*+ 
 
 
 *£> ^ 
 
 
 SPV 
 
 % 
 
 *> 
 
 <\ 
 
 ** 
 
 "W : 
 
 7^' ^ 
 
 ^ ,<■,* 
 
 .0' 
 
 
 
 
 
 4? , 
 
 * ^ ♦: . >o .<* * 
 

 
 
 4 O 
 .V t „ ^ f ,♦♦, V^ 
 
 "^ O 8 4" "fa V* 
 
 
THE MEANING OF PROPERTY 
 
FIFTH EDITION 
 
 The Meaning of 
 Property 
 
 b 
 
 ISAAC H. LlONBERGER, Chairman 
 
 American Credit-Indemnity Company 
 
 1922 
 
 THE STRATFORD CO., Publishers 
 BOSTON, MASSACHUSETTS 
 

 v 
 
 Copyrighted 1922 
 
 by 
 
 ISAAC H. LIONBERGER 
 
 of St. Louia 
 
 JUL 26 1922 
 
 ©CI.A681244 
 
"If in some things I dissent from others whose wit, 
 industry and judgment I look up at and admire, 
 let me not therefore hear presently of ingratitude and 
 rashness; for I thank those who have taught me, and 
 will ever, but yet dare not think the scope of their 
 labor and inquiry was to envy posterity what it could 
 add and find out." 
 
 "I do not desire to be equal to those that went be- 
 fore, but to have my reasons examined with theirs 
 and so much to be given to them as they shall deserve. 
 I will have no man addict himself to me, but if I say 
 anything right, defend it as truth — non mihi 
 cedendum sed veritati." 
 
 — Ben Jonson. 
 
Preface 
 
 This essay has to do with the unequal distribution 
 of wealth and with the discontent which results from 
 inequality. It attempts to dispel such discontent 
 by explaining the origin and function of property 
 and proving that the influences which tend to in- 
 equality are beneficial to poor as well as rich. It 
 discusses, briefly, the prejudices and errors which 
 have induced discontent, and attempts to show what 
 injurious consequences are apt to result from ill- 
 considered expedients which interfere with the nor- 
 mal operation of economic laws. 
 
 I. H. L. 
 
Introductory 
 
 Property is a natural or artificial institution, as we 
 choose to regard it. Those of us who have it rather 
 admit than attempt to justify its sanctity. Content 
 with its possession, we incline to regard with a cer- 
 tain scorn the complaints of those who question the 
 justice of a blessing in which they do not share. Yet 
 it is unwise to ignore the challenge of discontent. 
 The church employs its preachers; every political 
 party its advocates ; the law must be vindicated over 
 and over again from day to day and generation to 
 generation, for what is not understood can not sur- 
 vive. A hereditary monarchy was for many cen- 
 turies a sacred institution and no man dared to 
 question the Divine Right of Kings. Order was 
 so necessary to the world that men sanctified him 
 who represented it. When in the course of time they 
 had by practice become accustomed to obey law, 
 kings seemed no longer necessary; yet few nations 
 can dispense with them. "A king is a thing men 
 have made for quietness sake." He is an idea still 
 indispensable to those who do not understand the 
 art of government. He avoids frequent elections, 
 mitigates party strife and makes possible the transi- 
 tion of power from faction to faction without the 
 horrors of revolution. Yet today, notwithstanding 
 
INTRODUCTORY 
 
 its utility, the institution is being dissolved by the 
 inconsiderate suspicions of those who can not under- 
 stand that utility. Russia destroyed at once king- 
 ship and civil order, for having dethroned the king 
 there was none to replace him. Factions fought for 
 power and anarchy resulted in universal misery. A 
 sound argument may be made for the hereditary 
 principle, however foolish it may seem to the un- 
 thoughtful. 
 
 Property is harder to vindicate than the institu- 
 tion of kingship. Its utility is not so obvious to the 
 average man. It is produced by the cooperation of 
 all, yet one has more and another less. Who can 
 justify the millionaire to the pauper? Upon what 
 principle does wealth rest? There are no trained 
 advocates to answer this question, yet it must be 
 answered and so answered as to leave no doubt in 
 any honest mind. Political power has passed to the 
 majority and with it the right to tax, and with the 
 right to tax, the power to confiscate. Men who can 
 not perceive the righteousness of another's pros- 
 perity are apt to hate it and attempt to destroy it. 
 A majority in every democracy is composed of men 
 of moderate means or none. Great wealth is there- 
 fore odious to them. A new instrument has recently 
 been put into their hands. An income tax is an un- 
 equal tax ; it does not touch the majority. That such 
 a tax will be used to restore a plausible and specious 
 equality no man can doubt who observes the growing 
 
INTRODUCTORY 
 
 burdens put upon the rich. We believe vaguely in 
 equality. The dim generalities of the Declaration of 
 Independence have long been taught in the schools, 
 and as that instrument declares that men are born 
 equal, we think they should be so. Yet we can 
 nowhere perceive equality. Some are rich and some 
 poor, some masters and some servants. It will not 
 do to say that men are equal under such circum- 
 stances, nor can we justify inequality by affirming 
 that many are foolish and some wise, some good and 
 many bad. The majority is not as well off as the 
 minority, and an argument predicated upon the in- 
 feriority of the majority will never find acceptance 
 among a turbulent and free people. 
 
 To justify private property and its unequal dis- 
 tribution, we must resort to other arguments. We 
 must show why and how inequality is indispensable 
 to the general welfare — to the poor as well as to the 
 rich; and must prove not only the private value and 
 general utility of property, but make it evident that 
 like every other conventional institution, it is the 
 servant and not the master of men. We must allay 
 the discontent which we now observe by showing 
 that property is not the cause of the evils complained 
 of, but that these evils result from other influences, 
 which private property tends to mitigate; and 
 demonstrate clearly upon what considerations it 
 rests, what evils it mitigates, what general good it 
 accomplishes and why one should have more and 
 
INTRODUCTORY 
 
 another less. These are the problems which confront 
 us. 
 
 If we begin at the beginning and affirm what no 
 man is likely to deny, namely, that goods are indis- 
 pensable to the general welfare, — and I mean by 
 goods all those wares and commodities which con- 
 duce to the comfort and happiness of men — and 
 leave aside for the moment all notions of property, 
 we are brought face to face with the question, how 
 shall these goods be provided? They are not natural 
 in the sense that nature produces them ready for 
 man's enjoyment. Savages may flourish upon the 
 spontaneous offerings of nature, but the civilized 
 man cannot pluck food from an uncultivated field 
 nor clothe himself with the leaves of the forest; he 
 must work in order to live. The wealth we moderns 
 need is artificial wealth and must be produced by 
 labor. 
 
 Starting with this valid assumption, we are con- 
 fronted with the real problem of industry, namely, 
 how shall we labor? Should each be left to his own 
 resources and be dependent upon himself, or should 
 we resort to some contrived scheme of cooperation 
 wherein each shall be set to perform that sort of 
 labor for which he is best fitted? The latter plan 
 seems not only more rational, but more generous. 
 It is rational because it sets before each a task suited 
 to his capacity, and it is generous because the special 
 capacity of each is enabled to promote the welfare 
 
INTRODUCTORY 
 
 of all. Let us therefore first discuss this plan, which 
 for convenience ' sake we will call communism. It is 
 unnecessary to define the word. If we leave aside all 
 nice discriminations which are likely to confuse, 
 communism may be regarded as that scheme of co- 
 operation which exacts from every individual the 
 sort of productive labor for which he is best fitted, 
 in order that a common wealth may be produced as 
 efficiently as possible. 
 
Peoblems of Industry 
 Before we approve such a scheme, we should 
 take iuto consideration various of its essential 
 elements which can not be ignored. Its purpose 
 is to produce wealth of all sorts in abundance. In 
 order however to accomplish this object, we 
 must know what sort of wealth to produce, and 
 to this end be acquainted with all the wants of 
 the community, devise some plan whereby 
 every legitimate want may be satisfied with 
 least inconvenience, and at the same time dis- 
 cover and in some manner choose from among 
 the millions of men concerned, the special mas- 
 ters or directors who are competent to judge 
 of the capacities and needs of the community; 
 so that every man may have his appointed task 
 and each his just reward. Such overseers are 
 indispensable, for if every man be free to select 
 his own task and take from the general store 
 whatever he wants, confusion will be inevitable. 
 If I work for myself, I will know what to do, 
 but if I work for all the rest, I must be told 
 what to do. In order that I may have what I 
 
 [i] 
 
STATE CONTROL 
 
 want from the general stock, that which I need 
 must be put within my reach somehow. These 
 difficulties are not inconsiderable. 
 
 A great nation composed of millions of men 
 can not conveniently choose from so many 
 those whose special aptitudes fit them for the 
 delicate tasks so to be imposed upon them. The 
 masters selected will have great power as well 
 as great responsibility. They must be both wise 
 and just, for if they blunder the whole scheme 
 will fall into confusion. There is a limit to the 
 best human capacity. No man can know the pe- 
 culiarities, abilities and needs of even a thou- 
 sand of his fellow-citizens. We must therefore 
 appoint not one but many masters, as many in 
 fact as a hundred millions of people need. There 
 is in an army an officer for every ten or twenty 
 privates. Shall we appoint so many? If so, we 
 shall have over the many millions concerned 
 millions of masters each of whom will have with 
 respect to his fellows power more considerable 
 than that required for the management of 
 troops; for the civil master must not only 
 have power to make another do that which is 
 
 M 
 
STATE CONTROL 
 
 requisite for the general good but he must be a 
 judge of that good and of the fitness of every 
 man whom he controls for each task assigned. 
 He must moreover be acquainted with the wants 
 of all under his charge and see to it that each 
 appropriates what he ought to have and no 
 more. He must indeed be equal to an even more 
 delicate responsibility. All tasks are not alike ; 
 some are pleasant and others disagreeable, 
 some hard and some easy. These tasks must 
 be justly apportioned, and from day to day, so 
 that none shall have a grievance. 
 
 If notwithstanding all of these difficulties, 
 we do manage somehow to divide the popula- 
 tion into convenient groups and to set over 
 each a master competent to compel what is 
 requisite for the welfare of those composing 
 it, there will remain another difficulty which 
 ingenuity may find it hard to solve. Not every 
 petty group can possess the natural resources 
 upon which its prosperity must depend. We 
 have farming communities and cities. Those 
 who live in towns need food ; the inhabitants of 
 the country require a multitude of articles 
 
 [3] 
 
STATE CONTROL 
 
 made in the cities. How shall the various petty- 
 groups be induced to so cooperate as to produce 
 in right quantity the articles of which the others 
 have need? Will it be necessary to appoint, in 
 addition to the corporals and sergeants men- 
 tioned, captains, majors and generals as well? 
 Or should we first take a census and ascertain 
 the number to be served, the needs of each, say 
 so many pairs of shoes, so much clothing, so 
 much food, so many houses, etc., and then di- 
 vide the population into convenient productive 
 groups having in view the productive capacity 
 of each and the wants of all? 
 
 This latter plan has much to commend it. 
 If we know that one hundred millions of people 
 need three hundred million pairs of shoes each 
 year, nothing should be easier than to establish 
 factories having the requisite capacity; set so 
 many to the raising of cattle, so many to making 
 leather, etc. The plan is not however so simple 
 as it seems, for the cattle must be assembled 
 and killed, the material for tanning must be 
 provided from various parts of the country, the 
 leather must be forwarded to the factories and 
 the shoes delivered to the consumer. In order 
 
 [4] 
 
DIFFICULTIES 
 
 to accomplish all of these tasks satisfactorily, 
 the shoemaster must control or have some 
 authority over the grazing lands, the ploughed 
 fields, the forests, and also over the transporta- 
 tion systems which he must employ; and so 
 must every other master of every other indus- 
 try. How shall all of these masters be recon- 
 ciled? If we needed shoes and nothing else, the 
 problem should be simple enough, but we have 
 a thousand needs. Can a thousand masters in- 
 dependently control all of the various means, 
 materials and instrumentalities upon which 
 each must depend? If they can not, how can 
 their conflicts be reconciled? If one chooses 
 this man to make shoes and another thinks him 
 fitter for making cloth, which shall command 
 his energy? Moreover, in the event — and such 
 an event is not improbable — it transpires that 
 after the requisite labor has been set to the pro- 
 duction of shoes, there is not enough for other 
 commodities, how shall this trouble be over- 
 come? We need say ten commodities, but six 
 only can be produced : which shall we do with- 
 out? Who shall decide? 
 
 [5] 
 
Tykanny of Communism 
 These troubles incident to a communistic sys- 
 tem are not fanciful, yet they are inconsiderable 
 when we reflect upon the restraints which such 
 a system necessarily involves. Masters perhaps 
 will flourish, but what of the men? They must 
 do this or that as they are told. If they refuse 
 they must be punished, else the whole plan 
 fails. Will they be free or slaves? If slaves, 
 will they be apt to work with energy? If for 
 example I dislike my appointed job and prefer 
 literature to brick-laying, how and to whom 
 shall I show my fitness for one task and un- 
 fitness for the other; what tribunal will decide 
 where the principles involved are so delicate, 
 intangible and perplexing as those which affect 
 the merit of a literary performance or the ca- 
 pacity of an artist? If the tribunal decide 
 against me, must I continue to lay bricks, and 
 if I must, will I be apt to lay them well or ill, 
 zealously or peevishly? 
 
 We must consider also another necessary 
 incident of the communistic scheme no less 
 ominous. Not only will labor be enforced but 
 the wages received for it will depend upon 
 
 [6] 
 
FUTILITY 
 
 many delicate, accidental and capricious in- 
 fluences which may seriously affect the welfare 
 of all workers. Communism assumes that the 
 needs of a people can be ascertained by some 
 body of officials and that what they deem an 
 adequate supply of goods will in fact be satis- 
 factory to all men, however they may differ. 
 If the Bureau thinks we should be content with 
 so many shoes, so much clothing and food, such 
 and such living quarters, will all of us gladly 
 acquiesce? Will we be content to live not only 
 as another shall dictate, but where he shall ap- 
 point? These are very grave considerations 
 and we may well doubt the wisdom of any 
 scheme which involves them. Few men will be 
 content to get rid of private property in order 
 to substitute for it universal slavery; yet if we 
 must have a common property we must resort 
 to compulsory labor, to a directed and con- 
 trolled industry, to an arbitrary distribution of 
 goods, to limited gratifications, to a set wage, 
 to a predetermined and arbitrary mode and 
 place of living, and to the tyranny of a thous- 
 and masters elected by lot, unknown and un- 
 tried. 
 
 [7] 
 
THEORIES 
 
 If, bearing in mind these manifest conse- 
 quences of a common property and enforced 
 cooperation, we turn aside and attempt to con- 
 jecture a more comfortable, less complicated 
 and more liberal plan of living, what sort of 
 scheme should we devise? What we need is 
 an abundant production and just distribution 
 of all the goods which contribute to the comfort 
 or happiness of millions of individuals differing 
 in capacity, taste, inclination and energy; who, 
 having various wants and various aspirations, 
 wish to be free to do and live as they please 
 and where they like, and because they resent 
 another's tyranny, should be willing to allow a 
 like freedom to their f ellowmen. These are the 
 essentials of any plan which is likely to be ap- 
 proved by the common opinion of reasonable 
 people at this day. How and by whom shall 
 such a plan be devised 1 Who among us is com- 
 petent for so great an undertaking! What 
 human faculty can conceive the wants and 
 idiosyncrasies of the millions of his fellow- 
 citizens and show to each how he may accom- 
 plish his desires? The world has produced 
 many great men, yet since the beginning none 
 
 [8] 
 
A NATURAL SYSTEM 
 
 has been equal to such a task. Plato wrote his 
 Republic twenty-five hundred years ago; the 
 Greeks were a great and ingenious people, yet 
 at no time, under any government free or ty- 
 rannous, did they venture to make trial of the 
 beautiful but visionary scheme of their great 
 philosopher. More devised a utopia for the Eng- 
 land of Henry VIII 's time, yet neither his con- 
 temporaries nor posterity thought fit to try or 
 even consider his dream. A man may seem 
 ever so wise, but few of us can be brought to 
 believe that another is wise enough to guide the 
 industries and control the destinies of all of his 
 f ellowmen. Upon what then must we rely ? How 
 can we accomplish that which we desire? 
 
 The Free System — Its Evolution 
 
 Perhaps a task which is beyond the capacity 
 of any individual, may be within the reach of 
 the common sense of mankind guided by experi- 
 ment and instructed by experience. The race 
 is old; it has tried many experiments; it has 
 had a very various experience and after many 
 thousands of years we have the results of 
 its instruction embodied in the conventional 
 
 [9] 
 
SPONTANEOUS DEVELOPMENT 
 
 institutions which surround us. The world began 
 with savagery and has achieved what we call 
 civilization — not suddenly, but gradually. It 
 tried an enforced cooperation, a common prop- 
 erty, over and over again. Its slow progress 
 has been away from such expedients to the free 
 system which we now observe. 
 
