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12 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 12

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Chapter 2: Economic Theories, Data, and Graphs

This chapter provides an introduction to the methods that economists use in their research. We
integrate a detailed discussion of graphing into our discussion of how economists present economic
data and how they test economic theories.
In our experience, students typically do not learn enough about the connection between
theory and evidence, and how both are central to understanding economic phenomena. We
therefore recommend that considerable emphasis be placed on Figure 2-1, illustrating the process
of going from model building to generating hypotheses to confronting data and testing hypotheses,
and then returning to model building (or rebuilding). There is no real beginning or end to this
process, so it is difficult to call economics an entirely “theory driven” or “data driven” discipline.
Without the theory and models, we don’t know what to look for in the data; but without
experiencing the world around us, we can’t build models of human behaviour and interaction
through markets. The scientific approach in economics, as in the “hard” sciences, involves a close
relationship between theory and evidence.

***
The chapter is divided into four major sections. In the first section, we make the important
distinction between positive and normative statements and advice. Students must understand this
distinction, and that the progress of any scientific discipline relies on researchers’ ability to
separate what evidence suggests is true from what they would like to be true. We conclude this
section by explaining why economists are often seen to disagree even though there is a great deal
of agreement among them on many specific issues. We have added a new box on where
economists typically get jobs and the kind of work they often do.
The second section explains the elements of economic theories and how they are tested.
We emphasise how a theory’s or model’s definitions and assumptions lead, through a process of
logical deduction, to a set of conditional predictions. We then examine the testing of theories. It
is here that we focus on the interaction of theory and empirical observation (Figure 2-1). We
examine briefly several aspects of statistical analysis, including the difference between rejection
and confirmation, and the even more crucial distinction between correlation and causation.
The chapter’s third section deals with economic data. We begin by explaining the
construction of index numbers, and we use them to compare the volatility of two sample time
series. Index numbers are so pervasive in discussions of economic magnitudes that students must
know what these are and how they are constructed. We then make the distinction between cross-
sectional and time-series data, and at this point students are introduced to two types of graph.

Copyright © 2014 Pearson Canada Inc.

13 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 13

This brings us to the chapter’s final section, on graphing. We show how a relation can be
expressed in words, in an equation, or on a graph. We then go into considerable detail on linear
functions, slope, non-linear functions, and functions with minima and maxima. In this
discussion, the student is introduced to the concept of the margin, described as the change in Y in
response to a one-unit change in X. In all cases, the graphs apply to real -world situations rather
than abstract variables. Pollution abatement, hockey-stick production, firm profits, and fuel
consumption are our main examples.

Answers to Study Exercises

Question 1
a) normative (“The government should impose…” is inherently a value judgement.)

b) positive (In principle, we could determined the impact that foreign aid actually has.)

c) positive (In principle, we could determine the extent to which fee increases affect access.)

d) normative (What is or is not unfair is clearly based on a value judgement.)

e) normative (Use of the expression “too much” is a value judgement.)

Question 2
a) The issues concern the costs and benefits of applying fiscal or monetary stimulus to an economy
(about which students cannot yet say a lot in detail). Some of the normative issues will relate to
the reader's evaluation of the current government leaders, such as the Minister of Finance
and the Governor of the Bank of Canada. This can be turned into an interesting illustration of how
our value judgements can affect our assessment of positive but uncertain issues (in this case
the costs and benefits of economic stimulation).
b) North Americans are likely to emphasize the economic harm to the rest of the world done by
European farm subsidies; the Europeans are likely to stress the social (and political) harm done
by eliminating them.
c) Positive questions relate to the effects of school competition on the quality of education
actually delivered. Normative questions may relate to whether it is desirable to have the resulting
changes in the quality of education or on the distribution of income.

d) Positive issues relate to whether waiting times for medical treatment would fall, whether the
average quality of health care would rise, and whether incomes of those in the medical industry

Copyright © 2014 Pearson Canada Inc.

14 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 14

would be affected. Normative issues include whether it is desirable that some doctors make
themselves available only to people that can afford to pay for the “extra billing”.

Copyright © 2014 Pearson Canada Inc.

