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curve" is a part), and (2) the amount of the actual supply existing in the community. "This is not a curve at all, but an actual quantity." If, however, what we wish to know is not simply the price at which the commodity will be sold, but also the number of units that will change hands, and whether the price is in stable or unstable equilibrium, we must have recourse to the ordinary method of presenting the general demand curve in two sections: the ordinary conventional demand curve of the purchasers, and supply curve of the sellers.

That these are valid conclusions may be illustrated by reference to a hypothetical example.19 Suppose that in a given market for hats there are five buyers, B1, B2, B3, B4, and B5, and

TABLE I*

B, is willing to buy one hat for $5.00
B2 is willing to buy one hat for $4.00
B, is willing to buy one hat for $3.00
B is willing to buy one hat for $2.00
B, is willing to buy one hat for $1.00

S, is willing to sell one hat for $4.00
S, is willing to sell one hat for $3.00
S, is willing to sell one hat for $2.00
S4 is willing to sell one hat for $1.00

*Professor Henry L. Moore calls attention to the implicit assumption made in this example, i.e., that each seller has only one unit to sell and each buyer will take only one unit. This purely hypothetical assumption does not, however, invalidate the use of the example for the purpose of illustrating how the general demand schedule may be derived from the buyers' and sellers' schedules.

four sellers, S1, S2, S3, and S4, and that the situation is as shown in Table I.

Under these conditions, what will the price be?

1

It is evident that if B, is willing to buy one hat for $5.00, he certainly would be willing to buy it at a price less than $5.00, so that when the price is $4.00, the number of hats demanded is two (one by B1 and one by B2); when the price is $3.00, the number of hats demanded is three (one by B1, one by B2, and one by B3); etc. Similarly, if S, is willing to sell one hat for $1.00, he certainly would be willing to sell it at a higher price, so that when the price is $2.00, two hats are offered on the market (one by S, and one by S.); when the price is $3.00, three hats are offered on the market (one by S., one by S3, and one by S2); etc. Proceeding in this manner, we obtain the demand and supply schedules shown in Table II.

19

1 Cf. H. J. Davenport, Economics of Enterprise, pp. 47–51.

It is clear from these schedules that the market price will be $3.00, for at this price the number of hats demanded is equal

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to the number supplied. As there are four hats on the market, one hat will not find a purchaser. (S, is not willing to sell his hat for less than $4.00.)

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FIG. 3. The relation between the general demand curve and the particular demand and supply curves.

When these schedules are represented graphically, we have the usual demand and supply curves. In Figure 3, DD' is the demand curve of the buyers and SS' is the supply curve of the sellers. The intersection of the two curves is at the point P. From the co-ordinates of this point (X=3, Y=3) we know

tages of being a member of the system and may the advantages be obtained for state banks indirectly through correspondent member banks? The question of state banks and the banking system was discussed even before the law establishing regional reserve banks in this country. Much consideration also was given to the social aspects of state-bank membership. However, the crux of the issue continues to be the question of costs of membership for an individual bank compared with the benefits derived. Dr. Tippetts does not claim to have found new materials on this subject nor does he offer unusual suggestions for inducing state banks to enter the system. He has rendered a useful service, nevertheless, in bringing together much information which has been scattered and not conveniently available. Because of the nature of this study, it will serve more as a reference work than as a textbook.

A few statements from the introductory chapter will indicate the broad nature of the problem considered.

The problem of creating a unified American banking system is as old as the Federal government itself. During a large part of American history we have suffered from a dual banking system. The problem is largely one of how to secure unified control [p. 1]. . . . . It is the object of this study to trace the steps by which and the conditions upon which the state institutions were made eligible for membership in the federal reserve system; to explain the unfavorable attitude of the state banking institutions toward the system for so long after its adoption; to describe the changes which have been made in the Federal Reserve Act to make membership more attractive, and the way in which the state institutions responded; to investigate the attitude of these institutions during the late war; to consider whether their membership in the system is really desirable, necessary, or advantageous both for themselves and for the nation as a whole; and to point out what changes, if any, are still desirable in the law to meet the reasonable requirements of the state banks [p. 5].