 Let us examine this system and try to under- 
 stand its origin and the forces by which it is 
 guided and controlled. If we regard it histori- 
 cally, it seems to have been the result of influ- 
 ences which began to operate after the dissolu- 
 tion of the feudal system. The dark ages fol- 
 lowing the downfall of the Koman Empire were 
 disturbed by incessant conflict. Some sort of 
 law, some compelling authority was required for 
 peace. Groups of men found such law and 
 authority under one whom they first called chief 
 and then king, and they obeyed his will in order 
 to avoid anarchy. Such rulers used their 
 authority for the general welfare and forced 
 some to fight and some to till the ground and 
 some to forge armor. Tasks at first arbitrarily 
 distributed tended after a time to fall to those 
 fit for them, and so a variety of occupations 
 
 [IO] 
 
EVOLUTION 
 
 resulted from compelling influences. Society 
 however was organized for war and not for 
 peace, for safety and not for prosperity; and 
 so remained for a long time. 
 
 When by reason of the spread of order and 
 the gradual consolidation of kingdoms, wars 
 became less frequent, the restraints which in- 
 cessant conflict necessarily involved were grad- 
 ually relaxed and the arbitrary and vague 
 services of feudalism were commuted into fixed 
 rents or taxes. For centuries all workers had 
 been slaves. What one sowed, another reaped ; 
 none had a motive to zealous industry; all that 
 a man produced in excess of what was necessary 
 for his own livelihood was appropriated by the 
 lord. As soon as a limit was set to such exac- 
 tions and men were permitted to appropriate 
 and own the excess, industry began to revive. 
 Men worked zealously because they had a mo- 
 tive to do so. Freed from the land, they wan- 
 dered about in search of work and many of 
 them found their way into the towns and be- 
 came apprentices to various arts and crafts. 
 As the products of labor multiplied, trade be- 
 came active and markets were established 
 
 ["] 
 
EVOLUTION 
 
 where the goods and wares made in the towns 
 were exchanged for food and raw material; 
 and at these markets were revealed the various 
 needs of those who mingled together; and so 
 goods in demand were advertised and brought 
 forward and men were induced to take up use- 
 ful, profitable and various tasks. The slavish 
 system which compelled the individual to do 
 what another deemed necessary for the general 
 welfare was succeeded by a free system which 
 induced the right service by rewarding it. So 
 great a revolution was not however suddenly 
 accomplished. For centuries the laws inter- 
 fered with its progress. Those in authority 
 could not be brought to believe that men could 
 be safely emancipated from their superintend- 
 ing care. Wages and prices were fixed, trade 
 was regulated and restricted, monopolies were 
 granted to encourage special industries, and all 
 sorts of petty, vexatious and injurious res- 
 traints were imposed upon the makers and dis- 
 tributors of goods. Only after a long time, and 
 rather as the result of the stress than of the 
 instruction of experience, did industry become 
 
 [112] 
 
EVOLUTION 
 
 emancipated and take on that free yet depen- 
 dent character which we now observe. 
 
 The industrial no less than the political or- 
 ganization of society has therefore been the 
 result of vigorous and constantly operating in- 
 fluences which in the course of a long time led 
 men away from primitive tyranny to present 
 liberty. We began with communism and have 
 achieved a voluntary cooperation which if it be 
 not absolutely free, yet is more free and un- 
 restrained than any system which has preceded 
 it. If this be true, is it foolish to conclude that 
 the common sense of mankind, fortified by the 
 instruction of centuries, has rejected com- 
 munism and approved a freer and more com- 
 fortable system? And ought we not rather to 
 defer to this common sense, so fortified, than 
 to trust ourselves to the untried and perhaps 
 foolish dream of the theoretical philosopher? 
 Society has never been foolish collectively. 
 Somehow it has managed to survive all sorts of 
 vicissitudes and all sorts of trials, and in spite 
 of them to achieve a slow but visible progress 
 from anarchy to regulated liberty — from pov- 
 erty to relative affluence. That it has achieved 
 
 [13] 
 
SUPERIORITY TO COMMUNISM 
 
 so much should induce us to give to existing 
 institutions at least a candid and respectful 
 consideration and prevent us from condemning 
 them without a hearing. Perhaps our industrial 
 system is not as hateful as it seems. 
 
 By comparing it with communism, we dis- 
 cover that however imperfect it may be, it is at 
 least free from many of the evils which neces- 
 sarily result from communism. Men are free 
 to do what they please and to live where they 
 please, in the sense that they are not compelled 
 to do what and live where a master shall require. 
 They are not only free to choose their work but 
 to choose their gratifications. What they make 
 they may spend as, when and where they please 
 and not as another shall direct. These advan- 
 tages are not inconsiderable. Freedom is worth 
 something of itself. It is preferable to tyranny 
 even if it result in sacrifices; yet it seems to 
 involve none, for never before were men so 
 prosperous. They were poor under feudalism; 
 communism tended to make them so. They 
 began to prosper as soon as they became eman- 
 cipated. Today they are better off than ever 
 before. These facts invite our consideration. 
 
PROBLEMS OF FREEDOM 
 
 Whatever defects may be found in onr present 
 industrial system — and I frankly admit that 
 it is not perfect — it is yet free from many, 
 very many evils which communism involves; 
 and it has not made us poorer, but richer. Let 
 us therefore try to understand it. 
 
 In order to do so, it is necessary to confine 
 one's attention to the subject and not permit it 
 to stray into less fertile but more pleasant fields. 
 Industry concerns itself with the production 
 and distribution of wealth. Its object is not 
 moral but economic. It does not ignore, but it 
 can not be guided by those benevolent and most 
 worthy motives of private conduct which result 
 in liberality and charity. Concerned with busi- 
 ness and with business only, with the produc- 
 tion, not the benevolent use of wealth, with 
 what men do in order to live and thrive, and 
 not with what they ought to do in order that 
 others may not suffer; it leaves charity to re- 
 ligion and the nobler impulses of men, and con- 
 tents itself with providing the means whereby 
 those impulses may be gratified. 
 
 If we keep constantly in view this essential 
 difference between philanthropy and industry, 
 
 [«5] 
 
SPONTANEOUS SPECIALIZATION 
 
 many of the irritating suggestions of irrelevant 
 criticism will fall by the way and we shall per- 
 ceive and appreciate the admirable methods 
 whereby a reasoning people in the course of a 
 long time has managed to bring about the 
 closest harmony between private selfishness 
 and general welfare. 
 
 Present System 
 
 Let us now look about without prejudice. 
 What do we observe ? The world is very busy. 
 Men move to and fro incessantly, each intent 
 on his own affairs. A vast majority of them 
 find work to do which seems to be satisfactory. 
 They differ in character and in capacity, and 
 perform various labors. Somehow they have 
 managed to divide themselves into convenient 
 economic groups. We have farmers and mil- 
 lers, miners and blacksmiths, tanners and shoe- 
 makers, merchants and carriers, bankers and 
 brokers ; and each group seems to contain just 
 the right number, no more, no less. We have 
 also markets and exchanges where we get what 
 we need and dispose of what we have. Some- 
 how the right goods are brought forward in 
 
SELFISHNESS AND SERVICE 
 
 the right quantities, and no want of a luxurious 
 people can long remain unsatisfied. Everybody 
 seems to be intent on his own affairs ; yet if we 
 look more closely we shall observe that each 
 works for somebody else. No one makes goods 
 for his own use : what he makes he sells, what 
 he needs he buys. We serve each other not be- 
 cause we must but because we choose to do so, 
 yet in the exchange of services we seem to seek 
 not another's but our own advantage. If we 
 serve, we serve for pay; if we sell, we sell for 
 profit. Yet no harm seems to result. By co- 
 operation everybody seems to realize some 
 advantage for himself as well as for others. 
 Lacking direction of an official sort, we never- 
 theless spontaneously accomplish all that a com- 
 pelled cooperation, cunningly contrived and rig- 
 orously enforced, could accomplish. Being free, 
 we are yet mutually dependent. We thrive 
 together and languish together. No class pros- 
 pers at the expense of the other; each shares 
 in the prosperity of the other. If we have large 
 crops, the prosperity of the farmer is shared 
 by every other group ; when the factories thrive, 
 the miner flourishes. Somehow, in spite of 
 
 [i7] 
 
MOTIVES WHICH CONTKOL 
 
 what seems to be an industrial anarchy, we 
 manage to live together, to work together and 
 to serve each other zealously and efficiently; 
 and such irregular, spontaneous, undirected co- 
 operation seems to have resulted in greater 
 comfort and happiness than was ever before 
 known by mankind. These are the facts which 
 confront us. To understand them is worth an 
 effort. 
 
 The most remarkable feature of this free 
 system is that while it seems purely selfish it is 
 always cooperative or altruistic. We must first 
 understand this anomaly. 
 
 The explanation is obvious if we consider the 
 motives and influences by which this free sys- 
 tem is guided and controlled. It rests, as should 
 every human institution, on human nature ; not 
 of one man, not of a governing class, but of the 
 average man, his motives, weaknesses, propen- 
 sities, needs and capacities. We may assume 
 that this average man has wants and wishes to 
 gratify them in the easiest way, and that his 
 intelligence should prompt him to find that way 
 in the course of time. We may also assume that 
 by reason of the establishment of civil order 
 
 [18] 
 
HOW CONTROLLED 
 
 he is not at liberty to prey upon his neighbors, 
 as did the feudal baron and his retainers, but 
 must get by his own labor what he needs. Such 
 a man, so situated, may adopt either of two 
 courses : he may make all that he needs, as did 
 his savage ancestor, or he may make one thing 
 only and get what he needs by trade. Of the 
 two, specialization and trade are to be preferred 
 because practice tends to skill, and skill to more 
 and better goods, and trade to the mutual 
 advantage of all craftsmen. Where for ex- 
 ample A makes both shoes and hats, he will 
 not be apt to be so skillful in both crafts as he 
 might become in one. If he can make a hat and 
 a pair of shoes in a given time, he ought to be 
 able to make either three hats or three pairs 
 of shoes in the same time. Where therefore, 
 A makes hats only and B shoes only, the joint 
 product of both should be three hats and three 
 pairs of shoes as against two hats and two 
 pairs of shoes. This increment in the output 
 which results from specialization may be made 
 beneficial to both by the exchange of a hat for a 
 pair of shoes ; for after such an exchange each 
 will have what he might have independently 
 
 [*9] 
 
MOTIVES WHICH GUIDE 
 
 produced in the given time and a hat or a pair 
 of shoes besides; and such surplus commodity 
 may be used for the gratification of other wants. 
 
 Influences Which Control 
 
 In these advantages of specialization and 
 trade is to be found the explanation of that 
 spontaneous cooperation of free men which fol- 
 lowed the relaxation of the feudal system. Every 
 man got more for himself by working for others 
 than he could get by working for himself alone. 
 His motive was not benevolent, he did not wish 
 to do good : he was induced to become a special- 
 ist by the desire to help himself, and having 
 such a motive was compelled as a specialist, in 
 order to gratify his own wants, to make what 
 another desired. His prosperity depended al- 
 ways on the exchange value of his own goods. 
 To get by exchange, he had to give in exchange 
 something worth what he desired. So men were 
 induced to specialize and trade, and such un- 
 doubtedly is the explanation of that voluntary 
 cooperation of selfish men which we set out to 
 consider. 
 
 The motive which I have indicated not only 
 
 [20] 
 
STRESSES OF ECONOMIC LAW 
 
 induced men to do something useful to their 
 fellows, but to do that which each could do best. 
 An individual who selected a craft for which he 
 was unfit, could not hope to compete in the 
 goods market with another of greater capacity 
 and equal industry. If for example, I must 
 work ten hours in order to produce a certain 
 article, and another can make it in half the 
 time, he will be able to offer his product for less 
 than I, and unless the market be broad enough 
 for both, I must yield to him and go into some 
 other business. In trade every man has a mo- 
 tive to get as much as he can induce another 
 to give. He who gives more will therefore al- 
 ways be preferred to him who gives less. In 
 the case put, I can not compete with another 
 and must devote my energies to some craft 
 better suited to my capacity. The influence of 
 competition is not to be deprecated but encour- 
 aged. Society has many wants. Its prosperity 
 depends upon the ease with which it may 
 gratify them. Every producer of goods is also 
 a consumer. Where goods are easily produced 
 by one man, and by another with difficulty, the 
 former should be encouraged and the latter 
 
 [21] 
 
ECONOMIC LAWS 
 
 discouraged. We are apt to forget that in trade 
 we exchange labor for labor; that the value of 
 every man's labor depends on what he can get 
 for it; and that what each can get for his own 
 must depend upon another's efficiency. To 
 decrease the labor cost of an article is to de- 
 crease the market price, that is, the price which 
 we must pay in labor for it. We therefore 
 encourage efficiency, and by the constant stress 
 of competition induce free men to do that sort 
 of work for which they are best fitted. 
 
 Because these influences were constantly at 
 work, the emancipation of labor did not result 
 in anarchy. On the contrary free men devised 
 under their guidance a better industrial organ- 
 ization than was ever before known: one that 
 resulted not only in more goods of the right 
 sort, but in their just distribution. Under it 
 every man, however selfish he might be, had a 
 motive to do his best. His share of the goods 
 produced by all depended upon his own contri- 
 bution to the general stock. 
 
 To these influences and to freedom, we owe 
 modern prosperity. Men have become zealous 
 in each other's service. They have contrived 
 
 [22] 
 
SPECIALIZATION 
 
 ingenious machines which assist them in pro- 
 duction and have formed themselves into com- 
 petitive groups in order by a closer cooperation 
 to obtain better results. In these groups specia- 
 lization has been carried very far. No one is 
 now a shoe-maker. Each makes part of a shoe. 
 One cuts leather, another sews, another heels, 
 another finishes, and each has the assistance of 
 a machine. The result is astonishing. Where 
 formerly a man produced in a day one pair of 
 shoes, today five men with the aid of machines 
 produce not five pairs, but twenty or thirty 
 pairs. So it is in every other industry. The 
 factory has everywhere supplanted the crafts- 
 man, and as a consequence the community has 
 more goods than ever before. Every laborer 
 produces more by and gets more for his labor. 
 This is the explanation of the amazing progress 
 of modern industry and of the ease with which 
 we satisfy our wants. 
 
 Motive to Industry 
 
 We now approach the subject with which we 
 are chiefly concerned. What is the reward which 
 
FUNCTIONS OF PROPERTY 
 
 has stimulated men to strive so zealously for 
 the welfare of others 1 It is property. In prop- 
 erty every man finds a recompense proportion- 
 ate to his service. Rob him of this reward and 
 the whole system crumbles. If he can not pos- 
 sess and own what he makes, and freely ex- 
 change it for what another makes on terms 
 satisfactory to both, he will not work save 
 under the lash of compulsion. Liberty and prop- 
 erty are justly associated, for without property 
 liberty is fruitless. Property lies at the very 
 foundation of our political and industrial sys- 
 tems. It emancipates us from the lash of the 
 overlord, affords a motive and guide to indus- 
 try, induces every man to do that sort of work 
 for which he is fit, results in the abundant pro- 
 duction at least cost of all the various articles 
 of which society has need, and tends to that 
 cordial and zealous mutual service which we 
 now observe. So great is the importance of 
 property that we have almost sanctified it. It 
 seems a natural right. Christ praised the good 
 and faithful servant who increased his own 
 store by serving his fellows. Life, liberty and 
 
 [241 
 
PROPERTY 
 
 property are declared by our Declaration of 
 Independence to be among the inalienable 
 rights which governments are bound to protect. 
 If I make a hoe it is mine by the common opin- 
 ion of mankind. 
 
 We allow private property even in land, not 
 because the appropriation of a natural resource 
 to the exclusive use of any man can be justi- 
 fied, but because as practical men we wish the 
 land to be made as productive as possible. The 
 farmer must somehow be induced to feed not 
 only himself but the rest of the community. If 
 we say to him, "You must sow what we will 
 reap, ' ' he will not be zealous in the performance 
 of so unprofitable a service. 
 
 Notwithstanding these considerations, men 
 are constantly attacking property. They com- 
 plain that it is unequally distributed; that one 
 has less because another has more; that the 
 rich man has appropriated more than he can 
 earn, and that the poor are victims of spolia- 
 tion. If these things be true, then all that has 
 been said is false. Let us examine critically 
 the arguments of these protestants. 
 
