Chief of these is the evil of inadequate rates, together with discriminations imposed by conflicting policies of state and federal commissions. Unwise control of capitalization comes next, the trouble being an inevitable result of separate control exercised by the several states over an interstate industry. It appears that in some cases the strictest state can veto the permission given by others for the issue of securities, while in other cases the laxity of one state may permit abuses that virtually nullify the efforts of more conservative states to safeguard the financial operations of properties within their borders. However, the author does not give enough detail to enable the reader to see how and why the system produces such opposite results. In the control of operation there are useless discrepancies between different states and duplications of work between the states and the federal government, but the chief evils are the rigid character of legislative rulings and the fact that some are designed to make jobs rather than to safeguard the public interest. In general, commission regulation is preferred to legislative, because more adaptable, more expert, and less exposed to improper motives or undue political pressure, and the federal commission is preferred to those of the states.

As regards valuation, the author considers it irrelevant to the question whether rates are high enough to enable the roads to raise needed capital. However, he discusses the central points in the theory of valuation, advocating cost of reproduction with concessions to the doctrine of going value based on earning power. The general treatment of the theory of valuation and fair return is somewhat disappointing, and appears not to reach bedrock. For example, if the standard of reasonable rates be the ability to market securities, this depends on the policy followed in the control of security issues, as well as on the rates themselves. Difficulty in raising capital may arise from a bad system of security-issuance rather than from inadequate rates. As for the American situation in the years preceding the war, earnings made a better showing than during most of the previous history of the roads, and the logical inference is that the difficulty of raising capital had other causes than inadequate earnings alone. With the percentage of bonds in the capitalization unduly swollen, as it admittedly is, the plea of making more bonds salable call for unreasonably large returns on the attenuated equities of present stockholders. The raising of new capital could, however, be harmonized with various rates of return to previous security-holders on various valuations of their property, by adjusting the price at which new securities are to be issued. This would often

involve selling stocks and bonds at a discount, a thing which Mr. Dunn himself says should be permitted. If the control of security issues were co-ordinated in this way with the control of rates, the requirement of raising new capital need not be incompatible with an inquiry into the fair value of the properties for purposes of rate-fixing.

Another thing which the author quite rightly stresses is the inevitable gap between rich and poor roads in semi-competitive relations with each other, a matter which has not been adequately treated in previous books on the subject. This fact appears in various guises. The discrepancy is seen as a desirable thing, because it furnishes a differential reward to good management, which tends to preserve efficiency even under regulation-this in the section where the efficiency of government ownership is being attacked. It appears again as a necessary evil compelling the allowance of "going value" above the actual investment. And finally it disappears entirely in the author's plan for solving this latter difficulty through huge sectional mergers, each of which is to include all the roads in a large division of the country. There would seem to be some discrepancy between the various parts of the author's argument on this point in that, if his proposed plan were adopted, this particular argument for "going value" and for the superior efficiency of private enterprise would no longer hold. This would not be true, however, of the scheme of combining strong and weak lines into systems that should still compete with each other. Such a plan might diminish the difference between the stronger and the weaker units, but could never eliminate it entirely.

Mr. Dunn's various proposals for dealing with the problem will probably be met with varying favor. There is to be a series of regional combinations of roads under federal incorporation, with the Interstate Commerce Commission exercising control over all rates, and also whatever control can be exercised over wages and labor disputes. The public should have minority representation on the managing boards of the companies (why not also give labor minority representation?), and there are to be either separate regional commissions, or else advisory councils after the fashion of Germany, Austria-Hungary, and France. A minimum rate of earnings, say 5 per cent, is to be guaranteed, and profits above this minimum divided with the government. Probably the proposal for a guaranteed return, together with the completeness of the regional consolidations proposed, are the most dangerous features of the plan, but the argument as a whole is well worthy of consideration. J. M. CLARK

UNIVERSITY OF CHICAGO

Co-operation and the Future of Industry. By LEONARD S. WOOLF. London: George Allen & Unwin Ltd. New York: Macmillan

Co. Pp. 141. $2.00.

Students of social reform programs are familiar with the rapidity with which the Rochdale co-operative movement lost the revolutionary zeal and idealism of its Owenite founders and became practical, sensible, and worldly in its aims. Mr. Woolf has set himself the task of calling back the early vision and lifting the movement again to the millennial heights. He sees in consumers' co-operation the best chance for a re-organization of industrial society along satisfactory, i.e., democratic, lines. After a brief introduction on the social unrest follows a very informative historical and descriptive sketch of co-operation in Great Britain. The author then discusses (in chapter iii) the fundamentals of the organization as "A Democratic System of Industry." Chapter iv treats of the labor problems of the movement, the relations of the consumer-owners to the producer-employees, and chapter v of the changes necessary and difficulties to be overcome in extending the system over the whole field of industry (as far as the essentials of life are concerned) and transforming it into the co-operative commonwealth of prophetic dreams. The last chapter, on "Co-operators and Political Action," draws an outline picture of the society of the future and discusses the relations (in England in 1918) between co-operation and other working-class programs.

