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 EXCESSIVE SAVING 
 
 A CAUSE OF 
 
 COMMERCIAL DISTRESS; 
 
 BEINft A SERIES OF 
 
 ASSAULTS UPON ACCEPTED PRINCIPLES 
 OF POLITICAL ECONOMY. 
 
 BY 
 
 URIEL H. CROCKER. 
 
 BOSTON: 
 
 W. B. CLARKE AND CARRUTH, 
 
 340 Washington Stkeet. 
 1884. 
 

 I. 
 
PREFACE. 
 
 It is now about seven years since the undersigned made liis 
 first attempt to bring into public notice certain views which, 
 if received as true, will involve important changes in the 
 accepted principles of political economy. These views were 
 developed from time to time in the articles and communica- 
 tions to the press contained in the following pages. Some of 
 these articles and communications were declined by the peri- 
 odicals and newspapers to which they were offered, and none of 
 them have ever received any printed recognition of their sound- 
 ness, or even of their plausibility. A firm faith, however, in 
 the truth of the conclusions reached, and a strong sense of 
 their importance for a proper understanding of many of the 
 political and social phenomena of the present time, have led 
 tlie undersigned to print this pamphlet, — in part with the 
 liope that thus his suggestions and arguments may at last 
 reach minds prepared to receive them, and in part as a monu- 
 ment to prevent later inquirers from gaining such credit as 
 may be due to the original discoverer of whatever may have 
 been novel in the views here presented. 
 
 URIEL H. CROCKER. 
 Boston, 14th June, 1884. 
 
EXCESSIVE SAVING 
 
 A CAUSE OF 
 
 COMMERCIAL DISTRESS. 
 
 The first public suggestion of the author's views was contained in 
 the following communicatioa to the " Boston Daily Advertiser," and 
 appeared in the issue of that paper of August 8, 1877. 
 
 EVIL EFFECTS OF MAKING HASTE TO BE RICH. 
 
 The general depression in business, and more especially the 
 recent strikes arising out of that depression, have led to much 
 consideration of the causes that have produced the results 
 which we are now experiencing. Tlie following considera- 
 tions are offered as presenting somewhat novel views upon this 
 subject : — 
 
 The general product of the labor of the community may be 
 considered as being divided between two classes of people, — 
 between the laborers and the capitalists, — between those who 
 perform the manual labor and those who own and furnish the 
 machinery which aids the laborer in the performance of his 
 work ; who own and provide the factories, warehouses, ships, 
 railroads, etc. 
 
6 
 
 All the claim that the members of the first of these classes 
 — the laboring class — may acquire through their own labor 
 upon the labor of others is, as a general rule, employed and 
 exhausted in supplying themselves and their families with 
 articles needed for immediate use and consumption ; but the 
 second, or capitalist, class acquires in ordinarj^ times a large 
 claim upon labor in excess of what it needs for its immediate 
 support and maintenance. This claim upon or control over 
 labor it may use, according to its own desire, in several differ- 
 ent ways. The wealthy may keep the poor busy in producing 
 articles of luxury to be immediately consumed in the using ; 
 or in creating more lasting means of gratifying luxurious 
 tastes or fancies, as in the building of elegant dwellings or 
 churches ; or, lastly, in building new factories, warehouses, 
 ships, railroads, etc., as a means by which the rich may, by the 
 profits of their new investments, gain new and increased power 
 over labor, — may, in a word, become richer. 
 
 There may well .be, however, a limit to the extent to which 
 this last-mentioned employment of labor can profitably be 
 carried. If at any given time there are enough factories, 
 warehouses, ships, and railroads to supply the then existing 
 demands of the community, not only can there be no profit in 
 the creation of additional and uncalled-for factories, ware- 
 houses, ships, and railroads, but, if these are in fact created, 
 they will by competition destroy the profits of those previously 
 existing, and will thus, by diminishing or stopping both the 
 dividends of the capitalists and the wages of the laborers, 
 diminish the ability of all to purchase the products of labor, 
 and thereby, by diminishing demand, increase still more the 
 excess of the actual over the needed supply. 
 
 There seems to be good reason to suppose that this is ex- 
 actly the way in which our recent depression in business has 
 been brought about. By the termination of our civil war, and 
 by the numerous and important improvements recently made 
 in machinery, the productive power of the community had been 
 very largely increased. Our wealthy classes, being of a thrifty 
 and saving disposition, and wishing not to spend all their in- 
 come, but to accumulate still greater wealth, sought to use a 
 
large portion of their control or power over labor in creating 
 profitable investments for themselves. They had previously 
 " made money " by building factories, stores, dwellings, rail- 
 roads, etc., and they thought to make still more money by 
 repeating the operation. Comparatively little harm would 
 have been done if the new investments had simply turned out 
 to be unprofitable, and the old ones had continued to supply to 
 the rich their accustomed dividends, and to the poor their 
 accustomed wages. The mischief has been that the new invest- 
 ments have, by competition, ruined for the time being the old 
 ones ; dividends and wages have stopped, and the income of 
 all, both rich and poor, being cut down, their demands upon 
 labor have been immensely diminished, and the laborer has 
 been left in idleness, and without the means of procuring the 
 necessaries of life. 
 
 According to the above views it would seem that the economy 
 and thrift of our wealthier classes, — their desire to grow 
 richer by laying aside their surplus earnings in profitable 
 investments, — instead of benefiting the community, as in ordi- 
 nary times it has done, has actually, under the peculiar cir- 
 cumstances of the present, produced just the opposite result, 
 and that all, both rich and poor, would be more prosperous to- 
 day, if the rich, instead of endeavoring to be economical and 
 saving, and to make profitable investments, had employed the 
 labor which they did in fact employ in building factories and 
 railroads, in simply producing results out of which no profit 
 was sought other than their own gratification, — for instance, 
 in erecting palatial residences, or even in heaping up Egyptian 
 pyramids. 
 
 These views must be admitted to be at variance with gener- 
 ally accepted theories ; but political economists are plainly at 
 a loss in attempting to account for the present condition of 
 affairs, and it may be that we have reached a time in the 
 world's history when a new element, hitherto unnoticed be- 
 cause inactive, has begun to work. It may well be that the 
 possibilities of the profitable investment of capital have now 
 for the first time been temporarily exhausted, and that the 
 accumulative, money-getting spirit, which has heretofore done 
 
so much for human progress, has for a wliile no further room 
 for useful action. 
 
 U. H. C. 
 
 The above communication to the " Advertiser" called forth in that 
 paper an answer from one " E. W." and an editorial, both of which 
 sought to show that " U. H. C." was entirely wrong. 
 
 After waiting nearly a year, another attempt to draw attention to the 
 subject was made, the following communication appearing in the " Bos- 
 ton Daily Advertiser " of May 25, 1878. 
 
 UNIVERSAL ECONOMY — WILL IT DO GOOD OR 
 
 HARM ? 
 
 The present depression in business is a fruitful topic of 
 discussion in the newspapers and elsewhere, and with all dis- 
 putants the favorite cause of the trouble is past exti^avagance ; 
 the favorite remedy, the general practice of economy. My pres- 
 ent object is to ask what this economy is that is to help us, and 
 how it is to bring about that result. I suppose that when the 
 people are asked to economize they are asked to spend less 
 money upon luxuries and comforts for themselves and their 
 families, to consume less of the products of labor. But, as 
 our trouble has for a long time been that production has run 
 ahead of consumption, that our factories and our mechanics 
 have produced more than they could find purchasers for, that 
 laborers have been idle for want of any demand for any pos- 
 sible product of their labor, how is it conceivable that a still 
 further diminution of the demand for those products, a still 
 greater decrease in consumption, can help those that are now 
 suffering ? Can it give work to the idle laborer ? Will it 
 take the superfluous product of the manufacturer off his hands ? 
 Will it make the business of the wholesale or of the retail 
 trader more lively ? Suppose the whole community should 
 economize to the greatest possible degree ; suppose we should 
 all for a year wear our old clothes, eat and drink nothing 
 but bread and water, and forswear all pleasures, such as 
 travelling, the theatre, etc., — would this bring about a season 
 
9 
 
 of prosperity ? Or should we not rather find ourselves at the 
 end of that year in a condition of worse poverty and idleness 
 than at its beginning? If not, why not? I wish somebody 
 to explain this, I do not wish to be referred to the good 
 effect of economy upon the fortunes of an individual. I admit 
 that an individual may grow rich by personal economy, if 
 other people will find him work enough to keep him busy, and 
 will pay him for such work. One man may thus advance his 
 own interests at the expense of his neighbors ; but how if his 
 neighbors all adopt the same policy ? An economical shoe- 
 maker will grow rich if other people will buy his shoes ; but 
 how will he accumulate wealth if the whole community con- 
 cludes to go barefoot in the interest of economy ? If A, B, 
 and C are thrown into the water together, it may be good 
 policy for A, regarding only his interest as an individual, to 
 keep his own head above water by pressing B and C down ; 
 but if B and C practise the same policy, and try to keep their 
 respective heads up by pushing their fellows down, it is easy 
 to see that the total elevation of the heads of the three will 
 not amount to much. 
 
 As, among individuals, the one who economizes may grow 
 rich at the expense of tliose who are lavish or extravagant, so 
 an economical nation may grow rich at the expense of other 
 nations. Just at the present time the nations of Europe are 
 giving the United States such an opportunity to gain at their 
 expense, and if they will buy enough of our products to keep 
 our people all employed, there will be an opportunity for us to 
 gain by economizing. But those who extol the merits of 
 economy do not limit its good effects to any such special cir- 
 cumstances as those just mentioned. They claim that it is 
 good for everybody ; they recommend it not as a selfish policy, 
 to be practised by those who want to get ahead of their fel- 
 lows, but as a policy calculated to promote the good of the 
 whole. They recommend it to Europe as much as they do to 
 America. They say to the whole civilized world : " You have 
 been wasteful and extravagant ; you must do what the indi- 
 vidual does when he has been extravagant ; you must deny 
 yourselves many things you would like to have, and all will 
 
10 
 
 come right in a little while." This remedy may have been an 
 efficacious one in many former times of distress, but how can 
 it help us noiv, when the great trouble is that people are idle ? 
 If the cause of the present trouble really were past extrava- 
 gance and waste, ought it not to be easy for all to find some- 
 thing to do toward repairing that waste and making up for that 
 extravagance ? The usual result of extravagance and waste 
 is not an extra supply of goods for wliich no use can be found, 
 but a scarcity of the things that have been wasted. We see 
 nowhere, however, at the present time any symptoms of such 
 a scarcity. If there were a scarcity of any article, how many 
 laborers, now idle, would hasten to busy themselves in the 
 production of that article? How much capital, now vainly 
 seeking profitable employment, would hasten to supply those 
 laborers with all needed factories and macliinery ? Are we 
 not entitled to conclude that our troubles have not been caused 
 by past extravagance, and that the remedy for those troubles 
 is not to be found in the general practice of economy ? 
 