 D*5] 
 
Objections to Property 
 I assume that none of them is disposed to 
 quarrel with the general proposition that men 
 are and of right ought to be entitled to what 
 they produce and should be allowed to exchange 
 their own goods for goods produced by another. 
 The evil complained of, if there be one, must lie 
 elsewhere. It can not be found in the mere 
 fact that wealth is unequally distributed, for 
 one man may be more industrious or skillful or 
 saving than his neighbor, and if he produces 
 more he should have more. The evolution of 
 industry has resulted in many unforseen de- 
 rangements and in these we may find the 
 germ of the general discontent. One of these 
 consequences is the extreme to which we have 
 pushed specialization. In order to make as 
 much as possible with least effort, we have 
 established factories and so distributed the 
 various processes of manufacture that today 
 no one makes a completed article, that is, an 
 article ready for the market. Everything made 
 is the product of many workers and it is difficult 
 to estimate the contribution of each to its mar- 
 ket value. We now solve this difficulty in a 
 
 [26] 
 
OBJECTIONS TO PROPERTY 
 
 rough way. Goods are made and disposed of 
 and the proceeds are distributed among those 
 concerned according to a rule which seems to be 
 arbitrary and unjust, one receiving wages, an- 
 other a salary, another interest, another profits. 
 Fair men who do not quarrel with property as 
 such, are dissatisfied with the manner in which 
 it is distributed among those who cooperate to 
 produce it. There are others who complain of 
 trade, and insist that it encourages cunning and 
 rapacity and results in the enrichment of one 
 at the expense of another. Others quarrel with 
 usury : money they say is inert and barren and 
 produces nothing, yet it receives the lion's 
 share. These and like prejudices are too widely 
 diffused to be disregarded. Moreover they are 
 supported by facts which none can deny. Trade 
 does sharpen the wits and some get rich by it 
 while many fail. The capitalist may take his 
 ease and live in luxury ; the workman, who gets 
 least, must toil incessantly. These consequences 
 of our free and selfish system provoke resent- 
 ment, and lie at the root of the discontent which 
 now afflicts us. We can not ignore them. 
 
 [27] 
 
WAGES 
 
 The Labor Question 
 The labor question is hard to understand. 
 There are few principles to guide us. We can 
 no longer measure the value of an individual's 
 service. The old, simple way of ascertaining 
 the value of work done by the goods it may be 
 exchanged for in the market, is no longer avail- 
 able. Where many cooperate to make and one 
 sells and distributes the proceeds, it seems to 
 lie in his power to give much or little as he 
 pleases, and he has a motive to give little. The 
 employer is not altogether free, for he can not 
 force men to accept less than another will pay; 
 but jobs are not easy to find, and a man trained 
 to one craft can not always find a vacancy in 
 that craft. Moreover, a righteous employer 
 who means to be just, can not have his way. 
 Every factory must compete with every other, 
 and if one pays higher wages than another it 
 can not sell at the same price. Besides these 
 causes of friction, there is the difference in 
 men's capacity: one is a better workman than 
 another, yet both get the same pay. The cost 
 of goods is predicated upon the whole output of 
 the factory, and they are marketed wholesale. 
 
 [28] 
 
WAGES 
 
 Discrimination in wages is not only resisted by 
 the Unions, but is excessively inconvenient. 
 Employees are not associated in the manage- 
 ment. However wisely and justly affairs may 
 be managed, the employee is never sure 
 that he is getting his just share. These and like 
 influences tend to discontent. 
 
 I will not venture to offer a solution for prob- 
 lems which practical men familiar with all the 
 facts have tried in vain for centuries to unravel. 
 A theoretical solution can have no value. The 
 considerations involved are obvious enough, but 
 are too complicated and confused to admit of 
 definition. A factory is composed of building 
 and equipment, proprietor or manager, and 
 employees. The fund to be distributed is the 
 difference between the cost of goods, labor ex- 
 cluded, and the price realized for them in the 
 market, less the cost of distribution. Theoreti- 
 cally it should be easy to divide such fund into 
 interest, profit, and wages, but such a division 
 is never possible. Altho the rate of interest 
 may be fixed, the employer and employee will 
 never agree with respect to the division of the 
 
WAGES 
 
 rest. Business affairs involve great risks. 
 Times are not always prosperous. Upon the 
 proprietor fall the losses; out of the fat years 
 he must accumulate enough for the lean. The 
 success of the enterprise depends in greater 
 degree upon his ability than on any other factor. 
 He must know where, when and how to buy 
 raw material, and where, when and how to sell 
 the finished product ; what to make and how to 
 make it; the cost of goods and their market 
 value. It is hard to estimate the value of such 
 capacity : there is no standard by which it may 
 be gauged. 
 
 Moreover, wages have a first lien on the 
 enterprise. They must be paid whether earned 
 or not. What part of the value of the output is 
 due to the workman, what part to the efficiency 
 of the machine with which he works or the 
 peculiar market value of the commodity, it is 
 hard to determine. Workmen are not of equal 
 capacity : the man who makes a sewing machine 
 does not deserve as much as the inventor. Such 
 considerations obstruct the application of any 
 theoretical rule for the distribution of profits, 
 however plausible it may seem. Perhaps the 
 
 [30] 
 
AN INCIDENT 
 
 following incident of the Eussian revolution 
 may serve to show how hard it is to estimate 
 the value of managerial capacity. 
 
 A Russian Incident 
 
 An American in charge of a factory which 
 employed Russian workmen was called upon 
 by a committee of the party momentarily in 
 power and asked various details of his busi- 
 ness ; namely, what was his salary, how much 
 he paid his workmen, etc. He replied that he 
 received 37,500 rubles a year, and paid on an 
 average 1000 rubles to his employees. He was 
 thereupon informed that thereafter his salary 
 should be 1000 rubles. When he refused to serve 
 for such pay, he was seized by soldiers, forced 
 into a wheelbarrow and trundled thro the 
 streets behind a cryer who proclaimed that here 
 was an American who exacted for himself 37,- 
 500 rubles a year and paid his Russian em- 
 ployees only 1000. After being subjected to 
 much danger and humiliation, he was released 
 and discharged. Several weeks later the same 
 committee called upon him and requested him 
 to resume charge of the factory at his former 
 
 [3i] 
 
AN INCIDENT 
 
 salary, offering this remarkable explanation: 
 "Something has gone wrong. Everybody has 
 been busy, but we can not manage to get any 
 wages out of the concern. ' ' The American con- 
 sented on condition that he should again be 
 conducted thro the streets but with the pro- 
 clamation that he was the American who had 
 taught 2000 Russians how to earn 1000 rubles 
 a year. His request was granted. 
 
 Many schemes have been tried which promise 
 a reconciliation of employer and employee, but 
 none has been successful under all circum- 
 stances. Piece work, profit sharing, bonus in 
 proportion to output, however fair they may 
 seem and however well they may work in 
 special instances, sometimes result in bitter 
 failure. They must always fail where the wages 
 so derived are less than those current, and they 
 are apt to fail wherever such wages are more, 
 because a customary wage in time becomes a 
 vested right, however it may be earned, and dis- 
 content can never be satisfied. That there are 
 factories without discord is undoubtedly true, 
 yet in every such instance we find the explana- 
 tion in the special character of the employer 
 
 [32] 
 
WAGES 
 
 and men associated. A persistent course of fair 
 dealing, a generous desire to have men share in 
 the prosperity which they have helped to pro- 
 mote, a wise, flexible, adaptable policy founded 
 upon good faith and guided by intelligence, are 
 fruitful of good even tho they can not achieve 
 absolute justice. 
 
 Principles Which Control Wages 
 
 If, passing a problem which does not admit 
 of merely scientific solution, we turn to the 
 consideration of general economic influences 
 upon which both wages and profits depend, we 
 enter upon a more fruitful field and may per- 
 haps discover something which shall tend to 
 reassure the doubtful and calm resentment. 
 
 The wages of the cobbler, as I have explained, 
 must depend upon the exchange value of the 
 goods he produces. He can get for his work 
 what it is worth in the open market and he can 
 not get more. His prosperity depends upon 
 the purchasing power of his shoes. If they will 
 purchase much, he thrives; if little, his wages 
 are small. 
 
 The shoe factory has replaced the cobbler, 
 
 [33] 
 
STRESS OF COMPETITION 
 
 but it has not escaped and can not evade the 
 economic laws by which he was controlled. 
 These laws are inexorable. They compel every 
 factory first, to make the right articles ; second, 
 to make them well; third, to make them cheap. 
 If it makes the wrong articles, it can not find 
 a market; if it produces bad goods, or exacts 
 more than they are worth, it can not compete 
 with another that offers more for less ; its pros- 
 perity depends also upon the purchasing power 
 of its goods. 
 
 The harsh and at times destructive operation 
 of these laws none will incline to deprecate who 
 understand that they are protective as well as 
 corrective. The welfare of every specialist de- 
 pends upon the efficiency of every other special- 
 ist. Where all are efficient the purchasing 
 power of the goods of each is great ; where any 
 is inefficient, its goods are expensive to all the 
 rest. If for example, the employees of factory 
 A produce many shoes in a given time and the 
 employees of factory B produce few clothes in 
 the same time, the cost of clothing to the makers 
 of shoes will be high ; or — to state the same thing 
 in other words — the wages paid by the shoe 
 
 [34] 
 
WAGES 
 
 factory measured in clothing will be low. This 
 is the evil which competition tends to correct. 
 It compels every maker of goods to render as 
 much as he gets, by encouraging him who offers 
 most. Wages must be earned in order that they 
 may be realized. The prosperity of every in- 
 dustry depends upon the goods produced by 
 all. Where all are busy and trade is active, 
 wages tend to rise; where production is cur- 
 tailed because trade is slack, wages tend to 
 fall. 
 
 Wages can not be fixed by the employer. 
 They are not paid by him. They must be earned 
 by the employee and as earned, whether high or 
 low, they must be paid. The gradual increase 
 in wages which has marked the last half cen- 
 tury has been due to the increasing efficiency 
 of industry, and the cupidity of the employers 
 has not been able to check it. 
 
 High earned wages can not impair the pros- 
 perity of the employer, because they do not 
 come out of his pocket. Mr. Ford seems to 
 have understood this principle. His minimum 
 wage was twice the average, but he saw to it 
 that the minimum was earned. He would have 
 
 [35] 
 
EFFECT OF SCAMP WORK 
 
 no bad workmen about him. He made more for 
 himself by paying more to his workmen than 
 any other factory. His genius assisted their 
 industry, and their zeal his welfare. The or- 
 ganization which he provided was the best 
 friend of the worker, because it enabled him to 
 produce much by his labor. Mr. Ford knew 
 how to so organize and equip his establishment 
 as to make it the most efficient plant of its kind 
 and his workmen the most zealous. Neither 
 thrived at the expense of the other. Mr. Ford's 
 millions represent not harm done but good — 
 good to his associates, good to his employees 
 and good to the community. Profits do not 
 come out of wages. 
 
 Scamp Work 
 
 Nothing is more injurious to the community 
 and to those who compose it than scamp work 
 and restricted output. They tend to lower wages 
 which zeal and efficiency tend to raise. Where 
 the prosperity of the whole community depends 
 upon the amount of wealth produced by all, 
 everybody should somehow be compelled to 
 produce as much as possible, for his own share 
 
 [36] 
 
BASIS OF WAGES 
 
 will be great or small as the common stock is 
 great or small. What each appropriates, he 
 must create or get by fair exchange. He must 
 offer goods for goods. His enrichment does 
 not involve another's impoverishment. He can 
 not get something for nothing. If we look about 
 us and compare the economic condition of var- 
 ious peoples, we shall find that wealth and 
 wages depend upon the same influences and ad- 
 vance together. A country fertile and rich in 
 natural resources is not necessarily prosperous. 
 That country thrives, all other things being 
 equal, whose industry is equipped with best 
 machines and whose population is most intelli- 
 gent and most industrious. Wages are highest 
 and fortunes are at the same time greatest in 
 America, because it contains the most ingenious 
 and industrious people in the world. It pro- 
 duces most goods and has most to distribute. 
 What it pays in wages does not diminish profits, 
 and profits do not diminish wages. No one can 
 controvert these facts. They prove that the 
 spoliation complained of is fanciful. No man 
 has ever got rich by paying low wages. A pros- 
 perous factory pays higher wages than another. 
 
 [37] 
 
PRODUCTION AND WAGES 
 
 If special occasion for friction between em- 
 ployer and employee arises, it should be met 
 wisely and not by violence : with understanding 
 of the factors and laws upon which the pros- 
 perity of both depend, and a wish to promote 
 a common welfare by a just accomodation. The 
 trend of wages should be always upward, be- 
 cause the efficiency of factories is constantly 
 increasing. Today the machinist commands 
 the energy of ten men; and his product being 
 greater he should receive more than formerly. 
 Hereafter, with the progress of the arts, he 
 should receive still more. Sufficient goods can 
 now be produced to enrich every member of the 
 community, and if all classes would set them- 
 selves to zealous work and mutual fair dealing, 
 discontent should vanish. No man should com- 
 plain of another's prosperity, because that 
 prosperity rightly understood is proof of ser- 
 vices rendered and property earned. 
 
 Wages and Wealth 
 
 Let me illustrate what I mean. There are 
 upon a remote island ten men, each of whom 
 devotes himself to one of its ten industries. If 
 
 [38] 
 
TRADE — PROFITS 
 
 all ten work zealously and efficiently there will 
 be more goods than where each scamps his 
 work. The sum of all the wealth produced by 
 all being less, it is obvious that each will get 
 less as his distributive share, however the dis- 
 tribution may be effected; if more, each will 
 get more. The prosperity of all is dependent 
 upon the industry of each and the prosperity of 
 each is dependent upon the industry of all. 
 Wages as we call them must be higher where 
 the wealth produced by labor is greater than 
 where the wealth produced by labor is less. 
 
 Trade and Traders 
 
 A less difficult question is involved in the 
 notion that trade results in the enrichment of 
 one trader at the expense of another. It is hard 
 to understand the origin and persistence of 
 this delusion, yet it is widespread and lies at the 
 foundation of much of that prejudice against 
 private fortunes which we are now considering. 
 Eich men themselves share in the delusion. No 
 merchant treats a seller of goods with that cor- 
 diality which he shows the buyer. He subcon- 
 sciously assumes that he will make money out of 
 
 [39] 
 
ORIGIN OF PROTECTION 
 
 the buyer and can not make money out of the 
 seller. He always means to give in trade less 
 than he gets; to buy cheap and sell dear; and 
 because he realizes his profits only after hav- 
 ing sold, he thinks they are derived from sell- 
 ing. Nations are obsessed by the same delu- 
 sion. The United States protects its subjects 
 against foreign selling. Its statesmen and its 
 men of business are afraid of what they call an 
 adverse balance of trade, not because it can 
 be an evil to have an income in excess of an out- 
 go, but because they think it advantageous to 
 sell more than they buy. 
 
 If we search for the origin of this blunder, 
 we shall discover that it is almost as old as 
 human society. The foreign policies of all 
 nations were for centuries jealously exclusive 
 and in the highest degree injurious to them- 
 selves. The mercantile systems of the seven- 
 teenth and eighteenth centuries were built upon 
 a philosophy which few had the wit to evade. 
 Those systems rested upon the assumption that 
 money was the most desirable sort of wealth, 
 and this assumption proceeded from the notion 
 that prosperity could be measured only in 
 
 [40] 
 
MUTUAL BENEFITS OF TRADE 
 
 money. A trade which involved the export of 
 money was therefore deemed injurious. The 
 average merchant of today shares in the error 
 which dictated the old policies. When money 
 is coming in he knows that he is getting better 
 off, and when it is going out he thinks he is 
 getting worse off. He reckons his profits in 
 money, and as those profits are derived im- 
 mediately from the buyer, he assumes that 
 they are realized at the expense of the buyer. 
 As all men are buyers of goods, they regard 
 with suspicion those who inflict an assumed 
 injury by selling. People generally suspect the 
 rich man whose fortune is derived from trade. 
 Poor men and dreamers are constantly pro- 
 claiming against the iniquity of such ill got 
 wealth. We must understand trade in order 
 to dispel this illusion. 
 
 Trade is an incident of specialization. Where 
 no one uses or consumes what he makes, each 
 must resort to trade to gratify his wants. At 
 first goods were bartered or exchanged for 
 goods. It is obvious that in barter neither 
 party is buyer or seller: each is both. If he 
 
 [4i] 
 
METHODS OF TRADE 
 
 makes in one character, he must lose in the 
 other, — and so is no better or worse off as the 
 mere result of the exchange. One, of course, 
 may give a greater value than he gets, but such 
 a result is never contemplated by the other. 
 Each thinks he gets an advantage, for the ex- 
 change is always made on satisfactory terms. 
 If I say that each does derive an advantage, 
 yet neither derives it at the expense of the 
 other, I will be deemed to have uttered an 
 absurdity — yet the paradox is susceptible of 
 positive and satisfactory proof. 
 
