LIBRARY OF CONGRESS. Shelf.-^.Ol..Lt UNITED STATES OF AMERICA. OUTLINES OF LECTURES IN Elementary Economics Brown University BY HENRY B.V Gardner, ph. d. Associate Professor of Political Economy. COURSE I. Historical and Descriptive. These outlines are for class use only and are subject to the corrections and explanations made in the course of instruction. The Continental I^rinting Company, Uvek and iSqo. \t^c^-'p Pine Sts. '" y^ APR ia 1896^ PROVlDtNCE, R. Copyrighted 1800, By HENRY B. GARDNER. 6^' CONTENTS. PAGE. Works of (jENeral Reference. ... 5 Lecture I. Social Organisms. The Social Sciences. Economics. ........ 7 Lecture IL Economics as Science and Art. Possi- bility of Social and Economic Laws. Limitations and Difficulties of the Social Sciences. Importance of Economics. Method of Study. . . . 11 Lecture.s III — IV. Conditions Governing the De- \el()pment (^f Pxonomic Life. Economic Life of Savage and Barbarous Peoples and of Non-European Cix'ilizations. . . . . . . . . 15 Lkcture V. Economic Life of (ireece. ... 22 Lectures V'l — \TI. Economic Life of Rome. . . 28 N.oTE on the (General Course of Political Development HI I^urojK' since the Roman Empire. ... 41 LEcruRE VIII. Economic Life Under Feudalism. The Economic Organization of the Manor. . . 44 PAliE. Lecture iX. The Industrial Organization of Town Life. The Gild System. . . . . 51 Lecture X. Connnerce of Mediaeval Europe. . 58 Lectures XI — XIL Territorial Expansion and Na- tional Economic Organization. - ... 63 Lecture XII [. Economic Conditions about the Mid- dle of the Eighteenth Century. . . . . yj Lecture XIV. The Industrial Revolution: Causes. 85 Lectures XV — XVI. Industrial Revolution : Results. 93 Lectures XVII — XVIII. Economic Development Since 1850 103 Lecture XIX. Generalization, from Economic History. 133 Lecture XX. Organization of Modern Economic Life. Legal Framework. . . . . -139 Lecture XXI. Organization of Modern t^conomic Life. Production. . . . . . .142 Lecture XXII. The Mechanism of Exchange. Money. 155 Lecture XXIII. The Mechanism of Exchange. Credit. 165 Lecture XXIV. The Mechanism of Distribution. 172 Works of General Reference. Bibliographies. R. R. BowKER AND George Iles : The Reader s Guide in Eccnioviic, Social and Political Science. 1891. Not (irst ra e, but the best in English. Encyclopedias and Dictionaries. Cyclopcedia of Political Science, Political Economy and of the Political History of the United States. Iidited by J. J. Lalor, 3 vols. 1882-4. Very uneven. Many articles are translations Irpm antiquated French and German works. Others are by modern specialists, and are ol great value. Dictionary of Political Economy. Edited by R. H. I. Palgrave. 1 894. Only one volume ( A-E) has been published. It covers a very wide range of topics, anil tlie articles though brief are generally excellenr. \ Nonveau Dictioniiavie d Economic Politique. Edited l^y L. Say and J. Chailley. 2 vols. 1892. The last French work; devoted principally to economic theoiy. HandwdrterbucJi der Staatszvissenschaften. Edited by Profs. Conrad, Elster, Lexis and Loening. 6 vols. 1 890- 1 895. Most complete work of its kind. Many of the articles ai e extended treatises. HandbucJi der Politischen Oekonomie. Edited by G. Schonberg. 3rd. ed. 3 vols. 1 890-1. Comprehensive and excellent. Really an encyclopa'dia, though not so in name. Macleod H. D. Dictionary of Political Ecoiumiy. Only one volume (A-Cj has been published. M'CuLLOCH J. R. Dictionary of Commerce and Commer- cial Navigation. Lasted. 1882. Among general encyclopaedias, the Britannica and John- son's are valuable. 6 U'orh' of General Reference. Statistical Works a\d Year-Books. Block M. L Enropc Politique et Sociale. 2nd ed. 1892. Gannet H. The Building of a Nation. 1895. Itelcrs to U.S. In addition to publishing the results of censuses taken at intervals of from five to ten years, the principal coun- tries publish statistical annuals, covering the several departments of national life ; Statistical Abstract of the United States; Statistical Abstract of tJte United Kingdom. Among the publications covering several countries the following are the most reliable: Statistical Abstract for the several Colonial and Other Possessions of the United Kingdom ; Statistical Abstract for the Principal and Other Foreign Countries (both English official publi- cations) ; The Statesman' s Yearbook (J. Scott Keltic) ; Almanach de Gotha ; Annuairc de P Economic Politique (M. Ijlock) ; Otto Hiibner' s GeograpJiisch-StatistiscJie Tab- ellcn (Fr. V. Juraschek) ; Ubcrsichten der Wetivii thscJiaft (Fr. V. Juraschek). The last appeiir.s at irregular intervals; last edition cover? ISS-i-O. Treats of protluctioiis of food products and raw materials, of the precious niotala and other circulating media and of means of communication. Among non-statistical annuals Appletojis Annual Ency- clopcedia and HahelT s Annual are valuable. Economic Geography. Chisolm G. G. Handbook of Commercial Geography. 1889. Bartholomew J. G. Atlas of Commercial Geography. LECTURE I. SOCIAL ORGANISMS— THE SOCIAL SCIENCES— ECONOMICS. Social Organisms. Spenxer H. The Social Organism (pub. \\\ collect's (if his essays and in West. Rev., Jan. i860.) Principles of Sociology, Vol. I. Ft. II. (Spencer's discussion is full and suggestive, but he carries to extremes the analogy of social to animal organisms). 'Beuntschli J. K. The Thcoij of the State, Bk. I. Ch. I. Small A. W. and Vincent G. E. A)i Introduction to the Study of Soci- ety (traces in great detail and suggestively the growth and structure of the social organism). Newcomi; S. Principles of Political Economy, Bk. I. Ch. I. v. Mavr G. Statistik v. Gessellschaftslehre I, I, §§1-5 discusses the scientific study of social groups. Phases of the Life of Society and their Interrelations. 'Ward L. F". Dynamic Sciology, Ft. I. Ch. VIII. 'Ely R. T. Outlines of Economics, Bk. I. Ch. XI. Knies K. Politische Oekonomie voni Geschichtlichen Stand- punctc, 2nd ed., 1883. Keynes J. N. Scope and Method of Political Economy, Ch. IV. § i and refer- ences there oriven. Social Organisms. Political economy or economics is a branch of social science which treats of the structure and life of social organisms in a way analogous to that in which the bio- loo-ical sciences treat of the structure and life of the organisms of the animal and vegetable world. An organ- ism may be defined as a living whole composed of perma- nently related interdependent parts, the action of each part being subordinate to, the action of all the parts Social Organisms. together constituting, the Hfe of the whole. The term social organism is applied to groups of individuals organ- ized, for the attainment of a common purpose, in such a way that the action of no individual or individuals con- stituting a part of the group is complete in itself but attains its purpose only as it is combined with the action of other individuals (an industrial enterprise, family, city, nation, the civilized world). The idea of an organism is borrowed from the ani- mal and vegetable world, and is applied to social groups only by analogy. The justification of this application is that it emphasizes certain fundamental characteristics of social groups, which are apt to be overlooked, the understanding of which is, however, essential to the development of social science. 1. The individual in all that concerns his existence and progress is not independent of, but fundamentally, related to and dependent upon, other individuals with whom he is associated in social groups, and his actions and even his character are largely determined by the character and organization of the groups to which he belongs. 2. These groups, therefore, may be treated as units of which individuals are the constituent but subordinate elements. 3. The organization and character of the group at any given time are the products of a long process of development, analogous to evolution in the physical world. It should be noted in this connection, however, that {a) the form of social organisms is much less rigid than that of physical organisms, change much more frequent, and the lines of development much less restricted ; {b) conscious control by the organ- ism itself plays a much more important part in the development of social than of physical organisms. Social organisms vary greatly in i, size; 2, com- plexity of structure ; 3, importance and variety of The Social Sciences. 9 interests subserved ; 4, coherence and detiniteness of structure. The soci.d organism which combines these characteristics in the highest degree is the modern nation, and where the term social organism is used without modification in these lectures the nation will be understood, the minor social organ- isms being regarded as component elements of the nation. Thk Social Sciences ; Phases oe the Social Organism. Like physical science social science is, for purposes of study, divided into a number of branches, or social sciences, each treating of some special form of social organization, the result of activities arising from a par- ticular class of human desires or instincts, which in turn usually corresptMid to some need. The following- enumeration will serve as an illustration (it makes no pretense to completeness or e.xclusiveness in method of classification). 1. Industrial organization, outgrowth of the desire for the means of subsistence (food, clothing and shelter), which subserve the need of maintaining physical energy ; subject matter of economics. 2. Family organization ; outgrowth of the sexual instinct, which subserves the need of reproduction of the species. 3. Religious or ecclesiastical organization, outgrowth of complex of desires and instincts which we' may term the religious instinct, which subserves the needs of order, faith and morality. 4. Educational organization, outgrowth of the desire for knowledge and intellectual development, which sub- serves the need of knowledge. 5. Political organization (in broadest sense), outgrowth of a variety of instincts and desires (regard for cus- tom, desire for power, order, justice and the accom- plishment of large undertakings), which subserve the need of social order and cooperative action, the sub- ject matter of political science. 10 Economics. Interrelations of the Social Sciences. It should always be borne in mind, however, that such a dixdsion of the subject matter of social science is purely for purposes of practical convenience, and must always be more or less arbitrary, since the different classes of human desires and the resulting forms of social organization are so closely interrelated that no clearly defined separation is possible. The character of the interrelations may be summarized as follows : 1. The same class of desires gives rise to different kinds of activities and forms of social organization, and conversely. 2. Different classes of desires give rise to the same kinds of activities and forms of social organization. 3. The character of each class of desires, with its result- ing activities and forms of social organization, is largely determined by the character and stage of development of other classes of desires and their corresponding activities and forms of social organ- ization. It follows from this that though we may for conven- ience study separately the different phases of social life and organization, no single phase can be rightly under- stood except in its relation to social life as a whole. Definition of Economics. ' The scope of economics as related to the other social sciences has already been pointed out. Since, however, other desires give rise to the same kinds of activities as the desire for subsistence, it is proper and desirable to extend its scope so as to include such activities. Thus extended economics may be defined as the science which describes, explains, and traces the effects of the activities of men and the resulting forms of social organ- ization in so far as these activities are directed to obtaining the material means for the satisfaction of desires. LECTURE ECONOMICS AS SCIENCE AND ART— POSSIBILITY OF SOCIAL AND ECONOMIC LAWS-LIMITAl IONS AND DIFFICUL= TIES OF THE SOCIAL SCIENCES — IMPORTANCE OF ECONOniCS— HETHOD OF STUDY. Science, Law, and the Distinction Between a Science AND AN Art. Mill J. S. Logic Bk. Ill, Chs. IV, XII. Jevons \V. S. Principles of Science, y^^^. 1-4, 737-8. Lotze H. Logic. Bk. II, Ch. VIII. Newcomb S. Principles of Politi- cal Economy, Bk. I. Ch. III. Century Dictionary under " Science" and " Law." The Same, as Applied to Social Science and Economics. Mill J. S. Method in Political Economy, (in his essays on Some Unsettled Q?iestions in Political Economy, and West. Rev., 2^-6.) Logic \\k. VII. Keynes J. N. Scope and Method of Political Economy, Chs. II, III. Mar- shall A. Principles of Economics, ist ed. Vol. I, Bk. I, Chs. VII, VIII. Elements of Economics of Indnstry (1892), Bk. I, Chs. VI, VII. Walker F. A. Political Economy (advanced course), §§27-31. Sidgwick H. Principles of Political Economy, Introd. Ch. II. Cossa L. Introduction to the Study of Political Economy, Theoret. Ft. Ch. IV. Ely R. T. Outlines of Econom- ics, Bk. I, Ch. X, §4. Spencer H. Study of Sociology Ch. II. 'Ward L. F. Dynamic Sociology, Vol I, Introd. Froude G. a. The Science of History, in his Short Studies, Vol. IT Kingsley C. Limits of Exact Science as Applied to History, in West. Rev., 1861, and reprinted in collections of his essays. (F'roudeand Kingsley deny the possibility of a science of history). Wagner A. Grundlegung der Politischen Oekonomie, 3rd. ed. Pt. I, §§86-91. Knies K. Die Politisehe Ockojwmie vom Geschichtlichen Standpuncte, 2nd ed. II, i and 111,6. ScHONBERG G. Haudbuch d. Politischen Oekoiiomie, 3rd ed. Vol. I, I, 13. CoHN G. Nationalokomie, pp. 69-78. Rif.MELiN G. Reden v. Aufsdt.ze, Vol. I, p. i, 1 2 . Sciaicc and A rt. Vol. II, p. iiS. Smith R. M. Statistics and Econovi- ics, IV, in Pubs, of Amer. Econom. Assoc. III. Block M. Traite dc Statistiqnc\ Chs. V and VI v. Mavr G. Die Gcsctzuidssigkcst im Gcscllscliaftslcben, (Smith, Block and v. Mayr treat the question from the statisti- cal standpoint). L.mjrent F. Etudes snr V Histoire dd'Hnmanite, 2nd ed. Vol. i8, reviews the more mipor- tant theories concerning the forces controlling the devel- opment of social life. Adams C. K. Manna/ of His- torical Literature, 3rd. ed. p. 67, gives a brief biblio- graphy on the subject. Science and Art. We have spoken of economics as a science. In this sense it is to be distinguished from the art of regulating economic life. Science; a science describes and explains a given class of phenomena. It is a body of knowledge expressed in the form of laws. A lazv is the statement of a constant relation of coexistence or sequence between phenomena. A science is exact in proportion to the quantitative exactness of the laws which it comprises ; it is com- plete in proportion as it covers all the relations be- tween all the phenomena with which it deals. Art ; an art points out the way for attaining a given purpose ; it lays down rules for action. Science and art are, however, closely related ; the development of the latter is the chief purpose of the study of the former, and an art cannot be highly developed without such study. The relation between the two as applied to economics is well brought out in D. A. Well's definition of economics: "The his- tory of the world's experience in endeavoring to bet- ter its material condition and the making of correct deductions from such experience with a view to present and future guidance in furtherance of the same purpose." (Forum XVI-539.) Possibility of a Science of Social Phenomena. I. Denied on the ground that freedom of the will destroys constancy in the relations of social phenomena and Extreme Variations in Certain Phenomena 13 hence excludes the p(\s.sil)ihty of formulating laws. 2. Afifirmed on the ground that freedom of the will doe.s not exist, or admitting freedom of the will, on the ground that, (<'/■) freedom of the will is in a large proportion of cases subject to limitations so strong as to practi- cally nullify it : iyb) freedom of the will does not imply arbitrary action : (r) in large social groups individual eccentricities can- cel each other resulting in a very considerable degree of constancy between the action of the group as a whole and the conditions under which the action takes place. PlxTREME Variations in the Annual Recurrence of Certain Phenomena in the Countries and During the Periods Given. Tliis table is coiiiiiiled lioiii Block'.? L' Europe Politique et Sociiilc. 2nd ed. pp. .57, 60, 64, 4.50, 4.51, 460. In some cases. \vlii(;li may be there noted, the ligures do not cover all the years given at the heads of the columns. .Marriages. Births. Deaths. Murders and Homicides. Assaults. Suicides. Per 1(K)0 Inhabitants, 1881-18!K). Perl(IO,(X)0Inliabitants, 1881-18«'J. Per 1,(MM),00(I Inhabitants. 186.5-188'J. Un. Kingdom Denmark 6.7— 7.2 6.9— 7.8 6.1— 6.8 .5.9— 6 7 7. — 8 2 8.9—10.4 6.8 - 7.1 7.6— 8.2 7 6- 8.2 6.9— 7.4 (i.7— 7.2 6. — 6.3 7.7— 8.2 7. — 7.6 29.3—32.5 30.6—33.4 29.7—31.3 27.3—30. 36.7—39.7 42.9—45.3 26.6 - 29.8 35.7—37.2 36.6—37.8 32.9-35.3 28.7—31.4 36. —37.7 30. - 39. 21.8—24.9 18.1 — 19.6 17.9-19.7 16. —18.4 16 -17.8 27.3—30.8 30.8— .'!5 3 19.9—22.4 23.7—26.2 22.8—25.7 19.7-22.2 19.1—20.9 17.1—33.1 25.6-28.7 20.5—22.9 (1) ..38^ .(i3 (2) .32— .74 (3) .67—1.36 (1) 61— 80 Norw.ty 60- 85 74 l-'O SAvedeu Austria Hungary 2.06—2 .54 248.73— 285. Ill 64 170 Switzerland... German Emp . Prussia .80-1.08 121.57-159 24 121 •>•>() Holland Belgium Spain Italy 1 69—1.90 5.05—8.43 8.0.5-9.27 1 46—1.61 44 - 128 2.5— 53 130-212 225.99—231.34 65.12— 71.77 France... (1) England, (2) Scotland, (3) Ireland. 14 Social Science. Difficulties of Social Science. 1. Great number and complexity of the phenomena. 2. Lack of stability in the conditions governing social activities and in the forms of social organization. 3. Difificulty of observation ; {a) observations must fre- quently cover a territory and include a number of instances too great for a single observer, {b) Those who alone know the facts are interested to conceal them. 4. Impossibility of experiment. 5. Liability of the investigator to the influence of pas- sion and prejudice. (See Spencer, Study of Soci- ology). Economics the Best Developed Among the Social Sci- ences. 1. Has been longest and most carefully studied. 2. Deals with activities least subject to the arbitrary action of free will. Importance of Economic .Science. Explains and thus teaches the conditions of successfully controlling the economic side of the life of social or- ganisms, on the healthy development and right order- ing of which depends the possibility of attaining the highest purposes of human life. Method of Study. I Development of economic life, particularly of the nations of western Europe and the United States. 2. Description of the existing economic organization of these nations, and an analysis of its working. 3. Consideration of the principal elements of strength and weakness in this organization, and of some of the more important proposals for regulating and changing it. LECTURES HI-IV. CONDITIONS (jOVERNINQ THE DEVELOPMENT OF ECONOMIC— ECONOniC LIFH OF SAVAGE AND BARBAROUS PEO= PLES AND OF NON=EUROPEAN CIVILIZATIONS. Influence of External Nature on Economic Develop- ment. Shaler N. S. Nature and Man in America. Chs. VI-VIII; introductory essay in Vol. IV of Winsor s Narrative and Critical History of America ; Chs. I -1 1 1 on *rJie United States of America, ed. by him. Knies K. Politische Oekonomie voni gescJiichtlicJien Stand- pnncte II, i. Bartholomew J. G. Atlas of Com- mercial Geography (contains maps showing physical conditions of greatest economic importance). Influence of Race Characteristics. Knies K. As above, II, 2. Influence of Other Departments of Social Life. J^HiLLiPOViCH E. V. Grundriss d. PolitiscJien Oekono- mie. Bk. I. Marshall A. Principles of EconoDiics, Bk. I, Ch. II and III. Knies K. As above, II. 3-5. Wagner A. Grnndlegnng dcr PolitiscJien Oekon- mie. Pt. I, § 1 50-1. Ashley W. J. An Introduction to English Economic History and Theory. Vol. I, §§ 15-17, 20. Vol. II. §§ 63-65, 71. Cunningham W. Politics and Economics. Ch. II. Gnnvth of English Industry and Commerce. Vol. I, §§ 82-84. (Ashley and Cunningham bring out clearly the connection between economic organization and the prevailing relig- ion and ethical views.) Economic Life of Savage and Barbarous Peoples. Spencer H. Descriptive Sociology. Vols. Ill, VI, and 1 6 Economic Life of Non-European Civilizations. first portion of Vols. I and VIII. Ratzel F. ]'"dlker- kiinde, 3 vols, (fully illustrated and with a few good maps bearing on economic life). Letourneau C. Sociology. Jolly N. Man before Metals. Tvlor E. B. AntJiropology. Taylor I. Origin of the Ayrans. Lubbock J. Prehistoric Times. Mason O. T. The Origins of Invejitions ; Woman's Share in Primitive Culture. Clodd E. The Story of Primitive Man (contains good brief bibliography). Starr F. Some Eirst Steps in Human Progress. Brinton D. G. (edi- tor) Iconographic Dictionary ; sees, on Anthropology, Ethnology and Prehistoric Areheeology by Brinton, on EtJinography by Gerland, and on History of Culture by von Eye and others, de Laveleye E. Primitive Prop- erty. Letourneau C. Property: Its Origin and De- velop))! ent. Wilson D. Prehisto)'ic Alan (U. S.) ' The reports of the U. S. Bureau of Ethnology and H. H. Bancroft's History of the Native Races of the Pacific States contain a great amount of information concerning the primitive races of the U. S. Economic Life of Non-European Civilizations. Spencer H. Descriptive Sociology. Vols, II (Mexico and Peru), VII (Hebrews and Phoenicians); Ico)io- gi-aphic Dictio)iary, as above (Art. on History of Cul- ture). Erman J. P. A. Life in Ancient Egypt. Mas- PERO G. C. C. Tlie Daw)i of Civilization ; Egyptian ArchcBlogy ; I^ife in Ancient Egypt and Assyria. Wil- kinson J. G. TJie Egyptians in the Tinies of the Phai'- aoJis ; Ma?ine)-s a)id Custo))is of the A)icie)it Egyptians, (two series of Essays, 3 vols. each). Simcox E. J. P')-imitive Civilization (Kgy^i, Babylon, China). Wal- lon H. a. Historic de P Esclavage dans T A)iti quite (introductory chapter). Menard R. La J^ie Privee des Ancicns (vol. on Le Travail dans I'Antiquite). Pres- COTT W. H. Conquest of Mexico ; Conquest of Pern (Prescott's accounts probably considerably exaggerated). Payne E. J. Histo)y of the Ne%v ]Vo)'ld called Amo'- ica Vol. I (Mexico). Conditions Governing Development of Economic Life. 17 Conditions Governing the Development of Economic Life. The economic life of each people presents characteristic features which are the result of the special conditions in connection with which it has developed. The more important of these conditions are, i, the territory inhab- ited by the people in question ; 2, their race character- istics ; 3, the contemporaneous development in other departments of social life, especially {a) the industrial arts, dependent in turn on the development of physical science ; {b) social and political organization ; (r) law and custom, particularly property law; (^/) religious and ethical development. We shall trace in some detail the economic develop- ment of Western Europe and the United States. As an introduction to this it will be useful to look at the general features of economic life among peoples in a condition of savagery or barbarism, which may be taken as representing in the main an earlier stage in the development of European peoples. Economic Life of Savage Peoples. No people is supposed to have passed beyond the stage of savageiy earlier than in,(i()O-ir),O()0 B. C. Examples among existing peoples: Fuegians, Bushmen, Andaman Islanders, Veddahs, Australians, Tas- manians (recently extinct), Indians of Lower California. Desires : Of the simplest and coarsest nature ; both vegetable and animal food, the latter though gener- ally cooked, sometimes eaten raw ; immediate needs alone realized, saving being practically unknown, times of great want alternating with excessive supply ; life necessarily nomadic, houses being nothing more than natural shelters or constructions of the simplest and most temporary nature ; clothing either entirely lack- ing or of the simplest character, made of skins, bark of trees or leaves, and, except in the most northern climates regulated more by the sense of modesty or the desire for ornament than by the need of warmth. Productive Pozver: Hunting and fishing the principal means for gaining food, the only vegetable food being 1 8 Economic Life of Barbaivjis Peoples. such roots and fruits as grow wild ; tools made from such objects as stones, pieces of wood, bones, shells and horns, which require the smallest amount of prep- aration, (the most complicated instrument in general use among savages is the bow and arrow. This was unknown to the Australians, but its place was taken by the boomerang), art of making, or at least using, fire universally known ; though great skill is shown in adopting and using their primitive instruments, pro- ductive power is extremely small, causing a small and scattered populaton. (Estimated that it takes 60 sq. miles to support a savage.) Social and Political Organization : It has been a quite generally accepted view that mankind has passed through a stage of promiscuity in sexual relations. In the light of the most recent investigations, however, it seems probable that among the lowest savages (as well as among the animals most nearly related to man) there exists between parents and offspring a union sufficiently permanent and exclusive to be regarded as a family. Among the lowest savages, indeed, the family seems to be the only form of social organization, the difficulty and methods of obtaining subsistence not admitting of any concentra- tion of population or encouraging combined action ; union of families in clans or tribes marks a stage of progress. Economic Organization and Property Rights : Family the economic unit ; no division of labor except between the sexes, the drudgery being assigned to the women, and consequently no exchange ; slavery impracticable; individual property confined to articles of personal use ; clans or tribes as they develop some- times acquire exclusive use of a given territory. Economic Life of Barbarous Peoples. Transition from savagery gradual and no definite divid- ing line possible, the most fundamental change involved being the development of agriculture and the domes- tication of animals. Economic Life of Barbarous Peoples. 19 Kxamples of fully developed barbari.sm are to be found among the inhabitants of tiopical Africa, on some of the islands of the Pacific and Indian oceans, among the American Indians and the Mongolian lieopleH of Asia. The men of the bronze and iron ages in prehistoric Europe were in tliis stage of development. Desires : Marked development, as regards both quantity and quality of objects desired ; food more varied and better cooked ; a great increase in the importance of of vegetable goods among agricultural peoples ; shel- ter more effective and permanent ; clothing more suitable, cleanly and decorative ; desire for adornment in general much more varied in its objects ; realiza- tion of future needs begins to exercise an influence, surplus food being stored for future use. Productive Power: Tremendous increase due to agri- culture, yielding food trees, grains, vegetables and fibre plants ; domestication of animals (horned cattle, sheep, goat, horse, dog, fowl) ; substitution of metals (cop- per, bronze, iron,) for more primitive materials ; plait- ing and weaving of cloth, basketry and mats ; use of clay in pottery, making possible great improvements in cooking ; ofrinding of meal and makiuir of bread ; great improvements in boat construction, including the use of sails ; the more simple mechanical principles, such as the lever, simple pulley, and wedge, understood and skillfully applied. Social Organi::atio7i : E.xtension and strengthening of the clan and tribal organization, the territorial com- munity tending to take the place of the consanguine- ous clan and tribe ; custom rather than law the con- trolling force ; separation of social classes based on individual ability, conquest and birth ; slavery becomes general, maintained by war and sale of children, and rendered profitable by the changes in industry ; polyg- amy almost universally recognized (evident, however, that in practice polygamy must have been confined to the few and monogamy the usual form) ; father tends to not only become the head but the owner of the family ; settlements much more permanent, though life is still apt to be somewhat nomadic. 20 EconoDiic Life of Barbarous Peoples. Eeonoinic Organirjation and Property Rights : I^'aniily still the economic unit, most im])ortant form of divis- ion of labor still being that between the sexes, though specialization of employments, especially among slaves, tends to increase ; exchange by means of regular mar- kets also begins, though it still plays a very minor part, and there are no commercial or industrial cities, production being in the main for family use ; aj^pear- ance of marked distinctions in wealth and of an economically idle class ; individual property still con- fined to articles of immediate consumption and per- sonal use, the dwelling being usually the property of the family, though communal dwellings are common in some localities ; land tends to fall into the possession of individual families, their right to it, however, being one of excluive use rather than of full property, and subject to important limitations in the interest of the community. Economic Life of Non-European Civilizations : (Egypt, Assyria, Babylonia, Persia, India, China, Carthage, Phoenicia, Palestine, Peru, Mexico). Although we know comparatively little of their economic organiza- tion and life, and they present important differences as between themselves, they have certain general features a statement of which will be valuable for purposes of comparison with pAiropean civilization : A marked advance over barbarism in quality and vari- ety of desires shown by improvement in their houses (brick and stone), in the character of their clothing, in the quality and variety of food and the methods of its preparation, and by the growth of the arts of arch- itecture and sculpture. The increase in productive power, though great, is due not so much to essential changes in industrial methods as in greater skill and improvements in existing instrum'ents (plow), in the larger and more intelligent use of resources (increased use of animal, wind and water power, construction of permanent irrigation systems), and, most of all, per- haps, in the capacity for combined labor ; population Econoviic Life of Non-Evropcan Civilisations. 21 ceases to be nomadic ; the social and political organi- zation becomes more firmly fixed ; cities develop, implying a considerable surplus of agricultural pro- duce over and above the needs of cultivators ; divis- ion of occupations increases, but commercial exchange does not increase correspondingly (coined money unknown in Egypt at the height of its power, and in Peru), the reason being that labor is not "free labor ; generally a division of the population into, i, a com- paratively small governing class combinig civil, mil- itary and religious authority ; 2, the governed class, comprising the bulk of the population whose produc- tive power, above a more or less generous subsistence, is commanded by the governing class in the form of taxes or analogous payments ; cities not so much cen- ters of independent industry and commerce as resi- dences of members of the governing class and their dependents ; international trade very limited, being largely confined to caravans. The statements in i-egard to the subject condition of the bulk of the popuhition and the slight developnient of trade should, perhaps, b(^ considerably niodilied for the Chinese among modern nations, and, with respect to trade certainly, for the Phoenicians and Carthaginians, among ancient nations; commerce and manufactures were the foun- dation of their civilization ; they navigated the Mediterranean and col- onized its shores, went out into tlie Atlantic to England and the P.altic, and are even said to have sailed to India by the Red sea and to have passed around tlic Cape of Good Hope. LECTURE V. ECONOMIC LIFE OF GREECE. General. ScHoMANN G. F. TJic Atiqnitics of Greece. Boeckh A. The Public Economy of the Athenians. McCuL- LAGH W. T. Industrial History of Free Nations. Vol. I. Grant A. J. Greece in the Age of Pc? ides. Blumner H. The Home Life of the Ancient Greeks. GuHL E. and Koner W. Life of the Greeks and Ro- mans (does not give attention to industrial organization, but contains excellent descriptions of houses, food, cloth- ing, ornaments, etc). Smith W. Dictionary of Greek and * Roman Antiquities. Buchsenschutz B. Besitrj und Erwerb im griechischen AltertJiume ; Die Haupstddte des griecJiischen Geiverbefieisscs. MOller I. Handb. d. Klass Altcrtnms- WissenscJiaft. . Vol. IV. Die griechische Altertiimer 3 Die Privataltertfimer 8-12. Urumann W. Die Arbeiter u. Communisten in GriecJi- land u. Rom. Wachsmuth W. Die Stadt Athens. Meyer E. Die Wirtschaftliclic Entwickelung des Altcrtnms (Jahrb. f. Nationaloek. u. Stat. Series III, Vol. IX, p. 696), combats the view, usually, held that labor was almost exclusively slave labor, and produc- tion for exchange of comparatively little importance. Menard ; as in previous lecture. Population. Hume D. On the Popnlousncss of Ancient Nations (in his collected essays.) Meyer E. Bcvdlkcrungszvcscn {GescJi. d. Bcvolkerungsbewegnng ; Altcrtum), in Handb. d. Staatswissenschaften, Vol. II. Economic Life of Greece. 23 Commerce. Lindsay W. S. History of ]\Ie reliant Shipping and Ancient Connnerce. Giijbins H deB. History of Coni- vierce in Europe. Slavery. Ingram J. K. History of Slavery (enlarged from arti- cle on slavery in Encyl. Britan. 9th ed.). Wallon (as in previous lecture). Land and People. Land: Good supply of wood, metals, stone and clay ; soil yielding good returns to labor (wheat, barley, grapes, olives, ligs); principal domestic animals (cat- tle, sheep, goats, swine, dog, horse, ass, mule and various kinds of fowl) ; climate not severe but demand- ing industry and stimulating energy ; surface diver- sified encouraging development and competition of independent centers of civilization ; situation favor- able for commerce and for contact with the older civilizations of Egypt and Asia. People : Branch of the Aryan race, which has always shown a marked capacity for political organization and early developed the monogamic family and clan based on the patria potestas. From the lack of devel- opment of physical science, however, industry could not pass beyond the handicrafts stage of development, and the contempt for labor due to the prevalence of slavery prevented the application of the best thought of the age to industrial matters. General Course of Development. I. Prehistoric period. (a) Pre-Hovieric : Traces of a civilization possibly con- temporary with that of Egypt marked by the ex- istence of cities. Of the economic life of this period we know nothing. {f) Homeric : Large landed estates cultivated by a dependent class comprising both agricultural la- borers and artisans; considerable degree of skill 24 Econouiic Life of Greece. in working in cloth and metals and in ship build- ing ; city life of relatively small importance ; almost no commerce ; a small class of travelling artisans. 2. Historic period. Two classes of States, {a) States which remained predominantly agricultural, apparently, however, with the substitution of small proprietors for the large land owners with dependent cultivators. To this class be- longed almost all the states of Greece proper ; Sparta the most important representative, {b) States which developed a vigorous city life and with it industry and commerce, succeeding the Phoenicians as the greatest commercial people of the civilized world. In the east the Greeks began to predominate over the Plioenicians as early as tlie eighth century B. 0. In the west Carthage remained tlie cliicf commercial power until her overthrow by Rome in tlie tliird century B. C. To this class belonged the cities near the Pelopone- sian isthmus (Corinth), and Athens, on the mainland, and the far more numerous cities on the islands of the Aegean and the coast of Asia Minor, with their colonies in Italy, Sicily and Thrace. Sparta and Athens: Features in common. 1. The subordination of the individual to the state ; most marked in Sparta, but seen also at Athens in the magnificence and interest of public as compared with private life. 2. The existence of a large serf class (Sparta), or slave class (Athens), and of a class of freemen without l)olitical rights to whom belonged the greater part of the industrial life of the community. Poiiulatiou of Sparta. 1. Spartans; full ci'izens, estimated at not over 10,000 families. 2. Perioeci; tree land owning population without political rights, estimated to be three or four times as numerous as tlie Spartans. 3. Helots; serf population, cultivating the laud of the Spartans, estimated to be two or three times as numerous as the Perioeci. Population of Athens; (Attica) at outbreak of Peloponesian war: Citizens, 90,000. Metoeci : foreigners, industrial class, 4.5,000; slaves, 36.5,000. These figures, quite generally accepted, have recently been severely criticised, Meyer's estimate being: Citizens and slaves, some- thing over 100,000 each. Metoeci, ;!0,O0O. Sparta and Athens. 