for money ought a priori to increase the steadiness of rates; and conversely, the greater dependence upon actual money characteristic of the Continent would be expected to make the state of the money reserves more effective to cause fluctuations in the rates. Without elasticity, therefore, those markets would be expected to show greater fluctuations. Doubtless something is to be attributed to the superior management of the continental banks; yet here again it seems natural to argue that their power to furnish better management largely depends on the greater elasticity. As is well known, the Bank of England keeps out its whole uncovered circulation all the time, and therefore has no power to expand or contract, save as it contracts or expands its reserves. The continental banks, on the other hand, keep the circulation in constant flux, so that a change in the volume of outstanding notes of from twenty to thirty millions of dollars in a single week is no uncommon occurrence. This is more especially true of the Bank of France. It surely is reasonable to argue that this highly elastic condition of the circulation is one cause of importance in explaining the superior steadiness of the continental markets.

Finally, as to the matter of protecting the gold reserve of the country, is there any reasonable ground for doubting that a thoroughly elastic currency would make this task more easy? Admitting that the inflation of the currency has not been the cause of our recent exports of gold, admitting even that it has not in any considerable degree contributed to that export, still it cannot be seriously questioned that a contraction such as would naturally have taken place in an elastic currency, would have done much to check the outflow of gold. If only the national-bank notes were genuinely elastic, if they had such "homing" tendencies as New England notes had under the Suffolk system, their withdrawal from the country circulation and from the holdings of the private and state banks would have made plenty of room for the Treasury notes and silver without filling New York's reserves to repletion. Or if the Treasury notes were issued on an elastic system, say like that

1 Mr. Ladenburg in Forum, January, 1896.

advocated in 1871 by Comptroller Knox and later by Secretary Windom (i.e., the system of interchangeable bonds and notes), then as soon as idle money began to accumulate in New York after the panic, the notes would have been returned to the Treasury in exchange for low-rate bonds, the reserves would have remained at a reasonable level, rates of discount would have been kept somewhere near normal, the Treasury receipts would have continued to be in a considerable measure gold, and there would not have been any such easily available supply of greenbacks with which to work the "endless chain" arrangement. With all these conditions established, I venture to affirm that in spite of the free-silver agitation there would have been no gold export sufficient to arouse serious apprehension.

But, in regard to this matter, we are not dependent on theory alone. Experience, also, has shown the efficacy of currency contraction to check a gold movement. A single illustration on this point from the recent history of the Bank of England will close this article. In the fall of 1892, the Bank found itself called upon to stop a gold export. The rate was raised as usual; but the abundance of money in the city outside, made the action of the Bank impotent to affect the open market rate. At this juncture, following a plan developed in recent years, the Bank began selling consols in order to drain. off the surplus funds of the market. In the course of two weeks, about ten million dollars were absorbed in this way. The market quickly responded, the rate rising from about two per cent to three. In turn, the establishment of the higher rate was immediately followed by the practically complete cessation of the gold export. That contraction always has worked or always will work so well, no one would affirm; but, of its power to do much toward attaining the object sought, there is little room for reasonable doubt.

UNIVERSITY OF MICHIGAN.

F. M. TAYLOR.

1 See article by Heiligenstadt in Conrad's Jahrbücher, Folg. 3, Bd. v,

S. 209.

REVIEWS.

Municipal Government in Continental Europe. By ALBERT SHAW. New York, The Century Company, 1895.—xii, 505 pp.

Proceedings of the Minneapolis and Cleveland Conferences of the Municipal Reform League for Good City Government. Philadelphia, National Municipal League, 1895. — vii, 544 pp.

The City Government of Boston. By NATHAN Matthews, Jr., Mayor of Boston, 1891 to 1895. Boston, Rockwell & Churchill, 1895.288 pp.

To all interested in municipal questions, Dr. Shaw's new book will be most welcome. In no language is there an equally complete and exhaustive description of the workings of Continental municipal government. It must be admitted at the outset, however, that municipal reformers will not find much more in this work than they could find in the author's previous book on Municipal Government in Great Britain to serve as a basis for changing our municipal organization. Questions of municipal organization have little attraction for Dr. Shaw. He says, on page 304:

In the United States the reformers have doubtless at times lost sight of the aims and objects of government in striving after good government as an end in itself. Their attention has been devoted to the structure and mechanism, and so far as the cities are concerned they keep changing it perpetually. They are forever overhauling, repairing, or reconstructing the house without seeming to have many attractive or inspiring uses for which they are eager to make the house ready. The Germans of our generation, on the other hand, have taken their old framework of city government as they found it and have proceeded to use it for new and wonderful purposes, altering it somewhat from time to time, but not allowing its defects to paralyze the varied activities of the household.