15 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 15

e) Positive issues relate to which policy carbon taxes or cap-and-trade systems or direct regulations
on emissions would lead to the largest reductions in greenhouse-gas emissions and at what cost,
and about which policy instrument would be the easiest to administer. Normative issues include
whether the government ought to focus on this issue at the expense of dealing with other pressing
issues. There is also some remaining disagreement as to whether human activity is really
responsible for the observed increases in global average temperature, but this disagreement is
essentially a positive rather than normative one.
f) Positive issues relate to the extent to which regulations were the cause of the recent (2008-09)
financial crisis and about how regulations might be reformed in a way to reduce the probability
of future crises. Normative issues include choosing between alternative policies that may reduce
the profitability of financial institutions but at the same time increase the stability of the overall
financial system. To the extent that some regulatory changes alter the distribution of income,
further normative issues will be raised.

Question 3

a) In the Canadian wheat sector, the amount of rainfall on the Canadian prairies is an exogenous
variable; the amount of wheat produced is an endogenous variable.

b) To the Canadian market for coffee, the world price of coffee is exogenous; the price of a
cup at Tim Horton’s is endogenous.

c) To any individual student, the widespread unavailability of student loans is exogenous;

their own attendance at university or college is endogenous.
d) To any individual driver, the tax on gasoline is exogenous; his or her own decision regarding
which vehicle to purchase is endogenous.

Question 4

There are, of course, many possible answers to each part. Here we list only one possible answer.

a) When thinking about surveying (especially over small areas) it is very useful to ignore the
curvature of the Earth.
b) When framing an equal-pay-for-equal-work statute, it is useful (even central!) to assume that
here are no economic differences between men and women.
c) When analysing behaviour of the teams and players during the seventh (and final) game of the
World Series, the assumption that “there is no tomorrow” is quite useful.

Copyright © 2014 Pearson Canada Inc.

16 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 16

d) This assumption is useful, for example, for examining an individual's saving behaviour. In
general, any issue in which time is important clearly cannot be examined with a one-period model.

Copyright © 2014 Pearson Canada Inc.

17 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 17

Adding only a second period (and ignoring all others) often is all that is necessary to generate
valuable insights about behaviour over time.
e) In a world with only one good, it is not possible to discuss substitution between goods. But in
a model with many goods, it may be difficult to mentally keep track of all the substitution that is
going on. Thus, if one wanted to think about how a tariff on good X would affect the production
of other goods, for example, the central intuition would be well developed in a two-good model.
f) This assumption is a convenient simplification for the standard economic theory of utility
maximization. As long as self-interest is the most important motive most of the time, then
concentrating on it will be an acceptable simplification that will yield predictions that are
accurate most of the time.

Question 5

a) models (or theories)

b) endogenous; exogenous

c) (conditional) prediction; empirical

d) (positively) correlated; causal

Question 6

a) These data are best illustrated with a time-series graph, with the month shown on
the horizontal axis and the exchange rate shown on the vertical axis.

Copyright © 2014 Pearson Canada Inc.

18 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 18

Copyright © 2014 Pearson Canada Inc.

19 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 19

b) These cross-sectional data are best illustrated with a bar chart.

c) These cross-sectional data are best illustrated in a scatter diagram; the “line of best fit” is
clearly upward sloping, indicating a positive relationship between average investment rates and
average growth rates.

Copyright © 2014 Pearson Canada Inc.

20 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 20

Question 7

a) Along Line A, Y falls as X rises; thus the slope of Line A is negative. For Line B, the value
of Y rises as X rises; thus the slope of Line B is positive.
b) Along Line A, the change in Y is –4 when the change in X is 6. Thus the slope of Line A
is Y/ΔX = -4/6 = -2/3. The equation for Line A is:
Y = 4 – (2/3)X

c) Along Line B, the change in Y is 7 when the change in X is 6. Thus the slope of Line B
is Y/ΔX = 7/6. The equation for Line B is:
Y = 0 + (7/6)X

Question 8

Given the tax-revenue function T = 10 + .25Y, the plotted curve will have a vertical intercept of
10 and a slope of 0.25. The interpretation is that when Y is zero, tax revenues will be $10 billion.
And for every increase in Y of $100 billion, tax revenues will rise by $25 billion. The diagram is
as shown below:

Copyright © 2014 Pearson Canada Inc.