25 Sparta : Never attained to any considerable industrial devel- opment, the state doing all in its power to enfore a sim- ple manner of living and to discourage trade ; foreigners not allowed to settle in Sparta, nor Spartans to travel abroad without special permission ; industrial occupa- tions and even the possession of gold and silver forbid- den to Spartans (strictly enforced until the Peloponesian war); money for internal trade was iron, at first uncoined ; what industry (aside from agriculture) and commerce existed was in the hands of the Perioeci, who seem to have escaped many of the restrictions applicable to Spartans. Athens : Little known of the early development of economic life at Athens. At the time of Solon's legislation (594 B. C.) there seems to have been a tendency towards the concentration of land in the hands of large owners at the expense of the small holders who were laboring under a heavy burden of debt. During the greater part of Athenian history, however, Athens seems to have been divided into comparatively small estates, and most of the citizens, who alone had the right, seem to have been landowners. By the end of the sixth century, B. C, city life had come to predominate, and the devasta- tions of the Peloponesian war gave a blow to agricul- ture from which it never recovered. Organizatioi of Industry : (\) production: While pro- duction within the household, by the women (spinning and weaving) and slaves, played a much more impor- tant part than it does to-day, production for the mar- ket attained a considerable development, resulting in many instances in production on a large scale (factories employing twenty to fifty, and, in one instance, one hundred and twenty laborers). While the greater part of the manual labor, and even the superintendence, was doubtless confined to slaves and freedmen, the citizen being merely the capitalist, citizens must also have been engaged in handicrafts to some extent. In mining, slave labor was employed on 26 Athens. a large scale, and even the ownership of slaves, to be let out, was a source of great profit. In agriculture slaves probably performed the bulk of the labor, though the smaller owners may freqently have labored with their own hands. (2) Trade: Athens, not only invited to commerce by her situation but forced to it by the necessity of providing food for her population and raw materials for her industries, gradually became the emporium of the Greek world. From the northern countriea as far as the Pontus, came giain, salt lish, hemp, Ihix, wood, tar, pitch, wax and slaves, as well as eastern pro- ducts brought to the I'ontus by caravans; from Kgypt, giain, papyrus products, linen, salves and medicines; from Asia, manufactures, espec- ially line cloths and jewelry ; from the islands of the iEgean, metals, wine and marble; from Sicllj', grain and cheese. In return, Athens ex|)orted oil, ligs, lioney and manufactured articles, and performed a large part of the carrying trade (3) Money and BanktJig : Co'imgit, ^r'nt introduced by the Phoenicians, was regulated, at Athens especially, on sound principles, Athenian coins being everwhere recognized as standard. Silver was the standard metal, though Persian gold coins were also used. The principal branches of banking (deposits, trans- fers, loans), were practised. P^xtended use of bills of exchange seems doubtful, though orders on for- eign agents or debtors were not unknown The rates of interest was high, due apparently to risk ; 12% low, 18% common, 20%-3o% on mercantile ven- tures. Rklation of the State to Pxoxomic Life. Although trade and the handicrafts were regarded as degrading and incompatible with the best citizenship, the importance of a right ordering of economic life was recognized ; efforts towards the equal division of land at Sparta ; Solon's restrictions on the ownership of land at Athens ; strict regulation of coinage at Athens ; strict laws, securing the enforcement of contracts and the rights of property ; encouragement to foreigners to settle in the country ; provision of market places, of a market police, and of special courts for the settlement of trade disputes. Freedom was the rule in trade mat- Results. 27 ters, and such restrictions as existed {c. g. prohibition of exportation of grain from Athens ; requirement that loans should be made only on vessels bringing cargoes to Athens ; prohibition of the destruction of olive trees), were evidently in the interest of the comm'unity as a whole. There were no protective duties, in the modern sense, and no trade organizations corresponding to the mediaeval gilds. Propertv. Although in some states (Sparta, Crete,) there were im- portant restrictions upon the full right of individual property, as well as customs, which might imply an earlier, more or less, communistic system, the right of private property seems, during the historic period, to have been well developed, especially m the commercial states. Results. The commercial states alone achieved a considerable degree of wealth. In Athens the period following the Persian wars seems to have been a time of general pros- perity exemplified in the magnificence of public rather than of private life. The concentration of population in the city, the growth of slavery, the pauperization of the citizens by payments from the public treasury, and the opportunities for the accumulation of wealth in manufactures and commerce, in the mines, by the hiring out of slaves, and in the service of the state, especially in war, gradually produced, however, a population the bulk of whom, including slaves, had little more than the necessaries of life, while, together with a trading class (mostly foreigners) of considerable wealth, there were a few who had accumulated great wealth. LECTURES Vl-VII. ECONOMIC LIFE OF ROME. MoMMSEN T. History of Rome. Duruy V. History of Rome. (Each contains a good account of the econ- omic development of Rome. Mommsen does not go beyond the repubhc). Gibbon E. History of the Decline and Fall of the Roman Empire I, II, (shows the benefical effects of the estabhshment of the empire). GuizoT F. Lectures on the History of Civilization in France. Course I, Lect. II, and Course II, Lect. VII (gives some account of conditions during the later empire). Stephenson A. Public Lands and Agrariaii Laivs of the Roman Republic (in Johns Hopkins Uni- verity Studies, ninth series). Brown W. A. State Control of Industry in the Fourth Century (Pol. Science Quart. II). Ramsav W. A Manual of Roman Antiq- uities, edition of 1895, revised by Lanciani (contains chaps, on public lands and agrarian laws, revenues, coin- age, interest on money and agriculture). Bureau de LA Malle. Economic Politique des Romains (takes up money, population, agriculture, and financial adminis- tration. Antiquated, but still of some value). Voigt M . Die rom iscJicn A Itert timer ; Privat A Itertilmer ?ind KulturgescJiicJite in M tiller's Handb. d. Klass. Alter- tumswissenschaft. Vol. IV. Marouardt J. and Momm- sen T. Handb uch der rominishen Altertiimer (stand- ard ; very full on public economics, especially the finan- ciai system). Friedlander L. Darstelhmgen aus der SittengescJiicJite Roms. (deals with early empire and gives excellent picture of the life of the time, but does not touch much on industrial organization). Merkel J. Collegia (in the Handvvorterb. d. Staatswis.s). Liebe- Land and People. 29 NAM W. Zur GeschicJite nnd Organisation des roniis- cJien Vereinsivesens. Wagner A. Finanzivisscnsehaft, Vol. Ill (summary of financial system). Schmoller G. Die HandelsgesellscJiaften des Altertuvis (Jahrb. fur Gesetzgeb. Verwalt. u. Volkswirths. im Deut. Reich XVI). Wallon, Smith, Meyer, Menard, Ingram, GinniNS, Lindsay and Drumann as in previ- ous lecture. Arnold W. T. The Roman System of Provincial Administration. Fustel de Coulanges. Le Domaine rnral chez les Romains (Revue des deux Mondes, (Vol. LXXVII) ; a careful review of the development of the rural economy of the Romans, hold- ing that the displacement of peasant holdings by large estates, during the later republic and early empire, has been exaggerated. Importance : Civilizations or the ancient world merged in that of Rome which from an economic standpoint is the most important and best known of all. * It affords an excel- lent illustration of the close connection between eco- nomic, political and social development. Land and People : Land : Rome, situated on low hills not healthy until drained, but then favorable to agriculture. F^vidences of an extensive system of under ground drainage of portions of the Campagna even in pre- Roman times : the great Cloaca Maxima, still in use, attributed to Tarquin. Grain {spelt, the most common form), vegetables, the vine, and the fig seem to have been cultivated in the earliest time, and the olive towards the end of the royal period ; principal domestic animals also known and used for both food and draught purposes. The country was poor in metals, but afforded lime, -clay, salt, and coarse building stone. The situation on the Tiber was favorable for commerce. People : Aryans, 30 First Period. closely allied to the Greeks with same general char- acteristics but with a still more firmly developed and vigorous family life based on the patria potestas. Periods of Development : 1. From founding of t/ic city to tJic middle of tit e fourth century B. C. : period of internal development. 2. From middle of fourth century B. C. to the esta/>- lishment of the Empire : period of war and territo- rial expansion. 3. Imperial period : Rome a world state. Period I : Roman territory probably did not exceed 500 sq. miles. Agriculture was the predominant industry, the popula- tion being principally made up of small peasant farmers. (Mommsen estimates the average holding at \2\ acres at the time of the Servian constitution). The popula- tion seems, during the royal period, to have been divided into three main classes, i, Citizens. 2, Clients, a class of dependent cultivators. 3, Non-citizen freemen, capable of hoFding land but without political rights ; class I becoming later the Patrician class, 2 and 3 coalescing to form the Plebeians. Slaves, though not unknown, seem to have been relatively few. The political and economic unit was the family, comprising all subject to the patria potestas. There is early evidence that articles from other parts of Italy and, even, Greece, Egypt, and Baby- lonia were used at Rome, but that trade did not reach any considerable development is proved by the fact that, though copper early passed as money by weight, and in the form of bars in the time of Servius Tullius, it was not coined until about the time of the Decemvirs at which time fines were still reckoned in cattle, and silver was not coined until 269 B. C. Tradition ascribes to Numa the collegiate organization of certain handicrafts (goldsmiths, coppersmiths, car- penters, fullers, dyers, potters, and shoemakers), and it is probable that there was a distinct artisan class in the city, but the weight of evidence would indicate that it Second Period. 3 1 was of minor importance. While this description ap- plies in the main to the whole period under considera- tion there is evidence, during the later centuries, of i, growth of large estates, due princii)ally to the occupa- tion and leasing t)f the public lands, which were confined apparently to patricians, or at least to the wealthy ; 2, heavy indebtedness of the small boklei-s ; 3, an increase of slave labor. This state of affairs resulted in constant agitation and some legislation looking to the distribution of the j)ub- lic domain in small parcels to the common people, and to relief from debt. 'I'lic most iTiiiKii'tnnt of tliusc l;i\vs was tlic Lex Licinia .K;? 15. C. wiiich juoviilcd tliat 1, iiilere'st already paid should be deducted from the luniciiial of the debt, and llie remainder pai.l in Ihiee annual in slallnients; 2, no one should oeeuiiy more tlian 5(10 jugeia (300 acres) of the jiulilie lands; 3, a certain number of freemen shoidd be em- l)loyed on every estate; 4, no one should send out more than loo largci' or 500 smaller cattle to j^raze on tlie public pastures. Pi'.Kion II : Almost constant war, carried on during the first hun- dred years in Italy itself, and resulting in the consolida- tion of Italy under Roman control ; thereafter, with the exception of the second Punic war and the civil dissen- sions of the last century, throughout the known woild. Such conditions, bringing Rome into contact with east- ern civilizations and making her the commercial as well as the political center of the world, necessarily pro- duced fundamental changes in her economic life. The main changes to note are, I. 'J7ic disapfcarancc of the peasant class due to {a) the long continued wars in Italy, (/;) the demand for men -for service in the army, (c) the nnportation of grain from the pi^ovinces, which, being obtained by way of tribute or taxation, could not only be sold at a price less than that of the Italian product, but came to be sold by the state at less than cost and finally to be given away. Knsuring a sutlicient sujiply of grain for the city luid long been re- garded as a public obligation. As early as 200 li. C. grain obtained from the provinces had been furnislied at very low prices. Under Second Period. Ciius Gracchus (tribune 123-2 I?. C.) provision was made for the sale to each burgess wlio presentbd hiinsell: in the city of 1 1-4 bushels ol grain, ea(;li month, at about one-half of the then prevailing market price. Tliis custom, somewhat modified, was sto)ii>ed by Sulla, but re- newed, 78 B. C, and restored in its oiiginal form (io B. C. ]>istribution was made free, 51S U. C. The number of recipieiits reduced by Ciesar from ;WO,(100 to 150,0(Ki, increased to tlie former amount by the end of the century, to be again reduced by Augustus, who re(|uii(.d a small payment from all except the destitute. {d) the undermining of industi-ial habits among the mass of the people as a result of long continued military service in wars of conquest, and the rapid growth of slave labor, bringing free labor into contempt. Peasant cultivation endured longest in the case of market gardens in the neighborhood of cities. Many attempts were made, by distribution of the public domain, to reestablish the peasant class. In addition to the establislimeut of col- onies (of which, according to Stephenson, there were fifty-one estab- lished, between 367 B. C. and 133 B. C. comprising 48,800 colonists, with at-signmeuls of from 2 to 6 jugera each, occupying a territory of 2."),3Glsq. miles) there w'cre general distributions of land in 338 B.C., 28(5 B.C. (prob- ably), 232 B. C, 200 B. C , (to Scipio's soldiers) 172 B. U., and 144 B. C. The agrarian law of Tiberius Gracchus (13,5 B. C.) provided 1, that no one should occupy more than .^00 jugera of the public domain; 2, that the land obtained by the conliscatiou of the surplus over that amount shoald be assigned in parcels of 30 jugera each, such assignments to be used for agi icultural purposes, to be inalienable, and to be charged with a moderate rent to the state. The distribution was designed to be continuous, but was practically suspended in 12t) B. C (Mommsen at- tributes to tids law considerable results cxi)laiuing by this mean.s an increase of 76.000 iu the number of burgesses with property sullicient to qualify them for service in the army) ; revived by Caius Gra'Chus (tribune 123-2 B. C), it was soon nullified by laws 1, abolishing rent l)ayments and the condition of inalienability for those who had re- ceived allotments; 2, discontinuing allotments; 3, jji'oviding that do- main lands should henceforth be rented and the proceeds distributed among the people. Sulla is said to have made 120,000 allotments to his soliliers. Civsar when consul secured the passage of a law making al- lotments of 30 jugera each to heads of families with three or more children. Twenty thousand families are supposed to have shared in this distribution, which was apparently made by means otlandstaken from small cultivators renting from the state. After his defeat of Poinpey, Ca'»ar made large distributions of land to his soldiers (num- ber of allotments sometimes estimated as high as 100,000), the land to be inalienable for 20 years. Large distributions to soldiers were sub- sequently made by Antony and the second triumvirate. The policy of assigning small holdings, which, since the time of the Gnechi, was based largely on contis(;at.on, and had in view the reward of military service, was not fitted to establish a class of successful farmers, and was hence powerless to counteract the Influences mentioned above which were constantly tending to the destruction of the peasant class. 2. The Grozvth of a class of large landed proprietors working their estates by means of slaves (war fur- Second Period. 33 nishing an unlimited supply), substituting grazing and the finer kinds of agriculture for the growing of grain, and ultimately withdrawing large quantities of land from i)roductive use altogether and converting it into villas and [larks. The estates spread throughout the Roman •dominion, the largest being outside of Italy. The province of No. Africa was said to be owned, in Nero's time, by six great proi)rietor8. Seneca spealis of grazing lands eijual to prov- inces and Idngdonis in extent. "With its tliousands oi slaves and freednicn of all nations, a great estate constituted a small, and to some extent self-sullicient, state," (Friedlander 1, 206), the slaves not only cultivating tlie estate, but also producing a considciable portion of the products of mechanical industry now obtained by purclia^e, and serving even as teachers, doctors, musicians, architects, etc. As an indication, perhaps exaggerated, of the increase of slavery, the following ligures may be noted (Ingram, 137). 150,000 captives were sold as tlie result of the victory of Kniilius I'aulua in Kpirus. The same number of prison- ers were taken at' Aquju Sextijc Cicsar sold on a single occasion in Gaul, 03,0(10 captives, and 1)7,000 slaves were acquired by the Jewisli war. 3. TreDieiidons iucrease of wealth i)i the hands of a feiv ; rise of a moneyed aristocracy in the equestrian order ; distinction of rich and poor tends to supersede all oth- ers, and the conti'ol of the state falls into the hands of the wealthy. Mommsen (IV, XI,) gives as the main sources of income, i, rents of the soil of almost all Italy and the best portions of the provincial territory ; 2, interest on capital ; 3, gains from commerce ; 4, profits of farming the revenues ; to which might be added the income from slaves and freedmen employed in the industrial arts, and in the construction of pub- lic works, (about the middle of the second century, B. C, $10,000,000 was expended in three years on the Marcian aqueduct, and the public buildings ei-ected during Caesar's control cost $8,000,000) ; the income from war and confiscations, and the exactions prac- ticed by the officials of the provinces. I'he very wealthy class was doubtless small in number; said, 10-4 B.C., that there were not more than 2,000 wealthy families in Rome, lliough the numbers probably increased during the later republic and eaily empire. The following will illustrate the importance of war as a source of revenue. A Jewish priiu^e paiil Roman olliciala for their support $1,200,000, of which $.i()il,()0) went to l'omi)ey. Another small ruler bought independence by paying I'ompey ;?l,iiOO,000. Ariobazarncs 34 Second P CI iod. olCappailocia i)ai(i I'ompcy $33,000 a month. A king of Egypt paiilCtcsar $6,0110,000, anro-ronsiil of Syria, .■?10,(i0O,0O0. Cras- S118 was 8ai(l 10 liavc taken $10,0(lo,(iiiO from tlic temple at -Iciusalen^and Cai>io $1.1,000,000 from tlie temple at Tolosa. C;vsar brought back 80 n)uch gold, as the result of his Gallic war?, that its value fell -i.");; as measured in silver. Measured in money, however, foituucs were not .so large as at the present time (exact comparisons between the value of money now and then impossible; probable that it was somewhat greater then). In the latter part of the se(;ond century, B. C, $l;iO,000 was regarded as a moderate senatorial, $100,000 as a decent ecjucstrian fortune; itroperty of the wealthiest man at that time estimated at $.1,000,000. Fortunes later increased in size; Pomiiey, $3,500,000; ^Eso- pus (actor), $1,000,000; Crassus, $s,.iOO,000. The wealthiest Romans of whom we have record (early empire), one of tlieni a Ireedman. were worth $1.1,000,000 to $l(i,000,000 each. i\. Luxury and extravagance, the outgrowth of contact with ea.stern ci\'i]izations, jDrobably surpas.sing in some directions (country estates, food, personal service, expenditure to secure political preferment) anything which has existed since. Extravagance and luxury seem to have been out of proportion to the amount of wealth, judged even by the standaixl of to-day. Sev- eral causes might have contributed to this ; luxury in personal service explained b)' the abundance of slaves; the manner in which wealth was acquired, and the limited oj^portunity for productive industrial invest- ment, restricted the desire to save and encouraged lavish expenditure. The modern conception of wealth as an industrial agent played a very subordinate j^art in Roman life. The results of extravagance arc shown in the enormous debts of lead ing men. Ca-sar (62 B. C), after deducting his assets, owed $1,000,000: Antony, at the age of 24, owed $300,000, and fourteen yearslater, $-2,000,- 000; others owed $3,00o,ooo ami $3,.i00,ooo. Debt crises, which from their importance, must have involved the wealthy members of the com- munity, were of constant occurrence. 5. Orgatiization of industry. As in Greece, hand labor and industry on a small scale were held in contempt ; senators, excluded from trade and farming the reve- nues, were forced to become land owners. While citizens of small means must have engaged to a cer- tain extent in the handicrafts and retail trade (the two frequently combined), the great bulk of industry was carried on by slaves for the account of their masters (a single individual frequentl)M)wned several thousand Second Period. 3^ slaves), or by freedmen dividing their gains with their former masters, or worlving on their own account. Even the higher branches and management of indus- try (architects, bankers, etc.) belonged for the most part to these classes, and individuals among them, [tarticularly freedmen, frequently obtained great wealth. Progress of industry was shown in the con- stantly increasing division of occupations (workers in precious metals, wood, leather, etc., divided into a great number of minor trades). Capacity I'or large under- takings is evident from the great public works, mining, quarrying and the making of bricks. Banking, credit operations, and commerce were all highly developed. Associations of capitalists for large undertakings (farming revenues, public works, etc.), are known to have existed, but there are indications that they were temporary associations for special purposes. In building Uie Marcian ar(iiie(luct Uie governient made a contract with 3,000 master Ijuildcrn each with his band of slaves. SchmoUer inti- mates that these associations developed into stock companies, with tran8leral)k' sliares dealt in on tlie market. lie ildriks also that tliey became great permanent companies, forming in many instances a de facto part of the government, and rivalling tlic governmentitself in tlie number of odicers and laborers. * 6. The City: cosmopolitan in character, with houses several stories high, but streets so narrow that their use by carts was confined to the night time, contain- ing a population estimated at from 800,000 to 1,500,- 000, composed principally of the poorer citizens, for- eigners, slaves and freedmen, the poorer portion of the citizens wretchedly housed, the citizens largely an idle class dependent on the public distributions of grain, unfitted for industry by generations of warfare in foreign countries and the predominance of slave labor. Rome was not so much an industrial center as the home of the worst elements of the population of the empire, supported by the tribute of conquered nations. " There has never, perhajxs, existed a great city so thoroughly destitute of the means of support as Rome." (Mommsen V, XI, 596). 36 Third Pci iod. y. ComiHcrcc : almost entirely composed of imports, representing the tribute of provinces and the exploi- tations of governors, farmers of the revenue, mer- chants, land owners, and money lenders. The only im- portant exports were wine and oil. Pkkioi) III : Meyer estimatefl tlie i)i>i)iilation of the Roman Einjiire U A. P., as fol- lows (000,000 omitted) : Spain (i, Gaul 5, Daniil)e provinces 2 Africa, (i, Sicily .(!, Sardinia and Corsica .5, Italy 6, Asia 17-l.S, Eprypt 8, Greece :!, Oyrenaica .5. Total 5"). Meyer's estimate is much below that com- monly f^iven. Gi))l)on (f, II) estimates 120,000,000. Ingjrani (4:!) ([uotes approvingly for Italy, in time of Claudius, Blair's estimate of (i,!J44,000 freemen and 20,832,000 slaves. First effects of establisJnneiit of empire beneficial . I . l'2mpire put an end to a long period of civil war and es- tablished peace and an orderly government thrt)ughout the civilized world. During the first two centuries of the empire there was a marked improvement in admin- istration. The system of taxation was reorganized, the direct taxes, for the most part, taken out of the hands of the farmers of the revenue (this reform accomplished by CaDsar), and the exactions of this class and the pro- vincial magistrates much restricted. 2. The extension of the empire meant in many instances the introduction of improved industrial methods, the extension of the industrial area of the world, and the development of commerce. 3. A wonderful system of roads extending throughout the empire. Friedliinder says there was as much travelling by laud as at any time up to the introduction of railways. There were inns, mai)s giving di- rections, flistances and stopping places, wagons for travelling by night, a state postal service, probably, however, not available for private in- dividuals. The ordinary long distance rate of travelling for the state post was 4 1-2 miles per hour including all stops. Civsar went from Rome to ihc Rhone (733 miles) in eight days. llie Fiindauiental Weakness of Rome : The fact that her economic life was based on slavery and the trib- ute of conquered peoples was bound in the end to outweigh all advantages Conquests necessarily came to an end, and territories already conquered began to fall away, while the lack of a sound industrial system led to exhaustion of existing resources. With the Agriculture. 37 failure of fresh sources of supply, the number of slaves diminished. Public expenditures increased, es- pecially after the. second century, as a result of less efficient administration, defensive wars, and increas- ing extravagance at court. Diminishing productive power, combined with increasing expenditures, led to a rapidly increasing burden of taxation. The point was finally reached where people preferred to abandon industry rather than pay the taxes imposed, and the state was compelled in self-defence to render compul- sory the labor requisite to provide the necessaries of life to the people and the government, as well as the offices of those magistrates responsible for the taxes. This course of development involved Fundanicutal changes in the organization of industry. 1. Agriculture. The difficulty of obtaining slaves, and the inefficiency of slave labor, led to the substitu- tion of tenants for slaves. Two systems came to pre- dominate, both giving the cultivator an hereditary claim to his holding ; {a) occupier personally free, right to holding transferable, but forfeitable for non- payment of rent ; this system (emsphyteusis) found principally on lands of civil and religious communi- ties ; {b) occupiers (coloni) bound to the soil; this system again assumed two forms ; ( i ) as applied to individuals on private estates ; (2) as applied to a group of people on the land of the state. It is not meant 10 imply that the^e were the only classea of af?ricul- tural laborers, but merely that they tended to take the place of slave labor, which, however, still continued to some extent. For an enumer- ation of aarricultural workers, see Guizot; Lectuies on the Hist, of of Civilization in France, Cour^e I, Lect. 11; for discussion of position of coloni, ibid., Course II, Lect. A' 11. Also Fustel de C'oulanges. 2. Industry and coniniercc. Most significant is the development of {a) a class of free as opposed to slave artisans and traders ; {b) the collegiate, or gild, organization of indu.stry, used by the state for the enforcement of compulsory labor. The trade gilds attributed to Numa have already been mentioned. All through Roman history collegia, for agreat vaiiety of purposes (indus- trial, relii-'ious, social, for securing a suitable burial, etc.), seem to have 38 Orgatiizatioii of Industries. lieeu romiiion. During the perioti of the civil wars they seem to have used for political intrigues, and large numbers were 8uppres=-152, •239-.i42, 247-249, 280-283, 313-315. See also Sii' Henrv Maine's Ancient Law. NOTE. ON THE GENERAL COURSE OF POLITICAL DEVELOPMENT IN EUROPE SINCE THE ROMAN EHPIRE. GuizOT F. Lectures on the History of Civilization in Europe (espec. lectures IV, VII, XI) gives a good brief account of the course of development. Ram- baud A. Histoire de la Civilisation Frani;aise and Lacombe p. The GrozvtJi of a People (brief) give a good account of the course of development in France. For Mediaeval period ; Emerton E. Mediceval En- rope (Chs. XIV, XV, XII). Adams G. B. Civiliza- tion during the Middle Ages {C\\<,. IX, XII-XIV). GuizoT F. Lectures on the LListory of Civilization in France. (Course I, Lects. XXIV-XXV, Course II, Lects. II, VIII-XI). Hallam H. Vieiv of the State of Europe during the Middle Ages. Duruv \\ History of the Middle Ages. City, Medieoval, in Art. on City in Palgravcs Diet, of Pol. Ec. A ofood idea of the extreme decentralization and subse- quent consolidation of political power in F^urope may be derived from the maps of Proysen's Historische Handatlas. * Period of Transition. The Roman P^mpire was permanently divided into two parts (Eastern and Western Empires) by the end of the fourth century. The Western Empire rapidly broke up as the result of internal weakness and barba- rian invasions. There followed four or five centuries in which, with few exceptions of slight duration (Empire of Charlemagne), we can trace no general or well-de- fined system of political or social organization, the most striking fact being the disappearance of the Roman system with its chief element, town life, which becomes of very slight importance. Out of this period of confu- sion gradually developed the feudal system which by the tenth century had, probably, become the predomi- 42 Feudalism ; Cities. nant form of social and political organization through- out Western Europe. Feudalism, its Chief Characteristics. I. Hierarchical gradation of ranks based on a personal obligation of service from each lower to each higher, and of protection from each higher to each lower; usually connected with the holding of land. At the head stood the king ; under his protection, holding land from him, and owing services to him were the chief lords ; below these there might be lords of lower rank having the same relation to the chief lords that the chief lords bore to the king, and so on until we reach the actual cultivators of the soil. The im- portant point to notice is that it is only the chief lords who are under direct obligations to the king. 2 The union of political autJiority and property in land ; each lord exercises administrative and judicial au- thority over the inhabitants of his own estate. 3. Extreme decentralisation ; the kings are unable to exercise authority over the chief lords, who assume and exercise sovereign powers and thus establish a great number of petty, independent, political units. Guizot gives a list of twenty-nine practically inde- pendent principalities in France at the end of the ninth century and fifty-five at the end of the tenth century. 4. Cnstojn and status, as opposed to legislation and contract, the controlling conditions. Rise of Cities. The establishment of a system of public order, how- ever imperfect, naturally led to the revival of town life and of commerce. The development of a vigorous city life, securing independence of the feudal organization, began in Italy as early as the eleventh centur)- and during the fourteenth and fifteenth centuries was the predominant element in the life of Western Eu- rope. National governments not having as yet devel- oped the cities were to a large extent sovereign com- Modern Xations. 43 munities, maintaining" their own militia, making war and treaties (with slight reference to national bound- aries), levying taxes, administering justice, and coining money. The great city leagues, notably the Lombard League, headed by Milan (defeated the Emperor Fred- erick Barbarossa 11 76), and the Hanseatic League, headed by Lubeck, Bremen and Hamburg, and com- prising some ninety cities, mostly in northern Germany (defeated Waldemar of Denmark 1369), were among the foremost military powers of their times. Rise of Modern Nations. During the fifteenth century the growth of royal power began to make itself felt in the consolidation of local units into national wholes, and in the following century the national states of Europe assumed definite shape. The seventeenth and eighteenth centuries were marked by an almost continuous struggle between these states, both in Europe, and the new world opened up by the geographical discoveries of the fifteenth and succeed- ing centuries. At the end of the eighteenth century came a revolutionary movement which cesulted in the overthrow or limitation of royal power and the substi- tution of constitutional government, tending to democ- racy, together with a tendency towards restricting the field of governmental regulation and giving larger scope for individual liberty. This outline, applying- to Europe in general, needs modilication lor particular countries. In England the course of development has been much more even and gradual than on the continent, no single princi- ple of organization ever becoming so predominant. The revolution which was accomplished in a lew years in France, at the end of the last century, to be subsequently partly undone, has been going on in England with varying acceleration ever since the seventeenth cen- tury. The growth of a vigoious state life did not make itself felt in Prussia and Austria until the eighteenth century, and in Germany, as a whole, and in Italy, not until our own day. It is important, too, to notice briefly tlie broader relations of this polit- ical development. The growth of cities and commerce was intimately related to the Crusades. Tlie growth of state life was one jjhase of that general awakening and extension of European life which began at the end of the fifteenth century, other pliases of whicli a'e to be seen in the geographical discoveries, the invention of the mariner's compass, gunpowder, and printing, the revival of learning, and the rise of protestantisni. LECTURE Vlll. ECONOniC LIFE UNDER FEUDALISM. THE ECONOMIC OR= QANIZATION OF THE MANOR. England. Maps showing forest and fen areas of early England may be found in J. R. Green's Making of England. Ashley W. J. A71 Introduction to English Econoviic History and Theory. 2 Vols., covers the mediaeval pe- riod ; Manor, in Diet, of Eng. Hist. Cunningham W. Groivth of EnglisJi Industry and Couinicrcc. 2 Vols. (Vol. I. Early and Middle Ages). Cunningham W. and McArthur E. A. Outlines of English Industrial History. Rogers J. E. T. Six Centuries of Work and Wages; History of Agrieulture and Priees, Vols. I, IV, V. (In addition to the subjects noted in tho title Rogers discusses such questions as to the distribution of wealth, trade and markets, taxes, currency, weights and measures, cost of transportation, purchasing power of wages, profits of agriculture, etc.). Traill H. D. (editor) Social Etigland, Vols. I. II. Gibbins H. de B. Industrial History of England (contains map showing the distribution of population at the time of Domesday Survey). Andrews C. M. The Old English Manor. Seebohm F. The EnglisJi Village Community (con- tains maps showing the distribution, of lands on a manor, and the distribution of different classes of the population at the time of the Domesday Survey). Vi- NOGRADOFF P. ]^illaina^e in Euo-land ^ x^^Y^Y.. On the Agricultural Community of the Middle Ages and In- closures of the sixteenth century in England. Gomme G. L. The Ullage Community (Chs. VIII, IX). Garnier R. M. History of the English Landed Interests, Vol. I.; Annals of the British l^easantry. Nicholson J. S. Principles of Political Economy., Bk. II. Chs. Bibliogmpliy : Manor. 45 VI-VIII (a good brief discussion, showing analogies in other countries, economic significance of feudalism and causes of its decay). Maitland F. W. The History of a Cambridgeshire Manor {Eng. Hist. Rev. IX, 417) Fowler W. W. Stndy of a Typical Mediceval Village {Quart. Jour. Ecs. IX, 151. map). Cheyney E. P. The MedicBval Manor {Annals of the Avier. Acad. IV. 275.) Translation of an extent showing holdings and services on the Manor of Borley, 1308). v. Ochenkowski W. Ejigland' s ivirthscliaftliehe Entwickelung ini Ausgaiige des Mittelalters. Among general histories J. R. Green's Short History of the English People gives considerable attention to economic matters. 1-'kance. GuizoT and R.vmhaud, as in preceding Note. Lam- PRECHT K. Beitriige rjiir Geschichte des fra)izdsischen Wirtschaftsleben ini elften Jahrhnndei-t. Dareste de LA Chavanne. Histoire des Classes Agricoles en France, Chs. VI-X. DoxiOL H. Histoire des Classes Riirales en France Li\'res I-III. CjER^LWY. v. Ixama-Sternegg K. T. Deutsche IVirthschaftsge- schichte, Bd. II. Absch. II-V. Lamprecht K. Ar- ticles on Grundbesits, Agrargeschichte, Bauer {allge- inein. geschichtl. Skizze), Banerngut u. Baitenistand, all in the Handw. d. Staatsiviss. Other Examples of the Village Communlty^ OE Laveleye E. Primitive Property {^q.wqxz\). Maine Sir H. Village Conniiunities in the East and West, Lect. IV. (India). Nicholson J. S., as above. Ko- v.