N)^^ J'^ ^^" '^■ ^' .0^" I -^ .-\d^ n- ,, 'y >;,^; "'^ wV' 'V- .Oo. ■/' ,^x ^)i^ -" -S*^ ^ .^^^' -■•;, , ■' x'- '"^ ,,, ^ .0^ ' '/ 1 » S ^ o' '^ .•>'t>' x^' ■^ ^ 'C-" V '"" .:-- " .\^' ■^/ . * ' e * -y :. ^ '"o 0^ : %^ ?ix%% V ^> -''^^ ■.%^ -^ aX' '^V :^-^' '^5^' ■-^ .^:^ -^r. ''^./. ' * .0 N " ^ /;- '•■ %; '' * tf' , ^-^V -' -P .\-^' t,^ ... X'. ^: ^-^.^^ 'V 0^- c^ ^>. .\\ . . ' '^'^^^ -^^ v^^ vx> '^. c<-, ^ 4' '. ^. V^I^A; v>»^ -^ :>^^ ^^^ ■%. \.;% o^ "^A v^' PKINCIPLES OP THE Economic Philosophy OF SOCIETY, GOVERNMENT AND INDUSTRY / VAN BUREN DENSLOW, LL.D v^- c ^n V\> n :0 1888 7) CASSELL & COMPANY, Limited 104 *J Shoes. ^e'^-, ^^o; **( ^ o ^•^^oS; St. Paul. Chicago. Cleveland. Lynn. Prof. Jevons will seem, to some persons, to qualify his doctrine that value is not caused by labor, by the following statement (P. 178, "Theory of Pol. Econ.") : " But though labor is never the cause of value, it is in a large proportion of cases the determining cir- cumstance, and in the following way : Value depends solely on the final degi^ee of utility.* How can we vary tliis degree of util- ity ? By having more or less of the commodity to consume. t And how shall we get more or less of it ? By spending more or less labor in obtaining a supply. According to this view, then, there are two steps between labor and value. Labor affects sup- ply, and supply affects the degree of utility which governs value, *7. e., the utility or degree of effective demand which an article has to its con- sumer, i. e., what return he will make to obtain it. t/. e., to increase its quantity, and therefore to lower its value. MUCn LABOR LOWERS VALUE. 99 or the rate of exchange. In order that there may be no possible mistake about this all-important series of relations, I will restate it ill tabular form as follows: Cost of production determines supply, Supply determines final degree of utility, Final degree of utility determines value." It is evident, however, that cost of production determines sup- ply, in the sense that as cost of production diminishes the supply increases ; that supply determines final degree of utility (or con- sumer's value), in the sense that as su^jply increases the value to the consumer lessens ; and heiice that looking at the question as Jevons here does, with I'eference to the eff^ect that collective (not individual) labor has on the value of collective commodities, it leads to'the conclusion that the greater the quantity of labor ap- plied to their production the more they decline in value. This, however, makes labor a regulator of value, as Jevons says, but £)nly as a reducer of value, whereas the Smith-Ricardo-Marx doc- trine sought to make labor only, always, and proportionately the source of rise in values. What seems, at fii-st, a qualification of Jevons' dissent to the theory which bases value on labor, becomes, on analysis, a statement that labor is often a destroyer of value. 40. Markets Are the Index of Values. — The aggregate of all the demands for an article being the criterion which deter- mines how much of it can be sold, and the aggregate of all the sources of supply determining in like manner how much of it can be purchased, it becomes important that those who have the article to sell and those who have it to buy should all meet in a common spot, so that the most rajiid communication may be had between each buyer and every seller, until that buyer who will pay more or buy more than any other buyer, and that seller who will sell more or take less than any other seller, shall meet face to face. The rate at which these two interchange is the mar- ket or current price. Numerous other transactions may occur, but they Avill be above and below the market.* ♦Even in the earliest and simplest conditions of trade, markets, fairs, and bazars tend to establish themselves as the means of satisfying each buyer and seller that he is buy- ing as cheap, or selling as dear, as the ratio of the supply to the demand admits. Throughout most parts of Central Africa the travelers find fairs conducted largely by women. In Asia and primitive Europe they are held everywhere except where great towns with ample stores of goods of every kind have superseded the fair by furnishing a more varied and better form of market. Indeed, the periodical fair is the natural predecessor of the market town. The Eastern and Michaelmas fairs at Leipsic, and of 100 EGONOMIG PHILOSOPHY. It is a singular fact that markets have been the subject of pop- ular prejudice and moral objection, almost in proportion to the perfection with which they economize time, transportation, and effort and equalize prices. The projier meaning of a mai'ket is not mei-ely the place set apart, in which buyers and sellers may meet with their goods, but all that territory, with its groups of buyers and sellers, consumers and producers, of which the resi- dents are so brought into union and contact with each other, by the mutual intelligence which arises through reciprocal com- merce, that one price is arrived at by all with facility and prompt- itude. *t A market rises into its highest efficiency and value Frankfurt on the Main in Germany, of Keachta in Siberia and Nishni Novgorod in Russia, of Zurzach in Switzerland, Pesth in Hungary, Bergamo in Lombardy, tin cattle fairs of the Scottish Highlands still have a wide celebrity. The great Lortdon, Paris, Berlin, New York, and Philadelphia world's expositions of products are stimulated by the same motive on the part of exhibitors. Though they make no sales, their object is sales by sample so far as manufacturers and merchants are concerned. In all cities the dealers in certain commodities by a common instinct of buyers and sellers concen- trate in certain streets, as banking and brokerage make a money market of Lombard Street, London, and Wall Street, New^York. The swamp in New York is the traditional market of the leather trade. When the wholesale dry goods trade removed in 1857 9 from Pearl and Front streets to Park Place, Warren and Chambers streets, real prop- erty in the former " dry goods market " fell to one-tenth its former rental, until it be- came the oil market, when it revived. The bonnet trade of New York formerly cen- tred in Division Street so exclusively that it was difficult to buy elsewhere. The book trade in all cities has its own center, the lumber trade another, and even the prof es- sions concentrate in one spot, seeking equality with competitors, and the other advan- tages incident to a market, as the law trade in London centers at The Inns of Court, etc. * Cmirnot ("Recherches stir les Principes Mathematiques de la Theorie des Richesses," Paris, 1838, p. 55) says: "On sait queleseconomistes, entendent parmarche. non pas un lieu determine on se consomment les achats et les vents, mais tout in terriioire dont les parties sont unies par des rapports de libra commerce, en sorte que les p rix s'yni- vellent avec facilite et promptitude." tJewws ("Theory of Pol. Econ.,"92) says: "In economics we may usefully adopt this term with a clear and well-defined meaning. By a market I shall mean two or more persons dealing in two or more commodities, whose stocks of those commodities and intentions of exchanging are known to all. It is also essential that the rates of ex- change between any two persons should be known to all the others. It is only so far as this community of knowledge extends that the market extends. Any persons who are not acquainted at the moment with the prevailing rates of exchange, or whose stocks are not available for want of communication, must not be considered part of the market. Secret or unknown stocks of a commodity must also be considered beyond reach of a market so long as they remain secret and unknown. Every individual must be considered as exchanging from a pure regard to his own requirements or private in- terests, and there must be perfectly free competition, so that any one will exchange with any one else for the sligrhtest apparent advantage. There must be no conspira- cies for absorbing and holding supplies to produce unnatural ratios of exchange. Were a conspiracy of farmers to withhold all corn from market, tlie consumers might be driven by starvation to pay prices bearing no proper relation to the existing supplies, and the ordinary conditions of the market would thus be overthrown.'" A PERFECT MARKET. 101 when it concentrates into one focus so large a jjortion of the buy- ers and sellers of a certain commodity as to become, in conjunc- tion with one or two otlier markets of the same kind, an authori- tative standard of prices of the articles in which it deals, for all buj^ers and sellers throughout the world. By aid of the quick intelligence which the telegraph supplies and of the swift trans- portation which steam affords, the whole world is thus converted into one market, having one price, subject only to cost of trans- portation of the product between the point for which the price is quoted and all other points. Such mar-kets are the Bourse of Paris, for stocks and securities, the London Stock Exchange as well as the London Produce Exchange, the Liverpool and New York Cotton Exchanges, the New York Stock Exchange, Pro- duce Exchange and Eeal Estate Exchange, and formerly the Gold Room and the Boards of Trade (Grain and Provision Exchange) of Chicago, in conjunction with those of the other Western cities and that of Liverpool. Concerning these exchanges Prof. Jevons says : ' ' The theoreti- cal conception of a perfect market is more or less completely car- ried out in practice. It is the work of brokers in any extensive market to organize exchanges so that every purchase shall be made with the most thorough acquaintance with the conditions of the trade. Each broker strives to gain the best knowledge of the conditions of the supply and demand and the earliest intimation of any change. He is in communication with as many other traders as possible, in order to have the widest range of informa- tion and the greatest chance of making suitable exchanges. It is only thus that a definite market price can be ascertained at every moment, and varied according to the frequent news'^ capable of affecting buyers and sellers. By the mediation of a body of brokers a complete consensus is established, and the stock of every seller or the demand of every buyer brought into the mar- ket. It is of the very essence of trade to have wide and constant information. A market, then, is theoretically perfect only when all traders have perfect knowledge of the conditions of supply and demand and the consequent ratio of exchange; and in such a market, as we shall now see, there can only be one ratio of« ex- changet of one uniform commodity^ at any moment. * It is notable that this news never relates to the labor cost of producing the commod' ity, as it should if the theory is correct which is contended by Adam Smith, Mill, Ricardo, and Karl Marx, though it does relate always to the cost of reproducing it at the present moment, or more properly to the extent of supply and demand, t Meaning price. ^Usually called ' ' grade of goods." 102 ECONOMIC PHILOSOPHY. A market, in tlie broadest sense, is therefore a place where the facts relating to supply and demand are converted, through an at- trition of human intelligence and interest, into prices; in short, it is a price mill. 41. Freedom in Establishing Prices. —Whether trade can, in these markets of exchange, with advantage to any class or to the cause of business integrity and virtue, be restricted by legisla- tures, and whether these restrictions can be profitably and bene- ficially administered by courts, has been the subject of much controversy. Boards of trade usually establish a sj^stem of arbi- tration, or of courts within themselves, which are more satisfac- tory to their own members than the exterior courts of justice of the state, both because of their greater promptness and of their nicer familiai'ity with the class of questions arising in the transactions of the board. To the extent of the j)owers of such boards or markets, therefore, all appeal ^by members to the courts of law is discouraged.* An extensive opinion prevails, however, that the offense anciently known as forestalling, and now known as " cornering the market, " can with prudence, and ought in sound morals, to be forbidden by law, and restrained or punished by the courts. This is an economic question, at the bottom, since the morale or ethics of the transaction depends on whether the public and general mterest is promoted by leaving men perfectly free to trade as they will, or by an interference of the state in restraint of this freedom. The grain ti'ade, wherever carried on extensively, involves es- sentially at least eleven parties, viz. , (1) the farmer who raises the crop, and first sells it to the buying agent of the dealer, on the Board of Trade, or commission man; (2) the buying agent; (3) the dealer on the board or consignee ; (4) the railroad or carrier who brings the grain itself to market ; (5) the inspector or officer, jointly appointed by the city and the Board of Trade to receive the grain when it arrives, inspect it on its way from the car or ' boat in which it is brought into the bin where it is to be stored or "warehoused," who assigns it judicially its proper grade according to quality, and thereupon orders it into the proper bin, where it is usually blended, but may not be, with other grain of like grade, and who also issues the gi'ain certificate to the con- * This eeems to have obtained from a very early date, as the petty markets of pied- pmid7e in England testify. DEALING ON THE BOARD. 103 signee of the grain as for a given quantity, say 10,000 bushels (or 100,000), of "Michigan white wheat" or Minnesota No. 1, or Kansas No. 3, as the case may be, stored in Iowa Elevator A, in a bin designated by i^roper marks. This grain certificate is there- upon the proper evidence of title to the grain, and is the thing bought or sold on the board, as a substitute for the grain, when- ever grain is sold by grade, though grain may still be sold by sample, as well as by grade ; (6) the warehouseman, who is a peculiar kind of a bailee or storer merely, and has no title, but only custody for the Board ; (7) the Board of Trade or aggregate mass of buyers and sellers being virtually the market, on which the grain is offered and which is in close monetary communica- tion with all other centers of supply and demand; (8) the seller of the grain certificate ; (9) the buyer or buyers ; (10) the purchaser for shipment or consumption ; (11) the miller, baker, or manufacturer in the Eastern States or Europe who orders the purchase gener- ally, sometimes in advance, and awaits the arrival of the grain. Supposing the Board opened, the holders of grain, and the holders of money for investment in grain, necessarily form two parties, the former wanting grain to go up, the latter wanting it to go down. Those who have sold grain, agreeing to deliver it at a time stated, and have not yet got the grain for delivery, want grain to go down, so that they can fill their contract below the rate at which they have agreed to deliver. Those who have bought grain agree- ing to take it at a future date at a stated price, wish it "may go above that price, so that they may reap the difference. The former are beai's ; the latter are bulls. The former have ' ' sold short ;" the latter have "gone long." Three independent economies exist in the practice of buying and selling for future delivery, say one, two, or three months ahead, which could not be effected by buying grain on hand and taking present delivery. i^iVst— Buyers for consumption, millers, exporters, and foreign pui'chasers can, through these, convert a future unknown price into a known price, so far as is necessary to enable them to base future contracts for production thereon. Suppose a manufac- turer of cotton goods or iron, feeding his own men, as indirectly he does, and obliged to estimate the rate at which he can afford to take oi'dere according to the rate at which he can buy bread and pi'ovisions, it is plain that he could "figure" the rate at which he could take ordei-s more closely if he could make certain his own 104 ECONOMIC PHILOSOPHY. future rate of expenditure on his supplies of food and provisions. This he could do by buying in August, deliverable in October. Secondly. — Precisely as buying in a wide market equalizes prices over a wide area of country and enables millions of persons to produce the same product in close competition with each other, so buying for a considerable period of time, or * 'going long" spreads and equalizes over a long period of tims the changes in price which are made inevitable by natural causes, such as war, drought, flood, great or small harvests, and the like. Equaliza- tion of prices over time is as essential to steady production as equal- ization of prices over wide areas, and numerous groups of produc- ers and consumers. If a rise of 20 cents per bushel in wheat is made necessary by an impending war between two grain -grow- ing countries, and if one buyer knows it three months ahead, and buys his supply at an advance of two cents per bushel, he not only saves his own supply but he brings the market two points nearer where it ought to be, and thus serves millions of produc- ers and consumers who are interested in the rise being both early and gradual, not late and spasmodic. Thirdly. — Such "futures" originate with buyers, since if no one wished to buy ahead no one could sell futures. Each buyer pays a margin on his contract, sufficient to secure the seller against loss in event of a fall in price and no delivery. The futures run in links from the consumer back to the producer. In such cases they cause a current of advance payments to set in from the dealers in the futures or purchasers. This is in effect a movement of money in advance from the consumers, or their reiDresentatives on the Board of Trade, to and among the producers. Farmers are thus enabled to get advances on their grain and planters on their cotton, whereby the harvest- ing is virtually done with the capital advanced by the consumers. This converts articles like cotton and wheat, for which prices are established by "futures" into "cash" articles, or articles on which long advances ai'e had, whereas cotton goods, furniture, and manufactured articles are sold so invariably on long credits that even " cash " means thirty days after delivery. 43. Cornering- the Market. — Conceding that the economies «» of the trade compel dealing in futures, let us now analyze the working of a corner. A corner in grain occurs when a merchant or a clique of merchants have bought up so many of their fellow merchants' conti'acts for future delivery, and at the same time liave gained control of so much of the grain actually in mai'ket, that DEALING IN ' ' FUTURES. " 105 those who have made the contracts are unable to buy at the price stipulated, when the grain is deliverable. The cornered mer- chants must pay, to the clique, the difference between the price named in the contract and the price current at the time set for delivery. The corner could be prevented by confining the pur- chase and sale of grain to that in sight, or, in other words, by prohibiting a deakr from selling, or agi'eeing to sell, what he has not yet purchased. It can not always be known, until the contest is over, whether one party is trying to corner the market, or the other to break it. A purchaser may begin buying, to protect a price at which he has already bought and desires to sell. He may believe, as Mr. Keene did in 1879, that a wet season in England would send wheat up from $1.05 to $1.35. In August he buys 500,000 bushels, deliver- able in October at $1.10. Having once agreed to take this quan- tity at this rate, he does not want the price depressed below that rate, and believes that whoever tries it will lose their mouey, if met with both money and courage. He therefore buys all the wheat offered for October at $1.10. He can not always distin- guish between the effect of his own purchases to run up the mar- ket and the effect of English dampness. When he has bought 1 5, 000, 000 bushels he would have all the wheat the elevators in Chi- cago would hold, if he were buying for present delivery. But as he is buying for October delivery, the sales can be manufactured on him as often as there is a party with courage and the margin. Buying at prices ranging from $1.10 to $1.35, he has one chance of gain and two chances of loss. His two chances of loss are (1) that so much wheat deliverable in October may be poui^ed in on him, and the certaintj^ of English dampness not affecting the price in the degree he had expected may become so apparent, that either from loss of courage or lack of money he may be com- pelled before October to allow the market to break, in which case it falls to perhaps 90 cents, and he has lost the difference be- tween the prices he paid and 90 cents. He may have this luck when he is right in his judgment, and when October comes the price may be $1.35, unless he also has the courage and the money to hold the market against the bears. (2) His second chance of loss is that, in bujdng to sustain his price, he may have much " cash wheat " on hand which he must sell out at a decline. His one chance of profit is that, if his judgment was coiTect, he will ' have only sent up the market in advance, to the point where the ratio of supply to demand would have comjjelled it sooner or 106 ECONOMIC PHILOSOPHY. later to go, with the advantage that he will reap as profit the rise on all he has bought. In the case of the Keene wheat deal of 1879, the result showed that he operated against the true and proper course of the mar- ket, by underestimating the capacity of the American supply and overestimating the potency of the English deficienc;^ By expanding the Ameiican export of wheat from 152,075,000 bush- els m 1878-9 to 176,426,000 bushels in 1879-80, and our export of corn from 79,431,000 bushels to 103,450,000 bushels, with a like in- crease from India and elsewhere, the deficiency was filled with- out any serious rise in price. In 1881 tlie New York legislature ordered an investigation of the causes of the extraordinary rise in prices in Chicago and ces- sation of shipments of wheat eastward and to Europe. Railway managers of high repute testified that the difficulty was due to gambling in futures on the Chicago Board. The facts, when fully sifted, showed that the Board of Trade was right and wise in preventing the export of wheat necessary for our own consumption, and which, if we had sent abroad, we must have brought back at a still greater advance. The total corn crop of the United States had fallen from 1,754,861,535 bushels in 1880 to 1,194,916,000 bushels in 1881, a decline of 559,945,535 bushels, or more than five times the amount of our export in 1880. Our wheat crop in the same year had fallen from 459,479,505 bushels in 1880, according to the census, to 380,280,000 bushels in 1881, according to Bradstreefs. Here was a decline in production of 79,199,505 bushels in wheat, while our export of wheat in 18"80 had been 159,264,214 bushels. The market was maintained in its equilibrium by .sending abroad only 118,000,000 bushels in 1881, for which the American farmers received at the place of production $1.19 per bushel, whereas for the larger crop of 1880 the farmers got* only 95 cents, and for that of 1882 onij" $1.03. The amount saved, to the farmers, by the superior sagacity of the Board of Trade over that of their critics, was in this instance $28,320,000, or twice the sum involved in the so-called Alabama claims, the peaceful adjustment of which through the Geneva arbitration and award is justly i-egarded as one of the triumphs of national economy as well as of international diplomacy. A temptation is afforded, by the system of dealing in futures in the gx'ain market, to those who have no means of * According to Mr. Niramo, statisticiaa of the Department of Agriculture, Washing- ington, D. C. MAKING PRICES. 107 basing their ventures on any calculations or reasons connected with supply and demand, and whose purchases and sales are made upon no principle, and with no insight into the condition of the market or the facts which should influence prices. To such persons the buying- and selling- of futures becomes a mode of gambling as blind and reckless as betting on cards would be. The mistake has been made, however, of making the gravamen of the evil to consist in dealing in futures, whereas the real fact which marks their dealing as gambling is not that they do not get a physical delivery of the grain they buy, but that they do not get an intellectual conception of any reasons or motives which should justify buying. To bet in the dark on the prospective changes of prices, in an article of whose supply and demand they know nothing, is mere gambling, while to buy in anticipation and intelligent forethought of causes which make the thing purchased worth more than the money paid for it is mere prudence. 43. How Prices Are Made. — Economists have used the term natural value to express the value which they think a com- modity possesses by reason of the labor spent in producing it ; intrinsic value, to express the permanent value a commodity has when measured in the average of other commodities, or in com- parison with a sufficiently large number of commodities to com- prise a standard more trustworthy than gold or silver coin or other money ; and money value, or price, to express the value a commodity has in money. So far as money rises and falls, in its purchasing power, by reason of causes relating to its own volume, the price, or money value, ceases to accurately measure intrinsic value. But the disturbances in the value of money being slow, and often concealed far below the surface of things, do not appear in the ordinary markets of merchandise. In them price passes for value, as if the two were identical. What all men assume without thinking has, m certain ways, the potency of truth, even if they all think wrong. Hence prices, rather than values, be- come the immediate force that impels trade. Buyers seek the largest mai'kets they can reach to get the lowest prices, and sellers seek the largest markets they can to get the highest prices. Markets thus become the manufactory of a price, on each commod- ity in which they deal, which rules all transactions in that commod- ity. The price is the index of demand, and the magnet of supply. The price, by pointing out each new direction of the demand, rules production. If the price of peas is higher, relatively to oats, farm- 108 ECONOMIC PHILOSOPHT. ers drop oats and raise peas. If women wear Jerseys and Jerseys are made of worsted, wool-dealers express the change by a rise in worsted wools, and farmers meet the change by changing their short, fine-wooled merinoes for sheep that produce a longer wool. Thus price regulates production, and points out the changes which different articles undergo, in their relative utility, accord^ ingly as they begin, or cease, to please the human taste. The phrase, ' ' There can be but one price in one market, " depends for its truth, on our defining the term market to mean that area over which but one price rules, at one time, or over which all minds are in direct communication. Hence wide markets imply wide equality of terms, i. e. , that great numbers of persons shall be enabled to buy and sell at one price. This equality is sought by all dealers and insures promptness in trading, thus saving time and chaffering. For, as s oon as one who desires to buy knows he is getting his article at the lowest price obtainable, he buys. Till then he waits. The lack of a known price is a paral- ysis upon commerce, and through that upon production. Hence the prompt fixation of prices, the wide acceptance of their authority by producers and consumers, and prompt trading by many millions of peoj)le, is as important a time-saving, and labor- saving service, as is that pex^formed by steam engines and railway trains. In the more remote African fau^s, according to Stanley,- the buyers meet to inspect and chaffer, and perhaps continue this for days before beginning to buy and sell. The most advanced and useful markets are those whose prices are most widely authoritative. In grain these are the Chicago, Liverpool and New York Boards of Trade or Produce Exchanges. In stocks and shares it is the London and New York Stock Exchanges and the Paris Bourse. The instant a price is made at either of these, buyers and sellers, all over the world, deal in accordance with it. If each dealer had to wait until he himself could learn the causes which influence demand and supply commerce would be paral- yzed. Every manufactory must use power. A manufactory of prices involves a use of two powers : intelligence combined with courage,and money or credit. There are in every such prioe-mill two parties, one of which, the "bears," have made such contracts tliat they will gain if prices fall and lose if they rise. Another, the "bulls," is interested in having the market price go up. All the capital in the business divides itself between these two jjarties. The battle between the two contending forces is like a fight between two armies. Some are wounded in it ; some are slain. But it EQUIVALENCE IN VALUE. 