This attitude of the author tends, of course, to detract from the value of both books; for, while it is undoubtedly true that the tendency of all reformers is towards change, change for the better, it is hoped, but at any rate change of some sort, it must be admitted that in many states in this country municipal conditions are

such that almost any sort of a change would seem to offer no greater terrors, at least, than the expectation of continuing in our present conditions.

On one point in municipal organization Dr. Shaw does, however, lay great stress, namely, the fact that under all foreign systems of municipal government the detailed administrative work is delegated to a set of permanent expert officials. But he does not seem to put sufficient emphasis upon the relation of the Continental city to the central government. In speaking of France, it is true, attention is called to the important control which the central administration exercises over the acts of the city; but in the treatment of Germany one looks in vain for even a mention of such control, which is in fact as marked in that country as in France. Indeed, the corollary of the Continental principle of municipal autonomy, to which he calls attention, seems to be the existence of strict central administrative control both over those functions of general interest which the city is discharging and over the municipal finances. While Dr. Shaw does not intend in this book, any more than in his book on English municipal government, to set up models for us to follow, in both works his strong preference for the council system is apparent. Council government, particularly as applied in large cities, is thoroughly discredited in many parts of this country; and those who believe that a local legislative body is a necessary prerequisite of municipal home rule feel that their ideas can be realized only after some change in the principles of representation. His readers will therefore regret as much as does Dr. Shaw himself that he could not see his way clear to include within his volume an account of the workings of proportional representation in Switzerland.

But if attention is not directed to those points in which the public lawyer and the municipal reformer are particularly interested, no praise of this book can be too high. It contains a mass of information which is nowhere else accessible. Particularly interesting, and to the average reader surprising, are the statistics relative to municipal development in Germany. The book shows us what an earnest municipal government is capable of accomplishing; and to those who are interested in alleviating the wretched conditions so prevalent among the urban population in this country, it is invaluable. Further, notwithstanding all these detailed statistics, Dr. Shaw has given us an extremely interesting book. He who runs may read it with both profit and pleasure. Owing probably to the author's tendency to look with indifference if not

with scorn on the details of municipal organization, we find no dry discussion of legal principles, ordinarily so appalling to the general reader. Finally, it should be mentioned that the book is much more than its title indicates. Besides describing the system of European municipal administration, it gives in many cases an excellent description of the entire system of local government. Attention must be directed to the appendices: the first two contain the condensed budgets of Paris and Berlin; the third, an abridged translation of the French municipal code of April 5, 1884. As this is one of the latest general municipal-corporation acts, and as it probably exemplifies most completely the Continental theory of municipal government, it cannot fail to interest all students of this subject, and particularly those of municipal organization.

While an examination of European, and particularly of Continental, municipal institutions will reveal the fact that European minds have reached a very definite idea of the place which the city should occupy in the government, an examination of American conditions cannot fail to impress us with the belief that Americans have not yet come to any definite conclusion on the subject. This is due partly to historical and partly to legal reasons. On the one hand we have been so much occupied in determining the position of the state in our public policy that we have had little time to devote to the city; on the other hand, the struggles between the states and the federal government, and the solution of the problem how at the same time to protect private rights and preserve democratic principles, have confined our study of questions of public law almost entirely to those of a constitutional character. Administrative questions have been relegated to the background, or, when they have imperatively demanded attention, they have been solved by resort to temporary and often unwise expedients, certainly not based on any fundamental theory. Within the last half century, however, there has been a very general tendency to seek a solution of the municipal problem on somewhat the same lines that had previously been followed in preserving private rights; everywhere the power of the legislature over cities has been limited. But this remedy, the only one based on a fundamental theory, has not been very successful in its operation; and at the present moment we are probably more at sea, so far as the municipal problem is concerned, than at any other time in our history.

This fact comes out most clearly in the Proceedings of the Minneapolis and Cleveland Conferences, held under the auspices of the