 HERETIC. 
 
 This communication appears to have attracted considerable notice. 
 The author was informed by the editor of the "Advertiser" that 
 fifteen answers to his communication were received by that paper, all of 
 which controverted his arguments and conclusions. Three of these 
 answers were printed in the " Advertiser," and an editorial article 
 summed up the different views that had been presented, and concluded 
 that " Heretic " had gone badly astray. In answer to these criticisms 
 the next communication was written; but the " Advertiser" had had for 
 the time enough of the subject, and the communication was committed 
 to its waste basket. 
 
11 
 
 THE EFFECT OF ECONOMY. 
 
 I DO not see that you or your correspondents answer the 
 question that I proposed. I have made no question as to the 
 beneficial results of economy in the past, both to the indi- 
 vidual and to the world at large. I have made no question as 
 to the possibility of gain to be derived by an individual from 
 personal economy now. My inquiry was for some practical 
 explanation of the process by which general economy will help 
 the world under its present peculiar circumstances. I sug- 
 gested that the chief trouble at present is that laboring people 
 cannot find employment, and that any increased economy on 
 the part of the community will naturally tend, by decreasing 
 consumption, to increase rather than to diminish this trouble. 
 This is a result which lies on the surface, — the dullest mind 
 can perceive it, — I ask for an explanation of the more hidden 
 working of things by which this result may be prevented and 
 the opposite one produced. One of your correspondents says 
 that when the general love of economy induces people to go 
 without shoes, the shoemaker " must seek some other employ- 
 ment." But under such circumstances as the present, wher- 
 ever he turns, he will find that in each field of employment the 
 general economy has made fewer laborers necessary, — that 
 there are superfluous tailors, hatters, grocers, teamsters, and 
 farm hands, as well as superfluous shoemakers. Another of 
 your correspondents says that the answer to the question, what 
 the superfluous shoemakers shall do, is " easy." " They have 
 their own wants to satisfy, they can turn to producing for them- 
 selves." Producing what ? Are they to endeavor to return 
 to the mode of life of that long past time when a man and his 
 family supplied all their own wants directly by their own 
 labor, fed themselves with the products of their own tillage, 
 and clothed themselves in homespun ? Even if such a return 
 to the habits of his ancestors were possible for the laborer of 
 
12 
 
 to-day, would it be an advance or a retrograde movement ? 
 Would not such a course be simply an abandonment, by those 
 who were driven to adopt it, of the advantages and comforts 
 of modern civilization ? Indeed, would not general economy, 
 if pushed to an extreme, amount simply to the general practice 
 of denying ourselves the enjoyment of those comforts and 
 charms of life which we owe to modern civilization ? 
 
 It is said however that, if we all economized, — if we ceased 
 to consume as much as we do of the products of labor, — we 
 might employ our labor in adding to the world's " stock of 
 wealth." This sounds well, but I think I am entitled to ask 
 how this is to be done at the present time ? After all the 
 shoes and clothes that there is any demand for have been pro- 
 duced, will it increase the wealth of the world to lay up stores 
 of those articles, to moulder and decay before they can be 
 used ? Will it increase the wealth of the world to build fac- 
 tories, railroads, and ships, that must be left to ruin and decay 
 because there is no work for them to do? If there is a pos- 
 sibility of increasing our stock of wealth at the present time, 
 how is it that the idle laborers, who are now so plenty, — that 
 the idle capital wliich is now so abundant, — do not set about 
 the work ? The answer to this question involves the solution 
 of the whole difficulty. If any man, who has sufficient means 
 to meet the expense, will build a new house for himself and 
 thereby give many laboring men employment, he certainly will 
 not be " economizing," but he will increase the world's " stock 
 of wealth." Economy would teach him to remain satisfied 
 with his old house, and not to spend money for a new one. 
 Economy frowns on his proceeding, but he adds a new house 
 to the world's stock of wealth, and gives employment to 
 laborers who would otherwise be idle, and, by the wages that 
 he pays to those laborers, he enables them to consume the 
 products of the labors of others, who are in their turn kept in 
 employment ; and thus the good effects of his uneconomical 
 conduct spread in ever widening circles through the whole 
 community. Let it be distinctly understood, however, that I 
 do not claim that it would not be better for the community 
 that the labor expended in building the supposed house should 
 
13 
 
 have been expended in erecting a factory, or in building a ship 
 or a raih'oad, if there were not already a superfluity of those 
 articles, — that it would not be better that the money of the 
 capitalist should find what we may call a " profitable invest- 
 ment," if any such investment were to be had. But to-day 
 there is a dearth of such investments. A new factory not 
 only produces no profits, but, by competition, destroys the 
 profits of the old ones. Superfluous articles that nobody 
 wants are not wealth. Let the economist point out, if he 
 can, how the idle thousands can, to-day, be employed in pro- 
 ducing " wealth," except through such uneconomical measures 
 as the creation of new comforts and new luxuries for those 
 who are able to pay for them. 
 
 HERETIC. 
 
 A more labored attempt to state the author's views was next made, 
 resulting in the following article, which appeared in the "Atlantic 
 Monthly " for December, 1878. 
 
 SAVING VERSUS SPENDING. 
 
 THE " HARD TIMES : " TWO THEORIES AS TO THE CAUSE AND 
 THE REMEDY. 
 
 When the present " hard times " are discussed, two wholly 
 antagonistic theories are advanced as to their cause and as to 
 their remedy. On the one hand, it is claimed that the real 
 cause of our trouble is that we have been extravagant and 
 wasteful, and that, in order to make good the waste of the 
 past, we should now be as saving and economical as possible.^ 
 
 1 Thus in an article by Prof. Bonaray Price in the " Contemporary Eeview " 
 for April 1877, (p. 787), we find the statement that the cause of the general depres- 
 sion in business "is one and one only, — over-spending, over-consuming, destroying 
 more wealth than is reproduced ; and its necessary consequence, poverty. This is 
 the real fons mail, the root of all the disorder and the suffering, the creator of the 
 inevitable sequence of cause and effect." 
 
14 
 
 On the other hand, it is said that the cause of our present 
 distress cannot be past extravagance and waste, for such 
 causes ought to lead to a general scarcity, rather than abun- 
 dance, of the products of labor ; that the most peculiar and 
 conspicuous symptoms of the present distress are the large 
 stocks of all kinds of goods which have been waiting for con- 
 sumers, and the large numbers of people who have been un- 
 able to find employment ; that saving and economy on the part 
 of those who are not compelled to such a course by poverty 
 will increase rather than diminish the amount of unsalable 
 articles and the number of the unemployed, and will injure 
 our condition rather than improve it ; and that, consequently, 
 a liberal expenditure of public and private resources is not to 
 be condemned, but encouraged. In order to judge fairly as to 
 the respective merits of these two theories, it is well to con- 
 sider what the true purpose of saving is, and to what extent 
 the policy of saving may reasonably be carried. 
 
 FUTURE SPENDING THE ONLY RATIONAL OBJECT OF PRESENT 
 
 SAVING. 
 
 Prom the point of view of the political economist, there is 
 no virtue in saving except so far as some material benefit may 
 be expected to result from it, and it is impossible to suggest 
 any such benefit other than the acquirement of the means, 
 either for ourselves or for others, of future spending. We 
 refrain from consuming to-day all the fruits of to-day's labors 
 only that we, or those in whose welfare we are interested, 
 may be able to enjoy the benefit of an increased consump- 
 tion in the future. All the saving of the generations of the 
 past has been a profitless loss of comfort and enjoyment, 
 unless the present and the future are to derive from the results 
 of such saving increased comfort and increased enjoyment. 
 And so, also, it is profitless and unreasonable to save in the 
 present, except that there may be greater opportunity to enjoy 
 and spend and consume in the future. 
 
15 
 
 THE MEANS BY WHICH PRESENT SAVING AIDS FUTURE 
 SPENDING. 
 
 If, then, we conclude that the only reasonable object of 
 saving is the acquirement of the means of future spending, we 
 are led next to consider the ways in which saving can promote 
 this object. 
 
 The simplest way, of course, is by the accumulation and 
 storage for future use of food, clothing, etc. At the present 
 day tliere is comparatively little room for the operation of this 
 method. Formerly it was wise to lay up large stores of grain, 
 for example, in order to guard against a bad season ; but now, 
 when any portion of the world can call upon all the other 
 portions for a supply of any article of which it may find itself 
 temporarily in need, the accumulation and storage of more 
 than a year's supply of any article of daily consumption is 
 ordinarily useless, and tends, on the whole, to loss rather than 
 to gain. 
 
 The principal and most effective method of providing by 
 present saving for future spending is through what economists 
 have called " productive consumption ; " that is, by employing 
 labor, not directly in the creation of articles for immediate 
 use, but in the creation of articles which will be the cause and 
 means of further production, as in the making of tools and ma- 
 chinery with which labor may be aided in its work and 
 rendered more efficient* Plows and other simple agricultural 
 implements were among the earlier results of productive con- 
 sumption ; factories, railroads, and steamships are among the 
 more important of the later ones. Through these means sav- 
 ing, by immensely increasing all kinds of production, has im- 
 mensely increased all kinds of consumption, and the self-denial 
 of our ancestors has given us all our factories, railroads, and 
 steamships, and has enabled us of to-day to enjoy ten or a 
 lumdred fold the comforts and luxuries that would have been 
 possible had that saving not taken place. 
 