109 decides the price not merely for that spot but for millions deal- ing elsewhere. In the sale of carriages, pianos, jewelry, clothing, and other things which do not admit of such an authoritative contest over the price, there is great inequality in the prices at which two persons, in the same city, on the same day, may buy two things of the same kind, and of equal value. Hence there is great cheat- ing ill such trading. One may pay $200 for a watch which another buys for $100. There is no standard. In all these grades of goods long credits must be given, as the dealers must hold the goods until they reach consumers. But in articles dealt in by produce exchanges the price is advanced to the producer, and his crop can always be sold if he desires, even before it is har- vested. Hence the authoritative manufacture of prices confers somewhat the same benefit on a community as is conferred by an authoritative sj^stem of law, religion, manners, and ethics. It en- ables every man to know, each moment, how he stands relatively to the results of his past exertions, what they have cost, and how much he can get for them. It is easy to exaggerate the notion that exchanges of commodi- ties indicate equivalent values in the things exchanged. When Esau sold his birthright to Jacob for a mess of pottage, when Judas sold his Saviour to his enemies for 30 pieces of silver, and when Benedict Arnold sold his honor and his patriotism as an American for a commission in the British army, when Bacon sold his integrity as a judge — in all these cases there was an exchange, but not an equivalence of value. Men may sell what it is un- profitable for them to sell at any price, buy what would be dear if they got it gratis, and so make unprofitable exchanges as easily as unprofitable investments, employments, or experiments. The naked fact, that an exchange occurs, determines no more whether it is profitable, than the naked fact, that production occurs, deter- mines whether the product is worth more than the cost. Yet a presumption arises in favor of a continuing stream of exchanges, or productions, that both are profitable, as a presumption arises that the point to which water flows is lower than its fountain. In this sense, price becomes a presumption of equity and eco- nomic fair dealing, as between all who sell and all who buy. In our chax)ters on labor we shall endeavor to show that this princix)le of equitable exchange underlies the ordinary sales of labor to an employer for wages, of the use of money to a bor- rower for interest, of the use of land to a tenant for rent, and of 110 ECONOMIC PHILOSOPHY. the use of capital to those who labor. In all these cases it will be found that there is an essentially equitable division, between the several concurring- agents in production, of the entire earnings derived from their joint concurrence in proportion to their share in producing. In this sense every service, that is paid for, becomes a commodity to him who buys it. The price at which he buys it is the mean between two competitions, viz. , the competition between all the producers of the commodity desiring to sell, and all de- sirers of the commodity seeking to buy. The competition between the sellers fixes the lowest price at which he may have to buy. The competition between the buyers fixes the highest price at which he can possibly sell. Where these meet is price. Price is the sum at which those holding commodities can better afford to forego the commodity, and take the money that is of- fered, and at which those who hold the money can better forego the money and take the commodity. The former compares the other uses he can make of both commodity and money, and be- lieves he can make a profit by taking the money. The latter makes the same comparison, and believes the commodity is worth more to him. If all men were absolutely wise, all exchanges would be absolutely profitable. As it is, the best thing that is true of prices is that they are the highest .expression at once of human liberty and social order. In no act of life does choice so largely enter, and yet in none are we so peremptorily compelled to choose. On this chain, of freely chosen acts of will, is hung the commerce of the world. 44. Errors Concerning Causes of Prices. — A common er- ror concerning prices is that they are fixed by looking backward at cost of production ; that each successive participant or purchaser has only to add his ordinary profit to what he buys to get it ; and hence the prices of exchanged goods are enhanced according to the number of the ixiiddle men through whose hands they pass. In fact, however, prices are always determined by looking for- ward at the possibilities of sale, not backward at the cost of production. From the consumer back to the producer, each dealer sees only the ' ' inch before his nose " to the price he can get. He buys with reference to that price. In this way the sense of value is educated backward along the line, and the quantity unsold rises or falls, not according to its cost of produc- tion, but according to what the last purchaser paid. Profits can not be obtained by adding to price, but must be carved out of price in advance by economic bargains concerning wages, rent, SPLITTING DIFFERENCES 3IAKES PRICES. Ill interest, cost of raw materials, and other elements of production. The effort thus to carve out profits in advance from these several sources, as well as to obtain them through cheaxjer processes and wider mai'kets, has caused many employers to feel, with Ricardo, that, in practice, profits are the leavings of wages, though in theory profits are the cause of wages. The former is the superficial and practical, the latter the ultimate and iDliilosophic view. To get a nearer view of the mode in which price is adjusted, suppose a man is fishing from the shoi'e with a hook and line, without either boat or net; and, thus equipped, he can catch 20 lbs. of fish a day. If he is fishing for amusement and not for profit, he does not covet boat or net. But if he desires to sell his fish, and boat or net is offered to him, he asks by ho^v much will the boat increase his catch. He finds that thereby he can take 200 lbs. with the boat ; with the net 1,000 lbs. Now if there is only a present and near market for the 20 lbs. which he can catch with his hook and line, neither boat nor net has any value to him whatever, because of the absence of demand, whicli is the ultimate and first cause of all value. If there is a market for 200 lbs. and no more, then boat and net are of equal value to him. But if there is a present demand for 1,000 lbs., then the net is worth five times as much to him as the boat, and the boat ten times as much as the hook and line. Should he pay all his increased catch, however, both boat and net would still be of no value to him. How much Avill he pay ? If there are plenty of other boats and nets, and he alone wants them, he represents the sole demand against an ample supply. This would make his rent of the boat or net nearly gratuitous. Each owner would offer his net or boat at the highest rate he thought would be low enough to prevent his going elsewhere. If there were no other net or boats, and many other seekers, the boat would be offered to him only at a rate higher than any other seeker would pay for it. If the next seeker would j)ay 800 lbs. of fish, out of the 1,000 caught, then he must pay somewhere between 800 lbs. and the whole. If tlie motive, and the necessity, to both parties, to enter into the trade, wei'e equal, the price would be 900 lbs. Thus in each stage of the bargaining there is an equal division, not of the entire catch, but of the difference between the share of the catch which each can obtain by dealing with the other, and the lesser share he can get by dealing with the next best outside person. The competitive price, therefore, is the final mean arrived at by splitting the difference between the highest sum any known 112 ECONOMIC PHILOSOPHY. purchaser will pay and the lowest sum for which any known seller will sell, the seller having in view the relative advantage to him of the price rather than the commodity, and the buyer having in view the relative advantage to him of the commodity rather than the price. In this sense the term price covers the consideration for which every exchange is made, whether of money for goods, money for service, for use of land, or for use of money. In attempting to arrive at the influence of causes of any kind upon prices, no source of fallacious reasoning leads to so many prominent errors as the mistaking of a partial, secondary or ut- terly impotent factor, for the one decisive and controlling factor. Thus, in many English discussions of the influence of protection upon prices, we find free use made of the inequalities in the prices, of grain in Great Britain in the period from 1810 to 1825, accompanied by the assumption that these great inequalities are obviously due to the British duties on the importation of foreign grain, and without stopping to inquire wliether as great and like fluctuations did not occur at precisely the same periods in France, Germany, the United States, and all other countries from which England could have obtained her supply.* It will be seen by the chart of average prices,tduring the sev- eral years, that the average of 1817 was 96s., and that the average price in 1813 had been 109s., while in 1812 the average price had been 126s., and in 1801 it had been 120s., and the fluctuatious in these prices in Prance and in the United States in the same years were identical with those in England. In these discussions no mention is made of the war between the allied powers and France, under Napoleon, the latter aided in * Thus Mongredien in his " History of the Free Trade Movement in England," p. 5, sayS: "This Corn Law, which was enacted in 1823, under Lord Liverpool's adminis- tration, was bad enough, since it gave the landlords a monopoly of the wheat trade up to 70 shillings per quarter, and afforded no effectual relief till the price reached 85 shil- lings. It was, however, rather less stringent than that which preceded it, for that totally prohibited the importation of foreign wheat until the current price in England had reached 80 shillings per quarter. That price for wheat meant something like Is. M per quartern loaf. " This earlier Corn Law had been passed in 1815, and no wonder that at the time of its being enacted popular indignation was excited to its utmost. Riotous assemblages had to be dispersed by armed force, and the House of Commons itself had to be protected by the soldiery, when the third reading of the bill was voted by a large majority. This harsh measure, which took from the nation to give to a class, soon produced its inevit- able results. Two or three deficient harvests successively occurrei; and the price of wheat rose to 103s. per quarter in December, 1816, to 104s. in January, and to 112s. 8rf. in June, 1817. +For chart see p. 1,24. WAB AND PRICES. 113 1813-15 by the United States, of the vast quantities of debts and issues of credit money incident to these wars, or of the many circumstances which were potential in sending- prices of bread- stuffs as high in the United States, France, and Germany as they were in Enghmd. The accompanying chart of fluctuations in price in England, America and France shows that they were as great in the latter as in the former and occurred at the same periods. A. like tendency is manifest, among writers on free trade and protection, when dwelling on the period from 1860 to 1870 in the United States, to attribute solely to protective duties, a range of prices which were more largely due to the deprivation of the cot- ton supply, the increased demand for woolen clothing, the in- crease of railway building, the expansion in the volume of the currency and the debt, and the variations in price insepai'able from such causes, than to the immediate operation of tariff duties on imports. 45. Tooke on Pi'ices. — The wars between France and the allied powers (1795 to 1815), and the twenty years following, were marked by such remarkable variations in prices, as to cause a wide and voluminous discussion of the causes of prices in pamphlets and books. The results of this discussion ai*e embodied in Tooke's "History of Prices," which, more than any other English economic work, is marked by the inductive method, and proceeds from observation to theory. The alleged causes of fluctuation in price, to which Tooke's in- vestigations were chiefly dii'ected, were (1) the wars, (2) good and bad farming seasons, as affected chiefly by the weather, and (3) the currency, as affected by increased or diminished volume of coin or paper. Tooke concludes, after comparing prices during a long series of successive intervals of war and peace, that mere war, unaccom- panied by any changes in the volume of money, does not tend to raise i^rices, except in the line of military supplies and naval stores, for which in peace there is hardly any demand. He con- cludes that as war does not increase the consumption of food or clothing, since the soldiers consume no more of either in the field than they would at home, it can only enhance prices by lessen- ing the supply, by withdi-awing the workers who produce them, and expending their force in fighting, fortifications, and other unproductive labor. He says :* "As to the supposed extra de- "Tooke on Prices," Part ii., p. 40. 114 . ECONOMIC PHILOSOPHY. mand arising out of the war, the effective demand must be lim- ited by the means of payment, and the stimulus or excitement arising out of a state of war cannot supply any extra means of payment except by previous course of production." We do not concur in this statement, but hold that, instead of effective de- mand being limited by means of payment, the means of payment will be multiplied, and especially will be made to circulate more rapidly, to adapt them to the effective demand. When Secretary Chase, in 1861, tried to get a loan of $50,000,000 from the New York bankers, and they declined to lend it, and so the govern- ment was without means of payment, this, so long as it lasted, limited the effective demand for guns and uniforms. But when he told them he would issue government notes, until, instead of borrowing money from them, they would have to run their banks on his money, this shows how the effective demand for means of payment calls them into existence as it does all other commodi- ties. All modern wars cause a large manufacture of ' ' means of payment," and hence supi^ly the cause of rising prices. But, in a war in which no increase in the quantity of money of any sort occurs, the diminished production might be the chief cause tend- ing to enhance prices. Yet it would be difficult to imagine a war in which there would be no greater rapidity in the movements of money than in peace ; and, of course, if a given volume of money circulated so rapidly as to be the means of making more pay- ments than before, this increase in rapidity of circulation would have the same effect on prices as an increase in its volume or quantity. Tooke repudiates, so explicitly, the notion that cost of produc- tion regulates price ; that it is remarkable that economists should have disregarded his position. He says,* "that the cost of pro- duction can not be considered in the case of corn, and indeed of most other kinds of raw produce, as a cause determining actual or immediate market prices ; that the cost of production in nearly all cases relating to the grain produce of this country, and still more as regards the produce of other countries, is an un- known or unascertained quantity ; and the only mode in which it can be considered operative on prices is when, as a result of a course of years, market prices are found to be unremunerative to those growers, at home and abi'oad, who, in point of soil, climate, and situation, are least favorably situated ; under such * " History of Prices," vol. v., p. 23~. SCARCITY CREATING WEALTH. . 115 circumstances, the cultivation, so far as those are concerned, will be discontinued. So, on the other hand, if prices for some length of time be more tlian ordinarily remunerative, there will be an extension of the area of cultivation, and, according to the degree or proportion in which these causes of diminished or extended cultivation may be supposed to opei'ate on the total of the sources of supply, will be the greater or less influence on the ultimate range of jji-ices." In short, cost of production only affects prices when it becomes so high, I'elatively to the price which demand creates, as to cause those sources of production, which can not afford to produce at that price, to stop producing altogether, thus diminishing the supply. But in this case it is not the cessation of production that affects the price, but it is the price that causes the cessation of production. 46. Prices Rise in Disproportion to Scarcity. — Tooke confirmed, by actual facts the theory of Gregory King that a decided deficiency of supply, especially in the case of breadstuffs (corn), is attended with an advance in price very much greater than the degree of the deficiency. The effect of this is to make the years in which the smallest agricultural crops are produced the most profitable to the agriculturist, and they bring him the largest returns, thereby supplying him with a profit on his capital which stimulates him to the largest possible production the next year, and so tends to bring on those years of abund- ance which bring relief to the food consumers, but debt and distress to the farmers. King had stated the ratio of increase of price to scarcity of crop as follows : Above the common rate A defect of 1 tenth, 2 tenths 3 " 4 " 5 " raises the price ^ 3 tenths 8 " 1.6 " 2.8 " 4.5 " So that a deficit of one-third would treble the common price, and a deficit of one-half would raise it five-fold. The vei*y singular result which this rule, if true, would involve, is thus stated by Mr. Tooke* : "If the advance in price, from deficiency, increase the aggregate value of the smaller quantity, in some instances, to double or more than double the amount in * " Thoughts on Prices," p. 99, 116 ECONOMIC PHILOSOPHY. money wliich tlie larger or average quantity would have pro- duced, the fall in price from abundance may reduce the value in money of tlie larger, or more than average quantity, to a sum considerably less than the smaller would have produced. Thus, suppose that, with bad or scanty crops, the produce of all sorts of corn were 28,000,000 of quarters, which, one kind with another, fetched 60s. per quarter, or £84,000,000 ; and that, upon the full restoration of the ordinary produce, or 32,000,000 quarters, the price fell to the average rate of 40s., the 32,000,000 of quarters would be worth only £64,000,000, or less by £20,000,000 than the smaller quantity had been worth. In the same case, by the same sort of interior arithmetic by which the £20,000,000 additional, paid by the consumers to the producei's of corn, had been con- sidered as the creation of so much wealth, the mere cessation of that payment, by the restoration of an average quantity of prod- uce, would be considered as the destruction of so much national capital. " This notion that scarcity of production might be an increase of capital, and abundance of production might work a diminution of wealth, would seem frightful to Bastiat, and to all who hold that glut can not be poverty, and scarcity can not profit the consumer. But Mr. Tooke applied the test to several periods. He found that in 1799, the deficiency as stated from the best data, in a Report of Committee to the House of Commons, was less than one- fourth as to wheat, and still less as to other grains, the average crop being 8,000,000 quarters. Yet the actual rise in price of prod- uce by the deficiency was from 50s. 3d. to 104s. 4(i. average for the whole ci^op. 8,000,000 of quarters at 50s. 3d - - - £20,100,000 6,000,000 " " 104s. 4d. - - - 31,300,000 Here was a gross profit to the farmers of £11,000,000, by reason of being deficient 2,000,000 quarters on their wheat crop alone. But as the other food crops are double the value usually of the wheat crop, but were affected by a like rise in price, Mr. Tooke esti- mated the gross profit to the farmers on all at £33,000,000. One mark of an extension of cultivation, at this period, was an increase in the number of inclosure bills or acts of Parliament for inclos- ing land previously common. These bills rose from 63 in 1799 to 122 in 1801. In 1617, with an average crop, the price had been 43s. 2>d. (aver- PERMANENT AND TEMPORARY CHEAPNESS. 117 age). But in 1620-'31 abundant crops caused the price to fall to 27s. As the result, Mr. Tooke shows, the whole crop went off at such a sacrifice that the farmers were generally unable to pay any rents at all, and the greatest suffering and distress prevailed throughout the farming jjopulations. Mr. Tooke finds that the enormous prices which attended En- gland's contest with Napoleon, and made the farmers rich, were not due so much to the wars, or even to the inflation which attended them, as to the bad seasons. "In 20 years, from 1793 to 1812, included, there were 11 years of greater or less deficiency of produce, with long and severe winters." Similar facts were shown by Henry C. Carey concerning our cotton crop, and Henry Carey Baird has pointed out that the short grain crop of 1881 brought to the farmers of the United States $25,000,000 more _than it could have brought had it net been 700,000,000 bushels less than the average crop. 47. Permanent and Temporary Cheapness. — Cheap- ness in the sources of supply is more important, to every pur- chaser or purchasing counti'y, than cheapness in the actual supply at any moment. The tendei^cy of agricultural prices, in bad years, to rise to a point which would make the short crop more profitable than the average crop, and so furnish the farmers with a larger capital, and better inducement to plant largely the next year, acted as a stimulus to English, Irish, and Scotch farming, until the repeal of the corn laws withdrew protection against foreign competition from the British farmers in 1846 to 1819. Short crops would be followed by such increased planting, and dear meats by such increased cattle rearing, that, though the population never increased in so rapid a ratio, in the three king- doms, as from 1780 to 1846, the farmei'S kept even pace with the consumers. There was no impairment of the permanent sources of supply. It was expressly to j)revent this remuneration of the farmers in bad seasons, through a rise in the price of corn, that the duties on corn were repealed. They so attained the desired result that, after 1846, bad seasons to the farmers have not been attended by compensating prices.* * Thus Broderick (" English Land and English Landlords," p. 273) says : "The agricultural distress of the year 1879-'80 will long be memorable in tbe economical records of the country, and may probably be remembered as marking a crisis in the history of the English land system. lis most obvious and principal cause was the oc- currence of several bad seasons in succession, culminating in the coldest, wettest and least genial spring and summer that had been known within living memory. But this 1 1 8 ECONOMIC PHILOSOPHY. On the contrary, each succession of bad seasons has effected a permanent displacement of British in favor of foreign farmers, as the ordinary sources of suj)ply to the British peoi)le. The aggre- gate value of farm products, not including groceries, liquors and luxuries for the table, imported in Great Britain, quadrupled in 20 years, rising from £24,359,598 in 1859, to £95,996,249 in 1878, while the value per head of population had more than trebled, rising from 17s. to £2 16s. lOd. This,[^of course, implies that British cultivators are not only receding from furnishing a part of the supplies which they formerly furnished, but that they are furnishing a smaller aggregate value. The experiment of free importation of breadstuffs in Great Britain, therefore, is that of getting an immediately cheaper supply of corn, by demolishing their domestic sources of supply. The actual cheapening in the price of breadstuffs in conse. quence of the repeal was both so transient in duration and so small in amount as utterly to falsify the predictions on which the measure was passed.* It is possible, indeed, by selecting pecuMar periods, before and after the repeal, to seem to show that the repeal lowered the price by a third, or did not lower it at all, but raised calamity was greatly aggravated as regards the interest of farmers, though mitigated as regards those of the public, by a singularly low range of agricultural prices, as well as by a general sense of insecurity due to a vast expansion of foreign competition. % *Brode7'icJc, in " English Land and English Landlords,'' p. 292, says : " When the Corn Laws were repealed, it was never anticipated that agricultural prices could rise to their present level, and many rents were fixed upon the assumption that wheat in fu- ture would command an average price of 40s. per quarter; barley, 30s. ; oats, 20s. ; wool, Is. per pound; and butter, lOrf. or Is. per pound, no account being taken of milk, for which the demand was then infinitely less than it now is." S/iadivell, in " System of Pol. Econ.," p. 499, says : " When the Corn Laws were re- pealed, the farnners did not cease to obtain remunerative prices for their produce, though they did to some extent abandon corn-growing in favor of pasture. This change was carried out to so large an extent in Ireland as to produce most serious conse- quences, and free trade may be justly charged with the great depopulation of that is- land which has taken place during the last thirty years. The Corn Laws placed so great an impediment in the way of the importation of foreign corn that they held out a great inducement to grow it in every part of the United Kingdom; and Ireland, which is better fitted for a pastoral country, was by their operation converted into an agricul- tural one. Agriculture requires that a much larger number of laborers should reside upon the land than is necessary in pastoral industry, and thus the effect of the Corn Laws was to cause that remarkable increase in the population of Ireland which con- tinued as long as they were in force. When they were repealed, agriculture in its turn gave way-to pasture, and the population of Ireland rapidly diminished. The potato blieht and its consequent famine were the occasion of the commencement of the de- population, but such a temporary disaster can not have been the cause of what con- tinued long after the occasion had passed away. If, then, depopulation is to be con- sidered an evil, free trade has certainly inflicted an evil on Ireland ; but it must be re- AVERAGE PRICES OF WHEAT IN ENGLAND. IN SHILLINGS, PER QUARTER (OF 8 BUSHELS), BEFORE AND AFTER THE REPEAL OF PRO- TECTIVE DUTIES ON CORN IN 1846-9. . The doUed line marks the decline of acrease Tho .r"!*"^''"" '™°> ^'^v from 3,750,000 acres in 1852, lu h.^m.^uk, "1^ cultivation of breadstuffg receded in eacli of the 10 ?«";?; "oi ""lain OXCeDt four nnr1 nhn„t cn„cnnr1 tv,„ un»l-n o^rnncjp nmnfirl hv the Dul^e OF ui i"" Great Britain, as estimated by McCuUoch and Caird, between 1853 and 18G8, at 100,000 — „nr, acres of net decline in 16 years, or 81,063 acres per year. „„^ ...,„..„.u. u..„.,„ „, ...=a2e in cultivation of wheat ■""' ^'^s^^'mo acres ^ TOtes per section line, viz.. from 3.750,000 acres in 1852, to 2.453,000 acres '" ?™°' , ,rS,n']853 to 1868, exceeded in acreage the estates of either of the landholders of Gr except four, and about equalled the entire acreage owned by the Duki INFLUENCE OF FREE CORN ON PRICE. 