Mat 16, 1913] 



SCIENCE 



763 



effect of absorbing to a certain extent the 

 present oversupply of gold. It would scarcely 

 be effective in keeping down the average price 

 level until a far greater rise in the effective 

 reserve requirement had been made. 



The calculations by which the author shows 

 that had his system been in vogue during the 

 last few years the price level would have re- 

 mained sensibly constant are based upon the 

 assumption that a one per cent, rise in the 

 amount of gold demanded for a dollar brings 

 about a one per cent, fall in the price level. 

 On a certain vague value theory of money 

 this may appear reasonable, but from the 

 point of view of the equation of exchange it is 

 far from obvious. The one thing we must 

 bear in mind is that M'V must be kept under 

 control, and to a less extent MV. The au- 

 thor would have done much better to stick to 

 his equation and calculate what effect his 

 proposition would have had upon the changes 

 in M'V. That would have been more scien- 

 tific. 



Lowering the price of gold could diminish 

 the increase of M' in three ways. First, by 

 slackening the output. The lowering would 

 probably have to go a long way, however, be- 

 fore the slackening became considerable. Sec- 

 ond, by diverting gold from banking uses into 

 the arts. Whether the arts, which now con- 

 sume only about one third the annual output 

 as against two thirds which goes to monetary 

 and banking uses, could well absorb a much 

 greater quantity of gold unless the price were 

 very much lowered is not evident. Third, by 

 augmenting the effective reserve requirements, 

 as above explained. What we must have is 

 some sort of a sink for gold. Indeed, it occurs 

 to us to suggest that without at all disturbing 

 the ratio of exchange between gold and dol- 

 lars, we could accomplish the desired regula- 

 tion of prices by insisting upon the strength- 

 ening of reserves. Suppose all banks receiv- 

 ing deposits subject to check were compelled 

 to maintain a 50 per cent, reserve on all new 

 business beginning with 1914. An increase 

 of 15 billions in trade would then call for 150 

 millions in gold instead of the much smaller 



amount at present required. To make bank- 

 ing less profitable and safer might be easier 

 and more directly effective than to discourage 

 gold mining. 



So much attention has been devoted to 

 Fisher's plan for regulating the price level be- 

 cause the subject is actively under discussion 

 all over the world, because Fisher has failed 

 to maintain the scientific excellence with 

 which he started out, and because he has ap- 

 parently developed a method of attack which 

 is better and surer than the one he uses. In 

 view, however, of the almost unanimous in- 

 dorsement he has received we feel very apolo- 

 getic about these criticisms we offer. 



Some parts of the work we have scarcely 

 touched upon, parts which from a scientific 

 point of view might seem to merit more notice 

 in this weekly than the parts we have dis- 

 cussed. For instance, there is in Chap. X. an 

 analysis of the best index numbers of pur- 

 chasing power and in an appendix a masterly 

 analytical treatment of the various types of 

 index numbers which show the defects and 

 the advantages of different types for different 

 purposes. And in general there is much of 

 excellent scientific value throughout the ap- 

 pendices. But we must pass it by, as we do 

 much of the historical matter (Chap. VII.), 

 and the discussion of indirect influences which 

 exert secondary effects on the equation of 

 exchange (Chaps. V.-VL). 



The arrangement of the book is very 

 thoughtful toward the reader. Not only are 

 the table of contents and the index exception- 

 ally full, but there is a little foreword wherein 

 readers of different types are instructed as to 

 where they will find what they in particiilar 

 are looking for. The mathematical work is 

 relegated to the appendices, and so are the 

 more subtle developments. The book should 

 be read by everybody at all interested in any 

 of the questions it treats. 



Edwin Bidwell Wilson 



Massachusetts Institute op Technology 



The Mesozoic Flora of Graham Land. By T. 

 G. Halle. Wissenschaftliche Ergebnisse d. 

 Schwedischen Siid-polar-Expedition, 1901- 



