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Every schoolboy knows that a large fraction of the American public domain was granted to pioneer railroads in the nineteenth century. But was the federal land-grant policy socially beneficial? Professor Mercer provides one imaginative answer based upon an analysis of the economic issues involved and estimates of the private and social rates of return on the investment in the subsidized railroads.
In the manner of the Creole tradesmen of Louisiana, whose lagniappe to their patrons is legendary, the Editor offers a similar bonus to readers of the Review. Instead of trifling presents added to a purchase, however, our lagniappe will he notes and documents illustrative of the evolution of business enterprise.
Professor Cuff casts a critically dissenting eye at one of American history's most cherished myths: Bernard Baruch's role in United States' mobilization during World War I.
During the first half of the nineteenth century, a number of American states prohibited the establishment of banks of issue within their borders. In theory, these states seemingly opted for the slow economic development associated with an inelastic currency supply. In the case of Iowa, however, the people's demand for an elastic currency was met by the creation of substitute financial institutions — land agency-banks — that functioned as de facto banks of issue.
The question “What's in a bond rating?” has been asked at least since 1909 when such ratings were started in the United States. Informed persons who answer this question typically admit that ratings depend in part on readily available statistics on a firm's operations and financial condition. Examples of such statistics are earnings coverage, leverage ratios, and profit rates.
Many students of business finance subsume the risks associated with a firm's income stream under two general cognomens, namely, “business risk” and “financial risk.”1 The degree of business risk associated with a firm's income stream is considered to be a function of all determinants of risk except those that relate to the means by which a firm's operations are financed (i.e., the nature of a firm's capital structure). In general, business risk is determined by a firm's asset structure, the purposes for which a firm's assets are used, and the efficiency and effectiveness with which a firm's assets are utilized. The determinants of business risk include the competitive position of a firm, the nature of a firm's operating expenses, the intensity of demand for a firm's products, and a firm's managerial resources, inter alia. A measurement of the variability of net operating income (i.e., earnings before interest expenses and income taxes) is usually employed as a surrogate of business risk.