21 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 21

Question 9

a) For each relation, plot the values of Y for each value of X. Construct the following table:

(i) Y = 50 + 2X (ii) Y=50+2X+.05X2 (iii) Y = 50 + 2X - .05X2

X Y X Y X Y
0 50 0 50 0 50
10 70 10 75 10 65
20 90 20 110 20 70
30 110 30 155 30 65
40 130 40 210 40 50
50 150 50 275 50 25

Now plot these values on scale diagrams, as shown below. Notice the different vertical scale on
the three different diagrams.

b) For part (i), the slope is positive and constant and equal to 2. For each 10-unit increase in X,
there is an increase in Y of 20 units. For part (ii), the slope is always positive since an increase in
X always leads to an increase in Y. But the slope is not constant. As the value of X increases, the
slope of the line also increases. For part (iii), the slope is positive at low levels of X. But the function
reaches a maximum at X=20, after which the slope becomes negative. Furthermore, when X is
greater than 20, the slope of the line becomes more negative (steeper) as the value of X increases.

Copyright © 2014 Pearson Canada Inc.

22 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 22

c) For part (i), the marginal response of Y to a change in X is constant and equal to 2. This is the
slope of the line. In part (ii), the marginal response of Y to a change in X is always positive, but
the marginal response increases as the value of X increases. This is why the line gets steeper as X
increases. For part (iii), the marginal response of Y to a change in X is positive at low levels of X.
But after X=20, the marginal response becomes negative. Hence the slope of the line switches from
positive to negative. Note that for values of X further away from X=20, the marginal response of Y
to a change in X is larger in absolute value. That is, the curve flattens out as we approach X=20 and
becomes steeper as we move away (in either direction) from X=20.

Question 10

a) Using 2000 as the base year means that we choose $85 as the base price. We thus divide the
actual prices in all years by $85 and then multiply by 100. In this way, we will determine, in
percentage terms, how prices in other years differ from prices in 2000. The index values are as
follows:

Year Price ($) Physics textbook price index

2000 85 (85/85) × 100 = 100
2001 87 (87/85) × 100 = 102.4
2002 94 (94/85) × 100 = 110.6
2003 104 (104/85) × 100 = 122.4
2004 110 (110/85) × 100 = 129.4
2005 112 (112/85) × 100 = 131.8
2006 120 (120/85) × 100 = 141.2
2007 125 (125/85) × 100 = 147.1
2008 127 (127/85) × 100 = 149.4
2009 127 (127/85) × 100 = 149.4
2010 130 (130/85) × 100 = 152.9

b) The price index in 2005 is 131.8, meaning that the price of the physics textbook is 31.8
percent higher in 2005 than in the base year, 2000.

c) From 2007 to 2010, the price index increases from 147.1 to 152.9 but this is not an increase of
5.8 percent. The percentage increase in the price index from 2007 to 2010 is equal to [(152.9-
147.1)/147.1]×100 = 3.94 percent.
d) These are time-series data because the data are for the same product at the same place but at
different points in time.

Copyright © 2014 Pearson Canada Inc.

23 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 23

Question 11

a) Using Calgary as the “base university” means that we choose $6.25 as the base price. Thus we
divide all actual prices by $6.25 and then multiply by 100. In this way, we will determine, in
percentage terms, how prices at other universities differ from Calgary prices. The index values
are as follows:

University Price per Index of pizza prices

pizza
Dalhousie $6.50 (6.50/6.25)×100 = 104
Laval 5.95 (5.95/6.25)×100 = 95.2
McGill 6.00 (6.00/6.25)×100 = 96
Queen’s 8.00 (8.00/6.25)×100 = 128
Waterloo 7.50 (7.50/6.25)×100 = 120
Manitoba 5.50 (5.50/6.25)×100 = 88
Saskatchewan 5.75 (5.75/6.25)×100 = 92
Calgary 6.25 (6.25/6.25)×100 = 100
UBC 7.25 (7.25/6.25)×100 = 116
Victoria 7.00 (7.00/6.25)×100 = 112

b) The university with the most expensive pizza is Queen’s, at $8.00 per pizza. The index value
for Queen’s is 128, indicating that pizza there is 28 percent more expensive than at Calgary.
c) The university with the least expensive pizza is Manitoba, at $5.50 per pizza. The index value
for Manitoba is 88, indicating that the price of pizza there is only 88 percent of the price at Calgary.
It is therefore 12 percent cheaper than at Calgary.

d) These are cross-sectional data. The variable is the price of pizza, collected at different places
at a given point in time (March 1, 2013). If the data had been the prices of pizza at a single
university at various points in time, they would be time-series data.

