But if it is intended as a complete and impartial summary of the whole of the factors or the determining factors of the conflicts enumerated, it is quite obviously imperfect. To represent the Spanish-American War or the Boer War as the outcome merely of financial intrigue is to ignore certain outstanding facts which cannot be ignored if we are to have any just notion of the processes of war-making. In fact, one can say that, in the case of the Anglo-German conflict for instance, merchants and financiers as a whole fully realise its futility, and are throwing their influence against its precipitation, while huge sections of the public, who are unaware of possessing any interest in the conflict at all, are throwing the influence of their excitability and temper on the side of conflict. Your honest roaring jingo, who is so great and dangerous a factor in the precipitation of these conflicts, has, for the most part, no earthly private interest to serve by the war which his general influence may at times render inevitable. His action is due to genuine hatred or fears based upon false conceptions of the relationship of foreign nations to his own. He may think, like Lord Roberts, that foreign trade is a matter, not of having things to sell, but of having power to exercise against someone else; or he may conceive of foreign trade as a fixed quantity which we "take from one another as the balance of power drifts from one to the other; or of all nations as struggling economic units, rival business firms, the gain of one being the loss of the other-one could go on reciting indefinitely the sort of picture which is evidently in the jingo mind, and which necessarily and logically sets up the hostility, hatred and funk which play so large a rôle in bringing about international conflicts. These things may have their origin partly in economic conceptions, but are psychologically distinct. To represent the conflicts enumerated by Professor Loria as the direct outcome of financial intrigues reminds one of the Chinese Socialist who lays down certain doctrines concerning the relation of cholera to the Capitalistic system. The story runs that a Chinese Coffin Trust, in the interest of its dividends, had bribed a provincial governor to suspend sanitary arrangements during an outbreak of cholera"Plain proof," argued the Socialist in question, "that cholera is a Capitalistic interest, and will never be successfully dealt with until we have abolished the Capitalistic state."

The most powerful economic forces of our time are those which operate unseen and unnoticed by those subject to them, and which escape conscious political control. It is not the result of any conscious policy of government which has made German

industry so largely dependent, directly and indirectly, upon foreign capital; or which has caused France to furnish so large a part of the financial sinews of war for German industrial development. The great economic forces of the world are the resultant of isolated individual acts, no one of which is taken with the object of bringing about the result which in conjunction with others of a like kind it finally achieves. All of which means, not that the economic causes of war are not the chief causes they almost certainly are-but that those causes often act not directly or consciously at all, but indirectly, and irrespective of the conscious volition of Governments.

There are, indeed, two main facts in the economic development of the world which have the most direct bearing upon the problem of international conflict, and with neither of which Professor Loria deals, unless it be by casual references, in this book. The first of these facts is the complex division of labour, which, despite tariffs and protectionist devices, has made the economic unit something quite distinct from the political unit. Since the frontiers no longer coincide, political power has become largely irrelevant to economic ends. The second fact is that the linking of telegraphic communication to our credit system has made of the industrial world an economic organism endowed with sensory nerves, by means of which any appreciable damage to one part is instantaneously felt by the other parts, and which sets up therefore a co-ordination of policy which must finally end in the cessation of conflicts between the various parts of the same organism. These are the outstanding facts of modern industrial and financial development, and the ones perhaps which bear most directly upon international policy. It is to be hoped that an author so well equipped to show their operation as Professor Loria will turn his attention to them in the future. Meanwhile we may rejoice that the general conclusion which Professor Loria himself draws seems to be indicated in the following passage:

"Si le développement suivi jusqu'ici par les rapports économiques et par les rapports juridiques internationaux, qui en sont dérivés, permet quelques prévisions sur leur développement à venir, on peut facilement présager qu'avec le progrès ultérieur des rapports économiques, les guerres deviendront de plus en plus rares et qu'elles finiront par disparaître com-plètement."

Ainsi soit il!

NORMAN ANGELL.

Theorie

der wirtschaftlichen Entwicklung. By Dr. J. Schumpeter. Pp. viii+548. (Leipzig: Duncker und Humblot, 1912.)

DR. SCHUMPETER's book, although it covers a great part of the field usually covered by economic manuals, is not one itself; it is rather, as he himself puts it in his introduction, the development of one fundamental idea, which underlies most of his work. He does not set up this idea in opposition to the work of his predecessors; on the contrary, he considers it a further, necessary development, and takes much pains to fit it into the existing frame. This frame is given in the first chapter, which is both an introduction to his own work and an interesting and conscientious survey of Continental as well as of English and American economic literature. In it we see foreshadowed the outlines of his own work.

Economists, he holds, have hitherto dealt almost exclusively with problems of a static society; their teachings are explanations of its phenomena. The idea of a static society in no way excludes either the incidents of "economic friction," or development which merely preserves the equilibrium; thus, e.g. development in proportion to the growth of population does not destroy the static character of society; it is mere readjustment, not progress.

