are common to all and where meals are taken in one common dining room.

In this system of living thus in common, there is indeed a curtailing of expenses, but there is the danger of destroying family life, the charm and sanctity of the home, and all the beneficial influences for the moral education of the young that center around the exclusive hearth.

(2) Coöperative Associations. These have for their object the establishment of coöperative stores throughout the country, with capital furnished by the associates, where necessaries and other commodities may be bought at cost or at prices slightly above cost. Goods are bought by the stores at wholesale, and thus a saving is made. If there are profits, they are distributed among those who have contributed the capital.

Coöperative associations are established in great numbers in England and they do an enormous amount of business.

(3) Building Associations. Such associations were first established in Philadelphia in 1835. They have increased rapidly in the United States, until to-day they do a business approximating $600,000,000. Stock is issued to be paid for in small monthly installments. Only stockholders can borrow from the association. The association advances the money required for the building of houses, securing itself by taking mortgages on the houses and the land on which they are built. The borrower pays his installments, which are the equivalent of rent, and after ten or twelve years, he will have paid up the loan advanced him.

These associations furnish a ready means of supplying the money for house building and are a great inducement to the poorer classes to secure their own homes.

Luxury. Closely connected with the question of spending is the subject of Luxury.

Luxury is defined as "the unreasonable use of things rare and costly" (Antoine, Cours d'économie sociale, p. 670), or, again, "the gratification of a superfluous want." (Gide, Principles of Political Economy, p. 637.)

Luxury is relative. It depends on times, places, and persons. Some things that were luxuries one hundred years ago have to-day become the mere necessaries of life. What would be a luxury for a poor man may be even necessary for a wealthy man. Economists are divided on the subject of luxury. Some commend it. Others, more reasonably, condemn it. The reasons

for condemning it are:

1. It makes one selfish and diminishes one's sympathy for the poor and suffering.

2. It engenders greed and the desire for riches.

3. It dissipates capital which might aid in production. 4. It is contrary to the natural law.

Luxury is wastefulness and to be condemned for other reasons besides the extravagant expenditure of money, when it is a waste of labor, the labor being directed not to essentials, but to trifles; when it is procured by grinding poor laborers; when it is indulged in for mere vain display; when it hinders production (witness the extensive parks of English landowners); when it causes degenerates and classes.

III. SAVING

Saving means the laying aside of money saved from consumption. Saving is not practiced by savage tribes. It is the result of education and civilization, of forethought which looks into the future and esteems a future advantage or gain to be worth the present sacrifice. Saving means always a sacrifice of some kind.

Conditions for Saving. The conditions for saving are:

1. One must have something over and above one's daily expenses. It is hard for the poor to save. Still, very often even they can save, if they restrict the expenditures they make for useless or injurious things.

2. There must be the will to save. This condition is most frequently wanting, especially among the great mass of the poorer classes. These live wholly in the present, are incapable

of projecting their thoughts into the future, and hence have no strong motive for imposing on themselves the present sacrifice that saving entails. Education can do much in this matter.

Institutions for Saving. There are various institutions for saving, such as the state savings banks, the postal savings banks, coöperative societies, building associations, industrial insurance. Those here mentioned have been already dwelt upon.

IV. INVESTING

Investing is a mode of production. It adds to the wealth of a country. An investment may be made by the holder of money by lending it out to others who carry on production, or by his taking an actual part in production.

Ways of Investing. The principal ways of investing are in Loans and in Business.

(1) Loans. Money may be loaned to others who wish to engage in business. A certain rate of interest is charged. Security is exacted, and the security may take various formsa promissory note, a mortgage, or a claim on future salary. Again, money may be invested in government bonds. Such an investment is practically a loan to the government, the security being the government bonds, which pay a certain rate of interest yearly and are redeemable at a certain future date. Money may be invested in railroad bonds. Here a loan is made to the railroads, the security being the bonds of the railroads.

(2) Business. Money may be invested in business, as real estate, commerce, farming, productive industries; or, if one does not personally enter business, he may invest in the stocks of the numerous industrial concerns already engaged in business. These stocks pay a dividend to the stockholders at stated periods. One has but to glance over the financial page of the daily paper to see the list of large business concerns in which money may be profitably invested.

In all this matter of investing, it must be borne in mind that the money invested is consumed by the different concerns in

which it is invested, and herein consists the difference between hoarding and investing. Again, invested money when loaned is spent not by the person to whom the money belongs, but by the persons to whom the money is loaned, and herein consists the difference between investing in loans and spending.

Conditions for Investing. There are two conditions for investing, the Security and the Profits.

(1) Security. A prudent man will not invest his money either in loans or in business unless he has some assurance that he will get back not only the same amount of money, but also a surplus in the form of interest, which will pay him for the risk he runs in the investment. He must have security of three kinds, Political, Legal, and Moral.

Political security is security against revolutions in government, change of dynasty, change of governmental methods in dealing with finance, against oppressive government methods, against foreign embroilments which may result in war. When this political security is destroyed or notably disturbed, new investments cease, and, if possible without great loss, the existing investments are withdrawn. Some years ago the dread of internal disturbances in Russia had the effect of curtailing investments in Russian bonds. In all countries rumors of war will have a very perceptible influence on investments. The fear of a change from the gold to a bimetallic standard in 1893 caused the withdrawal of foreign money invested in American securities.

Legal security is sufficient guarantee that the investor's rights over his invested capital will be safeguarded by the laws, and by those who administer the laws.

Moral security depends on a public morality, a business honesty, a fidelity in keeping engagements, without which all business intercourse must come to an end.

(2) Profits. The second condition for investing is the reaping of some monetary profit from the investment. If nothing were to be gained by putting out one's money in loans and business transactions, money would not be so put out; it would be

hoarded. But the fact that a definite return in the form of interest is made for each dollar invested makes the investment at once profitable and desirable.

The ways open for profitable investment are innumerable. There are, as already mentioned, government bonds, railroad bonds, the shares of industrial concerns. Promoters on every side are constantly making enticing offers of large returns for capital invested in patents, new industries, mines, and business enterprises. Caution, however, is needed in accepting such offers. Close investigation should be made before intrusting one's often hard-earned capital to the ventures that are advertised. It is a safe view to hold that the higher the interest and the more easy and assured the returns, the greater is the risk for the investor. Where one seeks absolute safety, one must be content with small profits.

V. POVERTY

Much is being done to-day in the study of poverty, in the investigation of its causes, and the search for remedies. It will be well to look into the question, both for the sake of its economic importance and to learn how it is treated by economic writers.

Explanation of Poverty. Poverty may be Absolute or Relative. It is absolute when the income is insufficient to obtain the bare necessaries of life. It is relative when the income is sufficient indeed to obtain the bare necessaries of life, but insufficient to secure the ordinary comforts suitable to even the lowest orders of civilized society.

Poverty depends on the relation between income and cost of living. The fundamental items of expense are food, shelter, clothing.

Statisticians in Germany and more recently in the United States (in the Bureau of Labor) have conducted elaborate investigations in this matter, to find out the relation between income and the several items of expenditure. Thousands of