THE EVOLUTION OF SECURITIES 
for government use by the sale of interest-bearing government 
certificates of indebtedness to private investors began, the ex- 
penditures of governments have continually grown. The in- 
creased economic complexity of civilization has necessitated a 
vast extension of the functions of government even in times 
of peace. Today the U. S. Government, besides protecting 
Americans against external invasion or domestic violence, dis- 
tributes the mail, builds roads, inspects food products, con- 
serves natural resources, carries on scientific research in behalf 
of American agriculture, commerce, and industry, and per- 
forms for its citizens thousands of other distinct and costly 
services which were often undreamt of a century ago. In this 
expansion of its functions our government has been typical of 
other modern and progressive governments throughout the 
world. 
But a still more significant need for governmental borrow- 
ing has arisen from the vastly increased cost of warfare. In 
the terrible conflicts’ of modern times, not merely specialized 
fighting men but entire populations have had to be mobilized 
at an appalling expense. Although only about a quarter as 
long in duration as the Napoleonic Wars, the Great War proved 
in the case of England, roughly, ten times as expensive.? It is 
chiefly owing to the tremendous cost of modern scientific meth- 
ods of warfare that every great government in the world today 
carries an unprecedented burden of debt, and that so many 
important stock exchanges in the world experience large daily 
volumes of purchases and sales of government securities. 
Not only national governments but also their various sub- 
divisions have likewise become accustomed to finance their 
needs through the issuance of securities. In this country, for 
example, our investors hold, in addition to the bonds of our 
national government, the interest-bearing obligations of our 
states, counties, and municipalities. In most respects these 
Ta See Appendix Ib.