Question 12

The four scale diagrams are shown on the next page, each with different vertical scales. In each
case, the slope of the line is equal to the “rise over the run” – that is, the amount by which Y
changes when X increases by one unit.

Copyright © 2014 Pearson Canada Inc.

24 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 24

Question 13

This is a good question to make sure students understand the importance of using
weighted averages rather than simple averages in some situations.
a) The simple average of the three regional unemployment rates is equal to (5.5 + 7.2 + 12.5)/3 =
8.4. Is 8.4% the “right” unemployment rate for the country as a whole? The answer is no because
this simple, unweighted (or, more correctly, equally weighted) average does not account for the
fact that the Centre is much larger in terms of the labour force than either the West or East, and
thus should be given more weight than the other two regions.
b) To solve this problem, we construct a weighted average unemployment rate. We do so by
constructing a weight for each region equal to that region’s share in the total labour force. From
the data provided, the country’s total labour force is 17.2 million. The three weights are therfore:

West: weight = 5.3/17.2 = 0.308

Centre: weight = 8.4/17.2 = 0.488

East: weight = 3.5/17.2 = 0.203

These weights should sum exactly to 1.0, but due to rounding they do not quite do so. Using
these weights, we now construct the average unemployment rate as the weighted sum of the three
regional unemployment rates.

Canadian weighted unemployment rate = (.308 × 5.5) + (.488 × 7.2) + (.203 × 12.5) = 7.75

Copyright © 2014 Pearson Canada Inc.

25 Chapter 2: Economic Theories, Data, and Graphs
Chapter 2: Economic Theories, Data, and Graphs 25

This is a better measure of the Canadian unemployment rate because it correctly weights each
region’s influence in the national total. Keep in mind, however, that for many situations the
relevant unemployment rate for an individual or a firm may be the more local one rather than the
national average.
Question 14

The six required diagrams are shown below. Note that we have not provided specific units on the
axes. For the first three figures, the tax system provides good examples. In each case, think of
earned income as being shown along the horizontal axis and taxes paid shown along the vertical
axis. The first diagram might show a progressive income-tax system where the marginal tax rate
rises as income rises. The second diagram shows a proportional system with a constant marginal
tax rate. The third diagram shows marginal tax rates falling as income rises, even though total tax
paid still rises as income rises.
For the second set of three diagrams, imagine the relationship between the number of rounds
of golf played (along the horizontal axis) and the golf score one achieves (along the vertical axis).
In all three diagrams the golf score falls (improves) as one golfs more times. In the first diagram,
the more one golfs the more one improves on each successive round played. In the second diagram,
the rate of improvement is constant. In the third diagram, the rate of improvement diminishes as
the number of rounds played increases. The actual relationship probably has bits of all three
parts—presumably there is a lower limit to one’s score so eventually the curve must flatten
out.

*****

Copyright © 2014 Pearson Canada Inc.

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very quiet, except Margery who, in a whisper, gasped
into Tom’s ear: “Now do just as Bill said to do if Mort or
Henry appeared.”

Tom nodded. In the dimly lit room, bare except for a

bed and a stove and a chair with one leg gone, he and
Cliff and Nicky and his sister, with Bill and Jack, were as
silent as statues. So that Henry Morgan strolling with his
mind far away, got half-way through the door before he
discovered them.

“What—say!—er—” he gasped. “Why——”

“Hello!” said Tom. “How’s Mort? And how are you?”

“Um—er—oh! Fine. Fine! ’Cause why? ’Cause we see 268

you got this little lady safe away from the Indians. We
knew you would. I said to Mort, ‘We’ve told the Indians
to take good care of them till they want to leave and
then take them safe to the shore.’ He said ‘Seems like
deserting them, seems like,’ but we had to hurry,
because—because——”

For once his ’Cause why was forgotten in his effort to

hide his surprise. “——We had to keep an appointment
with the captain of a sloop——”

“Oh, that’s all right,” said Tom, playing a part which Bill,
Jack and the chums, and even Mr. Gray, had decided
was the surest way to lull suspicion of what they really
meant to accomplish.