\LEVSKY M. Tableau des Origines et de P Evolution de la Fa mi lie et de la Propriete, Legons XIII-XV, HouRWicH I. A. 77ie Ecotiomics of the Russiaii Ul- lage, Chs. Ill, V-VI. {Columbia Studies in Hist. Ecs. and Pub: Laiv, Vol. II). Wallace D. M. Russia Chs. VIII, XXIX. Leroy Beaulieu A. The Em- pire of the Tsars and Russians. All writers mentioned after Maine refer to Russia. 46 Manor. Effect of Feudalism on Economic Life. Evident that the lack of unity in law and administra- tion, the isolation, and even constant warfare, of small communities must i:)revent any considerable develop- ment of trade and hence of cities. Agriculture was thus reduced to providing the common necessaries of life, instead of producing a surplus for exchange. Cities and commerce never entirely disappeared, but they were alien elements in the feudal organization, and their growth involved its destruction. The Manor. Though the forms of the feudal system were not pre- cisely the same in all countries, they had a general sim- ilarity which enables us to treat as fairly typical, at least for France and Germany, the system as it existed in England. Everywhere the unit was the estate on which dwelt the peasants, cultivating the land, and the lord of the estate, or his representative. This estate was termed m England the inanor. h^ach manor was, for the most part, economically self-sufficient, the chief articles ob- tained from without being salt, tar, iron, and millstones, to purchase which, for the whole village, the manager of the lord's estate made, at certain seasons of the year, journeys to the fairs or towns where such things were obtainable, the .surplus agricultural produce affording the means of payment. I'oreign trade also existed to a greater or less extent, the luxuries of the wealthy being for the most part obtained in this way. Travel- ling tradesmen may also have existed to some extent. Tlie chief source of iiifoniiatioii coiiceniinj!; the economic life of early Knglaiid i8 the Domesday Survey (IOS(!), which covereil apparently the whole of England with tlie exception of North unilierland, Durham, Cum- berland, Westmoreland, Xoi'tli Lancashire, and Monmoutlishire. It showed it,-J5(» manors. The niimlierof tenants in cliief was 1,400, of under tenants 7, ".too. ^Nlany tenants-in-chief liad a large number of manors; the king himseU liail 1,4'2'2, his brother 7'.i;5, another 489, another 4i'2 The man- ors seem to have varied in size from a few hunilreil to several thousand acres. The gurvej' indicates tliat there were about ."ijOtMl.OOO acres undei- tillage, nearly one-half of what is now cultivated in the same area, and that the population was about 2,000,000. The total town population seems to have been less than 2(X),000, and, outside of London, there were only five towns with a population of over .1,000. Population was Lands aud Buildiiii^s. 47 more dense in the soiilli tli;m in tlie iioitli, most, dense of all in a nav row stri)) of country stretchiny:. from the coast of Norfolk and Suffolk in a southwesterly dii-ection to Somci-set ami Dorset. Lands axd I^lii.dixgs of thi-: Maxok. 1. The house of the lord of the manoi-, sometimes with out-buildings for servants and animals, and the land sur- rounding it, which might be used for agricultural pur- poses, the whole or a portion being probably enclosed. 2. The houses and yards of the peasantry forming a compact village. 3. The bulk of the arable land tem- porarily enclosed while the crop was gi^owing, at other times thrown open as common pasture, roughl}' divided into ten-acre sections (furlongs), and each of these divided into acre or half-acre strips. 4. Meadow land temporarily enclosed and usually di\ ided into acre or half-acre strips like the arable. 5. Common pasture and woodland {i<.Histc). 6. l^ermanent enclosures of arable or meadow land, held by the lord, by a free tenant, on rental, or possibly e\'en b}' an unfree tenant. 7. The parish church, the house and garden of the priest, the mill, etc. i, and those portions of 3, 4, and 6, which belonged to the lord, constituted the deincsiie land; 2 and those portions of 3 and 4 belonging to the unfree tenants, the land held in villainage ; the latter prob- ably amounting to from three-fifths to two-thirds of the whole amount untler cultivation. PoPLi.ATiox oi' rur: Maxcik. 1. The lord (or his baliff), owner of the land and .stock, though his proprietary rights were subject to important limitations ; exercising judicial and administrative author, ity ; holding for his own use the land around the manor house, outlying enclosures of arable and meadow land, and numerous acre and half-acre strips scattered about in the great arable fields, and ha\ing unlimited rights of pasture in the waste. 2. The cultivating and dependent classes (the figures given are those of Domesda)- as stated in Social England 1.240). (a) I ^illains (iog,ooo); important everywhere ; 48 Population. least numerous in eentral eastern eounties ; normal holding, in additon to house and garden })lot, ahout 30 • acres composed of acre and half-acre strips scattered about in the arable fields ; limited rights of pasture in the waste and rights in the ccjmmon meadows ; either singly or in groups of two or three they owned oxen and a plough (an average of several manors shows about half as many ploughs as villains) ; bound to the soil, and to render certain services to the lord. These services varied from manor to manor, but the following enumer- ation may be taken as typical : (i) two or three days' work each week in culti\'ating the lord's land ; (2) additional labor at ploughing and harvesting ; (3) miscellaneous pavments, in produce or money or both, and services, c. g., carting produce to market. The lord also enjoyed certain prerogatives, such as having all corn ground at his mill. Hereditary succession in holdings seems to have been customary, {b) Cottars and Boniars (90,000) ; specially important in central southern and central east- ern counties ; condition generally similar to that of vil- lains, but with smaller holdings (5 acres) and less oner- ous services ; usually not owning plough or oxen, (r) Freemen or Socmen (35,000) ; confined almost exclu- sively to central eastern counties where Danish influ- ence was strongest. The distinction between freeman and villains is not ea.sy to define, nor is the condition of the former by any means uniform. Sometimes they seem to be what their name implies ; at other times they seem to differ from the villains only in exemption from some of the more onerous and degrading services, c. g., week work, (d) Slaves (25,000) ; most numerous in central and southwestern counties. Absolute slavery rapidly disappeared after the Norman conquest, the slaves tending to merge with the cottars. Methods of Cultivation ; Occupations. Cultivation. Aside from the labor of the slaves (rela- tively unimportant) both the demesne and the land in villainage were worked by the serfs, who used their own I\fctIiods of Ciiltivaliou. 49 oxen and ploughs, as well as those of the lord, on the demesne land ; the three-field system usual ; this com- bined with the facts that the individual holdings were made up of strips scattered in the different furlongs, and that two or more villains frequently combined in the ownership of plough and oxen, indicates a system of cultivation in which each individual conformed to the accepted routine of the manor. Occupations. While agriculture was the predominant industry, and whatever division of labor existed was probably based for the most part on sex, and the seasons of the year, rather than on a permanent division of occupations, yet there is evidence of some specialization. Some of the more important special laborers (sower, keeper of the bees, the various herdsmen, woodward, and hedgeward,) were engaged in agricultural pursuits. They seem to have been villains whose services assumed these special forms, and there is some doubt whether they were in the service of the lord alone or of the whole village as well. The same doubt also exists m regard to the handi- craftsmen (workers in wood, iron and leather) who are sometimes mentioned as belonging to the manor. General Results. The indications are that the mass of the people led a life of hard labor (in the busy seasons the working day was probably fourteen hours at least, with perhaps two hours for rest) gaining a coarse, but sufficient and assured, subsistence. Grain supplied the main food, but meat, vegetables, dairy products and eggs, were probably in common use ; clothing of wool or skins, though coarse and simple, was doubtless sufficient for warmth ; houses were of the rudest kind, constructed probably of wood or stone plastered, perhaps, with clay, and with thatched roofs ; they contained usually but a single room with no chimney, the refuse heap standing before the door. The Di'.cAv oi"-the Manor l\l Svsi'KiVL This system, well defined cuul |)redominant at least a 50 Decay. century, and probably more, before the Norman C(jn- quest, began soon after to undergo a gradual change, a process greatly hastened by the l^lack Death, losing in relative importance until by the period of the Reforma- tion it had ceased, in its original form, to play an impor- tant part, either economically or politically, though the traces and effects of the system are clearly seen even in our own day. The fundamental cause of this change was a change in industrial conditions marked by a growth of commerce and the handicrafts and the intro- duction of a money economy. This gave lise to a desire on the part of the agricultural class, whether lord, ten- ant, or serf, to produce for the market and to purchase their manufactured articles in the towns. This in turn led to the effort to extend cultivation ; to introduce new methods of cultivation ; to increase the production of things for which there was a demand in the towns, especially wool, which was the basis of a rapidly grow- ing industry, could be easily transported, and was largely in demand abroad ; to secure more efficient and regular labor in place of the serf labor ; and, on the part of the cultivators, to the desire to control their own time, and to escape burdensome and irritating conditions of tenure which appeared even more humiliating by comparison with the growing freedom of the towns. The natural out- growth of these conditions was, i, the substitution of money payments for services as the c(»ndition of land- holding ; 2, the substitution of hired labor for serf labor ; 3, the extension of enclosures both of the demesne and the waste. All of these involved essential modifi- cation of the manorial system. After the middle of the fifteenth century, enclosure for pasturage, due to the rapid growth of the sheep industry, encroached even on the common fields and led during the succeed- ing century and a half to the practical disappearance of the older system throughout a considerable portion the country. LECTURE IX. THE INDUSTRIAL ORGANIZATION OF TOWN LIFE. THE GILD SYSTEM. General. Articles on Corporations of Arts and y/v^fr/^-j- (I^algrave's Dictionary of Political Economy) ; Corporations if Arts ct Metiers : Conipagnonnagc {Nonvean Dictionnaire if Economic Politique) ; Gilde7i, Znnftzvcscn {Handwoi'tb. d. Staatszviss.) ; Die rechtlicJic Ordnnng des Getverbe- zvesens in Schonberg's Handb. d. Pol. Oek. XXI, II. The French and German works devote particular at- tention to their own countries. Ex (i LAND. Bren'J'ANO L. On the Origin and Development of Gilds and the Origin of Prades [^nions (prefixed to Smith's English Gilds and also printed separately). Ashley, Cunningham, Ro(;eks, Ochenkowskt, and Social England (yo\^. I-III) as in j^revious lecture. Gross C. Phe Gild MercJiant (best on the subject.) Selic;max E. R. A. Pivo Chapters on the Jllediceval Gnilds of England (Pubs, the Am. Ec. Ass. Vol. II.) Ash lev W. J. Phe Early History of the Iinglish Woolen Pidustry (Pubs. Am. p:c. Ass. Vol. II). Hib- BERT Y . A. Influence and Development of English Gilds (Shrewsbury). Herbert J. 77te History of the Pivelvc Great Livery Companies of London, 2 Vols. Clooe C. M. 7 he Early History of the Guild of Merchant Taylors (Pt. I. History. Pt. II. Eives of members), (jreene Mrs. J. R. 'Pozon Life in the Eifteen th Century. France. R.\mbaud as in previous lecture. Lavasseur I{. His- toire des Classes Onvrieres en Prance. 52 Gild Merchant. . Germanv. Stieda \V. Znr Entstehniig dcs dcutschoi Zitnft'u'isciis (Jahrb. f. Nat. u. Stat. Jahrg. XIV. Bd. II. "Heft 3). ScHANZ G. Z//r GscliicJitc dcr Gcscllcii-]^crhdudc in Mittclaltcr. DOCUMEXT.S ANH RECORDS IlLU.STK ATI VE OF CiTV AND (jILD Life. Smith T. EjiHisJi Gilds. The Oi-isrinal Ordinances of more than one Jinndred Early English Gilds. Gross, as above (Vol II). Herbert as above. Clode as aboA^e ; also Memorials of the Gnild of Merchant Taylors. Rilev H. T. Memorials 0/ Londoji and London Life. Sdarpe R. R. Calendar of L^etters from the ALayor and Corporation of the City of London, circa 1 3 50- 1 370. Deppjng G. B. (editor) L^ivre dcs Metiers d' Etienne Boileau (Paris in the 13th century) Ouin-Lacroi.x C. Histoire des Aneiennes Corpora- tions d Arts ct Metiers (Rouen). In the absence of a settled political order organization for combined action in defence of local and class in- terests was a necessity. This was particularly true of industrial life, struggling for freedom from the hamper- ing control of the feudal lords. Individualism was an impossibility. The history of industrial association falls into two general periods ; that of the gild merchant, and that of the craft gilds. The Gild Merchant Marks the period when the trading class had become differentiated from the agricultural class but the artisan class had not yet become differentiated from the trading class. Appearing in some towns in the latter j^art of the eleventh century, it became general in the twelfth, almost every town having its gild merchant ( London and the Cinque Ports being the only notable exceptions). The gild of each place included, apparently, the great Mcrcliaiit (nlds. 53 bulk of the merchant citizens, who might be at the same time craftsmen, and even some non-residents. It was governed by officers elected by the members, enjoyed important privileges, and was under certain obligations to the town. The priveleges were, i. Partial or complete monoply of home trade due to restrictions- placed on non-members. Among such restrictions were taxes, prohibition of sale or purchase of many ar- ticles except to or from gild members or after gild mem- bers had been satisfied, prohibition of trade at retail. On a few specified occasions, such as fairs, these re- strictions seem to have been remitted either in whole or in part. 2. Exemption from restrictions in other towns, secured by grant of the king, or by treaties with such other towns. The gild was under obligation to ensure that the goods sold were as represented and of good quality and that the price was fair ; it had power to en- force the market regulations necessary to this end, and frequently had jurisdiction in trade disputes. Religious, social, and mutual benefit features also played an import- ant part in gild life. The gild was practically a part of the municipal administration for the regulation of in- dustrial matters, and was doubtless frequently the pre- dominant power in that administration, but the two do not seem to have been identical except in some instances, in the period of gild decadence', where the functions of the gild were absorbed by the municipal administra- tion. With the increasing division of employments the gild merchant gradualy dissolved into, or gave way to, a great number of special gilds, each comprising those who followed a single handicraft or branch of trade, the craft gilds. Craft Gilds Mark the growing differentiation of handicrafts from trade and from each other. Appearing in the twelfth century, and at first opposed by the municipal authori- ties and the gilds merchant, they gradually gained the 54 Craft Ciilds; 0!xaiii:zntii'ii. ascendency during the thirteenth and fourteenth cen- turies, and throughout the infteenth century consti- tuted the most characteristic feature of town life, The following description applies to the period of full development when membership had generally been ren- dered compulsory and the gilds constituted a principal element in the municipal administration. Organization. The gild members ( masters ) elected their own ex- ecutive ofificers, ( wardens, bailiffs, overseers, or mas- ters ), the general business of the gild being transacted in full meeting of the members. There was a common fund maintained by assessments, contributions, and fines. The classes of persons included in the gild organization were : 1. Masters; full members, . carrying on business on their own account. 2. Junrneynicn ; workers for wages who had alread)' served an apprenticeship and expected to become mas- ters. Each master employed only a few journeymen and they frequently lived in his house. By the end of the fourteenth centur)-, however, a perma- nent class of iourne3'men appeared. It is not clear whether the journeymen had a voice in the manage- ment of the gild. From the end of the fourteenth century on there is evidence of separate associations of journeymen, which, however, seem to have been sub- ject to the control of the masters' gild. 3. Apprentices ; serving a term of years to learn the trade. Apprenticeship apparently at first not regarded as absolutely necessary, but had become general!}' re- quired by the end of the fourteenth centur)' ; usuaT term seven years. Apprentices as a rule lived in the house of the master who had general oversight of them and was required to look after their moral as well as their industrial training. I V I PriviIc\<^iS and h'nuctioits. 55 I'KlNir.EtiES AND FUNCTION'S. 1. Industrial ; (a) monopoly; (/^) guarantee of quality of goods, and hence regulation of apprenticeship, ma- terials, tools, methods, hours and times of work; (c) regulation of wages and prices ; (d) jurisdiction in trade matters. 2. Political; (a) membership requisite for citizenship; (d) electoral bodies (frequently) for municipal officers ; (V) administrative bodies for such purposes as watching the streets at night ; (d) military di\'isions. 3. PJiilantluvpic ; mutual assistance in times of sick- ness, lack of work, poverty ; provision of suitable burial ; provision for widows and orphans. 4. Religious and Social ; patron saint in honor of whom festivals were celebrated ; common chapel or altar ; masses for deceased members ; gild uniform and em- blems. SOLIDAKrrV OF GlI-l) IxrF.KESTS. Little competition between members of the same gild ; sometimes the gild as a whole purchased the raw material and divided it among the members ; individuals compelled to share purchases with other members ; obligation to help members behindhand in their work ; limitation of the number of apprentices allowed to a single master. RlCLATIOX TO THE MUXICTPAL (niXEKXMEXT. This relation always one of subordination, at least in theory, and, apparently, usually in practice also, though the gilds as a whole or a single gild may s(jmetimcs have gained practical control of the city government. Municipal government had supervision and final de- cision as regarded all gild regulations ; this super\ision particularly important in the case of i)rices, the price of food being always regulated by nuinici[)al or ro)al authority. 56 Estiuiate of Gild Sysitiii. Estimate of the Gilu System. The gild system was the product of the peculiar condi- tions of the times in which it flourished. Difficulty of communication and the character of the prevailing political organization excluded individual self-interest and competition as the regulating economic forces, and necessitated resort to public regulation in order to se- cure good quality, and fair prices, wages, and conditions of work. It is evident further : i. That the gilds were an im- portant factor in securing the independence of indus- trial and city life, a necessary step in economic and political progress. 2. That they served the purpose of industrial education at a time when it was much needed. 3. That they afforded a most convenient instrument of municipal administration. 4. That they served a great variety of non-industrial interests now secured through a number of distinct agencies, public and pri- vate. 5. That they were suited only to a period of stable industrial conditions and would hamper the in- troduction of new processes or changes in industrial organization. 6. That there was great danger that pub- lic interests would be subordinated to the private inter- ests of the gilds, and that the control of the gilds would fall mto the hands of a few who would in turn sacrifice the welfare of the gild to their personal interests. CoXDITIOXS OF THE CONTINENT. In general similar, the development in Germany being somewhat later, but more enduring, on account of the lack of a strong central authority. In France, from the fourteenth century, the growing royal power exercised an important influence on gild development, at first hostile, but later using the gilds as instruments for establishing its own supremacy, and the development of a national industry. Other points of difference were : I. The struggle of the craft gilds for supremacy was marked by greater violence on the continent. 2. Their control of the city government was more com})lete. 3. Coiitiiuiital CiDiditions. 57 The term of apprenticeship was usually shorter (Germany 2-4 years, France 3-6 years ), though this was offset, particularly in Germany, by requiring a journeyman to travel for a number of years, frequently as many as five. 4. A masterpiece came to be required. 5. Asso- ciations of journeymen were more numerous and im- portant. LECTURE X. COnnERCE OF MEDIAEVAL EUROPE. CUNMNCiHAM, AsHLEV, RoGERS, Sociil/ Eug/cKud, R.\M- liAUD, and OcHEXKOWSKi, as in previous lectures. Anderson A. Origin of Cumuicrce, and McPhersox D. Annals of Commerce, give extended chronological accounts which have supplied materials for many later histories. \\'ille\m.sox J. B. The Foreign Commerce of England nnder the Tudors, based on Schanz G. Englische Hande/spoliti/c gcgen Endc des Mi tie la Iters. G1HBIX.S H. deB. History of Commerce in Enrope. Lexd-sav W. S. History of Merchant Shipping and Ancient Commerce. Veats J. Gro%vth and Vicissi- tudes of Commerce (not first rate). Adams G. B. Cii'ilir.ation dnrijig the Middle Ages, Ch. XII. Hal- lam H. Middle Ages Ch. IX. Ft. II. Seebohm F. The Era of the Protestant Revolution, Ft. I. Ch. II. (c) (a very brief but good account with map). Noel O. Histoire du Commerce du Monde, 2 Vols. Vol. I. Hevd W. Histoiie du Commerce du Levant. Baxklxc;. DuxBAR C. F. The Bank of ]'enice {(Juart. Jour. Fes. VI. 308). Mystery of the Nezv Eashioned Goldsmiths (Quart. Jour. Ecs. II, 255). Though commerce nevei" entirely ceased it was reduced to a very low ebb by the (lermanic invasions of the ■ Western Empire, and the conquests of the Saracens m Asia, Africa and Spain. Obstacles to the Re\t\'.\l of Co.mmi-:kci:. Even after the period of extreme social disorder had ■ passed, there were serit)us obstacles to the revival of commerce, i. The physical difficulties of communi- I Obstacles to Coiiniurcc-. ■ 59 cation ; not only Roman roads, but tlic art of road mak- ing had fallen into decay. 2. Lack of an abundant supply of the precious metals ; Roman mines, and the art of mining, had also fallen largely into disuse. 3. Lack of uniform and stable monetary s\stems. The coliiajre systfiiis ol iioitlnvestern Europe i;ni for the most part be traced to the sj>tein ot (Jliarleniagne, according to which a poujid ot silver was coined into twenty solidi, and each solidys into twelve dena- rii. With the rise of feudal prince?, and ialer of cities, each exercising tlie right of coinage, a great number of varying systems, with a more or less constant tendency towards debasement, came into existence. Ill France, about the muldle of the thirteenth century, there were eightv separate authorities having the right coinage, and tlu- /in-e contained only about one-fourth the amount of metal whi<-h it liad in the time of Charlemagne. The coinage system was not auilied until the end of the lilteenth century when tlie Uvre contained only about one-litteenth of of the original amount of metal. The conditions were as bad in 0«r- many. In England, ( 1 pound - -20 ishilUnffs - -240 pence ) the kings suc- ceeded in retaining control of the coinage except during the reign of Stephen, and unlil the reign of Edward III there seems to have been no tendency to a falling oft in the standard. In this leign the pound weight of silver, which hail formerly been coined into cue potmd of money, was coined into one pound and Ave sln//int/s. As a result of subsecjuent reductions the pound of silver was in the reign of Edward IV. coined into one ponnd seventeen shiUiiujs and six pence. The amount of metal was rapidly diminished by Ileniy VII f. until the pound was coined into seven /loimd.i. (ov.v slii/lins cir<-ulated: with Edward III. began the coinage ol gold. 4. The extreme political and administrative subdi\ision involved in the existence of feudalism and independent municipalities. 5. The oi>position of the church to the taking of interest and the ]nirsuit of gain. Ol'ii.ixe of Development. Notwithstanding these obstacles, a growth of commerce accompanied the de\'elopment of town life, already described, resulting in regular conmiercial intercourse not only between the diffei'ent parts of Europe but with northern Africa, Egypt, and through Egypt, Constanti- nople and the Black Sea, with the East, lliis develop- ment becomes much more marked after the crusades, which not onl)^ created an increased demand in Europe for eastern products, and \'ice versa, and introduced into 6o (rcoi^'raphv. Europe new processes and manufactures, but, by afford- ing the western nations a footing in eastern territories, rendered possible a more intimate commercial con- nection between east and west. Two clear indications of the growth of commerce at this time are seen in the introduction of a gold coinage and in the development of banking, both of which took place in Italy in the thirteenth century, and spread from there thi"oughout northern Europe. Municipal Character of Commerce. Mediaeval commerce municipal in character, /. c, com- mercial policy and commercial regulations were con- trolled b)' municipal authorities in the interest of municipal aggrandizement. Every effort was made, by the exclusion and taxation of foreigners, by treaties, and ev'en by war, to develop home industr)- at the expense of the industr}- of other cities and the surrrounding countr}'. Geography of Medi.fa'al Commerce. I. Coiiniicrcial and industrial centers, (c?) Theltalim cities (\^enice, Milan, Elorence, Genoa, Pisa), centers of the finer kinds of manufactures (silks, laces, jewelry, glass, armor, and all kinds of fine metal work), as well as centers of trade between the west and east, (b) The cities of northern P^ ranee, Flanders, Brabant, and Hol- land (Lille, Bruges, Ghent, Leyden), centers of fine manufactures, jDarticularly woolen and linen cloths. (c) Cities of northern (jermany (Lubeck, Bremen, Ham- burg). The most important of these cities united for commercial purposes in the Hanseatic League, with membership scattered over the territory from the Zuider Zee to the Gulf of Finland, and inland as far as Cracow and Cologne. This league with its factories in the principal cities of the districts with which it traded (London, Bruges, Bergen. Novgorod) was from the fourteenth to the sixteenth centuries the great commer- cial power and agency of northern Europe, {d) Rhine (Jeoi^rapJiy ami Oro-a)iiz:atio}H. 6 1 cities, centers of manufactures and a productive wine region, {e) Swabian cities. Both the Rhine and .Swabian cities derived a great part of their importance from the fact that they were situated on important in- land routes between northern and southern Europe. Russia, the Baltic countries (metals, lumber, oil, pitch, tar, furs, skins, fish) and England (wool, skins, lead, tin) were the principal sources of supply for raw- materials. It was not until towards the end of the mediaeval period that English handicrafts and com- merce attained a position of importance in the world's commerce (cloth industry the first to develop). 2. Commercial routes, (a) Between western central Europe and the northern countries and Russia by way of the Baltic. {I') Between western central Europe and Italy ; (i) by se;\, principally in the hands of the Vene- tians ; (2) by the Rhone ; (3) by the Rhine with diver- gent routes over the Alps, (c) Between western and central Euro]De and Constantinople by way of the Dan- ube, (ci) Betv/een Italy and the East ; through the Mediterranean to Egy]3t, Palestine, Constantinople and the Black Sea, and from these points inland by caravan routes and rivers ; and by the Red Sea or by the Euphrates and Tigris and Persian Gulf to India. ()rg.\nization. Commerce was not carried on independently by indi. viduals and continuously, but fleets frequently under military protection sailed at stated periods (deter- mined according to the seasons, frequently only once or twice a year) over regular commercial routes, to definite commercial centers. PYom these centers commodities were distributed throughout the surrounding country by means of fairs, and town markets held once or twice a week, through which agencies were also^'collected the the surplus j^roducts of neighboring districts. Many of these fairs were of international importance, being fre- quented by traders from all countries (Nijni Novgorod, Leipzig, Frankfurt, Stourbridge, Winchester, Troyes, 62 C oiuhisiol. Lyons, Beaucaire, and many others). It was customary for a city or group of cities to maintain in other cities or districts with which its trade was most important, a set- tlement (^factor)/) composed partly of a permanent com- mercial population, and partly of a shifting class of traders. This settlement usually occupied a particular portion of the city, was exempt from the jurisdiction of the city where it was situated, governed by its own officers, and of course in intimate relations with the parent citv, focussing the trade of that city with the district in question. Conclusion. Notwithstanding all that has been said commerce was a far less essential element in the economic life of the middle ages than in the life of to-day. The difficulties of transportation rendered impossible an extended com- merce in the more important food products and the heavier raw materials except along the sea coasts and navigable rivers. LECTURES XI.-XII TERRITORIAL EXPANSION AND NATIONAL ECONOHIC OR- GANIZATION. IJ|SC0\KR1ES AM) TkKK IK )KI A 1. Exi'A NSK ).\. Noel and Gip.r.ixs as in previous letters. Skki.kn' J. R. Expansion of Rns^land. Llcas C. P. Introduction to a Historical (icoi^raphy of the British Colonics. I)r(>\- SFN J. (7. Historischc Ilantlatlas. NaI'IoX \l. 1{CI).\(>.MI( ( )K(.AN1ZA IIO.N. (h-:xkral; 'riii'. Mi;rcaxtilk Sysikm. The best account of the g'eneral character and signifi- cance of the development of national control of indus- try is by Schmollp:r G. Das Mercantilsystcni in seiner historischen Bedentung ( Jahrb. f. Gesct.z. l^erivalt. n. Volkszvirth. Jahrg. VI [I. Ne/t I.) Ingram J. K. History of Political Fwononiy pp. 36-42. Smith A. Wealth of Xations, Hk. IV (a thorough discus- sion by a strong opponent who did more than an)' other writer to overthi'ow the system.) IXDJXIIH AL Si A i KS. England ; Cunxlxghaini as in previous lectures. France; Baudrillari' H. Jeaji Bodin et son Temps. CuAir.r.FA J. .Sally. Blanoui J. A. His- tory of Political Economy, Chs. XXV-XXVII. Mar- TFx H. History of France, Age of Louis, XIV. \^)1. I, (Eng. trans.) Perkins J. B. France ujider Rich- lien and AIa.':;arin, (^howA conditions before Colbert). Clement P. Histoire de Colbcit 2 Vols. P\arnam H. \V. Die innere franzdsische Geiverhepolitik von Colbert bis Tnrgot. Cxiw^ G. Colbert {Zeitschr. f. Ges. Staatszuiss. 1869, 1870.) Pru.ssl\ ; SchmollerG. Studieniiber die zvii tsehaft- liche Politik Friediichs des Grossen {Jahrb. f. G. / '. 64 Eiouoiinc Chan ires. V. V. as above). Tu itle H. History of Prussia under Frederic the Great . Holland; McCullagh W. T. hidusti ial History of Free Nations. Vol. II. Laspkvres E. Geschichte der Volkswirthschaftlichen Ansc hauungen der Nicder lander. Navigation' Acts; Cof.oxLAL Policy; Commf.rcial Companies. In addition to above (especially Giiuuxs, Noel, Las. PEYRES, and SMrrn), Beer G L. TJie Coiimiercial Policy of England toivard the American Colonies {Col. Coll. Stndies in History, Economic and Public Laiv III.) Hewins W. A. S. English Trade and Finance. Bonnassieux P. Les Grandes Compagnies de Commerce. Legislation (England). The Statutes of the Realm. Prothero (t. W. Select Statutes and Constitutional Documents (I^lizabeth and James I). A translation of the Statute of Labour- ers may be found in Henderson's Historical Docu- ments of the Middle Ages. Erom an economic standpoint the most important facts of the si.xteenth and seventeenth centuries were i. The diminishing importance of the Italian and German cities due, to the conquest of Constantinople and Egypt by the Turks, coincident with the discovery of America, and of the passage to India by the Cape of Good Hope, and, in the case of the latter, to the internal wars of Germany. 2. The increasing importance of the Atlantic states, due to the same causes which led to the decline of the Italian cities. The first states to reap the benefits of the change were Spain and Portu- gal. Their ascendancy was of short duration, Holland succeeding to the commercial leadership in the first half of the seventeenth century, yielding in turn by the end Xationalization of Economic Life. 65 ot the century to England and France, the tormer pre- dominating. 3. The increasing control of economic life by the central governments. It is this point which is most significant for the development of the econo- mic organism. 4. Extension of European influence in America and Asia. Nation-M-ization ()|- Economic LiFii. It must not he supposed that the Importauco of the towii^ as Indus trial centers diminished, nor even that they lost entirely their local privilege-), but simply that their influence in the T-egulation of Indus trial matters was constantly becoming less as compared with the influence of the central governments. The gilds continued to exist, though they tended to lose their democratic character; to separate into two classes, the one of wealthy, influential gilds, the other of poorer gilds; to become close corporations; and to lose their Indus trial importance, as in England, or to become instruments of tlie national administration, as in France. The national governments gradually assumed the regu- lation of those matters for which the towns were no longer competent, and in general it may be said that they merely developed and continued on a broader basis the economic policy of the towns, i. e. replaced the l^olicy of municipal by that of national aggrandizement. This involved a system of internal regulation directed to developing, consolidating, and .strengthening the economic life of the nation and to increasing its popu- lation, and an aggressive foreign i)olicy directed not only to the advancement of home interests but to the economic injury of competing nations. In carrying out these purposes the nations of Europe developed a system of economic policy which in its general out- line was uniform for all ; the mercautile system. Mkkcantile System. The main ends sought were 1. Accumulation of the precious metals. 2. Increase of population. 3. As a principal means to the.se, the growth of industry, par- ticularly of manufactures and commerce. As means to these ends may be noted as regards intertial regulation: ia) bounties on large families and early marriages ; {b) suppression of local trade barriers and regulations ; {c) 66 Mciraiitilc Systcin. regiilati(^n of wages, conditions of emplovnicnt, C|ualit\ of products, and methods of production ; (<-/) prohibi- tions of idleness and extravagance ; [c) enc(juragement of new enterprises by grants of special privileges, b)- encouragement of immigrati')n of foreign aitisans aiul introduction of foreign jirocesses, and by establishment of model industries; (/) i^rohibition of emigration of artisans and the carrying abroad of domestic processes ; i^g) regulation of the coinage on sound ])rinciples and the encouragement of banking. As regards foreign policy: {p) prohibition of the exportation of the pre- cious metals (later generally abandoned, as interfering with trade and thus diminishing iha favorable balance) ; (/-') prohibition or limitation, through taxation, of the importation of manufactured products, as tending both to injure home manufactures and to withdraw large quantities of the precious metals ; {c) encouragement of the importation of raw materials for opposite reasons ; {d) encouragement of the exportation of manufactured products by bounties and otherwise, as a means of in- creasing home manufactures and securing the precious metals ; (r) prohibition or limitation of the exportation of raw materials, a means to {li) ; {f) chartering com- mercial companies with large powers, and encourage- ment of colonization as a means of acquiring control (jver the newly discovered territories; {g) regulation of the colonial trade in the interest of the mother coun- try ; (//) wars and treaties for the extension of markets. 