BOOK REVIEWS AND NOTICES

Changes in the Size of American Families in One Generation. BY RAY E. BABER AND EDWARD A. Ross. Madison: The

University of Wisconsin, 1924. Pp. 99. $1.00.

This study is an interesting addition to those previously made by Miss Amy Hewes and the late Frederick Crum on the changing size of native American families. The material was collected by means of questionnaires sent to the native-born families of middle-western college students, who not only filled in the returns for the families of their brothers and sisters, but also for their parents. By this means schedules were secured for approximately 2,500 families of this generation, the husbands in which were born on the average in 1866, and for 750 families of the previous generation in which the average year of birth for the husbands was 1834. The study, therefore, probably covers a representative group from the middle-class native stock in the Mississippi basin.

The families of the previous generation had, on the average, 5.44 children. The average number of children in those families of the present generation which do have children at all is 3.35. This is a decrease in the average size of the family of 38 per cent. In addition, 13 per cent of the present families are infertile, making the average number of children per family only 2.81.

The authors then quote Dr. Louis I. Dublin's paper, The Significance of the Declining Birth-rate, which was written in 1917 and based upon the 1910 life-tables, to show that 3.7 children "per married couple were required to replace the preceding generation," and conclude that the families of native stock are rapidly decreasing, both relatively and absolutely. They consequently write gloomily that "the present prospect is that in a hundred years it (the present native stock) will be numerically a negligible element in the American people.

These figures do indeed seem foreboding, until one begins to examine them more closely. Then it is seen that the authors have misunderstood Dr. Dublin's earlier paper, and that, through no fault of their own, they also have not taken full cognizance of the later statistics which he has since utilized. The misapprehension arises from the

fact that Dr. Dublin's earlier figure of 3.7 children being necessary to replace the preceding generation was not the number required from each married couple, but instead from each fertile couple. The proper comparison which Messrs. Ross and Baber should have made with this figure was, therefore, not that of 2.81, but that of 3.41. When this comparison is made, the middle-class American stock is seen not to be dying out as fast as Messrs. Ross and Baber believe.

Nor is this all. Dr. Dublin has recently made a most thorough revision of his study and has brought it down to date. He now finds that only 3.1 children are needed from each fertile couple to keep the population as a whole constant. Due to the lower death-rate among the middle classes, this number would probably be somewhat smaller for the native-born group. The stock which the authors have been studying is seen, therefore, to be still increasing, and not declining at the rapid rate which this monograph would have us believe. The 100 per cent Americans can indeed say, with Mark Twain, that the report by Professors Ross and Baber of their death is greatly exaggerated.

While the birth-rate has been declining, moreover, the infant mortality rate has been decreasing as well. Thus, whereas 12.9 per cent of all the children formerly died before their fifth year, now only 7.9 per cent die during this period. This decrease helps to a small degree to offset the decline in the birth-rate. That there are elements of seriousness in the situation, however, is indicated by the fact that an investigation of 100 dependent families disclosed an average of 6.49 children per family.

Several other interesting tendencies are disclosed by the investigation. The men of this class now marry approximately two years later than their fathers, and the women nearly three years later than their mothers. That this is not merely due to the longer period of education which the present heads of families enjoyed will be seen from the fact that the average age of marriage of men in the past generation with only an elementary school education was 25.2 years, while for men of the present generation with the same educational advantages, the average age was 27.1. For the women of the two generations with such educational opportunities, the average age of marriage was 21.1 and 23.0 respectively.

The birth-rate for ministers is found to be appreciably higher than that of members of other professional groups. This conclusion is confirmed by a recent study in the registration area by the census bureau on the average number of children of fathers from forty to

bG the gold supply, and PP the supply of circulating mediums when a 40 per cent reserve is required, plus the amount of gold taken by industry. It is assumed that all the monetary gold is impounded and used as reserve. Consequently PP is drawn so that any point on it is two and one-half times as far from a corre sponding point on II as is a similarly corresponding point on bG. ab represents the existing stock of monetary gold, and therefore if the point b is taken as zero bG will represent the supply schedule for new gold. If specie only is in circulation, the value of gold (in terms of other goods) will be fixed at x, and bc gold will be produced, dc of which will be taken by industry and bd by the monetary system. But if the circulating medium consists of paper money backed by a 40 per cent reserve in gold, the value of gold will be fixed at y, and gold production will be reduced to bg. However, the amount of gold taken by industry will be increased to fe, and consequently the proportion of new gold available for the monetary system will decline; and this fact, together with the decrease in gold production, will result in a reduction in the new gold available to the monetary system to bg-fe, a great reduction.