16 
 
 THE LIMIT OP THE POWER OF SAVING TO AID FUTURE SPENDING 
 THROUGH PRODUCTIVE CONSUMPTION. 
 
 Productive consumption being found to be the chief means 
 through which saving can accomplish beneficial results, it next 
 becomes important to consider whether there is any limit to 
 the good that saving may effect in this way, and, if there is 
 such a limit, to determine where it lies. But as we have seen 
 that the only rational object^ of productive consumption is the 
 creation of articles of ordinary or unproductive consumption, 
 the extent to which the former can reasonably and profitably 
 be carried must be limited by the existing or anticipated 
 amount of the latter ; and as the unproductive consumption of 
 a community is always dependent upon and limited by, first, 
 the desire to consume unproductively, and, secondly, the abil- 
 ity to obtain the articles for such consumption, the extent to 
 which productive consumption can at any given time be profit- 
 ably carried must be limited in the same way. 
 
 As society is at present constituted, however, the unproduc- 
 tive consumption of a large part of the community is limited 
 solely by the extent of their ability to obtain the articles of 
 consumption, without reference to the extent of their desire to 
 consume. Large numbers of the poor are compelled by tlieir 
 necessities to consume unproductively all that their wages enable 
 them to purchase, and it is chiefly the wealthier classes whose 
 will or choice has any power to influence, at any given time, the 
 amount of unproductive, and through it the profitable amount 
 of productive, consumption. The wealthy may, according to 
 their own desires, claim for themselves more or less of the 
 comforts and luxuries of life ; and if all who have this power 
 should choose to deny themselves all comforts and all luxuries, 
 and to restrict themselves to absolute necessities, the unpro- 
 ductive and, as a necessary consequence, the productive con- 
 sumption of the world would, both of them, be greatly reduced. 
 There would be comparatively little use or occasion for facto- 
 
 ' The final, not the inimerliate, object is of course here referred to. 
 
17 
 
 ries, railroads, and steamboats, or for any of those things 
 which the wealthy seek to own as " profitable investments/' 
 It follows that if the rich, either from a desire to grow richer, 
 or from a desire to favor productive, as more useful or more 
 worthy than unproductive, consumption, should generally 
 adopt a policy of extreme self-denial, they would defeat their 
 own ends, and, by destroying the opportunities for profitable 
 productive consumption, make themselves poorer instead of 
 richer than before. 
 
 EEVIEW. STATEMENT OP THEORETICAL CONCLUSIONS. 
 
 We have seen that saving is to be approved only so far as 
 it leads to subsequent spending, and that it does largely 
 accomplish this result, mainly by affording opportunity for 
 productive consumption ; but that, as the extent to which pro- 
 ductive consumption can at any given time be profitably car- 
 ried, is limited in a great degree by the extent to which men, 
 and especially the richer classes, abstain from saving, it is 
 possible that this much-extolled policy of saving may be carried 
 to such a point as to destroy the efficiency of the principal 
 means by and through which it can promote its only rational 
 object, future spending; and that, consequently, when carried 
 to this point, it ceases to effect any good result, but rather 
 tends to defeat the only ends for which it may rationally be 
 practised at all. 
 
 APPLICATION OP THEORY TO THE PACTS. 
 
 Having shown theoretically that saving, though generally 
 beneficial and worthy to be encouraged, may possibly be carried 
 too far, — so far indeed that its benefits will be changed to 
 injuries, — we are now prepared to examine the circumstances 
 of the present times, in order to learn whether the indications 
 are that the tendency to save is to-day deficient or in excess. 
 
 It is very evident that productive consumption is now and 
 for some considerable time has been quite unprofitable ; that 
 factories, railroads, steamships, and warehouses bring very 
 small returns to their owners ; that the market-rate of interest 
 has been, and still is, unprecedentedly low ; and that capital 
 
 3 
 
18 
 
 has long been wholly at a loss as to how it should employ itself. 
 These facts surely indicate that the field for profitable produc- 
 tive consumption has been for the time nearly exhausted ; that 
 its temporary limit has been nearly reached ; and that a larger 
 amount of unproductive consumption is required before that 
 limit can be advanced. The correctness of this conclusion is 
 plainly shown, also, by the surplus stocks of all kinds of pro- 
 ducts and manufactures which are now, and have long been, 
 waiting for consumers, and by the enforced idleness of the 
 thousands of laboring men who have found that their labor 
 was not in demand for the supply of either productive or un- 
 productive consumption. Then, again, the hard times have 
 been felt most seriously in England, America, and Germany, 
 while France has been substantially exempt from them; the 
 explanation being that France, having had its territory devas- 
 tated by war, and its capital depleted by the subsidy paid to 
 Germany, has had large room for productive consumption, and 
 small capital to devote to it ; and hence productive consump- 
 tion has there been very extensive and very profitable. All 
 available capital has been employed, and the laborers liave 
 all been busy ; those who have been released from supplying 
 unproductive consumption having been in demand for the 
 supply of a profitable productive consumption. Germany, 
 however, undertook to grow rich by devoting the millions of 
 the French subsidy to productive consumption, which was 
 thereby carried to such an excess that its profit was destroyed. 
 And thus we find a simple explanation of the otherwise inex- 
 plicable mystery of the prosperity of the vanquished and the 
 distress of the victorious nation, after their recent tremendous 
 struggle. 
 
 RECENT EXPERIENCE OP THE UNITED STATES. 
 
 The history of the United States during and since the war 
 affords an illustration of the way in which productive con- 
 sumption may be overdone, — built up to an extent too great 
 to be supported by its always necessary substructure of unpro- 
 ductive consumption. During the war unproductive consump- 
 tion was carried on to an unprecedented degree, and the effect 
 
19 
 
 was that the opportunities for productive consumption also 
 were very largely increased, and, by consequence, rendered 
 very profitable. There was an urgent call for every man's 
 labor. No one who wished to work was allowed to remain 
 idle. Every man who wished to save, to accumulate wealth, 
 found all about him opportunities for so doing. These extra- 
 ordinary inducements to exertion kept every man's industry 
 up to the highest point, so that the production of the country 
 was marv'ellous, and, although there was an immense waste in 
 the war, there was still a large surplus of products, — suffi- 
 cient to enable the great mass of the community to consume 
 much unproductively for their own immediate comfort, and 
 yet to leave the country, at the termination of the war, at least 
 as full of buildings, factories, and railroads as it was at the 
 beginning. 
 
 When at length the war ceased, everything was arranged to 
 meet an immense demand for unproductive consumption. If 
 our people could then have said to themselves, '■ Now that this 
 great waste of the war is at an end, we can enjoy much more 
 of the comforts and luxuries of life than before; indeed, we 
 must do so if we would keep our machinery employed and our 
 people busy," — if they could have said this, and could have 
 acted accordingly, all would have gone on smoothly. But in 
 fact they, or those of them who by their wealth had the power 
 to act according to their own desires, did say, in effect, " We 
 have got rid of this sad waste of the war ; we have been get- 
 ting rich in spite of the waste, but now our possibilities of 
 enriching ourselves are far better than before ; we will not sit 
 down just yet to enjoy ourselves, but will postpone for a while 
 our days of enjoyment and of ease, in order that we may first 
 add a little to our wealth." The failure of this attempt of our 
 rich men to become richer lies before us to-day. Their facto- 
 ries had been very profitable, and they sought to increase their 
 profits by building more factories. Their railroads had re- 
 turned them large dividends, and they sought more dividends 
 of the same kind by more railroads of the same kind. But it 
 never occurred to them that unless a new unproductive con- 
 sumption arose, to take the place of that which had ceased with 
 
20 
 
 the war, even tlie former amount of productive consumption 
 would be too great to supply the wants of the people, and that, for 
 the profitable support of their neiv factories and netv railroads, 
 a still further increase of unproductive consumption would be 
 needed. They contributed, as has been said, but little them- 
 selves to this needed increase of unproductive consumption, 
 and as the poor found but little opportunity or possibility of 
 contributing to it, that increase was never brought about; and 
 it soon began to be perceived that productive consumption was 
 overdone, and that its profit was for the time ruined and lost. 
 Factories of all kinds produced immense stocks of goods which 
 could not be disposed of; their owners competed with each 
 other, and sold their goods at less than cost, and finally, in 
 many cases, shut up their factories and discharged their hands. 
 Then we began to have an actually diminished unproductive 
 consumption, where we had needed an increased one. The rich, 
 having lost their " income," felt that they must " economize." 
 Tiie poor, having lost their employment, were forced to do so. 
 This universal economy increased, by its reaction, the original 
 trouble, and thus we went on from bad to worse, until it seemed 
 that we were on a road that led, without' any turning, straight 
 to destruction. To-day, however, we are hoping, as indeed we 
 have hoped before, that we perceive signs of a change. The 
 nations of Europe, by their wars and preparations for war, 
 have been indulging in an increased amount of unproductive 
 consumption, and have been calling upon us to supply the 
 materials for it. The farmers of the West and some of the 
 manufacturers of the East have begun to feel again that they 
 may increase their expenditures for daily comforts and daily 
 luxuries ; and as their demand for such things increases, we 
 may hope that the machinery of production will get once more 
 in profitable motion, and, by employing those now unemployed, 
 will call forth still further demands for articles of daily con- 
 sumption. As daily consumption increases, the labor of all 
 men will gradually be brought into action, and we shall have 
 once more a busy and happy people, all at work, and all 
 enjoying the fruit of their labor ; and not, as we have seen 
 them within the past few years, one half idle, while the other 
 
21 
 
 half were engaged in a futile attempt to save and lay up for 
 the future more than the constitution of human affairs allowed 
 them to accumulate with any profit either to themselves or to 
 others. 
 
 EXPEEIENCE OF THE DUTCH AND THK ENGLISH. 
 
 Upon reviewing the history of the past, we find that the 
 present is not the first time that productive consumption has 
 approached near its limit, — not the first time that the thrift 
 of a people has been so great that they have nearly exhausted 
 the field of profitable productive consumption. In former 
 times the Dutch were a very energetic, industrious, and thrifty 
 people, and in their days the machinery for aiding production 
 was comparatively limited. Their means of productive con- 
 sumption were confined mostly to the building of ships and 
 the carrying on of foreign commerce ; and they were so desir- 
 ous of acquiring wealth that they exhausted their opportunities 
 for productive consumption to such a degree that their in- 
 vestments produced for them but a very small percentage of 
 profit, as is shown by the low rate of interest that ruled among 
 them. 
 
