is generally practicable only in relation to articles requiring for their production a large amount of capital in the hands of a comparatively few corporations or individuals, who may readily combine to limit the output of its different members; hence these trusts, monopolies, or combinations are generally confined to manufactured articles, and in this country are rendered doubly effective by the large import duties imposed on many manufactured articles, thereby giving a practical monopoly of the domestic market to the home manufacturers; but in the absence of such import duties a combination to be effective would have to embrace all the manufacturers of the world producing that article.

Competition necessarily reduces prices; combination is designed to increase them. The law-makers of the Federal Government and of the States have considered combinations so inimical to the general welfare as to pass most stringent laws against agreements or contracts in restraint of trade, and to refuse to enforce them.

5. Artificial Restraints of Trade, by which is meant interference either by governments or individuals with the natural laws and conduct of trade, necessarily affect the price of the article upon which that interference is exercised. Governmental restraints, whether they consist of the licenses which a city requires the vendors of various kinds of merchandise to purchase, the internal revenue taxes levied by the Federal Government, or the import duties imposed by the same power, add to the price of the article on which they are imposed, and this additional price must be paid by each subsequent purchaser. In the case of imported commodities on which there is an import duty, the import price is the price of the country of export plus the duty. In some classes of manufactured articles where the profit is great, it is sometimes the custom of merchants to make one price to their home buyers and another to their foreign purchasers, in order to reach

a market from which the duty would exclude their goods. Obviously, however, this reduced price for export goods can enable goods to reach the desired market only where the profit is large enough to admit of great reduction from the home price and where the duty is comparatively small. In the case of such staple commodities as food products, and the great bulk of clothing products, especially the cheaper grades, if there is any difference between the home and export price it is so slight as to amount to practically nothing, and the cost to the importer is nearly always the price prevailing in the country of export plus import duties, transportation, and insurance. Sometimes foreign merchants in order to dispose of their surplus or old stock, will sell to foreign buyers at a much lower price than to domestic, sooner than reduce the selling price of their products in the home market.

Individual restraints of trade usually consist of the purchasing by one or a number of men, of a quantity of a given product largely in excess of their legitimate wants or expectations of exchange. In common parlance this is known as a "corner." One or more men purchase the available supply of a particular commodity and thereby are able to demand whatever price they choose from buyers. While this may effect a temporary rise in the price of the product "cornered," it is impossible that it can permanently affect either its value or its price, because its only worth to the possessors is an exchangeable one, they possessing an amount largely in excess of their own needs, and of necessity being compelled to soon dispose of their holdings.

Effect of Standard of Value on Price. By many it is contended that what they term the demonetization of silver and the consequent making of gold the single standard of value has led to a decrease in the price of commodities and a consequent increase in the price of gold.

In order to sustain this contention it is necessary to show that gold has not been practically the sole universal standard of value for the last hundred years, and that the alleged demonetization of silver had resulted not only in the restriction of its legal-tender quality, but had likewise deprived it of its value as a commodity, and had been the sole cause of its relative decrease in value. This will probably not be attempted. It would be further necessary to prove that the available ratio of gold to the commerce of the world had not been maintained, or that the demand for gold as a circulating medium had increased out of proportion to its production, because as a standard it simply bears an abstract relation to other commodities. It could only as a measure of value itself increase in value and the things measured by it decrease as it became the preservative of value, not the measure of it. Again must be considered the fact that even if the proportion of gold to other commodities has not been maintained, this fact has been more than offset by the various devices brought into operation by governments, bankers, and financiers, by means of which the representatives of gold in the shape of paper money, credits, bills of exchange, etc., have been greatly augmented and the use of the metal itself as an actual medium of exchange has been minimized. It would be further necessary to show that other preservative values had decreased in amount and that a greater burden and therefore a larger demand for gold as a preservative commodity, which is its most restricted use, had ensued. This in the face of the obvious accumulation of wealth in other preservative forms it is impossible to prove. We may therefore conclude that whether there be one or more standards of value (it is in this work contended that there can be but one standard of value) the relative value of commodities to each other is not thereby changed.

In this relation it should be remembered that the tend

ency of finance during the last century at least has been toward the restricted circulation of metals as the media of exchange, and in the direction of the storing of those metals and the issuing against them of currency or credits in excess of the bullion value of the metals, and the securing of the deficiency in amount between the market value of the metal and the face value of the currency by the deposit of other credits, principally government, state, and municipal obligations. In other words, these last-named obligations have come to the assistance of the metals as a basis for the media of exchange, and have tended to minimize the actual use of metals, whose money use in most civilized countries is now principally as one of the bases of currency.

While gold, in common with other preservative commodities, has increased in relative value to food and clothing products, as the surplus of these products became yearly greater, its increase has not been so great as that of other preservative values. The price of government, state, municipal, corporate, and individual credits has increased in a much greater ratio, bonds bearing a rate of interest which enabled their makers to dispose of them at par fifty years ago would now sell at over 200. Capital generally is so plentiful that nearly all states and countries have reduced the legal rate of interest, and have been enabled repeatedly to fund their interest-bearing securities in others bearing a lower rate. This increase is not confined to securities and credits, but pertains to practically every commodity or article by which value can be preserved. The obvious reason for this enhanced value of preservative commodities, credits, and securities is the enormously increased supply of the necessities of life, owing largely to the rapid development of new areas and the greatly reduced cost of production.

PART II.

PRACTICE OF FINANCE.

CHAPTER I.

Money and Currency of the United States—The New York Sub-Treasury.

Practice. In the succeeding articles the application of the principles previously described, it is assumed, will be readily determined by the reader, without the writer pointing out the particular principles involved in each kind of business discussed.

Money of the United States.-The money of the United States consists of gold and silver coin. Nickel and copper are used for the minor subsidiary coin.

Gold, the coinage of which is unlimited, is legal tender for a period of twenty years from the date of coinage to any amount, when not reduced in weight more than one half of one per cent.

The coins now minted are the quarter eagles ($2.50), 64 grains; the half eagle ($5.00), 129 grains; the eagle ($10),258 grains; and the double eagle ($20), 516 grains, all ths fine, or nine-tenths pure gold and one-tenth alloy.

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Silver. The coinage of this metal is now practically confined to minor coins, and the purchase of silver bullion since the repeal in 1893 of the purchasing clause of the Sherman Act has ceased.