119 it slightly. Thus if one average be struck for the 48 years from 1800 to 1848, the ante-repeal price is inflated by the high prices incident to the wars with Napoleon from 1800 to 1815, the ave- rage being 70s. Zd. per quarter, as against 51s. 10c?. for the 30 years from 1849 to 1879. Yet there was but one year between 1819 and 1846, viz., 1839, when corn rose to this supposed avei^age, whereas after 1846 its average rose above 70s. in 1854 and 1855, and stood at 69s. 2d. in 1856, thus presenting three successive years, in the first decade of free importation, in which the average price rose above the jirice it had maintained in any year (but one) of the seventeen years preceding repeal. The average price, how- ever, for the eleven years 1837 to 1847, both inclusive, was 51s. 5d., while that for the eleven years 1847 to 1857, inclusive, was 47s. 3(i. But if the five years preceding the repeal be compared with the eleven years following, the result will indicate an actual rise in prices. The average for the five years preceding 1846 was 54s. 11 2-5cZ. In 1846 it was 54s. 8d., and for the eleven years following 1846 it was 55s. 5 l-4cZ., or 8d. higher for the eleven years after the repeal than for the five years before it. In 1847 the average pi-ice was 69s. 9d., in 1848 it was 50s. 6cZ., in 1849 it was 44s. 3d., in 1850 it was 40s. StZ., and in 1851, at 38s. M., five years after the repeal, it touched for the first time a lower point than it had reached in 1835 (39s. 4d.), eleven years before the re- peal. These facts clearly show that the repeal was an extremely secondary influence in reducing the price, if it can be conceded to have reduced it at all. It does not compare as an influence with a good season or an increased acreage. Owing to the fact that statistics of acreage planted were not kept by the government until 1862, the decline in acreage of cul- tivation must be partly matter of estimate. If it should appear that the land from which cultivation of breadstufPs receded, or to which it failed to extend with growth of population, would, if it had continued to be cultivated to those crops, have produced a quantity equal to the increased quantity of breadstufi^s imported,* membered that but for protection the population of the country n^ould never have in- creased to such a height as it did, and that if free trade had always been [in operation no diminution would have taken place. The iucrease in the numbers of the people was no p^eat benefit to them, for, as is well known, the greater part of them were in a state of chronic and abject poverty. The diminution of the population of Ireland has been accompanied by a larger increase in that of England and Scotland, so that the ef- fect of free trade has been to attract people to the 'Sistricts where they could live in greatest comfort. * The article on Corn Trade in the 0th edition of "Encyclopedia Britannica," quoting from Mr. McCulloch's article in its 8th edition, presents the facts in a manner which, 120 ECONOMIC PHILOSOPHY. and in addition tliat the average price since the rejjeal has not really been lower than it would have been had cultivation con- tinued on these lands by reason of continued protection to the farmer, it would follow that the British i^eople had transferred their source of supply to foreign countries without cheapening their supply. It may be fairly contended to be a principle con- cerning prices that when cheapness, in the supply of the product, is temporarily obtained by means which extinguish, or make very much dearer or more precarious, the permanent means of produc- ing that same product the tempoi-ary cheapness will prove to be an ultimate dearness. though not intended to concede that the repeal was a failure, does still show that enough land was withdrawn from cultivation to have produced the quantity of wheat imported, Rearranging the statements in our own form they contain the following facts: In the twenty years following the repeal of the corn laws, the production of wheat in Ireland and Scotland fell off one-half. As the acreage in Ireland in 1853, seven years after the repeal, was still, as stated by McCulloch, 400,000 acres, the falling off of one-half in Ireland was of at least 500,000 acres. And as Scotland is set down by McCulloch as having fallen off one-half, but as having still 350,000 acres in wheat in 1852-3, the Scotch falling off was 350,000 acres. England, says McCulloch, diminished in wheat 280,000 acres, in oats 450,000, in beans and peas 320,000. Ireland diminished also in barley and oats one-sixth. Without countmg the decline in produc- tion in oats, beans, and peas, except ia England, though such a decline occurred in both Scotland and Ireland, here is a total decline in the acreage planted to wheat and its equivalents of 1,900,000 acres. This is one-half as much as the total area planted to wheat alone in Great Britain in 1874, and is one-sixth the total area planted to grain of all kinds in Great Britain in 1881. Thirty bushels per acre is a low average estimate on cereals for Great Britain. Hence this decline in acreage represents a diminution in annual food supply of at least 57,000,000 bushels, whereas the average annual importa- tion from the years 1849 to 1859 was 80,000,000 bushels. Now, if we add to the diminu- tion in the food supply by decline of cultivation, namely, 57,000,000 bushels, the aver- age importation of wheat, barley, oats, and flour anterior to 1846, which is given by the "Encyclopedia Britannica" at 28,000,000 bushels, the total is 81,000,000 bushels, thus showing that the consumers of breadstufls got essentially the same supply af- ter as before the repeal of the duty on corn, the increase in the importation being exactly equal to the decline in the domestic production. Eyndman, "flistorical Basis of Socialism," p. 388, quotes "Sir James Caird, Sir John Lawes, Lord Leicester, Mr. Boyd Kinnear, and other skilled agriculturists as estimating that at least twice the quantity of food could be profitably grown in En- gland to-day that is now grown." On p. 328 he says : "Moreover, during the last few years, the farmers themselves have been, in many cases, paying away their capital in rent, taxes, tithe, interest, and insurances, whilst the soil has deteriorated, and the amount of live-stock has decreased. The actual diminution of wealth has been most serious. Between 1872 and 1882 the acreage sown with wheat, barley, oats, and pota- toes in England, Wales, and Scotland, f«ll from 9,183,600 to 8,403,000 acres ; between 1874 and 1882 the number of cattle decreased by 320,000 head, and the number of sheep dwindled from 30,300,000 to 24,300,000, a reduction of one-fifth, or 6,000,000. This means urimistakeablc impoverishment of the agricultural interest. At the very time, in fact, when more and more labor should bo employed to make up for the injury caused by bad seasons, the farmers are nearly bankrupt." HELATION OF PRICES TO FREEDOM. 121 48. Relation of Prices to Freedom. — One of Mr. Carey's " general truths " is that prices of raw materials and of finished products approach eacli other in proportion to the diversification of industries, the abundance with which money circulates, the activity of the societary movement, and the growth of human freedom. They certainly meet at the factory where the raw ma- terials ai'e converted into the manufactured goods, and where the only difference between them is the cost and jn'oflts of manufac- ture. The measure of man's growth in freedom, however, can be arrived at more nearly by inquiring the price of his time per day or per year than the condition of prices as to the commodity he produces. A farmer in Dakota may be producing the raw ma- terial, wheat, at a cost of 12 cents per bushel and selling it at the low rate of 60 cents. But if he is producing it in such quantity that the difference of 48 cents per bushel, between his cost of pro- duction and his selling price, ai^plies to 1,000,000 bushels a year, then his time for the year is worth to him $480,000, notwithstand- ing he is producing a " raw material," and at a very great dis- tance from the point of its consumption. His growth in freedom seems to be solely proportionate to the value of his time, or his rate of earnings for the year, and not at all proportionate to whetlier he is near or distant from the point where prices of raw materials and of finished products approximate. Nor can it be truly said that societjjr attains to a higher average condition of freedom, at the point where wool is converted into cloth, than it does at the point where grass is converted into wool. If human freedom can be said to stand connected with any condition of prices, it must be solely with the price of the time of the person whose freedom is to be estimated. To those localities where the diversity of industries is greatest, will often flock the greater number of those who are so badly equipped for the race of life that they would soon perish absolutely in Pata- gonia or on Selkirk's Island, but who get on after their fashion in a great city, because industries are there so diversified that occu- pation adajDted to the least competent is everywhere within reach. It is difficult to conceive an intellect so deficient that it could not sweep a sidewalk, or strength so feeble that it could not keep an apple stand, a child so dull that it could not sell a newspaper, or a pauper so old, or blind, or feeble, that he could not beg. Peo- ple, therefoi'e, who could not sux:)port themselves a week in the rural districts, flock to the cities as pi'esentiug the freest field of struggle for the feeble. In this way cities are often charged with 122 ECONOMIC PHILOSOPHY. producing the misery they only shelter ; the vast inequalities of fortune, which prevail in cities, are set down as due to the fact that those, who have never had any productive power adequate to their maintenance, have been in some way despoiled of the good living they are assumed to be entitled to, by those whose fortunes are in excess of their means of consumj)tion, or even of adequate consideration. It is, however, because of this very overflow of surplus wealth, that the incompetent and unproductive find ii easier to survive in the vicinity of the very rich, than to endure anywhere else.* Hence the scene of greatest diversity of industries, and most rapid circulation of money, is at once that in which industrial freedom rises highest, and yet in which the pecuniarily helpless swarm in greatest numbers, not because they are here reduced by competition to poverty, but because they are here enabled to sur- vive loBgest on the smallest endowment of productive energy. 49. Countries of Low and High Prices. — Prices of com- modities generally, and especially of labor, seem to descend at each stage as we pass from the silver and gold producing centers, viz., North and South America, and Australia, through the coun- tries which have usually made most use of specie, viz., England, France, and G-ermany, towards those oriental countries, China and India, where labor is very largely in surplus, and silver, es- pecially, is hardly produced at all, but is finally absorbed. It would seem as though the precious metals gain in purchasing power as they recede from the point of their production, until, amidst the reputed six hundred millions of people dwelling in India, China, Siam, and Japan, their average purchasing power as applied to land, labor, and commodities which do not admit of export, reaches its maximum. This apparent difference of prices is aided by two other causes. The lower relative use of machine IDOwer in Asiatic countries renders the actual product of labor less there than in Western peoples when the same degree of effort is put forth; and the simpler, less animal, and less nerve-stimulating diet of Eastern races, together with their inert and supine charac- ters, renders them indisposed to put forth an equivalent effort in industry for purposes of accumulation after the present wants of the body are satisfied * In Yorkshire it is said that woolen rags to the amount of $360,000,000 a year are manufactured into useful articles. {Tooke, "Wool Production," 196.) In Paris 4,000 per- sons maKe a living from what they picli up in the streets. Roscher, "Pol. Ecou.," vol. ii, p. 220. DE8TR UGTIVE "PRICES. 1 2 3 Of these concurring' reasons, the Western superiority in ma- chinery has only existed for a century, in any marked degree, while the drain of silver to the East is an affair of many cen- turies. It must he admitted also that both Chinese and Hindoos display every required degree of industry, thrift, and endurance, when subjected to the inducements of high wages and better modes of living,- in the United States and Eui'ope. It may be doubted, therefore, whether there is any other per- manent cause for difference in prices in the Western and Eastern world, than the fact that the point of chief production of the money metals is in the two Americas, the point of their chief utilization is in the banks and exchanges of Europe, and from these they percolate but slowly and feebly into the avenues of Asiatic commerce, owing to the slowness of Oriental peoples in adopting the machinery and ]3roductive methods of Western civilization. Whatever may be the reasons, the descending value of a day of average labor time, as we recede from the points of gold and silver production to those of their final absorption, may be stated with sufficient accuracy, as follows : «■ United States : California, $3 ; Colorado, $2 ; lUinois, $1.75 ; New York, $1.50 ; Massachusetts, $1.25. England, $1; Belgium, 90 cents ; France, 80 cents ; Germany, 70 cents ; Austria, 60 cents ; Spain, 60 cents ; Italy, 50 cents ; Scandinavia, 40 to 30 cents ; Russia, 20 cents ; Turkey, 20 cents ; Egypt, 15 cents ; Arabia, 12 cents ; India, 10 to 5 cents ; Japan, 8 cents ; China, 5 cents. A scale of descent, in the value of labor-time, of this n-ature, indicates that, as to labor, every geographical area from which, for any i-eason of immobility, whether it be poverty, patriotism, or sluggishness, laborers refuse to migrate, in order to seek a higher price elsewhere, becomes to that extent an independent market for labor, with a tendency to impart its own scale of prices to the products of labor, or rather to cease producing all those products whose prices cease to be remunerative. In so far, therefore, as any other country, through its greater command of capital or machinery, or low-priced human labor, or enslaved human labor, can produce a particular commodity at a money cost lower than it can be produced for in a country whose people can neither migrate nor adopt the cheaper methods of l^roduction, it is plain that the latter must exclude the cheaper product or see their own capacity to produce it destroyed by the 124 ECONOMIC PHILOSOPHY. foreign competition. Whenever low prices, obtained by importa- tion, involve the destruction of a domestic pi-oduction, which both countries have equal natural facilities for producing, the first interest of the importing country is to encourage the appli- cation, by its own people, of the artificial facilities to which the rival country owes its temporary superiority, and consequent lower pinces. These may consist of inventions, machinery, discoveries, cap- ital, skill, low rates of interest, low rates of wages or the like. All of these any country can more wisely adopt than the low rates of wages, since a descent in rates of wages involves a degra- dation in the standard of living, which may react on the productiv- ity of the labor itself, by making it less efficient, and may involve an inhumanity from which the conscience of society would revolt. Chart of Prices op Wheat. (See p. 112 and note.) Upper black line— Price of Wheat in England from 1780 to 1880, in shillings, per quarter. Lowerblackline— Price of Wheat in France from 1780 to 1880, in francs,. per hec- tolitre. Black dotted line— Price of Flour in United States from 1798 to 1860, in dimes, per barrel . CHAPTER IV. TITLE AND USE. 50. Title and Labor. — Title to property is vaguely associ- ated, ill inauy economic and in all socialistic arguments, with labor expended in producing it. It is contended that land can not justly be the subject of private ownership because it is not created by labor, or because its value is not due to the person possessing or occupying* it. The value of land is due to the aggregate societary movement which brings it into demand. It is shown by that competition among purchasers for its title, and among tenants for its occupancy, which causes it to command a purchase price at the hands of the former or a rental at those of *Henry Oeorge (" Progress and Poverty," Lovell's Edition, p. 240) says : "Asa man belongs to himself, so liis labor when put in concrete form belongs to him. " And for this reason, that which a man makes or produces is his own, as against all the world — to enjoy or to use, to destroy, to exchange, or to give. No one else can right- fully claim it, and his exclusive right to it involves no wrong to any one else. Thus there is to every thiug produced by human exertion a clear and indisputable title to ex- clusive possession and enjoyment, which is perfectly consistent with justice, as itde- scends from the original producer, in whom it vested by natural law. The pen with which I am writing is justly mine. No other human being can rightfully lay claim to it, for in me is the title of the man who produced it. It has become mine, because transferred to me by the stationer, to whom it was transferreu by the importer, who obtained the exclusive right to it by transfer from the manu- facturer, iu whom, by the same process of purchase, vested the right of those who dug the material from the ground and shaped it into a pen. Thus, my exclusive right of ownership in the pen springs from the natural right of the individual to the use of his own faculties. "Now, this is not only the original source from which all ideas of exclusive ownership arise — as is evident from the natural tendency of the mind to revert lo it when the idea of exclusive ownership is questioned, and the manner iu which social relations develop — but it is necessarily the only source." Mr. C4eorge here traces back his title to the steel pen with which he writes to " those who dug the material (iron ore) from the ground and shaped it into a pen," as if this were evidence that labor originated title. But it proves nothing of the kind. Those wh» dug the ore from the ground and shaped it into a pen may never have owned the groimd, the ore, or the pen. Tliey may have been hired servants who sold the mus- cular efEort with which they dug the material from the ground and shaped it into the pen, in which case all they ever owned was their muscular effort, labor-time, and the wages they received in exchange for them. Their labor, as first performed, became a part 126 ECONOMIC PHILOSOPHY. the latter. Causes of the values of land are thus reduced to the one cause, viz. : Demand, which is also the cause of the value of labor itself, of skill, of time, and of all forms of personal property. of the materials and of the pen, and belonged in that form to their employer. But if the iirst diggers of the ore owned the ore when dug, they did not own it by virtue of the act of digging it, for they would not have been allowed to dig it unless they had first owned it. As well might a horse-thief claim that the act of carrying off the horse of another gave title to the horse, as an ore-digger could assert that digging ore made it his. The title to the ore like the title to any crop, depended on title to the land. Thus Mr. George's title to his pen becomes, when traced back, the identical title to the land which he uses his pen to attack. Again he says, ibid. (p. 357) : "The truth is, and from this truth there can be no escape, that there is andean be no just title to an exclusive possession of the soil, and that private property in land is a bold, bare, enormous wrong, like that of cliattel slavery. "The majority of men in civilized communities do not recognize this, simply because the majority of men do not think. With them whatever is is right, until its wrongful- ness has been frequently pointed out; and in general they are ready to crucify whoever first attempts this. "But it is impossible for any one to study political economy, even as at present taught, or to think at all upon the production and distribution of wealth, without seeing tnat property in land differs essentially from property in things of human production, and that it has no warrant in abstract justice." Mr. George's uncourteous, and in the most exact sense, uncivilized remark, that the reason that the majority of men think private title to land to be just is that they do not think at all, seems to be an evidence, so far as it goes, that one can not become an admirer of the methods of savages without unconsciously adopting their manners. The study of political economy has, we think, never produced the impression upon any mind that Mr. George says it must produce upon all. We doubt if Mr. George himself did not first embrace this theory and then study political economy, after his fashion of stadying it, in order to find matter in proof. On p. 227 (Lovell's Edition) he says : " So true it is that, to whomsoever the soil at any time belongs, to him belongs the fruits of ' it.' " As all other things are immediately or ultimately " fruits of the soil," and as, accord- ing to Mr. George, the title to the fruits, I. e., to all other things, follows and is deter- mined by title to the soil, necessarily, if no one can justly have title to the soil, he can not justly have private title to any thing. All things must be owned in common. But where all things are held in common there can be (1) no commerce or exchange, as these consistin giving that which is one's own for that which is another's; (2) no gener- osity, for all generosity consists in giving that which is one's own to another ; (3) no rewards, for all rewards consist in obtaining from another for merit that which was his ; (4) no ambition, for all ambition consists in the desire to increase the stock of one's own ; (5) no production of wealth, for all production of wealth consists in bring- ing into being a surplus beyond our own needs for exchan'je, and perfect communism puts an end to exchanjre ; (0) no industry, for no man is industrious where industry can bring no increase of comfort ; (7) no comfortable living, for comfortable living can not be secured for the great mass of the world's population, without incessant industry on tne part of nearly all of them, and hence to abolish i)rivate titles to land involves an intense degree of want and suffering such as would render life an unmitigated calamity to every creature. Most of the uses of property can not be had or known at all except as they are private and exclusive, utterly unshared by any other. To till land is a use of this kind. Tho only absolutely communal use that can be made of laud is t.) hunt over it as the Indians did. Even tribal ownership of laud is inconsistent with Sir. George's theory that WHERE TITLES BEGIN. 127 Bemaud being tlie cause of value, all things are produced, i.e., brought forward, because they are foreseen to possess value. Nothing is demanded merely because it has been produced. But because man did not create or produce land therefore he can not own k. For the ' tribe came no nearer to creating land than the individual. Where, then, did one tribe get a greater right to exclude another than one individual has to exclude another? Nor, since the state did not produce the land, can the «tate own it. It simply can not be owned at all. And since, except as we own the laud on which things are produced we can not own the things produced, it follows that neither the individual, the tribe, nor the state, can own any thing. Mr. George's doctrine therefore lands us in that of Prudhon, that " all property is rol)bery." Mr. George doubtless thinks that he thinks, but the present writer can only acquit Mr. George of being destitute of the thinking faculty in the degree essential to a rational creature, by assuming that in the above extracts, and indeed throughout his work, he has been impelled by an impulse of in- tensely active and burning thouglitlessness. Mr. George's remedy is as follows: " What I, therefore, propose, as the simple yet sovereign remedy, which will raise wages, (1) increase the earnings of capital, (2) extirpate pauperism, C3) abolish poverty, (4) give rnmunerative (5) employment (,6) to whoever wishes it, (7) afford free (.8) scope (9) to human powers, lessen crime, (10) elevate morals, (11) and ta?te, (12) and intelli- gence, (13) purify government, (14) and carry civilization (15) to yet nobler (16) heights, is— to appropriaie rent by taxation. " In this way, the slate may become (17) the universal landlord without (18) calling her- self so, and without (19) assuming a single new function. In form, the own- ership of land would remain just as now ("20). No owner of land need be dispossessed, (21) and no restriction need be placed (.22) upon the amount of land any one could hold. For, rent being taken by the state in taxes, (23) land, no matter in whose name it stood, (24) or in what parcels it was held, (25) would be really (20) common property, and every member of the community(27)would participate in the advantages of its ovvnership"(28). Here are twenty-eight distinct prophecies in thirteen lines, to entertain any one of which requires, not a more profound faculty of thinking than that possessed by a majority of mankind, but only a more superb egotism, combined witli the eccentric retrogression which enables a man brought up in civilization to prefer barbarism. Two thousand years ago Aristotle (Politics, Book ii., ch. v.) said concerni'^.g this sys- tem: " This system of polity does indeed recommend itself by its good appearance and specious pretenses to humanity ; and the man who hears it proposed will receive it gladly, concluding that there v/ill be a wonderful bond of friendship between all its members, particularly when any one censures the evils which are now to be found in tociety, as arising from property not being in common; as for example the dis- putes which now happen between man and man, upon their contracts with each other, the judgments passed to punish perjury, and the flattering of the rich ; none of which arise from properties being private, but from the corruption of mankind. For we see those who live in one community and have all things in common, disputing»with each other oftener than those who have property separate ; but we observe fewer instances of strife, because of the very small number of those who have property in common, compared with those where it is appropriated. It is also but right to mention not only the evils from which they who share property in common will be preserved, but also the advantages which they will lose; for, viewed as a whole, this manner of life will be found impracticable." The singular fact in Henry George's mental obliquity is that he admits all the histori- cal facts essential to justify private property in land, if he formed liis opinion on a basis of historical evidence, and then denies its justice on the high metaphysical basis that its injustice has been directly revealed to him from God. For, that a policy promotes the freedom of man is to an economist its most complete vindication. Yet on p. 275 the 128 ECONOMIC PHIL080PHT. before a tiling can be produced, in the literal and economic mean- ing of that word, i. e. , brought or led. forward, it must first be owned, and only one who owns it can lawfully produce it or lead it forward. Instead of labor being the source of title, i. e. , instead of its being true that a man only comes to own things by having fii'st j)roduced them, it is true that a man only labors productively with and upon things that he has previously appro- priated and made his own, either by seizure, gift, finding, pur- chase, descent, contract, bequest, or some other mode of acquiring title. 51. Title Dates from Seizure or Appropriation.— That the act of appropriation, by which a thing becomes property, must precede an 3^ jDroductive labor upon it, becomes evident both by a priori reflection upon the motives which ordinarily govern human action, and by an observation of the mode in which legal rights to property come to exist. In no race or condition of soci- ety has the niind of man entertained the idea that the pi-operty of B could become the property of A merely by the voluntary act of A in w^orking upon it knowing it to belong to B. Societies have, only revelator wlio has yet re-enforced economic science by super-mundane wisdom, says : " The reason, I take it, that with tlie extension of the idea of personal freedom has gone on an extension of the idea of private property in land, is that," &c., &c. His supposed reason is immaterial. The fact, as he admits, is that private property in land and human freedom have increased together. Again, on the same page he says: " Thus with the extension of personal liberty, went on an extension of individual proprietorship in land." He might have added that one of the chief forms of personal liberty consists in the liberty of a person to own land, to have a home, which he can call his own, not merely as a fiction by paying rent to the State, but which he can transmit to his children free of rent. Deprived of the liberty to own land no man could be said to have any personal liberty. He would be the slave of his tribe, without a home, a wanderer and a nomad. Having admitted that personal liberty grows with ownership of land, which is all the warrant one uninspired would want to justify private title, Mr. George then assumes the altitudinous attitude of a revelator : " The laws of nature are the decrees of the Creator. There is written in them no recognition of any right save that of labor ; and in them is written broadly and clearly the equal right of all men to the use and enjoyment of nature ; to apply to her by their exertions, and to receive and possess her reward. Hence, as nature gives only to la- bor, the exertion of labor in production is the only title to exclusive possession." To so much of this utterance as purports to make known that the Creator has issued a decree to the effect " Thou shalt not own land," the majority of mankind will listen with profound reverence as soon as they shall be satisfied that Henry George has heard from the Creator since they have. To so much as states as an economic doctrine that labor is the only, or is any source of tftle, they will ask what he means by labor. If by labor he means labor performed, then, since all labor performed is capital, and cap- ital will always buy land, it is true that labor in this sense deserves land and always gets it. But labor unperformed— to buy land with that is the rub indeed! TITLE PRECEDES LABOR. 