“I knew you’d see it. ’Cause why? ’Cause you’re a fine

feller. Tom, we fixed it all up with the Indians about
letting Miss Margery go and then we come on back
here. ’Cause why? Mort had remembered about his
Golden Sun. It was a mine and he was anxious we
should be partners.”

Tom felt that Henry had mixed himself up in enough

half-falsehoods.

“Yes?” he said, with his eyelids lifted and brows arched,

playing his part in laying a trap. “So that’s why, in the
old days, Mort didn’t tell you where the gold dust went
——”

Henry darted closer and eagerly demanded:

“Do you know? Do you know anything? I didn’t learn 269

nothing ’cause Mort got chased by the bandits and hid
and then went to Central America.”

“I don’t think you ought to count too much on him for a

partner,” Tom added to his story as Bill had arranged
that he should, if circumstances allowed him to do so.
“Henry—what would you say if I showed you how the
gold dust disappeared—and where?”

“Oh! I’d—I’d be grateful. Of course, it won’t do any

good now, but it would be nice to know.”

“Come on, then,” Tom urged, and the whole party, with
Bill nudging Nicky to prevent the youth from doubling
up with glee, went up the old trail to a spot well
remembered as the point where the youths first met
Henry Morgan—the man who then boasted that he
could “smell money.”

“You said, when we first saw you, that you could smell
money,” said Tom. Henry nodded. “Your nose must have
been out of joint,” he said. “Look here.” He approached
the ledge, and pointed overside. Henry, cautiously, drew
close and looked; then he gasped.

“Why!—it’s only down about six feet.”

“Yes, there’s a narrow ledge about six feet down—of 270

course the chasm is below, but you could get down to
the narrow ledge—and, here’s a little secret—the ledge
goes back in under the overhang of rock—if you get on
your stomach and look over, you’ll see!”

“I do,” said Henry, after he had looked. “It’s like a

narrow cave under this overhang I’m lying on.” He
stared back again. “What’s that, like something black,
down on the ledge?”

“Oh, that!” said Tom, pretending to be uninterested.

“That is the last sack of the gold dust. Here’s where the
mules were stopped and where Mort dropped the sacks
of dust and then, later, he and Margery were down
there, hiding, when the—bandits!—rode past.”

“Well, I’ll be swiggle-swiggered!” gasped Henry. “What’s

going to be done with that sack of dust? And where’s
the rest?”

“Oh, a man from the Dead Hope is coming back for it—
he just took another one out. This is the last. We’re
going to lock it up with the rest of the mine’s nuggets
and dust, in that old shack, tonight. In the morning we’ll
all escort it to the city. We can’t do anything more here.”

“What did you come here for?”

“Oh, just to look up some papers Margery says father

gave her and she hid in the old shack.”
They all saw the cunning light in Henry’s eyes. “But you
ain’t found no papers!”

Tom laughed. “No,” he said. “The stove has been moved 271
since Margery hid our papers under the boards beneath
it—she thinks it used to be in the far corner—by the
window. We haven’t looked there, though. I don’t think
she remembers after all these years.”

Henry made an excuse and hurried away. Tom looked at

his sister and his chums and then, of a sudden, they all
smiled.

“Well,” said Tom, “I’ve baited a trap—hope we get two

rats!”

272
 CHAPTER XXIX
THE RATS COME

Tom took a firm grip of Cliff, on one side, and of Nick,

on the other; to the latter he whispered: “Here they
come! If you make a false move I’ll make mince-meat of
you!”

“I won’t,” agreed Nicky.

Black night had descended over the Dead Hope mine

and its new neighbor, the Golden Sun. The two new
partners of that latest venture had hastily taken their
few belongings from the Dead Hope shack when Henry
learned from Tom that it would be needed for gold-dust
storage that night.

To all appearances the shack, standing dark and still,

and the hillside behind it, were wrapped in slumber.