4. The building up of a strong merchant marine (and the destruction of the merchant marine of other nations) both as a means to the ends mentioned in i, 2 and 3, and as the basis of naval jDOvver. As means to this end : {a) bounties on ship building, voyages, and sea fishing ; {b) prohibition or restrictions on the use of foreign ves- sels in trade with the countr}' in question or its colonies. Not to be supposed thai this system prevailed in all its details in all countries. The main ends were common to all, l)iit the means em- ployed by a sinjrle country might include only a portion of those above mentioned, and a country might on a particular point pursue a policy not in accord with tlic mercantile system. The system was developed Hn_i:;lan(i. 67 ill different couiilrics at illHcreut tiiiu'r^, ain in the sixteenth century, in France and England in the later sixteenth, and seventeenth centuries, in Prussia in the cigliteenth cen tury, under Frederic the Great. Ex(iIAXD. Inteinial rcgnUxtious. Vwnw the niiddle of the four- teenth century lei^islation and royal ordinances lookini;" to the regulation of the industi"ial life of the nation (largel) ajjparently in the interest of the land-owning" classes) had not been uncommon. During the four- teenth aiul fifteenth centuries, however, the influence of such regulation was small as compared with the in- Huence of the municipalities and gilds. % Most important to notice is the Statute of Lal)ourers (1349), due to the scarcity of labourers and the high wages following the Black Death, requiring all capable of labor to accept em))loyment at the rate of wages prevailing before the plague. During the remainder of the fourteenth and the tifteenth centuries there were several enactments i-egulating wages, restricting the movement of labor (in the interest of the land-owaiing classes apparently), enforcing labor, providing sumptuary regulations, and fixing the prices of bread and beer. Much of this legislation was pidbably temporary (as in the case of the statute of Labourers) and it is rtoulitful if (with the excejition of the assize of bread and beer) it was strictly enforced. F'rom the beginning of the sixteenth centur\' the in- creasing influence of the national government is marked. The most striking evidence of this tendency is seen in the establishment of a national church and the confis- cation of the estates of the monasteries and the religious fraternities, as well of the income of the gilds devoted to religious purposes ; it holds equally true in industrial matters, however. » A law of 1.503-4 re((uired that no gihl should henceforth enact any ordinance except with the approval of specified royal officers. The poor law of 1536 I'ccognized the obligation of the state (local authori ties) to provide work for the able-bodied poor and to relieve the impotent, thus taking the first step towards an elaborate system of public poor relief. During the reign of Philip and Mary was passed the first genera] law for the repair of loads. The most complete results of this tendency in industrial matters were the Statute of Apprentices, so called, ( 1563) and the poor law of 1601. The Statute of Ap- prentices really provides a fairly com])rehensi\'e rcgula- 68 Stdluh of Apfyrentices. tion of the industrial life of the nation, with the purpose as stated in the preamble to " banish idleness, advance husbandry and yield unto the hired person, both in time of scarcity and in time of plenty, a convenient propor- tion of \va<;"es." Tlif |)re;iiiil>le status that many staliitcs concerning the condition? and wages of labor have ))een passed, but were not and could not be enforced, since some were antiquated, and taken together they embed ied many contradictions The purpose of the present act was stated to be the codilication and revision of this boily of legislation. It- principal provisions were as follows: 1. Requirement of seven years apprentice ship for "any craft now used within the realm of England or Wales.'" ■2. Regulation of way ex by justices of tlie peace and town olHcers. 'i. Hours of labor; artificers or lai>ourers hired by day or week, f> a. m., or earlier, to between 7 and Sp. m., with not more than two and one-half hours lor meals, from March to September, and from the "spring of the day " uniil night, from Septemb' r to March. 4. Enforcem^nt of •^!- labor; {a) enumeration of 3-i important trades (including loyment and for such wages as tlie public ofticials should deem suitable; (e) "If any person shall be requiied by any householder, having half a ploughland at the least in tillage, to l)e an] apprentice and to serve in husbandry or in any other kind of art before expressed" he may be compelled to do so, provided the pulilic ofticials regard hin) as suited to the art in ques tion. No ))ersons, except those under -.'l years of age, were however, bound to become av>prentices. 5. Requirements as to talcing appren- tices; (rt) Any householder having half a ploughland in tillage might receive as apprenii(;e in husV)andry any person from 10 to IS years of age to serve until 21 "r 24 years of age; (b) Every householder 24 years of age in a city or town corporate, engaged in any manual occupTtion might accept as apprentice "the son of au}- freeman ncjt occupying husbandry nor being a labourer " and living in a city or town corporate, such apprenticeship to be seven years at least and not to expire before the apprentice was 24 years of age; provided that no " merchant trafiicking into any parts beyond the sea, mercer, draper, goldsmitli, ironmonger, embroider or clothier, that doth put cloth to making or sale," shall take as apprentice any except his son, or one whose father or motlier has leal estate of the annual value ot 40s.; (r) Same provisions with respect to unincorporated market towns, except that the property (jualiflcation was £.3; (d) No woollen cloth weaver (those in Wales, Westmoreland, Lancat-ter and Cumber- bind wiaving friezes or housewives cloth only, and those in towns ex. <-epted), weaving goods coniuionly sold, could have as apprentice any- one except his own son, or one whose father or mother had real estate 69 of the yearly value ul £>!; (e) -Jl trades (iiK-luilinj; iron and building trades, linen weavers, cooijcrs, millers, potters, woollen weavers of liouseliold clotli, fullers, burners of ore and wood aslies) in which the son of any person may be taken as apprentice, (i. lielatiom between masters and servants, (a) In tlie trades specilled in 4 (a) no one was to be hired for less than a year; (h) Servi('e could not be terminated on either side before the end of that term, except for cause, nor at the expiration of the time, even, except after a quarter's notice; (c) In cloth and shoe making crafts every person having three appren- tices was to have one journeyman and an additional journeyman for each additional appientice; (d) Justices of the peace and town officers were empowered to enforce lair treatment between masters and ser- vants. 7 litsirictions on the movement of labor: Xo labourer to leave the place where he had been employed except with a testimonial un- der tlie public seal. 8. Penalties: Fines and imprisonment, rather more severe for servants than masters. The Statute of Appi-entices pi-ovided for the industrious classes, the I\wr Lctiv of 1601 provided for the idle classes, whether idleness was due to incapacity or un- willingness to labor, pi-oviding- compulsory labor in the latter case and relief in the former, the expenses of both to be met from the local rates, provided there were no relati\es upon whom the duty could be im- jiosed. • Thisact again was tlie culmination and codilication of numerous pre- vious acts passed for the most part since l.i;^u. Its principal jtrovisions were as follows: 1. Any poor iierson having children, parents or grand-pai-ents able to support him was to be supported by the relatives in (juestion. 2. Any person without means of support l)y himself or his i>arents, and not earning his living, was to be set to work %. Desti- tute children might be apprenticed up to the age of 24 for males, and •21, or until married, for females. 4. Destitute people unable to work were to J)e given necessary relief and houses might be erected for their accommodation, h. The execution of the act was placed in the hands of overseers of the poor (aiipointeit('li, tiiri>entine, lieinp, masts, yards, and bowsjjrits; and still later copper and peltry. Tliis policy was somewhat modified ))y special exceptions e. y., the exjiortation of rice and sugar, direct to countries soiitli of (ape Fiiiistci-re was per- mitted. {b.) Encouragement, by bounties and remission of duties, of the importation into England of some of the most essential products. Bounties were granted on tlie im]>ortation .)f lienip. masts, tar, pitch, rosin and other commodities. Kxemption from import duties was granted in the ease of hemp, lumber, jiig and bar iron, and i)earl and (lot-ashes, and partial remission to tobacco, molasses and otlier commo- dities. {c.) Requirement that European products should be shipped to the colonies from England only and in Eng- lish built and English manned ships. (15 C. II. 7.) Modilied by allowing importation of salt from any European (lort, ol' wine from Madeira and the Azores, of ])rovisions, liorses, or servants from Ireland or Scotland, and of linen from Ireland. {(l.) Restrictions on colonial manufactures. Prohibition of the exportation of wool or its manufactures from tlic colonies, as well as its transportation from colony, or from place to place within a colony (10 and 11 W. Ill, 10). Like restrictions were later placed on hats witli the f urtlier provision that no one should make hats, either as master or journeyman, who had not served a seven years apprenticeship, and that no master should have more than two apprentices (,i G. II, 2-2). By an act of IT.iO (23. G. II, 2!t) the establish- ment of mills, forges and furnaces for the working of iron was for- bidden. Conivicrcial Companies. The tendency to regulation which was universal, the lack of a well-maintained pub- lic order on the seas, and of a well-developed interna- tional comity, the result of the still imperfect political development, and the fact that the greater part of the newly developed commerce was with lands of a lower grade of civilization than that of Europe, all combined to throw the control of commerce into the hands of com- panies, each with a monopoly of trade in its own region. C ovimcvcial Coiiipauics. '/'"^ which bore something the same relation to commercial life that the gilds did earlier to industrial life, fulfilling political as well as industrial functions, maintaining consuls, ambassadors and even armies, and providing for the government of their trading centers and the territories which came under their control. These com- ])anies were of two kinds ; {li) rcoiilatcd covipanics, membership in which was secured by the payment of certain established dues, each individual being left free to trade on his own account, the action of the company as a whole being confined to establishing trade regula- tions and providing for common interests ; {b) joint stock companies, membership in which was represented b}' a share in the common stock, all trade being carried on for the benefit of the comitany as a whole by its officers and agents. The oiliest of these coiiipanies w:is the Mevchant AilVentures, incoi'po- lateil 111 1407 .aud tradiu.a' with the Xetheilands and later with Hambursr also, (ithei' coiiiiiaiiies of jjreat importance during the seventeenth rentury were the Levant or Turkey Company trading with tlie east by the old Mediterranean route, the Eastland Company trading with the llaltie regions, the Muscovy (later, Rnssiiui) Company, the JRoyal African (Guinea) Compaiu', the Hudson's I!ay Company and, most ini- poriant ot all, tlic East India Company. The last three were joint stock companies, (the African Company was changed to a regulated IT.iO,) the others were regulated compaiiin on the l)orrowing powers of the communes; {d) return to the communes of ;i part of the octroi duties which had been taken l.v the state. 2. Legal irfon/i. (a) Suppression of judicial abuses and strici enforcement of law in those districts where abuses liad been great, st {Great Days of An- vergtie); [h) Civil Ordinnnce, m-.oda of procedure simplifying and ex pediting processes and reducing costs (1667) ; (c) Criminal Ordinance, a code of (Criminal procedure (1670); Ordinance on Commerce, a com- mercial code (167;j). 3- EiiconmgciHcnt of agriculture. (a) revival of piohibiiion of .seizure ..f beasts uf labor for the villain tax; (6) limitations on the seizure of cattle for debt; (e) improvements in the breed of lioises by importation of foreign breeds; (rf) rcn.oval of inter provincial duties on cattle; prohibitorv dutieson importation- (e) lowering of duties on exportation and raising those on importation of wines and brandies. 4. Iniproviuicnt in nicaus of covnuuuicatiou. Improvement and construction of roads, canals of Lanaue.lo<- .nid Orleans. 5. Conservation of national resources. Ordinance concerning waters and forests (b;*;;*) providin- l„r the preservation and regulation of the forests in accordance with the per manent Interests of the community. 6. Removal of restrictions on internal trade. Suppression or limitation of tolls and duties on the movement of goods from place to place; consolidation of central France into a sln-ie cus toins union. 7. Building up of vtanufacturing industries. (a) Duties on imports and exports determined in accordance with the principles of the meicantile system (tarilfs of 1664 and 1667- the latter much more highly protective than the former, and leading to a war with Holland which necessitated a modiflc.ation of its provisions) • (h) encouragement of the establishment of new industries bv giants 01 privileges ane sixteenth century there seem to have been one or two instances of factories, i. e. shops where a con- siderable body of laborers worked together. Ashley thinks that, but for legislation, the factory system might liave developed two cen- turies earlier than it did and independently of the great mechanical inventions and the application of steam. France. Population about 25,000,000. Of these 140,000 belonged to the nobility and 130,00 to the clergy (Taine). Proba- bly four-fifths of the population were dependent directly upon agriculture for the greater part of their support. Outside of Paris which had a population of 600,000- 700,000, Lyons (135,207) was the only city with a population of over 100,000. llie total population living in places of over 10,000 was probably about 2,600,000. According to Taine, the nobility, the clergy, the third estate (the town population }), the rural population, the King and the communes, each owned one-fifth of the land. The nobility and clergy did not as a rule cul- 82 France. tivate their own land but let it out, usually in small parcels, on the system of metayage (division of gross produce between owner and cultivator). Though there were farmers working farms of moderate or even large size, the greater part of the land was in the hands of small cultivators, either peasant proprietors or metayers. The methods of cultivation were generally inferior to those of England and the condition of the rural popu- lation worse, though there is still much difference of opinion in regard to the condition of the cultivating class (see Taine and Lowell). There were certainly great differences between the different parts of the country, the conditions being particularly favorable in the northern manufacturing districts and in the south. Manufacturing industries presented much the same • general features as in England, but, owing to the stricter control, in many respects corrupt, exercised by the government through the gild organization, which was still maintained in full force, and which had bred an exclusive, selfish and unprogressive spirit among gild members, they had attained a less vigorous develop- ment. .Mercantile pursuits were subject to the same ham- pering influences as manufacturers. Tolls and charges on internal commerce still existed to a consider- able extent, new ones had even been added for revenue purposes, the right to levy them being, in some cases, sold to private individuals. The trade in grain was subject to government control and like everything else managed corruptly. While the main highways were much better than in England and some important canals had been built their effects seems to have been largely neutralized by the poor character of the local roads. Local famines were apparently not of infrequent occur- rence during the eighteenth century. The special conditions, most important from the economic standpoint, which made government regula- tion a failure in France, and aggravated discontent with France. 83 the existing order, may be summarized as follows : 1. The sacrifice of national well being to the selfish interests of the court and the privileged classes. The royal policy was directed principally with a view to raising revenue to meet the extravagant ex- penditures of the court. For three centuries the sale of public offices had been practised. The num- ber of such offices had been multiplied out of all reason purely for purposes of raising revenue ; trade monoplies, grants of nobility, masterships in gilds, exemption from public burdens, everything was sold in the same way. Gilds were multiplied simply in order to sell the privileges which they conferred. 2. Corruption and inefficiency in the public adminis- tration, naturally growing out of the above conditions and aggravated by the custom which still prevailed of farming the indirect taxes. 3. The burden, and still more the unjust distribution and harsh collection of taxes. The clergy were exempt from taxation, voting grants to the King as they saw fit and frequently obtaining from the public treasury more than they paid to it. The nobility were exempt from the taillc and were regularly under-assessed for the other direct taxes to a degree which made them practi- cally exempt. Each community was responsible for all the taxes assessed against it. In addition to the money taxes the rural population were subject to the corvee ( compulsory and unpaid labor for building and main- taining the public roads). 4. The survival of a great number of burdensome and irritating feudal servitudes in favor of the privileged classes after those classes had ceased to render any corresponding services. This condition was aggravated by the absenteeism of great landlords which had be come almost universal except where prevented by poverty. The servitudes mentioned atfected the whole peasant class and in- cluded payments, fixed or in proportion to product; payments on sale or inheritance of property; perlormauce of labor; use of the lord's 84 /^r?/ssuy. mill, oven, and wine prei^s; market ami transiioitation (hlel^; recuirni tion of the lord'r^ liuntin<>; rights involvinjr restrictions on times and methods of cultivation; and many otlier liurdens similar in character. (For concrete illustration see Taine, note 2, p. 404). The above condition, rendering" uncertain the reward of industry and offering opportunities for obtaining wealth by securing political positions or grants of special privi- leges, weakened the motives and spirit of industry and were sufficient, without taking into consideration the oppressive, arbitrary and inefficient character of the government in other directions, to explain the economic inferiority of France as compared with England. Prussia. More backward in its economic development than France or England, but its economic organization pre- sented perhaps an even better example of strict govern- mental control, actuated bv consideration of economic well being, and exercised through the gild system (based on regulations of 1734-7), ^"d of survivals from an earlier feudal period. These survivals, were more marked and, in some ways, more repressive of economic development than in France. Serfdom still existed to a considerable extent and restrictions involved in the gild system, combined with restrictions on the ownership of land, created an almost caste-like division of society. Noble estates could be held only by nobles, persons of civic origin being able to acquire them only by express permission of the sovereign ; in the same way peasant land could, as a rule, be held only by peasants, and town land only by citizens of the town. I LECTURE XIV. THE INDUSTRIAL REVOLUTION: CAUSES. ICnci.axd. TovNisEK, Housox, lli:i.i), Cuxnin(;ham (also Politics and Economics), Giubixs, and Prothero, as in previous lectures. Li':ck\- W. E. H. A History of England in the Eighteenth Century (Ch. XXIII). Wai.holk S. A History of England from the Conclusion of the Creat War in 1815, Vol. I. Tavi.or W. C. Introduction to a History of the Eactory System ; Ehe Modern Factory System. Jf.voxs W. S. The Coal Question. WuK.iir C. D. The Eactory System (Tenth Census of L^ S., Vol. II.) l^RK A. 'The Cotton Manufacture of Creat Britain; The Philosophy of Manufactures (eds. 1861). Baines E. Jr. History of the Cotton Manufacture in Great Britain. Scrivexor H. A Comprehensive His- tory of the Tvn 'Trade. Swaxk J. M. Tvn in All Ages (the same in briefer form in the Tenth Census of the U. S., Vol. II). BiscHoFF J. A. A Comprehensive History of the Woollen and Worsted Manufactures. SMir,E.s S. Tulustrial Biography Mron Workers and Tool Makers ; Josiah Wedgeioood ; Tives of Ton I to// and Watt; Tives of the Engineers ; Men of Invention and Industry. h'RAXCE. vox Svi!i:l, as in pre\ious lecture. Prussia. SEEr.E^•, as m ])revious lecture. Pt. III. Ch. IV., Pt.\' . Ch. I. Pr()i;\ X J. W. (l'',(l.) Systems if hand I'euui-e in I \irious C ountries. See also articles on land tenui'c and trade corpoi'ations in the Economic liucycli>p(Cdias, mentioned in the Cen- eral Reference list. S6 Industrial Revolution. V^)X the abolition of feudal tenuies in other countries see Pkobvx as above. Ixckam J. K. Histo/y of Slave?-]' ; DoNloL H. La Revolution I'laneaise et La lu'odalite. (il'AI'.KAL. iJinint;- the last half of the eighteenth antl the hrst half of the nineteenth centuries there occurred \w the ])rincii)al lunopean nations changes so fundamental and far reaching in the methods and structure of economic life that thev ma^■ be regarded as constituting an industrial revolution. The causes of this revolution fall into two classes: i. ///c/z/.st'/vV?/, including (^r) a series of mechanical inventions, involving fundamental changes in manufacturing and mining processes; (/-') improvements in agricultural processes ; (r) improve- ments in the means of transportation. 2. Legislative enactments, overthrowing the remains of mediccval organization and the prevailing system of governmental regulation, and establi.shing the system of individual freedom. Both of these classes of causes were every- where i:)resent but in different relations and proportions, the industrial causes preceding" and predominating in I'jigland, the reverse being true on the continent. I'^XCI. AM). Manufaeturing and Mining. Four essential elements closel\- inter-related contributed to revolutionize the pi-ocesses and organization of these branches of indus- ti"\-. I. Ihe invention of the steam engine, yielding tiemendous increase of motive powei", the extended ap- pHtMtion of which was rendered possible by the use of coal as fuel and iron for structural purposes. 2. The increased use of eoal as fuel, I'cndered possible by the more successful draining of mines due to the use of the steam engine. 3. Increased jiroduction of iron, ren- dei'ed i)ossible b)' the production of coal, the steam engine, and imj^roxements in methods of treatment. 4. The in\entiou ot u/ae/iinery, the extended application I ]\fanufactnirs. S7 ot \vhicli was i'cikIciccI possible h\' the use ol iron tor structural |)ui"])oses, and of the steam eni;-iiie as a motixe power. 1 he histoi'y ot eaeh of these ini])io\ enients is one of t;ratliial _<;To\vth, final suceess beini;- the outeome of man)' unsuccessful or partially successful efforts, in the case of all, howex'er, decisive ix-sults were reached tlurini;- the period 1760-1790. St(> fuaclii n,^;' li;ick 1(. Hie lieniiiiiiiis' ol' the scviMitcciil li <-ciiliir\ (SnldiiiMii dc Cmu- . 'I'lic rirst eii,aiiie known to Inivc liccn .-n-luallv- i-cmstrnctcil \va> liiiilt in ICd:;. An engine, fir.st constructiMl l)y Thomas Savrry in IC.'.IS and in ITn.") ini livoved by Ntnvconicn, was uj-ed dniin;:- the early part oT tin- ciulitLH-ntli century for draining mines l)ut was too waslidnl oT riicl Tor ucncral use. Tlie furtlu'r ini|>rov('mcnts « jiicii vciMlcred tlie eni^-ine senci-ally availa able;weri' made l>y James Watt (lir>t patent I7 . 'i'he reason> tor I his weie its disagreeable snicdxc (led even to legislative ref;trictiini- (oi its use), the dilliculiy ot Ueepin^■ the mines free from wtiter, and the iini)()ssi))llity of .uetting a strong enough Idast to make il availalile tor working iron. The lirsl obstacle was overcome by the growing scarcil\ id' wood and the oIImm's by the invention ottlie steam engine. Iron. Theuninngand smelting (d' iron (by means id' charcoal ) was a nourislling industry in the seventeenth ceidur\ . particulai'l\ in Sussex. r>y the eighteenth centiir>, howe\ cr, the ,-carcit> ot wood liad checUed. and was e\ en causing a tailing olt. in the industry. 'I' he llrst >uccessl ul a|)plicatiou of coal (<'oke) in the production of iron \\a>inadel)> .\bra hum Darby in I7l:i (I7.S5:-'). ^\'ith the improvement oltlu' steam engine. rendering possible a more powertid blast, this process became incieas liigly |)ra("ticable, and the invention by Cort of a nie.ms for rolling iron into bars by machinery (17S:!), and tor converting]iig iion into malleable by means ot i)uddling (17S-t), rendered po.-sible a production correspond iiig to the new needs. Mdchinerij. The lirsl im])ortant macliine brought into use in lOn.uland wasprobablv the stoidxing frame invented liy William I.ee in the leign of Klizabeth. Macliinery tor throwing silk was const ru-tcd on Italian models by John l.onibc in 171s. and an e\tensi\e silk laclory creeled . The first extemled use of machinery, however, took place in connection with the mannfactnres of cotton and wool. In the earlv iiart oi the eighteenth century the snpi)ly of yarn does not seem to have fieen sulli cient to meet the demand id' the weavers. This nn^adjiislnient was increased by Kay's invention of the. ^(.// .'(/(Vi/i/K (17:!!^) which douliled the l)roductive (jower of the weaver (applied lirst in the woolliii iiidusir\ ami transferred to cotton about 17(i(l). The effort to increase the spinning resulted (17(i4) in the invention of the /'r»//// {lor cotton) usuall.v allri- buted to Uargreaves (wlio i)atented it in 1770' liy which several threads coiild be si>un at once. It was, however, available onlv for lilling. In 1769 Arkwright patented his vulcr fniiin'. a s|>innin^ m.achine re (juiring the use of water or steam power, but litti'd for -pinning cotton 8S Airricitltnir. w;!!-)!, thus I'lnaiiciiiMtinii- the I'ottiiii Ironi tlic linen hnliistvv. 'I'liis \\;i> Idlliiwi'il liy iin|)riivt'iiu'nts in •■iirdimj, iind li> (_ runipton's invcntidn ot llic mute. (177")-177!t) wliii'ii entirely siipersodeii tlie .ie'i"y ;iiul even lor ;i time tlie water I'rMnie. 'riiis r^cries of inveiitioiifi cau'-ed spinning to out- run weaving; Tlie balance was restored, and the cotton nianul'acture established on tlie general lines which have been maintained ever since, by Cartright's invention of tlie /?o(fcc too/« (U.'^o). Tlie last ot the great inventions was the cdttDii. i/hi of Kli Whitney (I7'.I4) which ensured a sullic.iciit suiii)ly of the raw material at a moderate cost. I nvcniiiin in the textile industries was typical of what, liy the inidillc ol the iireseiit ctntiiiy. had taken ]ilace in all bianrhes ot industry, though the rate development was in imist branches le>s raiiid. Ai^-j-/c-////;//r. Dunni;- the sccoiul c|uartcr of the eigh- teentli centur\', Chai'les Townshend introthiced tlie s)-,stem of alternating' tuiiiips and clover with cereals in 'A four yeais' rotation, tliereb)' (hminishini;' the amount of tallow, maintaining" the fertilit^■ of the soil, and render- ing i)ossil)le the maintenanee of a larger iiirmher of cat- tle which in tinai enriched the soil, l^akewell (1725- 1794) introduced .sv7V//////r ,v/(^(;-/' breeding iov pur{X)ses ot tood. The o[)[)ortunities for proht opened up by these improxements led about 1770 to a re\i\al of the enclosure mo\'ement and to the de\'eloi)ment of a class of capitalist farmers managing their farms as profit earn- ing enterjM'ises.'on the scientific principles developed by cUi increasing number of scientific agriculturalists (Arthur ^'oung. ) '■So late as 17U4 it is calculated that, of ^,'M) i)ari,slies, 4,o(l(l were cxcn llieii still fai'nied in cominon " (I'rothero |). oO.) Between 17(;t) and l.sju, ;>.-.'()'.t enclosure a<'ts were jiassed ami more than (i, -.'(Mi, Odd acres enclosed. (Ibid.-r)7). Means of Connnnnieation and I ransportation. All through the eighteenth centur\' (particularly in the last tpiarter, ) and in the earl)' part ot the present centur^■, there' weix' great impi'o\-ements in the construction (Macatlam 1815) and maintenance of roads (turnpike SNStem, 452 bills for the inn;)ro\'ement of roads in tlie first fourteen sessions under deorge ill). l'A|uall\ im- portant, |)erha})s, was the rapid extension of canal con- strnction, and the impro\-ements in biadge Iniildmg (I^rindley, Telford). The lirst canal (7 miles" of imporlancc. coiinecLing the DiiUc of I'.ridge water's coal mincsal Worslex with Manchester was oiiened in I7(d and () Legislation. 89 WHS hiliT cMfiitlfil Id the :Mcis('> lirin.uiiii;- MiinclK'slcr iiiUi (•(iniK't-litm with l.iveriiiiol. \\\ ITItd Lonitoii. Hristol, Livcriioiil, .-iiul Hull wcrt (•(iiiiH'i-tcil l)v internal water Cdinnuinicatioii and in the same yeai- canal connecliuii was establishuil between the Clyde and tlie Forth, r.elore the eonmieneeinent of the i-ailway ei-a -i.liOh miles of navi,u-al)le canals had been constructed in Eiiiiland, -.'Tf; miles in Ireland and -J-i.") miles in Scotland. The amount of capital invested was about t;.">o.i»U().iMiO. So coni|ilete was the system of canals in coiidiin.-ition with the fixers that it was said that no place in Knuland south of Durham was more than llfteen miles renioxed from w atei- transporta lion. Lcoislatioii. The chanj^'c from ^-oxernnicntal reL;'ula- tion to the s\'stem of incHxichuil libcrt}' in l^^ngland took l)hice to a great e.xtent throu<;-h a g-radual rela.vation in the enforcement of statutes, which finally became ibsolete, the ]e>;-islative repeal, when it came, merely registering an already accomplished fact. This, taken in connection with the fact that rei)eal was largely piecemeal, directed to the removal of particular abuses, renders it difficult to trace in legislation the break-up of the existing system. The following will, however, ser\ e as an outline. The regulations as to the qualit}- of woollen cloths were in large |)art repealed in 1 809 ; the assize of bread was abolished for London in 1815 ; the East India trade was thrown open to all British subjects in 1 81 3 antl their exclusive ]M-ivileges were withdrawn from the South Sea Company (18 1 5), the Levant Com- ])any (1825, and the African Company (1821); the pro- visions of the Statute of .Apprentices in regard to the regulation of wages b\- the justices were repealed in 181 3, the apprenticeship clauses a year later, and the remainder of the statute in 1824; the |)r()hibition of the emigration of artisans was repealed in 1824 and the combination laws (forbidding all combinations of laborers for shortening hours or raising wages. .Such laws, special and general, had been passed from time to time since Henry VI and were revised and-extended in 1799 and 1800) in 1825 ; ^ere was a formal abolition of gild privileges in 1835, and in 1834 the laws of settlement were remodelled, m connection with the new poor law, so as to gi\'e greater freedom of moxement to labor. The culmination of the movement towards remo\'al of 90 France. legislative rcsti'iclions is lOund in the legislation ol 1842-1849 which re|jealed the corn laws and navigation acts and established I'Jigiish trade on a practically free trade basis. Economic doctrine. The best exposition of the changed views in regard to economic life and policy, which both reflected the new dexelopment of industrial life and guided legislative action is found in Adam Smith's Inquiry into the Xatiirc and Causes of the Wealth of Xatious (1776) which maintains the harmony of inter- ests between the indixidual and the nation, from which it follows that individual self-interest is the safest guide in economic matters and that the government, in order to give full play to this fundamental f(jrce in economic life, should, with few excejotions, confine its operations to [protecting the nation from external attacks, adminis- tering justice, and maintaining certain public works and iiistitutions which it would not be for the interest of in- dividuals to maintain ( Iik. I\' last ])art of ch. IX). I-'k Axci:. The strictlv industi'ial features of the economic revolu- tion were largeh' borrowed from luigiand and pku'ed a minor part until the i)eace of Kurojie was finally estab- lished, llie legislative features were one element in the general political revolution and shared its abru))! and radical character. The decrees of August 4, 1789, de- clared the abolition of feudal dues, the abolition of the trade corporations and the freedom of industry. Iliese principles wcix- carried out in the legislation of 1791. The old tlivision into provinces was broken down, and, with it, the barriers to internal trade disap])eared. 'i'hus by a single stroke, as it were, the svstem of individual liberty took the place of the svstem of regulation in the internal industiial life of the nation. As regards foreign conuuerce the piinciple of legulation (prc^tective) has never been abandoned though sometimes modified in the tlirection of freedom. All I'Milicr .■illciM|il 1(1 i|iiiiini>li ui'N fiiinictit;il n'niil.-itioii Ii.'mI Iiccii iiiMilc li\ 'I'uriiot. wild, ill ITTtl, sfciUL'il llic ciiii-cnt ul lliu Kiiii;- to P/y/ss/n. 9 1 lU'creCfi ;ili()lisliiiii; tradi' (-(iriioi'iitiims, tlie corvee Mini noveniiiiontiil legiilatioii ol tlie uraiii tnide. Tlie fiiends nl the estnlilislieil iirdei- were, liowMner, sullieienlly stroiin' to secure tlie aiiiiuliueiit ol the decrees witliin a lew nioiiths. Ill its anxiety to estal)lish industry on an individualistic l)asis the national assenil)!}' went so far as to prohiliit all associations ol laborers, employers or merchants, or ol' those who followed the same tiadc. Tlioiifth not strictlx' enforced, for the most iiart, this law was not repealed until 1S!^4. As in Knuland there was a school ol economists {I'ltjinincrats) whose teacliinj^s rellected and lurlhcred the new order, hut in Frame the doctrine of v/ttural rif/lifs played a much more important part in leuislation than considerations of economic e\pe2 ISOl 0,1 It:! •lf^% l(!-2 -A 10,-22:) ISIO lO.OSO 30,802 42,057 isii io,4(;s '270 !iO 14,424 1S'20 i:^,78(i ;!2.:il3 H2,472 48,845 1M"'1 I-Moo 417 i:^7 ■2o,;M(; 1 S-> ;i .581 4(i,:iOO is;{() (iO 701 ls;ii 14,071 .i4(; ■27;i 2S,700 If^i') ],-24it IK'IO .r2. OiiO 07,403 110,481 1841 10,0.) 1 745 4:!7 40,484 IS50 10(1, 4(iO 107,8111 lS.il 18,100 .")7,107 ISH •2.70(1 (e) (e) Signifies that the figure is siniplj- an estimate. The other letters in parenthesis refer to the authors (Jevons, Cunningham, Bisclioff, Levi, .AfcCulloch's Dictionary of Commerce), from whom the tigui'cs are taken. The other letters i-efer to the territories to which the figures apply. Statistics showing directly the increase of productive power in agriculture are difficult to obtain, but that such increase took place is proven by the fact that a rapidly increasing population was supported without a corresponding increase in the area cultivated, in the number of agricultural laborers, or in the imports of food products (Prothero, Porter, McCulloch). Porter estimates that on the average 10,000 acres would in I C//(r//^r ill [iidiisti-ial Oro;aiii:::otii>n. 95 iSoi support 4,327 persons, and, in 1826, 5,555 persons. CONCENTKATI()X OF POPL' I.A'IIOX. (ikoWJII Ol' ClTIKS. The rate of increase of the total p()i)ulation of iMigiand and Wales fi-om 1811-1821 was 18% and from 1821-1831 16% ; the rates of increase of the principal towns for the ]3eri()ds in question were 24% and 23%. Many towns showed nnieh higher rates ; Manchester 46% and zTli<). The making of i^lockinirs was still carrieil on entirely under the domestic system, (lie workers icnting their frames from the inanufacttirers: in the lace manufacture hand ma were still very nuich more numerous than power machines. The hardware manufacturei- of Biimingham (iresenled about INS.") a most interesting transition phase in which the introduction of power machinery tended to break ui> ratliei- than develop the capitalistic form of production. It is thus described by Portei- (I--2!I8). "A build- ing, containing a great number of rooms of various sizes, is furnished with a steam engine, working shaft-i from which are placed in each apartment or workshop, which is likewise fui'uished with a lathe, benches, and such other conveniences as are suited to various of the branches of manufacture for which the rooms are likely to be needed. When a workman Ims received an order for the supply of such a nuaiitity of goods as will occupy him a week, or a month, or an\ other given time for their comitletion, he hires one or more of these rooms of sizes and with conveniences suited to his particular wants, sii])ulating foi- the use of a certain amount of steam power. * * * liefore the introttuclion of this system, llie trade of Birmingham was for the most part' carried on by men of large capital, who employed journeymen, and gave a considerable credit to the merchants who dealt with tliem. At pi-esent, those merchants themselves employ the workmen, who can give no credit, but receive payment in ready money at tlie end of every week for such part of their goods as they can then deliver in a finished state." "Tlierc were but few large capitals employed in the manufactures of Birmingiiani," (McCulloch, I, (iiJS). A large part of the work was stillcarried on in the homes of tlie workers. Nails were still made by hand in the outlying district.