Two chapters analyze the advantages of membership for state banks and the validity of objections to membership. The advantages are those usually cited in favor of the Federal Reserve System. The objections are covered under five heads: membership not necessary because the advantages are available through correspondent banks, non-payment of interest on reserves kept in federal reserve banks, hostility to par remittance on checks, dissatisfaction with the administration of the system, and limitations on loans and discounts. The objections are well supported and the reader must conclude that many state banks, probably most of them, have sound reasons for not becoming members, especially when the advantages can be exploited indi

rectly without incurring the costs of membership. In elaborating on one of the objections to membership, viz., the par remittance on checks, the author includes two chapters (xiii and xiv) on the controversy and litigation. Without doubt, this point was one of great irritation to many state banks and probably contributed toward a reduction in membership, but it seems that two long chapters, comprising almost one-fifth of the book, give too much space to this objection. Especially is this true of the chapter on litigation. The final chapter raises the question whether a large number of state banks should join the system, and suggests only one change which might be made in the act to encourage more state banks to become members. Provision might be made for a wider distribution of the earnings of the Federal Reserve banks. Other amendments might increase membership but would not be sound or wise. The author concludes also that possibly some improvement might be made in the administration of the system.

This book is written in an interesting and easy style and holds the attention of the reader in spite of the great amount of statistical, historical, and legal details. The author is logical in developing his points and shows proper balance among the topics handled, with one or two possible exceptions. There is evidence of much research and painstaking labor in the hundreds of references and footnotes scattered throughout the various chapters. A useful bibliography is included at the end of the book. As a work in recent economic history and as a reference book on the subject chosen, this study fully justifies itself and will be welcomed most heartily by students interested in the banking experience of the United States.

UNIVERSITY OF MICHIGAN

RAY V. LEFFLER

The American Whaleman. By ELMO P. HOHMAN. New York: Longmans, Green & Co., 1928. Pp. vii+355. $5.00.

The purpose of this volume is to describe the life and labor of the American whaleman-his origins and character, his hours, wages, and working conditions. It offers a brief history of the industry from European beginnings, a detailed description of ships, crews, and whaling methods in the period when it was at its full height, and a brief discussion of the decline after the Civil War. The chief value of the work lies in a sound and careful evaluation, from adequate sources, in a field where fiction and romance have long distorted facts.

The story, as Mr. Hohman tells it, is not a pleasing one. The character of the crews ever tended to decline in quality as "provincial

both buyers and sellers, or that of buyers only, depends upon the nature of the statistical data on which it is based. If, for example, we are given the annual production of potatoes including the amount left to rot in the ground, the amount fed to hogs, etc., and the corresponding prices, we have a series of points or observations, such as P' and D" (Fig. 3), affected of course by disturbing factors. The law of demand derived from these observations will be a general demand curve. Such a demand curve must not be put in juxtaposition with a supply curve. If, on the other hand, we are given the quantities sold and the corresponding prices, we have a series of observations or points such as P. The law of demand derived from these observations will be a particular (or buyers') demand curve. In practice, however, it may often be impossible to derive a purely buyers' or a purely general demand curve, owing to the unsatisfactory nature of the available statistics and to the fact that the two curves may coincide for part of the distance.

5. The most common demand curve is the locus of a point P whose abscissa represents the number of units demanded and whose ordinate represents the price per unit (see Fig. 2). There are, however, other kinds of demand curves. Thus, if in the above demand curve we let the ordinate represent not the price per unit, but the total amount of money (or any other specified article) given in exchange for the quantity represented on the X-axis, we have the integral curve which is frequently used for representing demand in international trade. In this study, however, only the more common demand curve will be dealt with.

IV. LIMITATIONS OF THE STATIC LAW OF DEMAND The limitations of the static law of demand have been discussed by Marshall20 and, more especially, by Edgeworth." At this point only two difficulties need be mentioned.

1) In theory the law of demand for any one commodity is given only on the assumption that the prices of all other com

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21 Article on "Demand Curves," in Palgrave's Dictionary of Political Economy, I, 554.

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