129 when and where land was owned communally, provided that the neglect of the occupant to till, improve, fence, occupy, irrigate, or mine it, should be deemed by the law to be an abandonment, by the occupant, of his possessory title. In that case, the new appropri- ator would be justified in regarding it as unappropriated land, and could enter in and work the land. In tliis case, as in that of the previous possessor, his new title would begin in the act of appropriation or seizure. Even his title to the crops and pi'oducts, produced by him on the land, would either depend on the validity of his act of appropriation, or upon some rule of law whereby his good faith concerning the land, i. e., his belief that he had the right to appropriate it, was made a ground for giving him title to the crops produced by him while in possession. In no case, we repeat,* was an intentional and confessed trespasser permitted to acquire title by his trespass, whatever might be the ■ value of the labor he had blended with the article during its intentionally wrongful possession by him. Nor is it in the nature of any man, in any race, to hope to gain title to a thing he does not own, by working upon it, unless it lies open to appropriation. In this case he first appropriates it, afterwards works upon it, and then bases his title on his act of appropriation and not on his labor. The phrases of the early Roman law show definitely that title in all cases arose in aj)pro- priation. All dominion or title, whether to wife, cliildren, slaves, cattle, or land, was called manus — hand power, or the gi'ip, grasp, or grapple by which the owner held them. The act of acquisition by which his title vested was mancipium or the "giving them into his hand, " a word which included the idea of capture. The common form of closing hands in ratifying a trade is believed to be a survival of the old grapple or wrestle in which the victor carried off his booty as prize. Our modern purchaser thus succeeds the ancient victor, and our modern vendor takes the place of the vanqiiished. The early English word seizin, meaning the occupancy of land under a claim of title, as distinguished from mere possession, dis- closes and incloses the fact that all titles began in an ancient seizure, or act of appropi'iation of title, which a modern seizure could not aspire to be or undo. The title having once been appro- priated by seizure could not be the subject of a second appropri- ation, but all subsequent acts of acquisition must be by transfer from the original appropriator. f * Vide Ante. tThe chief function of laws and courts is to protect titles. It is natural that jurists l30 ECONOMIC PmLOSOPHT. 52. Private Title Is Monopoly. — In the infancj^ of society titles were at first almost wholly in the tribe, the individual owning only his food, clothing, and shelter ; then in the state, and finally, in a mixed degree, in the state and the individual. The title attached either to persons, chattels, or land.* The economic prin- ciple underlying society is that no person will devote much labor upon that which he does not own, and will not work except for his personal and private benefit, but will work assiduously and industriously where the full return for his labor is to come to himself. In the degree, therefore, that private titles are multi- plied and perfected, protected by law and vindicated by courts, differentiated in kind, extent, and duration, and adapted to the wants of a people in complexity of quality "Srid and simplicity of transfer, in like degree is the production of wealth and increase of values promoted. Moreover, as all private title is carved out of what was previously a possession in common by the tribe or state, and as this process of carving out private titles is entered upon in order to stimulate activity in production by substituting the strong motive of private interest for the weak one of public interest, it may be said that the i^rogress of industrial civilization is attended by a continual increase in the number and extent of the private monopolies through which society distrib- utes at the most economic rate the services of its members to each other. The growth of productive energy is proportionate to the growth of private property. Private property is in all cases the conversion into a personal monopoly of something pre- viously enjoyed in common. As private property advances, in the volume and quantity held by one owner, and in the number of owners, society, including the non-owners, gets constantly a larger measure of its use at a lower cost. Thus, at least in should have the clearest views of the origin of Title. Blackstone (" Commentaries on the Laws of England," Book ii.) first divides Title, as to its vulnerability, into title by possession, by right of possesBion, and by right of property. The two last are intensi' fications of the fii'st, due to the continuance of possession in a manner indicating a greater or less acquiescence by others. He then divides it, as to its mode of acquisi- tion, into title by descent and by purchase, both of which point back to possession as their origin, tinder title by purchase he includes the several modes of acquiring by Escheat, Occupancy, Prescription, Forfeiture, and Alienation, which latter included alienation by will, by marriage, by gift, or by deed. Neither in English, Roman, Jew- ish, nor any other law was it recognized that title to property could be acquired by labor. As law is but the generalization of facts, it follows from this unity in the law that in fact labor never gave rise to a title, even in a single instance. * "Outlines of Roman Law," by Morey, p. 33. THE STATE AS A FORM OF MONOPOLY. 13 1 certain mai^ked instances, an increase of monopoly in title works out a great diffusion of socialism in use, or the greater the number of exclusive ownerships of pi'operty the fewer are they who are excluded from its enjoyment, since it is only by having an exclusive title to many things we do not want, that we ai'O furnished with the means wherewith to exchange for the many other things we do want. In the coramunal life no man's time and labor can be his own or subject to his own direction. They must belong to the com- mune. In the completely communistic life, i. e., where the relation extends to the sexes, even his wife and children could not be his own, and no one would own any relatives, since he could not distinguish his father from his uncle or his sister from his most distant cousin. Aristotle* pointed to these vagaries in Plato's Republic, twenty centuries ago, in much the same terms as they are exposed to-day, remarking, " For there are two things which principally inspire mankind with care and affection, viz., the sense of Avhat is one's own, and exclusive possession ; neither of which can find place in this sort of community." * * " Pros- perity will increase as each person labors to improve his own private property." 53. The State as a Form of Monopoly. — A monopoly of the privilege or power to allot land, decide controversies, punish crime, levy taxes, and make laws is called the state or govern- ment. It consists of a mechanism for vesting in a few persons certain general rights which may be supposed to have been previously diffused throughout the mass. The State begins therefore as a monopoly (compared with anarchy) of the privileges of com- pelling service, holding and exchanging property and making war, which is the primal form of making law. Later on it extends its supervision to worship, commerce, education, art and industiy. In theory, in a republic the whole voting class take part in the creation of this mechanism for making laws. Still the mechanism when created becomes, for the time being, a monop- oly of the law-making and law-executing power, to the direct exclusion of its creators. The title by which each officer pei'forms his functions is a monopoly power, created by law, though he may be said morally to hold the power in trust, that he will exercise it for the public weal. * "Politics and Economics," Bohn's Edition, p. 41. 132 ECONOMIC PHILOSOPHT. The means of enforcing this moral obligation are, however, the very imperfect ones of withdrawing the' monopoly and transfer- ring it to another, and still another. But obviously mere rotation, in those who are to exercise a monopoly of power, does not lessen the exclusiveness of monopoly, at any one moment, but only its duration as to one person. The philosopher Hobbes was among the first to advocate the theory that states originate in compact. This theory became very popular among advanced thinkers during the eighteenth ceutury and finds vigorous expression in those sentences of the American Declaration of Independence which assert that ' ' all men are created equal and are endowed by their Creator with certain inalienable rights, among which are the right to life, liberty, and the pursuit of happiness ; that to secure these rights, govern- ments are instituted among men ; which derive their just powers from the consent of the governed." In pi'actice, governments derive their actual jjower from the ability of an aggregated constituency to suppress all opposition. This is the only test known to history or international law. The consent of the governed, to the current conduct of a government, through the election of its officers, has been asked only in Grreece, Rome, England, America, and a few other states in a modified and partial degree. Hence, under the definition pi'escribed by the Declaration above referred to most actual governm.ents would be held to have had no just powers. The political scientist, searching for the origin of govei^nment, can not be bound by the language of a document designed rather to promote a revolution than to preserve a calm and exact equiv- alence between the figures of rhetoric and the facts of history. Most governments have originated, historically, in usurpation and seizure of powers, by men who had the strength and will to govern, who had in view the profits, plunder, and wealth they could amass to themselves in the exercise of their power, and who, in all the earlier history of mankind, would have laughed at the' notion that equity, justice, or the common welfare formed any leading feature in their thoughts. As property begins in appropriation of men, lands, and goods, so do governments begin in the appropriation and assumption of power over men, lands, and goods. Hence, title to property and to government are in their origin one ; both are involuntary, since man can not help owning and governing, or being owned and governed. Before it existed among men it had begun to UO W LA WS GEO ]V. 1 ^Z exist among animals, and in the co-operative class of animals and insects, the ant, bee, beaver, etc. , it was carried to great perfec- tion by instinct. Not only is government due to an exercise of power which compels consent on the part of the governed, but each advance in government is due to the innovations introduced by those who for the fii-st time usurp unwonted powers. In this way particu- lar portions of government grow by usurpation, under strong men, and are eliminated by timidity, while filled by weak men. Because Chief Justice Marshall was a strong man, individually, the Supreme Court of the United States obtained the unforeseen power to adjudge an Act of Congress unconstitutional. Because President Jackson was a strong Executive, Congress lost, through his veto, the power to incorporate a bank of the United States. Because George III. was obstinate, without being strong, and so lost the American colonies to Gi^eat Britain, the ministry in En- gland ceased to be the servants of the Crown, and became the ser- vants of the House of Commons and masters of the Crown. As governments are daily molded into new forms by the ])ower and genius of the men who administer them, so in all times title to property has been in a degree the plastic expression of the dominant will of the class who succeeded in appropriating, develojDing, and creating the property. Before all statutes come the judicial decisions in similar cases, of which the statutes are but the condensed result. Before the judicial decision, there must have been a case to decide. Before there could be a case to decide, some one man must have usurped a right with which an- other was unfamiliar, pursuant to an interest, or appropriation of values, which the other' opposed. Hence, law carries us back to visurpation and contest, rather than to compact, as its origin. And when the individual title has been vindicated, by contest in court, each ramification of its development into many estates, modes of transmission, capacities for concealment and means of subdivided enjoj'ment becomes also thesubject of enactment into statutes only after their nature has frequently been passed upon by courts, in consequence of a judicial question arising between an aggres- sive innovator, or usurper, or appropriator, on the one hand, and a conservative defender on the other. The law of titles to property, therefore, has risen into compact systems of jurisprudence as slowly and involuntarily as coral reefs have risen in the ocean. As each atom of lime in tlie reef is the skeleton of a dead insect, the residuum of his effort to sur- 134 ECONOMIC PIlILOSOPHr. vive as permanently as possible by making liis nutrition exceed his waste, so in the law of titles, every principle evolved has been the contribution of a successful litigant, grappling with a defeated one, each animated by the desire to maintain an old right or create a new one, because behind the supposed right in either case lay a profit, or at least an excess of income over ex- penditure, which could only be obtained either by an act of ap- propriation or of resistance. In this way the sons and servants of the household first ex- pelled strangers from the inheritance and enjoyed it in common. Then the sons and daughters drove out the servants, and then in some instances the sons drove out the daughters, and the eldest son drove out the younger. Thus the power to devise by will, and to convey by deed, grew into law. The power to mortgage, and to sell under mortgage, and to restrain from sale, are later powers, which were supposed to have been evolved within the period of the Roman law, until cuneiform inscriptions bring then to light in the ruins of primeval Asia. In every stage of this evolution the real goal and motive in the mind of each litigant was one of private profit. In the earliest stages of society the same motive animated the judge. To this day in Asiatic and African countries the client expects to in- fluence the court by presents. At length as the judge came to achieve a greater unity of interest with society, he came to see his private interest in deciding questions in the manner most profitable to the general public, which is the ultimate definition of impartiality and equity. Thus, out of the motive profit, have been evolved law, justice, and equity. Each advance, toward a refined system of jurisprudence, consists in a clearer vindication of private title in that which had an- ciently been common right, accompanied by a larger power of use in exchange on the part of the owner, attended by a more equal diffusion of the utilities resulting from the use among mankind. Thus land, held communally by the tribe, can only be used for hunting or fishing, and can not be tilled until private title is acknowledged. The first to fence and till it is a usurper and an encroacher ; so is the fii-st to defend it as an inheritance, or as a grant, or to hold it in partnership or for a debt. But, in the sum of these usurpations and encroachments, lies the evolution of title to land into that stage wherein the secure possession of it and its fruits can be transferred in fee, for life, for years, at will or for an hour, by deed or by devise, to one or to many, or to a corpo- HOW RIGHTS ARISE. 135 rate one composed of many, in absolute right of enjoyment or in trust or to secure a debt, in perpetuity to a charity, or in expec- tancy to some person now unborn. With each increase in this securitj' of title, there is an increased power of deriving profit from its use, which is itself the measure of the increased degree in which it serves the wants of society at large. Titles alone render industry possible by rendering the future foreseeable. When they who fought in the wars of the Roses on either side could convey their lands securely to others, in trust, and thereby exemijt them from confiscation for their treason, a crime equally chargeable on whichever side they fought, or if they refused to fight on either, the tenant holding a lease from their grantee could till the lands of a traitor in perfect security as to his crops, while the soldier of fortune went on fighting in equal security as to his title. Thus a secure division of labor was effected, whereby the one aided in perfecting the stability of the state, while the other aided in maintaining the supply of food. The first salvor, who tied the vessel he had saved from wreck to his own and towed her into port, and then demanded half her value for his services, converted into private right a service which, if rendered at all, must have been previously rendered for the public weal. But when the courts gave the suitor his claim the public weal was far better served than by denying it, since twenty vessels would now be saved for private profit where one might have been saved from generous motives. The first carrier who exacted a fare for carrying a passenger over a public highway, where, so far as travelers had previously been carried at all, they had been carried gratuitously, was as truly a usurper and monopolist as the first man who fenced land ])reviously held in common. But when his demand was sus- tained, the transportation of passengers and freight made its first step towai'd the modern railway system. The first man who took his neighbor by the collar and led him before a magistrate, be- cause he did not fulfill a promise, was doubtless denounced by tlie pi'omiser as a usurper. But when the court assumed jurisdic- tion and sanctioned the act there was a beginning of commercial law and of commercial honor. 54. Title, the Source of Exchange, and of Division of Labor. — The principle in human nature, which compels the creation of the monopoly known as The State, is the same as that which compels private title to land and to all other forms of prop- erty, viz., that whatever, to use a homely phrase, is every body's 136 ECONOMIC PHILOSOPHY. business is nobody's business. To have the work in any depart- ment of effort well done, those who do it must have a reward proportionate to the value of their work to society, and a training and capacity adapted to the particular kind of work. Govern- ment is one of the first steps toward, what Herbert Spencer and the sociologists have called the specialization of functions, and what Adam Smith and the economists have styled the Division of Labor. As men can only make good watches, who are profi- cient in the "art and mystery" of watchmaking, so skill in framing and administering the laws and economies of a nation can only be attained by men skilled in the knowledge of those laws and economies. It would be as great a waste of time and diversion of effort, on the j)art of most farmers, miners or fisher- men, for them to devote the degree of study and investigation to laws and economics whicli would be essential to make them very poor judges, lawyers, or legislators, as it would be on the part of a legislator to attempt to become an exjjert fisherman. But the power to administer government, wisely and well, is not wholly an affair of accomplishments, or which can be leai-ned in schools. Even if it were, the power and address essential to get office under any system of government, are qualities without which the ability to govern, when in office, would be of no value. These powers to get office often arise in the most fortuitous and accidental way, out of qualities of character which are by no means identical with those which would insure a proper performance of the duties of office. Hence, while the state theoretically assumes that its officers are selected for their higher skill in administering offi- cial duties, they are in fact often selected through their higher skill in manipulatmg the machinery of selection, a species of skill which, in certain instances, may even unfit them for a wise per- foi^mance of the duties of ofiice, as where the machinery of selec- tion may be influenced by bribery and the duties of the office may be to punish bribery and the like ; still, in a crude way, the state is a mechanism for vesthig in a few specialized and skilled- persons, the business of making and administering the laws, and it works by making the emoluments and honors of office so profit- able that it becomes a matter of private interest to make a profes- sion and business of attending to matters of public interest. In so far, therefore, as the state is useful, it becomes so by the fact that it usurps, appropriates, and seizes, or society tacitly grants to it a monopoly, of judging concerning jural, economic and social questions, or of the functions of making, executing, and construing FREEDOM OR0W8 WITH PRIVATE RIGHT. 137 the laws. Government is a monopoly of the power of decreeing and executing justice. Historically, the monopoly of power comes first, and the desire to do justice, later. Government, in its bar- barous beginnings combines the maximum of force with the minimum of equity. Theoretically, but for government, all men would have an equal say as to what is right. Practically, very few men would think of right, as power would be the only thing desired. So, before private property in land is established, all men have nominally an equal right to the use and product of all land. But the right of all, to use for hunting, precludes the right of any, to use for farming and gardening, and so pre- vents each man from producing as much as he immediately wants, thus chaining all down to the severest penury. Private property in land steps in, to make it the interest of each to jDro- duce what others want, by enabling him through his private title to that which he produces, and through the better mode of tillage which comes only with exclusive title to the soil, to buy what another has produced. Thus private property in land is essentia] to exchange, because that which all own no one can sell, and land owned by all does not admit of those permanent crops, orchai'ds, impi'ovements, etc., which extend over years. Under a state ownership, or tribal ownership of land, there must necessarily be a state, or tribal title, to all its products, and to the labor itself which produces the products, and hence a right in each to enjoy them, but in none to exchange them. "What- ever each gets he must get by allotment. Hence the monopoly of the land, by giving to individuals a private title, is essential to each individual having a title to his own labor, and to that wide diffusion of a great diversity of products which is brought about thi'ough exchange, commerce, trade, buying and selling. While the monopoly seems to build up the individual at the ex- pense of the public, it really is the first step in freeing the indi- vidual to serve himself and inciting him to serve the j)ublic, by making it a source of profit and power to him, to produce on his land a vast excess of commodities of which he has no need, because he knows that those commodities, being his own, can be freely exchanged for those he needs, thus in the end se- curing to him a far greater variety and diversity of commodi- ties for consumption, than he could in person produce. Whatever advantages to society grow out of connnerce in commodities and division of labor are indirectly due to that private title in com- modities, Avithout which no such facts as commerce, or division of labor exist. 138 ECONOMIC PHILOSOPHY. Private title in commodities is inseparable from private title in the instruments by which commodities are produced, i.e., the land, labor, and other means of their production. If the latter are o^vned in common by all, the former must be allotted so that each shall get a share proportionate either to his needs, his desert, or his importunity and troublesomeness. This, as we have seen, is done in all socialistic and tribal stages of growth. But in this condition of things the collective state, or its chief, is the only ex- changer, and it can only exchange with somebody outside its frontiers. Members of a state, which jDrovides for all its members out of a public crib, have no motive to exchange and no private title to commodities. A social, tribal, or communal ownership in land, by involving logically a like ownership of labor, goods, and products, pei'petuates poverty, slavery, and indolence, by paralyz- ing commerce. 55. Titles Becoming' Private. — The first essential con- dition to commerce and division of labor being private ownership of land and goods, it follows that the growth of a country in wealth, production, and civilization will depend largely on the degree in which it asserts this principle of private ownership, i. e., the promptness with which it converts its lands from tribal, com- munal, or national to individual ownership.* * It seems to have been a notion generally entertained in the ancient world that every citizen of a country should be a landholder ; and that the territory of a state, so far as it was not left uninclosed or reserved for public purposes, should be divided in equal portions among the citizens. Such a distribution of public land seems to have been acted upon as a recognized principle from the earliest period to which existing historical records extend. (Encyclop. Brit.— Art. Agrarian Laws.) Hence the division of Canaan into private allotments to every Hebrew (Numb, xxxiii. 54), naming every allottee (Numb, sssiv. 18). The year of jubilee did not return these lands thus privately allotted into liodcje podge or communal ownership, but only restored them from grantees and mortgagees to their original owners or their heirs (Numb. xxv. 10). In the republics of ancient Greece and in the Grecian colonies a similar system of division prevailed (Thucyd., v. 4 ; Herod., iv. 159). Lycurgus is represented by Plutarch (Lycur.) as redividing the whole territory of Laconia into 39,000 parcels, of which 9,000 were assigned in equal lots to as many Spartan familiLS, and 30,000 also in equal lots to their free subjects (i6.). But this equal division of land between private owners did not imply among the Greeks that the equality of ownership should bo forcibly maintained. The enactments among the Romans for dividing the public domain {ager intblicus) among private holders were called Agrarian laws. For a long time they were misun- derstood to mean enactments for prohibiting Roman citizens from owning lauds above a fixed amount, and as authorizing the division among the poorer classes of the estates of private individuals when these exceeded the prescribed limit, thus legalizing a sys- tem of plunder which would have been subversive of ail social order. No such laws were enacted in Rome or any other state. The Agrarian laws merely provided that where citizens had appropriated more of the public domain than they were by law al. lowed to do they should be required to restore, but had no relation to lands acquired by IfEW MODES OF PlilVxiTE TITLE. 139 The distribution of the land of the United States, from the form of communal ownership in which it was held by the Indian tribes, and in which it was first feebly attempted to be held by the settlers at New Haven, Jamestown, and Plymouth, into pri- vate ownership, was a substitution of self-interest in lieu of social interest as the motive to industry. The intrusting to private railway corporations, of the business of giving cheap transporta- tion to mai'kets, came to be a means of effecting a most important public function entirely at private risk as to loss, and at private cost as to capital. The evolution of the land system and the rail- way system of the United States were thus the concurrent work- ing of the principle that private title, or the profits of monopoly, form a far stx'onger inducement than public spirit, to the expendi- ture of inventive force, and of capital, in ways that are socialistic in their results. Nothing serves society at large more usefully than steamers, railways, printing presses, telegraph facilities, power looms, spinning jennies, the manufacture of India rubber, photography and the like. But to perfect each of these in the breadth of its social use, i. e., in the number of persons who might enjoy its use, some new form of aggression on private right was hi vented and sanctioned by law and some new mode of private title was created. For railways, their projectors were allowed to take lands for a way over which they alone could draw their carriages. Previous ways had been open to the car- riages of all. For the highest utility of printing presses men were denied the right to manufacture copies, indefinitely, of any book they might possess. For, when all books were written, every pnrcbase, or otherwise than by fencing in, unlawfully, portions of the public domain. (Encyclop , Brit.