nity's experience, past and present, which has no existence apart from the community's life, and can be transmitted only in the keeping of the community at large. It may be objected by those who make much of the productivity of capital that tangible capital goods on hand are themselves of value and have a specific productive efficiency, if not apart from the industrial processes in which they serve, then at least as a prerequisite to these processes, and therefore a material condition-precedent standing in a causal relation to the industrial product. But these material goods are themselves a product of the past exercise of technological knowledge, and so back to the beginning. What there is involved in the material equipment, which is not of this immaterial, spiritual nature, and so what is not an immaterial residue of the community's experience, is the raw material out of which the industrial appliances are constructed, with the stress falling wholly on the "raw."

The point is illustrated by what happens to a mechanical contrivance which goes out of date because of a technological advance and is displaced by a new contrivance embodying a new process. Such a contrivance "goes to the junk-heap," as the phrase has it. The specific technological expedient which it embodies ceases to be effective in industry, in competition with "improved methods." It ceases to be an immaterial asset. When it is in this way eliminated, the material repository of it ceases to have value as capital. It ceases to be a material asset. "The original and indestructible powers" of the material constituents of capital goods, to adapt Ricardo's phrase, do not make these constituents capital goods; nor, indeed, do these original and indestructible powers of themselves bring the objects in question into the category of economic goods at all. The raw materials-land, minerals, and the like-may, of course, be valuable property,

and may be counted among the assets of a business. But the value which they so have is a function of the anticipated use to which they may be put, and that is a function of the technological situation under which it is anticipated that they will be useful.

All this may seem to undervalue or perhaps to overlook the physical facts of industry and the physical nature of commodities. There is, of course, no call to understate the importance of material goods or of manual labor. The goods about which this inquiry turns are the products of trained labor working on the available materials; but the labor has to be trained, in the large sense, in order to be labor, and the materials have to be available in order to be materials of industry. And both the trained efficiency of the labor and the availability of the material objects engaged are a function of the "state of the industrial arts."

Yet the state of the industrial arts is dependent on the traits of human nature, physical, intellectual, and spiritual, and on the character of the material environment. It is out of these elements that the human technology is made up; and this technology is efficient only as it meets with the suitable material conditions and is worked out, practically, in the material forces required. The brute forces of the human animal are an indispensable factor in industry, as are likewise the physical characteristics of the material objects with which industry deals. And it seems bootless to ask how much of the products of industry or of its productivity is to be imputed to these brute forces, human and non-human, as contrasted with the specifically human factors that make technological efficiency. Nor is it necessary to go into questions of that import here, since the inquiry here turns on the productive relation of capital to industry; that is to say, the relation

of the material equipment and its ownership to men's dealings with the physical environment in which the race is placed. The question of capital goods (including that of their ownership and therefore including the question of investment) is a question of how mankind as a species of intelligent animals deals with the brute force at its disposal. It is a question of how the human agent deals with his means of life, not of how the forces of the environment deal with man. Questions of the latter class belong under the head of ecology, a branch of the biological sciences dealing with the adaptive variability of plants and animals. Economic inquiry would belong under that category if the human response to the forces of the environment were instinctive and variational only, including nothing in the way of a technology. But in that case there would be no question of capital goods, or of capital, or of labor. Such questions do not arise in relation to the non-human animals.

In an inquiry into the productivity of labor some perplexity might be met with as to the share or the place of the brute forces of the human organism in the theory of production; but in relation to capital that question does not arise, except so far as these forces are involved in the production of the capital goods. As a parenthesis, more or less germane to the present inquiry into capital, it may be remarked that an analysis of the productive powers of labor would apparently take account of the brute energies of mankind (nervous and muscular energies) as material forces placed at the disposal of man by circumstances largely beyond human control, and in great part not theoretically dissimilar to the like nervous and muscular forces afforded by the domestic animals.

THORSTEIN VEBLEN.

STANFORD UNIVERSITY.

THE STREET RAILWAY SETTLEMENT IN

CLEVELAND.

SUMMARY.

The law as to franchises in Ohio; the "consent law," 543.-Three difficulties: consents, reaching the center, finances. Mayor Johnson's guarantees, 545.-Earlier competing companies, 548.-Negotiations with the main company, 549.-Physical value of property; questions as to paving, overhead charges, 551.-Method of determining franchise values, 553.-Three transactions for effecting the transfer,-the sale, 559; the security grant, 559; the lease to the Municipal Traction Company, 561.-Financial calculations and expected economies of the Traction Company, 566.-The strike of the first few weeks and its defeat, 571.-Mayor Johnson's attitude, 574.

A MOST remarkable chapter of street railway history in this country has just come to an end in Cleveland. A new method of attacking a public utility in private hands has been successful, and a new solution of the street-car question has been placed on trial. It will take some time, perhaps years, to demonstrate beyond cavil the strength or weakness of this solution, but the time has already arrived when the proposed mode of solution can be described as something already undertaken.

Street railway franchises in Ohio can only be granted for twenty-five years. The Rogers law, passed about the middle of the last decade, provided for fifty-year street railway franchises in Ohio, but through a popular uprising was repealed before the street railways had been able to take advantage of it in Cleveland, as they did do in Cincinnati. This was due, in part at least, to the quarrel between Mayor McKisson, the Republican mayor between 1895 and 1889, and the late Senator Hanna, who

was then the most prominent street railway magnate in Cleveland.

The old company, known as the Cleveland Electric Railway Company, which was operating, until April, 224 miles of track in the streets and highways of the city and county, had secured franchises at various times, which were to expire at various intervals in the future. In fact, on a few miles the franchises had already expired.

The city in its early grants to two of the lines had reserved the right to regulate fares, and almost every one supposed that it still retained this right. But ordinances. passed in 1898, to reduce the fare to four cents, were declared to be illegal by the United States Supreme Court on May 31, 1904, because of the wording of an ordinance for the consolidation of some of the roads in the city, and for their electrification and extension, which had been passed in February, 1885. For over ten years no new long-time franchises had been granted in the city, altho some had been secured in the suburbs. In time the old franchises would all expire. In fact, their average life in the city was conceded by the company, at the close of 1907, as less than four years. The railway laws of Ohio, however, had been passed in the days of street railway domination and were hard to amend. They appear drawn with a special purpose of making it easy for an old company to secure a renewal of its grant, and to make it impossible for any other company to compete for the grant. This was brought about chiefly by the so-called consent law. Under that law a company which had once secured the consent of the majority of the abutting property owners of any street, need not secure them again when its franchises ran out and it sought a renewal. But a new company wishing to bid for the franchises at the time of expiration of the old grant must present to the Council the consent of over one-half of the property owners upon