 So also the immense wealth that England has acquired by 
 the thrift of her richer classes has made her home productive 
 consumption, for many years, bring so little profit that the 
 rate of interest that borrowers can afford to pay, and that 
 lenders are glad to take, has long been very low. In fact the 
 greater part of the surplus wealth of England has for many 
 years been applied to increasing the productive or unproduc- 
 tive consumption of foreign nations, induced thereto by their 
 often illusory promises of future return for present benefits. 
 
 EFFECT OF MACHINERY TO INCREASE THE POWER OF 
 PRODUCTION. 
 
 The great improvements in machinery and in the means 
 of communication and of transportation, Avhich have been 
 brought about within the last fifty years, have marvellously in- 
 creased mankind's power of production. A comparatively small 
 
22 
 
 number of laborers could to-day supply all the wants of man- 
 kind, if those wants had not, within those fifty years, largely 
 increased ; and it is only because those wants — that is, the 
 demand for consumption — have largely increased that the 
 majority of mankind are not to-day idle instead of busy. That 
 demand, hovv^ever, has not kept pace with the supply, for the 
 reason that the power of increasing the demand has come 
 principally to the rich, and but slowly to the poor; and this 
 power of the rich has, by their choice, been turned to the 
 increase of the demand for productive consumption, — for 
 factories, railroads, and warehouses. This, as we have seen, 
 they have carried to such an extent that productive consump- 
 tion has been overdone, and its profits reduced to a very small 
 percentage. 
 
 It seems probable, indeed, that in the future the rate of 
 profit of productive consumption will be permanently dimin- 
 ished, wealth increasing, on the whole, more rapidly than the 
 possibilities of its profitable investment ; and as this result is 
 developed, we may expect that wealth will turn itself more to 
 the acquisition of things which, although not productive of 
 income, are a permanent source of comfort or pleasure to their 
 possessors ; that there will be an added tendency to spend 
 large sums in the purchase of land, in the erection of resi- 
 dences, and in the purchase of paintings and other works of 
 art. And although the opportunities for increased unproduc- 
 tive consumption come first to the rich, they must extend 
 speedily to the poor. All that is needed is that the poor shall 
 be kept busy, and the rest will take care of itself. 
 
 Just at the present moment the poor are strongly tempted to 
 try desperate remedies for the improvement of their condition. 
 Tliey see a world overflowing with good things ; they are 
 anxious and willing by their labor to increase the supply of 
 those good things, and to earn the right to share in the enjoy- 
 ment of them ; but they are forbidden to touch them, although 
 they are going to waste before their eyes. What wonder that 
 they think that there is something rotten in a constitution of 
 affairs that brings about such a result? What wonder that 
 they are ready for desperate remedies ? But let us have once 
 
23 
 
 more the work of consumption and production in full action, 
 — a world full of busy men consuming the products of their 
 own labor, — and the talk of communism, instead of being, as 
 now, largely prevalent among the laboring classes, will again 
 be confined to a small number of persons, partly theorists, 
 and partly men who are discontented by reason of failure 
 caused by their own incapacity or folly. 
 
 GENERAL CONCLUSIONS. 
 
 The preceding arguments would seem to show that, in the 
 present constitution of society, the world, in order to be pros- 
 perous and happy, must be busy both in producing and in con- 
 suming the products of its own labors ; and that if those who 
 have by wealth acquired a control over labor do not use that 
 labor, either selfishly in ministering to their own present com- 
 fort and enjoyment, or generously in ministering to the com- 
 fort and enjoyment of others, we shall necessarily have a more 
 or less idle world, in which the rich will not, and the poor can 
 not, enjoy themselves as they reasonably might. Mankind's 
 power of production is now immense compared with what it 
 has been in the past, and consequently its power and possibil- 
 ity of enjoyment of life are equally large ; and it is certainly 
 an important question whether mankind may wisely and prof- 
 itably avail itself of all its varied possibilities of rational 
 enjoyment, or whether its present duty lies chiefly in the 
 direction of self-denial. The latter doctrine is continually 
 preached to us, and we are constantly told that we must deny 
 ourselves present enjoyments if we would regain our lost pros- 
 perity. But if the arguments adduced above are sound, there 
 is to-day neither merit nor prospective benefit in increased 
 saving ; there is nothing but evil and Ic^s in abstaining, more 
 than we have been and are doing, from the consumption and 
 enjoyment of the good things of life.^ 
 
 ^ The following references to works on political economy ai'c given for the 
 benefit of any who may wish to read what has been written by others upon the 
 subject considered in the above article. Much of what is referred to below was 
 written with special reference to the condition of England after the termination of 
 its wars with Napoleon, — the condition of England at that time having been very 
 
24 
 
 similar to the recent condition of the United States, and the problem, then as now, 
 being to explain a general distress in the midst of a general overplus of all kinds 
 of products. 
 
 Wealth of Nations, by Adam Smith: Book I., chap, ix., Of the profits of 
 stock: Book II., chap, iii., Of the accumulation of capital, or of productive and 
 unproductive labor. Principles of Political Economy, by Rev. T. R. Malthus : 
 chap, vii., s. 3, Of accumulation, or the saving from revenue to add to capital, 
 considered as a stimulus to the increase of wealth ; s. 10, Application of some of 
 the preceding principles to the distress of the laboring classes since 1815, with 
 general observations. Political Economy, by Dr. Thomas Chalmers : chap, iii., 
 On the increase and limit of capital ; chap, v.. On the possibility of a general glut. 
 Treatise on Political Economy, by Jean-Baptiste Say : Book I., chap, xi.. Of the 
 formation and multiplication of capital; chap, xv., Of the demand or market for 
 products. Letters to Mr. Malthus on various subjects of Political Economy, par- 
 ticularly on the Causes of the General Stagnation of Commerce, by Jean-Baptiste 
 Say. Principles of Political Economy and Taxation, by David Ricardo : chap, 
 xxi.. Effect of accumulation on profits and interest; chap, vi., On profits. Ele- 
 ments of Political Economy, by James Mill: chap, iv., s. 1, Of productive and 
 unproductive Consumption; s. 3, That Consumption is co-extensive with produc- 
 tion. Principles of Political Economy, by John Stuart Mill : vol. i.. Book I., 
 chap, v., Fundamental propositions on capital, s. 3 ; chap, xi., Law of increase of 
 capital, s. 4 ; vol. ii.. Book IIF., chap, xiv., Excess of supply ; Book IV., chap, 
 iv., Of the tendency of profits to a minimum; chap. v. Consequences of the ten- 
 dency of profits to a minimum. Chapters on Political Economy, by Prof. Bonamy 
 Price : chap, iv.. Capital. The Economy of Consumption, by Robert Scott 
 Moffat. Principles of Political Economy, by J. R. M'Culloch : Pt. I., chap, ii., 
 s. 3, Accumulation and employment of capital; chap, vii.. Causes of gluts; Pt. 
 III., chap, vii.. Circumstances which determine the average rate of profits ; Pt. IV., 
 Consumption of wealth. Article on Industrial Reconstruction, by Edward At- 
 kinson, in the International Review for July-August, 1878. 
 
25 
 
 The preceding article in the " Atlantic Monthly" elicited two com- 
 munications in the " Contributors' Club," in the numbers of that 
 magazine for March and April, 1879. Both of these communications 
 sought to expose what they claimed to be the fallacies of the author 
 of " Saving versus Spending," and the author can now recall no printed 
 notice of that article, however brief, that treated it with any favor or 
 respect. 
 
 Not entirely discouraged by the reception given to his article, the 
 author ventured again, in February, 1880, to write and offer to the 
 editor of the " Atlantic " a second article, which, however, did not suc- 
 ceed in obtaining admission to the columns of that magazine. This 
 second article was entitled " The Return of Prosperity," and is here 
 given in full, as originally written. 
 
 THE RETURN OP PROSPERITY. 
 
 In an article entitled " Saving versus Spending," wliieli 
 appeared in the " Atlantic Monthly " for December, 1878, an 
 attempt was made to prove the fallacy of the generally ac- 
 cepted theory, that there is no limit to the extent to which 
 saving may profitably be carried. Arguments were also 
 adduced tending to show that the area of the field for the 
 profitable investment of capital is always limited by and de- 
 pendent upon the existing amount of unproductive consump- 
 tion, and that the natural effect of an overcrowding of this 
 field is to diminish consumption, both productive and unpro- 
 ductive, and to cause a general depression in business, and 
 idleness and suffering among the laboring classes. 
 
 When that article was written, business in this country was 
 sadly depressed, — large numbers of laborers were out of em- 
 ployment, and there was only the beginning of a hope for 
 improvement. Now that hope seems to be in process of 
 realization, — the whole country appears to be in the full tide 
 of success ; the poor man finds again that his labor is .in 
 active demand, and the capitalist discovers that his invest- 
 ments are beginning once more to produce profits. We 
 propose in the present article briefly to examine into the 
 manner in which this great change has been brought about, 
 
 4 
 
26 
 
 and to discover what further changes we may expect in the 
 future. 
 
