tain material forces so fixed in special relations that, if the present plan be consistently carried out, they shall be ready in forty years to yield the required satisfaction to the society; and on the other hand of certain human powers and skill, called labor, so directed that they similarly shall be ready in forty years, in conjunction with the material forces, or capital, to serve the ends of the consumer. The same is true, mutatis mutandis, of the existing provision for each one of the fifty years.

The work of the undertaker is to move forward each year toward completion each one of these fifty years' stocks. This is represented in the diagram by adding a triangle of dotted lines at the top of each year's stock, each addition represented by 2, thus making a total addition of 100, the full value of one year's income.

This analysis shows, when values alone are considered, the source of interest and the causes which fix its rate, viz., the advance or recession of this margin of effective anticipation of the future. For instance, the fifty-year margin in the diagram indicates a total value in the existing stock of 2,550, which means a rate of interest approximately 4 per cent. But, more to the purpose here, it shows the actual organization of the productive forces. Certain existing capital will be fixed in forms which will not yield finished goods for half a century. Certain special labor capacity will be acquired with a like purpose. Men will devote their productive capacity to results. which are fifty years remote. Again, other human energies and other physical powers will be devoted to results forty-nine years remote, and so on upward to the provision for the present year. The undertaker's economy, therefore, is one which reaches fifty years into the future, which must make accurate adjustment among the complex requirements of fifty years' consumption of a great community. The directive work of the undertakers, as a class, is thus seen to be highly difficult. Production must be set into the right lines to meet the consumption of fifty years, or undertaker and consumer alike will come to grief. The over-sanguine estimates of railroad projectors in many instances show how easily and how disastrously undertakers may fail in the performance of this function. It must

be borne in mind, of course, that these great lines of production are broken up into many parts, so that most undertakers have a comparatively small reach of territory and time under their control. This makes the problem easier for the single undertaker, but more complicated and uncertain for the whole class. The result of each undertaker's work thus comes into the market as an exchangeable good and, though unfinished in the sense that it is meant for consumption some years hence, it exchanges for goods now ready. The range of exchange is therefore not merely between present or finished goods, but extends over all partially finished goods and unused personal capacity destined to enter into any part of the provision for the whole fifty years. It is through the regular market for these unfinished goods and services, with the relatively stable prices prevalent, that undertakers are enabled to make proper forecast as to the demand for their particular product. They are enabled to regard their product thus as a finished good, since another undertaker, who purchases it, takes it forward on its further journey toward its ultimate consumer.

The greater importance and responsibility of the undertaker, the farther into the future this margin of effective desire reaches, is easily shown on the diagram. Let this marginal point advance to sixty years, marked by the letter K. The existing stock of specialized capital and labor capacity must then be increased to meet the dotted line CK. This addition not only increases quantitatively the provision for each year, but increases greatly also the complexity of organization, of interrelation between the various parts of the stock for each year and betweeen the stocks for the different years. Thus the difficulty of the undertaker's problem is seen to be greatly enhanced.

The organizing function of the undertaker appears with equal clearness in this analysis. In the completion of each year's stock it is seen that there is required the conjoint activity of natural forces adapted to these needs and of human capacity similarly adapted, i. e., of capital and of labor. Each without the other is powerless. Capital considered as physical force is valueless, except as it is suited by labor to satisfy human need, and labor cannot be exerted except upon, and by aid of, capital.

The year's stock of finished goods is not merely a supply of physical goods; it is likewise a supply of labor capacity or service. The year's stock is therefore, as a sum of value, made up of both these elements. This fifty-year mechanism of production therefore is a combination of the two great mechanisms, capital, or specialized physical force, and labor, or specialized human force. It is the combination of the two which constitutes the productive organization we have been studying.

It is the work of the undertaker to effect this combination. He brings the stock of physical goods nearer to completion by procuring upon them more labor and he brings labor to its readiness for service by confronting it with capital. He is an intermediary between the consumer and the wage-worker, giving the latter the means to procure present goods for his present wants, in exchange for which he receives from the latter a future good which he carries forward for the benefit of the consumer of next year or twenty years hence. The difficulty of his task appears in this, that he has not only to consider whether he is really carrying forward the right thing for the future consumer, but whether he is getting the laborer's service and the capitalist's goods at prices in present goods which will enable him, when these future goods are purchased by the consumer, to keep unimpaired the capital, the labor capacity, and his own undertaking skill. Or, put in another way, given the consumer's price, his problem is to procure the necessary capital and labor to furnish the required goods and maintain his own position, as well, within that price. The technical economy in the work of the undertaker is thus seen to be of the most vital importance to all members of the community within which his operations lie.

In his work of guiding the processes of industry so that supply shall meet demand, the instrument by which the undertaker is enabled to achieve this result is credit. The coöperation of capital and labor is secured only through credit. It is by its agency that the undertaker brings together these two forces and organizes them into the complex mechanism of production. When it is considered that capital is for the most part in the ownership of people who have not the capacity to

direct its use, and that labor capacity belongs in the main likewise to men who do not own capital, it is seen that the problem of undertaking is the problem of inducing people to allow their capital and their labor to be devoted, under other leadership than their own, to certain lines of production. In free communities credit is the only force which can do this. Let us inquire how this result is achieved by credit.

The first part of the undertaker's work-this accurate estimate of society's demand for his product-could never be done successfully in the complicated industrial life of our day, were it not for the existence of relatively stable prices. It is the customary consumption of society, persisting from year to year, which renders possible the right direction of industry by the undertaker. In another paper1 I have traced the process by which the customary consumption of society acts as the primary force which, passing first through the ranks of retail dealers in the various lines of goods, then through the ranks of the wholesalers, back to the manufacturers and through them ultimately to the producers of raw materials, everywhere sets in motion the productive forces. It is by the study of this customary consumption that the undertaker learns which are the right channels for new production. I pointed out, in the article just referred to, the part played by the undertaker's knowledge of the consumer's demand for various goods in determining the "external specialization in production, i. e., the separation in personality between the producer and consumer of specific goods, in other words, the separation of industry into distinct trades for the production of each finished good." This customary demand of consumers is in reality a tacit promise to repay undertakers for the creation of the things demanded, and constitutes the basis of what I have ventured to call "consumer's credit." It is not credit in the legal sense. Credit, however, in the economic sense is based upon faith in the reasonableness and uniformity of other men's voluntary acts. Undertakers, thus, are willing to produce what others want because they rely upon these tacit promises of the consumers to take their goods and render

"The Nature and Mechanism of Credit," Quarterly Journal of Economics, 1894, Vol. viii, p. 149.