* .iround Hirniingham, women lieing frecjuently employed in the work. (Ibiil. (i! IS, 700). " l?ut few, comparatively of the She Hi eld nuinuliicturers have large capitals; and the business is not so generally carried on in worksl'.ops or factories as in Birmingham. A person worth a few shillings may commence business on his own account as a cutter; and, ill this class, indiviiluals are not unfrenuently journeymen one year and master another, and conversely." (Il)id. 7(14). The factory system had already made considerable progress in the jiottery and paper industiies, but even today independent iiroducers are common in some branches of tiade ami the sweating system is a survival of the domestic ill its wiirst form. Kl^'b'ECT Ol' THl': IXDL'.STKI.VL R KNOLL TK)X OX Till-: KCUXUMIC Well-Being of the Lahokek.s. It is ini])()i'tant to dl.stinguish here between i. effects attributable to the new .system ; 2. local and temporary effects attributable to the difficulties of transition from one .system to another; 3. effects attributable to non- industrial causes, such as war and legislation. Manufactures. It is probably safe to say that, as re- gards men, the conditions under the new system were better than under the old, unless it was with respect to llcoiioviic Effects. 99 the intensit)' of the work, safety, and the loss of the re- source against absolute want which existed when the laborer could combine agriculture with his handicraft ; earning power was apparently increased, work was more regular and steady, (exception should perhaj^s be made of factories run by water power), hours were gradually shortened (though' there was probably considerable irregularity as between different factories) and there is no reason to believe that the condition under which work was carried on was on the whole more unhealth)- than under the domestic system. The local and tem- porary cjfccts \\a<{. ^H rears. 12-13 years. 13-18 . -ears. Above 18 vs. Tot al. i s m a) E 0) 1 S 2 S Cotton 4,328 •2,4S1 •2,4S6 59-2 3,669 •2,283 3,925 (524 10,663 4,290 952 1,782 9,911 4,268 1,711 2,290 18.180 27,251 10,138 2,636 3,4.')7 43.482 38,23.1 11,112 6,815 8,.Vi4 58,0.53 20,.568 4,114 4,564 67,824 100,495 119,636 Silk Flax 8,043 11,410 103,411 10,188 10,395 1.55.3.55 20,494 22,888 Total 10,087 10,501 17.687 64,726 87.299 196,S18 Milling. The new industrial .system involved a more than proportionate increase in the number of laborers engaged in mining, one of the hardest, most dangerous and brutalizing branches of industry. This in itself was an evil, but, further than this, women and children came to be employed in underground mine work under conditions which it would seem must have been far worse than anything which could ha\'e existed under the earlier .system. Table showinj; laborer.s (elassilied according t(i aye and sex) en- gaged in Mining-, as given in the Census of 1841. Coal Mines . . Copper^^Mines Lead Mines.. Iron Mines. . . Tin .Mines. . . Not Siiecilied Total... 137,398 Men over 20 Years. Men under 20 Years. 83,408 32,475 9,861; 3,428 9,427 1,9:!2 7,733 2,679 4.602 1,349 24,162 6, .591 Women over Women under 20 Years. 20 Years. 1,185 !)13 40 424 68 3,102 1,165 1,200 20 82 491 f Geneva I Social Effects. loi Agyicultur c. Here again it is impossible to make exact statements. There is however no doubt, i. That the rapid progress of enclosures proved a serious injur}-, per- haps in the majority of cases, to the small holders who were, thereby, frequently reduced to the class of mere laborers. 2. That the change in the character and lo- cation of manufacturing industries inflicted a permanent injury on the agricultural laborers in the very districts where they had hitherto been most prosperous. Cje.xeral Social Ep^fect.s of the Industrial Revolution. In addition to the strictly economic effects of the new system it is necessary to notice certain more general re- sults the reaction of which 011 economic life has been of great importance, i. 1 he increased tendency to con- centration in cities with the resulting evils of over crowding, bad sanitary conditions, and the increased tendenc}' to certain forms of vice naturally springing from these conditions. 2. The tendency to the de- struction of family life resulting from the separation of the workshop from the home, and from the labor of wo- men and children in factories. 3. A growing insta- bility of social conditions, the natural result of the break up of a long established system and of the improved means of communication. Many of the worst evils attributed to the new system showed themselves in connection with these tendencies i"ather than in economic conditions proper. C()\rKIHL'T()K\- CaUSE.S. During the period of the industrial re\olution there were at work a considerable number of influences, in addition to those already considered, which had impor- tant economic results and modified to a considerable ex- tent the results properly attributable to the change of industrial system, i. War, necessitating a great in- crease in taxation, and interfering directly with com- merce. 2. The suspension of specie payments (1797- 1819) resulting in a general rise of prices. 3. A series of bad harvests at the end of the eighteenth century, 102 Co7itribiitory Causes. and restrictions on the importation of grain resulting both from war and from legislation. 4. Lax methods of poor relief ; excessive out-door relief, grants in propor- tion to size of family, grants in addition to wages. Average Price of Wheat per quarter. 6. d. National Revenue. £000,000. Poor Rate. £000,000. 1748-50 1760-69 1762 1770-79 1780-89 1783-85 1790-99 1795 1800 - 45 10 6.7 45 • 45 9 1.9 .55 11 19.7 110 5 33. 180S 4 1810 1810-19 1812 103 3 88 8 6.7 1815 18-20 71.9 .53.9 5.7 58 5 1825 .52.1 49.9 5.9 1830 fi.S 1830-35 1 835 54 7 i 45.9 47.4 51.7 .52.2 4 7 1840 1845 1850 4 8 5. Nummary of Results. 103 Conclusion. Reviewing the course of events as a whole it is safe to say. I. The new system rendered possible the support of a larger population in a better manner than before. 2. Until about the middle of this centur}' the gain in productive power was, for the laboring classes, largely, and in some cases more than counter-balanced by their loss of independence, the evils peculiar to the new sys- tem, the evils incident to a rapid transition froin one system to another, and the evils resulting from a num- ber of disturbing causes acting contemporaneously with the industrial chanires. LECTURES XVII.-XVII ECONOMIC DEVELOPHENT SINCE 1850. HoBSON, Swank, Wright, Gibbins, Schulze-Gaever- NiTZ, Taylor, Levi and Hodder as in previous lecture. Wells D. A. Recent Economic Changes. Rand B. Selections Illnstrating Economic Progress since tin- Seven Years War. Ward T. H. Reign of Q?tecn Victoi'ia. WooLSEY T. D. and others. The First Cen- tury of the Republic ( U. S.). First Annual Report of the (U. S.) Commissioner of Labor (Shows the increased productive power due to machinery). Tenth Census of U. S., Vols. II. {Matiufactures). III. (Agj-iculture). IV. ( Transportation). Wright C. D. Industrial E-oolu- tion of the {U.S.). Hadlev A. T. Railroad Transpor- tation (Chs. I-II). FoviLLE A. DE. La Transforma- tion cies Moyens de Ti-ansport et ses Consecjuences Eco- nomiques et Sociales. Lindsay W. S. Lii story of Mer- chant Shipping and Ancient Commerce (Vol. IV.) GiFFEN R. The Groiuth of Capital; the Progress op tin- Working Classes in the Last Fifty Years (in his Essays on Finance, Second Series). Report of Committee on Finance of the U. S. Senate on Wholesale Prices, Wages, to4 Continuation of Existing Tendencies. and Transportation (the most complete collection of sta- tistics on the subjects treated, covering the years 1849- 1891). MuLHALL M. G. Dictionary of Statistics (con- tains a mass of material illustration the progress of the last fifty years, but is not always reliable). Jeans J. S. Trusts, Pools, and Corners, von Halle E. Trusts or Industrial Combinations in the U. S. Howell G. Conflicts of Capital and Labour. Webb S. and B. P. The History of Trade Utiiotiisui. Trant W. Trades Unions. Ely R. X . 'The Labor Moveuicnt in America. Third Annual Report of the (U. S.) Commissioner of Labor (Strikes and Eockouts ) Bulletin of the Depart- ment of Labor. (U. S.) No. \. (Strikes in U. S., G. B., Erance, Italy and Austria.) Cooke-Tavlok R. W. The Factory System and the Factory Acts. Jevon.s VV. S. 'The State in Relation to Labor. \'ON Plenkr E. E. TJie English Facfory Legislation. Second Special Report of the (U. S.) Commissioner of Labor (Eabor Laws of U, S.). Fourth Special Report of (U. S.) Commissioner of Labor (compulsory insurance in Ger- many). Leroy-Beaulieu p. E Etat Moderne et ses Fonctions. Cunningham W. Politics and Economics, Bk. H. (A Summary of recent legislation in England.) Continued Development Along Existing Linb.s. The same forces which produced the industrial revolu- tion have continued to act with ever increasing strength; machinery has been more and more perfected, has sup- planted hand labor in one branch of manufactures after another, and about the middle of this century began to be successfully applied to agriculture ; the results of science, especially of chemistry, have been applied as never before to the improvement of industrial processes ( Bessemer process of steel manufacture, improved fer- tilizers etc.). Development of the Mea.ns of Transportation and Com- munication. The application of steam to transportation by land and I Transportation and Communication. 105 I sea, the use of electricity for the transfer of messages, the invention of the printing press and the shortening of routes of traffic (Suez Canal) have brought all parts of the civilized world into closer connection with each other than were the counties of England a century ago. The development o( the modern steam railway system began with tl)e opening of the Stockton and Darlington road in September, 1825, the engine used being built by George Stephenson. There were in- stances of boats propelled by machinery as early as the end of the last century, but no considerable development of steam navigation before the second quarter of this century. A railway across the Isthmus of Panama has been in operation since 1855. The Suez Canal, shortening the ilistance from England to Bombay l)y nearly one half, was opened in 1869. The modern postal system dates from the reform by Rowland Hill in 1837, and the development of the meiins of transportation. The first telegraph line was openeii in England in 1839. Telegraphic connection between Europe and Ameiica was first established in 1858 but was not made permanent until 18G5. There are at present about I'io, 000 miles of submarine cable. The telephone began to come into general use about 1877. Printing by power machinery began in 1814. Length of R'ways Kilometers. Tonnage of Ocean Ships. Length of Teleg. lines Telegrams sent. Foreign Trade (000.) All countries. Letters sent (UUO.OOO.) (000.) , (0y lake and rail, 1868, 29; 1894, 7; by all rail, 1868, 42.6; 1894, 12.88. According to the report of the senate committee, ocean freight rates on wlieat from N. Y to Liver- pool showed a tendency to rise from 1866 to the early part of 1875. Fiom that date there was a tendency to fall. The highest and lowest rates (in cents per bushel) quoted by the committee for 1873 were 27 and 11; for 1892, 9 and ZU. A clear indication of t'le extent to which obstacles to free intercourse, imposed by distance and national differences, have been overcome is seen in the increasing international movement of population. Immigration into the U. S. has been as follows (000,000 omitted). 1821-30 1 1831-40 6 1841-50 1.7 1851-60 2.6 1861-70 2.3 1871-80 2.8 1881-90. . . . 1881-94.... Total, The emigration from the German Empire from 1871-88 was 1,769,297; from Great Britain, 18.53-88, it was 6,650,0.55 of which 2,710,084 was from Ireland. Of the population of the U. S. in 1890, over one- seveuth were foreign born and one-third were of foreign parentage. Results. Expansion of the Industrial Area. Repetition and Intensification, on a zvor/d sea/e, of the tendencies of the preceding period in England. The increase of pro- ducti\'e power and population which was ah'eady so marked in England at the beginning of the century has spread throughout the world of western civilization, as a result not onl}' of the introduction in one country after another of the new methods of production, but also of the expansion of the industrial area. I r Grozvth of Population and Production. 107 The rapid exp!iii.sion of the U. S. may be seen from the following table : Year 1790 1800 1810- 1820 Settled area (2 or more to .sq. mile). sq. miles (000) 229.9 305.7 407.9 508.7 1830 1840 1850 1860 Settled area. Ini- pioved land. Acres (000,000) 632.7 807.3 979.2 1,194.8 Wheal land. Acreb. (000,000; 113. 163.1 (1) 11 Wheat pro duced. Bush. (000,000) 100.5 173.1 Year, 1870 1880 1890 Set- Ini- tled prv'd Area . land . 1272.2 188.9 1569.6 288.8 1947.3 357.6 Wh't IWh't -'^•d^d .. .J 287.7 35.4 , 459.5 33.6 468.4 The figures are talien fiom the eleventh census of the U. S. except (1) which is from the seventh census. The increase of population and of productive power , as indicatt d by (lie quanliiies of some of the most important raw materials produced and used, is shown In the following table : POPULATION (000,000.) Coal Iron \5r0duced produce . metr. tns. Kilograms. (000,000) ! _ (000,000) (13) Cotton Year. Germ. (1) Fr. (1) E.&A'. Austr Belg. Italy. U.S. produced lbs. (OOO.OOO) 1820 26.3 29.5 .32.8 .35.4 37.7 40.8 45.2 49.4 30.5 32.6 34.2 35.8 .36.7 36.1 38.3 12. 13.9 15.9 17.9 20. 22.7 26. 29. '(4) 3.8 (T) 19.8 9.6 12.9 17. 23.2 31.4 38.6 50,2 62.6 1830 IS40 1 ■> 900 940 2 1 850 136. . 7,.360 (12) 260. 12,095 345. , 18,385 514.1 i 27,332 1,482.9 1,265.2 2,609.9 3,61.5.7 4,013.2 1860 1S70 ISSO 18110 ■ •2) 18-2 (3) 20.4 22.1 23 .9 4.7 (5) 5.5 (0) 6.1 (S) 25. (9) 26.8 (10) 28.4 (H) 30.3 (I) The figures are for 1821, 1831, etc. (2), 1857. (3), 1869. (4), 1831. (.5), 1879. (6), 1891. (7), 1812. (8), 1861. (9), 1871. <10), 1879. (11), .1891. (12), 1871. (13), the figures represent annual averages for five year periods beginning 1841, 1851, etc., to 1881. The last figure in the colun)n is the annual average 1886-9. The population figures are from the Jahrh. f. K. loyfcs ((100) ■.>;!7 4S-J.'.l Cotton used, lbs. (000,000). 2(;-.>.7 l,4:i'.i.4 •.>,.-):!s sol 1,00.-) 4:;,.504.s 1 ■.'-i(;.7 10,7i:i.7 (;i.").7 ;!:!.4 •220.S .Vi8.S :u.r, 1S4.S 77.0 7()'.i.7 The above table is compileii from the tenth ami eleventh U. S. cen- suses ami the Vhersiclifeu iter ir<'lf.wirf!Iany striking illustrations of the increase of proiluclive jiower can be I'ouiul in Schtil/.e-(iaevci-nit/. (Cotton Tnidej ami Kd. Atkinson's His- tribntion of Products. The pi'ice of a iiounilof No. 4(iyai-n in Euirland in 177!l was Kis., the price of the cotton necessary to make the same Js., difterence Us. The corresponding ligures for ls:>0 were N. -.".d.. TVii., O'ld.": for J8!»-J, 7 Vd., 4".,d.. Jv.d. Hetwocn 18-2'.l-:!l and 1nso-S2 llie product in yarn loi- each laborer increased between three and four- fold, notwithstanding a reiluction in Morking lime of ihiiteen or more hours per week. In tlie same time and umler llic same con- ditions the amount of clolli woven jier laboi'er increased nearly eight-fold. That these tendencies have not licen conlined to any special branch of trade i.s shown by the following table, which aiijilies to manufactui-- ing industry, a.s a whole, in the United States. Years. Kstaldish- ments. Eniiiloyees. 000 Capital. 000,000 Jraterials. 000,000 Proreviou8 censuses. ."Many of the principal iiuluslries showed, in is'.io, .'i decrease in the numberof establishments, with incrt'ase in number of laborers, aumunt of c.apit.al, and ((uantity of nialerials worked up, I 10 [iitcru'itioiitl C haractcr of Iiidnstry. In soiiiu instaiu-c~ Illi^i was very iiKirki'd. T!i(; lUiuilitT nf i'>t;il!lisVi- luunts lor the iiiaiiuructiiier of a.micultural iinpleineiits ilecreased lie- tween ISSd and IWM) from 1,!)4:{ to '.(10; the number of euii)loyees increased from ;W.580 to -f-i.."i44 : the value of the product from $(;S,(i40,4Sfi, to $8t},27J,0.")l. Auioiiu- other niiiiuifactures showing the same tendencies, though in less uunked de^free were cariJCts, chemicals, clay and pottery, Hour, foundry i>roducts, furniture, giass. hardwari'. iron and steel, li((iior, lumber, iiaper, saddlerx and harnesses, salt, sihcrwarc. wire, and woollen goods. Af/7-iculture. The average si/.c of farms in the L". >. as sliown li> successive censuses has been as follows; l.'^.">0, 20;! acres; 1S(;0, I'.i'.l acres: ISTO, 1.53 acres; 18S0, 1:!4. acres; IfiiK), 187 acres. The most rapid incI•ea^c l>etween 18S0 and ISliO was in farms of .'lOO-loOd acres. In the faiiiiing states between the Mississiiipi and the Rocky Mountains llicre was be tween 18S0 and i8!IOa more oi- less marked tendency to an increase in the average size of farms and a large increase in farms id the l.iriiesi si/i', .iOO-lOOO acres and 1000 acres and over (Abstract of census of ISlio, jip. 00-0.">). The interniitioiKil clKiriirter of iiii/asfri/ nia\- be ilhisiralcd in a variety of ways. From 18.V2-ii the average prodiu^tion of wlu-at in the VJnited Kingdom, deduction made of the amount necessary for seed, was l;i,lo0,0()0 tpiarlers, the imimrts for lujnie consumption were 4,()5o,000 quarters. The corresponding ligures for I8i<'.) 1)0 were 8, 770,001) and H),'2(i8,OO0. In 18<)8 the United Kingdom imported aliout one fourteenth of its meat supply, in 18;i0 about one-third. Among raw materials Great Britain imports all her cotton and silk and two-thirds of lier wool. The mauufaclure of cotton employs over .'inii.oiio workers; wool over oOO,000; silk over 40,ooo,ooo. Giffeu {Essai/ in Finance, Sec. Series. ]>. J04) estimated in Is,s2 the Knglish capital invested abroad at X l..")00,000.ooo. .\nother indication is seen in the growth of international trade. The following figures show the total imports and exports of the United States and the Uniteil Kingdom, in ndllions of dollars and pounds respectively, for the years given : 1845. •21!) 1854. 535 268 1860. 1870. 1880. 1890. 1894. Unitei Unitei .States (>87 37.") 8-2<) .547 1,504 (;!)8 1,047 740 1,547 083 The less rapid iucrease between 1880 and 1800 and the falling olf since 1800 were due largely to falling prices aggravateil in the latter case by severe industrial depression. Nenmann-Spallait ( r^cr.s/c/f^ (/. Ifelt- vrirt. 1883-4) estimated the international commerce of the world in 1867-8 at 44,-214,000,000 marks, and in Iss.". at (;i,(;ii:;,oi)0,(iiiO marks. T\\crceiitage of urlian to total poimlation in tVie countries and foi' tlic years named : England AND Wai.e.s. (1.) Gkumanv. (3.) 1861 62.3 1867 35.5 1871 64.8 1875 30. 1881 66.6 1885 43.7 1891 71.7 J890 47. p I ll'rs and 1 loiii 1 1 1 FRAX(^E. (2.) 1S4() ■24.4-2 !(<()() :i0.4(; issi; s").!).') Uniteu Statks. (4.) 1790 3.35 1S,50 12.4!) If^'.Kl 29.-2() (1) Ilobson, p. o2(). (2) Mayo-Siiiith, Statisiic.s and Sociologij, p. .'iOT. (if) 1><67-1885, Wagnei- GruiuUegung d. polit. Oek. Erster Theilfx^. '>\)\, 1890, Statesman's Yearbook 1895. (4) Mayo-Smitli, p. 368. Ttie dividing: line between nrban and rural population is by no means uniform in the different countries. On the continent of Europe settle- ments ol' 2,000 and more are usually counted as urban; in England the l)()pulation of the urban sanitary distri(;ts is treated as urban; in the llnited States the figures apply to incorporated villages and towns of 8000 and over. In 1890 30.28 $? of the population of the United States lived in towns of 2,500 and over. In 1790 there were in the United states six cities wit h a i>opulation of 800 or more, the largest being I'hil adeli)liia with 42,.520; in 1890 there were 448 such cities, three of which liad a i)opulation of over 1,000,000 each. Concentration is mostmarkeil i7i England among the larger states. In 1891 one-fifth of tiie poiiulatioii of England and Wales lived in the " Greater London," 14 5'; in "Minoi- Jyondon " and 22;,' in cities of 2.50,000 aud over. As a rule the larger (though not the largest) cities have everywhere been increasing more rapidly than the smaller. The most comiilete investigation of wa-fjex, lioiira oi'htbor and in-lccs is to l)e found in the Report of the U. S. Senate Committee on Finance (Maich o, 1893) on U'liolexale Prices, Wages and Transportation. Tak- ing the year 1860 as a standard and i-epresenting by 100 the average wages for that year, in the industi'ies fpi'i'iC'ipi'Hy nianufacturiug aud 1 ranspovtation) covered by the investigation, the wages for 1846 M'ould l)c represented by H7.7 (82.5"): for 1891 by 160.7 (168.6), the figures out- side the parenthesis l)eing based on simple averages, those within the ))arenthesis being based on averages in which allowance is made for ilie various degrees of impcjrtance of the different industries. The <-hanges in wages and hours in some of the more important industries are shown in the following table. Column 1 shows the rate of wages in 1891 as compared with 1860 which is taken as 100; columns 2 ami :! show the hours of labor in 1860 and 1891 respectively, iNDUSTltlES, 1 Agi-ic. Implements. .. 137.9 I'.oilding Trades 172..") Cily Wiii-ks im.O Colldn (ioo(.) Kiiod ( loths and clothing... Fuel and light .Metals and implemeiil- Total .1(1.!. II Lumber and b'ld'g materials. . IJ-.'.:! . si.l Drugs and chemicals'. st;.:; Ill, House furnishing gooils To. I . 74. ;i Miscellaneous 'm.\ '.i-J, The most important item omitted from these statistics is rent. Treat- ing tiiis and other omitted items as (constant and the variation in retail prices as proportional to those in wholesale prices, and taking account of the relative importance of different classes of commodities in the expenditures of workiiigmen tlie cost of living in isd'.' was ;h;.-.' ,is compared with 100 in IWiO. 'V\\e cmp/oi/iiieiU oj' ivdiiic.ii and rliiUlren. According to the lollowing ligures (taken from the a i tide .iHiicudUche Arheiter in thv //iindir'li. d. Staatsiviss.) which appiv to the principal textile industries the number ofchildro*i under thirteen years of age employed underwent a rapid increase both absolutely ami relatively between 1K')() and IST.i, followed by an almost ecjual decrease between 1ST,') and LS'JO. Ifecent inxestigations on soinewliat different lines would seem to indicate that llic proportion of the iioiiulation between ten and lifteen \ears of age engaged in industry had considerably increased between 18.^1 and isui though it is not cpiite clear whether these results ai)ply to the whole population or only to cities nf .')(), OOO and over , /lu//. oi' tlie Dep/.ot' Lalior No. 1.) The table applies to Great Britain. 187,1 Children under 1:5. Males, i:i-l8 Males over Is Females over 18. . . Total Number Number Numlier IHMI (100 (10(1 4().S 1-24. 8 IJ.s m;..'i >. t;7.s li.i; 7S4 ,s. SS . 7 S.-J . K ;."..'.! •-•s.:! •J.Vi.4 ■20.-J ■ios.s "27.(') :!l-J.i .-..!.- .M.i.4 .V.'.ll oio.i; .")(; ;; .').8(;.(i lOtl. 074. 100. 1,0.84.0 100. A^rio Dc'i'clopuinit.s II"> The facts in re,nai- I.."i7(;.l \\dnien 1,447..") 'I'lie most marked increases in the emiil(»yment of women liave l;iUcn lihice in tlie textile (and dyeinn) and clothing' industries: in the loimci- the li^ures tor ISll were .Uri.-iuii men. •2.'>7.()()0 women ; tor ISIM, 430..)(M» men. .KS-i.tiOO women: in the latler tor 1841, 348.(j0(» men, 177, -2(10 women: lor IS'.ll. 3,");j,8()0 men, (;sl,.!Ou women. The investigation above reteried to would seem to show, howexer, that the i)ro|>ortion ot women einiiloyed in industry to the I'emale i>oiiulalii>n ten years of age and over had diminished t>etween issi and 1S!)1. The tacts for tlie United States, so far as it is iKjssihle lo obtain them are shown in the following table(^-'o;/(/)<'»f/. of Tenth C'eiistis./iji. irjSS/) The ligures show the numbers of the various classes employed in manufactures in the years given (doo omitted). M.-iles above 1(1 years.. Females ab year: Children and youths... 1S.")II. 1860. 1870. 7:!l.i 1,040.;; i.iii.i.t; •2-2.-..(l •270. '.1 .">'2.!.S 114.(i 1880. Xczi' Developments. In addition to rhe results ahoxc noted which are a further development of results ah"ead^' well marked I^efore 1850, there exist in modern economic life certain tendencies which did not attain anything like their ])resent importance until after that date. I. Tlie e red it systeui and the joint stoek prineiple in indnstrial oro-a)ii:zation. We ha\'e pre\iousi\' noted the beginnings of both of these factors in economic life, but during the last hft)- )-ears they have become t)f fundamental importance. It is hardly too much to sa}- that all industry is carried on b)' means of credit and that all large enterprises are in the hands of joint stock companies. Each has increased, immensel)', pro(hicti\ e power by rendering possible a more complete use of the wealth and savings of the community. This has been { 14 Credit Systnii. done in two ways: i, by making available, through aggregation, small sa\ings which b}' themselves would have been comparativel}' useless for productive purposes : 2, by rendering possible enterprises requiring an inxest- ment of wealth too great for a single individual or e\'en for a small grou}) of mdividuals. The extended oppor. tunit}' for the use of wealth thereb}' opened up has jjeen in turn the strongest inducement to the accumulation of wealth and to savdng. Credit, through the econom)' in the use of mone)' which it has effected by means c^f bills of exchange, drafts, checks and clearing houses, has also facilitated the exchange as much as the production of wealth. Accurate :~t;itiBti('s as to all tonus of wealth are, peihapft: an iiiipossi- l)ility, but it lias been estimated by good authority that the aniouut of indebtedness in the United States in ]>Si»() was at least .•if'2(),-J-2T,170,54ti, nearly one-third ol the estimated wealth of the couiiti'X'. (Hull, of the 1')ei>t. . Public l)('lir> 2,057.2 Tiansportatiou Cos. (other than those previously spe- cified) IU.2 Tlie extent to which the saving of small sums in a foiin axailnblc for Industrial purposes has developed can be judged from tin' statistics of savings banks and buUdiny loan (tssociations. The lirst savings bank in this country was chartered lu Boston in IfiK). lu ISSO the ileposits in all the savings banks of the country amounted to $o,i)2:!,.'{04 : in lS.i0 to *43,295,904; in 1874-.) to $>s4i),o>si,(j33; in 1893-4 to $l,747,9(il,2Nl belonging to 4,777,687 depositors, making the average dejiosits S3(;;).8(;. 'I'he first building loan association so far as known was st.jirted in 1831 ; a report of the U. S. Commissioner of Labor in 1894 gives returns from o..')98 such associations, existing about Jan. 1, 1893, in which the dues paid in on shares in force and the jirolils on the same, amounted t()7 was settled through the <'leariiiK housos ot tlie United States by the use of only about 8^ of that amount in money for tlie settlement of lialances. In the New York clearinj; house no coin and less than $8(10,()(H),()()0 in (;oin certill- cates was used to settle indebtedness to the amount of *o(;,-27'.l,!)(C).-':i(i. tl{ei>t. of the Comptroner of the Currency, IH'.t'J). A joint stocl,- lompiini/ or coriioratioii. Hi* it \!^ usually termed in this rountry, is a lej:;al entity distinct from the groTip of persons wlio con- trol il. It is given the right to issue shares which confer upon their owners the right to a voice in the management and to a proportionate share in the property and earnings of the corporation. Tlie important l)oints to notice are : 1. That the life of the corporalioii is <-ontlnu- ous and not dependent on the lives of the individuals who ina.v, for the time being, own its shares; -2. That the shares being issued tor small amounts (seldom over $100 ea<',h), transferable, and imposing on the owner no responsibility or only a limited resiionsibility foi' the debts of the cor|)oration, they offer oi)portuiiities for the inveslinent of small savings and for a scattering of investments b.v persons ol' large means, thus ful filling, in iiroduclion, a lunctimi analogous to that of credit. i\loie than .'iO,00(l joint stock comi>anies with liniitccl lialiility were or- ganized under the general law in Kngland bet ween isi;:; and IM(0, 2, 7(1'.) being organized in the last-named year. There are almost no statistics 4)t coriiorations in the United States, but tluii-e is no doubt that the growth of this form of organization has been as rapid as, or even more rapid than, in anv other country. In l.sss, .?,(i,s'.l corporations were or- ganized in thirteen states. The Massachusetts censuses of lS7."i and ISS.T (Ixxiii) showed the following results as regards the manul.'ic- tures of the stale. I'rivate firms. Partners, Ave. No. of partners to linn. Corporations, Stockholders, -\ve. No. of stockholders to corp., Tlie caplcal stock of corporations in Massachusetts in 1 SS.") was $l."<'2,- .ifio.Ofi,'), the estimated value of capital invested in all manufactures, $500 .594,377. The capital stock of the railroads in the United Slates in ISiSO was :?'2,.(il.">.4 14,904. i IS. 000. 4.4.i0.7 ri.(;7ii 1 I7,9!)2.S 1) i:i,:ill.7 (;o,0(»o. 20,l(i(i. 19,40(1..-) ISonikil Deiit *000. :!,o()8. .■;,ono. 4..MI0. 0.294.. C, 0(1(1. (1) Not all issued. The above figures are taken fruiii lirtuhtreet's. December 7, lS9,i. The capitalization of all of these corporations as above sliown is far in excess of the money paid in by the sharehohlers or the cost of the plants controlled. In many cases the latter is supposed to be covered by the l)onded debt and the preferred stock. ; In addition to the references filreaciy given bearing on couibinations of capitalists see Baker, C. W.' I I C ON/bn/tJl/oi/s of Lnhorci'S. 119 Monopolica iiiid tliv /'<'i>p/<' : AiulrcHS E. B. Trusts ticcordiay Ui ojjiciul Jnrestiffiiflon, Quart. .I(»U7-ii. of Ecoiinniics HI ; Jenks, J. \\ ., Develop ineiit a/ the irhiskei/ Trust, I'ol. Sc. Quart. JV, Trusts in the If. S., Ec. .louni. If., Cainffi/islif yfonopolies, I'ol. Sc. Quart. IX. A full l)ibli ograpliy will be found in v. Halle's Trusts, which also contains reprints of many documents of great value.) Labor Combinations. These combinations have, for the most part, developed in the same branches of industry as the combinations of capitalists. England. More or less permanent associations of laborers for the inaintainance of their interests against their employers existed in Englanil even in the eighteenth century, and their number probabl\ increased rather than diminished during the period of legal repres siou. The first considerable development, however, took place after the modification of the combination laws in 1824 and 18-25. The first national association, comprising workers in all departments of a great industry (machine manufacture) was organized in 1851 under the title of "The Amalgamated Society of Engineers." The trades unions were granted a legal standing in 186'.). The number of trades unionists in the United Kingdom, in IS'j-2, according to official returns, was l,.>07,0-2(j; in England 1,221,141. United States. The development of labor unions on a large scale did not begin until about 1850 and was seriously interrupted by the war so that the greater part of their giowth has taken place sin(;e that time. There ai-e no official statistics of trades unions as in England, but in 189;J the membership of the national unions connected with the American Federation of Labor was returned as 610,200. Taking into consideration the national organizations notaffllitated with this body and the various independent local unions it is, perha|>s, safe to sa.v that the trades unionists in this country number about l,0(ii),000. Among the larger national organiza- tions connected with the Federation of Labor are those of the bric-k- layers and stone masons (32,000), carpentei-s and joiners ;57,0f)0), cigar makers (29,000), miners (20,000), locomotive engineers (.■!1,000), locomo five firemen (20,000), iron moulders (2!),H00), iron and steel workers, (34,000), machinists (20,000), printers (37,100), trainmen (25,000). The figures are from the Tribune Almanac, 1894, pp. 282-3. The Knights of Labor, intended as a national organization of all classes of laborers, which at one time nunil)ered several hundred thousand members, has diminished rapidly during late years, the niembership for 1892 being fi4,0()0 {rrih Al.. 1SU4). 3- Conflicts bctzoccti Employers and Employees. Di.s putes between these two classes have, doubtless, e.xisted ever since the distinction between them arose, but with the growth of combination on both sides there has developed, in place of the personal and local disputes of earlier periods, a species of warfare between organized forces, frequentl}- involving thousands of men and millions of dollars' worth of productive property, affect- ing the industrial life of a whole nation, and seriously endangering the public peace. 120 Strike's lUiii Lockouts. The following figures are taken fruin llie Bulletin of the Department oj Labor, (U. S.,) Xo. I. They refer to Viviteil States, Jan. 1 , ISSl-.Iuly 1, 1SU4. Number of Strikes, 14,8!)(i. Number of E-itabli!n. connection with the new industrial system, of evils evi- dent!} dangerous to social and economic well-being" has necessitated a revival of governmental regulation, a tendency which began even before the old forms ol regulation disappeared, but which has been particularl\' marked during the last twenty years. The great bulk , of this legislation ma\- be classified under the following- heads: I. Regulation of the conditions of labor, par- ticularly for women and children, with reference to hours, Sunday labor, safety, sanitary conditions, methods of payment, etc. This class of legislation applied first to mines and factories, is gradually being extended to all workshops where women and children are employed, and practically acts as a regulation of men's labor in all industries where they are emploj'ed with women and children. Like regulation has also been applied to cer- tain industries (especially steam and street railways) in which men only are employed. Such legislation has largely grown out of sympathy with the laborers on ac- count of their relative weakness under modern indus- trial conditions, but it is also justified on the ground of preservation of the energ)-, intelligence and moralit\' ot the labor force of the communit}-. 2. Regulation oi the business (especially as regards prices) of certain monopolies which render servaces of fundamental im- portance to the community, railways, telegraph and tele- phone companies, water and lighting companies, etc. In man}' instances regulation has been superseded b}' government ownership and management. 3. Regula- tion of the organization and use of credit, a result of the great economic disturbance which experience has shown may follow unsound methods in these particulars. 4. Regulation of the use of certain resources of prime pub- lic importance — forests. 5. The latest development of the tendencv to governmental regulation is in the direction of compulsory insurance of the laboring- classes, the means being supplied, largely, by compul- sor}- savings on the part of these classes, with a view to providing support during periods of inability to work ; I Labor Legislation : England. 1 23 a result of the instability of economic relations and the uncertainty of emplo\nient under modern industrial conditions. In addition to tliese general classes of legislation there have been striking cases of governmental intei'terence in special cases, noticeabl) the compulsor\ readjust- ment of land rents in Ireland, and compulsor) acquisition of land, m England, iox assignment in small allotments. There are also man)- other cases of increased govern- mental interfei^ence, or interference in new diiections, in which the economic motixe rs not predominant, but which have most important economic results ; i\ g. free and compulsor\' public education, regulation of sanitar\' condition of dwelling houses. Leghldtion for the protection of women ttiiil ehildrtii. Kngland. 