 In the article before referred to, it was claimed that the 
 immediate cause of the " hard times " was not, as was gener- 
 ally supposed, that there had been too much, but rather too 
 little spending, and that what was specially needed was that 
 in some way the general consumption of the products of labor 
 should be increased, and thereby the demand for labor ex- 
 tended and general industry substituted for general idleness. 
 Just such an increase in consumption and in industry, as was 
 then claimed to be needful, we have within the last two years 
 seen actually taking place. Apparently the primary increase 
 in the consumption of the products of this country came from 
 abroad. The nations of Europe found that they had need for 
 much of our crops and for many of our articles of manufact- 
 ure, and the demand arising out of these needs gave the 
 initial impulse that was requisite to start us in our career of 
 prosperity, — it not only put money into the pockets of our 
 farmers and manufacturers, but it also, by the increased need 
 of transportation, gave employment to our railroads and to 
 our carriers of all kinds. Hence it resulted that farm owners 
 and farm laborers, factory owners and factory hands, owners 
 of railroad stock and railroad employees, — all these and 
 many others found themselves with an increase of income, — 
 of the power of spending and consuming ; a large portion 
 of which increase they promptly availed themselves of. Their 
 increased expenditures gave employment and income to many 
 others in various walks of life, and the prosperity and in- 
 creased expenditures of these extended again to a still larger 
 circle, till the good effect has spread to all classes, and to-day 
 we find on all hands general industry and general prosperity ; 
 railroads and factories reporting increased profits, — mer- 
 chants and storekeepers finding their business gaining not 
 only in amount but in profit, — mechanics and laborers finding 
 regular employment and regular wages, -r— and all, rich and 
 poor, spending freely out of their increased means. The 
 general increase of unproductive consumption thus caused 
 has widened the field for productive consumption, — for 
 
27 
 
 dividend paying investments. New factories, new railroads, 
 and new buildings are called for on all sides ; capital no longer 
 is at a loss where to place itself, but is everywhere in demand, 
 and is attracted by the most alluring promises of almost 
 fabulous gains, and, like the mercury in a barometer after 
 a storm, the current rate of interest rises. 
 
 Such has been the course of events in the past few years. 
 What may we expect in the years to come ? It would seem 
 that, if we do not waste our golden opportunities by indulging 
 in follies, such as wars, riots, and revolutions, a great change 
 for the better in the general condition of the whole people 
 may at once be looked for. Some twenty years have now 
 passed without any very marked advance in the comforts and 
 luxuries of living. In these twenty years, however, very 
 many labor-saving inventions have been made, and the means 
 for the interchange of products between different parts of the 
 world have been greatly improved. Tlie world might to-day 
 be supplied with, all the comforts and luxuries that it enjoyed 
 twenty years ago with an expenditure of two thirds, if not of 
 one half, of the labor then required. For twenty years the 
 productive powers of this country have been largely and 
 rapidly increasing, while from several causes, such as the war 
 of the rebellion, and the over-investment of capital and the 
 consequent general idleness that followed it, but, little of the 
 increased enjoyment of life that should have resulted from 
 these increased powers, has been felt. Now, it seems probable 
 that, with universal industry directed to useful ends, we are 
 about to leap at once into the full enjoyment of the beneficial 
 effects of powers that have for years been rapidly and largely 
 expanding, without producing their legitimate effects to any- 
 considerable extent. 
 
 What new comforts and luxuries this great increase in the 
 productiveness of labor will bring to our people, and in what 
 manner the new good things of life will be distributed, it is not 
 easy to say. On some points, however, we may indulge in 
 plausible anticipations. It would seem that better and more 
 varied food will be placed within the reach of all classes. 
 The immense numbers of cattle raised in the West and the 
 
28 
 
 extent to which their transportation is even now carried, 
 show that beef will henceforth be a common article of food 
 to thousands to whom it has hitherto been unknown. Fruits, 
 such as strawberries, grapes, peaches, and pears, are now 
 spread broadcast over the land in such quantities that their 
 use can no longer be confined, as a luxury, to the rich. In 
 the matter of clothing, also, we may expect a great advance in 
 the condition of the poorer classes. Machinery now creates 
 all articles of clothing of so good a quality and with so little 
 aid from human labor, that it will take but a small fraction of 
 the wages of a laboring man to clothe himself and his family, 
 not only warmly and comfortably, but also with a regard to 
 appearances which heretofore could be thought of only by the 
 rich. In other matters also, besides food and clothing, we 
 see that the tendency of the times is to an improvement in 
 the condition of the masses, and that it will by no means be 
 within the power of the rich to monopolize the gains that 
 should be distributed among all. The great movements of the 
 present day are towards improvements that affect all classes. 
 Aqueducts, sewers, public parks, and horse railroads may be 
 mentioned as among the most important of the new things 
 which command the attention of the public, and these are no 
 exclusive luxuries of the rich, but the common comforts and 
 delights of the whole people. 
 
 As, in the years to come, the comforts and luxuries within 
 the reach of the laborers' wages increase, and as capital grows 
 faster than the field for its profitable investment extends, so 
 that the percentage of income from accumulated capital dim- 
 inishes, the capitalist and the laborer will find themselves 
 daily approaching more nearly to an equality. Relatively to 
 each other, the laborer's wages will increase in purchasing 
 power, while the capitalist's income will diminish. The power 
 of each class to spend, — to employ the labor of others, — will 
 approach an equality, and society will make a decided advance 
 towards that ideal condition in which each man's power to 
 command the comforts and luxuries of life will depend, not 
 on the chance of birth and inherited wealth, but on the ex- 
 tent of his own powers and of his own willingness to produce. 
 
/ 
 
 29 
 
 by tlie labor of his hands or of his brain, things useful to 
 his fellow-men, — that condition of society in which the degree 
 of a man's worldly prosperity will depend on his own ability 
 and industry. 
 
 In October, 1883, the United States Senate Committee on Education 
 and Labor gave in Boston several hearings to persons desiring to present 
 views on the subject which the committee had been appointed to consider. 
 The following letter -was sent to Hon. H. W. Blair, the Chairman of this 
 Committee. 
 
 Boston, 21st Oct., 1883. 
 Senator Blair, 
 
 Dear Sir, — Understanding through the papers that you 
 are not unwilling to receive written suggestions relative to 
 the subject of Capital and Labor, I venture to write this short 
 abstract of certain views of my own. 
 
 When we speak of Capital in connection with Labor, we 
 generally have in mind that portion of Capital which seeks a 
 profitable investment, — that which the owner does not invest 
 in a dwelling, for instance, for his own use, but in a factory or 
 railroad which shall bring him annual returns. 
 
 No investment of capital can be profitable, — i. e. produce 
 annual returns for the owner, — except so far as the people are 
 spending. If the poor, through their poverty, ca7i^t spend, and 
 the rich, through their desire to be richer, won''t spend, the 
 field for the profitable investment of capital must be very 
 small. The call for the products of the factories will be limited 
 to comparatively few articles, — the railroads will have but 
 little merchandise and but few passengers to transport. Under 
 these circumstances capital will be abundant, but unable to 
 find any employment that will return a profit. At such a time 
 the capitalist can of course produce articles which he can dis- 
 pose of in cliarity, but nothing which he can sell at a profit. 
 Consequently he will cease to employ his capital, and laborers 
 will find that they have no work to do. We shall have " hard 
 times," — hard for all, rich and poor, — the rich will be with- 
 out income, and the poor without employment. 
 
30 
 
 One conclusion to be deduced from the foregoing is tliis, — 
 tl)at the larger the wages that the laborer receives, the more 
 he can spend, and the greater consequently will be the field for 
 the profitable investment of capital. On the other hand, the 
 smaller the wages of the laborer, the less he can spend, and the 
 smaller will be the field for the profitable investment of capital. 
 In other words, the more generous capital is to labor, the more 
 will capital itself prosper ; and the more niggardly it is, the 
 more it attempts to monopolize the profits, the more likely it 
 will be to find that all profits have disappeared. 
 
 Jay Gould doubtless feared that his dividends would cease if 
 the recent strike of the telegraph operators should succeed, 
 but their success would have meant an increased expenditure 
 by many thousands of people, an increased demand for many 
 articles, the supply of which would have afforded Gould and 
 his friends new fields in which to seek for profits, and would 
 also have given to his railroads, already built, more work to 
 do. Thus, by the success of the strike. Jay Gould might him- 
 self have gained more than he could have lost. 
 
 The true interests of capital and labor, then, are not adverse 
 but harmonious. Each, in helping the other, advances its own 
 welfare. Each, in attacking the other, injures itself. 
 
 Hoping that you will be able to find time to read with care 
 what I have written, I am. 
 
 Yours respectfully, 
 
 URIEL H. CROCKER. 
 
 Shortly afterwards the following appeared in the " Boston Daily Adver- 
 tiser" of Nov. 24, 1883. 
 
 OVER-PRODUCTION. 
 
 A continually recurring subject of discussion is the alleged 
 over-production in various branches of business. The general 
 testimony seems to be that at the present time the principal 
 
31 
 
 branches of manufacture in this country have been producing 
 in excess of the demand for consumption, and tliat, consequently, 
 factories are being closed and laborers thrown out of employ- 
 ment. It is usually assumed, however, that a general over- 
 production in all branches of labor is an impossibility, the 
 argument of Mill to prove the impossibility of a " general 
 glut " being accepted as conclusive and final. No matter how 
 strongly the facts may seem to support him who argues the 
 possibility of general over-production, the political economist 
 complacently waives him aside as one who suffers himself to 
 be bewildered by a long-ago exploded fallacy. The political 
 economist will admit that there is an over-production of certain 
 articles, but he insists that, at the same time, there must be, 
 and consequently is, an under-production of other articles. It 
 is useless to ask him what those articles are, the demand for 
 which is in excess of the supply, or why the shrewd owners 
 of the immense amount of capital seeking profitable employ- 
 ment cannot discover and supply this demand. He is wholly 
 undisturbed by the apparent inconsistency of the facts with 
 his theory, and plants himself, as on an immovable rock, on 
 the argument of Mill. 
 
 It is often well to re-examine the foundations of our beliefs ; 
 and it may not be a waste of time to test the validity of the 
 arguments of even so acute a reasoner as Mill. I propose, at 
 any rate, to make the attempt. 
 
 Mill's argument to prove the impossibility of general over, 
 production is in substance this, — that no man will labor to 
 produce any article unless he either wishes to consume that 
 article himself, or is in want of some other article for which he 
 can exchange it. Men do not, to any appreciable extent, labor 
 for the mere pleasure of laboring. They labor either because 
 they want the result for itself, or to exchange it for something 
 which they do want. It is only an unsatisfied want that can 
 induce a man to labor, — there can be no product of labor 
 unless there was a want that induced the labor; and thus 
 production must ever correspond to demand, and can never 
 outrun it, and general over-production is in the nature of 
 things impossible. 
 