— Art. Agrarian Laws.) This was demonstrated by Prof. Heyne of Got- tingen in 1793, by Heeren and Hegewisch and by Niebuhr (ib.). In its article on commons the Encyclopedia Brittannica says : " It is a well-known result of the application of the historical method to laws and institutions that it has reversed many of our leading conceptions of the natural or original forms of property. That the primitive form of property in land was not severalty but commonalty, that land was held not by individuals but l)y communities, and that individual ownership was slowly evolved out of communal ownership, are propositions as nearly as possible the opposite of our a jJfiori ideas on the subject. The existence of rights of common is one of the traces of the ancient system still remaining in our law, but its real signifl- cancc was for a long time obscured by the feudal theories on which the law of real property is based. Among the English, as among other Teutonic nations, the system of landholding by village communities prevailed. . . The increase of the population and the growing need for food-producing land made it the interest of both the lord and of the public also that much of the common ground snould be brought under cultivation. Down to the year 1800 this was effected by private inclosure acts, of which there were as many as 1600 or 1700. 140 ECONOMIC PHIL080PET. scribe was free to copy any book. With printing came the new form of monopoly known as copyright. And this monopoly, in the profit of multiplying copies of a book, effects a far greater multiplication of copies than would be effected without it. Land being the primary implement, agent, and condition of all production of commodities, the first economic requisite to the rapid and cheap production of them all, is that title to land shall be easily obtainable, and when obtained, shall be easily defended. When, to these, are added ready access to the consumers of land j)rodLicts, and a free influx of all the industries which can use the land most productively for mankmd, all the conditions of growth in wealth ai^e assured. The monopoly of land by great families in England causes the government there to be aristocratic. The early diffusion of land in America caused the republic. 56. The American Land. System. — A few colonists came to America for opinion's sake, and a few for ci'ime. The great mass came hither for profit, to better their pecuniary condition.' Had the governments, which first obtained footing in America, limited the land system by making large grants to a few propri- etaries, and exacting that these should grant only leases to ten- ants; and had they, without jealousy, created the large propi'ietors into a peerage, with like powers to that of England, including seats in the British House of Lords, while the colonial delegates should have like seats in the Commons, it is difficult to prove that the Anglo-Saxon race might not have continued to this day to be one empire. A difference in the allotment of land left the colonies without the materials for representation in the House of Lords. The creation of colonial legislatures provided them with a satisfactory substitute for the Commons. Hence the colonies fell away from Grreat Britain, because not allowed a represen- tation they had never desired. During the colonial period the increase in population in the territory of what are now the United States was slow. The entire population in 1680, sixty years after the landing at Plymouth and seventy-three years after the settlement of Virginia, was only 80, 000 ; in 1701 it had grown to 260,000 ; in 1753 to 1,051,000 ; in 1775 an official esti- mate made it 2,383,000; and in the first census of 1790 it was as follows : Virginia 747,610 Connecticut 237,946 Massachusetts 475,327 New Jersey 184,139 Pennsylvania 434,373 New Hampshire 141,885 North Carolina 393,951 Georgia 82,548 ALLOTTING THE LAND. 141 New York 340,120 Rhode Island 68,825 Maryland 319,728 Delaware 59,094 South Carolina .... 249,073 During the first ten years of independence immigrants came to the number of only 4,000 yearly, and in 1794, the year of the French Revolution, to 6,000. The cession of lai'ge portions of land to private aristocratic pro- prietors, and the restrictions forbidding the colonists to manufac- ture machinery, cloths, iron, steel, etc., contributed, with the insecurity attending pioneer life among savages, to check immi- gration. Some of the private proprietors, including at least those in New York, intended to follow the English or feudal precedent of renting tlieir lands to tenants, retaining forever the fee. Such a system, logically carried out, would have resulted in a landed nobility and House of Lords like those of Great Britain. With the establishment of national independence in 1783,* the legal theory became, in the United States, that all titles to land are derived from the government of the United States, as in En- gland it had been that all lands are held immediately or ulti- mately of the king. Within the original States, only the lands remaining unappropriated, and those belonging to Tory owners, and passing by forfeiture to the government, ever actually vested in the United States. By the acquisition of the Northwest Terri- tory and Louisiana it devolved on the government to become the distributor, to private owners, of an area east of the Rocky Moun- tains, as large as China, and half as large as Europe. The present total area of the United States, including Alaska, is 3,603,884 En- glish square miles, exclusive of the lakes and other waters, while that of Europe is 3,828,328 square miles. The policy adopted by the United States was that of giving the lands to actual settlers, at a price per acre barely sufficient to pay the cost of survey and of the land department, surveying the lands on lines corresj)onding to the four cardinal points of the compass, so that the exact location of all lands for transfer, occu- pancy, or search of title could be expressed by a brief formula. This was done by running a meridian line north and south through some arbitrary point selected for convenience, then a base line east and west through the same point. One point of this kind exists in Ohio, and the meridian line which runs through it is called the first principal meridian, or in the language of con- * Supreme Ct., Jobnsoa vs. Mclntish, 8 Wheat, 543 :t 3 Op. Alt. Gen. 333. 142 ECONOMIC PEILOSOPHT. veyancing 1st P. M. The second principal meridian line is in In- diana ; the third makes its point of intersection with the base line at Vandalia, Illinois, the fourth in Western Iowa, etc. Lines drawn parallel to the meridian line at intervals of six miles, whether eastward or westward, are called ranges, those to the eastward being range 1, 2, 3, etc., east, and those to the west- ward, range 1, 3, 3, etc., west of the meridian. Lines drawn par- allel with the base line, whether to the northward or southward of it, become township lines, since the intersection of each with the meridian lines marks a plot six miles square, which is the townshij) of the land surveyors. In fact, also, the organization of the people into townships usually follows these lines. The location of the township, east or west of the meridian, is desig- nated by the range number, and its location north or south of the base line by the township number. Thus T. 38, N. E. 14 E. of 3 P. M. in Cook County, 111., designates a township, being the 38th to the northward of the base line, in the range (of town- ships) which are on the meridian line the 14th eastward from the 8d principal mei'idian. Each township is divided by similar parallel lines into 36 sections. The sections are numbered as follows : 6 7 5 4 3 2 1 8 9 10 11 12 18 17 16 15 14 23 13 24 19 30 20 29 21 22 28 27 26 25 31 32 33 34 35 36 The sections proceed by halving and quartering, or otherwise, until the definite lot, however small, is reached. Property worth millions may be thus described as lot 44 and Ni of lot 43, in block 2, Lockwood's subdivision of south half of W. i of N. E. i of N. W. i of section 3, T. 38 N. R. 14 E. of 3 P. M. The start- ing point of this description is at Vandalia, yet the land which it accurately describes is near Chicago. The simplicity and celerity with which conveyances can be executed and recorded, and titles searched, and cei'tifled, is also an element in bringing about the easy transferability of land. The ENSURING TITLES. 143 several States, at an early date, adopted the system of recording in- struments affecting real property, and j)rovided that subsequently executed instruments, conveying interests in lands to purchasers for value, in good faith, and witliout notice, to thein, of the exis- tence of any prior, unrecorded, conveyance, will have precedence of the prior, unrecorded, conveyance. This enables a purchaser of land, generally, to learn by a search in one or two offices whether his title is valid. Judgments of the federal courts become liens, within the distinct of their jurisdiction, without record in any State office. The facts of heirshiiJ, deaths, and marriages must also be traced outside the record. These provisions were a vast im- provement on the English system, which lacked the provision making conveyances, in good faith, valid in the order of priority of record. Hence, in England, search was necessary in every place where an instrument affecting title might happen to be. In some cases, of property of considerable value, the legal charges, for making the transfer and becoming satisfied of the validity of the title, exceeded the whole pui'chase money paid for the land. Since the system of registration of deeds was perfected in America a still more perfect system, known as the Registration of Titles, has gi'own up and is practiced in all the colonies of Australasia, and, it is said, in sevei'al smaller states of Europe. This consists in vesting the recording officer with power to make the title per- fect in the grantee by simply recording the conveyance to him, as the title to a note is good, in the hands of a bona fide endoi'see for value, even though there may have been a fraud or theft in the previous course of transfer. Such a system makes land as negotiable as commercial paper. The Register is required to use care in recording the instru- ment, both in searching the i^revious conveyances to accertain in whom the present title is, and in properly identifying any new grantor as being the same person as the last grantee. An insur- ance fund is also provided, by requiring that a small fraction of one per cent, on the value of the land, should be paid as a transfer and recording fee, and out of the fees thus received a reserve is held for the purpose of indemnifying any owner who may lose his title by this system. Very few losses, in all not exceeding £8,000, have been paid out of this fund, which now amounts to about £158,000, and in three of the oldest colonies, viz.. New South Wales, Victoria, and Tasmania, the fund is still intact. The United States have not thus far limited the quantity of 144 EGONOMIG PHILOSOPHY. land a single purchaser could monopolize, nor prohibited the free purchase of lands by citizens of foreign countries. Such, how- ever, is the objection felt in many quarters to the extensive purchase of lands by foreign capitalists, Avhich have, in a few instances, been made, that legislation to prevent it in future is probable. During the reign of George II., the British Parliament pi'ovided that the writ of execution for debt, to be issued in the Colo- nial Courts of America, should call for the sale of the lands and tenements of the debtor as well as his goods. In Great Britain, a land-holding debtor might be dissolute, insolvent, and bank- rupt, but no creditor could, or can to-day, obtain any writ of execution which will sell the debtor's land. Hence, there, ' ' once a landlord always a landlord. " If he bets away his fortune at the races, the return of his quarterly rent days will soon restore the means to bet again. In America, however, the largest landed estate is dissipated by the first spendthrift who comes into its possession, provided he become a bankrupt. In England, also, the law of primogeniture (preference for the oldest son) required the estate to descend to the eldest son only, unless it was otherwise disposed of by will. The law of entail also permitted the land to be so given by deed or will that oialy a life estate should at any time inhere in its present owner, the inheritable fee beingmt all times in the heirs in pei'petuity. These two laws tended still further to tie up the trade in land in England. In America, in all the colonies, or as soon as they became States, it was provided that all laud should descend at death equally to all children, and wills or deeds which tied up the title by entail, so as to render them untransferable for more than the lives of one, two, or three persons were made void. Throughout America, also, State, county, town, and school taxes rest directly on land, as a rule. If not paid, the title to the land is sold for the tax. In this respect the so-called land tax in England, which is only in law a tax on the occupant, though called a land tax, does not resemble the American taxes on land. In default of payment of the English land tax the writ for their collection is powerless to sell the land. It authorizes only a distraint on the goods and chattels of tlie occupant. It is a tax on occupation, not on ownership. In America, land is ever}^ where saleable for both taxes and debts. Bounty laws were, from time to time, passed, donating certain FREE LAND ATTRACTS. 145 quantities of land, usually 160 acres or 80 aci'es, to persons who had served as soldiers or sailors in either of the wars of 1776-'83, of 1812-'15, of 1847 to 1848 with Mexico, or of 1861-'5 with the seceding States. Public lands were also donated to aid in the construction of canals, and section No. 16 in every township was donated to the support of schools. By an Act of Congress, also, lands proportionate in quantity to the representation each State had in Congress were donated to it for the endowment of an agricultural college. By all these causes, land was forced upon the market in quan- tities so that each man could get his 40, 80, 160 acres, half section or section of land at near the government price, $1.25 an acre, until the influx of " settlers " gave it a higher value. The first settlers, so far from fearing "monopolists," were glad to have either resident or non-resident capitalists buy in their neighbor- hood, as it tended to raise the value of the land, and gave them a class of taxpayers on whom they could freely levy for cost of schools, court-houses, bridges, roads, and local improvements. In some of the Western and newer States, local taxation, in the hands of resident voters, tended to throw as much of the burden of taxes as possible on non-resident owners of lands. The profits of land-owning were thus kept down to the minimum, and the inducement to monopolize land was small. It hardly became matter of complaint until about the year 1870. 57. Effect of Free Land on Immigration. — Freedom of individual conduct and belief, equality in political rights, and abundant supplies of cheap land, supplied the chief inducements to immigration fi'om Europe down to 1851. Since then the gold and silver mines, the rapid px'ogress of railroad building, and the growth of manufactures, under the stimulus supplied by an abundant currency and a partial protection of American producers against the importation of competing goods, have largely increased the inducements to immigration previously existing.* Tlie rate of increase has been so evenly from 33 to 35 per cent, in each decade that, as early as 1830 statisticians began to compute accurately the future rate of increase of the Republic. Dr. Carey, in 1835, placed the population in 1880 at 60,000,000, which has been verified. Similar estimates show a population in 1930 of 191,000,000. This future rate of increase * Since 1790, when the first census was taken, the following table shows the increase in every ten years : 146 ECONOMIC! PB1L080PHY. of American population, if no great wars intervene, is one of the most demonstrable theorems in social science. Since 1819 a careful register of immigration has been kept, the result of which appears in the table contained in the note. By comparison of this table of immigration with the facts set forth in the chapter on " Commercial Crises," it will be seen that the movement of population into the country, while somewhat afl'ected by the Irish famine in 1846-9, was most rapid in the years Year. 1790 1800 1810 1820 1830 1840 1850 1860 1870 1880 Tear. 1830 . 1821 . 1822 . 1823 . 1824 . 1825 . 1826 . 1827 . 1828 . 1829 . 1830 1831 . 1832 1833 Population. 3,929,827 5,305,925 7,239,814 9,638,131 12,866,020 17,069,453 23,191,876 31,443,321 38,925,598* 48,141,800 Per Cent. Extent of Territory. Tear. Eugl. Sq. Miles. 1793 805,461 35.03 36.45 33.13 33.49 1830 2,150,000 32.67 1840 2,308,362 35.87 1850 2,743,500 35.53 23.79 1870 3,603,884 Increase. 1,376,098 1,933,889 2,398,317 3,227,889 4,208,433 6,122,423 8,251,455 7,482,277 9,216,223 Immigrants. Tear. Immigrants. 8,353 1854 427,833 .... 9,130 1855 200,877 .... 6,911 1856 200,436 6,350 1857 251,306 7,613 1858 123,126 10,199 1859 131,382 10,837 1860 153,640 18,815 1861 91,920 27,382 1862 91,987 22,520 1863 176,222 23,.322 1864 193,418 .... 32,633 1865 248.020 60,482 1866 348,554 58,640 1867 298,358 1834 65,365 1868 297,205 1835 45,374 1869 385,387 1836 76,343 1870 361,338 1887 79,330 1871 367,789 1838 38,914 1873 449,040 1839 68,072 1873 437,004 1840 84,006 1874 277,511 1841 80,289 1875 209.036 1842 104,565 1876 224:860 1843 52,196 1877 130,503 1844 78,615 1878 153,307 1845 114,371 1879 177.836 1846 154,416 18S0 4.57,257 1847 234,968 1881 669,431 1848 326,507 1882 738,902 1849 297,011 1883 603,322 1850 361,863 1884 518,592 1851 379,466 1885 39.-),346 1852 371,603 1886 ... 334,203 1853 368,564 1887 ? 490,109 Total since 1819, Of the total population in 1790, 17.8 per cent, were slaves. In 1800, 12.6 per cent, were slaves. * Including Indians and Alaska. P^RIOBB OF" INFLUX. 147 of money inflation, aiicl of great activity of the societary move- ment, wliethei' induced by protection, war, or increased production of gold and silver. While the magnitude of the immigration maintains a general increase in subsequent years over earlier, it more than doubles between 1826 and 1828, a period of protection ; doubles again in 1832— over 1831— drops slightly in 1833 on the passage of the Compromise Tariff; rises slightly in 1834, but drops sharply in 1835 ; attains a great height in 1836 and '37, and again in 1842, but drops one-half in 1843; i^esumes its upward course in 1846; is heaviest in the periods of the Irish famine (1846-9), the revolutions in Europe, 1848, and the California gold supply, 1849 to 1854 ; but in 1854, in the midst of this gold supply, it drops one-half, thereby showing that the condition of industries in the United States was then very bad. In fact, from the winter of 1853-4 to the batik crisis of 1857 the manufacturing industries in the United States had been in a low, typhoid condition, owing to the causes named in our chapter on "Crises." From the high- water mark of 1854 the immigration declined, under the i^olicy of the almost free importation of foreign goods, from 427,833 in 1854 to little more than a fourth that number in 1858-9. It sank still lower in the first two years of the war, but in the second two years it nearly resumed its former rate, but did not pass the rate of 1854 again until 1872 and 1873, which were years of marked activity in railroad building. The following static chart shows the rate for each year on a scale of 40,000 population to the section line : — 7.20 ~^ ~ r- Rl 5,2 712- - - / / 3l3 U f\ Ti g 33 ^ ^ 11 ,s 3C r\ \ ^ / / J 1/ 1 f -3£ >8r: >8 1- - f ' 1 \ / V 1 / 15 7, 77 '> 7<5 ? 4f ^ K / - - ' '. ■— T>/ V V 91,822 ^- 1_ ,9 14 1 1 1 «0 00 O (N -^ to 00 Immigration into United States from 1820 to 1887. 148 ECONOMIC PHILOSOPHY. It is estimated that between the years 1820 and 1876 the immi- grants arriving were, as to nationality and race, as follows : — English and Irish 4,527,892 Germans 2,889,235 Swiss 77,299 Austrians 49,793 Swedes and Noi^wegians 263,994 Danes and Icelanders . . . . \ .* . . . 41,417 French 300,259 Italians 56,874 Spaniards and Portuguese , 34,717 Belgians 21,498 Dutch 42,401 From Canada and British America .... 469,450 West Indies 59,569 Chinese 196,891 Japanese . 337 Officers in charge of the immigrants estimate the money brought into the United States by the immigrants for the ten years, 1850- 1860, at £83,333,333. Prior to 1860 the sentiment of the country was in favor of immigration, and every immigrant was valued, though he brought only his muscular strength, as an accession. Since 1865 a sentiment has arisen in favor of an assorted immi- gration, to the exclusion, of Chinese, paupers, bound laborers, gypsies, persons bringing disease, and criminals. 58. — Wasting the Ljaiid. — The opening up of new lands in America, and the denudation of timber, has been done in a way to sacrifice the largest future interests to the smallest present in- terests, which is the essence of waste. Dr. Franklin B. Hough, Chief of Forestry at Washington, estimates that in 1870 our entire area of remaining wood lands of every kind was 380,000,000 acres, that we were stripping the wood from 15,000,000 acres yearly, and were planting less than 10,000 acres. If these dates were cor- rect there has been a subsequent reduction of 160,000,000 acres, leaving 220,000,000 acres standing, or enough to last twenty- two years longer. It is also estimated officially that the mills of the Northern States, if they could be planted in the South, would saw up every standing pine in Florida or Alabama in twelve months, and would requii-e but six months more for that of Georgia or either of the Carolinas. Three hundred million dollars worth per year are being cut, of a crop which nobody is plantijig, not because it is not one of LOSS OF FORESTS. 149 the most profitable of ci'ops, but because no private individual can afford to plant an agricultural crop which he must wait twenty- five years to reap. It is estimated that our white pine and spruce supply may not last a decade. Yet it is matter of easy computation that in thirty or forty years land in most parts of the United States, if left to grow up to timber, would, without labor, produce a cro^j the value of which on the stump, if spread over the period, would divide to each year about as large a return as can ordinarily be got out of the land by labor. All this points to substitution of brick, iron, straw pulp, and similar materials at an early date, for, wood. Foi'estry asso- ciations for planting trees have been formed in Ohio and elsewhere, but no effective check on the timber waste has yet been devised. The rapid destruction of the forests, of the Appallachian chain and Adirondacks, has also lessened the beauty and value of many American streams, by causing the entire waterflow occasioned by the meltmg of the winter snows to pass off in destructive freshets or floods in the spring, after which the streams are neai'ly dry. In the Ohio and Mississippi these spring floods are becoming each year more destructive of life and property ; and are suggesting as remedies either extended plans of n-rigation by canal, which will draw off these extra supplies of water, or systems of dams along the rivers to retain it, or a compulsory restoration of the forests. It is worthy of note that m China all these plans have been adopted. The fact that their river system is more nearly like ours, than that of any other country, may in time compel our legislation concerning rivers to more nearly approach theirs. The wasteful destruction of buffalo, deer, prairie pheasants, and other game on our Western plains, and of birds of every kind, and especially singing birds in the Western States, in response to the demand for birds for ladies' hats, are forms of waste for whose avoidance legal penalties have been invoked. In our streams and lakes the artificial propagation of fish has had the effect to partially restore the original supply. Marked economic effects have attended the building, or failing to build, important highways in the United States, of whatever kind, where opportunity and need existed. The early topo- graphical engineei'S of the country, including especially George Washington, who was an engineer by profession, foresaw that at whatever point on the Atlantic coast an outlet should be made for the products of the Mississippi and Ohio valleys, a great, probably the greatest, Atlantic seaport would arise. Virginia was at this 150 ECONOMIC PHILOSOPHY. time fai' in advance of the other States, and especially of New York, as is shown by a call made by the General Government upon the States in 1781 for money. The sum to be raised was £1,666,660, and it wa_s divided among the original thirteen States according to the supposed value of their cultivated lands, since it was to be collected, by each State, by direct tax on land. The division was as follows :— Virginia, £272,415 South Carolina, . £177,834 Massachusetts, 272,395 New York, 77,832 Pennsylvania, 233,498 Rhode Island, 45,142 Maryland, 194,582 New Hampshire, . 36,124 Connecticut, , 151,499 Delaware, 23,351 New Jersey, . 147,078 Georgia, 5,130 North Carolina, . 129,724 Even in 1810 the city of New York had a population of 96,377, while Philadelphia had 96,691, Baltimore having 46,555, Boston 32,250, New Orleans 17,212, Cincinnati 2,540, and Brooklyn 4,462. It is difficult even at this day to perceive that Washing- ton's calculation, that the metropolis of the Atlantic coast would be at Norfolk, might not have been verified by sufficient enter- prise on the part of the people of Virginia. Washington urged the legislature of Virginia to build a canal connecting the Ohio River and the James or Potomac, so as to place the outlet at Nor- folk. His advice was not heeded. Subsequently New York, under the leadership of DeWitt Clinton, constructed the Erie Canal, connecting Lake Erie at Buffalo with the Hudson at Al- bany, then a stupendous feat of State enterprise in finance and civil engineering. Until that canal was built New York city had little more than the trade of the Hudson River Valley. The build- ing of the canal made New York the Empire State, and the city the commercial metropolis of the Union. 59. The American Railway System in Its Unproductive Infancy. — American railways have passed through the several periods (1) of infancy and feebleness, demanding State aid at every step ; (2) of incipient profits and precipitate haste on the part of municipalities, couiities, and adjoining owners to embark in them for the value they would give to the lands adjoining; (3) of consolidation of continuous lines and pooling of competing lines, ending finally in a condition of stability, profit, and secur- ity; (4) of sevei'e criticism and assault on the part of shippers of freiglit as to the discriminations in freights and fai-es deemed WFANT RAILWAYS. 