 It ought to be evident that the mere exchange 
 of one commodity for another can not increase 
 or decrease the value of either. Where shoes 
 are worth as much — that is, cost as much in 
 labor — as hats, the cobbler and hatter after 
 trading will have as much in value as each had 
 before, no more, no less : but — and this is the 
 explanation of the anomaly — each will have 
 what he wants and to this extent each will have 
 derived a distinct advantage from the other — 
 not at his expense however, for both are bene- 
 fited. 
 
 [42] 
 
LINCOLN'S BLUNDER 
 
 Buying and Selling 
 Now let us assume that the parties use money 
 and buy and sell instead of bartering goods. 
 Each starts with say five dollars and goods of 
 equal value, and each buys from the other what 
 he needs for five dollars. Is it not obvious that 
 after such dealing each will have precisely what 
 he would have had if he had bartered or ex- 
 changed one commodity for the other? The 
 reader need not be annoyed if he accepts with 
 reluctance so plain a demonstration. Lincoln 
 seems to have been unable to perceive it. He 
 is reported to have said, "If I buy from an 
 American an American hat for five dollars, 
 America retains the money and the hat; but if 
 I buy a hat from an Englishman, England will 
 have the money and America the hat only." 
 The implication is irresistible that we lose 
 money by buying from a foreigner, yet it is 
 false and misleading. In the one case, America 
 started with five dollars and a hat, and after the 
 purchase had been effected, still had the hat and 
 the money, no more, no less. In the other case, 
 she had five dollars but no hat, and after trad- 
 ing, a hat worth five dollars. 
 
 [43] 
 
TRADE — HOW BENEFICIAL 
 
 We are beguiled by the immediate conse- 
 quences of selling and forget that we sell in 
 order to buy. No trade can be complete until 
 goods shall have been exchanged for goods. 
 We do not now barter, because barter is incon- 
 venient. A pair of shoes may be worth more 
 than a hat, and the difference must be adjusted. 
 We use money because it facilitates trade, first 
 bartering goods for money of equal value, and 
 then money for goods ; but our object is to get 
 with the goods we produce the goods we need. 
 It matters not therefore, so far as the benefits 
 involved are concerned, whether we exchange 
 goods for goods immediately or goods for 
 money and then money for goods. That an 
 unfair advantage is not designed may be in- 
 ferred from the common use in trade of the 
 word "bar-gain." 
 
 Mutual Profits of Trade 
 
 I have stated a simple case in order that it 
 may not confuse. Let us go further into the 
 matter and assume that shoes are worth four 
 dollars and hats five, and that they are ex- 
 changed at these valuations. If each party 
 
 [44] 
 
TRADE 
 
 starts with his commodity and five dollars, after 
 trading the cobbler will have a hat and four 
 dollars, and the hatter a pair of shoes and six 
 dollars, but each will have in value precisely 
 what he started with, altho that value has as- 
 sumed another form. The cobbler started with 
 five dollars and a pair of shoes worth four 
 dollars, or nine dollars in value ; and after trad- 
 ing he had four dollars in cash and a hat worth 
 five dollars, — that is, nine dollars in value. 
 He has neither made nor lost in value, but he 
 has what he wants, and this benefit was his 
 object. The profits which seem to be derived 
 from mere selling are delusive, for each party 
 may derive from the same trade the same profit. 
 For example, if I value shoes which cost me 
 four dollars, at five, and sell to the hatter for 
 five, I seem to have made a profit of one dollar ; 
 but if the hatter values his hat, which cost four 
 dollars, at five and sells it to me at five, he 
 also has made a nominal profit of one dollar. 
 
 The principle is obscure because we do not 
 exchange goods for goods immediately, but buy 
 and sell. Nevertheless the principle still holds, 
 for money is but a medium of exchange and a 
 
 [45] 
 
MEANING OF PROFITS 
 
 measure of the relative values of the goods in- 
 volved. When we exchange goods we save 
 labor, when we buy and sell we say that we 
 make money, but what we make in the one case 
 is precisely what we save in the other. For 
 example, the trader who makes for $4 and sells 
 for $5 and continues to do so until he shall have 
 accumulated $20, has in fact saved $20 worth 
 of his own labor. The same saving is realized 
 by a hatter who makes ten hats, sells five and 
 puts five hats worth $4 each in a warehouse. 
 Each has accumulated goods, called in the one 
 case dollars and in the other case hats. 
 
 Producers as a rule do not accumulate hats or 
 shoes, and do accumulate money, for the fol- 
 lowing reasons. In the first place, it is more 
 convenient to do so. Money is a precious metal 
 having great value in small bulk, which may be 
 deposited and kept in a safe place without 
 charge: whereas goods are bulky and perish- 
 able and can not be stored and preserved with- 
 out trouble. In the second place, it is safer to 
 invest in than money to keep goods. Goods are 
 more readily made than disposed of. Produc- 
 tion is mechanical, trade depends upon many 
 
 [46] 
 
PROFITS 
 
 considerations: the desires, wants and means 
 of others. To test, to keep in touch with the 
 demands of the market, the maker of special 
 goods must sell, for unless he does so he can not 
 be sure that he is making what another will 
 buy. To avoid this uncertainty, traders prefer 
 as a rule to sell even before they produce goods, 
 Money will buy anything at any time. Its 
 market value fluctuates very little and very 
 gradually; and it is because money possesses 
 these qualities that men prefer to accumulate 
 money rather than speculate by accumulating 
 goods. Nevertheless, money saved is but the 
 proceeds of goods made and converted into a 
 more convenient, merchantable sort of com- 
 modity; and if we admit that accumulated hats 
 are the fruits of the industry and thrift of the 
 hatter, then we must admit that the money for 
 which hats have been exchanged is also the fruit 
 of his industry and thrift and not of another's. 
 Men are mistaken who think money got by 
 trade is wrung from or got at the cost of the 
 buyer. More than charity, trade enriches him 
 that gives and him that receives: it is always 
 
 [47] 
 
ILLUSTRATION 
 
 advantageous for all engaged in it — buyer and 
 seller, seller and buyer. 
 
 Perhaps the problem will be simplified if we 
 take a broader view of trade than is afforded 
 by a single transaction. A diversified industry 
 engages say one hundred men in as many dis- 
 tinct occupations, each of whom depends upon 
 the rest for the gratification of his wants. In 
 such case each must sell ninety-nine times and 
 buy ninety-nine times. If every sale is made 
 at a profit, every purchase must be made at a 
 loss, for after it is all over the quantity of goods 
 has been neither increased nor diminished. 
 Each worker contributes one sort of goods and 
 gets ninety-nine others of equal value. He gets 
 out in value as much as he put in — no more, no 
 less. The farmers of Kansas exchange wheat 
 for various articles made in New England, and 
 both sections are better off, but neither at the 
 expense of the other. 
 
 I will not deny that trade can be less advanta- 
 geous to one party than to the other. It is 
 always hard to precisely measure the values 
 involved, yet in the nature of things this diffi- 
 culty is unavoidable. An article is worth to me 
 
 [48] 
 
BAD TRADING 
 
 what I am willing to give for it, altho another 
 may be willing to give more or less. If one 
 makes a bad bargain, he is the victim not of 
 trade bnt of bad trading. Certainly mere trad- 
 ing should not be regarded as the cause of the 
 unjust enrichment of which men complain. Nor- 
 mally conducted, as it must be in the long run, 
 it results in benefits to both parties. Men be- 
 come rich by reason not of what they carry out 
 of it but by reason of what they carry into it. 
 Those who have more to exchange will always 
 be better off than those who have less, and to 
 this consequence of trade none should object. 
 
 Unprofitable Trade 
 
 Heretofore I have confined myself to the 
 simplest sort of trade, namely that which is 
 carried on between the producers of various 
 commodities. Trade however is never so 
 simple. Consumers of goods never meet face to 
 face with producers of what they themselves 
 need. The cobbler who needs beef may find it 
 hard to discover a butcher who needs shoes. 
 To avoid this inconvenience, money was in- 
 vented. But money does not avoid all the 
 
 [49] 
 
COMPETITION 
 
 inconveniences of trade. It may be hard to find 
 a buyer for goods. The maker is as a rule too 
 busy to undertake this task, and it is therefore 
 entrusted to one who makes a business of trade. 
 The merchant buys from the producer and sells 
 to the consumer ; and as his service is useful to 
 both, he is allowed what is called a profit for 
 performing it. 
 
 Not all merchants get rich, but some of them 
 do. Why! Is it not because those who render 
 a better or greater service get more than the 
 rest ? The man who buys corn in Massachusetts 
 for sale in Kansas, will not do as well as he 
 who buys corn in Kansas for sale in Massachu- 
 setts. Merchandising is a science which requires 
 ability, experience and resources. Of those 
 who undertake it, few are what is called suc- 
 cessful, and because many fail we are apt to 
 assume that they are the victims of those who 
 succeed. 
 
 Usefulness of Competition 
 
 Disregarding for a moment the welfare of 
 the individual, what does the welfare of many 
 men engaged in various occupations require? 
 
 [50] 
 
COMPETITION 
 
 Each makes one thing, and that thing must 
 somehow be exchanged on fair terms for every 
 thing which he needs. If he gets a fair price 
 for his own commodity and pays a fair price 
 for another's, he is as prosperous as he de- 
 serves ; but if he gets little and pays much, he 
 is the victim of another's rapacity. The mer- 
 chant or trader helps him to get a fair price 
 and protects him against paying an unfair price 
 by buying in a cheap market and selling in a 
 dear. He who achieves that service accomp- 
 lishes it in competition with others having the 
 same object. Much depends upon him. If he 
 buys where goods are dear and sells where they 
 are cheap, has he not hurt both sections? Has 
 he not made harder to get what was already 
 hard to get, and made more abundant that which 
 was already abundant? Who, under such cir- 
 cumstances, is better off as the result of his 
 intervention? If on the other hand he buys 
 corn in Kansas and sells it in Massachusetts, 
 has he not done good to both sections by ena- 
 bling one to dispose of what it has to sell and 
 the other to get what it wants ? 
 
 Simple as this service seems, all men are not 
 
 [6i] 
 
ON WHAT PROFITS DEPEND 
 
 equally competent to perform it, and a shrewd 
 trader will always drive out a foolish one. No 
 one should complain of such competition. It 
 is called the life of trade, and it is : it tends to 
 confine trade to those who understand it and 
 render a service by conducting it. If we assume 
 that the successful trader has rendered this 
 service, his intervention is helpful to producers 
 and consumers. He has hurt neither. His pro- 
 fit does not come out of either. Corn in Kansas 
 is worth so much, in Massachusetts so much 
 more. To buy at its worth in Kansas and sell 
 at its worth in Massachusetts does not hurt 
 anybody. If the merchant did not buy in 
 Kansas, wheat would be worth less there, and 
 if he did not sell in Massachusetts, wheat would 
 be worth more there. The difference between 
 the local values affords a legitimate profit to 
 the merchant. 
 
 If this service were easy, all men would thrive 
 by trade, yet they do not: neither should they. 
 Consumers encourage him who sells for least; 
 producers, him who pays most : between the two 
 there is room for ability — for that sort of fac- 
 ulty which knows how to pay more and sell for 
 
 [52] 
 
GREAT FORTUNES 
 
 less than another, that is, to help both pro- 
 ducer and consumer. Underselling should not 
 be deprecated, save in those rare instances 
 where goods are sold for less than they are 
 worth in cut-throat competition; and in such 
 instances the loss falls on the merchant, not the 
 consumer. The profits of a trader show his 
 usefulness, and none should withhold from him 
 what he has honestly earned. 
 
 Competition and Success 
 
 Great profits which go to swell great fortunes 
 sometimes alarm us, but only because we do not 
 understand their origin. A. T. Stewart made a 
 vast fortune by selling goods cheap which had 
 been dear, and at the same time was the best 
 buyer in the market. He diminished the cost 
 of distribution. 
 
 People are mistaken who deprecate the en- 
 richment of traders. If good ones did not thrive 
 there would be no inducement to promote the 
 general welfare by discovering and satisfying 
 on favorable terms the various needs of various 
 members of the community. We should rather 
 admire than contemn success in trade. Such 
 
 [53] 
 
USURY 
 
 success is never won by hurting — it is always 
 the result of helping. The merchant prince is 
 a benefactor of mankind and none should envy 
 his prosperity. 
 
 Usury, Its Justification 
 
 I have discussed that sort of enrichment 
 which results from trade and trading, and dis- 
 covered in neither just cause for suspicion or 
 resentment. It remains to discuss interest, or 
 that increment which capital demands of the 
 borrower. By reason of interest, men are 
 enabled to live in luxury who seem to do noth- 
 ing. Is it right that they should be permitted 
 to do so? 
 
 Usury has always been odious. Christ drove 
 the money changers from the temple. For many 
 centuries the Church forbade it. During long 
 ages it was deemed hurtful and hateful by all 
 good men. "The usurer is the great Sabbath 
 breaker; his plough goeth on Sunday' ' contains 
 a general and persistent opinion. Men were 
 persecuted because they were usurers. We 
 have today in the statutes of many states severe 
 restraints upon the rates of interest that may 
 
 [54] 
 
CAPITAL 
 
 be charged. If we search for the origin of this 
 opprobrium, we shall find that it proceeded 
 from the just resentment of men. Usury was 
 an evil for many centuries. Men in distress 
 borrowed so much, spent it and were required 
 to pay more. The improvident heir resorted to 
 the lender and lost his heritage, and that trade 
 became hateful which involved the ruin of so 
 many. 
 
 Value of Capital 
 
 Today however these evils are confined to 
 very narrow dimensions. Men no longer bor- 
 row in order to spend but in order to make 
 money. We still justly condemn the money 
 shark who afflicts the poor, but we should not 
 despise a use of capital which enriches the bor- 
 rower and the community. What is capital? 
 Capital is saved wealth, and since all wealth is 
 in a sense the product of labor, capital may 
 properly be regarded as accumulated labor. As 
 we use the word however, we mean by capital 
 that part of saved wealth which is used in the 
 production or distribution of other wealth. 
 Every tool is capital. So is a machine, a factory, 
 
 [55] 
 
EARNING POWER OF CAPITAL 
 
 the raw material required and the wages 
 paid pending the production and distribution of 
 goods. Railroads, canals, highways and ships 
 are capital, and all the innumerable instrumen- 
 talities of commerce. The function of capital 
 is to help the laborer. A mechanical knitter 
 will do the work of 7000 hands. Machines of 
 various sorts increase the efficiency of the la- 
 borer from five to twenty-fold. A century ago 
 it cost 26 cents to transport overland one ton 
 one mile; today the same quantity is carried 
 the same distance for half a cent. Our present 
 prosperity is in larger measure due to the gen- 
 eral and wise use of capital than to any other 
 influence, and for this reason it is indispensable 
 to the general welfare that somehow a constant 
 and adequate supply be provided. There are 
 but two conceivable ways in which it can be 
 provided : the state may furnish it, or its accum- 
 ulation may be left to individuals. How can the 
 state provide it? 
 
 The state as we know it is not a maker but 
 a spender of wealth: it does not support in- 
 dustry, but is supported by it. If it needs 
 capital it must tax the property of its citizens. 
 
 [56] 
 
ACCUMULATION OF CAPITAL 
 
 Can we rely on such a source for all the capital 
 needed for the development of a great country ? 
 Let us assume that a law is passed which ap- 
 propriates all private fortunes in excess of that 
 modest competence which the majority of our 
 fellow-citizens deem sufficient ; and further, that 
 as a consequence of such law, all of the fac- 
 tories and plants and transportation systems 
 of the country pass into the hands of office 
 holders. How long will such capital last? If 
 we allow it usury, the people are no better off, 
 since they must pay. If we deny it usury, we 
 must replace it. Capital is not immortal. Tools, 
 machines, factories and railroads wear out. 
 Are they apt to depreciate more or less rapidly 
 under political control? If they do depreciate, 
 how can the cost of renewals, enlargements and 
 improvements be derived? Additional exac- 
 tions from the people are impossible in the 
 case assumed, without impairment of that mod- 
 erate competence which we are willing to allow. 
 If nevertheless we continue to appropriate 
 private property, how long will the industrious 
 part of the community continue to save what 
 
 [57] 
 
CAPITAL 
 
 they can not enjoy? The blight of the feudal 
 system lay in its undefined exactions. No man 
 had a motive to work so long as another had 
 the power to appropriate the fruits of his labor. 
 If we revert to the old plan and say to men, 
 you may have so much and no more, is it likely 
 that they will labor zealously after their allow- 
 ance shall have been won ? None but a dreamer, 
 ignorant of history and of human nature, would 
 venture to predicate an economic system on so 
 false a foundation. 
 