32 
 
 This argument is very plausible, but it overlooks one im- 
 portant consideration. A large portion of the want, of the 
 demand of the community at the present day, is of a peculiar 
 character. Men want what we call " profitable investments." 
 In return for what they produce directly by their labor, or indi- 
 rectly, by the use of their capital, they wish to acquire some- 
 thing tliat shall be to them a continuing source of income. 
 Factories go on producing, not wholly because the owners and 
 the laborers want otlier " consumable articles," such as food, 
 clothes, etc. If this were so, Mill's argument would be unan- 
 swerable ; demand and supply would be equivalent. But an 
 important want, both of capitalist and of laborer, is the want 
 to build and own more factories, — the desire for the opportu- 
 nity and ability to produce more, that thereby they may acquire 
 more income. Thus we find that the demand that has led to 
 production, instead of being wholly a demand for consumption, 
 has been in great part a desire for increased production. I do 
 not overlook a certain increased consumption in the building of 
 the new factory ; but that is only incidental to the great end 
 sought, — the increase of production with a view to the increase 
 of income. What, however, becomes of Mill's argument when 
 we once see clearly that production is induced, not only by the 
 desire to consume, but by the desire to increase production. 
 So far as it is induced by the latter cause, it may certainly get 
 in advance of consumption ; in other words, it may become 
 general over-production, — it may cause what has been called 
 a general glut. 
 
 So much for the theory of the matter, — the practical work- 
 ing of these principles is more easily traced. Let us assume a 
 time of general prosperity, when business is thriving and goods 
 find ready purchasers, when there is plenty of work for every 
 one who wants work, and for capital ready employment with 
 liberal profits. But a spirit of thrift is abroad ; the desire to 
 accumulate wealth is very strong, especially among the richer 
 classes. The consumption of the poor is limited by their small 
 wages, the consumption of the rich is limited by their desire to 
 grow richer through economy. The rich own the machinery 
 of production, and it has brought them large annual returns ; 
 
33 
 
 the more of such machinery they have o\vned, the larger has 
 been their income. They have endeavored to increase their 
 incomes by the creation of still more of this machinery. At 
 last the machinery of production increases the supply of pro- 
 ducts beyond the limit of consumption, — a limit fixed, as 
 before stated, as to the poor mainly by their ability, and as to 
 the rich by their willingness to spend. More products are 
 created than are called for. In the competition to sell, the 
 profits of the seller disappear. Then at last the desire to 
 increase the machinery of production disappears, — even the 
 desire to keep the existing machinery at work, — laborers are 
 thrown out of employment, and their capacity for consumption 
 is greatly decreased thereby ; the capitalists fail to receive their 
 usual income, and begin to feel that they must reduce their 
 expenses. Thus the demand for the products of labor is 
 diminished on every hand, distress and discontent are wide- 
 spread, factories stand idle, railroads and steamships have few 
 passengers and light freights ; capital is abundant, but unable 
 to employ itself at a profit ; in a word, " hard times " have 
 been brought about through over-production. Are we not 
 
 travelling on this road at present ? 
 
 U. H. C. 
 22d Oct., 1883. 
 
 The preceding communication was soon followed by another which 
 appeared in the New York " Nation," of Feb. 21, 1884. 
 
 THE CAUSE OF THE DEPRESSION IN BUSINESS. 
 
 SiR^ — 111 your issue of this week you state that the present 
 depression in trade has been caused by abnormal activity and 
 over-production in certain branches of business, and that what 
 is needed is a " redistribution of employments." This is in 
 accordance with tlie accepted theories of political economy. 
 If we would accept these theories, we must believe that the 
 cause of the present troubles lies in the fact that we have been 
 
 5 
 
34 
 
 busy producing the wrong articles ; that we have produced 
 what was not wanted, and have failed to produce wliat was 
 wanted ; and that all we liave to do now is to turn round and 
 produce the things that are really called for, and all will be 
 well again. The difficulty with tliis theory is, that it requires 
 us to believe that there are certain wants and demands now 
 unsatisfied and unsupplied, not because of the lack of means to 
 purchase, but because of the scarcity of the thing to be pur- 
 chased. But if there are any productions of human labor that 
 are now scarce, they must command high prices and furnish 
 large profits to tlie producers ; and any capital that miglit now 
 be unemployed would be hastening to secure a share of those 
 profits. As a matter of fact, however, there is in tliis country 
 at the present time an immense amount of unemployed capi- 
 tal, and there are no symptoms that even the shrewdest and 
 most enterprising of its owners have any idea that there is 
 any possible field in whicli they can employ it with profit to 
 themselves. 
 
 If, however, we consider the cause of our present troubles to 
 be an abnormal activity and over-production, not in certain clas- 
 ses of business, but in business generally ; if we consider that 
 the wealthy and thrifty among our people have endeavored to 
 do more business than the condition of the country permitted, 
 to create more productions than the pecuniary ability of the 
 rest of the community enabled them to consume, we have an 
 explanation that fits the present state of the facts. A large 
 portion of the community have l>een eager to accumulate 
 wealth, to make profitable investments, to save up their in- 
 come or their earnings, and put them where they should bring 
 annual returns. People have seen that factories produced for 
 their owners large profits, and they have forthwith proceeded 
 to build new factories in the hope of securing for themselves 
 similar profits. In like manner capital has hastened to build 
 new railroads, to erect new warehouses, and to extend and 
 multiply all branches of trade and business. But the fact has 
 been overlooked that profitable business and profitable produc- 
 tion cannot be increased indefinitely without a corresponding 
 increase of customers and consumers. While there has been 
 
35 
 
 recently an immense increase of production, the wages of the 
 poor, which fix the limit of their ability to purchase and to 
 consume, have not been largely increased, and the rich have 
 sought rather an increased accumulation of wealth than a fuller 
 gratification of their daily wants and desires. Thus, instead 
 of one factory producing and selling at a profit a supply of pro- 
 ducts that rather fell short of than exceeded the demand for 
 them, we have had two or three factories producing a supply 
 much in excess of the demand, and consequently competing 
 with each other in the endeavor to sell their surplus stock, and 
 selling it at no profit or at a loss. Finally the factories have 
 cut down the wages of their employees or have dismissed them 
 altogether, and the capacity of the poor to purchase and to con- 
 sume has thus been largely taken away from them, while the 
 inclination of the rich in that direction has been lessened by 
 the loss of their usual dividends, and thus the original mischief 
 of over-production has been increased and intensified. 
 
 Briefly, the theory here suggested is this, — that our people 
 have been trying to invest more capital profitably, to do more 
 business, than their capacity and inclination to consume made 
 possible ; and that the result has been to seriously reduce that 
 capacity and inclination, and to destroy the annual returns 
 that capital hopes to receive from its investments and from 
 
 business. 
 
 U. H. C. 
 Boston, Feb. 9, 1884. 
 
 This communication elicited a response from one "B.J. S." of Cincin- 
 nati, which was printed in the " Nation " of March 6, 1884. The follow- 
 ing answer to " B. J. S.," was declined by the " Nation," on the ground 
 that " to print it, with a chance of prolonging the controversy, would be 
 just now an inconvenience." 
 
36 
 
 GENERAL OVER-PRODUCTION. 
 
 SiR^ — Your correspondent " B. J. S.," in your issue of 
 Marcli 6, while admitting the existence of a " general over- 
 production," at the present time, claims that a remedy for our 
 distress might be reached through a " redistribution of em- 
 ployments " that shovxld divert the labor recently thrown out 
 of employment to the pi'oduction of food, — an article of which, 
 as he admits, there is now no scarcity, but which the laborers 
 have not sufficient means to purchase, and which, as " B. J. S." 
 assumes, they might and should now produce for themselves. 
 It must be admitted that such a change of employment might 
 help those discharged factory hands and mechanics who could 
 surmount the obstacles that lie in the way of their supporting 
 themselves by agriculture. But many of them would perish in 
 the attempt, and those who succeeded would find themselves in 
 a much less comfortable condition in life than that which they 
 had previously enjoyed. They would have gone back to that 
 earlier state of society in which each family produced its own 
 food and clothed itself in its own homespun. If we should all 
 go back to that condition of society, the present difficulties of 
 over-production, either general or special, would be unknown. 
 Such ah abandonment of the present division of labor, such a 
 return to the old system under whicli every man supplied his 
 own wants, would indeed be in one sense a " redistribution of 
 employments ; " but it is not such a redistribution as the politi- 
 cal economist looks forward to for our relief from our present 
 troubles, and it is to be hoped that we may find some way 
 out of those troubles without being driven to it. Except on the 
 above point " B. J. S." asserts nothing that I am not willing 
 in substance to admit, — he admits the existence at present 
 of a " general over-production." This fact it was a main 
 purpose of my communication to maintain, in opposition to the 
 accepted dogmas of the political economists. 
 
 U. H. C. 
 
 Boston, March 7, 1884. 
 
37 
 
 The author's last effort has been the following, which found a 
 resting place in the editorial waste basket of the " Nation." 
 
 TPIE FALLACY OF MILL'S ARGUMENT AGAINST THE 
 POSSIBILITY OF GENERAL OVER-PRODUCTION. 
 
 Sir, — In your issue of March 13, you say, " It would seem, 
 in spite of all that political economists tell us, as though the 
 world had at last reached a state of general over-production, 
 and not merely of disproportionate production." All that po- 
 litical economists have to tell us on this subject is based on 
 the argument of Mill to prove the impossibility of what used 
 to be called a " general glut." The apparent strength of this 
 argument and the weight of Mill's name and reputation have 
 caused his conclusions to be accepted as fundamental truths ; 
 but if, as you intimate, his conclusions do not agree with the 
 facts, it may be well to look for the flaw in his argument. 
 That flaw can, I think, be discovered and exposed. 
 
 Mill argues that no man produces any article unless he 
 wishes to consume it himself or to exchange it for something 
 else which he wishes to consume, and that, consequently, 
 production can never as a whole exceed the demand for con- 
 sumption. He who asserts the possibility of a general over- 
 production is necessarily involved, according to Mill, in the 
 absurdity of believing that large numbers of people will go on 
 producing articles, which they do not want either to use them- 
 selves, or to exchange for other articles which they do wish to 
 use. Mill says that the error of those who oppose his views 
 lies, to quote his own words, " in not perceiving that, though 
 all who have an equivalent to give might be fully provided 
 with every consumable article which they desire, the fact that 
 they go on adding to the production proves that this is not 
 actually the case." 
 
