for money and for the earnings of money at the point where they are most needed. A market denuded of capital will pay a high price for capital. It is only through the mechanism of the money market and the stock exchange together that any real clue is afforded of the need for capital, either territorially or in different industries. Through the influences which the rates for money and capital exert upon investment in new industries, through the fact that capital is attracted to securities. which are selling high because the industries they represent are earning well, there results a closer adjustment of production to consumption, of the world's work to the world's need, than would be possible under any other system.

From this point of view, the mechanism of modern industry affords an almost insuperable objection to State socialism. If it were attempted to establish any system of State socialism, it would have to be determined in just what proportion every article should be produced, — just how many shoes and hats, how much clothing

and sugar and vinegar the world needed, and it would be necessary to adjust the supply to that need. To-day through the mechanism of the stock market it is determined, as precisely as human ingenuity has yet found it possible, just how much is needed of every commodity, because the products of those industries which are needed are rising in value, tempting to increased production, and those which are not needed are falling, giving warning that production should be curtailed.

If the stock market were abolished and State socialism set up, who would be the judges of the direction of production? Who would determine whether there should be a million more pairs of shoes produced or only ten thousand? Who would determine whether human energy should be wasted in producing shoes nobody could use, or utilized in building railways where they were badly needed?

The guiding factor of rising and falling prices having been eliminated, there would be no means of determining promptly when the supply of any article had reached

the limit of the world's need. An executive board of one hundred of the ablest men in the world could not possibly determine the direction which production should take without the index afforded by prices in the merchandise and stock markets. But through the stock market it is determined almost automatically, with as much nicety as anything can be determined which depends upon human judgment, where further production is needed and where capital is needed. Upon that market is concentrated, in a sense, the judgment of every human being in the world having any interest in production either as consumer or producer, not only of those who deal in stocks and securities, but those also who are directly concerned in the industries and interests which those securities represent. That delicate register of values, that sensitive governor of production, that accurate barometer of the people's needs, could not be replaced by any process that any State socialist has devised or suggested.

IV

THE ECONOMIC PROGRESS OF THE NINE

TEENTH CENTURY

A MORE striking growth in wealth and in the material comforts of civilization was witnessed by the nineteenth century than by any preceding century in the history of the world. This statement can be made without qualification, because of the new power brought to the aid of the human hand by machine production. The application of steam power and electricity to manufacturing and transportation has revolutionized the organization of industry, brought together distant parts of the world, and so increased the producing power of the individual arm, that the food supply, clothing, and shelter required by the community are now produced by a small portion of its members, and a larger proportion than ever before are released

from these employments for the higher ones of luxury, literature, art, and ministry to the finest tastes.

The changes in methods of business, in wealth, and in the general economic conditions, which have been thus brought about, are revealed chiefly through the creation of mills and factories, through the increase in their output, through the enlarged equipment for carrying this output by rail and steamship to all parts of the world, and through the great volume of commerce, banking credits, and saved capital among every civilized people. These changes in methods of production and exchange have caused not merely changes in the volume of things produced and in the rapidity of their exchange, but have tended by nearly wiping out the costs of transportation, to reduce competition in the staple articles of agriculture and manufacture to the character of competition in a single world market, where prices and conditions affecting supply and demand are brought to a focus by the quotations flashed around the world in an instant by