STANFO

CIBRARY

FUNDS AND THEIR USES

CHAPTER I

PUBLIC AND PRIVATE FUNDS

Property. Among the first ideas that one gets as a child is a notion of respect for the "property" of others; we soon come to know that there is a difference between those things which we may call "our own" and those things which "belong" to another. The teachings of parents first impress the lesson; later, the idea becomes firmly fixed through association with playmates and elders. Any attempt to violate what are commonly recognized as "rights of property' brings us quickly to grief. The jealousy with which the child guards his right to use his own top, his own marbles, his own knick-knacks, and the respect which he comes to have for things displayed in shop-windows or in the possession of his playmates, illustrate the force with which ideas of property are early impressed upon the race.

How property is acquired. No sooner does the child come to know the use of things, or begin to long for objects that attract his notice, than he learns that the "consent" of some one must be obtained before they may be taken. From a parent, a sister, or a brother-a member of the household-this consent may be had for the asking; within the family, acquisition takes the form of "gift." In order to obtain things from others, however-those not bound. by ties of affection or duty-a mere request is not enough. In front of a shop sits a basket of apples. It has been

placed there by the owner, the shopkeeper, to attract attention. The rich color and fragrance of the fruit suggests to the passing child' that he would like to have some of it; and he seeks to obtain an apple "by gift," as he had been used to doing. at home. But his request is refused. The mere request of the child is not enough to win the consent of the shopkeeper. How is he to obtain the coveted apple? The shopkeeper helps him out of his trouble. "Have you a.penny?" "No." "If you will get me a penny I will let you have an apple." With this suggestion the boy gets his first idea in finance. He runs to his father; he gets a penny "by gift," and, returning gets an apple "by exchange." Thus he learns how the "consent" of shopkeepers may be won, and that there is a second method by which the property of others may be acquired.

Exchange the chief method of acquiring property. -Exchange lies at the foundation of the world's industrial progress. The story of Crusoe serves well to illustrate the possibilities of life without it. This lonely man, cast ashore on an island, found useful things all around him. But they must be gathered, and they must be reshaped and put together in a different way than they were found in nature. Among a primitive people centuries may be required to obtain from nature the metals needed for a few rude weapons and tools. We have but to think of the many things about the modern household, each of which adds something to comfort or pleasure, to realize how incapable man would be if he had to make everything for himself.

How long, for example, would it take a man, working alone, to extract from the ore a pound of iron? Even if he found the metal, how long must be labor to make a needle or a screw? Few of the common things in use to-day could be had at all; they are each the product of the labor of many hands, working with different processes, in different places, each offering in exchange for things desired

may say, inherited from a society that has labored for centuries past. Each thing that we use is the product of a great coöperative society, bound together in service by the instruments and institutions of exchange. Without exchange, coöperation would be impossible. In every instance, increased facilities afforded for exchange have led to a wider range of social and industrial activity. To its development we owe the economics made possible by division of labor, the benefits of the factory system, the larger returns made possible by mass production and by the direc tion and control of the enormous forces and resources of nature, which, when working alone, man has been unable to turn to his uses. Every milestone of human progress has engraved upon it the significant emblem "Exchange.'

Importance of funds in business.-Out of exchange arises the need for "funds'-stocks or stores of money or other things that can be used as means of purchase and payment. In business there is no word so big with meaning. "If I could get the necessary funds," says the blacksmith, "I would build a wagon shop." The grocer does not add to his stock of sugar when the price is low "for lack of funds." "We are in need of funds, says the building contractor to his partner, "we must have at least $1,000 more to pay our men. "Our funds are running low," says the miller's clerk, "we must realize on outstanding bills, or make some other arrangement to meet obligations maturing on the first of the month." It is out of just such situations and just such problems that the business of finance arises. "Funds" are the key to business under an economy of exchange-a necessary part of business equipment.

What is business?-John Ruskin calls business a game of counters. Business for profit is a contest in which every one uses the same kind of counters-and is striving for

the same thing. One has but to look out on Broadway or any busy street of a great city to be impressed with the fact that some kind of contest is going on. Men are hurrying to and fro, pushing each other about; each is trying to get somewhere, to do something, one does not know why. But it is evident that each has something very definite in mind and that he is straining every nerve and muscle to accomplish a purpose. What is it that brings these crowds. together, takes them to the shops, causes some to stand behind work benches and sweat before furnaces? Each seems to be working and striving in a different way, but if you ask the clerk or the foundryman, the day-laborer or the banker, what he is striving for, each will make the same answer. And why? Each one has the same wants and desires to satisfy. What we call business is the effort of individuals and groups to possess themselves of things that are useful, either to themselves or others, in a peaceful way. And, in so far as they may not wish to use the things so obtained to satisfy their own wants, they seek to better their own condition by trading with others. The extent to which each betters his condition is called his "gain" or "profit." The success of a business enterprise is measured by its "profits." The "profits" of a business, as business is now done, is the amount of the increase in the money value, of properties owned during a period for which the gains are reckoned.

Necessity for law and order in business. In business there is the same need for rules that there is in any game or friendly contest. Every contest must have rules to govern it, for without rules there would be misunderstandings and these would lead to violence. Watch a group of boys at play. A number of marbles are placed within a ring; a line is drawn, behind which each player must stand for the first throw; the one who lands his marble nearest the center takes first shot. So the rules are laid down for the begin