161 necessary by the railways; (5) of enormous railway grants in aid of transcontinental routes of vast future importance ; and, finally, (6) of the appointment of State Boards of Railway Commissioners and the recent adoption of national legislation whose effects are not yet matured. At the outset, in the Eastern States, railroads crei^t feebly into being by scattered efforts, involving much individual sacrifice. Some town and county aid was given, or loaned, by subscrip- tions to stock and bonds. Frequently English loans were' ob- tained of money enough to buy the rails, or sales of the iron rails were made by English rolling mills taking stock or bonds in re- turn. In a rough way it might be said that individual enterprise bought the cai'S, town and county aid furnished the right of way and graded the roads, and English mills turned out rails in ex- change for the bonds. The first railroad projectors had no conception of the length of road required, and concentration of traffic essential, to make steam railways pay a profit. Many of them began with small capitals. The New York and Harlem Railway began (in 1831) with a capital of $350,000, authorized to construct a road from 23d Street to Harlem River, about five miles. In 1836 the merchants of Baltimore, perceiving that the public works of Pennsylvania, and the Erie Canal, were attracting to Philadelphia and New York much of the tariff from the West, in which Baltimore had formerly participated, began to project a railroad which should connect that city with the Ohio, in lieu of the Chesapeake and Ohio Canal, which had been found to be a work of much difficulty, in consequence of the high elevations over which it had to be carried. At this date no railroad, either in Europe or America, had been constructed for the general con,- veyance of freight and passengers. In England an iron tramway, the Stockton and Darlington Railroad, had been constructed for carrying coal, and near Boston the Granite Branch Railroad for carrying heavy materials to tide-water. It was much mooted whether, in case railways should be adopted, horses or steam would be the better power. The Liverpool and Manchester Railway in England was, however, in course of construction, and 2,000 miles of railway were projected. The first railroad charter, issued in the United States, was issued to the Baltimore and Ohio Railroad Company, at the solicitation of Philip E. Thomas, president of the Mechanics' Bank of Balti- more, its chief i^rojector. The State of Maryland voted aid to the 152 ECONOMIC PHILOSOPHY. amount of $500,000 in 1828 ; work was begun amidst imposing ceremonies. Congress was prevented from voting aid only by the fact tbat the chairman of the Committee of Roads and Canals was also president of the Chesapeake and Ohio Canal Company, whose interests conflicted with, those of the proposed road. On July 4th, 1829, Charles Carroll of Carrol ton, whose remarkable signature adorns the Declaration of Independence, presided over the ceremon}" at the age of ninety years, remarking that he con- sidered the act second in importance, in his life, only to the signing of that Declaration, if, indeed, it was second to that. In the en- suing October, eleven and one-half miles were being graded, and one and one-half were ready for rails. Horses and mules were relied on for drawing the first ' ' brigade of cars, " the word train having not then been applied to this new use. Four brigades of cars each day were run between Baltimore and EUicott's mills, on July 5th, 1830. Locomotive engines had not demonstrated their capacity to attain a higher rate of speed than six miles per hour in England, until their use on the Liverpool and Manchester road in the same year. The company advertised for locomotives in 1831, offering rewards of $4,000 and $3,500 respectively for first and second best, and in response to these bounties three engines were placed upon its track, one of which made a speed of thirty miles per hour. In 1832 the further building of the road was arrested by a decision of the Maryland Court of Appeals that the Chesapeake and Ohio Canal had a prior and exclusive right of way over that portion of the route lying between Point of Rocks and Harper's Ferry. In 1833 this difficulty was compromised, by the company assuming the State's obligation for 2,500 shares of the stock of the canal company, when the canal reached Harper's Ferry. The company were the first to insert steel springs under the locomo- tive tenders and burden cars, thereby saving one-third in cost of carriage and wear and tear. In 1835 the Washington branch was opened and carried 200 passengers daily. In 1835-6 the legislature of Maryland subscribed $3,000,000 to the capital stock of the road, as did also the city of Baltimore. In 1 838 surveys had been completed to the Ohio River at Wheeling ; the cost of the road was estimated for the whole route from Baltimore to Wheeling at $9,500,000, and the legislature of Virginia subscribed $1,058,420 toAvard the capital stock, being two-fifths of the esti- mated cost of so much of the route as lay within the State. In March, 1853, the road was opened to Wheeling on a running STATE AID. 153 schedule of nineteen hours, and had cost $15,000,000, or about $40,000 per mile. The Mohawk and Hudson River Railroad Company, forming the first link in the present New York Central and Hudson River, was constructed to run from Albany to Schenectady only, seventeen miles, and partly by stationary engines. It was authorized in 1826 and opened for traffic in 1831. The present New York Cen- tral, without its Hudson River or Harlem branches, comprises what were built as twelve independent roads. The present Boston and Albany Railroad Company originated in a project formed in 1791 by General Henry Knox, who with his associates were incor- porated in 1792, with power to make a canal from Boston to the Connecticut River. The project languished until 1825, when Governor Lincoln in his message to the legislature called atten- tion to the importance, to the agricultural and manufacturing interests of the intei'ior, of means of transportation to Boston. It was also suggested that "railways" might be substituted for the canal. Dr. Phelps, a member of the select committee, had himself worked the Quincy railway by horse power, and advo- cated the new railway idea, in which he was greatly encouraged by the opinion expressed by Mr. Daniel Webster in favor of its feasibility. The Boston and Worcester Road, the first built in Massachusetts, was chartered in 1831 and completed to Westboro, thirty-four and one-half miles, in 1834, with a capital of $1,000,000. In March, 1833, persons who were directors in the Boston and Worcester Road formed the Western Railroad Corporation, to construct a connecting road from Worcester to Springfield. The legislature passed almost unanimously, and on the recommen- dation of the Governor, an act allowing the State to subscribe for stock to the amount of $1,000,000. Rival jjroposals, to build a direct road from Worcester to Hart- ford, were defeated in the legislature, as interfering with this road. In 1837 the State was further authorized to loan its credit to the extent of 80 per cent, of the capital stock of the road, or $2,100,000. And in 1839 the State credit was further loaned in scrip to the amount of $6,200,000. The object of the Boston capitalists was to secure a direct line from Boston to Albany by connecting with the Albany and West Stockbridge Road, in behalf of which the city of Albany had agreed to subscribe $650,000. This was seven years in advance of the New York connection. The extension of the New York and Harlem road to Albany was not pi'ojected until 154 ECONOMIC PHIL 080 PHY. 1845. The legal limit of the Harlem had been in Westchester County at the Connecticut State line. Opposition to the Albany indorsement, by the New York merchants, ultimately obliged the Massachusetts road to assume the financial responsibility of com- pleting its extension to Albany. In New Jersey the Delaware and Raritan Canal Company was incorporated in 1830, also with a capital nominally of $1,000,000, but was authorized when $25,000 of cajiital had been paid in to build a canal between the Delaware and Raritan rivers. In the same year the Camden and Amboy Railroad and Transportation Company was incorporated with the like capital of $1,000,000, divided into shares of $10,000 each, to build a railroad from the Delaware River to Raritan Bay, with a lateral line to Borden- town, the State to have the privilege of subscribing for one-fourth of the capital, and in that case was to have two directors, or, if it subscribed for less than one-fourth, its number of directors was to be in the same proportion as the number of shares subscribed for by the State bore to the whole amount of stock. The State was also to have the right to take possession of the road as its own, at the expiration of thirty years from its completion, by paying its value, as it should be appraised by special commissioners, to be appointed equally by the State and the stockholders. The road, from its completion, was to make quarterly returns to the State, and to pay to the State in lieu of all other taxes ten cents on each passenger and fifteen cents for each ton of merchandise transported. But if the State should authorize the construction of any other road across the State from New York to Philadelphia, to com- mence or terminate within thi-ee miles of the commencement and termination of the Camden and Amboy Railroad, then the payment often cents for each passenger and fifteen cents per ton for each ton of freight should cease. In 1831 the act was so amended that the company presented to the State 1,000 shares in lieu of the pro- posed subscription by the State, and that the ten cents per pas- senger was to be paid only on passengers carried across the state from New York to Pennsylvania, and not on passengers starting or stopping in New Jersey. Thus, instead of the State aiding the construction of the road, it imposed itself as an incubus on the road, and made it the medium of sustaining in part its own State government, by imposing a tax on the transit, through New Jer- sey, of the citizens of other States. A similar "deal " or partner- ship, in which the State put in only its skill and not its capital, was made by the State with the New Jersey Railroad and Trans- LAND GRANTS. 155 portation Company, which in 1832 was incorporated (capital $750, 000) to build a railroad from New Brunswick to Jersey City. The State reserved also the privilege of becoming proprietor of the road at an appraised value. In Pennsylvania, in 1831, a railroad from Philadelphia to Mor- ristown, seventeen miles, with a branch to Germantown, three miles, was authorized, and soon after was built without State aid. The Cumberland Valley Railroad, authorized in April, 1831, to be built from Carlisle to Harrisburg, gave the State the right to take its property at an appraised value, and, not being able to build itself, in 1838 obtained from the legislature an act author- izing the governor to subscribe on behalf of the common- wealth for 2,000 shai'es at $50 per share. In 1845 the road lost its bridge over the Susquehanna, and the State, as a measure of relief, presented the stock which it held to the company, the proceeds of its sale to be used in rebuilding the bridge. In Illinois, in 1851, the Illinois Central Railroad was begun, by a national and State grant of land in aid, conditioned that the company should pay into the treasury 6 per cent, per annum on its gross earnings. The land formed the chief source of credit for the $32,000,000 which have been issued towards its construction. The proceeds of sales of the lands have paid off nearly all the bonds, and will pay off the remainder by 1890. The road was largely built with English capital. Richard Cobden, the leader of the English movement for the withdrawal of protection from the English and Irish farmers, and who was himself a cotton manufacturer, is reported to have sunk in the Illinois Central Railroad shares upward of $80,000. Prior to 1860-4 nearly every other line of American securities was deemed safer than railways. To invest m them at all was not " legitimate " business, and tended to shake the credit of the investor. Two or three successive sets of stockholders fre- quently lost the value of their stocks before any stock came to have a sustainable value. The profits of the railway business were almost confined to those who negotiated foreign loans upon them, and then foreclosed in behalf of these loans, on the mari- time principle that the last salvor has the first lien. 60. The Era of Consolidation. — In 1851, partly in con- sequence of the inflow of gold from California, began a series of consolidations of continuous lines of railway, which marked the close of the first and beginning of the second railway epoch. The consolidation of lines between Albany and Buffalo into the New York Central, in 1853, began one of the great trunk lines. In 156 ECONOMIC PHILOSOPHY. 1846 tlie Pennsylvania Railroad Company had been foi'med to construct a line from Harrisburg to Pittsburg. In 1848 the cities of Pittsburg and Alleghany, and of Philadelphia, and all inter- mediate counties, were authorized to subscribe for stock in the road, and the State reserved the power to take the road at cost and eight per cent, interest at the end of any period of twenty years. The company was authorized to guarantee the bonds of roads in other States which might become feeders to it. In 1857, the State sold it all the public works of which it had itself become owner, including two railroads and three canals, for $9,000,000, and exempted its property in future from all taxes, except those levied for school, township, and borough purposes. The Erie Railway, incorporated in 1833, had carried its track only from Piermont on the Hudson to Goshen in the adjoining county in 1841, being at the rate of about one mile per year. It reached Middletown in June, 1843, Port Jervis in January, 1848, Binghampton in December, 1848, Elmira in October, 1849, Cor- ning in January, 1850, and Dunkirk, its western terminus, in May, 1851. In 1852-55 it was forming a direct connection with Jersey City, by which it became embarrassed, and from 1859 to '61 was in the hands of a I'eceiver. This, however, was the third of the great trunk lines, to which the Baltimore and Ohio, completed in 1853, added the fourth route. The Great Western of Canada, pro- jected in 1845, from Niagara River to Lake Huron, and completed at a cost of $25,000,000, formed, with the Michigan Central and New York Central, the first complete through route from New York to Chicago. The Grand Trunk, projected in 1852 and com- pleted at a cost of $29,000,000 from Portland through Montreal and Toronto to Chicago, now forms the fifth trunk route. With the creation of these five trunk lines closed the second period of railway development. The period from 1859-64 was that of the transition, of the older and more eastern and central rail- way entei'prises, from a condition of failure and insol- vency to one of success and fortune-making. In the dis- tricts and counties not yet supplied, there was an ardent de- maud, impelled often to rashness, by the feeling that they were losing population, wealth, and progress, and being left behind in the march of prosperity by their more fortunate neigh- bors. To be near a railway was to get larger prices for all crops and cheaper supplies — therefore to grow rich. To be distant from railways meant burning one's corn as fuel and paying dear for supplies — hence to grow poor. Hence the desire for railways led NATIONAL AID. 157 towns and counties to apply to legislatures everywhere, but especially in the Western States, for acts giving them leave to is- sue town and county bonds in aid of railways, to subscribe to shares of stock or to assess themselves for the cost of grading roads through their own limits. These acts being liberally passed, many cities, towns, and counties ran into debt. In some cases the railways desired were built. In others there was disappoint- ment, failure, and a struggle to avoid paying the loans. This ended in many of the Western States passing constitutional pro- visions, prohibiting towns and counties issuing bonds or sub- scribing to shares of railways, just as they had previously prohibited the creation of State banks, and for like reasons. In some cases the prohibition was absolute. In others it permitted the aid to be extended where it had first been voted on at the polls. 61. Great Land Grants to Railways.— Simultaneously with this epoch of transition from failure to prosperity from 1859 to 1862, Congress had been called on to make numerous grants of lands to the States in order that the States might grant them to railways. The first of these grants by Congress was to the State of Illinois, in 1850, for the Illinois Central. Twenty-nine Acts of Congress had, in 1874,* been passed, whereby lands had been granted to sixty-eight railway enterprises. It is estimatedf that 255,000,000 acres had been granted in 1883 by the General Government and the State of Texas, and that re- ductions by forfeitures, etc., will still leave 185,000,000 actually conveyed. About one-half has gone into the hands of the five great corporations, as follows: — To the Central Pacific 15,260,000 acres; the Union Pacific 16,115,000 acres; the Northern Pacific 42,000,000 acres; the Atchison, Topeka, and Santa Fe 25,667,200 acres ; the Texas Pacific 13, 000, 000 acres. Total, 112, 042, 000 acres. A belt eighty miles wide, extending from near Lake Superior to tlie Pacific Ocean, covering the very best agricultural, pasture, and timber lands, was granted to the Northern Pacific Railroad Company, which, notwithstanding the grant, failed under Jay Cooke, and continued little better than in a mendicant condition, until its second organization under Villard, or from about 1870 to 1878. A belt forty miles wide, from the Missouri River to near the Bay of San Francisco, is held by the Union and Central *Poor'8 "Manual of Railroads," p. 663- t Moody's "Laud and Labor," 101. 158 ECONOMIC PHILOSOPUY. Pacific Comx:)anies. The Western and Southern Pacific Companies control a line extending longtitudinally through California. The Atchison, Topeka, and Santa Fe have a belt forty miles wide, stretching thi'ough Kansas into Colorado and New Mexico, towards Arizona and Mexico. The Atlantic and Pacific Company own a belt eighty miles Avide, extending across New Mexico and Arizona to near the Pacific. For the first twelve years of the system of national aid to rail- ways, viz. , from 1850 to 1862, the grants were in all cases made by Congress to the several States and by the latter to the railway companies. On July 1st, 1862, Congress made its first grant of lands direct to coi'porations, in the cases of the Union and Central Pacific Companies. In the earlier grants but six sections of land per mile were granted. In the later the grant rose to forty per mile. Assuming the areas actually conveyed under these grants to be 185,000,000 acres, they amount to two-and-a-half times the total area of Great Britain and Ireland(74, 137, 600) . The thirteen or- iginal States of the Union have 204,001,280 acres, or but little more than the quantity thus conveyed. The Empire of Austro-Hungary, the Kingdom of Italy, with Switzerland and the Netherlands, have 250,112,720 acres, and the Empire of Germany, with Italy, Portugal, Greece, and the Swiss Republic combined, have 251,163,520 acres. Meanwhile, with the war period and the jDolicy of concentration above referred to, the great upbuilding of manu" factures, cheaj)ening of iron, and increase of travel, the railroads passed out of insolvency and became magnificent fortunes to nearly all who were interested in them. The rate of construction rose until, from having only 29,000 miles of poorly equipped road in 1860, laid mostly with iron rails, there were in 1880 112,000 miles, about one-half of which were laid with steel rails, and the manu- facture of locomotives and rolling stock had become the best extant. Even our mileage of railroads laid equaled that of all other nations combined. 62. Socialistic Reaction against Railways. — No sooner had the railroad investments emerged from their period of bank- ruptcy into one of prosperity than several modes of popular agi- tation arose, based on their alleged abuses and mismanagement. Associations of farmers, calling themselves grangers, began form- ing in 1864-5 in the Western States, to oppose the policy of the roads in charging at a lower rate per ton per mile for loiig hauls of freight than for a short one. At first the legislatures attempted to fix rates of freight and fares for roads. Tlie efl:"ort ended, how- STATE REGULATION. 159 evei*, iu the designation of State Board of Railway and Warehouse Commissioners to do so ; and when these had been appointed and had acted iu most of the raih-oad States for several years, the demand for State regulation assumed the form of a demand for National regulation. Bills were introduced into Congress which proposed that, under the power conferred on that body to regulate commerce between the several States, Congress should assume a national charge of the rates for transportation, on all railways and railway systems, which by consolidation, " pooling receipts," or other con- tracts between the roads, had become inter-State lines. This was opposed by railway managers, partly as being impracticable in itself, for lack of foreknowledge on the part of Congress of the many exigencies required to be considered to avoid great obstruc- tions to railway business, partly from the fact that it would leave lines which lay wholly within one State, like the New York Central and Pennsylvania Central, an unfair advantage over their competitors, the Erie and Baltimore and Ohio, which lay in several States, and would act as a stimulus to the Grand Trunk Railway of Canada, which had its termini in Chicago, 111., and Portland, Me., but most of its route outside the Union, since Congress could pretend to no control over either of these classes of roads. There has also developed, since 1860, a State socialism concern- ing railways and telegraphs, which finds expression in a desire that these works shall be owned and run by the nation at lai^ge. The extent of the feeling in favor of such a change can not be numerically stated with accuracy, but it is large when the profits of the business are large, and disappears as the railway and telegraph investments pass into a period of disaster. As in the similar case of the socialistic desire to nationalize the lands, mines, etc., some of the socialists believe the present rights of owners should be respected, and that they should be paid for their property. Others say that, as private title to lands, railways, and all other capital, is, according to their theory, only a robbery from the beginning, to pay for nationalizing the lands and railways, by distributing among their ])resent owners, an amount of new national bonds equal to their present value, would only be to perpetuate the crime. The nationalizing of the railways, telegraphs, and lauds, by issuing national bonds in payment for them, would involve an issue of bonds to the amount of at least one-half the total wealth of the nation, or say, $25,000,000,000, being about ten times the quantity of debt incun-ed to defeat the Southern secession. 160 ECONOMIC PHILOSOPHY. 63. Objections to Socialistic Theories Concerning' Railways. — The effective answer to the objection that railway concentration gives a few persons the power to raise freights and fares has been, that in the degree that they have been controlled by a few persons, they have reduced the rates of freight and fare. When it has been urged that the post-office illustrates, by its cheap postage system, how admirably the government is adapted to take charge of railways, it is replied that the government, by its postal department, only sorts the letters, and that the railways themselves carry them. In looking back, it is per- ceived that courts and legislatures set their faces honestly but crudely against railroad consolidation, and held, to the end, that any one stockholder, objecting, had the legal right to pi'event the others from effecting the consolidation. But courts and legislatures, herein, served the cause of production less wisely than the railways. When one set of shippers has risen uj) to demand that railways be forbidden to get traffic where they can, by making such reductions in rates as will secure the traffic, even though they cany for one shipper a great distance for less than they charge another for a short one, another, and usually a more powerful class of shippers, has demanded that they be given the.se low rates on the long hauls. When objection has,been made to the issue of an excessive quantity of stock, it has been met by the prop- osition that the aggregate dividends a free railway can pay are not increased by the issue of stock, since this can have no effect either to expand the earnings, or diminish the expenses of the road. Dividends can only come from the excess of earnings over ex- penses. A long period of agitation, for the legislative reduction of rates, has been suddenly arrested by the spectacle of millions of capital squandering itself in carrying freights and passengers for rates so low as to work a rapid impairment of the value of the stock. A recent shrinkage of one-third* in the railway values generally, both in England and America, has done much to destroy the temptation to socialistic agitation for the control of railways by the State. Indeed, hai'dly had the agitation in behalf of national control of railways reached tliesarface, when railway owners were found tentatively encouraging a scheme Avhich would enable them to " unload" their property, by turning it over to the government. Speculations in favor of a system of opening all railways to com- * In lSS-1. INTER-STATE COMMERCE. IGl petition, between the ears, engines, locomotives, etc., of cora])et- ing lines, have been indulged in by various writers. In this, as in relation to land, it seems thus far as if title in one best preserves the use to many. In land, there is no mode so effectual to exclude each from the effective use as to vest the title in all. In railways, it may also a]3pear that private profit is the only induce- ment adequate to supply them in the degree which shall give society their most advantageous and abundant use. The latest outcome of the desire that railways shall be regu- lated as to their charges and services by government supervi- sion, instead of by their owners' sense of profit, is seen in the Inter-State Commerce Law. Thus far, the law has given rise to a sort of exchange, for the acquisition of infox-mation concerning the railroad business, and the removal of errors concerning pos- sible modes of reform. As a rule, the intended reformers have furnished most of the errors needing correction, and the officers of the various railways have supplied the facts i^equired to coi-rect these errors. The lovers of good and }3ure English, among whom the fram.ers of the Constitution were conspicuous, can not fail to feel their teeth set on edge by the audacity with which a majority in Con- gress has assumed that it could cause the word "commerce " in the Constitution to include " transportation " by simply enacting it. Commerce is a change of ownership in products, and may be vpithout change of places. Transportation is change of place, and maybe without change of ownership. "Commerce between " (the people of) " different States " may imply that transportation will occur as the means of completing the exchange. It certainly does. But the meaning of the two words is as distinct as title is from locality. But a clause in the Constitution, authorizing Congress to regulate exchanges of goods between citizens of dif- ferent states will doubtless continue to be construed to authorize Congress to regulate the mode of doing business by the corpora- tions that carry the goods. CHAPTER V. PEOFIT AND LOSS. 64. The Beginnings of Industry. — Industry, in any proper sense of the word, develops, as wealth and values do, only with civilization. Savageism is a condition of intended indolence, broken only by the exertion rendei-ed necessary as the alternative to immediate want of food, clothing, or shelter. The savage stops work when these wants are sufficiently supplied to yield him time for slumber or debauch. Such labor as is performed in savage life consists almost solely in the toil of appropriating or reducing to possession the wild game and fish, in capturing which a day's labor may be required to successfully appropriate enough for a meal. The entii'e toil of savages, therefore, in hunting, fishing, digging roots, and picking berries, consists of appropria- tion, which is not yet differentiated from production, and largely of a form of labor to which the well-to-do and nobles of aristo- cratic civilization return as the highest form of sport. Title, possession, and enioyment are acquired by one act, and that an act of manual force. No anterior pains have been taken by the savage to cause his game, fish, berries, or roots to exist. So far as industry consists of mere appropriation, man's life does not rise above that of the beast of prey, and falls below that of the agricultural ants, which keep flocks and plant rice, and below the bees who collect and store honey and practice division of labor. The principles of accumulation, and of the organization of labor through rank, force, or slavery, evidently do not originate with man, but are amply illustrated in many orders of animals. They are, therefore, instincts of the animal organization, and not human inventions, or elements of character which man can choose whether he will have or dispense with. When the savage ceases to be content with appropriating the means of food, clothing, and shelter, which can be had by hunt- ing, fishing, digging roots, and snaring birds, and begins to plant seeds, dig the ground, tame and herd his wild goats and sheep, and set out fruit trees, he becomes a producer, and the form of his toil changes from hunting and fisbing to industry. Production and titRJURS ANi) LABOUPJUS. 163 industiy, therefore, imply a degree of i^rovideuce or forethought, in the production of things not immediately enjoyable; which forethought, and care for the future, are the germ of civilization. 