 If we do not resort to taxation, we must so 
 operate the instrumentalities appropriated as 
 to provide for their maintenance and immor- 
 tality. In this event, the factories and railroads 
 must be operated at a profit and the com- 
 munity will be no better off than at present. 
 Will it be as well off? I have already discussed 
 the dangers and inconveniences of communism 
 and it is unnecessary to reiterate them. Public 
 control is never efficient. Politicians are not 
 good captains of industry. An enforced labor 
 is a sluggish labor. Where no man has a motive 
 to economy, little will be saved. A monopoly 
 
 [58] 
 
CAPITAL AND WORK 
 
 is apt to be careless of efficiency, for where 
 wages depend upon political influence and the 
 public must pay, every job will become a 
 sinecure. The appropriation by the government 
 of the railroads in 1917 was followed by an im- 
 mediate increase of from 25% to 33% in the 
 charge for transportation, and a corresponding 
 increase in the wages paid. A reasonable 
 nation, however generous its prosperity, should 
 hesitate to embark upon so hazardous a plan, 
 save as a desperate expedient to remedy a des- 
 perate evil. We need capital and should prefer 
 to provide it in some other manner. It is now 
 provided abundantly. The government has 
 borrowed billions for war and other billions will 
 be forthcoming. In times of peace, capital seeks 
 investment. States and cities get what they 
 need at 3 x /2% or 4%. Private capital has built 
 the railroads, equipped the farmers with cun- 
 ningly contrived machines, established lines of 
 communication from ocean to ocean, and 
 financed the industry and trade of this country 
 so advantageously that none can compare with 
 it in affluence and power. 
 
 [59] 
 
CAPITAL 
 
 How Capital Provided 
 
 If it be asked how so great a sum has been 
 provided, I answer, by the industry and provi- 
 dence of millions of people, each of whom has 
 a motive to save. We have learned how to 
 incorporate capital and can make a little profit- 
 able. Small sums derived from petty savings 
 furnish the great sums required for great un- 
 dertakings. We pay interest on savings, and 
 get all the capital we need by allowing it earn- 
 ing power. What harm has followed! Who is 
 hurt by the lender's gain? Not the borrower. 
 If I lend a man a plow, can he not afford to 
 pay me for its hire ? The great borrowers are 
 the soulless corporations created for profit and 
 nothing else. The workman to whom I lend a 
 machine increases his output five or ten fold. 
 Do I wrong him if I ask a small part of his 
 profit for the use of my property? 
 
 Does usury impair the general welfare? How 
 can it? It tends to induce the accumulation of 
 the capital required for efficient production and 
 distribution, and results in more goods at less 
 cost and cheap distribution. The merchant who 
 borrows can sell more cheaply than he who 
 
 [60] 
 
CAPITAL AND USURY 
 
 does not. Trade is a hazardous undertaking 
 and the profits realized should recompense the 
 merchant for his services and risk. If we assume 
 that 10% is a fair return on money invested, 
 the merchant who uses $100,000 of his own must 
 make $10,000. If however another has but 
 $50,000 and borrows $50,000 at 5%, he need 
 earn but $7,500 on the same sales, and can 
 therefore undersell. Usury as we now under- 
 stand it is paid neither by the borrower nor 
 the community and can not hurt either. If 1 
 make by the work of my hands in the course 
 of a given time $1000 and save $500 which I 
 invest in a machine to enable me to make twice 
 as much in the same time, my increased output 
 serves to increase the general stock of goods 
 or make them more abundant. If I lend my 
 machine to another exacting Vk or less of the 
 benefit he will derive from its use, will my 
 enrichment be the result of his work or his 
 enrichment be the result of my help! These 
 considerations can not be ignored. The pros- 
 perity of a community depends upon the ac- 
 cumulation and abundant supply of capital. 
 
 [6i] 
 
USURY 
 
 The usury exacted can not hurt either the bor- 
 rower or the community: it affords a motive 
 to do what otherwise could not be accomplished. 
 It encourages thrift and rewards self-denial. 
 No evil can result from it. The capitalist can 
 consume so much and no more. What he has 
 in excess of his wants, he must use beneficially 
 or waste profligately. To allow him usury is 
 to encourage him to do good. None but those 
 ignorant of affairs would venture to prohibit 
 so fruitful a source of good. 
 
 Usury does sometimes result in the accumula- 
 tion of great fortunes, but such fortunes should 
 not be feared. It is an old maxim that ' ' riches 
 take unto themselves wings and depart. " He 
 who makes a bad use of capital, that is a use 
 which is not profitable to the community, can 
 not retain it. There are but three generations 
 between shirt-sleeves and shirt-sleeves, because 
 it requires ability to manage a fortune. Few 
 fortunes are inherited and transmitted unim- 
 paired. If we consider the consequences of 
 folly, extravagance, the distribution of estates, 
 and the catastrophies which from time to time 
 
 [62] 
 
CAUSES OP PROSPERITY 
 
 sweep over the country, we will not be apt to 
 fear plutocracy. New men now and always have 
 controlled business affairs. In spite of its 
 power, capital must depend upon ability, and 
 ability will in time appropriate capital. Happy 
 is that country which succeeds in inducing men 
 to provide capital and compelling them to make 
 an advantageous use of it. America is today 
 more prosperous than Russia not because its 
 natural resources are greater but because it has 
 more capital, its laws are wiser, its industrial 
 system is more free, its men are more indus- 
 trious and more intelligent and its property is 
 more secure. If we revert to the old tyranny 
 and deny men a motive to thrift, we shall sink 
 into the old poverty. The poor man should 
 never complain that the rich man is his enemy. 
 Capital is the best friend of poverty. It fortifies 
 energy. Labor is indispensable to capital. Each 
 is dependent upon the other and the mastery is 
 with neither. Each helps the other, — capital 
 more than labor: it affords the tool, the place 
 to work, the increased product, the greater part 
 of the wages earned. 
 
 [63] 
 
RICHES 
 
 Unjust Enrichment 
 
 What then becomes of the objections to 
 private property which we set out to consider? 
 "What a man makes is his by the common opinion 
 of mankind. He can make more by specializa- 
 tion than by attempting all thing's. Where 
 labor is divided, trade is indispensable. Trade 
 is advantageous to both buyer and seller. The 
 merchant who facilitates it is worthy of his 
 hire. Capital is requisite to industry — it in- 
 creases the products of labor and cheapens the 
 cost of distribution. Usury induces the accumu- 
 lation of capital. Its payment does not hurt 
 the borrower; riches must be made of use to 
 the community. Except they be usefully em- 
 ployed they can not be retained. These are the 
 general considerations which justify private 
 property : common sense, experience, its private 
 and general utility, its origin in service and 
 self-denial, the spur it affords to industry, and 
 above all the evils which it precludes. 
 
 I can not deny that there are bad ways of 
 getting rich, nor that wealth may be and fre- 
 quently is ill used; but these subjects I can not 
 discuss. The ways of the criminal and specu- 
 
 [64] 
 
IMPEDIMENTS TO PROSPERITY 
 
 lator are fugitive and various. I have con- 
 sidered only that normal sort of conduct which 
 we most properly attribute to just men who 
 thrive by helping their fellows, and that sort 
 of enrichment which is the just result of that 
 service. If the argument fails it is because it 
 is difficult to make an argument which shall be 
 satisfactory to those who lack property. What 
 men can not have for themselves they are re- 
 luctant to allow to others. Reason has very little 
 to do with the matter. If we envy a man of 
 greater ability, it is natural to deny his super- 
 iority; if we have less by deserving less, we 
 can still question his right to more. The dis- 
 satisfied part of the community will ever find 
 an excuse in an accusation. "Believe not much 
 them that seem to despise property, for they 
 despise it that despair of it," said Lord Bacon. 
 
 Obstacles to Prosperity 
 
 I have ventured upon the foregoing apology 
 not alone to justify private property to those 
 who are ignorant of the considerations upon 
 which it rests, but by the display of those con- 
 siderations to make evident certain blunders 
 
 [65] 
 
DISCONTENT 
 
 and follies commonly committed which tend, De- 
 restricting or restraining the free play of eco- 
 nomic laws, to impair the general welfare. The 
 most prosperous among us, not content with 
 the natural and just rewards of energy and 
 service, are apt at times to pervert their efforts 
 to unworthy uses and strive to get without giv- 
 ing and win without deserving. Combinations 
 in restraint of trade, labor conspiracies, pro- 
 tective laws and burdensome taxes are the 
 effects of prejudice or cupidity and tend not 
 only to serious material loss but to general dis- 
 satisfaction and unrest. Forgetting their mutual 
 dependence and the actual interest of every- 
 body in the efficiency and prosperity of his 
 neighbor, class is arrayed against class, indus- 
 try against industry, community against com- 
 munity and nation against nation. Labor unions 
 restrict out-put under the delusion that such 
 restriction will result in giving employment 
 to more men. Manufacturers combine to keep 
 up prices. Communities are jealous of each 
 other's goods, and attempt to excite a narrow 
 and local feeling. Nations surround themselves 
 by obstacles to trade which they call protective 
 
 [66] 
 
' LABOR UNIONS 
 
 barriers. Taxes are imposed in hate. These 
 and like wrongs are perpetrated in good faith 
 by ignorant men. Let us examine the preju- 
 dices which prompt them and the effects which 
 follow. 
 
 Labor Unions 
 
 The labor union seems to be of opinion that 
 short hours, scamp work and restricted out-put 
 tend to raise wages. This delusion is very old. 
 It originated in China thousands of years ago, 
 and still dominates that unhappy country. The 
 Chinese have always been jealous of innova- 
 tions and improvements. They hold, almost as 
 an article of religion, that every labor saving 
 device costs a man a job. As a consequence, 
 twenty men are required to pull one up a river. 
 Steam is excluded. Freight is carried by men. 
 Goods are made by hand. In consequence of 
 these follies, Chinese labor is the worst paid 
 in the world. This fact, which none can deny, 
 should arrest the attention of those who are 
 now obsessed by a like delusion. Wages depend 
 upon the wealth produced by labor. Where ten 
 men are employed to do the work of one, the 
 
 [67] 
 
BLUNDERS 
 
 proper wage of one must be divided among 
 ten. The workman is reluctant to admit that 
 he must subsist upon what he himself produces. 
 He does not know that if he confederates to 
 produce little, he conspires against his own 
 interest. The economic law which I have en- 
 deavored to explain exacts of every man that 
 he shall contribute to the general stock of goods 
 as much as he derives from it. If an individual 
 evades the law by some hocus pocus, he is a 
 parasite deriving his subsistence from another 's 
 effort. If he contributes no more than he gets, 
 then when his contribution is small his wages 
 must be small. 
 
 The Case or The Cloth Weavers 
 
 An illustration of the operation of this law 
 is afforded by the pathetic consequences of the 
 introduction of cloth making machinery into 
 Lancaster in the early part of the 19th century. 
 Prior to its introduction, cloth had been made 
 on hand looms, and thousands of people were 
 employed in such work. The immediate effect 
 of the use of machinery was to deprive every 
 hand-loomer of his livelihood. That under such 
 
 [68] 
 
BLUNDERS 
 
 circumstances they should have hated and 
 attempted to destroy the machine was natural 
 but unfortunate. After years of bitter strife 
 and sorrow, they were compelled to submit — 
 with this remarkable result, that the average 
 wage of the district increased three-fold: as 
 soon as they began to produce more, they got 
 more. The propensity to create jobs by slack 
 work is no less foolish than the opposition to 
 machinery. We divided the tasks of industry 
 in order to increase its output. To now restrict 
 the output by slack work, is to revert to the 
 old poverty. It is sometimes hard to discover 
 the operation of the law in the immediate con- 
 sequences of job-creating conspiracies. A 
 brick-layer formerly laid 1200 bricks a day; he 
 is now permitted to lay no more than 700. 
 Wages were then $3.00 a day and are now $6.00 
 more. How can the law be reconciled with the 
 fact? 
 
 The explanation is simple. The competitive 
 law which controls those engaged in the pro- 
 duction and distribution of goods intended for 
 consumption, does not operate on the brick- 
 layer, and his wages seem to be independent of 
 
 [69] 
 
BLUNDERS 
 
 the service rendered by him. Yet he is not 
 emancipated from all control, for if he exacts 
 more than another can earn he must make way 
 for the other, unless by a combination he can 
 sustain his unjust exaction. For this reason 
 there is usually behind every union composed 
 of brick-layers, railroad men and others of like 
 class, a sinister threat of violence. Their 
 rapacity rests upon violence, implicated if not 
 practiced. No man should get more for work 
 than it is worth ; for if he succeeds in doing so, 
 he thrives at somebody's else expense. Monop- 
 olies of all sorts are injurious. They levy toll 
 on industry and derive their profits from spolia- 
 tion. The constant and conscious object of 
 every one engaged in industry should be to do 
 his best, for that way lies prosperity. We are 
 apt to forget that wages are great or small, not 
 as they are high or low measured in money but 
 as their purchasing power is great or small. A 
 man may receive $10 a day and be able to pur- 
 chase but $2 worth of goods. "When we sell 
 and buy, we exchange labor for labor, and none 
 can have an interest in getting little for his 
 own. No one can get $10 worth of work for 
 
 [7o] 
 
RESTRAINTS OF TRADE 
 
 work worth $2, by any fair bargaining. To 
 attempt such spoliation is to deserve disaster. 
 Where a man gets five days wages for four 
 day's work, somebody pays for four days work 
 five days wages, and if many are required to 
 submit to such wrong, the industrial system is 
 out of joint. Men who earn five dollars a day 
 by honest labor, can not long afford to pay 
 ten dollars a day for dishonest labor. 
 
 Teade Conspieacies 
 
 Conspiracies between manufacturers to keep 
 up prices are equally injurious and equally 
 wrong. They tend to make goods expensive or 
 hard to get, and disturb that equal, fair and 
 just distribution which should be the aim of all 
 honest men. High prices have always been 
 alluring. A moment's reflection should dis- 
 cover how specious they are. To sell for a high 
 price is to buy for a high price. The object of 
 trade is the exchange of goods for goods; and 
 their market values, however conventionally 
 measured, can not affect their intrinsic values. 
 If a pair of shoes is worth a hat, it matters 
 not whether these commodities be valued for 
 
 [7i] 
 
EFFECTS OF 
 
 exchange at $2 or $20. People attribute pros- 
 perity to high prices, because advancing prices 
 always attend an improvement in business. 
 Yet the improvement can not be the effect of 
 the advance. A community which finds it 
 harder from day to day to satisfy its wants is 
 not progressive but decadent. Prosperity is 
 the result of a contrary tendency. When goods 
 are easily produced and readily disposed of, 
 business is good. It neither hurts nor helps 
 that money values advance; always provided 
 they advance equally. Where however, owing 
 to combinations, certain goods advance and 
 others remain stationary, the disparity must 
 always result in the arrest of trade. What is 
 hurtful to the community can not in the long 
 run bring profit to the wrongdoer. The crises 
 which from time to time disturb all commercial 
 affairs are due to a growing disparity between 
 the prices demanded and the means of pay- 
 ment. There is a price which the average man 
 can not pay. When he ceases to buy, the de- 
 mand for goods falls off and industry lan- 
 guishes; and when as a result of such stress 
 prices are reduced, the demand is renewed and 
 
 [72] 
 
FUTILITY OF REGULATIONS 
 
 business revives. Conspiracies in restraint of 
 trade temporarily result in unjust enrichment; 
 yet in the long run cheapness is more profitable 
 than clearness — service than spoliation. 
 
 Wages, Pkices and Law 
 
 All efforts to fix prices or wages arbitrarily 
 are doomed to ultimate failure. They must fail 
 because they result always in wrong to some 
 class of the community, and there is a limit set 
 by immutable laws to wrong doing. The law 
 of supply and demand can not be repealed. Since 
 the beginning, ignorant men have been striving 
 to evade it — never successfully. In Elizabeth's 
 time wages were fixed. During the Dark Ages 
 and down to our own time many, many attempts 
 were made to fix prices. Today we are attempt- 
 ing to do what our ancestors tried to accom- 
 plish by valuers in the thirteenth and fourteenth 
 centuries. They tried and we try to establish 
 what is thought to be a justum pretium for 
 goods. The result of such interference is always 
 uncertainty, confusion — wrong; and always 
 will be. No man's intelligence is equal to such 
 a task. To fix a price too low is to give a man 
 
 [73] 
 
PRICE CONTROL 
 
 too little for his labor; to fix it too high is to 
 hurt the purchaser. Benevolence can not esti- 
 mate the relative values involved. What I, 
 having nothing to sell, think of the value of 
 another's property, may be less than he can get 
 for it, or more than he can get. It is worth in 
 exchange what another will give for it. 
 