'I'he lirst step iu this chis.s of lesiislation was taken in JS02, and was di- rected against the terrilile evils arising from the employment, in cotton and woollen fa<'tories, of pauper children apprenticed by the parish authorities. Il applieil only to apprentices and, for these, reduced the hours of laboi' to twelve per day, forbade night work, with a few ex- ceptions, provided for the clothing and instruction of the apprentices by their masters, and required the observance of certain sjinitary con- ditions. By an act of 181 U protection was extended to all children in cotton mills: employment of children, under nine years of age, was forbidden ; hours of labor for young persons (9 — 16 yeais of age) were limited to twelve yier day, excluding meal times (I'i honr>). and night work was prohibited. An act of 1825 shortened the hours of labor on Saturday to nine, and an act of 1831 loibade night work to all under twenty-one, and raised to eighteen the age limit of those who had the benefit of the twelve-honr day with nine hours on Saturdny. All of the acts mentioned, ex(!ept that of ISO'2 which had become practicall.v inoperative, applied only to the cotton iudustrj'. The first legislation affecting the whole textile industry ^some exceptions in the case of silk) was the act oi 183S. This act distinguished between " cliildren " (9 — 13 years of age) and 'young i>ersons " (13 — 18 years of age), the hours of labor for the former being limited to nine per day and forty eight per week, for the latter to twelve per day and sixty-nine per week. Night work was prohibited for both classes, and children were required to attend school two hours each day. By act of 1 844 the working time of children was reduced to Kj-b hours per day, and they were not to work after 1 f. M. on any day iu which they had been em ployed in the morning; they might, however, be employed ten hours per day, if they were employed on alternate days only, the interven ing days to be spent in school. The minimum age for the employment of children was reduced to eight, but the regulations concerning young persons were made applicable to all women, and provision was made for proper sanitary arrangements and for safety. By the act of 1847 the working time for young persons and women was limited to ten hours per day and fifty-eight hours per week. In 18.")0 the daily labor time was increased to 10>3 hours, but with no work alter 2 p. m 124 Labor Legislation : England. on Siilurdays. Thougli lenjitheniiig llie working time slightly, the net was a real advance. The working day was lixed at G a. m. to 6p. m., ex cept on Saturday, when it was to close at -1 v. M., i'j' hours to be al- lowed for meals (Saturday \K hours). The maxininni working time was thus sixty hours per week. The main outlines of the systeui of regulation had now been established, and its subsequent history is one of extension and improvement. An act of 184.5 had prohibited night work by women and childien in print work-^, and j)rint works seem to have been included in the provisions oi the act of 1847 anil subsequeiit factorj- acts. In 18(i0 the factory laws, with souie modifications, were extended to bleaching and dyeing works; in 18ti;5 to factories in which bleached and dyed goods were calendered, dressed and finished; in 1864 to workshops where the work was done by manual labor other than that of males ovor 14 yeais of age. In 1861 lace factories using power machinerx had been brought under the act, and in 18(i:j work in bake-honses, between 9 M. and 5 a. m., was jjrohibited for persons un- der 18 years of age. Great advance was made by an act of 1864 whi'-h extended regulation to manufactures of earthernware (excep; bri(;k and common tiles), lucifer matches, percussion caps and cartridges, and to the employments of paper staining and fustian cutting. By the Factory Acts Extension Act and The Workshop Ttegulation, Act, both passed in 1867, regulation was practically extended to all manufactur- ing inchistry. employing women, young persons, or childien, ex cept such as was carried on by independent worker^ or in the homes of the woi'kers. The first mentioned act. after specifically enumerat- ing several industries, brings under its provisions "any premises, whether adjoining or separate, in the same occupation situate in the same city, tow^i, parish, or place, and constituting one trade establish- ment, in * * * * which fifty or moi'C persons are employed in any manufacturing process." The industries specifically mentioned in- clude;! smelting works, iron and steel works, foundries, manufactures of mjichinery and metal goods, rubber and rubber goods. pa|)ci'. glass, and tobacco, and printing and bookbinding establishments, though in the case of many of these more, less important, modifications were made in the application of the law. By the second act mentione^ hours, and no woman, young person, or child was to be employed continuously foi- more than 4J2 hours without an interval of at least one-half hour tor a meal; children could not be employed in both morning and afternoon of the same day. unless they were employed on alternate days only. In nou-texlile factories the working day was t\yelve hours with Ui hours out for meals (Satur r. M., instead oU> a. m. (or 7 A. m.; jiiid () p. M. (or 7 P. M.). as i" the latter. Full provision was made I'or sanitation, C.-;alety, and education of cliil dren; Sumlay labor was iiroliibited. employers were compelled to grant full holidays on Christmas and Good Fridav and eight half holi- days each year in addition. Most of these provisions had reference simply to women, young persons and children, but some (e ff., in re- gard to .sanitation and safety; ai)plied without reference to any special class of workers, and all provisions practically affected men ill industries in which any con.siderable portion of the laborers lie- longed to the protected classes. Special provisions in the direction l)olh of greater leniency and strii-t- ness were made in connection with special industries, the eniploy- meiitof women, young persons and children being absolutely forbid- den in some cases. (The full text of this act, which is perhai>s the most in.portant and coniDrehensive iiiece of labor legislation in the world, can be found inNottcutt's Faciorie.i and Worlcshops Act A sum- mary of the provisions relating to textile factories can be found in AVright's Report oh the. Factor// Sij.itcm in the I'o/. on Movufactiiren, 1 0th Census of U. S.). Tlie last factory act was that of isyi, which raised to 11 the minimum age for employment of children, lorbade the employment of women within four weeks after confinement, and liroiiglit under the sanitary provisions and subjected to inspection by government oflicials work- shops where men only are employed. Mines. Undei-ground work in coal mines by women and by i oys under 10 was prohibited in l.^"4-2; in 18(50 regulation was extended to iron mines, and in 187'2 to all metalliferous mines. According to the law as it now stands the minimum age for boys under ground has been raised to l.', and boys between 12 and l(i are not to work more than 10 hour.s a day or .il hours a week, with intervals of at least 12 hours rest. Children under 12 are prohibited from working above ground, and those under l.S cannot work more than three days a week. The hours for young persons and women (above ground) in coal mines are the same as for boys (12-16) under ground. There are provisions in regard to night work, Saturday half holiday, .Sunday work, health and safety, corresponding to the pro- visions of the factory acts; above ground work in mines other than coal mines comes under the factory acts. Mercantile establishmenfx wei-e subjected to regulation in 18S6, the hours of labor for iiersoiis under 18 being limited io 74 a week. United States. Regulation of the kind above described is a matter of state legislation, and therefore presents little uniformity and can with difliculty be summarized. It began about the middle of this century, and has developed most extensively in the manufacturing states of the north and east, appearing only exceptionally in the south ern and trans-Mississippi states. In the following table no claim is made of perfect accuracy or completeness, but it is believed that it presents a substantially correct view of the state of legislative re strictions on the labor of women and children in the United States at the end of 1895. It is based on the SecomI Special Report of the (U. S.) Commissioner of Labor (which contains a compiliation of the labor laws • of the states up to about 1890), supplemented bp the annual reviews of labor legislation published in the Quart. .Tourn. of Ecs. The letters designate the kind of industry to which the regulation applies: m-mines; m(c)-coal mines; f-fartories: f(c&w)-cotton 126 Labor LcgisIatio)i ; United States. Mild woollen iMctdrif-;: \v workshops; s-stores (iiu'rciiiitilr f-i.'ilili-h iiients. ) Mini- Hooks ok I^aboi;. Mini- " HOUUS OK I,AB<»1!. mum age IIIUIII age STATK. for Em- ploy- Children. Upper age limitfor Women. Statk. for Em- ploy- Child ren. Upper age limitfor Won fii. ment. Uay. Week. Child'n. Day. Week. ment. Day. W'k. child'n. Day. VVlv. Al 1.-. Ill s fw 14 Minn... 1 ■ fws is l(ii'l:r' f\\ Cal.. .. 10 10 (iO IS N. H... l:i 10 (ii) 1> 10 Cll Iws fws . fws 1 fw iw fw fw Iw Col .... 14 m(l)f N. .7.... 12(14) mfw ]()(l.i) fw fw 14 li)( 1.-,) iw fw'' ( onii. . 14 10 (id 10 10 60 N. v.... 14 10 60 1S(16) 10 6(1 fw.-t Iw.^ Cws fws fw^s fw fw fw fi\- fw (iii 11(2, 06 11 66 IN. 1).. . 10 14 f(c&w) f^c&w) f(c&w) f(c&W) 1 fw klalio. 14 in (1) iOhio... 14 in f w 10 fw IS Ill 13 14 Iw Ha 12 iiiU\> (IT) 1(1 r (IS) t;o fws minori- ty. (19) Ind.... 14 10 18 R. I.... 12 10 6(1 16 10 oil 1(3) f(c&w) (4) fws fw fw fw fw m(c) 8 fw 14 s. c.-.. (20) (21) u 11 Iowa... 1-2 111 S. D.... fl.C&W) ]() 14 f(c.Vw) Kan 1-' ni :Vt 10 fw ' 10 1.-) l,a 12 (.->) fw 10 Ivv 00 f« 18 10 fw (iO fw ^^•l fw f\\ 1(1 14 10 Me 12 fw 10 fw 00 16 (6) 10 (7) fw (;o 1w iWash. . 14 f f M(l.. .. i 10 fw 16 21 f(c&w). 10 f(c*w) W. Va . mfw 12 1 fni .Mass.. . 13 r8)l 10 .■)S 18 (9) 10 .iS Wis.... 14 s 14 fWS; fws fw f^v f« m f w fw Mich... 12 fw.'? fwn .■)4 Iws 14(10) 10 fw 60 fw A\ y .... 14 (22) (11) (12) I (1) Underground. (2) The act prohibits the making of, Tind declares non-enforceable, contracts for longer hours but apparently does not absolutely forbid working longer hours. |3) Manufactures of iron, steel, nails, metals, machinery and. tobacco. (4) Employment of I I I I I Labor Legislation ; United States. 127 womep in coal iniiies liiil)iil(lcii. (5) Tliis applies to boys; the age for jrirls is 14. ((!) This is the a^e lor boys; the age for girls is IS. No corporation can employ anyone under 16 for more than 10 hours. (7) Women of 18 and over may contract for not exceeding 60 addi- tional hours a year. (8) Night work forbidden for children under 14, and in manufacturing establishments for women and minors. (9) Mi- nors in mercantile establishments not to work over 60 hours per week. flO) This is the limit for boys; for girls it is 16 for the daily hours and 15 for the weekly hours. (11) This provision applies apparently to every form of business except agriculture, domestic service, and clerkships in stores. It is not clear whether it was appealed by the act fixing the weekly hours at 54, which came later. (12) This act came earlier than those just mentioned and forbade the employment of children iiiuler IS and of women in any factory, workshop, or ware- house, for more than an average of 10 hours a day or 60 hours a week. (13) Applies to women in all employments except domestic service and farm labor. (14) This is for boys; for girls the limit is 14. (15) For the first five days of the week the hours are 7 A. M.— 1-2 M. and 1 P. M. —6 P. M. ; Saturdays, 7 A . M. to 12 M. (16) This is the age for males ; the age for females is 21. (17) No boys under 14 in underground antharacite mining; girls cannot be employed in mining; the mini- mum age in cotton, woolen, silk, paper, bagging, and flax factories is 13. (18) Applies to factories mentioned under 17. (lit) Women cannot be employed in coal mining. (20) Includes telegraph and telephone companies. (21) Manufacturing estal)lishments. (22) Applies also to all women. In addition to the provisions above noted, several states have passefl laws declaring a certain number of hours to be a day's work for women and children, and forbidding employers to compel (but not to permit) persons of the classes named to labor for a longer time than that specified. Some of the states included in the table al)ove given have additional legislation of this kind with lefereuce to older children; such laws, however, can be easily a voided by the consent (voluntary or necessitated) of the workers. More imporianl is the usual requirement of certain educational qualifications as a condition of the eniploj'ment of children tor some years after the minimum age has been reached. Laws reqi.ii ing that sea, are legislatiDn ol tlu- same kind. Acts requirintj proper provision lor health ami safely in mines are almost universal wherever mininir is an important industry. In the United States several of ilie individual states (Conn.. 111., la.. Mass., Mich., N. H., \. V., and perhaps otiiers) require the use ul safety appliances in tlie manaaemenl of railway trains, and in 18!Ki a law was enacted by the national novt'iiiment requiring that after Jan. 1, 1S98, all trains engaged in interstate commerce be equipped with train brakes worked from the engine, and with automatic cou)) lers. Direct reiitilatio)t of the hums u/ Uibor of men has, been ex ceptional and coHsidered as lesting on a very different basis from like regulation for women and children, and as involving a much more serious interference with the freedcnn of conti-act. Such regulation, however, has sometimes taken place. The excessive hours of labor on railways in England led, in IS'.Ki. to the passage of the Iluilirai/ Re(julation Act, which gives the I'.oard ot Trade and the Railway and Canal Conunission power to enforce reasonable hours of labor on rail- ways. In the United States the national government and many of the states have passed laws fixing the hours of labor for employees in the |iublic, service and even for all engaged on public, works. Many of the states, too, have lixed the number of hours (frequently 8) whicli should constitute a day's labor, in the ab,sen(;e of an agreement to the contrary, but an act of this kind m Nebiaeka, which provided that extra hours should be paid for at double the rate of the preceding hour, has been declared uniionstitutional liy the couits. The nu)st importaut legislation regulating the hours of men has been in connec tion with railway labor, and may be defended on grounds of public safety. Tlie following states (and possibly others) limit the hours of labor on street riiifirut/s as follows: Cal. Oi>: La. (12): Md. (li): :SIass. I 10); X.J. (1-2); Fa.(l-i): Wash. (10): N. V.(IO). A leAv slates have liassed like legislation wiih le Terence to steani rdilicays: Col. (18); Minn, (l.s, for engineers and lirenien); (). (not more th:in I.t hours continuous la l)or, to be followed by eight lioursrest: applies to train- men and telegiaph operators); Ga. (trainmen not to be reciuired to make runs aggregating o«er thirteen hours in any twenty-foui' hours). In 1S95 X. Y. limited th confined to banUs organized under the national law of 18f;3, and its amendments. Tliis act re(iuires the deposit, witii the national gov ernment, of United States bonds as security for notes issue^l, the main- tenance of a reserve of 25^ or W,i of deposits, according to the charac ter of the city in which )he bank is situated, and the accumulation of a sxirplus equal to 20;? of the capital. Further provisions determine the character of the investments allowed, and subject the banlcs to in spection by government oflicials. Almost every state, also has laws regulating methods of banking and insurunce. The use ot forests which are the property of private individuals, is, throughout the con- tinent of Europe, sul)jcct to more or less strict government regulation (see Pinchot G. Government Forestry Abroad in Pubs. 0/ Amer. F.r. Assoc. VI.) The compulsory insurance legislation of tlie German A'mp/recomprist > three parts. 1. Insurance ag,ainst sickness, {^n^tnaX, 19:^). The laws specifiy in great detail the classes for which insurance is compulsory. They incluile almost all persons, in continuous employment for more than a week, who work for wages or for a salary less than 2000 marks a year, witli the exception of agricultural laborers, and for them insur- ance may be made compulsory within a given territory ))y vote of the individual states or communes. Such votes have been passed in many cases. The law recognizes seven kinds of insurance associations, (four of them in existence when the law was passed), in which insur- ance inay be effected. In all except the free associations the employ- ers pay oue third and the insured two thirds of the contributions: towards insurance in tlie free associations the employer pays nothing. The amount of relief received varies witli cliaracter of tlie association, but in no case exceeds the expense of medical treatment and 75^ of wages. The average membership of these associations in 1893 was 7,106,804, the number of cases of sickness 2,794,027, days of sick 46,r,J9,43K contributions by employers and employees, and entrance fees 106,154,fiti3 marks, total income 132,137,396 marks, payments for medical treatment and sick pay 101,971,698 marks. Insurance against accidents (first act 1884). Like sick insurance it is compulsory, for the great bulk of the workers for wages, and for sala- ries less than 2,000 marks a year. In 188G it was made compulsory for those engaged in agriculture, and in 1887 tor those engaged in mari- Character of Goi'cnnuciital Regulations. 13 1 liuie einploynieiiti". Tliis l:i\\ is su|>ijU'ineiitar.\ to the sick insuraiKf law, and becomes operative only after the thirteenth week of bicknes.^ due to accident. The burden of insurance rests entirelj- upon the em- ployers. In case of total disability the payments amount to two-thirds of the wages; in case of partial disability the payment is proportional ; in (;ase of death there is a payment for burial expenses, and a pension to the survivors, not to exceed sixty (ter cent, of the wages of the de. ceased. Accurate statistics as to the number injured are not available, but it is safe to say that in 1893 (including small farmers) it was over l'2,()00,000. The accidents for which payment was made numbered •J-2-2,475i of which loi),T4(J occured in previous years, the payments on account of the same amounting to 38,163,800 marks. Old age. and disability insurnnre (first act 1889). Compulsory, practi. cally. for all workers (over 16 years of age) for wages, and for salaries less than -2,000 marks a year, and may be extended by the federal council to small independent producers. Disability means inability to earn one-third of former earnings ; old age begins at TO. The funds are raised by contributions from the imperial treasury (.i0 marks yearly for each .pensioner), and by payments from the employer and em- ployees, these two classes contributing equal amounts, varying for the first ten years from 14 pfennigs to 30 pfennigs a week, according to the wages of the person insured. The number of persons insured under the act in 1893 could not have been less than 12,000,000; the number of pensions payable on December 31, 1893, was '210,294; the payments made during 1893 amounted to 28,046,200 maiUni. including 11,261,700 marks contributed by the Kmpire. A description of the German insurance laws will be found in the lumrtli Specifil Report of the Commissioner o/ Labor (U. S.) It was prepared by .). G. Brooks. There is a prospect that the German laws will be more or less widely imitated on the continent of Europe, and the policy <>f old age iiensions has many strong and able advocates in Kn gland. For an enumeiation and brief description a great variety of acts recently passed by the English parliament, and interfering with the system of individual rreedoni, sef Cunningham W., Politics and Eco^ iiomics. Instances of regulations affecting international relations nrv.lhii pro- tective import duties imposed by almost all nations, with a marked in- crease to extension and increase during the last twenty years, and the restrictions imposed on immigration, (('hivext Kxclvsion .-J ^r )ii-(idiictioii. LECTURE XIX. GENERALIZATIONS FROM ECONOniC HISTORY. Ti:rkit()Rial I^xtkxt oi' J'^coxo.mic J'k()(;re.ss. Baktiiolomkw J. (i. Atlas of Commercial (icoo-rapliy. Classifications oi" tiiI'. Sta(.i:s oi" I^'coxo.mk: Dkxki.op- Mi:x r. ScHONlsEKG (i. Uaudiich dry PoUtisclicu Ofkonomic \o\. I, I. This same classification will be fountl in sub- stance in I'JA' R. T. An iiiti-odiiction to Political Economy Pt. I L'h. \i. Schmolli-.k (t. The Mercan- tile System (translation from the German). Fa\r1': Ch. Ldivolution Economiqite dans F Histoire, in Revne d"" Economic Politiqne, \'ol. VHI p. i. (an abstract of Ix. Buchkr's, Die Entsteluing der Folksieirtsc/iaft). Vox the stages in the evolution of manufacturing in- dustry see Bl'cher K. Les Formes d' Industrie dans lenr Dcvelloppement Historiqne in the Revne d' Economic Politiqne \'ol. W. p. 625. In looking back over the course of economic dexelop- ment we are enabled to make certain generalizations in regard to its extent and character. I. Economic Progress has been the Exception. The land area of the earth is about 52,000,000 square miles. It is probably a conservative estimate that under exist- ing climatic conditions not over 40,000,000 square miles are available foi" industrial purposes, of which not over one half is occupied by peoples who ha\^e passed beyond the statre of barbarism. 134 lixtcnt and Coiiisc of licoiiomic Progress. TIk' eritimatu iiiclutlf!* the tervitoiy occuiiicil Ijy poDiilcs who have reached even tlie hiwer stages of civilizatinii. It docs not imply that all the land in this territory is I'ully used; much of it is idle or only liurtially used. The ijreater part of A I'rica and considerable portions of Xorth and South America and Asia are still occuiiied by barbaric or savasie peoples. The population of the world is probably about. 1,500,- 000,000, of which perhap.s one fifth are in a .state of bar- barism or savagery, not much oxer one half have made any appreciable progress m historic times, and less than one third, occupying not over one fifth of the available area, have reached the highest stages of industrial de- velopment (nations of central and western Europe and the United States). The population of the world may be roughly classified into races as follows ; \Vhitc\ 610,- 500,000; {Aryan, 545,500,000: Semitic, 65,000,000); Yt'/loio, 630,000,000; Black, 185,150,000; Red, 15,000- 000. A portion of the Aryans alone have reached the highest stages of industrial development. Although there are indications of a great progressive movement in the near future, it is exident that in the past }M-ogress has been the exception rather tlian the rule. The next great progressive movement is aiipareully to lake i]lace iu con nection with the oiiening up of Asia to modern industi'ial methods through the inlliience principally of Russia and .Jaiiaii , trans Siberian railway In the process of construction by the Itu^sian Government). 2. ]\conoviic Progress has been irregular and discon- tinuous. Long jjeriods of comparati\-ely stable condi- tions ha\'e alternated with periods of rapid })rogress. Such periods of progress accompanied the growth of city life at Athens and in Asia Minor, the establish- ment of the Roman dominion, the rise of city life in mediaeval luirope, the rise of national life in the six- teenth and seventeenth centuries, and, most strikingly of all, the era of in\x'ntit)n which began in the last century. Each of these periods has been preceded by a period, sometimes centuries in duration, when eco- nomic progress was almost inappreciable. Eollowing the period of development which culminated during the early centuries of the Roman Empire there was a j)eriod of marked and lonfr continued retrogression, P/unsis of lu-ouoiitic Ori^-iiiiizatiou. 135 3. The groi^'th of cconoinic life Jias been iutiniatcjy re- lated to t/ie i^TO-u'tf of other pliases of soeial Ife, and to the state of intelleetiial developuient, particularly as sluKoii ill t/ie development of the industrial arts, lu-o- iiomic histoi"}' is a constant illustration of the i-clationsof economic life to the general life of society as stated in Lectures IJ-III. The economic life of Rome at each stage of its development was the direct outgrowth of political conditions ; just as intimate were the relations of the economic life -of the early middle ages and feu- dalism, the gild s\stem and the growth of the power of the towns, the mercantile s}-stem and the growing power of national go\ernments, the modern economic s)stem and the de\'elopment of the industrial arts, itself a result of the de\-elopment of physical science. 4. As a result of the relations of economic life stated under 3. We find that the form of ecououne organirj.a-^ tion existing at an)- Iww^ presents tivo more or less dis- tinct phases \ (a) it is the counterpart of the existing political organization, the result of the conscious mould- ing action of the political power ; (b) it is the uncon- scious outgrowth of the conditions of external nature and the state of development of the industrial arts in connection with which it exists. The former may be termed the conscious or couipnlsory phase, the latter the unconscious or spontaneous phase of economic oi'ganiza- tion. The gild system, and the general form of economic organizatic^i during the period of the mer- cantile system, especiall}' on the continent of luirope, are good illusti'ations of compulsory organizations, the modern industrial system of spontaneous organization. NeitlitT tlie division iiiaile nor the tciiiis used almve art', liowcver. entirely accurate. Tlie orfiani/.ation of eciononiic life in the early mid- dle ages, ior e.\anii)le, was tlie cdiniteriiart oi' the social and political organization of the time, but was in no sense tlic result of any conscious action of a controlling i)olitical i)o\\ei'; I'ustom, the outgrowth of cir- cumstances, and not of any conscious juiriiose in regard to economic organization, was the regulating force; and at all times the social and l)olitical exercise an imimrtant indirect inlluence on the economic or- ganization in many ways not present to the minds of those wlio control the politic)"! power. On tlie other hand nil those forms of economic organization (c ;/. the factory system, trusts) wliich arc tlie jirochK't of 136 Sta^'cs j)i lu'0)iouiic Progress. the action ol (n-ivate individuals, iiru the lesult ol a conscious purpor^e on tlie part of sucli indiviiluals, l)ut, usually, a i)uri'09e directed to securing private gain, not to proilucing new forms of econonii<- or- ganization; sometimes, however, the latter iiurpose is present. 5. Classificatioii of the Stages af Eeonoviie Develop- i/ietit. There may be .several clas.sification.s determined by the phase of economic organization (compulsory or spontaneous) upon which emphasis is hiid. The most common (see Schonberg and Kly) refers principal!)' to the development of the spontaneous organization and distinguishes h\'e stages. (a). Hunting and Jjs/iing sttrge, man entirely dependent on the l^ounty of nature. For the general characteristics of this stage see the account of the economic life of savage peoples in Lectures III.T\\ (b). Pastoral stage. Man begins to control the forces of nature with the result of in- creasing the suj^pl)- of things fitted for his use; popu- lation is nomadic, (c). Agricultural stage. Man's control over natural forces gi'eatly increased ; perma- nent settlements begin, b'or the general characteris- tics of stages (b). and (c)., see the account of the economic life of barbarous peoples in Lectures III.-I\'. (d). Trades and eonnneire stage. The main economic characteristics are the di\-ision of occupations, and the growth of commerce and of a money economy. No ancient civilization (see account of the economic life of non-European civilizations, in Lectures III.-I\'., and of Greece and Rome) passed beyond this stage, and in the history of modern Europe it includes the whole period from the rise of cities to the industrial revolution at the end of the last century, (e). Industrial stage \ marked by the rise of modern forms of industr}' with all their accompan3'ing characteristics. It covers the present century. It should lie noted that the successive stages are not exclusive hut cumulative, the life of the lower stages continuing to exist to some ex- tent even after higlier forms have become predominent. Further- more, stages (b). and (c). should be regarded rather as ditferent phases of the same .stage than as successivestages. Another classification of the same general class rests entirel)- upon the character of the mechanism of ex- Stdi^rs ill lu-ouoviic l^ro^-rcss. 137 change, distinguishini;- (a), the stage of l)arter ; (h). tlie stage of money ; (c). the stage of credit. Schmoller, on the other hand, in liis classification lays emphasis upon wllat we have termed the compidsory phase of economic organization, distinguishing successive stages in which economic life has been controlled and given its special characteristics by (a), the tribe or clan ; (b). the village ; (c). the town or city; (d). the ]M-ovince (Territorium) ; (e). the nation ; (f). the union of nations. Scliinollei's point of view maybe .seen from the lollowing i|Uotatioii3. " In eyei'y phase of economic development, a guiding and controlling part belongs to some one or other political organ of the life of the race or nation." (Mercantile System p. 2). "The idea that economic life has ever been a process mainly dependent on individnal action, an idea based on the impression that it is concerned merely with methods of satisfying individual needs,— is mistaken witli regard to all stages of human civilization, and in some respects it is moi-c mistaken tlie furtlier \\ e go back." (ib. pp. .?-4). Bucher's classification combines to some extent the com- pulsory and the spontaneous phases of economic or- ganization. The determining, element is the way in which production and consumption are connected, the method by which the product is transferred from the producer to the consumer. J^'rom this point of view he distinguishes three main periods, (a). The period of domestic economy- The producers and consumers are identical, there is no exchange, the whole process of production and consumption is completed within the producing group, (household or tribe). This period lasted from the beginning of economic life to about the beginning of the eleventh century, A. D. (For a criti- cism of this view as applied to (jreece and Rome, see Meyer E. Die Wirtschaftliche Eiitivickeliuio- des Altcrtums,\w \\\^ Jahrb. f. Xationalock,\\. Stat. Series 111., Vol. IX., p. 696). (b). TJie period of toicn or city economy. A separation has taken place between the pro- ducer and the consumer, exchange has consequentl}- come into existence, but it is a direct exchange, no in- termediaries having arisen between the two. (c). 77/0 period of national economy. Production is for the gen- l3iS h'liiidauu'iUal liiidciicii's in licoiioiiiic I'' ivt^rcss. eral market and numerous intermediaries, usini;" a com- plicated meclianism of e\chanL;'e. ha\e arisen between tlu' producer and the consumer. Some iilcii 111 till' ichitiun,- lictwi'cn Ihoc \ai'iou> i-l;ts^ini';iU()iis niay be obtiiiiicU from tlic I'ollowing tiibiil.ir stiitumoiil. S( II()MJKI{G. 1. s< II()M'.KI{G. S( II.MOM.KI!. iii ( IIKIi. Ilniitiii^- iuid Fish- ii),n- stagi'. I'astoral Stajri'. stage ol I'.artcr. Tribal Kcoiioiiiy. Domestic, Keoiiomy. Ag-ricult iiral StaK->'. \illage I'j-iiiioniv . Town or ( il\ Kcohoniy. Trades and ( onimer ortai)t part in the overthrow ol tlie system of gover- niental regulation. The American Declaratiou of Independence de- clares it self-evident. "That all men are created equal : that they are endowed by their creator with certain imalienalile riglits: tluit among these are life, liberty, and the pursuit of happiness." The National Assembly in France in its declaration of ITiSlt, included among the nat- ural rigiits of man, liberty, property, security, and resistance to oji pression. Many of the State constitutions in this country contain sinii- lar,an extL-nsidii beinjj possible only by act of congres.i; P^ngland, fourteen yearf, witli the possibility of extension for seven or fourteen years by act of the Piivj- Council; France, five to fifteen years, accord! nL' to the aniuunt paid; Germanj-, fifteen years. (b) Restrictions on commerce (protectixe tariffs), for the purpose of securing an increase or better distribu- tion of protective powei' and wealth, and of maintaining a high standai'd of living, (c) Restrictions on immi- gration for the purpose la.st mentioned, (Chinese exclu- sion acts in the United States), (d) Restrictions on certain industries either in themsehes injurious (liquor business), or which may be managed in such a way as to involve injury to public well being (railways, etc), (e) Restrictions on certain occupations in which lack of skill may have serious results, (pharmacy, medicine, law), (f) Restrictions on contracts involvnig injury to public well being (anti-trust laws), (g) Resti'ictions directed to the maintenance of safe and healthy condi- tions of industry and life, (h) Restrictions for the IDrotection of classes not in a position to care for their 142 Restrictions on Individual Freedom and Propeity. own interests, (i) Restrictions on pii\ate in the in- terest of public enterprise (post office). In tlie above (li.scussioii it is not ot course meant to cover all the rights included under tlie freedom of the individual or all the restrictions on those rights existing at the present time, but merely the rights and re. stri<'tions which are most importimt fmrn an economic standpoint. LECTURE XXI, ORGANIZATION OF MODERN ECONOMIC LIFE. PRODUCTION. There is not ver\' nuicli in economic literature that bears chrectl}' on the organization of production from the point of \\q.\\ of tlie present lecture. The fullest treatment be found in LiaiR J. Prodnktion u Kon- siiviption in d. ]\dksicirtscliaft. Something will be tound in Makmiall A. Principles of Economics, Bk. \\. (especially Ch. XII) and in Ki.einwachter Fk. Die X'olkswirtschaftliche Prodnktion iin Allgemeinen in ScHoNJii:KG's Handb. d. Pol. Oek. A description of corporations and of the organization of credit as a factor in production ma}' be found in Cakkoli. E., ]\<. Prin- ciples and Practice of Finance. Fistribntion of /Productive J^oicer. In a nation where the economic organization is based uyxni the legal system described in the last lecture, the distribution of productive power and the organization of productive enterprises will be the result of an immense number of individual choices, each individual being guided by the desire to advance his economic interests Distribution of I^rodiictivc Pon'Cf. 143 (/. c. to obtain the largest i-eturn for a given expenditure of labor and wealth), but subject to the restrictions mentioned, to others growing out of the circumstances of each individual, and to the conflicting influences of other than economic interests. Under mydern conditions when industry is organized on an inter- national basis a view of the distribution of productive forces between different industries should take in the whole world of related industry, but even fairly accurate statistics are available for only a few countries. The difificulties are the lack of ;n\ uniform classification and the omission of subsidiar\' occupations. The following table, taken from Riimelin's Hcvdlkcningslclircxw Schon- bcrg s Handb. d. Pol. Ock. i., is perhaps as near an approximation to the facts as can be obtained, l^omes- tic servants are apparenth' not included in ihc classifi- cation. The figures arc based on censuses taken during the years 1880-1882 but there has piT)babl)- been no sub- stantial change since that time. NrMHKi; 01 1* t.SUX.S (000 OMITTKU ) WHOSK CHIEF OCCUPATION IS IN (1) A (-(jiisidd'aliU' iiurliuii of Uiesc sliould prcbably bo classeti Liiidei' ai'iiculture. 144 I lutividiial J^rodiictio)i. ()k(;anization of IxnrsTKiEs from thk Point of \mf\v of Pkoductiox. From the point of \'ie\v of organization we ma\' divide industries into two main classes, i. Those carried on ^ by a single individual or 4 single famil)-. 2. Those carried on bya group of indixiduals other than a family. According as production is carried on in one way oi- the other we may term it an individual production or a group proditctiou. Individuii/ Production. A great number of those engaged in industry are still working in this way. It exists largely in the minor branches of transportation, in the smipler forms of mechanical industries, in small retail trade, in farming, in domestic service (this should include all household labor whether performed by paid servants or not), and in the liberal professions. In all except the last two classes mentioned however there is doubt- less a tendency for it to gix'e way to the group" enter- ]:)rise. There are few titatistics as to the uuinber of iucUvidual enterprises. In the case of agriculture we can judge something from the size of tlie holding. In tlie following table column 1 shows tlie number of agri- cultural holdings under 50 acres each (unless otherwise stated) in the countries and at ilie times stated. The flgures except for Great Britain and Ireland (Statesman's Yearboolc V&)'t) and the United States (Census I8iJ0j are from the article on Bauerngut und Bauernstand in tlie Haudw'Vh. d. Siaatswiss. Column 2 shows in per cents, the proportion of the holdings given to all holdings above the minimum holdings given in the table. COUNTKY. 1. I w Belgium, (1880) \ 89.3,810 (2) Holland, (1887) ■ 137,i).T2 Oreat Britain, (188:t i f0i),422 W Ireland, (1893) , 481,989 2. CO0NTRY. 1. -• 98 Hungary (5) •>,;;48.(jio 95 84 United states, (1890) (8) i,;«8,.V2l •-'9 71 France, (1881--i) (6) 4,738,.190 9-2 84 German Empire, (188-2-3) . . (T) 4,969,843 96 (1) These holdings covered 63 per cent, of the cultivated area. 709,.566 (covering 23 per cent, of the area) were under 5 acres. (2) 2>a to 50 acres; 74,039 under 12 '< acres. (3) U' to 50 acres; covered p Croup Proiliiclion. 