New York: Harcourt Brace & Co., 1928. Pp. 390.

This work is translated from the now almost classical Zeitalter der Fugger, which bears the subtitle Geldkapital und Kreditverkehr im 16. Jahrhundert. It is not, however, a translation of that work, since it reproduces only a little over two-thirds of the text, none of the matter in Appendixes (some sixty-five pages in the original), and little besides the literary references from the fairly copious footnotes in the

parts that are translated. The textual omissions include the entire third "section" (one of three books or parts of the entire work), dealing with "The Epoch of the Great Commercial Financial Crisis," and the last two (fourth and fifth) chapters of section i, entitled, respectively, "The Genoese, Spaniards and Netherlanders" and "The Nature and Significance of the Money Powers of the Sixteenth Century." The Author's Preface is also missing. The omission of this fifth chapter on "Nature and Significance" seems to the reviewer quite inexcusable. If some unalterable doom limited the English edition absolutely to just 359 pages of text, it would surely have been better to include this interpretive section and sacrifice some details of the transactions of some of the less important German and Italian magnates. And the same would apply to the summary and interpretive paragraphs in the other omitted divisions.

Of the translation in the narrow sense, little need be said. It is acceptable, judged by the standard of translations as they are, as it is generally readable and generally gives the sense of the German. Most of the bad errors seem to be due to careless printing. (Cf. "without more" for ohne weiteres twice on page 33; "as though" instead of “although," p. 41; "absolute" for "obsolete," p. 126, etc.) But the printer cannot be blamed for such errors as calling Zinstaxe an interest tax instead of a tariff of rates (p. 34) and probably not for the recurrent rendering of Stände by "States" instead of "Estates." In some cases unintelligible expressions which occur in the English are found to be correctly translated. (Cf. p. 28, "on the average," which apparently should be "in round numbers," and p. 41 [31 in original] where Ehrenberg says certain compulsory refundings reduced interest rates by from 100 to 200 per cent!)

Regarding Dr. Ehrenberg's work in itself, we must confess to a feeling of disappointment. This is not because it is not an able, even masterly, performance; perhaps even in part because of its high quality. But life after all is limited, and these two heavy volumes go such a little way toward answering the questions that seem really to call for answer concerning the short though crucial period of which they treat. Most of the events and facts related consist of time, place, persons, and terms of purely monetary dealings between the big moneyed families like the Medici, Grimaldi, Fugger, etc., on the one hand, and, on the other, the rising dynastic powers of Europe. Of the wealth represented by all this money, its nature, origin, movements, transformations, and uses, or of the rôle of money in such wealth facts and events, we are told very

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roll of the professions. Two conditions, according to the author, have prevented investment banking as a whole from occupying this position. The first of these can be best stated in the author's own words (p. 8):

but competition has grown noticeably in recent years, especially because of the formation of many firms composed of men who are brilliant salesmen but who lack financial responsibility. Since in many cases they have not the capital with which to carry securities, they are forced to sacrifice in the open market. . . . . This situation has tended to increase competition and to put it on the plane of salesmanship rather than of service and judgment. It has been a gradual growth which has carried along many older houses which tried to resist. It is not suitable to present-day conditions under which investing has become so complicated as to call for a professional service rather than salesmanship.

The other obstacle to this professional development is the investor himself. The investor does not place himself in the same receptive attitude that he does when consulting his doctor or lawyer. The investor will always follow the advice of the latter two, but not that of his investment banker. With the complexity of corporate organizations and the intricacies of market movements, however, "only those with a high degree of knowledge and training can do justice to the swings of a nation." The author also believes, contrary to the frequently heard criticism, that the investment banker properly equipped with a service department can give as unprejudiced service and advice as the "independent services" having no securities to sell. This development he now believes is taking place.

In the discussion of investment securities themselves, the following topics are discussed: the general conditions, the industry, the company reports, the choice of a company, the choice of the particular security, and the procedure. These chapters are followed by the more general discussion of speculation, the investment trust, English methods, a code of ethics, an ideal investment house, and a word to the investor.

The book is non-technical in character, but its presentation is forceful and convincing. The chapters on securities, though not complete, are suggestive. Some of the chapters seem trite and would leave the inexperienced reader of financial literature somewhat at sea. The intent of the author evidently is to state in general terms what the problem is, rather than attempt to indicate how securities shall be analyzed. The most valuable contribution of the book undoubtedly is the author's interpretation of the investment banker's functions and

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