 In the sixteenth century there were three 
 years of drought in England, and to alleviate 
 the general distress, the King sent his commis- 
 sioners into every county with instructions to 
 inventory and value all farm products and com- 
 pel their sale at the prices fixed. Almost imme- 
 diately there was a great outcry, for no goods 
 were brought to market. The commissions 
 were revoked with this significant comment: 
 "We can not induce men to accept 6 d. for a 
 shillings-worth. ' ' We tried a similar experi- 
 ment during the American revolution. So did 
 France under the Directorate. Neither was 
 successful. Today we seem to be succeeding — 
 not because we have power to fix prices but be- 
 cause the government controls transportation. 
 England controlled the price of corn during the 
 Napoleonic wars by excluding foreign grain 
 
 [74] 
 
MINIMUM WAGE 
 
 from its ports. The effect of our interference 
 has been not to put prices down but to put them 
 up. We create a monopoly by restricting the 
 supply. Under normal conditions prices are 
 automatically adjusted. An advancing price 
 tends to stimulate production, and increased 
 production tends to lower prices. To require 
 a man to sell for less than cost is to stop pro- 
 duction and inflate the price. The object of 
 trade is mutual benefit, and he who robs it of 
 its reciprocal advantage kills it. Price-fixing 
 results in wrong to one or other, producer or 
 consumer; and that wrong can not be long 
 endured. If some are so enriched, others must 
 suffer a corresponding loss. 
 
 Laws prescribing minimum wages hurt the 
 very people whom they are designed to help. 
 If an employee can not earn what must be paid 
 him, no one will give him work, and he is 
 denied the right to earn what he can. We 
 remedy what seems to be an injustice in one 
 case by inflicting a wrong in another. That 
 we can not at once require an employer to give 
 work and a minimum wage, ought to be evident. 
 
 [75] 
 
EFFECTS OF FOLLY 
 
 Where a miner can or will produce coal worth 
 one dollar only, no one can afford to hire him 
 for two dollars. 
 
 Tampering with Economic Law 
 
 The infirmity which afflicts the social re- 
 former is ignorance of the nice balance main- 
 tained by economic law between supply and 
 demand — labor and its recompense — service 
 and property. He is disposed to deprive Peter 
 of something in order to help Paul. If he knew 
 how and would teach Paul to help himself by 
 helping others, many of the mischiefs which 
 now afflict us would cease to do harm. I must 
 admit that there are situations which seem to 
 require drastic remedy, all laws to the con- 
 trary nothwithstanding ; yet even in such in- 
 stances, unforseen and injurious consequences 
 are apt to follow. 
 
 Lysis, a famous orator, persuaded the Greeks 
 two thousand years ago to punish the corn 
 dealers because they had raised prices. His 
 argument, stripped of tinsel, amounted to no 
 more than this : if you wish cheap corn, punish 
 these men with death. They were executed, but 
 
 [76] 
 
PROTECTION 
 
 the price of corn advanced. If in time of famine 
 provident men who expect calamity and take 
 proper precautions, be treated as malefactors, 
 none will dare to do what the general welfare 
 requires. 
 
 It is easy to disturb the intricate and compli- 
 cated methods whereby goods useful to the 
 community are provided and distributed under 
 a system which originated in and depends upon 
 experience rather than reason. The reciprocal 
 play of powerful influences operating upon all 
 is more trustworthy than any cunningly devised 
 expedient of speculative philosophy. The inno- 
 vator is more apt to hurt than to help. 
 
 Protection 
 
 Of all the evils which have retarded the pros- 
 perity of mankind, none is more remarkable 
 than that which is disguised under the bene- 
 volent mask of protection. The word is of 
 modern origin, but the pretence is old. Selfish 
 men, benevolent philanthropists, misguided 
 statesmen, busy-bodies comprehending nothing 
 but eager to follow another's leading, and ig- 
 norant workers striving to get more than they 
 
 [77] 
 
PROTECTION 
 
 deserve, have confederated throughout the ages 
 to support a body of doctrine plainly antag- 
 onistic in its actual operation to the very in- 
 terests which it pretends to promote. Protection 
 always involves an essential evil: it "protects" 
 the consumer of goods against the goods. We 
 have divided or specialized the labor of the 
 world in order that it may be more productive, 
 and have induced the production of the right 
 articles by making every specialist depend upon 
 the exchange value of his own goods. So only 
 can he be induced to produce what another 
 needs. To interpose an obstacle between them 
 and the gratification of their desires can not 
 protect either; yet the doctrine is founded on 
 such an expedient. 
 
 It is unnecessary to trace the history of this 
 remarkable heresy. It had its origin in the 
 paternalism of the old systems of government. 
 The tyrant, king or emperor found it hard to 
 trust any intelligence save his own and that of 
 the parasites who surrounded him. Even under 
 the Republic, Rome thought it necessary to 
 compel every man to follow the calling of his 
 ancestor, under the delusion that if industry 
 
 [78] 
 
MONEY AND TRADE 
 
 were free men would not do what the general 
 welfare required. Guilds and monopolies were 
 the curse of the Middle Ages. Native manu- 
 facturers, feeling the stress of foreign compe- 
 tition, found it easy to induce impecunious 
 rulers to levy taxes which had the effect of 
 embarrassing importations. Private cupidity 
 and public need undoubtedly originated the pro- 
 tective system. When, by the growth of com- 
 merce the enrichment resulting from foreign 
 trade had become evident to many people, the 
 restiveness of the merchants under hampering 
 restrictions was allayed by an ingenious argu- 
 ment which they found it hard to resist. 
 "What," said the advocates of protection, "is 
 the object of trade: is it not to convert goods 
 into money? If this be its object, then that 
 trade which brings money in is profitable and 
 that which drives it out is unprofitable. We 
 should therefore encourage exports and dis- 
 courage imports. ' ' As a result of such specious 
 reasoning, the mercantile policy, as it was 
 called, became firmly established all over 
 Europe and obtained until recently even in 
 England. 
 
 [79] 
 
ORIGIN OF PROTECTION 
 
 Origin of Our Protective System 
 The American colonists, ignorant perhaps of 
 the argument, were soon induced to adopt it by 
 a series of events resulting in great local dis- 
 comfort which they were unable otherwise to 
 explain. Starting from the old country, they 
 converted their wealth into its most portable 
 form, and instead of bringing bulky goods 
 brought specie. Money of course had little 
 value in a wilderness, and in a short time was 
 sent home to purchase the goods needed. Incon- 
 venience was the natural result of such exporta- 
 tion. Domestic trade needed a medium of 
 exchange and measure of value. Ignoring the 
 influences which induced the outflow of specie, 
 the settlers adopted the expedient of paper 
 money, and inconvertible paper money as we 
 now know will drive out of circulation and keep 
 out all money having intrinsic value. The 
 troubles which followed led foolish men to 
 attribute the mischief to the importation of 
 goods, for goods imported had to be paid for, 
 and as the Pilgrims lacked commodities they 
 were compelled to send specie. 
 
 A century and a half of incessant embarrass- 
 
 [80] 
 
AMERICA AND PROTECTION 
 
 ment did not afford the instruction requisite for 
 the adoption of the proper remedy. The first 
 act passed by the Congress of the United States 
 was directed against foreign goods, and after a 
 while a remedy for the evil was found, not by 
 the wit of man but in the consequences of that 
 gradual industrial development which attended 
 the growth of the settlements. Fishermen sold 
 salt cod in the West Indies for silver, brought 
 the silver home and thence it was exported for 
 goods needed. In time domestic goods were 
 used for a like purpose ; and gradually, but only 
 after a long period, was commerce put on a 
 right basis. Not even then however did men 
 perceive the underlying principles of trade. 
 Jealousy of imports had become an established 
 tradition; and long after they had ceased to 
 result in special inconveniences selfish men 
 found it easy to appeal to and profit by the 
 general prejudice. Today in America that tra- 
 dition is still firmly established. The argument 
 for it has been modified to secure and retain 
 votes enough for its support, but its prosperity 
 rests upon the old prejudice. Manufacturers 
 now say they need protection not for themselves 
 
 [81] 
 
ENGLAND AND FREE TRADE 
 
 but for their workmen, and pretend that high 
 wages are the results of high duties. This im 
 teresting pretension is now part of the eco- 
 nomic gospel of the country. 
 
 England's Emancipation 
 
 Perhaps the best way to dispel it is to trace 
 the emancipation of the English people from a 
 similar delusion. Until the beginning of the 
 19th century England was governed by the 
 country gentry. Agriculture was presumed to 
 be the foundation of its prosperity, and to pro- 
 tect agriculture the importation of corn was 
 restricted or prohibited. Adam Smith had long 
 ago pointed out the iniquity of such restrictions, 
 but his book had not yet become orthodox. Pitt 
 having read it and been convinced by it, forced 
 through Parliament a law emancipating Irish 
 commerce from prohibitions imposed for the 
 presumed benefit of the English ; but the Irish 
 parliament rejected the boon. In the early part 
 of the 19th century, Cobden began his famous 
 agitation for the repeal of the corn laws. He 
 was a manufacturer of cloth, who found his 
 markets greatly curtailed by imposts which not 
 
 [82] 
 
COBDEN'S ARGUMENT 
 
 only reduced his profits but raised the cost of 
 living to his operatives. His attempt met with 
 violent and contemptuous opposition. Per- 
 ceiving the difficulty of convincing the landed 
 aristocracy, he set himself to the instruction of 
 the people and after a long, arduous and 
 dangerous campaign, so far succeeded as to 
 provoke the serious attention of statesmen. 
 
 The argument which prevailed was extremely 
 simple. To the farmer he said, Why do you 
 work; how much corn do you produce by your 
 labor; what do you sell it for; what are your 
 wages ? When men admitted that they worked 
 to produce corn, and produced by very hard 
 work about seven bushels to the acre, and sold 
 it at a price which realized for themselves about 
 8 shillings a week, he said to them : Leave your 
 fields ; come into my factory, produce cloth and 
 I will procure for you twice as much corn and 
 pay you twice your present wages, provided 
 you will help me to repeal the law which now 
 keeps you poor. The argument was striking — 
 and incredulity yielded to faith when he ex- 
 plained that cloth made in England might be 
 
 [83] 
 
STRUGGLE 
 
 exchanged for more American corn than could 
 be produced in England by twice the labor. 
 
 Opposition to Cobden 
 
 Cobden 's campaign was helped by the misery 
 and discontent which followed the waste of the 
 Napoleonic wars, but even suffering and riot 
 failed to disturb the stupid serenity of the land 
 owners. Their profits seemed to depend upon 
 the exclusion of corn, and they could not under- 
 stand how any man could be discontented so 
 long as the gentlemen of England flourished. 
 One man however, of first rate ability and 
 great power, was convinced. He brought in a 
 bill to repeal the corn laws, availing himself of 
 an Irish famine to overcome opposition, and 
 passed it through a reluctant House of Com- 
 mons. Almost immediately prosperity began to 
 revive. Even the land lords were enriched in 
 spite of themselves. Having to compete with 
 foreign corn, they improved their methods and 
 increased the yield of corn fourfold. The pros- 
 perity of all classes, notwithstanding the inno- 
 vation, led to the investigation of the principles 
 of political economy — the usefulness of trade 
 
 [8 4 ] 
 
BALANCE OF TRADE 
 
 and the harm resulting from hindrances to the 
 exchange of commodities; and after a time all 
 protective laws were swept aside by the rising 
 tide of enlightenment. 
 
 America seems to have been untouched by 
 the new doctrine. While England was busily 
 engaged in emancipating its commerce, the Con- 
 gress of the United States was forging chains 
 for its restraint. I have been unable to find any 
 echo of Cobden 's agitation in any contemporary 
 American publication. The index to McMaster 's 
 History of the People does not contain Cobden 's 
 name. Webster's great speech in advocacy of 
 free coal for Massachusetts industries was fol- 
 lowed by an equally great speech in which he 
 supported Clay's policy of exclusion; but in 
 neither does he refer to Cobden or Bright. 
 
 Balance of Tkade 
 
 This remarkable fact requires explanation. 
 Perhaps the remoteness of England and the 
 difficulty of communication shut us off from 
 even the most important events in its experience. 
 I incline however to believe that we were too 
 much occupied by internal affairs to understand 
 
 [85] 
 
FAVORABLE BALANCE 
 
 even so significant a revolution as the repeal of 
 the Corn Laws. Specie was still scarce among 
 us. Paper currencies prevented its use. Always 
 in want of specie, we attributed its loss to the 
 importation of goods. That jealousy of foreign 
 goods had its origin in this error, seems to be 
 established by the persistent use of the phrase 
 "adverse balance of trade' ' and the care with 
 which we have always guarded domestic trade 
 against all restraints. The absurdity of the 
 phrase can not be exaggerated. What is trade? 
 Is it not the exchange of goods for goods ? Can 
 the balance be "favorable' ' when more are ex- 
 changed for less? Was the balance "favorable" 
 throughout that long period of time during 
 which we constantly exported more than we 
 imported? The fantastic notion that a balance 
 of trade can be either favorable or unfavorable 
 is hard to understand. Our excess of exports 
 indicates no more than that as a debtor nation 
 we have shipped goods for goods and also goods 
 to pay interest on what we have borrowed. We 
 made a profitable use of England's capital and 
 sent abroad her share of the benefits realized. 
 England's imports have been greater than her 
 
 [S6] 
 
ADVERSE BALANCE 
 
 exports for a century, yet she has lost no money 
 by reason of this " adverse' ' balance of trade. 
 Throughout the period she has been the money 
 market of the world. How can this fact be 
 reconciled with the prevailing delusion? Eng- 
 land has become rich because her income has 
 been greater than her outgo — not in money but 
 in goods. The United States has also been 
 prosperous — although her income in goods 
 was less than her outgo. Both are better off. 
 She enriched us with her capital, we her by 
 paying interest for its use. The balance has 
 always been even. 
 
 I know that under certain circumstances what 
 is called an " adverse' ' balance of trade must 
 be corrected by the export of money, but why, 
 under such circumstances, do we use money and 
 no other commodity? Is it not because it is 
 more advantageous to pay in money than in 
 goods? How can that be properly regarded as 
 * ' adverse ' ' which is profitable to us ? In a great 
 emergency such as confronted England at the 
 outbreak of the war in 1914, she needed goods 
 immediately which could not be paid for with 
 goods, and naturally and instinctively sent to 
 
 [87] 
 
BLUNDER OF ENGLAND 
 
 us a flood of gold. The mistake she made was 
 not in using gold to get what she needed more, 
 but in her estimate of her needs. All the gold 
 in her coffers could not pay for half the goods 
 needed. Vaguely apprehensive with respect to 
 her own currency, she made a grave blunder at 
 the start and attempted to check the outgo of 
 gold, not by restricting her buying, but by re- 
 stricting its export. The result of her folly 
 was a great rise in the cost of what she needed. 
 Her trade became " adverse' ' to her not in the 
 conventional sense, but in the sense that her 
 immediate needs could not be satisfied by her 
 ready resources. As soon as she understood 
 her predicament, she adopted the right exped- 
 ient, and trouble was averted. Buying on 
 credit, she retained her gold and her goods. 
 
 No one need ever fear an ' ' adverse ' ' balance 
 under normal conditions. Gold is never ex- 
 ported unless it is advantageous to do so. No 
 disaster should follow. If its export results in 
 inconvenience at home, that is, if gold become 
 scarce at home, its purchasing power will rise 
 and the direct and necessary result of such 
 advance will be to draw gold from abroad. 
 
 [88] 
 
COST OF PROTECTION 
 
 Money seeks its best market as instinctively as 
 wheat or any other commodity, and it is incredi- 
 ble that it shall be long lacking in that country 
 where it will buy most. 
 
