law was enacted permitting savings banks to establish departments for the issue of life insurance and annuities.

The forms of policies issued are:

1. Straight life policy, in which premiums cease at the age of 75.

2. Endowment policy, maturing at age 65.

3. Endowment policy, maturing in 20 years. 4. Insurance and annuity policy.

5. Old age pension policies.

The maximum life insurance that may be taken by a person in any one bank is $500, and the maximum annuity $200, but policies may be taken by a person in two or more banks. (Report of Commissioner Labor, 1908.)

It is thought that savings banks, already fully equipped as they are, can manage the insurance business without the outlay of expenditure incidental to the present system. The house-tohouse collection of premiums is dispensed with, eliminating the expense due to the collecting system. The advantages of insurance will be perceived by the working classes without the need of persistent persuasion on the part of agents, when they recognize the safety of their investment and the low price at which they can obtain such advantages. (Cf. L. D. Brandeis, Savings Insurance.)

QUESTIONS

1. What is insurance? Give a short historical account of insurance. 2. What is the extent of insurance business to-day?

3. Explain by example the economic advantage of insurance.

4. Give the theory of insurance.

5. What is a joint-stock company? A mutual company?

mium; policy; reinsurance.

Define pre

6. What are the different kinds of insurance? What kinds of insurance come under personal insurance? What under property insurance? 7. Explain under life insurance what is meant by straight life insurance; term insurance; endowment insurance. How is the premium determined in life insurance?

8. What is a limited-payment policy? A non-participating policy? Describe what is meant by loading.

9. When does a policy lapse? When is it surrendered? What becomes of the sums of money accumulated by an insurance company?

10. Explain joint-stock and mutual fire insurance companies.

II. Explain coinsurance.

12. How is the premium in fire insurance determined?

13. Give a general account of workingmen's insurance.

14. What is industrial insurance? Describe its growth in the United States.

15. What are the advantages of industrial insurance?

16. State some of the objections made against industrial insurance as carried on to-day.

17. Answer the objections.

18. What remedy has been adopted in Massachusetts against the alleged evils of the present system of industrial insurance?

CONSUMPTION.

CHAPTER XX

SPENDING.

POVERTY

SAVING. INVESTING.

I. CONSUMPTION

Definition. Consumption is the second division of Political Economy. Consumption is defined as the use which man makes of riches for the obtaining of his needs. (Gide, Principles of Political Economy.) Again: "Economic consumption is the enjoyment of the utilities which wealth is capable of offering.” (Fetter, The Principles of Economics.)

Kinds of Consumption. — Consumption is public when carried on by the state. Its results are seen in the educational establishments, the hospitals, the sanatoria, the parks, erected and constructed at public expense. Consumption is private when carried on by private individuals in the satisfaction of their own wants.

Consumption is sometimes divided into Productive and Nonproductive. Productive consumption occurs when the objects are used so that they may serve to produce more wealth. This is not consumption in our present sense. It occurs in actual production. Non-productive consumption occurs when the objects satisfy a want, without reference to the fact that they are or are not destroyed. This is the final term of production.

Explanation. Consumption is not necessarily destruction. There may be destruction, as in the case of food and fuel. There may be but gradual destruction, as in clothes, furniture, houses, etc. There may be no destruction from wear, as in a statue or a painting.

Consumption is the ultimate aim of production. There are some who conceive production of wealth to be an end, and who would make the consumer but a part of the mechanism the

object of which is the production of wealth. This view is prevalent to-day.

The betterment of society as a whole, the betterment of the individuals who compose society, should be the aim of all productive effort. Yet in the present state of things, a great portion of society is in misery. Thirty per cent of the population of England are in poverty, i.e. have not wherewith to procure the necessaries of life. In America, perhaps fifteen or twentyfive per cent are in the same condition.

In the consumption of goods, man seeks the satisfaction of three orders of wants: those which relate to the necessaries of life; those which relate to the decencies or comforts of life; those which relate to luxuries. The rational man, in the consumption of goods, should seek to gratify his wants in the foregoing order. Morality requires the same order. As a matter of fact, impulse, habit, or fashion determines very often the actions of men in this matter.

Consumption has naturally a great influence on production. It constitutes the term "demand," while the product is the "supply." To bring about equilibrium between the demand and the supply is the great aim of production. The consumers ultimately determine the nature and the amount of production. They can restrict the production of a commodity if they limit their demand for it; they can stop its production wholly if they cease to demand it.

Thus the consumers have it in their power to determine what shall be the nature and what the quality of production. The Consumers' League, for example, is an organization composed of members who bind themselves to buy no article which has not on it a printed guarantee that the article has been made under just and sanitary conditions.

It follows from this that the criminality of those producers who turn out products, books, pictures, so-called works of art, that offend against justice, religion, and morality is participated in by those consumers whose demand alone for such products creates for them a profitable market.

Subjects discussed under Consumption. Under consumption come the three subjects: Expenditure or Spending, Saving, and Investing. After discussing these subjects, a short study will be made of Poverty and its remedies.

II. SPENDING

Spending here means the giving away of money for objects which serve for our personal consumption. It does not mean buying raw material for manufacture, nor does it mean paying wages.

Spending should steer a midway course between prodigality and avarice. Each person should determine how much he needs for his real wants and those of persons depending on him, and how much he may devote to spending. A certain amount of recreation and pleasure is allowable. If guided by reason and morality, expenditure will be directed to the procuring of those things which will further the perfection of the individual. The individual's perfection will embrace the complete development of heart, mind, and body. This rule will apply to public expenditure as well as to private.

Spending that gives money to more productive industries is economically the better kind of spending.

Means of reducing Expenditure. Several means are resorted to for the purpose of reducing expenditure. Some of the principal methods are as follows:

(1) Living in Common. — There is no doubt that the expense of living is increased immensely by each family living by itself. There are the separate individual expenses for house, servants, cooking utensils, etc. If several families live together in one house and have servants in common, a common dining room, and meals in common, there must necessarily be a great saving in expenditure. This idea has appealed to Americans as to no other people, and hence the prevalence in this country of the practice of living in hotels and apartment houses where servants