The book is of course optimistic, but is extremely fair in tone, candid, and even critical in its optimism. The points of objection or disagreement raised in the reviewer's mind cut rather deeply into the fundamental presuppositions of social reform. The author's perpetually reiterated contrast between production for the use of all and production for the profit of the few seems overdrawn. He does not recognize that competition theoretically gives control to the consumer, or inquire as to how far or why it fails to do so in practice. In fact the relegation of the present system to the discard is taken too much as a matter of course. Nor are the ultimate problems of the proposed substitute system more than touched-many not so much as that. Nothing is said of property, education, inheritance, or family relations under the new order; the inherent difficulties of voluntary democratic control are very lightly passed over, and the proposal to distribute the heavy and disagreeable work by conscription on the basis of a physical examination will fail, we fear, to appeal strongly to large circles. The general idea of a large degree of regimentation in the production and distribution of

things essential to health and efficiency, combined with liberty in "luxuries," is probably what we shall have to come to; but Mr. Woolf has thrown little light on the solution of the staggering problems of detail which swarm into view when we consider carrying out the suggestion.

Perhaps the most serious criticism, and one cutting most deeply into fundamentals, is the author's much emphasized assumption that the sole legitimate aim of economic life is the consumption of goods, that as a starting-point all industrial productive activity must be recognized as an evil, though a necessary one. Our older economics ran in terms of human needs; latterly we are making more use of the term "wants" instead; it is time to face the fact that even this concept is too much "ontologized." We really know very little about human motives, and still oversimplify them disastrously in nearly all discussion. Some criticism of the existing order amounts virtually to contending that a game is unfair if anybody comes out ahead. Real human needs have in a sense a first place in our thinking; but not only is it impossible to tell definitely what these are, but however defined, their place in the problem of social organization is after all a relatively small one. The larger problem is to arrange things so that people will find their lives interesting and will grow into such personalities that they can respect themselves, admire others and enjoy their society, appreciate thought and beauty, and in general look upon creation and call it good. Question may be raised as to just how much will be contributed to this end by giving the worker any new sort of suffrage (in addition to that which he already has as a voter and free chooser of his own work and expenditure of its proceeds) for the control of industry.

The book is very well written indeed, and makes interesting and stimulating reading. It is unfortunate that it seemed necessary to print it in such small type. It has a good index, and is a useful source of information in regard to the British co-operative movement, outside of its missionary appeal.

UNIVERSITY OF IOWA

FRANK H. KNIGHT

Employment Psychology: The Application of Scientific Methods to the Selection. Training, and Grading of Employees. By HENRY C. LINK, PH.D. New York: Macmillan, 1919. Pp. 435.

By virtue of his connection as psychologist with the Winchester Repeating Arms Company, the author enjoyed unusual opportunity

to investigate and demonstrate the feasibility of psychological methods in industry, and he writes this book as a record of his findings.

In Part I he describes a number of tests that have been useful in selecting workers of various sorts: assemblers, office clerks, stenographers, comptometrists, tool-makers. He discusses the technique of giving, scoring, and evaluating tests, and frankly exposes their limitations and possibilities in vocational psychology. It is gratifying to observe that the author used, as far as possible, tests that had been already developed and refined in the psychological laboratory, holding to the doctrine that the need is not for more tests, but for the establishment of the significance of tests in terms of correlative practical achievement. In circumstances requiring deviations from this rule Dr. Link devised several ingenious tests, among which is an improved form of the Bogardus fatigue machine. A novel departure that may mark a significant step in the scientific study of factory operations is his portable laboratory.

In Part II the author treats another group of problems less closely related to psychological tests. He discusses trade tests, with numerous examples; job analysis; the vestibule school; and presents prophylactics against the fallacies of the observational method of selecting employees. This breadth of topics shows that the author recognizes the place of psychological methods in the entire scheme of employment; that he does not hold to the obsolete conception of the field of employment as limited to the mere act of hiring and rejecting applicants. The training of new employees, keeping accurate records of their activities, transferring them when advisable, devising methods of promotion, are all phases of the employment problem. Fitness for an occupation is a blend of innate ability and training. The latter can be supplied by the employing firm. Consequently much stress should be laid upon the educative operations of the firm. The author opines in his final chapter-a somewhat philosophical dissertation entitled, "Employment Psychology, Labor and Industry"-that "the higher the education, the lower the turnover."

Part III contains the author's views upon the retention of employees and the scientific methods of measuring and recording their productiveness. Records consisting of objective measures of productiveness and subjective estimates by overseers should be a permanent part of the employment department.

The concluding section, Part IV, consists of a collation of plans for personnel work. And to show that the author is not prejudiced