145 probably al»oiit Ki per cent, of ihu cultivated area; 17-2,f37 (coveriiiL;- probably about 1'^ per cent, of the cultivated area) were less than r. acres. There were also 455,00.t "allotments," apparently not included in the figures for "lioldings," and most of them under 1/4 acre, (4) 172,8;>T undero acres. (5) about 7 to 43 acres. The figures are merely an esti- mate. (6) covered 38 per cent, of I he cultivated area ; 2,67-2,007 (cover- ing 2 per cent, of the cultivated area) were under 2'i acres. (7) covered about 44 per cent, of the agricultural area; 3,061,831 (covering about .1.5 per cent, of the area) were under .5 acres. (8) Does not include farms under 3 acres from which less than $.")00 worth of product had been sold during the preceding year. The only general statistics concerning individual producers in other brandies of production are those of the trades census of 1882 for the German Empire. The census included gardening, raising of animals, raining, stoneworking, mechanical and manufacturing pursuits, trade, and transportation with the exception of the railway, the post office and the telegraph. There were engaged in these industries, altogether, 7,340,789 persons, of whom 1,012,886 were individual producers. The numbers of sueli producers in the trades mentioned would doulitless be relatively less in England or the United States, but when we take into consideration the occupations mentioned above, but not included in this census, individual producers would constitute a considerable proportion of all prdducers even in these <•ouIltrie^. (rronp Prod lit tio)i. Wherever men i^roduce in gi-oups we usually find a dixa.sion of functions, a portion supply the labor power, receiving in return a stipulated wage, not dependent upon the profit or loss in the enterprise during a particular period. This portion we may term the cmplovccs or the laborers. The other portion con- trols the organization and the management of the group supplies the land, buildings, tools, machiner)', and ma- terials, pays their stipulated wages to the laborers, and keeps to itself the profits or bears the loss, /. c. assumes the risk. This portion we may term the employing por- tion, or, treated as a unit the employer. The employer again ma)' be either an individual or a group of individ- uals. This group may be oi'ganized in a variety of ways. It may be a partnership (a simple combination of indi\- iduals), a corporation, or a branch of the government, national or local. There are various intermediate forms of organization between the partnership and the corporation combininar some of the character- istics of each (for a brief description see KleinwJichter and Lehr), but they are of minor importance and for our purposes may be classed as partnerships or corporations. As regards the relative importance of these different forms of employers, the only general statistics are those of the German trades 146 Goi'crmnciit as au Riiiploy ceusus of l!^S2. That showed lor the mechauical and manufacturing industries 834,910 enterprises in wliich group production prevailed. Of these, 801,692, employing- •2,969,397 persons, were controlled by individuals; 28,693, emploj'ing 749,003 people, by partnersliips; 3,028, employing 288,033 persons, by corporations and lilic associations; 845, employing 11,782 persons, by local governments; and 6rr2, employ- ing 54,574, by the state or imperial governments. The stalii^tics lor England and the United States would doubtless show a relatively smaller proportion of enterprises controlled by individuals and by government and relatively larger proportion controlled by partner ships and corporations. For the facts in regard to 55assachusetts see p. 115. irovernment as an Emploiivr. From an economic standpoint govern- ment itself is properly to be regarded as a productive enterprise, and both national and local governments are, within their own territories, the largest or among the largest employers of labor. Exact ^tatistic^ are not obtainable, but it is [irobable that government (national and local) expenditures vary from about 7 per cent, of the national product in some countries to 16 per cent, or 17 per cent, in others. Looking at those branches of government activity which arc similar to industries carried on by private individuals and associations, national governments everywhere manage the postal service, combin- ing with it H larger or smaller portion of the express business, and, out- side of America, almost without exception, the telegraph and to a great extent the telephone service. In the greater part of the countries of the world (the I'nited States, the United Kingdom. Switzerland, Italy, and Spain the most important exceptions) the government operates at least a part of the i-ailway system. Practically the whole sjstem is under government management in the Geinian Empire, Australia, Cape Colony and Norway and a considerable portion in India, Austria-Hungary, Belgium (live sevenths), Brazil, Chili, Denmark, (three fourihs), .Japan, the Netherlands, Kussia, and Sweden. In many of the states of Continental Europe forestry is an important government indu.stry. In Prussia the government enters hu-gelv into mining, and in some states the government carries on important industries as a means of raising ta.xes, the production ol tobacco being monopolized by the government in several states, among them Austria, Hungary, and Italy; in France the government has a monopoly m tobacco, powder, and matches, but lets out the nianu- lacture of the last. Most national governments do their own printing and manufacture a large part of the equipment of the army and navy; many carry on manufactures of artistic goods, such as jjorcelain and tapestry. The following figures will give an idea of the vast size iif some of these industries in the more important states. The postal service in the United States during the year 1893-4 required an expenditure of $84,000,000, and employed over 100,^00 people, although a very large proportion of these did not give their whole time to the work; the English postal system (including the telegraph) involved an expenditure of $40,000,000, the French (including telegraph and telephone) about the same, the German $65,000,000 (employees 161,000). The government railways in Prussia involve an annual expenditure of $1.50,000,000 and employ probably 2.i0,000 men. The Prussian government expends annually over $8,000,000 on forestry, and $30,000,- 000 in mining, and allied industries, employing over 50,000 men. The French government expends $13,000,000 in the manufacture of tobacco and employs about 16,000 people. These are perhaps the most striking examples of great industries carried on b\ national ]-^ariations in the Oi-i^aiii:zation of Productive Groups. 147 fjoveinnieuts, but similar instances oC great importance can be found n almost every country of the world. The industries just mentioned are exactly similar to indiistries managed by private individuals, and, with the excei:)tion of the post oflice of the United States, yield the governments which engage in them a prolit. Every national govern- ment moreover expends annually great sums of money on public improvements, the building and maintenance of 7o*'^^l'^> canals and harbors, the deepening of river channels and strengthening river banks, but the greater part of such work is probably everywhere done by contract and it \vi)ulil be impossible to say how far governments are direct employers of labor in this connection. .\s managers of the police and fire departments and the school system local ffovernments control large numbers of employees, Vmt much of their work is of a kind more strictly analogous to that of private business enterprises. Such is the construction and maintenance of streets, sewers, parks and public buildings. Tlie construction in connection with such undertakings is, however, ixsualiy, in this country at least, with the possible exception of streets, let out to private contractors. The water supply is everywhere, as a rule, ' under goverunient management. The same might almost be said i>f the gas supply in England and on the continent of Europe, althougli it is very excci]tional in the United States. There are even some instances of the management of street railwax^s by the local govern- ments (Glasgow, Huddersfleld, Plymoutli, Blackpool). The following figures will give an idea of the immensity ot some of these uniler takings in great cities. In Berlin (18S"2-9:S) the expenditure in connec tion with the gas department amounted to over $3,000,000, not includ- ing payments on debts; in connection with the water works to about 1? 1,750, 000. The largest city in the United States which manages its own gas works is Philadelphia. The exi)enditure in connecition with these works in IS'.H), exclusive of extensions and payments on debt, were nearlj' i!'2,O0o,0()ii: in connection with the water works, estimated on the same basis, about .'5(300,000. The corresponding iigiires for the Boston water works were about S.iOO.OOO, with about an equal sum for extension, apparently under government management; for Provi- dence (1894-5) $100,000, with about $90,000 for new construction under government management. In all its departments the city government of Providence paid out not less than $1,. 500,000 in salaries and wages. For an account of the industrial activity of governments, botli national and local, see Leroy-Beaulieu, P., L'Etat Moderixi et ses Fonctions (there is an abridged Knglish version). James, E. J.. The. Relation of the Modern Munlcipaliii/ to the Gas Supply; Pubs, of the Am. Eg. Assoc. Vol. I.; Bemis, E. W., Municipal Oivnership of Gas in the United States, Ibid. Vol. VI.; Shaw, A., Municipal Government in Great Britnin; Municipal Government in Continental Europe; Dolman, F., Municipalities at Work: and Sniait, W., The Municipal iVorl; and Finance of Glasgow. Ec. .lour. Vol. V. treat Of lo(;al under- takings. Variation in the or(jani::atioH of group production from the type above described. 1. In the division of functions between employers and laborers, it was stated that the laborers supplied only their own lal)oi- liower. This is not always the case. In trades not adapted to factory oi'ganization ( e. (;. those building trades immediately concerned \\ ith construction), or in trades carried on in the homes of the workers (house trades) the laborers frequently supply their own tools and in some instances a portion of the materials which they use. Statistics again are difficult to obtain. According to the German trades census of 18S2, out of 5,50:i,5'.J9 who found their chief o(-cupat)on in manufac. 148 i obpcration. Comnnniistic Groups. tnre?, 479,526 persons wero employed under the house industry system, of whom 284.727 worked alone, and 6.3,274. with the assistance of 131,525 lielpers(Schunl)erg- II , p. 434) . The division as to industries was : textile industries, 28G,4.")6: clothing: industries, 133,049; other industries, 60,021. Those who worked alone seem to have been included in the figures for individual producers given on p. 145. It is in fact difficult to draw the line between the individual producer and the employee under tlie house industry system, the producing group under this sys- tem lacking definiteness of form and coherence. (.Schiinberg II., 11. 433) . 2. In some producing groups the laborers themselves act as the managing body, working together and dividing the product according to some prearranged plan. The most important groups of this kind are the Russian ArWs, groups of workmen, who as a group or as individuals, iindertake the performance of certain work, the group as a wliole assuming the responsibility in either case. Siich groups arc rare outside of Russia, but exist to some extent in connection with dock labor and mining. (See article on Artelle in the Hmidw' b. d. Staats- wlss). The same thing is accomplished in another way, while preserv- ing the corporate or partnership form of organization, when the l:tborers themselves are the controlling shareholders or partners, thus doing away M'ith all essential distinction between laborers and em. ployer, although the formal distinction continues. This form of organization is known as producih-e co6perntion. Thougli there arc some successful instances of this form of organization in France, and though there .are in England and the United States many productive enterprises termed cooperative, real productive cooperation seems to be very rare, the term usually being applied to organizations in which the laborers are shareholders, but in which they do not have the con- trolling powers, or to organizations in which the shares are held by working-men who arc not, however, laborers in the enterprise, or to organizations controlled by other cooperative organizations, or to enterprises in which the employers allowthe laborers a share in the profits, in addition to their wages. Where the real cooperative form of organization has succeeded in i)rodu(;tionithaa been for the most part in mechanical trades which do not req.uire extensive machinery or a comiilicated form of organization, or in correspondingly simple agri- cultural piirsuits, such as the making of dairy products. Cpnccrning cooperation see the articles on Cooperation in the English Dictionartj »f I'oiUical Economy, and Prod nJctivgpnosxenschaf ten in the Handw't'h. (1. Stfiatawissenchoften; Barnard C. Cooperation as a Bvxinesn; Gilman N. P., Profit Sharinrj between Employer and Employee. (Ch. VI, sec. 11. See also index) ; .Schloss, D. F., Methods of Industrial Remuneration, iChs. XXIII-XXVII); Wright, C. 1)., A Manual of Distributive Co- operation (ti-eats also of productive cooperation, and is reprinted in the Report of the Statistics of Labor for Mass. 1886; Reports by Her Majesty's RepresentatitJes Abroad on the System of Co-operation in I'oreign Countries, \?,^; Giddings, F. H.. Profit .SAwrin.r; ( printed in Report of the Bureau of Stati8ti(;s of Eabor for Mass., 1886) ; Ely, R. T., The Labor Morement in America, Ch. VII; I'he History of Co-operation in the I'nited Slates, Vol. VI of the Johns Hopkins Univer.-ity Studies (especially the articles by Shaw and Bemis) ; Herbert-Valleroux, P., Les Associations Cooj)eratires en France et a V Etranger, Vol. VI., of the Revue d'Economie Politique contains several aixicles on cooperation in various countries of continental Europe, and A'ol. VII contains Le Mouvement Cooperatif en France dans les dix dernieres Annies, by Gide, C. Longuinine, W., Les Artcles et le Mouvement Cooperatif en Rufsi'e. Beatrice Potter in her Co-operative Movement in Great Britain hrmg?. out clearly the slight development of produc- I Differentiation of the Functions of t lie Employer. 149 tive cooperation there. 3. Another form of organization which is too rare to exercise any influence on the organization of produclion as a whole, is seen in the communistic settlements which have existed ■ and siill exist to some extent, particnhirly in the United States. See Ely, R.T., The Labor Movement tn America, Ch. II. Noyes. J. H.. History of American Socuilism.i. Differentiation of the functions of tlie Employer. This diffei-entiation may be said to have taken place both within and without the entei'pi'ise. (a). As an enter- prise increases in size it becomes more and more dif- ficult for a single person, or even two or three persons, to exercise the entire management, and the tendency is for a division to take place between what may be termed the genei^al management, including an oversight of the internal working of the entei'prise and the con- trol of its relations to other enterprises, and the actual administi'ation of details which are left to salaried em- ployees. This administrative force, exercising in part the functions of management, becomes veiy numei'ous in a great enterprise and in its lower gi'ades is hardly to be distinguished from the class of manual laborers. In the case of a corporation, although all the shai'e- holders are formally members of the employing body, it frecjuently happens that many of them, sometimes a large majority of them, take no active part whatever in the management, holding their shares simply as invest- ments and regularly transferring their voting power to others. The actual exercise of the employer's functions is left to the board of directors, who represent the shai'eholders most largely interested, and even within this boai"d thei"e is frequently a still smaller group of persons with whom the control of the enterprise practi- cally rests. In a corporation of this kind the chief salaried officials are usually more than administrative subordinates. They are entrusted with considerable dis- cretionary powers, their knowledge and advice are gi^eatly relied on, and they are sometimes themselves among the largest shareholders, (b). The employer while oi'ganizing and managing the industry and sup- plying the land, buildings, machinery and materials 150 Banks as Factors in Prodnctton. necessan- for the employment of labor has come more and more to obtain from others the means of acquiring these things and even of advancing wages to the laborers. This may be accomplished either by borrow- ing, or in the case of a corporation by selling shares (those shareholders who actually have the control, being regarded as the employing body). This ma)' within certain limits be accomplished directly by a transaction between the manager of industry and the individual investor, but as a rule the parties are un- known to each other, and the bringing of investors into relation with those in need of their resources, and ren- dering available for industry the resources kept on hand to meet current expenses, have come to involve a somewhat complicated mechanism. The principal elements in this mechanism are incorporated banks, bankers, and brokers. Incorporated banks may be divided into two classes, sa\'ings banks and mer- cantile banks. Savings banks as a rule derive their resources exclusively from the deposits made w-ith them, such deposits representing in the main the savings of people of moderate means. In this way there are col- lected sums enormous in the aggregate (see p. 114) a large portion of which are loaned on real estate mort- gage security, the greater part of the remainder being invested in bonds and stocks, principally in the bonds of national state and local governments and of railways. The great bulk of their investments are, therefore, what may be termed long time mvestments ; the bank keeps a comparatively small amount of cash on hand and may, usually, requn^e notice of withdrawal of deposits. The mutual banks pay oxqv to the depositors their whole earnings, less expenses of management and the payments necessary to the maintenance of a reserve fund ; in the case of stock banks dividends on stock are also deducted. Mercantile banks derive their resources partly from their capital paid in by share- holders, sometimes from the issue of notes, but princi- pally from the deposit of the cash kept on hand to meet I luiiiks as Foi-tors in Proiiiicttoii. I 5 i current expenses. These deposits do not represent sa\- ings and are held, for the most part, subject to payment on demand (by means of checks), the banks payuig no interest or a very low rate of interest on the deposits. These banks seldom loan on real estate (such loans are forbidden to banks organized under the national law in this country), they may invest their capital and undi\- ided earnings in stocks and bonds, but the greater part of their investments are made by discounting short time (seldom over six months) commercial paper which represents loans to men in active business, to enable them to meet their regular expenses for the purchase of materials and the payment of wages, at a time when their own propertv is not in a form available for this purpose. The difference in Uie functions of mercantile banks and savings bankw comes out clearly in the following statement of the resources and Ha unities of national l)anks and savings banks in the United States, taken from the report of the Comptroller of the Currency for 1S94, pp. lid) and 308. Tlie figures represent miUions'of dollars. RESOURCES. ■ ; UIABILITIES. Nal'l Sav'gs Nat'l Sav'gs Banks. 15'ks. r4) | Banks. Banks. Loans (real estate) 77'.' Capital Stock (JOli :il Loans (.other than Surplus Fund 'li^ l.'ix real estate) -2.007 i-lf^ (7) ,, ,. „ «^ „,, .,.. Lndiv. I'rohts SO iO Circulation 172 Due Depositors..." 1,74'2(5) 1.778 (.6) Due Banks 527 3 Otlier Lia))ilities :«) \ Stocks and Bonds .. . 410(1) 779(2) Due from Banks ;;99 82 Real Estate 08 37 (3) Money 37G ) 4-J Other Cash Items 143) Other Resources 31 14 Total 3,474 1,981 Total 3,474 1,981 (1) Of these $226,000,000 were U. S. bonds. (2) Of these $109,000,000 were U. S. bonds; $399,000,000 state, county, municipal, &c., bonds; $122,000,000 railway bonds and stocks; and $45,000,000 bank stocks. (3) Includes furniture and fixtures. (4) Of the savings banks 640 were mutual banks (453 in New England, 182 in middle slates, 1 in tlie southern states, 10 in the western states; total resources $1,691,432,501, deposits $1,538,305,070), and 378 were stock banks (18 in Vermont, 7 in middle states, 49 in southern states, 211 in western states, 93 in Pacific I S2 Brokers and Bankers. states; total resouiccs $-289,311,688, deposits $-239,6-2S,172). With the exception of Caliloniiii banks (the resoui'ces of which are about 50 per cent, of the resources of all stock banks) the stock banks have a very small ])ropoition of loans on real estate. This is pariiculaily true in tlio west where the slock savings banks would seem to coi respond prettv closely to mercantile banks. (5) Practically all subject to ije drawn against by check. (6) S-29,&71,962 subject to check, all in stock banks, and $26,622,(il0 in Illinois. No deposits subject to check in the stock banks of Vt., N. C, La., la., Minn., N. M., AVash., or Cal. (7) $8.1,856,723 were made by stock banks. Brokers may be divided into three classes, i. Stock brokers whose business may be (a) speculative, buying and selling stocks, either for themselves or as the agents of others, in order to make a profit out of price fluctuations (it is in this connection that stock ex- changes have developed, which, while giving use to serious evils, have without doubt rendered securities more marketable and thereby encouraged investment) ; (b) the sale of stocks and bonds to individuals, banks, insurance companies etc., to be held as investments. 2. Note brokers, who act as the agents of borrowers in getting their notes discounted at the banks. 3. Mort- gage brokers who act as intermediaries betweeii bor- rowers and lenders on real 'estate usually combining with this the business of dealing in real estate itself. Among all classes of brokers it is common to find a banking business combined with that of brokerage proper. Private bankei's also frequently act as brokers. The larger among these firms control very large amounts of capital and play an important part in taking up large loans, to be afterwards placed with other bankers and brokers and through them with the public ; in supplying the means for the organization of great enterprises ; and in the carrying through of great com- binations. In addition to the above principal credit agencies should be mentioned building loan associations (p. 114) whose resources are the accumula- tion of small savings and are usually let out on mortgage security to be used for buildinjj purposes; trust companies, which in addition to doing a banking business act as trustees with whom e. g., borrowers may deposit, for the benelit of their creditors, the mortgage or other security ottered for the loan which they seek; mortgage companies which are organized for the purpose of lending on mortgage, obtaining their resources from the capital contributed by their shareholders. Hank Credits. i 53 anil various lornis of cooperative credit associations, especially com- mon in certain P.uropeau countries, organized either on the prin- ciple of building loan associations (except that the funds are used lor purposes other than liuilding) or with a view to obtaining loans on the joint responsibility of the association on more favorable terms than would be possible for the individual members. (See the aiticle on banks in the English Dictionary of Political Economy; Peters, E. T. Cooperative Credit Associations in Certain European Countries, ie|)ort to U. S. Dept. of Agric. Misc. Series No. 3; VVolflf H. W. Peoples Hanks; tlie various articles mentioned under Kreditgenossenschaften and Landwirtschafiliches Kreditwesen in the Handw't'b. d. Staat Swiss.) It is important to emphasize the fact that the function of banks, and the alHed factors, in production is not confined to collecting money and rendering it available for productive uses. Owing to the fact that in their notes, and deposits which can be drawn against by check, banks possess forms of credit which are available for all purposes, and owing to the fact that, as a result of settling accounts between banks by a balancing of indebtedness, (See lecture XXIII) they are called upon to redeem in coin only a small portion of their obli- gations, they can extend their accommodation far beyond the amount of money which it would be possible for them to control. It thus becomes possible for every one through the agency of banks to obtain on the security of the goods which he possesses, or in exchange for the debts which are due him, monev or the equiva- lent of money. The following will illustrate liow accommodation may be atforded by a bank without the use of money. A person goes to a bank and gets his own note, or a note which his debtor has given him, discounted. The bank credits him with the amount as a deposit against whicli he can draw by check, the greater part of which checks are not paid in money but offset against debts due the bank from other sources (lect. XXIII). Some discussion of credit and banks as factors in pro- duction will be found in almost every general work on political economy. Among articles and works bearing specially on banking may be mentioned: Atkinson E., Bank, Functions of, in Lalor's Cyclopaedia of Pol. Sc, Pol. Ec, and (J. S. History; What is a Bank, in Economic Tracts, First and Second Series (Putnam's). Dunbar C. F., Tlie Theory and History of Banking. Macleod H. D., The Elements of Banking (chs. V-X). Gilbart J. W., The Histoi-y, Principles, and Practice of Banking. AVhite H., Money and Banking. For the practi. cal details of banking sec Patten, C. B., Practical Banking. As a result of the differentiation of the functions of the employer as above described we find that almost every I 54 C /nssrs C ontribntitii^- to Piodiictioji. productive enterprise is dependent upon elements de- rived from a great variety of sources, supplied by per- sons who have no acquaintance with each other, sep- arated perhaps by thousands of miles, many of them unconscious of any relation to the enterprise in ques- tion, all the elements, howe\'er, harmoniously combined under the control of a single manager, or group of man- agers, for the attainment of the purpose in hand. In view of the same discussion we may now enumerate the following more or less distinct classes of persons who take part in production, i The land owjier. 2. The capitalist, who furnishes the means of obtaining the plant, the materials and ad\'ancing the wages. 3. The manager or entrepreneur. 4. The administrative force. 5. The manual laborers. It follows too that in the terms "individual production" or "cooperative produc- tion " it is not meant to imply that all the productive tactors are supplied by the same persons (land may be hired or resources borrowed) but merely that in the en- terprise in question they are brought under the control of the same person or persons. I LECTURE XXll. THE MECHANISM OF EXCHANGE. MONEY. The best general introduction is Jevons W. S. Money and the Mechanism of Exchange. Other excellent works are Walker F. A. Money. Nicholson, J. S. A Treatise on Money published in connection with his essays on monetary problems. All the text books on political economy include an account of money and its functions. For an account of the development of money in this country see Weeden W. B. Indian Money as a Factor i?i Nezv England Civilization (in J. H. U. Studies, Vol. II); Economic and Social History of A' e 10 Englaiid. Bruce P. A. The Economic History of Virginia in the Seventeenth Ccjitnry. Sumxer W. G. History of American Cnrrency. White H. Money and Banking. For paper money in particular see Phillips H. J. Historical Sketches of the Paper Money of the American Colonies Prior to 1789. Rider S. S. Bills of Credit or Paper Money of Rhode Island (R. I. Hist. Tracts No. 8). Knox J. J. United States Notes. For a concise account of the monetary systems of the world see Muhleman M. L. Monetary Systems of the World. It contams an equally concise statement of the princi- pal facts in the monetary history of the United States. A statement of. the monetary units and the principal coins of the different countries may also be found in the annual reports of the Director of the (U. S.) Mint, or in the current numbers of the Consular Reports published by the Department of State (U. S.). Dunbar C. F. Laws of the United States Relating to Cnrrency, Finance, arid Banking from 1789 to 1891 gives all that is essential in legislatixe enactments in this country. I 56 Functions of Money. AIoxEV AS A Mf:dium of Exchange. The primitive means of effecting exchanges is by barter i. e. a person having a commodity to dispose of seeks out a person who desires the commodity which he has, and has the commodity which he desires, and effects an exchange. It is evident that as divisions of occupations and hence the number of exchanges, increase this pro- cess must involve great difficulties, that these difficul- ties would be immensely increased in the case of indivisible articles of considerable value in exchange for which a variety of commodities were desired, and that under anything like the modern system of economic organization they would become practically insurmount- able. In order to overcome the difficulties of what has been termed "the want of coincidence in barter" people come to accept in exchange for the commodities which they have to dispose of some commodity which, being very generally desired in the community, they believe will in turn be readily accepted in exchange for the commodities which they desire when an opportunity for exchange arises. In this way a commodity or a number of commodities come to serve as a medium, or media, of exchange. When in any community a com- modity has come to be regularly and generally used in this capacity it is termed money. Other Functions of Monev. When a commodity has come to be used as a medium of exchange, i. e. to be money, it follows that every other commodity is more frequently exchanged for money than anything else. It becomes customary, therefore, to express the exchange values of other com- modities in terms of money. Money thus comes to fulfil the functions of a measure of value. A person desiring to secure by loan a variety of commodities would find it more convenient to borrow and to repay money rather than the particular commodities desired. In this way loans and all contracts for future payments come to be Evolution of Gold and Silver Coins. 157 made in terms oi money which serves as a standard of value i. e. as a measure of value as between different tunes as contrasted with a measure of value as between different commodities at the same time. Most forms of wealth do not have great durabilit}-. A person desiring to accumulate wealth would desire to turn it into those forms which are most durable, least liable to depreciation in value, and most readil)' disposable. It is evident that the mone)- commodit}' has the last mentioned qualit)' in the highest degree and will therefore, other things being equal, constitute the best stoir of value or repre- sentative of loealtli in o-citcral. This is particularly true in the case of accumulations intended for use in the near future. 'riie abovu are the tenii.s by wliicli the lunetioiis ol money ai'e u-ually (le>iigi)atecl. For reiis^ous wliicli will bcconu' evident later nionc)- cannot be a measure or standard of value in precisely the same s-eiisc that a loot iis a measure of length or a pound a measure of weight. With a view to emphasizing tliis differeiu;e F. A. Walker has proposed to substitute the term common denominator of value for measure of mine and standard of deferred pai/tnents for standard of value. There i.s no doubt that ^V-a ker is riglit as to the fact but it is doubtful whether it is wise to attempt a cliange in Uie generally accepted terminology. AoLUTiox OF Gold .vnd Silver Coin Money. At different times and places a very great variety of commodities have served as media of exchange (See Jevons Ch. IV.). Among the early colonists of New luigiand wampumpeage (strings of shells used by In- dians as ornaments) first ser\'ed as money; and for a long time certain of the more important agricultural products were used in this way. In V^irginia tobacco was for over a century almost .the onl}^ kind of money used and it continued to circulate up to the end of the last century. It is evident however that different commodities possess in different degrees the qualities which are desirable in money and that those commodi- ties which possess these qualities in the highest degree will gradually supplant the others as the money com- modities, from the fact that the}- will be more readily i-eceived as such. Jevons (Ch. V.) enumerates as fol- 158 Qualities Desirable in Money. lows the qualities desirable in money, i. Utilit}" and value. Both of these qualities might perhaps be summed up m the term aeeeptability, which is the fun- damental 'requisite. 2. Portabilit)-. 3. Indestructi- bilit)-. 4. H()nK)geueity. 5. Di\-isibility. 6. Sta- bility of value. 7. Coguizabilit) . It will be found on examination that among commodities which e.\ist in sufficient quantit)' to render possible their general use as va(n\Ki\, gold ajid silx'er {t\\c precious metals) possess these qualities in a higher degree than an\- other com- modities, and that, consequently, the}' have come into almost universal use as mone}' among civilized peoples, their suitabilit)' for this use being immenseh' increased by coinage which provides a government guarantee of the weight and fineness of the metal in the ct)in, a guar- antee which within recent times, among the more advanced industrial nations, has become absoluteh' reliable. ^n.U.'iidinrij and ioheii coins ;iie coin.- nf minor ileuoiiiiiiiitions the value of the metal in which is les.* tlian the f.ii'e value of the coins, the value of the coins theniselves being kei)t lip liy conveitibilit\ Into coins ol 4 full value. Coinage vaay hi.' I. /'rev. J. limiieif. Under tlie lir-l >y.tfree. Subsidiary and token coins are coined only on government account. When the difference between the nmount ol metal which it is necessary to bring to the mint to obtain a certain (juautity of coin and the Jimount of the metal contained in such <|uantity of coin is greater than the cost of coinage the diffeience is termed .s<'«iovY/,yc, which is tlierefore a profit to the government. Seniorage may also arise wlicn the government purchases the metal which it coins il the iiuautity of metal which ran be purcha.«ed by a given quantity of coin is greater than the amount ol metal which goes into siu-li coins. ( r()\ernments. als<\ have sanctioned the use of one t)r both of these metals as money not onl\- by regulating the coinage but by declaring them to he legal tender in payment of debts, which does not however exclude contracts specifying other modes of payment. Paper Money. ^ 59 \foniiy of Accoun*. It sometimes happen? that prices are expressed and accounts kept in monev denominations different from the denom- ination, of the money in actual circulation; the former constituting- merely a money of account. The money unit again may he different irom both the money of account and from any coin in circulation. Thus in the Anglo-Saxon monetary system the money unit was a pound weight of standard silver, practically the only coins in circulation were pennies, each of which was suppo^etl to contain a specific portion of a pound of silver, while the usual money of account was the shilling- representing a specific number of pennies (Jevons Ch. VIll). Throughout the colonial period, and in some instances even later, the money of account in this country was pounds, shillings, and pence, while the coins in nctual circulation were Mlmo-t exclusively Spnnisli dollars and their snlidivisions. 