 Lincoln's Blunder 
 
 I have discussed the current delusion with 
 respect to the "balance of trade" because it 
 aided in the establishment of our protective 
 system and lies at the root of much foolish 
 thinking with respect to the nature of trade. 
 Lincoln's hat story, already referred to, affords 
 an illustration of the use made by protectionists 
 of the delusion. Turning now to protection, we 
 are confronted by an anomaly which demands 
 explanation : we emancipate domestic trade and 
 protect against foreign trade. Why! The ad- 
 verse balance of trade notion being out of the 
 way, what other delusion induces us to do so 
 absurd a thing as to hinder our foreign markets 
 for goods by restricting their exchange for other 
 goods 1 
 
 Burden of Tariff 
 
 There are various answers. Some people 
 have a notion that the foreigner pays the duty, 
 
 [89] 
 
ARGUMENTS FOR PROTECTION 
 
 and therefore approve a policy which relieves 
 themselves from taxation. Let us consider this 
 error. I, a farmer, take my wheat to its best 
 market, Liverpool, and exchange 100 bushels 
 for a suit of clothes. When I arrive at New 
 York, the government compels me to pay $60 
 duty upon the goods. What foreigner pays the 
 tax? If I assume that the suit is sent to America 
 and here exchanged for my wheat, must I not 
 pay in wheat 100 bushels plus the duty! By 
 what motive can the foreigner be induced other- 
 wise to sell in America f Moreover, the dictum 
 that duties add to the price which must be paid 
 by Americans for foreign goods is the very 
 foundation stone of protection. Domestic 
 goods, it is assumed, should not be compelled to 
 compete in price with foreign goods ; and such 
 competition is overcome by loading foreign 
 goods with the duty: that is, raising the cost 
 of them to the American consumer.. 
 
 The arguments for protection are too various 
 for discussion. None of them proceed upon 
 any intelligible, economic principle. Adam 
 Smith has never been understood here. His 
 doctrine was rejected even in England for fifty 
 
 [90] 
 
DOMESTIC TRADE 
 
 years. Obscured perhaps by national jealous- 
 ies, it made no progress anywhere. France 
 rejected Turgot and admired Colbert. Every 
 nation was obsessed by the mercantile delusion 
 that trade is profitable to the seller alone. None 
 perceived the reciprocal advantages of a free 
 exchange of the products of a divided and diver- 
 sified industry. The American colonies were 
 jealous of each other. Local imposts and re- 
 straints upon trade among the members of the 
 Union were surrendered reluctantly — not be- 
 cause men perceived them to be injurious, but 
 because they felt the kindling emotion of a com- 
 mon cause and a common victory. What they 
 imposed upon themselves, as if in mutual sac- 
 rifice, they refused to allow to other nations. 
 Today, as a result of that sacrifice, we have 
 free trade among 100,000,000 of people widely 
 separated and variously occupied, which we 
 scrupulously defend against every encroach- 
 ment; yet we as jealously prohibit the obvious 
 benefits of such trade between ourselves and 
 millions of foreigners more variously occupied 
 and therefore more necessary to ourselves. 
 
THIERS' BLUNDER 
 
 Thiers' Blunder 
 
 A startling fallacy like Lincoln's seems to be 
 most influential with the crowd. Thiers when 
 asked why he imposed certain duties on imports, 
 said "I wish to see the chimneys of France 
 smoke.' ' His banality staggered his enemies, 
 delighted his friends and won an instant vic- 
 tory. Nevertheless the connection between a 
 smoking chimney and a duty on imports is ob- 
 scure. The implication contained in the retort 
 is of course false: one may make a chimney 
 smoke by burning very precious wealth. A 
 smoking chimney is not an end of itself: we 
 consume coal to produce wealth of greater value. 
 The real question, whether by burning coal we 
 create such greater value, is smothered by the 
 smoke. It can not be worth while to burn coal 
 to make at an expense of one dollar what we 
 can buy for fifty cents. 
 
 That the American policy was not a reasoned 
 policy is evident if we consider that trade can 
 not be beneficial as between Maine and Cali- 
 fornia and at the same time injurious as between 
 Maine and Canada: excellent east and west, 
 criminal north and south. The original argu- 
 
 [92] 
 
INFANT INDUSTRIES 
 
 ment for infant industries was perhaps plaus- 
 ible a hundred years ago, but why after a cen- 
 tury of fostering do those same industries now 
 need a far greater degree of protection than 
 that which sufficed for their establishment? 
 Having searched diligently, I can find no satis- 
 factory ground for what Clay proudly called an 
 American policy but the prejudices which were 
 due to a peculiar experience from which we 
 have never been emancipated by trial. America 
 has always been prosperous in a general sense. 
 Its resources were immense, its territory bound- 
 less, and wealth was within the reach of every 
 industrious worker. The petty restraints im- 
 posed upon an inconsiderable foreign commerce 
 did not prevent the free exchange of goods 
 among ourselves. Because the protective sys- 
 tem resulted in no distinct, visible and lasting 
 harm, we have never tried to get rid of it. 
 
 England was emancipated by a famine. We 
 have had no famine. By reason of our good 
 fortune, we have never been compelled to con- 
 sider and understand the inconveniences and 
 loss actually resulting from our blunder. We 
 take for granted that a system which is not 
 
 [93] 
 
PAUPER LABOR 
 
 obviously injurious must be advantageous. How 
 little reason is used with respect to the ques- 
 tions involved appears in every political cam- 
 paign. Orators tell us foolish things unabashed 
 and unchallenged. One uses the balance of 
 trade argument, another says the foreigner pays 
 the tax; another says that infants one hundred 
 years old must still be " protected,' ' and another 
 that wages are high because goods are expen- 
 sive. It is fruitless to discuss a question ob- 
 scured by tradition and entrenched behind an 
 inveterate habit. If I say that you can not make 
 goods or wages or prosperity by law, none will 
 attend. To point to the fact that men who 
 "protect" Americans against the pauper wages 
 of Europe import paupers, is to excite anger. 
 Many men are enriched by protection. The laws 
 compel others to pay them tribute. Their 
 wealth is ill got. What one man produces by 
 the sweat of his face, the law compels him to 
 exchange for less than its worth in order to 
 enrich another. If protection were not spolia- 
 tion, it would be absurd. To protect A against 
 B and B against A, involves a manifest absurd- 
 ity. If I get more because another gets less, 
 
 [94] 
 
BENEFITS OF FOREIGN TRADE 
 
 and he gets more because I get less — what we 
 each make we each lose, and so the protection 
 is fatnous. 
 
 Benefits op Foreign Trade 
 
 Protection is wrong in theory and wrong in 
 practice. We perform various tasks and there- 
 by intend to help each other. We make to sell 
 and buy to use. Our mutual welfare depends 
 upon a just exchange of goods for goods. Pro- 
 tection compels some of us to receive less than 
 our goods are worth, and give to others more 
 than their goods are worth. The farmer who 
 can exchange 100 bushels of wheat for a plow 
 in England is required to pay 150 bushels to an 
 American — to what end? In order that the 
 100 year old steel industry may be fostered into 
 manhood, or that some Bohemian who can not 
 speak English may get high wages, or that an 
 adverse balance of trade may be avoided, or 
 that plows — to use Mr. Harrison's impressive 
 phrase — may not be cheap and nasty. 
 
 Let me take a particular instance, now 
 likely to excite prejudice, and examine the effect 
 of protection upon trade with an enemy whom 
 
 [95] 
 
THE CASE OF GERMANY 
 
 we have every reason to dislike. Germany pro- 
 duces dyes say for less than any other country: 
 why should we "protect" ourselves against 
 them? In order that we may learn to make 
 them at greater cost? If we do not succeed in 
 making them for less, is it not better to pur- 
 chase them with other commodities which she 
 needs? What harm can result? If we yield 
 her a profit on her product, do we not get a 
 profit on ours? By producing dyes at greater 
 cost than we can buy them, we must lose the 
 difference somehow. Germany can gain no 
 more by selling than we by buying. Why should 
 we prohibit such reciprocal service ? Should we 
 not rather bind her to our service than pro- 
 hibit her to serve us? The system which we 
 have evolved as a result of experience rests 
 upon the principle that it is advantageous for 
 all that each should be induced to do that which 
 each can do best. Protection induces men to do 
 what another can do better, and thereby im- 
 pairs the general prosperity. We can grow 
 bananas under glass in Maine: would it be 
 profitable to exclude the tropical fruit in order 
 to establish such an exotic industry? 
 
 [96] 
 
TAXES 
 
 At the risk of being tedious, I have en- 
 deavored to show the origin of the protective 
 system, the fallacies by which it is supported 
 and the actual derangement which it effects in 
 that superior, natural and spontaneous system 
 which we have found to be so advantageous. 
 If trade be profitable to buyer as well as to 
 seller; if the fruits of a divided labor can not 
 be justly distributed without free trade between 
 the various factors of wealth, then protection 
 is a delusion and a snare. It restrains trade; 
 it secures to special producers more for their 
 goods than they are worth; it forces another 
 producer to take less than his are worth. It is 
 unjust and injurious and results in a private 
 enrichment which is won by no corresponding 
 service. 
 
 Taxes 
 
 Taxes invite consideration because people are 
 not apt to understand the effect of such im- 
 positions. They are levied by representatives 
 of a majority who are prone to make them as 
 heavy as possible under the delusion that taxes 
 are paid by the rich. Let us consider a special 
 
 [97] 
 
TAXES AND WEALTH 
 
 instance. If the whole stock of corn amounts to 
 1000 bushels, of which A owns 100, a tax on 
 A's share seems to fall on A only; but it does 
 not. A may intend to consume the corn or sell 
 it. In either case the tax falls on the commun- 
 ity. If he intends to consume it and it is taken 
 from him, he must appropriate what he needs 
 from the general stock; if he intends to sell it, 
 its appropriation by the government diminishes 
 the general stock. We find it hard to under- 
 stand such effects because taxes are paid im- 
 mediately in money, and only ultimately in 
 goods. Where a millionaire pays $1000 into the 
 public treasury, the money is disbursed in sala- 
 ries and wages and we are apt to think such 
 salaries and wages are paid by the millionaire. 
 They are, in a sense, but not in effect ; for every 
 employee who gets money from the public treas- 
 ury immediately spends it for food, clothing 
 and other goods. Who produces the goods? 
 Not, according to the case assumed, the million- 
 aire, for all goods must be produced by labor. 
 If this be true, then all taxes fall ultimately 
 upon the productive labor of the country, and 
 however they be distributed, must ultimately 
 
 [98] 
 
TAXES AND COST OF LIVING 
 
 result in the appropriation of goods produced 
 by labor. They always tend to diminish the 
 general stock of goods. If a community pro- 
 duces $10,000,000 worth of goods, and taxes 
 amounting to $5,000,000 worth are gathered and 
 consumed by the public employees, but $5,000,- 
 000 worth will be left for the use of the workers. 
 The heavier the tax, the harder it is for men to 
 live. Particular industries may not immediately 
 feel this effect, because prices advance as taxes 
 are increased ; but nevertheless every producer 
 is a consumer of goods and what he makes as 
 producer he must lose as consumer: altho he 
 may seem to get more, he in reality is getting 
 less. An industrious German peasant who gets 
 high wages may nevertheless, as a result of 
 indirect taxation, starve to death. All taxes 
 ultimately fall on the consumer of goods — no 
 matter how they may be levied. The majority 
 can not evade their share. Pay they must, 
 somehow, soon or late, in meat, rent or labor. 
 The inheritance taxes now imposed by federal 
 and state governments involve an evil which 
 must result in an impairment of the productive 
 power of the nation. The assistance which 
 
 [99] 
 
CAUSES OF POVERTY 
 
 capital affords to labor has been fully discussed. 
 It is indispensable to the general welfare that 
 an adequate supply shall be provided and main- 
 tained. Inheritance taxes, by appropriating a 
 considerable part of the accumulations of every 
 generation, impair the capital resources of the 
 country, the efficiency of its industry and the 
 prosperity of its citizens. 
 
 That many foreign nations are poor is due 
 more to a lack of the capital requisite for in- 
 dustry than to any other cause. They save 
 little and have not enough to invest in tools, 
 machines, railroads and other facilities for pro- . 
 duction and distribution. Back of every inheri- 
 tance tax is the communistic notion which tends 
 always to equality in poverty. 
 
 I have discussed these various expedients 
 whereby clever men have attempted to evade or 
 hinder the operation of economic influences, in 
 order to emphasize the value of those influences 
 — the good they accomplish and the evils they 
 tend to mitigate. Restricted output, combina- 
 tions to raise prices, duties on imports, taxes 
 however imposed, tend to impair the purchas- 
 ing power of labor and to withdraw from the 
 
 [IOO] 
 
SUMMARY 
 
 laborer that just share of the common wealth 
 which his industry deserves. Ingeniously, cun- 
 ningly and always oppressively, selfish men 
 have contrived and schemed to escape the eco- 
 nomic law. They may succeed for a time, with 
 the aid of unjust and injurious legal devices, 
 but always the economic law tends to restrain 
 and correct them. The free, spontaneous sys- 
 tem evolved by the experience of mankind, is 
 wiser, juster and more beneficial than any con- 
 trived by the deliberate purpose of any man, 
 however able. We are constantly interfering 
 with its operation, but can never quite succeed 
 in defeating the salutary restraints which it im- 
 poses, the good which it compels. 
 
 Summary 
 
 We have now traced the organization of 
 industry from its origin through the various 
 stages of its development, to the complicated 
 but admirable system which is now firmly es- 
 tablished. Founded upon the natural desire of 
 every man to help himself, it has resulted in 
 a harmonious cooperation whose guiding prin- 
 ciple is mutual service. Selfishness has not 
 
 [IOI] 
 
SUMMARY 
 
 ceased to be influential, but it has ceased to be 
 harmful, for every man's private welfare is so 
 firmly yoked to that of his fellows that strive as 
 he may he can not emancipate himself. The 
 labor of each is a specialized labor. No one 
 consumes what he makes. Making for another 's 
 use, each must make what another needs in 
 order that he may get what he himself wants. 
 Actuated by selfishness, men have become cun- 
 ning and zealous in mutual service. Labor is 
 free, but not absolutely so : it is free to do good 
 but not to do harm. 
 
 Trade enriches all who engage in it. Neither 
 party can thrive at the expense of the other. 
 Each gets what he needs in exchange for what 
 he wants, but neither gets more than he gives. 
 And so the increasing products of a divided 
 industry are distributed justly and ratably 
 among the various factors of wealth. 
 
 Vaguely perceiving the mutual advantages of 
 trade, we have emancipated it from restraints 
 and provided ingenious facilities for conduct- 
 ing it, such as money and markets. To enlarge 
 the benefits resulting from it, we have encour- 
 aged a class who devote themselves to search- 
 
 [102] 
 
SUMMARY 
 
 ing out the resources and wants of remote com- 
 munities, and by their aid the fruits of the fields 
 are brought to the doors of the manufacturers 
 and the products of the factory to the doors of 
 the farmer. Distant countries have been in- 
 vaded and explored and their greatly diversified 
 products made to contribute to our prosperity 
 and theirs. 
 
 To another class we have entrusted the busi- 
 ness of transportation, and by its aid the cost 
 of moving goods has steadily declined until now 
 it is one-tenth or one-twentieth of what it was 
 half a century ago. 
 
 Still others provide the capital required for 
 machines, highways, ships and trade. We have 
 induced saving by rewarding it, and now mil- 
 lions pour the fruits of self-denial into the 
 coffers of the banks, which in turn direct their 
 investment or use for purposes profitable to 
 the community. 
 
 These things free men have accomplished by 
 themselves, unaided and uncompelled, under a 
 spontaneous, natural system which has resulted 
 in the enrichment of the world. At its basis, 
 
 [103] 
 
AN ASPIRATION 
 
 affording a sure and firm foundation, is one 
 notion, one principle, one fact : what a man earns 
 is HIS. We allow the laborer his hire; the 
 employer his profit; the capitalist his share of 
 the wealth which he has helped to create and 
 distribute. Take away this wage, this profit, 
 this interest, and the whole structure crumbles 
 away. Disturb the spontaneous and just dis- 
 tribution of the rewards of service which men 
 freely render to each other, and you rob them of 
 a motive to mutual service and imperil industry. 
 If some get rich, it is not because others remain 
 poor. Riches is the servant of the people; 
 property is the best friend of labor. 
 
 An Ideal Era 
 
 We have a country rich in natural resources ; 
 an energetic and ingenious people; capital in 
 abundance ; every hand at work among us con- 
 trols the energy of five; goods were never so 
 easily produced; there is no limit to the pro- 
 ductive capacity of men, and none to their de- 
 sires. Why are we not all rich? Goods are 
 riches. We can produce as many as we wish. 
 
 [104] 
 
UTOPIA 
 
 We now deliberately produce few, save under 
 those rare conditions of feverish prosperity 
 which can not endure. Let me assume what we 
 have never observed — that every employer 
 knows his business ; that his credit is good be- 
 cause deserved; that capital is abundant; that 
 he is emancipated from all foolish restraints, 
 commands the best machinery known to the 
 craft and is surrounded by skillful workmen 
 eager to assist ; that all other industries are as 
 well managed and as well equipped; and that 
 trade is free ; — what should be the consequence? 
 Will not goods be abundant and fabulously 
 cheap, and will not each get his share ? Goods 
 are made for consumption, and the workmen 
 constitute nine-tenths of the population. It is 
 they who consume nine-tenths of the wealth. 
 Every increase in product necessarily involves 
 a corresponding increase in the share of each. 
 If those who need much or wish much will pro- 
 duce much, they can not fail to thrive. Each 
 depends upon the other, and upon the cordial 
 and unrestrained cooperation of all classes 
 depends the welfare of all. 
 
