Volkswirtschaftliche Theorie der Offentlichen Investitionen. by Hans Richter-AltschafferReview by: Edgar M. Hoover, Jr.Journal of the American Statistical Association, Vol. 32, No. 198 (Jun., 1937), pp. 429-430Published by: American Statistical AssociationStable URL: http://www.jstor.org/stable/2279599 .

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* REVIEWS 429

But for that matter so is this whole chapter on graphic correlation. This serves as an example of a considerable unevenness of the level of treatment of the various subjects covered in the book. Otherwise, the selection of material to be presented is commendable for the purpose in hand. The early chapters present a simple undergraduate theory of equilibrium price. Then follows two chapters on artificial price-raising measures, six not so simple mostly on methods of price analysis, and seven on prices of groups of farm commodities. These last chapters bring together in brief form the re- sults of most of the extant analyses of prices of individual farm products

JOHN D. BLACK Harvard University

Volkswirtschaftliche Theorie der 6ffentlichen Investitionen, by Hans Richter- Altscha;ffer. Mulnchen und Leipzig, Germany: Verlag von Duncker & Humblot. Eine Untersuchung fiber die theoretische Stellung der offent- lichen Investitionen in der Dynamik der modernen Verkehrswirtschaft. 1936. iv, 155 pp. R.M. 5.80.

This is a deductive justification of the policy of business stabilization by public works, touching only incidentally on fiscal questions and methods of administration.

The book is up to date in the emphasis it places upon anticipations in determining the investments of entrepreneurs-whose functions are dis- tinguished sharply, as by Schumpeter, from those of routine business men. Examining in some detail the elements influencing these entrepreneurial decisions, the author concludes that such corrective reactions as are set up by depression (principally lowered costs) may be offset indefinitely by the reactions hostile to equilibrium (working principally through breakdown of confidence and credit). He emphasizes his belief that there is no automatic process turning depression into revival. The depression, like the boom, is cumulative and contrary to equilibrium; but whereas the boom is limited by the scarcity of production factors, the depression is limited only by the extinction of capitalistic production. This is not a new point of view; but the author gives it a clear and persuasive exposition.

As is pointed out in a "Digression on Business Cycle Theory," such a view is incompatible with the concept of a "cycle" as a succession of stages each of which evolves into the next. It would seem more akin to the early idea of catastrophic "crises," except that here the catastrophe begins as a boom which evolves into the crisis and finally the depression, which lasts until some lucky combination of events gives rise to another boom.

Since depressions do not cure themselves, the author views stabilization as a peculiarly public function. Public investment should be judged, ac- cordingly, by its conjunctural effects on private production and employ- ment, not by its profitability in the narrow sense. The objective is pump- priming rather than revenue.

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430 AMERICAN STATISTICAL ASSOCIATION*

The author enumerates in some detail the components of saving and investment, so defined that when saving is equal to (the price of new) in- vestment, the returns to producers of currently consumed goods are just equal to costs, including a sufficient profit to justify the continuance of production on the same scale. It is not made quite clear, however, whether the equality of saving and investment is to be considered a sufficient or merely a necessary condition of stability.

When wages and prices are pursuing divergent trends, we are told that neither should be allowed to fall. In periods of increasing efficiency, the author favors stabilizing prices and letting wages rise; in periods of de- creasing efficiency, he would stabilize wages and let prices rise.

Little that is new is found in the refutations of the orthodox arguments against public works. Nor has the author anything definite to offer as criteria of the business situation. He quotes with approval a list of indicators, such as prices, employment, idle capacity, inventories, and interest rates, but does not specify how these are to be combined. Nor does he suggest the compilation of any new measures of saving or investment.

There are few figures in the book, aside from some interesting data on dwelling construction and public works in various countries and some esti- mates of investment in Germany. Worthy of note is the convenient summary (pp. 129-138) of the development of the idea and policy of public works, and the useful bibliography. In the elaborate analysis of the components of saving and investment which occupies more than half the book, the statisti- cally inclined economist will find many empty economic boxes and much stimulation to set about filling them.

EDGAR M. HoOVER, JR. University of Michigan

Bustness Cycles and Forecasting, by Elmer C. Bratt. Chicago: Business Publications, Inc. 1937. xiii, 501 pp. $3.50.

Although economists generally deny the possibility of overproduction, there has clearly been a surplus output of textbooks in most lines of eco- nomics and business. Business-cycle analysis does not share this embarrass- ment. On the contrary, the subject has lacked a general textbook appro- priate for an introductory course.

Professor Bratt's book is more general than the title suggests, owing to a liberal assignment of space to the broad question of economic change. The cylical focus of the subject matter, however, is kept continually in the fore- ground. The result is a textbook well suited to the needs of students who are embarking on the study of business cycles. Although there are almost 500 pages of text, the treatment does not and cannot go deeply enough to meet all the requirements of advanced courses and retain the scope and balance required of an introductory offering. It may, however, serve reasonably well

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