1'aim:i>; Monev. In addition to the commodity money (now coin money) above described there have been and are in circulation in every advanced industrial country various kinds of paper money, which, the material of which they are composed having practically no value in itselt, must derive their value from some outside source. Paper money may be divided into two general classes, accord- in «■ as it is or is not convertible into coin on demand the question of convertibility being wholly a c|uestion of fact. Conveitible paper money exddently derives its value from the fact that it can at will be exchanged tor coin. This does not necessitate that the redemption agency should keep on hand an amount of coin equal to the amount of notes outstanding but merely that it shouW have coin sufficient to redeem such notes as are actual)}' presented for redemption, which, if there be general confidence in the convertibility of the notes, may, at any o-iven time, be a very small proportit)n of the total. If the coin kept on hand does equal thetull amount of notes outstanding these notes become merely represen- tative money. The light of issuing convertible paper money is to-day confined practically to banks (on speci- fied condition.s) and to national governments. Inconvertible paper money, ma\- be accepted in ex- change for commodities and consequently have value from a great variet\- of causes among which may be mentioned the following; receivability for ta.xes, hope l6o Inconvertible Pa per Money. of future conxertibilit)', the fact that it has been made legal tender in payment of outstanding debts, habit, the the lack of any other circulating medium, patriotism, the promise of redemption in something other than coin. It is impossible however to make any statement as to what will be the value of inconvertible paper mone)', the \-alue in each case depending upon the particular circumstances of time and place, particularl)- upon the actual and probable amount of such monc)'. It has frequently happened (the issues by the colonial governments, and by the federal congress at the time of the Revolution, in this country, and the issues of the revolutionary governments in France, are among the most noted instances) that, all the value-giving causes above mentioned, except the hope of future converti- bility, being present, inconvertible paper money has lost its value completeh' and has ceased to circulate as money. The iLsual I'orni ut' paper money is a promiirsory note payable on de- niand, l)ut in the case of inconvertible paper this promise has some- times been omitted. For accounts of inconvertible paper money which has lost its value and ceased to circulate see Walker, F. A. Money Chs. XV. -XVI. White A. D. Paper Money Infiation in France, in Economic Tracts, First and Second Series, pub. by I'utnanis. Cheap Money Experiments pub. by the Century Co. The most notable instances of an inconvertible paper money maintaining its value oc- curred in connection with the issues of the bank of France in 1848 and 1870-1878; see Walker Money Ch. XVI. Dwnhur Tlie Theory and His ^ tory of Hanking Ch. VIII. Examples of inconvertible paper money which lost a considerable part of its value but continued to perform the functions of a circidating medium, linally becoming convertible, may be found in the legal tender notes issued by the United States gov ernment at the time of the Civil war, and in the Bank of England notes during tlie period of 1797-1811): see Walker Ch. XVI; Dunbar Ch. X. See also the references on paper money at the beginning of the lecture. White, II., Sumner, and Weeden, (Ec. and Snr. Hist.) describe the paper money issues in this country. Thk Moxktakv Svstems of thf. WoKi.n.' C /(7ssiJicatioH according to the money material. The following classilication is taken with some nioditicatious t'lom a letter from J. H. Norman of the London Chamber of Commerce to Uradsfrfets Fcli. Hi. 1S".1.'). For riullicr details see Muhleman. (,o/r/. (Jold countries include those in which gold is the metal of tlie stand ard full legal tender money. In some of these countries (indicated by i I Moiictary Systems. i6i s), there are full legal tender silver coins, but tliere is not free coinage lor silver, and the supply of such coins is so regulated that their value conforms not to the value of the metal which they contain, but to the value of the gold coins with which they circulate; in some of these countries, (indicated by r), there Is paper money issued by the government, but convertible into gold or its equivalent; in all, or almost all, there is paper money issued by the banks and convertijjle in the samCAva}'; in all there are subsidiary and token coins iif silver, l)ronze, nickel, etc. Cireat Britain. Australasia, Canada, Newfoundlancl, Cape of Good Hope, many of the minor British colonies in Africa and the West Indies, Belgium (s. ), Bulgaria (s), Egypt, P^rance (s.), Finland, (iermany (i*. s.), Hayti (s), Netherlands (p. s.), Newfoundland, Roumania (s.), Sweden, Norway, Switzerland (s.), Turkey (s.), United States (p. s.), Uruguay, Venezuela (s.), Algeria (s.), Tunis (s.), and several other minor countries. The total i^opulation of this group is estimated at 254,250,000. Silver. The same remarks mutatis mutainli.f apply to silver as to gold countries, except that in very few of these countries, probably, is there any consideralile amount of gold coinage in circulation, and in many of them, particularly the smaller among them, the monetary systems are in a chaotic condition, the circulation being comprised principally of coins brouglit in from outside sources in the course of trade. Asia (including Japan), East Indies, Pacific islands, most of those parts of Africa, outside of the countries included above undei" the gold standard, where mone}' is used, Madagascar, Mexico, British Honduras, i^eru. The population of the silver countries is estimated at about 670,000,000. In Japan, India, Ceylon, Borneo, Mauri- tius, the go\ernments issue notes. Iiiconvciiiblc /\ipi/: a. indicates that tlie standard is nominally gold; s., silver; G..s., gold and silver; Austria-Hungary, Italy, and Spain (Cuba), have full legal tender silver money, but the free coinage of silver has been sus- pended. In all tliese countries the circulation is composed princi- pally of bank notes, p. indicates that the government also issues notes. Chile la on the point of changing to the gold standard, bui apparently without prospect of resuming specie payments. Au^t'ia Hungary is on the jioint of resuming specie payments. 1 62 Monet (iry Systems. Argentina (g. p.), Austria-Hungary ((t. p.), Bolivia (s.), Brazil (c;. p.), Chile (g. s. p.), Cuba (g.), Colombia (s.), Costa Rica (s.), Ecuador (s.), (ireece (g. s. p.), Guatemala (s.), Honduras (s. ), Italy (g. p.), Nicaragua (s.), Paraguay (s. p.), Portugal (g.), Russia (s. p.), Servia (g. s.), Spain (g.), Salvador (s.). The population of these countries is estimated at about 242,000,000. Muhleinan, (p. 1.')!)), sums up as iollows Mie money supply ol the world. The tigure.s apparently represent millions of dollars with the value of lull legal teiuU-r silver, calculated at the U. S. coinasre ratio, one ounce=»l.-292ii. Ueograi>lii- cal Divisions. -J ii o . •^ a a aj m o O Eh ai « . 11^ S^ 'Si ■5 S ■? > •1} 1 o c y. Govcrnm Notes. Si Si So 5 Kffectiv Money Kuropi' Asia Oceanic;! Africa No. America. So. America. Total ;!64.3 304S 8.S.'5.8 81 45.4 127 T.).9i 178.1 '.)8.4 666.9 36.71 34.1 1160 1800 44 20.9 fiO,i.,-) 10.2 501.5 153.5 .-3. 22.3 '.)6.7 26.4 4709.5 20.34.5 224. 221.3 1360.1 7it.7 3018.6 193 4S.5 24.7 2s;i 493.4 !466 j .3484.6 149.5 343.3 0.1 48.6 26.2 5{118o.5 31 676.7 2178.3 226.4 105. .34.8 831.7 36.1 I4.yt.9 4l35.1|3640.6l 853.418629.1 4062. 1702.9 .1764.9 3412.3 1.314.8 126.51 o.lj 11.5, 3.56.5 640.7 6024.3 2161 229.1 232.8 17-2.-).(i 711.4 102.;; 24,s.5 10.7 11. 17.6 24.55.11 11,084.2 393.1 (1) This does not include the gold in India and China, estimated at $610,000,000, of which very little is supposed to he in use as money. L lassificatiojt accordino to iiioiietarv units. Where different units ai-e mentioned in the same class, they are in fact identical through differing in name, .//. signilies gold; s., silver; w.. weight in grammes; ,;'., fineness; ».. e., the proportion of pure metal in thousandths; v., value in United States money, the value of silver coins being based on the United States coinage rate. It does not follow that there are actiuil coins corresponding to the units mentioned, (though it is usually the case with silver), but if not identical with the unit they are multiples of it. The countries mentioned it is believed, include the most important in each (••■ise. 1. Poii7id {g:)7u.y.()'S>^, f. 9i6|, 7'. ^4.86|, (ireat Britain, Australasia. Canada, Cape Colony. 2. Franc {g.) w. .3226,/. .900, v. §.193; (.v.) zc'. 5./. 009, 7'. $.187, France, Belgium, .Switzerland, Algeria, Tunis. Moiictarv Systems. 163 f.ira (^i,''. and .V. ), Italw Diaclniia ( i^'. and .v. ), Greece. J\'srta { g: and .v.), Spain. Dinar (g. and s.), Servia. /.rzt' {g. and .v.), Bulgaria. A^/' (,.;,'■.). Roumania. Peso, {g. and -s-., 5 francs), Argentina, Colombia, Central .America, Chile (.v.). Bolivaf { g. and .v.), X'enezuela. Gourde (g. and .v.), Ihuti. Boliviano ( g. and .v., 5 francs), Bolivia. So/ { g. and .s., 3 francs), Peru. Suere (g. and .v.), I'x'uador. 3. Dollar (g.) 70. 1.672,/. .900, ■:'. $1.00, (.v.) zo. 26.729. /". .900, z'. jSi.oo, L'nited States, Canada ( i,'.), Hawaii. 4. J/arl: (g.) 70. .398,/ .900, 7'. $.238, Germany. 5. Krone {g.} 70. .448, /' .900, 7'. $.268. Sweden, IJen- mark, Norwa}'. 6. Krone {g.) 70. ^^l, f. ,.900, •?'. ^.203, Austria-Hun- gai-y. 7. Rouble (s.) 70. 19.996, /! .900, 7'. $.748, Russia. 8. I'lorin { g.) lu. .672,/. .900, :•. 3.402. (.v.) r^'. 10, /'. .945, <-'. $.393, Netherlands and Dutch East Indies. 9. Rupee (s.) 70. 11.664,/. .9i6f, z'. $.444, India. 10. )'<■//. (,<,'•.) a'. 1.667,/. -900' ''• $-997- (•'''•) "'^'- -6.956, / .900, 7'. SI. 008, Japan. .\ 11 ex;iiiiiiiali(iii of tlio ;iboM' uiiiti ^liow?^ Unit witli Uii- i;x(;ei)lioii of Great Brilaiii and her coloiiie.-i there is iiniri)rinit_v in lineiiess anil that it would re()uire in most in>tances i\\\U iiic(insideral)le alterations ol weight to bring the units into sitiiplc numerical iiroportious with each (^ther. Moreover as will be seen Irom the following statement, niaiiv of the less important units correspond closelj' to some of the above. Milreis, Portugal, $1.08; Brazil, $..o4C. DoUnr, Xewfoundland, .^l.OU; ITong Kong and Strait.s Settlements, $].00,>^. Peso, Mexico, i?1.0Hi. I'nund. Egypt, .f4.iM3. I'iuster, C'o<;hin China, .i!l.018. Peso. Philippine Islands, $.!i8a. As will be seen from the above. .\sia is )n:iclicall\ a silver using continent. The whole continent, according to Muhlemaii (p. 87), may from a monetary standpoint, be divided into two i)arts, the first, beginning at the Red Sea and extending along the coast to Slam, using the rupee; the second, including the countries beyond Siain, using the dollar, formerly the Spanish, more recently tlie Mexican (peso) a result of Spain's early siii)remacy and contiol of the silver coming from the new world after the discovery of America. The United States gold coins also circulate freel\ in the Kmopean po,ssessions on or near this continent. Monetary System of the United States. The monetar)' system of the United States is composed of the following elements; i. (jold coins (free coin- 164 Monetary Sv-s'trf// of tJic United States. age. full legal tender). 2. Sih'ei" coins (coined on government account, full legal tender). 3. Silver coins (subsidiaiy, limited legal tender, convertible into full legal tender money). 4. Gold certificates repre- senting an equal quantit}- of gold held in the United States Treasur}\ 5. Silver certificates representing an equal quantity of silver held in -the United States Treasury. 6. Treasur}' notes, legal tender, pa}"able on demand in "coin," issued in pa) nient for silver under act of 1890 (repealed 1893). 7. United States notes, "greenbacks," legal tender, payable on demand, first issued during the civil war, limited to present amount. 8. Currency Certificates, representing an equal amcnrnt of United States notes held in the treasurx'. 9. National Bank notes issued by National banks on securit)' of United States bonds deposited with the United States, payable on demand by the United States in legal tender money. Kiirtbcr detiiils in regard to the vaiiou^^ kind- oT inoniy will lie luund in ^lulileuian. The following table .show- ilie clLMraclei- and location ol tlie money supply on October 1, 1895. Kl.NI> Ol MONKV. is r s. TKKA!«rKy. OUTSILiE Ol- Tkeasukv. (Estimated). Total. Uold Coin .^ 8H,-.'i(i,7:)(! ,S; 46!).88-l,0(i'2 $ .").Vi,ln(i,sis standard silver Dollar-^ :i(;8, u-2,7s-2 r).i,UG,.T27 4-.>:i,'281),30<.l Sul),sidiary .Silver 14..'i8-2,3:!7 (;i,40!i..')4;; 7(i.'J!ll, 8S() .■■i(i.(i4.i.."i;!;i ."".(i.(i4."),."i:;'.i Silver Certilicates Treasury Notes. Act of l,S.i<). o3(i.i:-!4.s:>7 :«(),4:^4.,'«;!7 :i(i.t;8(i.s.")U l(r7,U8.i,4-.'(; l4;!,t;ii(i.-.>so liiited St;ile> Not(;s lo(>.::il(;,(;iHi •.U(i,:ii34,4ii; :'.4(;,f;8i.iii(i i;:'., 840, 01 111 ():!,840,0OO National Bank Notes (;,018,77") •.'()«, 8:^8, 1.V.t •Jl'2,8ol,984 Total •i? 618,208,104 * l,5S5,5!)3,rj01) $2 ,203,801,(il:! f LECTURE XXIll nECHANISM OF EXCHANGE. CREDIT. All text books of Political Pkonomy treat more or less fully of credit as a factor in exchange. Jevons VV. S. Money and the Meehanisni of Rxduxno-c, (Chs. XIX- XXIII) and Dux ha k C. V . The TJieory and History of Bankino; (Ch. IV) gi\e excellent introductory ac- counts. Gii.p.AKr j. \V. The History, Prineiples and Praetiee of Banking; (Ch. XXX\'). W'uitk H. Mojuy and Banhino-. Patti:x C. B. Methods and Maehinery of Praetieal Banking. Hollf.s A. S. Practical Banking. Cark(ii.1- !•:. Jr. Prineiples and Practice of Finance. Cr.ARi' G. Tlte A. B. C. of the Foreign Exchanges gives an excellent description of the settlement of international indebtedness; also GoscHEX G. J. The Theory of the Foreign Exchanges. Articles on Banking and Clearing Honse in economic dictionaries. Statistics in regard to the extent to which exchanges are effected by credit may be found in the annual Reports of the Comptroller of tJie Currency. (See especially report for 1894, pp. 16 ff.). Kinlev, I). Credit Instrnnients in Retail Trade. ( Jour, of Pol. Ec. March, 1895.). P^ishek, W. Mo)iey and Credit Papei in the Modern Market. ( Jour, of Pol. P:c. Sept. 1895.) Tfie Balanxing of Indebtedness. If A and B are regularly selling to each other, instead of paying for each purchase in money, they may, at stated periods, offset the debts of one against the other, so far as possible, and pay only the balances in money. It is evident that in this way a great economy in the use of money would be effected. The same system 1 66 Check (Did Cicariiii^ House System. may evidently be applied to the settlement of accounts between three or any larger number of persons doing business witlieach other and, as a matter of fact, is applied to a great extent, to the settlement of the accounts of the millions of buyers and sellers in the modern industi"ial world. The description of the me- chanism hx which this is accomplished is the ])urpose of this lecture. The discussion ma\' be best divided into two parts, the first dealing with the settlement of debts within a single localit}' and the second with the settlement of debts between different localities. .Si. iri,i:Mi-.N r oi' hhu. iM)r;iiTi:i).\Ess ; i>,\.\k.s, chkcks, thi", ( l.l':.\KIX(. IIOLSl'.. A check \!< :iii unlcr, troiii a (k'i>osit(ir Id a bank in w liicli \\v ha^ a deposit, to i)a.\ to llif beaier of, or to the iici'son naiiicil in, Uie check a sum of moue.v .stated in the clieck. It may be tran.sf erred l)y endorse - nient, tlie various transferees aciiiiiring- all the rights of tlie original liolder. If in a given ct)mmunity it were customar}- for ever)-- one to keep their cash in the same bank A. might pay his debts to B. C. 1). etc. by giving them checks on the bank, which being dei)osited b\' them in the bank (and their rights transferred to the bank b_\' endorsement) the indebtedness could be settled b}' the bank deduct- ing the amounts of the checks frcjm the deposit credited to A. and adding it in ])roper proportion to the deposits credited to B. C. D. etc. Nt^ money whatever would be emplo3-ed. Where there is not one but many banks, and diffeient persons keep their accounts in different banks the same result is reached b)- the banks coming together and offsetting their mutual indebtedness. A. keeps his deposits in bank No. i., B. in bank No. 2., C. in bank N(x 3., and D. in bank No. 4., A. owes B. ;^ioo., C. 370., D. $85. and pays his debts by drawing checks for these amounts on bank No. i. in favor of his creditors, each of whom deposits his cheek in the bank in which he keeps his tleposit, transferring to the bank the right to receive the sum stated in the check, the bank m turn crediting his deposit with that amount. Banks 2, 3, and 4 now hold claims against bank i. for 3100., 3/0., Check nil if Clcariui^ House System. 167 and JS85. respectively. B. owing- A. $60., C. $110.. and D. $90., pa}\s his debts in the same way, drawing checks on bank 2. C. owing A. $75., Jl $150., D. ^95- and D. owing A. $65., 11 $125., and C. $80. do the .same. The mutual claims and obligations existing between the banks as a result of these operations are shown in the followinii" table : Bank 1. Bask •-'. Banks. Bank 4. owes oil ha.s claiiiis owe.« on ha.s <;lain]s owes on li!is claims owes on has claims clainis lield a.uainst claims lieiil against claims licbl against claims bold against .•ijfiiinst it by against it by against it l)y against it by Uaiik •-', $100 Bank -J, «! (iO Bank 1, s* o •• •2. no •• 2. f2.-. 2, '.10 •• 4, .Si " 4, C.i " 4, iiO " 4, 1-25 '• 4, 95 1 " 4, so " ;!. so •• .'i, '.15 ^. Total... $255 *-200 ^•>60 $.^75 *3'20 !i«-2(iO .•#270 !S270 Bal. due other banks, !<.')5 Balance due from other banks, It is evident that if Bank i. pays $55., and Hank 3, 360 to Bank 2. all accounts between the four banks will be settled with precisely the same results as if each bank had presented to the other banks the checks which it held, and received payment in cash, which would have involved the use of $1105 in money. Debts can be settled in the same way, and with little more difficulty, between one hundred as between four banks, it is actually accomplished through the agency of the clear- ing house which is simply an association of banks for the purpose of settling their accounts on the plan above described. The representatives of the banks meet for this purpose at the clearing house, usually once a day, and accounts aggregating tens of millions of dollars are settled in less than an hour, with the use of not over 5 per cent, of that amount in nione)', and sometimes with the use of no money at all, e\en the balances being settled by checks on other banks. 1 68 Intcr-local Iiuicbtcducss. Where, as is usual in tlie more iniportant countries outside of tlie United States, the banking business is concentrated in the liands of a relatively few lai'ge banks with numerous branches, large amounts of indebtedness are balanced by transfers on the books of each bank with out the use of the clearing house. In the Tnited states the clearing liouse is more essential .'• nd the number of such institutions ha s increased with great rapidity, being at present about sevcnty-rtve. The most l)erfect excniiililicalion of the system is to be found, however, in Kng land, where the small size of the country and the fact that all the lead- ing banks keep a deposit with the bank of England, renders it i)ossible to unite pi-actic;illy all the banks of the country in a common clearing system operated at Loudon, the banks outside of London acting through their London correspondents, and to settle all balances by transfers at the bank of England. 'When it is remembered that a check may pass from hand to hand and settle several tlelits liefore it is depositeil in a bank, it is seen what a tremendous e<-onomy in the use of money the check and clearing systems elTect. The use of Itanksand especially of checks is relatively little developed on the continent of Europe, as compared with England and the United States, and the clearing house system is conse(|uently of small importance. The clear- ing system has also been extended to other than bank transactions, to the dealings of stock antl other exchanges (more common on the con- tinent of Europe and in England than in this country ; introduced into the New York Stock P^xchauge in lsii-2. See Noyes A. D., Sioc): E" change Clearing Houses in L\)l. Sc. tjuart. Vlll. p. -i.Vi) and to the set tlenient of accounts between railways. .-\n excellent brief account of the clearing system in the jirincipal (countries will be found in the article clearing si/stem in I'algraves' Dictionary of Political Economy. For statement in regard to amount of clearings and ccononty effected in the use of money in this country see p. 1 15 of these lectures. SETTI.KMKXr 01" I NDEBTKDXESS BKT^^■KKN DIFFERENT LO- CALITIES. The principle is essentially tlie same as in the settle- ment of debts within the same locality, namely, the offsetting- of debts against each other, but the mech- anism is somewhat different, involving" the use of cas//- icrs checks (checks drawn by one bank on another, son"ietimes termed drafts), drafts and bills of exchange (both orders from a creditor to his debtor to pay, at sight or a specified number of days after sight, a stated sum to the i)erson named in the order). In describing" the method of procedure it will be convenient to dis- tinguish between transactions taking place between residents of the same country and those between resi- dents of different countries. Settlement of domestic indebtedness, (a). Cashiers' checks. Banks situated in towns keep balances with the banks of neighboring cities, which balances they main- Intcr-local Indcbtcdticss. 169 tain by transmitting for collection all drafts which they purchase, or checks and interest coupons deposited with them and payable outside of their own district. The banks of the smaller cities in the same way keep bal- ances with the banks of the great financial centers, and the principal banks in each of these centers keep bal- ances with banks in other centers. If a debtor wishes to make payment to a creditoi' outside of his own lo- calit)' he may obtain from the local bank a cashier's check on its correspondent in some neighboring city or in some financial center. This check he sends to his creditor, who deposits it in his l.)ank, which sends it to its correspondent for collection, and so it final))' returns to the bank which originally drew the check, through the local clearing house if that bank be situated in a city. (b). Jh-afts. A in Charleston having sold cotton for $5000 to B in Providence draws on B a draft for that amount payable to A, attaches to it the bill of lading, by means of which alone the cotton can be obtained, and sells it to bank No. i in Charleston, transferring his claim to the bank by endorsement. Bank No. i sends it to its correspondent in New York, bank. No. 2, which credits bank No. i with the amount and sends it to its correspondent in Providence, bank, No. 3, which credits bank No. 2 and collects the amount of the draft from B l)efore surrendering the bill of lading. Bank No. 3 dis- charges its debt to No. 2 by sending it drafts purchased by it from manufacturers in Pro\-idence, who ha\e drawn against their debtors in New York or other parts of the country to whom they have sold goods, and No. 2 dis- charges its liabilit)- to No. i by sending like drafts drawn b)' New ^'ol■k merchants against southern mer- chants, (c). Cas/iicrs' c/n-cks and drafts. Taking the illustration used undei' (b) suppose, as i,s the case, that the seller of cotton in the south draws a draft against his northern debtor, but that the manufacturers in Providence are accustomed to receive checks from their debtors rather than to draw drafts on them. The only difference would be that bank No. 3 would make remit- tance to No. 2, not by drafts but by checks deposited 1 70 Jutcr-local ludcbicihiess. with it by customers who had received them for debts clue frem other jxirts of the country. Whether bank Xo. 2 remitted to N<». i by checks or drafts would de- pend upDU the wa)- in which its customers arc accus- tomed to settle with their southern flebtors. \\ lietliei- (iral'ts or clifcks are iiscil depeml.s upon aj;rL'oiiient Ijetween the parties to the transaction and still more api)arently upon local and trade customs. In many cases drafts are drawn without any security attached. In such cases the banks through which the draft passes on its way to the debtor usually act merely as agents, granting no credits on the draft until it has been paid. Drafts are also drawn payable a certain number of days after date iu which case they are forwarded for arceptaiice (acknowledgement by the drawee) but are held by the bank purchasing them from the drawer (discounting theno until they become due. It might of course hai)i)en that at a gi\-en time a debtor bank did not haxe on hand available drafts, checks, or interest coupons in sufficient quantities to make the nec- es.sary remittances to its creditor bank. The bank, however, would i)robabl}- not remit money unless it had on hand more than it needed for its own reserves. Taking the case of bank No. 3 above, even if it did not have funds of the sort which it would naturall}' send to New York it might have a large balance in Boston, and bank No. 2 might be willing to accept a check on Bos- ton, or other Providence banks having on hand consid- erable balances in New York might furnish it with a New York check. If none of these means were avail- able it might borrow in New York or elsewhere until such time as it was convenient to remit. A permanent lack of remittances could exist only on the supposition that the })ayments to be made from Prox'idence to other portions of the country constantly exceed thepa)'ments from other j^oi'tions of the country to Providence ; a wholl}' abnormal condition. ■ Money will lie moved from one section of the country to another only when it is necessary to increase bank reserves in localities where such increase is needed, or to meet some special need for money in cases where credit instruments cannot be substituted. The most striking example of such a special need arises in connection with the harvesting of the crops. At that season of the N'car money is sent I Foreign Indebtedness. 171 from the banks of the financial centers to the banks situated in the cities and towns of the agricultural re- gions, whence it is obtained by the purchasers of the crop to be distributed by them to the farmers. The farmers make their annual purchases, the money thus coming into the hands of local dealers who in turn de- posit it in the banks whence, the special demand for money in the agricultural districts having passed, it is sent back to the banks at the financial centers where the demand for money is larger and mcjre constant. Settlement of foreign indebtedness. The [principle is precisely the same and the mechanism almost the same as in the case of domestic indebtedness, the onl)- differ- ences being that dealing in bills of exchange (as the instruments, corresponding to drafts and cashiers' checks in domestic transactions are usual!)- termed) is confined for the most part to the great pri\ate banking houses in the commercial centei"s, and that in settlmg indebtedness between this ct)untry and ICuro})e it is usual for creditors in this country to draw bills on their foreign debtors and for debtors in this country to send bills (bankers bills co\-ere(.l by the bills which the bankers have purchased fi-om the American creditors) to their foreign creditors. Mdix' ilebts aio due Kngiaiul (ttn- her exi)oilf-, lor iiiloi (.'sl and divi- dends on her foreign investments and for tlie freight which shijjs (-.any) than any country in i)ie worhl. Tliere is therefore a larjicr demand for bills drawn on London than for any others. For this rea- son foreigners can lioth draw and liuy London bills more advan- tageously than can Englishmen forein'n bills. LECTURE XXIV. THE MECHANISM OF DISTRIBUl ION. l-'or a brief description of tlie classes among' the [)i"()cluct is distributed -see Mill J. S. Principles of Political Economy Bk. II. Ch. III. An account of land tenure in Europe in the early [)art of this centurv is given by Jones R. Peasant Rents (in the Economic Classics ed. by Ashley). Mill as abo\e C7/s. \I.-IX. discusses the same question. J^\)r a more recent account see Systems of Land Tennre pub. b)- the Cobden Club, and the ar- ticle Tennres des Terres in the Dictionnaire d' Econ- oiiiie Politique. A statistical review of existing condi- tions will be found in the articles on Banerngnt und Ihinernstand and Paelit in the Haiidiv b. d' Staatsiuiss. In regard to the infiuence of custom see Mill as above Ch. \\ . and M,\ksil\ll A. Principles of Economics, Bk. VII. Ch. XI. ScHLO.ss D. F. Methods of Indus- trial Remuneration gives a full account of methods of wage payments. Cl-vkki: J. H. In his Philosophy of luealth Ch. XI. discusses briefly some phases of second- ary distribution. By the distribution of wealth is meant neither the trans- fer of products from the producer to the consumer nor the relative amounts of property belonging to different individuals, but the relative shares in the product ob- tained in a given community during a given period by the different classes and individuals in a community. We may distinguish in general between two stages in the process of distribution, i. Primary distribution i. e. distribution among those who have contributed directly to the production of the products in question. 2. Second- ary distirbution, i. e. distribution between the shares in primary distribution and others. Prniiary Distribiitiou. Rent. 173 Primary Distriiuition. The mechanism of priman- distribution is the direct outgrowth of the division of occupations and of eco- nomic classes, which have characterized the development of modern industry, as influenced by the legal condi- tions described in lecture XX. When the producer works by hiinsell' and with his own resources, pro- ducing for his own conaiiinption, there is no question of distribution; Mie earnings of each are wliat he produces. W^hen, liowever, division of occupation has developed, tlie earnings of the individual, even though he provide his own resources, are determined not only by what lie has i)roduced liut by the terms upon which he exchanges his prod- ucts with tlie product-t of others, and in case lie obtains a part of his lesources from others, or is working in a group, his earnings will be further conditioned by the terms of division with the others who have taken part in, or contributed to, the enterprise. I"he form which this division takes is the resuh of the organization of production described in lecture XXI. It will be seen from the classification on page 154 that in every enterprise some individual or group of individuals (managers, undertakers, entrepreneurs) take the initiative and assume the risk, securing the as- sistance of others b)' contracting to pay them fixed sums or by admitting them as sharers in the possible gains and risks of the enterprise. Within a gi\en period of time therefore (varying greatly in length for dif- ferent classe.s), the incomes of some of those contribut- ing to production are fixed in amount and payable at stated times, while the incomes of others, those who have assumed the risk, the profit recei\'ers, are un- certain as regards both amount and time. The follow- ing are the principal classes of payments which are fixed by agreement at definite amounts for longer or shorter periods. • I . Payments for land and buildings, usually termed rent. In the case of city real estate the agreement is almost without exception a written contract for the payment of a fixed sum per annum, continuing usually from one to twenty five years, but sometimes for longer or shorter periods. Among the nations industrially most ad- vanced, the tendencv has been to extend the same Priviary Distvibulioii. Wages. form of contract to agricultural lands. The term for which the agreement runs however is usually shorter (one year is the most common term in England), except where custom and not contract is the regulating power, when the rent may practically be fixed in perpetuity. In the case of agricultural lands it frequently happens also that the rent is not a fixed amount but a certain proportion of the gross produce from the land. lu France about one-eighth of tlie agncultuial land is cultivated l),v tenants on shares {metayaf/e), in Italy a still larger proportion, and in the United States in 1890 between one-fiftli and one-si.\th of all the farms were held in this way. Outside of England, where the culiivatit)n of laml liy tenants is almost universal, the proportion of agricultural land worked by owners who, consequently, i)ay no rent is very large. In tlu' United states three- tourths of the farms are cultivated in this way, in France more than one-half of the cultivated area and in German}-, according to the cen sus of 1S82, S.T per cent. 2. Payments for labor; (a.) manual labor, zuages. This payment may be a stated amount per unit of time worked {time zuages) or per unit of goods pro- duced {piece zuages) or some combination of the two. In agriculture, transportation and trade, and in unskilled occupations time wages are the rule ; in mining and manufactui'es the tendency has been towards piece wages, this tendency becoming sti-onger as labor has be- come more and more specialized. A reliable authority (Howell) has stated as a conservative estimate that 75 per cent, of the manufacturing labor in England is paid by the piece. Wages are usually not fixed by a written contract, and the agreement is usually for no specified time, very .seldom for over a )ear. (b) Administrative labor] salaries. Salaries are usually paid on a time basis and in the case of the most important employees are frequently determined by a written contract running f(ir a term of years. Wages are soinetimes made dependent on the state of the business by making them vary with the selling price of the products {sliding scale), or, in the o:ise of botli wages and salaries, by adding to them a part of the profits when the piolits ex(;eed a certain amount {profit sharing). When laborers work on their- own account wages may not appear as an item separate from profit, or from rent or interest, provided the laborers supply their own land and capital. I Priinaiy Distribution. Interest and Profit. 175 3. Payjuent for capital Iwrroii'ed ; interest. This pay- ment is almost always at a fixed rate per cent, per year until the principal of the loan is repaid. It is usually based on a written contract, which may cover a period varying from a few months to a hundred years and even" longer. About the only exception to this rule is deposits in li;inks, (he rale paid uot being- u-ually lixed by contract. When tlic capital is liupplied by the same individuMl or group supply ing other of the productive factors, interest may not be distinguishable from other sliares iu distribution. Profit, within a limited period of time (/. e. a period during which the other factors are fixed by agreement), is, therefore, the residual product, after the other shares have been deducted from the gross product. Contract and Custom. We have spoken above as if the shares in the product other than profit were determined from time to time by agreement between the parties concerned. y\s a matter of fact custom still plays a more or less important part (least important in the case of interest) and in some instances is the controlling factor. This is true in the case of land on the continent of Europe, rented on the system of metayage, and in the case of all rents for agricultural lands custom pro- bably exercises some influence. In some cases also leirislation has interfered to determine the amount to be paid as rent {e. g. Irish land legislation ; See Article Landlord in Ency. Brit.) or to fix an annual payment by which a tenant might both pay his rent and ulti- mately acquire property in the land. (Prussian land legislation ; see lecture XIV.) SECONnARV D1.STKIF.UTION. Among the principal forms of secondary distribution are the following. 1. Payments by sharers in primary distributio)i for the support of their families and de- pendents. So essential to the existing form of social organization is this phase of secondary distribution that it might possibly be better to treat the family rather 176 ScioiKi/orr Disfrlh/i/ioN. '/'(i.vrs. than the incHxidual as the unit in piimary distribution. 2. Taxis. Ccjmpulson- payments b)- citizens to the <;overnment, expended by the government for pubhe purposes, the real beneficiaries lieing- those who enjoN without pa}ment, or onl\- partial paxment, the benefits of expenditures. It iii;iy ^^L•l■lll th.-it since govciniMcnt iciidi'ib :i lull ((luix ;iltiil U>v \\\f tnxe> whirl) it ii'ctMve.s tliat t;ixt> !3,t)34,376; judiciary, .1i!23,071,07.5; penal and reforni'iiory institutions, .*12,'3SM2.i! protection. from fire, $10,423,820; p^Mio lifjhtinr/, $11,363,780; iniUic health, $3,280,294; piddic paries a.nd jilaces, $2,962,697; rivers and harbors, $11,737,438; miHtarij (includinf/ naval) purposes, $57,.543,817 ; ijeneral administration about $.")(),00O,O()0. ^ 3. Gifts] by the sharer.s in primary distribution. These- gifts may take a great variety of forms such as alms giving, endowment of charitable institutions {e. g. homes for the dependent and defective classes, hos- pitals), educational institutions, art in.stitutions, etc. The most important form of secondary distribution by gifts in this country has been the endowment of higher instituUons of learning. It is safe to say that by far the greater part of the resources of such in- stitutions has been obtained in this way. The report of the U. S. Bureau of EducaUon for 1892-3 gives the following figures. Number of colleges and universities, exclusive of those for women only, 451. Value olf scientific apparatus and libraries, $13,532,419. Value of grounds and buildings, $95,545,681. Productive funds, $94,500,758. Benefactions during the year, $6,532,157. Total income, $14,601,034, of wjiich $5,466,810 (37.4 per cent.) was from tuition fees; $5,099,8.59 (34.9 percent.) from productive funds; $1,679,051 ,11.5 percent.) from state and municipal appropriations; $682,292 (4.7 per cent.) from the United States government and $1,423,022 from niiscellaneius sources. When it is remembered that in addition to the colleges and universities in eluded in the above figures there are great numbers of professional and technical schools, public libraries and art museuius, all depending in large degree upon private endowment, it is plain that secondary distribution by means of gilts is an element of prime importance in the economic life of this country. It is probable that this form of secondary distribution is relatively much more important in this country and England than on the conti- nent of Kurope, governments there doing the work for the accom- plishment of which we rely upon private individuals. 4. Income which is not the result of production but is obtained from others in ways other than those above mentioned, without the rendering of an equivalent, c. g. by gambling and deceit. I7>^ Secondary Distribution. Gambling. Much of what is commonly termed fepeculation is gam- bling, consisting not in the purchasing and selling of property of any kind, but in betting on price variations. Some forms of speculation are, on the other hand, in- strumental in carrying goods from a time or place of relatively large supply to a timS or place of relatively small supply. They are thus essentially useful and the income from them is to be regarded as a share in pri- mary distribution. There is no way of estimating the amount of income derived from sucli sources, but there is no doubt that it is very large in the aggregate.