Two dull figures, as quiet as ghosts, slipped along in the

gloomiest parts of the shadow, close to brush, hugging
the cliff, or slinking under the shack windows.

“Seems like nobody’s around, seems like,” Mort

whispered. “Ain’t that sort of funny?”

“There was a guard,” Henry said in his hoarse, but 273

subdued rumble. “He ain’t around—’Cause why? ’Cause
Henry attends to everything. He was leaning out the
window when I sneaked around the side of the shack
first time, spying. Well—there’s his hat.” He kicked the
sombrero lying on the ground under the window.

“Blackjack, heh?”

“Naw. Cudgel!”

“Oh.”

“Now the main thing is not to wake up the camp,” Henry

said. “Last time we played bandits we come with guns
and a gang at our backs. But this time it’s different.
’Cause we are workin’ alone and I mean to see that you
don’t get the best of me this time.”

“Seems like you never will get over that idear, seems
like,” Mort grunted. “I tell you and tell you—I had the
little gal to watch out for and I tried to find you but the
others was too close behind me——”

“Well, it’s all come back to us, anyhow, except what you
wasted in Colon—one sack was all you took, wasn’t it?”

“Only one, Hen. Yes, it’s come back. Now we’d better
get it and get the papers out from where the stove used
to be——”

“And we was pulling up boards in the wrong place. 274

That’s kids for you—she remembers where she hid stuff
and her brother tells us as nice as pie and never plans
to bother to look. Thinks his sister has forgot—like that
silly old codger, Jack, we saw down to Porto Bello!”

“Yep! Well, Hen, let’s get in through the window—or will

you let me hand you the sacks and you take ’em to
where we got the burros tied?”
“We’ll work right together,” Henry declared. “Here, you
get in there and I’ll be right behind you. Watch. Go
easy. Don’t come down hard onto the guard—I hit him
and he dropped inward—don’t step on ’im if you can
help it!”

“I won’t—but they ain’t any guard here.”

“Maybe he crawled off from under the window. Get in—

let me get there after you. Hurry, you slow poke.”

Mort hastened all his fat bulk would permit. Then Henry
got in.

“That’s strange,” he said. “I was sure the guard fell in

the room when I poked the cudgel down onto his fat
head! But, he must of come to life and crawled off.
Don’t hear nothing so he hasn’t sounded any alarm!”

“Got the flashlight? Turn it this way.”

Henry unslung a small pocket lamp and switched on its

beam. Throwing it over the room he gave an
exclamation of delight.

“There’s them sacks o’ dust—and some of nuggets, by 275

the feel.”

They lost no time in dragging some of the buckskin

pouches from the top of the pile and dropping them out
of the window so they could get to the bulkier flour
sacks and gunny sacks beneath them. When they had
lifted until they were tired, they decided to transfer
what they had dropped under the window to the backs
of the mules.
“But wait!” admonished Mort. “Seems like we better get
at the papers, seems like. Then, if we’re chased, we
know we haven’t left that partnership agreement and
deed for the kids to find.”

“Wise idea,” agreed Henry. “Take this flash, and put it

so’s it can’t be noticed outside. Then I’ll pry up the
boards—let’s see—a girl of nine or ten or so would
never have tools—and she was excited when you come
in, wasn’t she, Mort?”

“Seems like she was, way I remember.”

“Now, the stove was about here—yep, here’s the spots

where the heat warped the wooden floor. Now—Mort,
where was the little gal standing that night when you
come in?”

“Well as I recall—I come in the door, and she was—just

about like you are now.”

“Well, that settles it. She had just straightened up, I 276
bet. ’Cause why? Look at that board along the wall.
Loose, I’ll bet. See! A kid could get her fingers almost
under the edge—enough to lift it—and sure enough!
Here they are!”

He wrenched savagely at the long, narrow board, and

lifted it enough to get his arm through and fish out
some mouldy looking paper.

“Take care,” warned Mort. “It’s nearly falling to bits.”

“Only the outer wrappers,” Henry whispered, holding

the papers close to the electric beam, already growing
dim. “See—the inside papers are all right.”
“Well, hurry up and make sure what they are. We want
the deed and we might as well take the others and tear
’em up where the pieces won’t get us in trouble. Hurry,
though. The battery is going down on that flashlamp.”