65. Capital and Labor Part to be Partners. — Simul- taneously with this beginning of industry, values or possessions divide into two kinds, viz., the enjoyable and the reproductive. The game which js shot is the enjoyable wealth. The bow and arrow used in shooting it are the reproductive. The former is exhausted by a single use, but ministers directly to human sus- tenance or comfort. The latter is capable of a long period of use, and only ministers indii-ectly to human want. The former is re- ward for effort, and a]Dproximates more or less closely to wages ; the latter is means of production, or of appropriation, and soon begins to be called capital. The former is perishable, and must be used, if at all, immediately. The latter is persistent and may be used indefinitely. To work with the latter (re^Droductive Avealth), to obtain the former (means of consumption), is industry. The man who owns his own implements of industry is said to be his own employer. If he does not own his own implements of industry, but is furnished them by another, and keeps the product of his industry, some I'eturn to that other is made for the loan of the implem.ent. This return may be called rent if it be land leased, interest if it be money loaned, or profits if it be merchan- dise sold. If the worker with another's implements surrenders the product to the owner of the implements, the latter makes a return to the former for his work, which may be called also share, profit, or wages. If this I'eturn to the worker is proportionate to the value of the product obtained it is called share or profit. If it is irrespective of the j)roduct, but a definite payment for time and labor expended, it is called wages. The person owning the imple- ments of industry, and employing others to work for him at wages, is called the investor, capitalist, enterpriser {entrepreneur Fr.) contractor, or employer. From the time the two functions of owning the means of labor, and furnishing the labor, become separated between two persons, the term industry covers the joint co-operation of the two ; the term enterprise covers the function of the contributor of the capital or means of industry, and the term labor covers the act of working for wages, hire, or share. This division of men into those able to pay wages,* and those * " The ultimate partners in any production may be divided into two classes, capi- talists and laborers. If the distributor be the capitalist, the share of the laborer is called wages. If the distributor be the laborer, the share of the capitalist is called either interest or rent." (Hearu's " Plutology," pp. 325-7.) 164 ECONOMIC PHILOSOPHY. compelled to work for wages, arises in a state of developed or free society, and where labor is organized by capital, irresistibly out of the fact that of two persons having an equal start, one will hoard while the other spends, and the one will make while the other loses, until it comes to pass that one is able to employ while the other is glad to be employed. Historically, however, the relation of employer and wages- worker, when traced backward, does not find its origin in any primeval Eden of social equality, but arises gradually in most cases out of an antecedent condition, a little more despotic and enslaving, known as boss and journeyman; and this originates in one still more arbitrary known as master and servant ; and this in that of lord and vassal, until we get back to liege and bond- man, and thence to patrician and slave (in Rome), citizen and helot in Grreece, man and chattel nearly everywhere. The in- equality deepens as we ascend to more primitive eras, until we reach a condition where the owner has every power over his working man, whether of death, mutilation, or sale, that he would over his ox. The races wherein the love of personal liberty pre- vented this degree of subjugation remained nomadic, unorganized, or merely tribal. If the sj)irit of subserviency facilitated such a despotic organization of society, as it did in India, Persia, Egypt, Babylon, Grreece, and Rome, then national greatness was readied, at least in part, through a subordination of individual freedom that seemed to enslave all, even those that ruled. The process by which despotisms thus organized emerged into the condition of wages-paying nations of employers and em- ployed, was sometimes by sudden convulsion, as in the United States (South) in 1860-65, but generally by the gradual substi- tution of money for force, through the increase in the volume of the former, and through the greater economy of money than of force, in securing that subordination of will and concurrence of purpose without which there can be no extensive co-operation of labor. 66. Organization of Labor by Force. — In speaking of the oi-ganization of society by force, rank, or money, it must not be supposed that, in the period of force, force itself has the same dis- tastefulness which it comes to have in the wages period. It is in the natui'e of the servile to be proud of their relations to those they serve, and to be happy in feeling that their lives are linked to a more stable means of subsistence than they could find in their own efi'orts. The henchman was proud of his laird, the page FROM FORCE TO WAGES. 105 loved and honored his knight, and the slaves in many Southern families took intense pride in the families owning them, as do to-day the hereditary servants among aristocratic families every- where. The transition from the oi'ganization of labor by force, to that by wages, is sometimes made through a substitution of rewards in lieu of punishments, until these rewards, by custom, assume the foi'm and regulai'ity of wages. The master, in warlike periods, getting a new swoi'd, presents his old one to his servant, who esteems the honor of wearing his master's sword as a species of knighthood. Or, in industrial periods, the master presents his servant with a house and garden, or, as in many Southern in- stances, even makes him ruler over other servants and foreman in his household. Thus the habit of command gradually gives way to that of pui'chase, and the habit of servility to the sense of in- dependence. But presents, "tips," etc., remain to indicate the earlier system of favors or perquisites. Under the system of jiegro slavery in the United States, some of the slaves would get more material comforts by this system of presents, tips, and favors, than they could afterwards earn as wages. They would appear in their master's clothing, and jewelry, after it had been slightly worn. They had the advantage of medical attendance in sickness, and of an a,ctive interest in their health and welfare, which disappeared when they came to receive wages. Stanley, in making his tour across the Dark Continent of Africa, bound himself to treat his 280 black servants, whom he employed to accompany him, kindly, to nurse and care for them in their sickness, to defend them against enemies, and "to be a father and a mother to them. " The serfs and villeins of the feudal time, in entering the contract of homage or service, knelt on the ground before their protector Avith both hands in that of the master, and promised to be "his man, in life and limb and terrene honor.'' Where vassalage is thus implied on one side, and protection on the other, the wages system can hardly be said to have begun. When the chief and his soldiers settled on the land, the ex- change was at first a rent service, but gradually the element of sei'vice disappeai'ed from rent, and it became a payment for the use of land. If the tenant's services were wanted they were at first compelled, and later employed. When society became so addicted to commerce that the laborer's time was bought and paid for like any other commodity, according to the relation which the quantity offared for sale bore to the quantity of money em- IQ^ ECONOMIC PHILOSOPHY. ployers were willing to pay, various theories succeeded each other as to the proper basis on which rates of wages should be determined. In the military and knight-errantry, feudal and baronial stage, it was held that the lord should have what befitted his station, and he took pride in seeing that his servants and re- tainers had what was befitting their station. The principle was equality as to substantial essential to life and comfort, discrim- ination as to the accessories which denote rank. This truth is accurately portrayed by Shakespeare in the crowning humiliation which overwhelms King Lear when he learns that his ungrateful daughters purpose to limit him as to his retinue of servants and as to their right to make merry over their wine. Abraham and Lot part company as much for their servants' welfare as their own. When the relation of master and servant was one of social rank, it was the master's pride and part of his means of control to pro- vide for his servaiit as liberally as his station would permit. In- deed, the chief source of bankruptcy consisted in attempting to provide for more domestics and attendants than the master's in- come could be made to cover. In getting upon the commercial basis, the English statutes show that for centui'ies it was assumed to be the duty of the ruling gentry to regulate hours of labor and rates of wages, always by enacting that they should not exceed certain rates, and by for- bidding unions of workmen to obtain more. In no instance, says their chief historian* f did Parliament legislate to raise rates of wages, nor to restrain conspiracies among employers to keep them down. At last, by the absorption of the land by the wealthy, the dis- possession of the poor from their customary holdings, the rise of the factory system, and the growth of the capitalists and the wages class into widely separated and unsympathetic classes, labor, or more properly labor-time, became a commodity. Economists found an avei-age rate of wages existing in each trade, about as steady as prices of goods or food or the value of money. What fixed this rate ? 67. Adam Smith on Wages. — Adam Smith made a curious mixture of the errors which attend unrestrained a priori reason- ing, and the felicitous effects of shrewd observation, in his " Chapter VIII." on the wages of labor. He began by supposing * Thorold Rogers' " Six Centuries of Work and Wages in England." t Adam Smith's " Wealth of Nations," by McCullough, p. 30. WHEN LABOR PRODUCES. 167 an ''original state of things which precedes both the appropria- tion of land and the accumulation of stock" (capital), when he said " the whole produce of labor belongs to the laboi'er." From this beginning he proceeded to treat labor as the one producer, and landlords and profit-makers as the sources, not of production, but only of deduction from what labor i^roduced. This beginning overlooks the historical fact that in most races, if not in all, history opens with the fact that the laborer is the first property to be appropriated — slavery preceding often the appropriation of the land, and the ownership of labor being the first form of circulating capital. This was wholly the rule among the Egyptians, Greeks, and Romans, and largely so among the Asiatic races. If there was any early golden age among the Germans and Saxons wlien labor was not owned, it disappeared before Eoman conquests and feudal institutions. Dr. Smith then sa^'s : "It seldom happens that the person who tills the ground has wherewithal to maintain himself until he reaps the harvest. His maintenance is generally advanced to him from the stock (capital) of a master, the farmer who employs him, and who would have no interest to employ him unless he was to share in the produce of his labor, or unless his stock (capital) was to be replaced to him with a profit. This profit makes a second deduction from the produce of the labor which is employed upon land." * Dr. Smith gets at the nugget of the truth which he seems deter- mined to ignore. He assumes that his laborer is a destitute per- son, without land, implements to work with, or the means to sub- sist him until the harvest is reaped. In fact, his so-called laborer is not a laborer at all, but a helpless, suffering image of destitu- tion, lacking the land to labor upon, the food to sustain himself, or the implements to work with. Is he in this condition a pro- ducer ? Certainly not, x\ll that he can produce is famine. The landlord who, in this stage of his fate, advances him land to work upon, and the farmer who gives him means and subsistence while he labors, are the true producers of his work. In this case, and in all in which the laborer is wholly destitute, he has not the initiative in production, but must be initiated from without, as truly as must the labor of an ox, mule, or engine. Only that can be said to be the producer which has the power jper se to initiate production. Since, of the three forces at work, * Rent of the land on which he labor:- being the first. 168 ECONOMIC PHILOSOPHY. the landlord, the farmer (or capitalist), and the laborer, the second is the one who initiates production by hiring the land and employing the labor ; and since, as Dr. Smith perceives, the mo- tive to him is profit, evidently Profit^ though it may be the last element to be counted out, into the hand of its recipient, when the product is sold, is the first to inspire the production. It is Profit* that hires the land and agrees to pay the rent. Profit fences it, drains it, manures it, plants and cultivates it, and markets its product. Profit picks up the destitute j)auper from the highway and converts him from a hungry appetite, ready for crime itself, unless he can be fed, into a laborer co-operating in producing commodities for which there is some demand. For the destitute man, as a mere walking appetite, there may have been so little demand that parishes would compete to crowd him on each other, and emigration committees would woo him to leave the country. Pagins would tempt him, judges would gladly banish or serenely hang him, and poets would write I'hymes upon him as perhaps One more unfortunate, Weary of breath, Eashly importunate, Gone to his death. In the economic sense, he is converted from a commodity for which there is no demand, into a worker, co-operating to make society wealthy, by the profit-maker, who has the initiative in industry, by being possessed of the capital to sustain him, the enterprise to obtain a job for him, and the courage to risk the loss of a capital, all of which he might convert into the means of his own enjoyment without employing any body. Under these cir- * McCullough's note to "Wealth of Nations," p. 159, says: " It is plain, therefore, that the prosperity of a country is to be measured by the rate of profit which her capital yields, or (for it is the same thing) by her capacity of employing capital and labor with advantage, and not by the actual amount of her capital or the number of her people. The capital of Holland is undoubtedly much larger, compared with her population, than that of the United States ; though as the latter is able to employ lier capital with far greater advantage than the former, every one is ready to admit that she is also by far the most prosperous. ' The progressive state ' is justly characterized by Dr. Smith as be- ing in reality the cheerful and hearty state to all the different orders of tlie society ; the stationary is dull, the declining melancholy. But as this progressive state is mainly a consequence of a comparatively high rate of profit, he ought in consistency to have maintained the doctrine that the rate of profit realized in different employments is the best standard by which to judge of their advantageousness." Mr. McCullough is here thinking of economic advantage, not of intellectual, moral, or social. PROFITS THE SOURCE OF WAGES. 169 cumstances, is it fair to say with Dr. Smitli that this impersona- tion of destitution is the producer, and tliat the profit-maker and the landlord are the vampires that merely suck a part of his blood ? Is it not absolutely true that the profit-maker is the sole producer, and that i^ent is a first deduction from profit's share of the product ? Raw materials are a second deduction, implements and plant ai'e a third, wages of labor are a fourth, and so on ? Dr. Smith, however, saw clearly that, between the employers and workmen tliere goes on a system of profit-sharing, in which the true source of rise in wages is rise in profits. He says,* "It is not in the richest countries, but in the most thriving, or those ivhich are groiving rich the fastest, that the wages of labor are the highest. " Again, on p. 40, he says, ' ' The rise and fall in the profits of stock (capital) depend upon the same causes with the rise and fall in the wages of labor, the increasing or declining state of the wealth of society." Again, on p. 37, " The liberal reward of labor, therefore, as it is the effect of increasing wealth, so it is the cause of increasing population." P. 33, " The liberal reward of labor, as it is the necessary effect, so it is the natural symptom of increasing national wealth." The term used here, "rapid increase of national wealth," is identical in meaning with high rate of profit on capital. Eepeatedly, also, Dr. Smith explains that the high rate of profits induces a higher rate of wages through its effect to cause a com- petition among employers for the hire of workmen. Dr. Smitli had thus laid the ground- work for making the wages of labor depend upon the profits of capital, when he drops into the error expi'essed in the following (p. 41) : "In a thriving town, the people who have great stocks (capitals) to employ, frequently can not get the number of workmen they want, and therefore bid against one another, in order to get as many as they can, which raises the wages of labor and lowers the profits of stock. In the remote parts of the country there is frequently not stock sufficient to employ all the people, who therefore bid against one another in order to get employment, which lowers the wages of labor and raises the profits of stock.'' Capitalists do not bid against each other for more workmen merely because they have lai'ge amounts of unemployed capital on hand. They let their capital lie idle until there is such a margin between cost of i-aw materials and wages added on one * " Wealth of Nations," by Mr. McCuUough, p. 31. 1 V ECONOMIC PHIL SOPHY. side, and the price they will get for the finished product, as presents a fair show of profit. This is illustrated in Chapter XV. of this work, in the cotton famine in Lancashire, in 1864, pro- duced by the cessation of supplies of American cotton. The raw cotton went up so suddenly as to be worth more per pound than the cotton goods, thus eliminating the possibility of profit in the manufacture. The mill-owners had abundance of capital, but they did not disperse it in wages after the margin for profit was gone. They shut down and waited until, by the consumption of the stocks of cotton goods on hand, the prices of the goods climbed up far enough above the price of cotton and wages to leave the margin of profit. The instant prices showed the margin the mills resumed. Nor is it always true that in remote parts of the country peo- ple bid against each other actively for employment, and so make wages low. They oftener withdraw from seeking employment at the hands of others, live upon nature, or within themselves, by those barbarous pursuits, hunting, fishing, and trapping, which consist only in appropriation, but engender independence. Capital is scarce and insecure in such places, and rates of interest are high because its investments are precarious, not because they are profitable, or rather none but the most profitable investments will overcome the deterrent effect of the precariousness of the venture. Wages may in like circumstances be high where they are paid at all, because the people are so accustomed to living without them that unless paid high wages they decline to work. While this may not be the universal rule, it is therefore the frequent fact that in remote localities the profits of capital are high, so far as capital consents to engage, and the wages of labor are high, so far as men consent to work, but both the men and the capital (what there is) are largely idle. By means of this partial error Dr. Smith was led into the gener- alization that "as wages rise profits fall," which was subse- quently elaborated by Ricardo. This is true in the same short- sense as it is true that when the clouds appear the sun ceases to shine. In fact, behind the clouds the sun is always shining, and the density of the clouds becomes the most powerful measure, as well as effect, of the intensity of the sun's shining. So it is rising profits alone that can ever he the potential cause of rising wages. Let that cause actually cease, and the effect would be like that of the extinguishment of the sun upon the clouds. They could never reappear. But so long as that cause is active, a temporar;y WHAT FIXES THE BATE. 171 rise ill wages may seem, for a brief time, to extinguish profits, just as a temporaiy condensation of moisture may seem to extin- guisli the suii\s Hght. Tliat wliich seems to be extinguislied is in reahty the All-Powerful Cause of tlie existence of tliat wliich seems to extinguisli it. 68. Equivalence of Exchange in the Wages Contract. — The political economist, lifting the veil fi-om society at work, brings to light a wholly involuntary system, not merely of co- operation but of social government, far more pervading in its in- fluence, and searching in its power, than the exterior State, whose framework exists in constitutions, and whose dignitaries fill the various oflBces of the visible commonwealth. This social plexus, this network of self-interest, this labyrinth of production and exchange, commands our service, not merely at occasional inter- vals or through official substitutes, but every moment and as to every person. In all our pursuit of wealth we obey it. In all business it reigns. Its capitals are where capital is. Its prophets are where profit is. We may adopt infinite resolutions to the effect that all men are equal, but, in the very act of adopting them, we appoint a ruler to preside at their adoption, and apply to capital to print them, which request it grants through the obedience it is able to exact from labor. Is this dominance economically necessary ? Is it a product of natural law? Political economy answers Yes; socialist critics answer No. Nine-tenths of that organization of industry, or asso- ciation of men in co-operative production, which distinguishes civilization from barbarism, and industry from anarchy, is ef- fected by the payment of wages. To discuss the cause of rates of wages, therefore, is to discuss the justice of the economic order of society. Wages are the compromise between the highest sum, which capitalists will pay rather than forego their chance of profit, and the lowest sum laborers will accept, rather than forego their chance of employment. If there is a margin between these two sums, if, for instance, the employer would pay $1 per day rather than forego his hope of profit from the emi^loyment, and the wage-worker would accept 60 qents a day rather than be out of work, then either will yield to the other, according to the degree in which he regards it necessary to him to secure the profit or the wage. All this, however, relates merely to the motives of the dicker. What is it that, getting down to the economic bedrock of the bargain, determines whether the employer will lose a profit unless he 172 ECONOMIC PHILOSOPHY. employs a woi'kman, and, vice versa, whether the workman will lose a wage unless he works at the rate offered? Supposing both parties to judge of their own interests with accuracy, it will he the fact that the product, of their co-operation in industry, will sell for enough to yield the employer a return on his capital better than he could get elsewhere, after paying the laborer a wage better than he could get elsewhere. Here are two equations, each of which takes in a vast market of transactions. They are made between two classes of persons, between whom some things are equal and some things are unequal. Among the things in which they are equal is that the portion of the capital of the employer, which will hire a man, is of just as much value to the man whom it employs, as that man's work is to his employer. For where, of two co-operative agents, neither can act without the other, both are equal, and being equal in efficiency should have equal pay. Again, a dollar to a rich man is exactly equal to a dollar to a poor man, in the sense that if a rich man renders a service worth a dollar, his right to the dollar is as good, in ethics and equity, as that of a poor man. If, therefore, he brings to the poor man a co-operative agent, viz. capital,with which the poor man is enabled to earn a dollar which he otherwise could not, he renders an equal service to that which the poor man renders to him, if the poor man so uses this capital as to cause it to earn a dollar for the capitalist, through capital which would otherwise earn less. So if the two parties were merely fishermen, one of whom had furnished boat, lines, and bait, but could not fish himself, wliile the other fished, but had neither boat, lines, nor bait of his own, the aid of each being equally necessary as that of the other, it would be equitable that the fish product should be divided equally between them, no matter how many other meii the owner of the boat, lines, and bait might employ in the same way. Here we strike a principle of equity as between man and man. This is, that the amount of capital which employs a man's labor, and the amount of human labor which gives employment to this same amount of capital, should have an equal share of the joint product, if they are, as usually they must be, equally necessary to the joint result. If this is a sophism, I am not able to discern itg fallacy. Now, in every business, there is an aggregate capital, and an aggregate labor force. Suppose the capital to be $60,000 and the labor force 50 men. The unit of capital that employs each man is |1,200. For 50 men putting up $1,300 eacli could employ them- EQUAL SERVICE, EQUAL PAY. 173 selves; virtually, therefore, the wage employment is a loan by the employer to each of his workmen of |1,200 with which to effect a work of production. If the mode of production is ill-advised, or the product is not in sufficient demand to pay a return of more than say $1,000 a year, while the wages^of the workmen, the i*ent, and other costs are $25,000 a year, then the employer will sink his entire capital in two years, while the workmen will get their wages. But the economic assumption is in accordance with the average course of industry, which I'equires that it should be socially in demand. Suppose it pays a return of fifty per cent, on the caijital, or a profit of $25,000 after paying wages. This will attract capi- tal from every quarter, until the rate of return is reduced to the average rate which capital yields in other similar enterprises. When it has reached this stable rate of gross return, what propor- tion of the gross return must go to capital and what to labor to make the transaction just? Should not that unit of capital which employs a man, and the man himself, share alike ? True, one man may own twenty units of capital and in that way get a return equal to that of twenty men. What matter, if the service he renders to each of the twenty exactly equals the service each ren- ders to him? His aggregate services to the twenty must be equal to the aggregate of the services of the twenty to him. Hence, if he furnishes the capital which employs twenty, or five thousand, he should receive an aggregate return equal to that of the whole number of persons to each of whom he reciprocates an equal ser- vice. In this way only can there be equality, and equity, in each of his exchanges of service for service. 