But there is according to Dr. Schumpeter such a thing as spontaneous, economic development, development due to new combinations in economic life, to constructive economic leadership. At the present time we are so accustomed to the phenomena of change that we are only too inclined to forget that anything else is possible; that there might be a state in which economic life would be one series of uniform cycles, rhythmically repeating themselves, one state of static equilibrium. That it is not so is due to the entrepreneur, the man of action, the originator of new systems, which if successful enter as component parts into the circulatory flow of economic life. His action and work cannot be explained by the hedonistic rules of the usual homo economicus; he forms a type by himself.

The essential feature of his action is the attempt to increase the efficiency of production (in the widest sense) through an improved use of the means at his disposal. If he succeeds, he obtains a surplus. Hoping to achieve this surplus, he is able to pay a premium to those who will give him the command of the required means. To give him this command is the task of "credit.” The payment for this command is "interest." Interest can be

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paid, because there will be the surplus out of which it can be paid. In a static society there would be no such surplus; in a state of perfect equilibrium the value of the product is the sum of the values of the means by which it is produced. Prof. v. Böhm-Bawerk sees in "time-preference" the factor which (besides the incidents of economic friction-always understood) causes the divergence of these values. Dr. Schumpeter asks: is the preference given to present as against future values the direct effect of independent psychological factors, or do we value present values higher, because we are able to retain them to a future date and still draw incomes from them? His answer is that in a static society there would be no reason to give this general preference to present values; the rule would be equality of both. In the existence of economic development Dr. Schumpeter sees the one great reason why preference is given to present values.

Dr. Schumpeter does not merely throw out his idea; he follows out its necessary consequences; he surveys from his new point of view our existing ideas of various economic phenomena. He devotes an interesting, though lengthy, chapter to the nature of economic crises, and shows that besides the crises which are due to disturbances originating outside the sphere of economic life, there is a category due to the very nature of economic development. Economic development works intermittently; innovations in different branches of economic activity follow one another in rapid succession. Each burst of this character necessitates a period of readjustment, of "statisation"; this process gives the impression of a backwash, sometimes it may become an acute crisis. It is impossible in a short review to deal with the numerous ramifications of the author's work; still more, to endorse or criticise them. All we can say is that Dr. Schumpeter does not shun any amount of trouble to make his work complete; that he is very fair and very conscientious; that he grapples with all kinds of possible objections. Even too much so; he often answers possible questions, which if asked are better left unanswered. He is not satisfied with presenting to us his building, he presents us with all the scaffolding which he has used, and takes us over all the paths he has trodden. This, combined with frequent repetition, makes his book cumbrous. The reader, who could not understand him if half the explanations were omitted, will hardly wade through the work in its present condition. Still no one who takes a real and thorough interest in economics ought to pass it by. L. B. NAYMIER

Die gemischt privaten und öffentlichen Unternehmungen auf dem Gebiete der Elektrizitäts- und Gasversorgung und des Strassenbahnwesens. By DR. RICHARD PASSOow. (Jena: Gustav Fischer. 1912. Pp. vi+220. 6 marks.)

THIS book contains an interesting and detailed account of what is probably the most recent phase of municipal trading in Germany, viz., the holding of shares in, and the representation on the directorate of, electricity, gas, and tramway companies by local authorities. This movement during the last few years appears to have succeeded an earlier one in favour of municipalising public utility services. The new development is ascribed by the author partly to the recognition by local authorities of some of the difficulties associated with municipal management of trading undertakings, and partly to the technical and economic desirability of electricity, gas, and tramway undertakings conducting their operations over large areas, which generally embrace the districts of several local authorities. Although a large area of operations may be secured by one municipality trading outside its boundaries, or by the establishment of some form of joint board by the various authorities concerned, in practice it is not always possible to secure the necessary agreement amongst a number of local authorities whose interests may conflict. In some cases municipalities realising the need for extending their area of operations have actually leased their trading undertakings to private companies; a striking instance is that of Königsberg, which in 1910 so leased its electricity and tramway undertakings. More frequently municipalities have sold their works to companies, or have undertaken to buy gas or electricity in bulk from companies, in which they are themselves shareholders, e.g., Darmstadt has disposed of its electricity and tramway undertakings to such a company, which owns also the suburban lines; and Cologne has recently entered into an arrangement to buy temporarily some, and ultimately all, of its current from another similarly constituted company. In other cases a local authority has preferred to purchase shares in a company supplying a public utility service in its area, rather than buy up the whole undertaking; Strassburg, for example, has bought a majority of the shares in both the local tramway and the local electricity companies. Where a local authority purchases shares in a company, it is generally brought about by agreement with the private firms and individuals who are shareholders; the local authority does not necessarily secure either a majority of the shares or a right to nominate a majority