 Just at this point, as it seems to me, the fallacy lies. 
 Mill overlooks the fact that a very large portion of the produc- 
 tion of to-day is prompted, not by the desire of the producers 
 
to acquire any " consumable articles," but by their desire to 
 gain new productive investments. They wish, not to consume, 
 but to grow rich. The wish to sell their cotton cloth, for in- 
 stance, not that they may apply the proceeds of the sale to the 
 purchase of other " consumable articles," but that they may 
 with those proceeds build new factories which shall produce 
 still more cotton cloth ; or, if they perceive that, by reason of 
 the over-production of cotton cloth, such factories will not be 
 profitable, they hold their funds idle and unemployed, waiting 
 for a chance to make some other investment that will promise 
 the return of regular profits. They produce " consumable ar- 
 ticles," not that they may exchange them for other consumable 
 articles, but that they may increase the machinery for the pro- 
 duction of consumable articles, and thereby, of course, increase 
 largely that production. The fact, then, that men go on add- 
 ing to production, does not, as Mill claims, prove that they 
 desire some consumable article which they are not already 
 provided with, — they may have no such desire, and the sole 
 motive which impels them to go on producing may be a desire 
 to gain the power to produce still more. Thus the limit to 
 production, which Mill fancied he saw in the failure of the 
 desire to consume, disappears, — production is seen to be 
 caused in great measure by a desire to increase production ; 
 general over-production becomes, not an impossibility, but a 
 natural and probable result of the general thrift, of the gen- 
 eral desire of our people to make profitable investments, — 
 and theory is made to conform to the observed facts. 
 
 U. H. C. 
 
 Boston, March 16, 1884. 
 
 The author hopes that any who have taken the trouble to 
 read the preceding pages will be satisfied that an earnest and 
 long-continued, though as yet unsuccessful, attempt has been 
 made to convince the public of the correctness of his views 
 and theories. That these views, if correct, are important, is 
 
39 
 
 vouched for by Mill himself, who says, speaking of the ques- 
 tion of the possibility of a general over-production of com- 
 modities : " The point is fundamental ; any difference of 
 opinion on it involves radically different conceptions of polit- 
 ical economy, especially in its practical aspect. On the one 
 view, we have only to consider how a sufficient production 
 may be combined with the best possible distribution ; but, 
 on the other, there is a third thing to be considered : how 
 a market can be created for produce, or how production can 
 be limited to the capabilities of the market." Still, as we 
 have seen, our leading papers and magazines have not been 
 willing to encourage the discussion of this subject. The author 
 has not been alone in his efforts to ventilate it. Two other 
 gentlemen, arriving at their conclusions independently of the 
 author and of each other, have had experiences very similar to 
 those before recited. Mr. Fred. B. Hawley, of Brooklyn, 
 N. Y., publislied in the " National Quarterly Review " for July, 
 1879, an article entitled " The Ratio of Capital to Consump- 
 tion," which contained views very similar to those presented 
 in the preceding pages. This article was followed in the 
 number of the same Review for October, 1879, by another 
 entitled " The Rationale of Panics ; " and Mr. Hawley pub- 
 lished, in 1882, a book entitled " Capital and Population," in 
 wiiich he elaborated his views at greater length. Mr. Edward 
 F. Sweet, formerly of Chicago, but now residing in Pittsburgh, 
 Pa., has also endeavored to gain a public hearing for the ex- 
 position of similar views regarding general over-production. 
 His principal article on the subject appeared in the " Chicago 
 Times" of April 26, 1880. What other gentlemen may have 
 been laboring in the same field the author of this pamphlet 
 does not know. It should also be stated that Prof. Francis 
 Bowen has advanced views in many respects similar to those 
 advocated in these pages ; as may be seen by consulting his 
 chapter (c. 17) on " The rate of profit as affected by tlie 
 limited extent of the field for the employment of capital : 
 The theory of gluts " in his " American Political Economy," 
 3d ed. (1863). See also "Principles of Political Economy," 
 by Prof. William Roscher, of the University of Leipzig, 
 
40 014 060 462 8 
 
 Am. ed., translated by Jolin J. Lalor (1882), Sect. 213, 
 "Equilibrium between production and consumption;" Sect. 
 215, " Necessity of the proper simultaneous development of 
 production and consumption;" Sects. 216 and 217, "Com- 
 mercial crises in general ; " Sect. 220, " When saving is 
 injurious ; " Sect. 221, " Limits to the saving of capital." 
 
 It may be well to close this pamphlet with a short summary 
 of the propositions which it has been the author's object to 
 assert and maintain. These propositions are : — 
 
 1. That saving is not always and under all circumstances 
 beneficial. 
 
 2. That consumption and production are not necessarily 
 equal, i. e., not rigidly equal, but liable to fluctuations which 
 may disturb their normal condition of equality. 
 
 3. That there may be general over-production, and that the 
 arguments, which have been supposed to prove that it cannot 
 exist, are fallacious. 
 
 4. That excessive saving with a view to profitable invest- 
 ment tends to cause general over-production. 
 
 5. That general over-production, when thus brought about, 
 results in a reduction of consumption, and consequently in a 
 reduction of production. 
 
 6. That when the amount of production is thus diminished, 
 there is necessarily less work for producers, and, consequently, 
 idleness among the laboring classes, dull business for the 
 commercial classes, and diminished profit to be derived from 
 capital, — in other words, we have commercial distress or 
 " hard times." 
 
 The final conclusion of the whole argument is this : that 
 saving, instead of being, as we have been taught, always and 
 necessarily a good, may be carried so far as to be an evil, — so 
 far as to cause distress among all classes, the rich as well as 
 the poor. 
 
^^37 
 
 c.n 
 
 SUPPLEMENT 
 
 TO 
 
 EXCESSIYE SAYING A CAUSE OF 
 COMMERCIAL DISTRESS." 
 
 CONTAINING MORE RECENT COMMUNICATIONS ON 
 THE SAME SUBJECT. 
 
 The following articles, which have been written since the pamphlet on 
 " Excessive Saving a Cause op Commercial Distress " was published, 
 are now printed as containing the author's latest and, as he is inclined to think, 
 best statements of the theory which he has endeavored to maintain. 
 
 Uriel H. Crocker. 
 Boston, June 20, 1885. 
 
 THE TRUE CAUSE OP THE HARD TIMES. 
 
 To THE Editor of " The Nation." 
 
 Sir, — It is generally assumed that there is no limit to the 
 extent to which income-producing wealth may be accumulated. 
 This is indeed practically true so far as the accumulation of 
 such wealth by an individual is concerned ; but when the pos- 
 sible amount of accumulation of income-producing wealth by 
 the whole world is considered, we find that the problem involves 
 a new element, and that a limit to that amount really exists. 
 The chief kind of income-producing wealth known to modern 
 civilization consists of the machinery or instruments of produc- 
 tion and transportation. In other words, the principal way in 
 which men at the present day can so use capital that it will 
 bring them annual returns is by employing it in the creation of 
 such machinery and instruments, — by building factories, rail- 
 roads, steamboats, etc. 
 
44 
 
 Then, as the products accumulated in the warehouses, we might 
 next expect to see the factories, in their competition to sell 
 their products, reducing their selling prices till at last they 
 would be ready to sell at or below the cost of production. Then 
 there would naturally come a reduction of the wages of the 
 work-people, as the result of an attempt to reduce the cost of 
 the products below the price at which they could be sold, or the 
 factories might stop work altogether till their accumulated prod- 
 ucts could be disposed of. Then, as the wages of the work- 
 people were cut down or ceased altogether, there would arise 
 distress among the laboring classes, and as the natural con- 
 sequence of such distress, strikes and labor riots. At the same 
 time that the poor were losing their wages, the rich would 
 necessarily be losing their dividends from their factories, rail- 
 roads, and other investments; and these causes would force all 
 classes to economize, and thereby the consumption of the prod- 
 ucts of the factories and the work of the railroads in the trans- 
 portation of both passengers and freight would be largely 
 diminished, the business of the trader and mechanic would fall 
 away, and hotels, theatres, and places of amusement would 
 languish. There would be an appearance of plenty in the mar- 
 kets, which would be filled with an abundance of the products of 
 the field and of the factory ; everybody would have something, 
 either goods or labor, that he wished to sell, but comparatively 
 few persons would be both able and willing to purchase. There 
 would be a world full of factories lying idle, of railroads not 
 paying their running expenses, of stores and warehouses stand- 
 ing empty, of banks overflowing with funds for which no in- 
 vestment could be found, and finally, and worst of all, there 
 would be a world full of men and women able and anxious to 
 engage in useful labor, but forced to sit idle and starving in the 
 midst of the abundance by which they were surrounded. Is 
 not all this exactly what we have seen in recent years and are 
 seeing to-day? 
 
 In conclusion, do not the observed facts all agree with the 
 theory that the hard times have been caused by an excessive 
 desire to acquire income-producing wealth, by overdomg the 
 creation of the machinery and instruments of production and 
 
45 
 
 transportation ? And does not this theory afford, what other 
 theories have failed to do, a full and simple explanation of the 
 causes of the distress from which the whole business world is 
 suffering to-day ? 
 
 U. H. C. 
 
 Boston, Feb. 16, 1885. 
 
 The above appeared in the New York " Nation" of Feb. 25, 1885. 
 
 THE CAUSE OF THE "HARD TIMES." 
 
 To THE Editors of the Boston "Daily Advertiser." 
 
 That the whole civilized world is now suffering from " hard 
 times," is a proposition which no one will deny. It is gen- 
 erally admitted also that the most noticeable features of the 
 present hard times are the excessive supply of products of every 
 kind and the impossibility of finding full employment for fac- 
 tories and for workmen. In the case of an individual such 
 results are usually caused by past extravagance ; and people 
 readily jump to the conclusion that the world's present distress 
 must be due to a similar cause. Indeed the various theories 
 which have been advanced to account for the hard times may 
 generally be reduced to this proposition, — that the world is 
 suffering the results of its past extravagance or waste. 
 