 [105] 
 
DERANGEMENTS OF INDUSTRY 
 
 Over-Production 
 
 Today we fear over-production, as if it could 
 be an evil to have many goods of the right 
 sort. What we should fear is dear goods, or 
 goods of the wrong sort. Nothing tends so 
 effectually to arrest trade as a gradual increase 
 in the cost and price demanded for special 
 goods. Cheapness is never an evil, provided 
 all goods be cheap at the same time. If how- 
 ever the makers of one sort of goods demand 
 more in exchange for them than they are worth 
 to the community, trade in those goods must 
 cease. Cheap goods of the right sort will 
 always find a ready market. We must never 
 forget that ultimately wages, profits and 
 interest must be realized in goods and not in 
 money, and that where goods are cheap the 
 rewards of all enterprise and all service are 
 correspondingly high. An unrestrained trade 
 in cheap goods is the economic ideal for which 
 all should strive, for such a trade affords abso- 
 lute assurance that the right goods are being 
 cheaply produced and justly distributed. 
 
 The resentment which men feel when others 
 thrive is a foolish sentiment, unwise and un- 
 
 [106] 
 
JAMES HILL 
 
 generous. If property is the result of service, 
 none should envy it. Not even the greatest 
 fortune is to be feared. Where it has been 
 earned it will be wisely used. There are among 
 us men of affairs and genius who have become 
 benefactors of millions, and their fortunes are 
 fabulous because their service to their fellows 
 has been incalculable. 
 
 Case of James Hill 
 
 James Hill of Minnesota died worth fifty 
 millions of dollars. He first made money by 
 dealing in wood. In the course of that business 
 he became familiar with problems of transpor- 
 tation, and bought a steamboat. Later he got 
 control of a bankrupt railroad, and its business 
 required him to penetrate and explore its terri- 
 tory. He traveled constantly and discovered 
 a great and resourceful region lying along the 
 northern border of the United States which had 
 never been developed. He undertook its devel- 
 opment. His first problem was to secure capital 
 enough for the enterprise. He encountered great 
 opposition. Those identified with the Northern 
 Pacific Railroad regarded with suspicion an 
 
 [107] 
 
JAMBS HILL 
 
 undertaking which seemed to threaten an 
 injurious competition, but Hill persisted. He 
 made a careful survey of the country to be 
 traversed, ascertained the number of acres 
 available for cultivation and the extent and 
 value of its mines and forests. He calculated 
 the cost of the railroad, the cost of operation 
 and its probable income. In the course of time 
 he convinced others of the feasibility of his 
 enterprise, and secured the capital required. 
 The road was constructed with the utmost care 
 and economy. All possible routes were investi- 
 gated, and that was adopted which cost least, 
 allowed of most economical operation and prom- 
 ised the greatest income. He caused the lands 
 through which the selected route passed to be 
 tested by experts, ascertained the number of 
 acres which an industrious farmer might most 
 profitably cultivate, selected his settlers and 
 saw to it that they were properly stocked and 
 equipped; he examined the markets at which 
 various crops should be disposed of, and as- 
 sumed the burden of transporting them at a 
 charge which would allow of a profit to the 
 farmer at such market. All of these various 
 
 [108] 
 
JAMES HILL 
 
 affairs he managed with the utmost ability. 
 His road was well managed. He kept his cars 
 full and moving. When business was lacking, 
 he created it. Where the jealousy of his rivals 
 interposed obstacles, he obviated them by bold 
 and unexpected expedients. He was success- 
 ful and made money for himself, his associates 
 and the millions of men who settled by the way ; 
 and he added to the riches and resources of 
 his country the products of an immense area 
 stretching from the Great Lakes to the Pacific 
 Ocean. 
 
 Is anyone disposed to think that Mr. Hil] 
 did not earn his millions ? He was the benefac- 
 tor of millions of men, and each freely ren- 
 dered to him a trifling part of the wealth he 
 helped to create and market. His railroad is 
 still the servant of the people, its rates are 
 deemed satisfactory to the public authorities, 
 it is well operated and no one complains of its 
 service. The tradition established by him still 
 prevails, and because its service is excellent 
 and the property is well and wisely employed, 
 the road continues to prosper. Did not Mr. 
 Hill earn and deserve the great fortune which 
 
 [109] 
 
ABUSE OF WEALTH 
 
 his sons inherited? How, in what manner, to 
 what extent has his sons' ownership of the se- 
 curities of the Great Northern Railroad Com- 
 pany interfered with the general welfare 1 Who 
 is worse off as the result of that ownership? 
 The fortune left by Mr. Hill will be unprofitable 
 to his heirs if it be not usefully employed. They 
 can not devour their income. What they save 
 swells the capital resources of the country and 
 assists its productive and distributive indus- 
 tries. They have been taught in a good school, 
 and know how to employ capital. If they make 
 a bad use of it, it will pass into other and more 
 competent hands and ultimately enure to the 
 advantage of mankind, since otherwise it can not 
 be of value to its possessor. 
 
 Abuse of Wealth 
 
 The moderate estate, limited to the actual 
 needs of an average family, however alluring 
 it may be to the dreamy reformer who desires 
 a beatific equality, will never provide more 
 than the actual day by day wants of the people. 
 We need more, more for war and more for 
 peace; and if we need more, we should en- 
 
 [iio] 
 
PROPERTY AND PROSPERITY 
 
 courage its accumulation by rewarding those 
 who make and save. 
 
 I know that many make what is regarded as 
 a base use of their incomes, but what use would 
 you have them make of it? How can one man 
 know the propensities and natural desires of 
 another? What right has he to interfere with 
 their gratification? What good will result from 
 the impertinent interferences of one 's neighbor, 
 who insists that I shall dress, eat and live as he 
 thinks proper? However extravagant a man 
 may be, there is a limit to the amount of wealth 
 which he may devour. What he does not waste 
 belongs in a real sense to the community, since 
 it must be employed in its service. 
 
 Property affords a basis not only for our in- 
 dustrial system, but a solid foundation for what 
 we call civilization, It affords leisure for that 
 sort of thinking which tends to make people 
 wise and that sort of refinement which tends to 
 make them mutually agreeable, and that sort of 
 culture which enables them to understand their 
 fellows, and that sort of security which is indis- 
 pensable to what we call happiness. 
 
 Today we praise charity and affect to despise 
 
 [in] 
 
PROPERTY VINDICATED 
 
 the means by which it accomplishes its bless- 
 ings. Who is more useful to the state — he who 
 teaches ten thousand men to make an honorable 
 livelihood by serving their fellows, or he who 
 induces five hundred to submit to tender min- 
 istrations of another's providing? Charity is 
 exhausting; industry is productive. There is 
 room for both in the world, but of the two in- 
 dustry is more necessary, for charity must de- 
 pend upon it. 
 
 Vindication of Pkoperty 
 
 I admit that property is abused, but so is 
 every other human institution. There are mar- 
 riages which are not delicious, religions that 
 lack credibility, courts which can not under- 
 stand law, doctors who disagree, lawyers who 
 strive rather for victory than justice ; yet mar- 
 riage, religion, justice and medicine should not 
 therefore be condemned. We observe the 
 flaunting ostentation of the vulgar plutocrat 
 and assume that property, not himself, is to 
 blame. We wrong property. As an institution 
 it should not be condemned. If it is unequally 
 distributed, so is ability, character and energy. 
 
 [112] 
 
UNEQUAL DISTRIBUTION 
 
 In inequality there is diversity and variety and 
 mutual influence. If all men were alike, thought 
 alike and lived alike, we should have nothing to 
 say to each other. If men wished nothing, 
 worked for nothing, could possess nothing save 
 that average of goods allowed by the dreamer 
 as enough for felicity, — what would become 
 of the arts, crafts and industries of the world ; 
 of its civilization and progress? Property 
 affords a material basis for domestic happi- 
 ness; it can not guarantee such happiness. It 
 also affords a motive for industry, helpful 
 machines and means of transportation; but it 
 can not guarantee that all men shall become 
 skillful and zealous and wise in the production 
 of or use to which property may be put. Its 
 tendency is to help, not to hurt; to help the 
 poor as well as the rich. That it can not cure 
 the infirmities of men should not be urged 
 against it. What crimes have been committed 
 in the name of religion! Is it therefore bad? 
 Men condemn property, but none should incline 
 to do so who understand human nature and the 
 spur which property affords to the languishing 
 virtues of mankind. It is a selfish institution, 
 
 [«3] 
 
IRONY OF HALIFAX 
 
 but so is marriage and the home. Men will 
 work for their own wives and their own children 
 and their own property, and they will not work 
 so zealously for any other. If it is wicked to be 
 so yet we are so and can not help it. We must 
 deal with human nature as we find it, and while 
 we are human, ' ' It will never be a natural thing 
 for men to take extravagant pains for the mere 
 sake of doing good to others. "Where a man 
 can honestly propose nothing to himself except 
 trouble, change and loss, to be violent in the 
 pursuit of so ill a bargain is not at all suited 
 to the languishing virtue of mankind so cor- 
 rupted. Such self-denying zeal in such a self- 
 seeking age is so little to be imagined that it 
 may without injury be suspected. ' ' 
 
 The irony of Lord Halifax will offend many 
 good people. To these I venture to say: is it 
 not possible that such resentment may be un- 
 reasonable? Selfishness is natural in the sense 
 that none are without it. Is it not a certain 
 sort of hypocrisy to ignore human nature and 
 pretend that it is otherwise than it seems ? Are 
 not the church, the state and all other conven- 
 tional institutions predicated upon the infirmi- 
 
ABUSE OF PROPERTY 
 
 ties of men? Do men not need salvation be- 
 cause they deserve condemnation? Are not 
 laws and courts necessary because men are 
 prone to crime and wrong-doing? Political 
 economy predicates its doctrine on the same 
 foundation. Why then should people who ap- 
 prove the church and state denounce political 
 economy 1 Its doctrine is not wicked, neither is 
 it unjust nor unfair, nor in any way injurious 
 to the commonwealth. It found men disposed 
 to be free and useful to themselves. Finding 
 them so, it observed and examined the conse- 
 quences of these propensities and discovered in 
 such propensities compensations which are 
 most reassuring. It justifies private property 
 because private property affords to selfish, 
 free men a motive to mutual service, a sure 
 basis for general prosperity, an aid as well as 
 an inducement to industry. Its doctrine is not 
 an apology for selfishness, however clearly it 
 may demonstrate that guided by paramount 
 influences selfishness has been made useful to 
 the community. 
 
 To denounce human nature may seem very 
 great folly, yet to denounce selfishness will ever 
 
 [US] 
 
ECONOMIC AND MORAL LAW 
 
 seem most generous. Is it therefore that men 
 so loudly complain of political economy and 
 profess to hate that property which affords the 
 firm basis of its doctrines? Selfishness is in- 
 eradicable. Property is its effect, not its cause. 
 If, like the church and state, philanthropy will 
 allow what it can not deny, much of the foolish 
 declamation which now afflicts us will be quieted. 
 Selfishness of itself may be either good or bad 
 as its consequences are so. A courage which is 
 admirable in a good fight may actuate the 
 footpad. A selfishness which affords a power- 
 ful and constant motive to honorable industry, 
 which induces a cordial and helpful cooperation 
 and tends to a cheerful and intelligent mutual 
 service should not be lightly condemned. 
 
 Property itself can be neither good nor bad. 
 It is a possession, a tool, a thing. One may 
 make a good or a bad use of it. Would any 
 man take a good tool from a good man because 
 in the hands of a bad man it may be used mis- 
 chievously? The church is not the cause of 
 hypocrisy, yet hypocrites thrive within it. 
 Should churches therefore be condemned? 
 
 I have attempted to justify private property 
 
 [116] 
 
SUCCESS AND FAILURE 
 
 not as an end but as a means to an end which 
 none can affirm to be dishonorable. That end 
 is comfortable living under conditions which 
 admit of what we call the higher civilization. 
 I have not attempted to justify its abuse. I 
 know that all men have not achieved that end, 
 but if so, it is because some can not or will not, 
 by reason of their infirmities of character. If 
 many fail where few succeed, the trouble lies 
 not in the success of the few but in the failure 
 of the many. The few do not succeed because 
 the many fail, nor do the many fail because the 
 few succeed. If we destroy property, we will 
 not help the many. Their prosperity depends 
 upon the guidance of those who are superior 
 to them in those faculties of which every com- 
 munity has greatest need. If all must suffer, 
 then great will be the disaster, for nothing is 
 more true than that a common property in- 
 volves a common misery and a common slavery. 
 I trust the reader will pardon the reiterations 
 of this brief essay. Prejudice is not easily over- 
 thrown, and I have thought that what one blow 
 may not accomplish, two may. The same argu- 
 ment may have various aspects, one plausible 
 
 ["7] 
 
POSTSCRIPT 
 
 to this man, another convincing to that. It 
 can do no harm to say twice or three times the 
 same thing, save to those who do not need to 
 be convinced. I do not write for them, but for 
 those less familiar with the refined considera- 
 tions upon which economic doctrine depends; 
 and I have tried to make common errors evident 
 to those who are obsessed by them. 
 
 Postscript 
 
 In this essay I have attempted to prove that 
 selfishness as a human impulse is so controlled 
 by irresistible economic laws that we should 
 not fear it. The events of the last year (1919) 
 seem to have confuted my argument. Never 
 before was there such general discontent, and 
 that discontent seems to be the direct result of a 
 relentless, pushing, industrious selfishness 
 which puts aside all restraints in pursuit of 
 gain. 
 
 Nevertheless the argument is unshaken. Its 
 apparent fallacy is not real. Selfishness is 
 now a devastating influence because the war has 
 for a time suspended the operation of the in- 
 fluences by which it was formerly restrained. 
 
 [118] 
 
ECONOMIC LAW AND FREEDOM 
 
 The State has come between the producer and 
 consumer of goods. Its power, much abused, 
 has usurped the instrumentalities of commerce. 
 It has taken over the railroads and ships and 
 so interfered with the law of supply and de- 
 mand that the stress of that law can not correct 
 disparities which have day by day become 
 enormous. The economic law depends upon 
 freedom. It can not resist political tyranny. 
 It is spontaneous in its operation and can not 
 be consciously guided by calculating intelli- 
 gence. What seems to the mind most injurious 
 may in fact be most beneficial. High prices 
 should stimulate production; the higher the 
 price, the greater the stress, the quicker the 
 response. Coal for example is today a regu- 
 lated commodity. The government transports 
 it ; its distribution depends upon those who care 
 not at all for gain to be got by service ; no one 
 has a motive to work zealously. Cars are want- 
 ing ; delays in delivery are not punished by loss 
 to the carrier. Competition can not correct 
 bad service ; the price is fixed — the mine owner 
 is not permitted to make a profit; wages are 
 established by violence ; the mines are idle and 
 
 ["Pi 
 
CONSEQUENCES OF STATE CONTROL 
 
 the consumer shivers in the cold. All of these 
 evils are the immediate effect of injudicious 
 governmental interferences. 
 
 If the railroads had been free, competitive, 
 and selfishly operated, if the price of coal had 
 not been arbitrarily fixed, if proper protection 
 had been guaranteed to all willing to work — it 
 is inconceivable that we should not have had 
 coal enough. Let us assume that it might have 
 been sold for $20 a ton : what should have been 
 the consequences of such a price f First, a gen- 
 eral rise in miners ' wages ; 2d, a great increase 
 in the number engaged in mining ; 3d, a rush of 
 coal to the markets ; 4th, a glut of coal ; 5th, a 
 declining market; 6th, a speedy return to nor- 
 mal conditions. 
 
 All of these consequences of freedom have 
 been prevented by the pestering and afflicting 
 interferences of various public officials acting 
 under bad laws enacted during a war. The 
 facts by which we are confronted, so far from 
 invalidating the argument for freedom, confirm 
 it and make but more evident the validity of the 
 principles upon which it rests. Selfishness is 
 a stimulating, useful influence only so long as 
 
 [120] 
 
THE END 
 
 it is left unrestrained to achieve its gratifica- 
 tion by zealous service. Rob it of its incentive 
 to serve, and its usefulness is gone. We have 
 impaired its usefulness by restraining its grati- 
 fication. Politics have usurped the function of 
 economic law, and many of the evils which afflict 
 us are traceable to the malign interferences of 
 misguided political benefactors who, wishing 
 good, know how to do harm only. 
 
 [121] 
 
£ c - 2- 4> 
 

JSTINE 
 
 32084