“It’s the deed all right,” Mort took one paper and
unfolded it partly. “I recall how this corner was tore off
where it was signed, and I made a patch onto it—only
with my name instead of—that other ’un.”

“And here is the partnership paper. I won’t tear it up yet

—but what are these other things?”

“Maybe more of his deeds,” Mort said. “You know, the 277
night you was chief of the bandits and I helped, you
said we ought to find more deeds for mines because he
was representin’ a company——”

“Well, if you hadn’t shot him!—” accused Henry.

“I shot him? You got rats! You done that!”

“Well, look at the papers and let’s go back to toting

gold.”

Henry, with the flash bulb now merely a dim, yellowish

filament, held a paper close to his eyes.

“What’s this?” he almost forgot his caution.

“Well, what is it?”

“‘I—Henry Morgan—do confess,’” he began, then flung

aside the paper and opened the last one feverishly.

Meanwhile Mort strained his eyes at the first, but Henry,

snatching the lamp and using it, snarled.
“It’s got all about you being a bandit and shooting the
gringoes—“(Americans)—“and lots more, Henry.”

“Well, this confession is about you and how you stole

from me and your pals and hid the gold dust and took
the little girl.”

“Well—what of it? Who put them there?”

“We did!” snapped a sharp voice.

“And you might as well sign the confessions!” said 278

another.

Whirling, dazzled by two vivid white beams cast on

them from large flashlamps protruding through the
window, the two, caught red-handed, blinked and
stammered in amazement.

“We’re the Mexican police,” declared one of three men

who promptly handcuffed the two dazed culprits.

Tom, Nicky, Cliff, Bill, Jack, Mr. Gray, the mine

superintendent—and Margery—everybody was trooping
into the doorway and the small room.

“We heard every word they said, we crept right under

the window,” Nicky said. He turned to Tom, “and I didn’t
make a false move, did I?”

“Not a one,” said Tom. “The only false move was the
one these men made trying to get the best of three
boys, as they thought.”

“And they can sign those confessions and save you a lot
of trouble,” said one of the Mexican officials. Mort
looked at Henry and his look was returned—there was
nothing else to do so the confessions checking and
verifying the duplicity of the two—and worse!—were
duly signed.

“But what became of the guard I hit?” asked Henry, 279

when he had been told how they were surrounded all
the time they talked and worked, and Tom answered:
“Oh, Nicky and I were inside here with a hat and
wadded sacks around a broomstick, to seem like a man
in sombrero and poncho, leaning out of the window.
When you ‘socked’ at them we let the hat drop off and
put the rest over in the corner—there they are!”

“You certainly outwitted us,” said Mort, grudging

admiration, but compelled to admit defeat.

“And now—” it was Jack, the man who had no memory

until he left Porto Bello—“Just wait a bit. Mort Beecher—
you that was with me so long in Porto Bello, and I never
guessed—listen to this! Who crept in my room in a
Colorado camp bunk house and stole my deeds, that I
was carrying from one ranch to another—and who, by
doing that, ruined my reputation, caused me to leave
the State, and made the wreck who ended up on the
beach at Porto Bello?”

“How should I know?” demanded the handcuffed Mort,

but he shivered.

“You should know by this!” snapped Jack. “Oh, I got my 280

memory back at last, and I can remember as well as
anything how a piece was torn off the bottom of one
deed, the one you tore taking it out of my bunk! It was
my own deed, to my own mine, I had just bought, down
in Mexico. You thought the corner of the paper was lost.
It wasn’t! It was left in my bunk and I had it in my old
wallet down in Porto Bello all the time; only, I had been
there so long I didn’t recall anything. But I brought
away the wallet and here is that piece of paper with my
signature on it!”

Eagerly Tom grasped the deed to the Golden Sun,

transferred, supposedly, to one Morton Beecher. From
Jack’s worn, faded wallet he fitted to its patched corner
a bit of paper, yellow and mildewed, but an exact fit!

“So Margery and I will have you for a half-partner

instead of that—” Tom made a face toward Mort who
was being led, with head bent, toward his imprisonment
and trial, with Henry, for their many sins.

“Bill,” cried Jack. “Tell you what I’ll do. You always liked
mining and you say you used to prospect in Peru for
mines. How about trading my share in this Golden Sun
for your ranch in Colorado?”