 When one says that the world has been extravagant or waste- 
 ful, he must mean that it has employed too large a proportion 
 of its labor in the production of articles of daily comfort and of 
 luxury, or of articles useless for any good purpose, and that it 
 has neglected to maintain and make due additions to its capital, 
 — that it has spent its income in high living or in folly, and 
 has not kept up its principal. The world's principal or capital 
 consists in the main of its machinery and instruments of pro- 
 duction and distribution, — of its factories, railroads, ships, 
 warehouses, etc. ; and unless a large part of the world's labor 
 had been in the past and were now yearly devoted to the crea- 
 tion and maintenance of these things, the civilization of to-day, 
 with its comforts and its luxuries, would not be possible. The 
 
46 
 
 remainder of the world's labor, not devoted to these purposes, 
 has been, and is, employed in supplying the articles called for 
 by what the political economist terms "unproductive consump- 
 tion." When, therefore, it is said that the world has been ex- 
 travagant and wasteful, it must necessarily be intended that 
 too much labor has been expended in meeting the demands of 
 unproductive consumption, and too little in building and repair- 
 ing factories, railroads, ships, and warehouses and the other 
 machinery and instruments of production and distribution, 
 which consequently must be supposed to have become worn 
 out and dilapidated, or, in case of their destruction by fire, not 
 to have been replaced. If the world has applied a due propor- 
 tion of its labor to the maintenance and increase of its princi- 
 pal, it cannot properly be said to have been extravagant, even 
 though it has consumed un productively all the remaining prod- 
 ucts of labor ; for human labor can have no other final object 
 than the promotion of the comfort and happiness of mankind. 
 We have seen, then, what must necessarily be the character 
 of the results of past extravagance and waste. If, however, 
 we look about us, not only are no such results apparent to-day, 
 but the results actually existing are of an entirely different 
 character. Instead of finding that our factories, railroads, ships, 
 and warehouses have been neglected and suffered to become 
 ruinous, or that they are insufficient in numbers, we now find 
 that all these things are in excellent condition, and that the 
 present embarrassment arises from the evident fact that there 
 are not too few, but too many, of them. This condition of af- 
 fairs cannot have had its origin in past extravagance and waste, 
 — we cannot suffer in this way by reason of having used up 
 all our income and neglected our principal. The results point 
 clearly to causes of an entirely opposite character, — they sug- 
 gest that the world has been devoting too much, rather than 
 too little, of its labor to the creation of the machinery and in- 
 struments of production and distribution ; that by reason of 
 the desire of mankind to acquire such machinery and such in- 
 struments, in order to profit by the annual income ordinarily 
 accruing to the owners thereof, the world has devoted itself too 
 largely to the accumulation of such property ; that the world's 
 
47 
 
 readiness to produce has been out of all due proportion to its 
 readiness to consume ; . in fine, that not excessive spending, 
 but excessive thrift, has been the real cause of the present 
 distress. 
 
 U. H. C. 
 Boston, April 12, 1885. 
 
 The above appeared in the Boston " Daily Advertiser" of April 15, 1885, 
 
 WHAT MAKES THE "BAD TIMES." 
 
 To THE Editor of the "Herald." 
 
 In your paper of this morning, in answer to the above ques- 
 tion, you say that the "bad times" have been caused by 
 " overproduction," and that that in its turn has been caused by 
 protective tariffs, which have interfered with the working of the 
 " great law of supply and demand." This may appear plausi- 
 ble at first sight, but it would seem that those who attribute 
 our present troubles to protective tariffs are bound to point out 
 more definitely and more in detail than you have attempted to 
 do, how such tariffs can cause overproduction, not only in the 
 countries where they exist, but also in free-trade England, 
 which has been suffering from bad times as much as the United 
 States. This, I believe, you will find it difficult to do. 
 
 Another cause, the whole working of which may easily be 
 traced, can, I think, be suggested for the bad times. Why not 
 attribute the overproduction from which the whole civilized 
 world appears to be suffering to-day, simply to the excessive 
 number of factories that have been set in operation ; and why 
 not account for the fact that so many factories have been built, 
 by that general desire for the accumulation of income-producing 
 wealth which is prevalent in all the countries which have been 
 suffering from the overproduction ? This would afford a 
 simple and easy solution of the whole mystery. If the world, 
 in its desire to " grow rich," builds so many factories that their 
 capacity of production is far in excess of the world's readiness 
 
48 
 
 to consume their products, the natural and necessary result 
 will be a general overproduction of those products. If the poor, 
 by reason of the smallness of their wages, have but little money 
 to spend in the purchase of the products of the factories, and if 
 the rich, being inclined to put a large part of their incomes 
 into new investments, are willing to spend but little on factory 
 products, it is evident that the limit to the number of profitable 
 factories will soon be reached. Indeed, as soon as that limit 
 has been reached, and as soon as too many factories have been 
 built, and there begins to be in consequence an excess of prod- 
 ucts, all the factories, the old ones as well as the new, will 
 cease to be profitable, for they will begin to compete with each 
 other in the attempt to get rid of their superfluous products ; 
 they will sell at the cost or even below the cost of production ; 
 they will cut down the wages of their operatives ; they will work 
 on half time or close up altogether, — they will do, in fact, just 
 what we are hearing of their doing to-day all over this country 
 and in Europe. 
 
 In answer to the question, "What makes the bad times?" 
 my suggestion would be that it is the fact that the world's de- 
 sire to get the profits arising from the manufacture of products 
 has run ahead of its readiness to spend its money in purchasing 
 and consuming those products ; or, to put it more simply and 
 broadly, that the world has proved itself more ready to produce 
 
 than to consume. 
 
 U. H. C. 
 
 Boston, April 7, 1885. 
 
 The above appeared in the Boston "Evening Herald" of April 13, 
 
 1885. 
 
49 
 
 THE BUSINESS FUTURE. 
 
 To THE Editor of the " Herald." 
 
 There is at the present time much speculation as to the 
 future of business, and we are hearing many prophecies of 
 better times soon to come. We all hope that these prophecies 
 will be verified by the facts, but we should not delude ourselves 
 with unfounded hopes. It is best in this matter to know the 
 truth, whether it be pleasant or unpleasant. I therefore ven- 
 ture to suggest some considerations which seem to indicate 
 that the commercial distress from which we suffered in 1884 is 
 likely to continue and be intensified in 1885. 
 
 During the past summer and fall very many of our factories 
 either reduced the number of laborers employed by them or 
 stopped work altogether. They found that the demand for 
 their products did not keep up with the supply, and they met 
 the difficulty by attempting to reduce the supply to an equality 
 with the demand. But one result of this course which our 
 factories have taken has not been much considered. When 
 thousands of laboring men are thrown out of employment, and 
 thereby deprived of their regular wages, they necessarily cut 
 down their expenses and abstain from purchasing many fac- 
 tory products whichthey would otherwise buy for clothing, house- 
 hold use, etc. If the manufacturers of cloth, for instance, have 
 stopped their factories because they have found that they were 
 producing more cloth than there was a demand for, the mere 
 fact that many laborers have, by reason of that stoppage, been 
 thrown out of employment will tend to decrease still further 
 the already insufficient demand for cloth, and will also have a 
 similar effect upon the demand for many other articles, the 
 makers of which have been pursuing the same course as the 
 makers of cloth. If, by reason of the stoppage of the factories, 
 the corporations owning them cease to pay dividends, the 
 stockholders in those corporations will begin also to curtail 
 their expenses, and the demand for the products of labor will 
 thereby be still further reduced. Of the stoppage of factories 
 we have already had many instances. We are beginning to 
 
 7 
 
50 
 
 hear of the cessation of dividends. During the year now just 
 begun we ought to feel the effect of the loss of wages by 
 the unemployed laborers and of the loss of dividends by the 
 wealthier classes. If, during this year, large numbers of the 
 laboring classes are forced to practise the strictest economy, 
 and if the richer people economize also, because they find their 
 incomes diminishing, must we not necessarily have a greater 
 stagnation of business than we have yet felt ? Shall we not 
 find that our railroads are not doing sufficient business, either 
 in passengers or in freight, to return them any profit ? Will 
 not our hotels suffer because people will feel so poor that they 
 will abstain from travel ? Will the masons, carpenters, and 
 painters find any one ready to undertake the erection of new 
 buildings after those now commenced have been completed ? 
 It would seem, indeed, that many men in every department of 
 labor and business, in addition to those already idle, must soon 
 be thrown out of employment ; and every man thus forced into 
 idleness will intensify the existing mischief by lessening still 
 further the demand for the products of labor. 
 
 We see, then, that there is at the present time a tendency of 
 things to go from bad to worse, and it is not easy to discover 
 what is to counteract this tendency and cause matters to begin 
 to mend. The " hard times" that culminated in this country 
 in 1878 found relief in the call that Europe made upon us in 
 1879 for vast quantities of our crops. Large sums of money 
 were thereby distributed among our farmers, who were thus 
 supplied with the means of purchasing all sorts of products of 
 labor ; and our railroads, our factories, and our merchants were 
 thereby given employment and business. Now, no such relief 
 seems to be at hand. Large quantities of our crops will no 
 doubt go to Europe, but the produce of our soil has this year 
 been so abundant that our farmers, in their competition to sell, 
 have been forced to dispose of their produce at prices which 
 will leave them little or no profit. When the farmer counted 
 up his gains at the end of 1884, he was fortunate if he found 
 that his income had exceeded his expenses. Instead of launch- 
 ing out into new expenditures, as our farmers did in 1879 and 
 1880, they are likely to feel in 1885 that they must retrench ; 
 
51 
 
 and that retrenchment will mean just so much less employment 
 for labor — just so much less profits for the capital that em- 
 ploys labor in the production of the articles that farmers are 
 accustomed to buy. 
 
 There certainly have been of late many encouraging symp- 
 toms in the course of business, but it is not easy to discover 
 that anything has yet happened or is likely soon to happen g 
 
 that can avert the downward course above suggested. If there 1 
 
 are any causes at work that are likely to have this effect, it is 
 to be hoped that some one will point them out. 
 
 U. H. C. 
 
 Boston, Jan. 13, 1885. 
 
 The above appeared in the Boston " Sunday Herald" of Feb. 8, 1885. 
 
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