There is no way of predicting what the behavior of demand would be if a smaller reserve ratio were introduced. A lower value of gold might induce new uses of which we now know nothing, in which case the demand curve would shift to the right; but on the other hand there might be a decline in demand for any one of a number of reasons. Be all that as it may, only if in actual fact considerably less gold were taken by the arts could it be true that the monetary system would receive more gold; and this result does not seem very probable.

Let us now return to the question of the possible value of a so-called elastic bank-note issue on other grounds than those of elasticity. If under such a system of note issue, with its higher price level, less gold were used in the monetary system, society would be using less of its productive resources in the mining of gold to be used for monetary purposes; and inasmuch as there would be virtually no offsetting loss to this gain of resources for

other industries, there would result a net gain to society. If it so happened that more gold went to the monetary system there would then be a loss to society in that this additional gold in monetary use would serve no useful purpose; but this result, for the reasons already given, is improbable. There would, then, be this probable gain from the use of an "elastic" bank-note issue; but it would be very slight; and it would be in no way connected with the problem of the elasticity of the currency.13 However, there would be a very small loss which would partially counterbalance this gain in that a greater amount of gold would be necessary to settle international balances of payment, and consequently costs of transporting gold (exclusive of insurance charges) would be greater. In amount this loss would be quite inconsequential.

Let us next consider the interests of a particular country as they may be affected by this question of bank notes. If at any given time a nation is on a purely specie standard, i.e., having only specie or specie certificates in circulation, it will be to the interest of that nation to make provision for the issuance of bank notes. The extent of the advantage so to be gained, however, will be a matter of the relative size of the nation in question. If it be a small nation, the advantage will be greater than if it be large, for in the former case the action of this nation will have relatively little influence on the world-price level, and consequently a much smaller amount of specie than would be necessary in the absence of bank notes in the monetary system will suffice, both to maintain convertibility of the currency and to provide the requisite degree of elasticity. But again it should be noted that the question of elasticity is merely a question of reserves, that the gain in this case comes from the smaller amount of gold required to maintain a given degree of elasticity, and that, furthermore, the gain to this particular nation will be mainly a competitive gain,

13

This gain is only to a very minor extent an argument for a paper standard, for while such a standard, as compared with a specie standard, would give society a gain in productive resources, it would take away the advantage, if it be an advantage, which a gold standard has of setting a maximum limit to the amount of the circulating medium.

that is, it will be almost entirely offset by a loss to other nations. It will not be entirely offset, however, because of the fact that the action of this one nation will, to a very slight extent, raise the world-price level and consequently there will be a reduction, but in reality a negligible one, in the productive energy that is devoted to the provision of gold to be used in the monetary system.

It will of course be true that in a period during which gold production is inadequate to maintain the existing price level, a gain would be derived from the introduction of bank notes; but it is also true that during a period of excessive gold production the introduction of bank notes would merely add to the harm done by the excessive gold; or, if a nation is already using bank notes, a gain would be derived from eliminating or reducing to some extent the number of these notes if there were an excess of gold production. But even though there be times when an issuance of bank notes would be advantageous on these grounds, it should again be noted that the advantage is derived merely from an avoidance of a changing price level-reserves will still be the indispensable prerequisite to elasticity of the currency, even though bank notes, of the supposedly elastic sort, constitute a part of the currency.

Regardless of the form in which the proceeds of bank loans are taken-be it in the form of gold, bank notes, or deposits-the total of the circulating medium will expand with the making of loans, or with the acquisition of any type of earning assets by the commercial banks; and will contract with the repayment of these loans, or with the sale of any kind of earning assets. Elasticity of the currency is therefore a question of the ability of the banks to make loans and not at all a matter of the kind of security behind the notes issued, nor, indeed, of bank notes at all; and this ability to make loans depends exclusively upon the existence within the banking system of adequate reserves. Moreover, the maintenance of reserves adequate for the purpose of giving elasticity to the currency is itself entirely a question of the presence within the banking system of a non-profit-seeking institution which is