“It’s a go!” said Bill.

“And our old Bill will be our partner,” chuckled Tom. “I’m
glad.”

“And we’ll take Cliff and Nicky into partnership, too,

won’t we?” Margery pleaded.

“As to that!” exclaimed Tom, with a grand air, and 281

waving a hand like an orator, while he stuck the other
arm into the bosom of his coat, “I believe we shall have
to take that up with the board of directors—in the
morning.”

“In the morning, my dear!”

 282

CHAPTER XXX
SUNSET

“The reason I didn’t want to talk about shares, last

night,” Tom told his sister, late the next afternoon, “was
because we don’t actually own a dollar’s worth of that
mine.”

They were sitting outside the mine shack. Henry and

Mort had been lodged in a Mexican prison. They were
merely waiting until Mr. Gray would be ready to leave
the mines. Bill and Jack had attended to the necessary
legal formalities. But Mr. Gray learned that the mine
superintendent had discovered a regular hoard of old
Aztec relics in the fastness of the hills and Mr. Gray
proposed to go with him to inspect them the next day.
He might decide to remain the rest of the late summer
and collect and arrange the relics.

“Why, don’t she own a dollar of the mine?” Nicky

demanded. “She hid the paper. Her father paid for half
the mine.”

“But he paid Mort, and Mort can’t return the money, and
he had no right to sell the mine. It was really Jack’s——”

“Well,” said Jack, ambling up, “did I hear my name 283

mentioned?”
“You certainly did,” declared Cliff. “Tom says he can’t
touch the mine at all because it’s all yours and what his
father paid——”

“Please—please!” gasped Mort’s former beach combing

partner of Porto Bello. “Don’t make me weep. Don’t
make me laugh.”

“Just the same,” said Tom, “it wouldn’t be right.”

“Well,” said Jack, “let’s look at it this way. Your father

paid in good earnest.”

Tom nodded, and Margery, beside him, smiled and gave

vigorous assent.

“And because Mort was greedy and all, his greed and
lust has turned against him and has brought me back to
being a man through you folks. But that don’t pay for
the mine, of course. And it’s a shame, too.” He looked
over toward the mountains. The sun, declining, was
taking on the rich, golden hue, and the sky was dyed,
above a blood-red line just over the hills, with a vast,
swimming, pulsating light, a vivid golden sea of beauty.

“It’s too bad,” Jack added. “Don’t you think so, Bill?” as 284
Bill came up. “What with us finding that the Dead Hope
vein has been struck again, and they’ve got their gold
dust back and our own mine has a vein of ore as thick
as your arm, about two feet under the rock—ain’t it too
bad we can’t sell shares to our friends?”

“Sell, yes! But not give!” said Tom.

“Well,” said Jack, “how about making me an offer. If you

was to want the half-interest, say, I might consider
taking that—let me see—yes! That cigar lighter that
saved you in the Chucunaque country. You don’t smoke.
It’s no good to you.”

“It’s a keepsake,” Tom said—and then started—“Golly! It

isn’t even mine to keep. I took it from Bill.”

“I now and here make you a present of it!” said Bill

magnanimously, “and you keep it, too. Jack may own
that mine, but he’s traded half to me for my ranch, and
he don’t know which half he’s traded, so I guess nobody
owns the other half—so, why not claim it from him!”

“Would that be right?” asked Margery, her eyes big and

interested.

“Little sister,” said Bill kindly, “for lads like Tom, and Cliff,
and Nicky—and a girl like you!—anything a decent
fellow can do is—right!”

“Thanks,” said Nicky.

“Same here,” said Cliff.

Margery wasn’t ashamed to hug Bill.

As for Tom, with just a little lump in his throat for the
fine chum Bill always was—Tom couldn’t think what to
say.

So, as Bill dragged out a cigarette, Tom said nothing. 285

And lit the cigarette with his life-saving lighter.

THE END
 FOOTNOTE

[1]
This is not impossible for a clever and adept person
who has the strange ability to identify his mind with
that of another, to “see his pictures,” as Cliff’s father
explained it to Tom later.
 Transcriber’s Notes

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spellings and dialect unchanged.
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