69. Instances of Equality of Division. — A case which was among.the first to suggest that there may be a natural tendency in the aggregate capital, to work on equal shares wuth the aggregate labor, employed in any branch of production, was that of the fifty- four railways which report annually to the railway commission- ers of Illinois. They embrace a cost, for construction and equip- ment, of $1,251,792,029.74, and have a par capital of $2,800,000,000. The number of persons who own shares, or hold loans, against them is not known, and is not perhaps capable of being made definitely known, as it is liable to hourly changes. The number of persons employed, from president down to switchmen is 156,007. The companies report that they pay for the use of their capital in all its forms, i.e., in Dividends and interest, $81,720,265.53 And in wages and salaries, 81,936,170.81 174 ECONOMIC PHILOSOPHY. Total gross income or joint earnings of labor and capital, $163,656,436.34 Excess of labor's share over capital's sliare, . . $215,905.29 Variation from equality in division, one-eighth of one per cent. Mr. Edward Bates Dorsey, in a paper read before the American Society of Civil Engineers, states that the total gross earnings of the railways of the United Kingdom are $355,311,350, of which the "operating expenses " absorb $186,842,810, and the total net earn- ings are $168,468,540, thus making the former absorb fifty- three per cent, and the latter forty-seven per cent. I have not the data by which to determine that the operating expenses are identical with wages and salaries, or whether as to some small part they inay not cover purchases of commodities which are really addi- tions to the fixed or circulating capital of the roads. If in opera- ting expenses are included any rents, or purchases for renewal of the fixed capital, as of engines, etc. , or payments for accidents and losses, then the true " wages and salaries " account would be diminished by so much. The unit of capital required to employ one man in the railway business in the United States is |8, 000. That sum, invested in rail- ways earns the same return as the mail it employs, within one- eighth of one per cent, per annum, so far as the railways reporting to the Illinois commissioners are concerned, and these are about one-fourth of all the railways in the country. This seems to indicate an involuntary tendency on the part of railway enterprises, employ- ing labor and capital at the cheapest competitive rates at which they can buy both in the market, to divide equally between labor and capital as wholes, paying the same sum to the unit of capital which renders the employment of one man possible, as they pay to that man whose employment renders the use of the unit of capital possible. On referring to the census, some materials are supplied for inferring the terms of division of the product between the aggregate labor aiid aggregate capitals there indicated. In doing so no occasion exists to use the figures, relating to capital, which numerous critics have successfully impeached. It makes no dif- ference, with reference to this calculation, whether the principal capital of an establishment includes bori'owed capital or not, or good will, or whether deduction is made for loans or debts, or, in short, whether the capital of any or all establishments is set down as $10 or $10,000,000. THE WAGE FUND. 175 Simply take the value of the gross product of the various indus- tries, i.e. , what the product sells for in the market. The figures of the census, for this, have not been improved upon or attacked. From tliis, deduct the cost of raw materials used as per census, which also is as yet unimpeached. This difference between cost of raw materials, and value of finished product, is, of course, the increment of value which arises in the particular process of manu- facture under consideration. This is, in the long run, and making no consideration of losses, the fund which is to be divided be- tween capital and wages. In manufactures the wages are paid before the product could be sold. In railroading the product, transportation, is sold a month or so before the wages are paid, but in searching for the ratio of economic distribution of the joint product, between capital and labor, the time when the wages are paid is immaterial. Wages ai'e usually paid before the employer knows whether his product will reimburse him, and some- times it does not reimburse him. But this is true also of his rent, his plant, and every other element which undergoes economic distribution, and is therefore also immaterial in any effort to trace out the principles on which capital and labor usually divide, in order togivei'ise to existing rates of profit and wages. From the joint product above obtained, by deducting cost of raw materials from value of finished product, deduct still further the aggregate wages paid as given by the census. This quantity is un- impeached by the criticisms on the census, as it does not involve the average amount of wages paid per man, the ratio of the total amount to the time worked, or any disputed fact. The residue left by this last deduction would be the amount which capital would at least receive for distribution, or reimbursement, and for profits. It would be the sole fund from which capital would repair or ex- tend its plant, pay for losses in bad years or by bad debts, pay for wear and tear of plant and implements, rent, insurance, etc. The. net sum, remaining to the employer after covering all disburse- ments, would be profits. It must be borne in mind also that the labor bill, referred to in the census, is not to be mistaken for the entire labor bill involved in the product, which includes also the labor bills involved in the construction of plant and raw materials. It is the labor bill involved in the last process only of manufactui-e, viz., that of which the census professes to be an enumeration. By this method it appears that the total manufacturing indus- tries of the United States, in 1880, paid, as 176 ECONOMIC PHILOSOPHY. Wages to labor, Capital's share for disti-ibution, profits, .... includino- Excess of capital's share over labor's. Excess over half, ^ 947,952,745 1,023,801,837 76,848,092 38,424,046 Variation from equality of division of the joint prodiict between capital and labor, four per cent, in favor of capital. As the rate at which capital extends its plant in manufactures, a service equally beneficial to labor as to capital, is not far from four per cent. per annum, the rate of effective division, or of actual beneficial equality, is about as perfect in manufactures as in railroading. In the chapter on labor other illustrations of this rule or coin- cidence appear. These instances are presented tentatively, and as showing a tendency, rather than as demonstrating a law which, in the present state of research, can be clearly defined.* Some pro- * Many facts bearing on this general point seem to confirm this ratio. Mr. Mallock (in " Property and Progress," p. 202) figures the gross income or joint earnings of the British people (including Ireland) at between £1,300,000,000 and £1,200,- 000,000by the census of 1881. Of this sum the wages-class received £625,000,000 defi- nitely, leaving the aggregate receipts of the class having incomes exceeding £150 at about £577,000,000. A small share of these incomes may also in the economic sense be properly wages, which would require a deduction. But doubtless a much larger share of incomes were concealed or underrated. So a substantial equality is indicated throughout Great Britain between the earnings of capital on one side and labor on the other. It is indicative of equality in a rude but substantial way that in the United States the deposits in savings banks, which bere represent very closely the nninvested receipts of the aggregate wages-class, about equal the total deposits in National, State, and private banks, which are the uninvested receipts of the capital class. The apt diagrams used in this connection by Mr. Grunlund in setting forth the di- vision between the wages-fund and the capital-fund are marred only by Mr. Grunlund's deceptive term " surplus." Mr. Grunlund's allowance of 5 per cent, for wear and tear of capital is quite inadequate. With these qualifications he presents the system of division of the gross earnings of the manufacturing industries of the United . States in four successive census years as follows : 1850. Wages for o 957,000 E •^ "hands." B 13 $437,000,000. 1860. Wages for 1,300,000 "hands." Capital Fund, 53 per cent. $805,000,003. WORKING ON SHARES. Ill cesses of exchange, for instance, may illustrate a far gx'eater power in capital than in labor, and one which will content itself with only the lion's share of the joint product. 1870. 1 Wages for 2,000,000 "hands." Capital Fund, 53 per cent. $1,310,000,000. 1880. Wages for Capital Fund, 2,739,000 48 1-3 per cent. "hands." $1,834,000,000. It is made evident, by the facts collected concerning rents and interest in England, that the normal share of the gross produce of land, hired for Industrial purposes, which goes for rent, is one-fourth, or more frequently 21 per cent., and that the normal share of gross produce which goes for interest, when the whole capital is borrowed, is another fourth. As capital's share is two-fourths of the gross product, if we suppose the man- ufacturer hires his factory and pays rent, and hires his whole capital and pays interest, it is evident that a line directly through the so-called "surplus ''of Mr. Grunlund would devote half of it to rent and the other half to interest, and leave the enterpriser no " surplus " whatever. i?aeV "Contemporary Socialism," p. 399, says: "In Arthur Young's 'Political Arithmetic,' pablished in 1779 (Partii., pages 27, 31), heestimated thegross agricultural produce of England (exclusive of Wales) at £72,826,827, and the gross agricultural rental at £19,200,000, or 21 per cent., very nearly one-fourth of the produce. To come down nearer our own time, McCulloch estimated the gross agricultural produce of Eng- land and Wales in 1842-3 to have been £141,606,857, and the gross agricultural rental £37,795,905, or 26 per cent, of the produce. (" Statistical Account of the British Em- 178 ECONOMIC PHILOSOPHY. Adam Smith thought that agricultural rent was "seldom less than a fourth and frequently more than a third of the whole pro- duce" (Book ii. Ch.v.), but that "in the progress of improvement pire, SdEdn., p. 553.) The gross agricultural produce of the United Kingdom is now two hundred and seventy millions sterling, and the gross agricultural rental seventy millions. Mr. Mulhall, indeed, estimates it at only fifty-eight millions, but at seventy millions it would be as nearly as possible 26 per cent., curiously enough the same figure as in 1843 and in 1779, and almost the same as in 1689." These facts show that rent tends to take a fourth part of the gross product of such industries as are carried on on tho rented surface, or that the enterpriser v/ho hires all his plant pays out one-half the capital share for rent. As to rates of interest, it is easy, by comparison, to see that they usually range at one- half the profits earned by a capital invested by its owner in active business. Says Koscher : " At the end of the last century English farmers expected 10 per cent, profit on their capital, i. e., after paying for rent, wages, implements, and ravs^ materials." As current rates of interest were 5 per cent,, it would follow that if the farmer borrowed all his capital he would work at the halves with his usurer. The principle of division be- tween usurer and farmer is the same as between farmer and landlord. (A. Young, "View of the Agriculture of Suffolk," 179, 138,) Senior is of opinion that in Eng- land to-day (1830) industrial enterprises of £100,000 yield a profit of less than 10 per cent, a year ; those of £40,000 at least ISJ^ per cent. ; those of from £10,000 to £20,000 15 per cent.; smaller one? 20 per cent., and even more. He mentions fruit huck- sters who earned over 20 per cent, a day, i.e., over 7,000 per cent, a year ("Outlines," 203 seq.) In Manchester manufacturers, according to the same authority, turn over their capital twice a year at 5 per cent, (each turn), retail dealers, three times a year at Z% per cent. (Ibid. 143.) Torrens, "The Budget," (1844) 108, designates 7 per cent, as the minimum profit which would induce an English capitalist to engage in an enterprise of his own." (No'e to Am. Edn. of Roscher, Pol. Econ., vol. ii., p. 151). By profit in the last illustration I assume is meant the residue after paying rent, wages, cost of raw materials, and every other charge except that of interest on the capital invested. The profit of per cent, therefore would be the regular rate of interest, viz., 5 per cent., and the regular rate of commissions on managing small investments, viz. 2]/2 per cent. Each of the above cited rates of profit is twice the current rates of interest in transactions of similar dimensions. For it is well knowu that in the same circumstances in which profits on small capitals rise to 20, 30 or 40 per cent, interest on small loans rises to 10, 15 and 20 per cent. Hence interest ranges at a fourth of the gross proceeds of the industry on which the capital is loaned. The mode of distribution of the price of the gross product tends theoretically toward the following result : Raw Materials. Rent. V 5J^ Interest. 1 EVANESCENCE OF TRUE PROFITS. Hd it increases iu proportion to the extent, but diminishes in propor- tion to the produce of land" (B. ii. Ch. iii.) thus leaving it at not more than one-fourth. Adam Smith saw this ratio of division between capital and But this is equivalent to saying that the distribution tends constantly to obliterate profits, to one who neither owns his plant nor his capital. This is true. It is exceed- ingly rarely that euch an one can continuously maintain himself in any business. It is almost an axiom that a profit-maker, to succeed as such, must own either his fixed capital, or his circulating capital, or both. Without either, he is a man of straw, an ad- venturer, aud is likely to travel out of one bankruptcy into another. Hence, in practice, profits proper, i. «. , considered apart from both rent of hind and remuneration to capi- tal, seem almost to narrow themselves down to a reward for getting the start of every body ; for making money in new or shrewd modes not known to either money-lenders generally or to landlords generally. Of course the profit-maker nas four funds out of which to save a profit if he can, viz.: in buying rawmaterials, in hiring labor, in hiring his plant, and in borrowing his capital. He has four more out of which to create a new gain, viz. : in discovering new channels of demand, in inventing new processes of sup- ply, in widening his market, and in cheapening his means of reaching it. But out of all these there is none which has the fi^sity which belongs to rates of wages, of rent, or of interest. Hence, it is singular that Adam Smith should have begun to reason concern- ing distribution by assuming an ordinary rate of profit on capital as a first fact. Profits, meaning a compensation for capital In excess of rates of interest, are so fluctuating as to be always extraordinary. For if profits perform the same function v.'hich a rudder of a ship performs, viz. : that of steering the course of industry, the rudder must be con- stantly changing, even when the course of the vessel is straight. Hence, of two com- mercial houses in business side by side, one may be making heavy profits, one may be losing heavily, and both may be mistaken as to their actual condition, or whence the profits or losses will come. It may seem that the proportion above claimed for the share of capital is widely in conflict with that arrived at by Mr. Edward Atkinson,* who expresses the opinion that " what portion " of the total product of a nation's industry "constitutes the average share of the capitalist at the present time can not be substantially proved. In a normal year under normal conditions," Mr. Atkinson is " of the profound conviction that not exceeding 10 per cent, can be set aside as either rent, interest, profit, or savings ; " and that nine-tenths constitutes the share of the laborer, which by subdivision becomes ex- pressed in personal wages." In saying that " not exceeding 10 per cent, can be set aside as either rent, interest, profit, or savings " Mr. Atkinson first awards 10 per cent, to each of these, making 40 par cent, for all, but by assuming that nine-tenths of the product would be left for wages he reconstructs his 10 per cent, so as to make it cover all instead of each of the four. This may be a slip of the pen, but iu view of the actual facts it seems much like a fatal leap in the thought. Among fully one-half the popu- lation of the United States, and over three-fourths of the area, say in all parts south of Cincinnati and west of Toledo, 10 per cent, is the current and average rate of interest alone on all loans except the largest of those made in cities. Most real estate rented for productive purposes draws from 8 to 10 per cent, rent, even in Eastern cities, and frequently 20 per cent. Most corporate shares are rated at the principal sum on which they will pay 20 per cent, instead of 10, thus showing that capital values itself for investment at 20 per cent., not 10. Thus a corporation having a par capital of $200.- 000 and earning $200,000 a year will sell its shares in the aggregate at about $1,000,000, or the sum on which it pays 20 per cent. Twenty per cent., therefore, is capital's own valuation on itself when invested productively. Again, the ratio of the annual prod- * Essay, " What Makes the Rate of Wages," p. 27. 180 ECONOMIC PHILOSOPHY. labor and states it very comprehensively. (Book ii. Ch. iii.) He says : ' ' That part, of the annual produce of the land and labor of any country, which replaces a capital, never is immediately employed to maintain any but productive hands. It pays the wages of productive labor only. " " When it (the annual produce) first comes either from the ground or from the hands of the productive laborers it naturally divides itself into two parts. One of them, and frequently the largest, is in the first place destined for replacing a capital (^. e., re-imbursing for wages paid) or for renewing the provisions, materials, and finished work, which had been withdrawn from a capital ; the other for constituting a revenue, either to the owner of this capital, as the profit of his stock (or interest), or to some other person as the rent of his land. Of the produce of a great manufactory, in the same manner, one part, and that alwaj'^s the largest, replaces the capital of the undertaker of the work ; the other pays his profit, and thus constitutes a revenue to the owner of this capital. '' Dr. Smith also describes interest as ruling at one-half the cur- uct of the nation's industry to its principal capital is 25 per cent. , showing a tendency to earn that amount through the joint efforts of capital and labor. Again, Mulhall and other statisticians estimate the annual national savings alone, or the increase of wealth that goes over to another year, at upwards of $800,000,000, or at least 12 per cent. Sup- pose A to desire a property worth $20,000 for manufacturing purposes. As rents go he would begin by paying $2,000 for it as rent. If he should form a stock company the capitalized value of the shares in the money market would be that sum on which his earnings would pay from 15 to 20 per cent, dividends. How many times would he turn his entire capital over in a year? In a daily newspaper at least three times. In other branches of manufactures nearly as often. The total value of the establishment will be the principal on which the profits of these three turnings over will be 20 per cent. The average of business establishments apply nearly 10 per cent, per annum, sooner or later, to the extension of their business or to private residences of their owners. Either is an embodiment of profit. Contemplate the enormous manufacture of private resi- dences constantly going on as a means of embodying the profits of business. All this does not come out of a 10 per cent, on the money invested. Mr. Atkinson seems to have in mind, moreover, the net profit of the capitalist ap- propriable to personal and family expenditure, after paying cost of erection and annual wear and tear of plant and implements, insurance, losses of bad years, and the like. The distributive share which capital must disburse in other ways than in payment of wages and raw materials is another matter. The latter forms the object of my pur- suit. It is to be regretted that neither Smith, Ricardo, Mill, Carey, Cairnes, MacLeod, nor any other writer, so far as I have met with their writings, attempts to fix the ratio of the distributive share of capital by an appeal to data sufficiently extensive to be called scientific. Hence any attempt to reduce the hitherto unrestrained course of assumption to a basis of fact may give rise to the charge of empiricism . This we must endure, so that the course of the combat may in time be shifted from the empirical to the Hcientific basis. LABOR BECOMING CAPITAL. 181 rent rates of profit. (Book i. Cli. x.) He had thus in mind, exactly the division outlined in this chapter, viz. , one-half to re- imburse capital (wliich he defines as all going to pay wages of pro- ductive labor) and the other half to interest (one-fourth) and rent (one-fourth). Three facts in our American rates of wages tend to confirm this view. These are : 1. Tlie standard of wages in agriculture goes far toward fixing the standai'd of wages in manufactures. In agriculture the extent to which the farm labor contracts to work for half the product, as against the land and the capital jointly, both of which get the other half, shows that in farming the real rate of wages is adjusted upon the principle of giving half the product to labor and half to cajjital and land jointly. A presumj)tion would arise that the same must be true in manufactures, mining, railroading, and merchandising, simply as an effect of the natural tendency toward an equation of rates of wages (other things being equal) in all occupations. 2. The practice, in manufactures, of arranging the wages of workmen on a sliding scale, whereby the workman's compensa- tion is proportionate to the price of the products, prevails iii cer- tain branches of the iron manufacture, and indicates, so far as it goes, that wages in manufactures generally are proportionate to product. 3. When colored laborers in the Southern States were the sub- jects of property, the price which attached to the laborer as an ob- ject of iDurchase would naturally be adjusted according to the amount of cajpital on whicli his earnings in excess of the cost of sub- sisting him would pay a better profit than would be obtained on the same capital in other forms of industry, other things being equal. Agricultural laborers brought from $800 to $1,200. In free agricultural labor at the same period the amount of capital re- quired to work in partnex'ship with a laborer, i.e., the amount of capital which would, when invested in farming, land, and imple- ments draw the same return which the laborer would draw, was from $800 to $1,200. Of course the slave became himself capital, to the amount of the capital he exempted his owner from the neces- sity of acquiring, in order to use his labor. The free laborer works in partnership with this same equivalent of capital, invested in land and implements and takes half the product. Doubtless in a shi-ewdly conducted commei^cial business like that of the late A. T. Stewart, the share of capital, and even per- 182 ECONOMIC PHILOSOPHY. haps the annual net profits of the proprietor, might amount to more than the clerk hire and labor bills. But I have heard it remarked, by practical merchants, that what a clerk or salesman makes in his last years of clerking and the profits of his first years of trade, are so nearly on a level as seldom to result in any sud- den change in his condition. 70. Productive Industry Is a Form of Social Govern- ment. — Though I have thus far treated the wages conti^act as if labor were the thing sold by the woi^ker to his employer, it will help to clear away many deceptions, which have misled some to their injury, if I point out that, as a rule, the essence of the wage contract is not in the sale of labor but of obedience, sovereignty, or will, so as to produce not so much force, as flow or harmony of action, which can only come from the subordination of many wills to a single will. A man may put any amount of time and vigorous toil into his work, but if it is done disobediently to his employer's will, he is entitled to no pay legally or morally. It is universally understood that what the employer buys, is not so much, or so specifically, muscular efi'ort, as the right to direct the effort, whatever its kind, whether it be muscular or nervous, bod- ily or mental. The porter who stands at the door of a residence, hotel, or restaurant, and opens the door, perhajDS electrically by touching a spring, whenever he sees a guest about to enter, can not be said to laljor, for no more physical effort is required to do this than to do nothing. But he earns his wages and is a productive laborer. Why ? Because his employer's interests prosper better, or his employer's pleasure is subserved more truly, by impressing every person who enters with a sense of politeness pervading the establishment than if the visitor is requii^ed to ring and wait, or is left to open the door himself. In this case, therefore, the wages are earned, not by labor, but by that subserviency, which shall stand for, and represent, the intended politeness, or taste, or style, or dignity of the master. Subordination, therefore, is the one thing bought and paid for in the wages contract. "They also serve who only stand and wait." On the other hand, insubordination destroj^s utterly the working value of the most capable, skillful, or experienced worker. It is, in the wages contracts, the chief and most unpardonable of all viciousness. An insubordinate, or self -inspired worker, can not be depended on, in any capacity which requires organization or co-op- eration with others on a large scale, and must either become his own employer or must degenei^ate into pauperism. OBEDIENCE IN LABOR. 183 Uninstructed persons, of insubordinate or truculent tempers, often pride themselves upon what they style their independence, meaning thereby their readiness to quarrel or argue with employ- ers, and thereby to bring on themselves discharge from employ- ment. They should understand that there is no baseness in the sort of obedience, which is called for and paid for as the essence of the wages contract, for the reason that only in this way can industry be steered in the direction of demand, which is the function which employers subserve in industry. The employer's business is to seek and yield to the public de- mand. His phrase to his workmen is, "I must please the public ; you must please me." It is through the subserviency of the em- ployer to the public, followed up by the subserviency of each employe to his or her own employer, that the entire force of employes may be held to the work of satisfying a public want. This is organization in industry. It is the only practicable way in which men and women ordinarily can render those services to their fellow-men sufficient to call for that return service at the hands of others known as " a comfortable living." For, as a rule, each person in business gains his living by the service he renders to strangers in the economic sense, i. e., to persons to whom he is under no obligations, and very likely does not know, and who, in turn, do not know him. The engineer on a railway really serves the passengers and the owners of the freight which are entrusted to be drawn by his engine. Both these classes are strangers to him. The medium of enabling him to serve these strangers is his wage contract with the railroad company, which, in this case, is the middleman effecting an ex- change of the engineer's time and that of others, working to- gether in the use of the stockholders' capital, i. e. , the rolling stock, in order to sell, to the freight owners and passengers, a joint product of capital and labor, viz., transportation. But on analysis it is not really capital and labor that effect the trans- portation, but it is command and obedience. For, no matter how much capital is put up, if commands are not obeyed, the railway is converted instantly from a means of transportation into a mere means of wholesale slaughter. The labor of transportation in this case, i.e., the physical force which draws the train, is not put forth by the engineer but wholly by his engine. The supervision of the engineer is directed wholly to making the engine obey the time-table. This may be called labor on his part ; but it may be 184 ECONOMIC PHIL080PHT. merely a labor of watching — the end of which is obedience, pure and simple, but the alternative of which is destruction, sudden and terrific. The organization of labor in society, therefore, is effected by means of a system of subserviency and obedience, whereby every industrial act, every sale of a service or a com- modity, and every performance of a service, or a contract, is part in a chain of causation of which the supply of all is the ultimate effect, and the demand of all is the primary moving power and stimulus. The steering and piloting is all done to make profits. The manual and methodized labor is all done to earn wages. But these terms are, in the final analysis, interchangeable. Wages are always the profits a man wins, by investing his time and sell- ing his will, judgment, and obedience, in the manner which he draws his wages for, rather than any other. And profits are the wages a man gets for risking his means in a given investment, and abstaining from enjoying the principal while it is so invested. Hence there is an ultimate sense in which wages are profits and profits are wages. Just as we have seen in Chapter I. , there is an ultimate sense in which capital performs labor, or labor is capital. 71. Do the Indispensable Means of Labor Earn a Share of the Product ? — While Karl Marx nowhere presents any facts showing what the ratio of the wages share to the capital share really is, he constantly assumes that it is equal.* But by assximing also that the wage laborer is the sole producer of value, that the capitalist's contribution of the means of work is in no way necessary, and should not be permitted to reap any return, since these means are themselves the result of previous robbery and not of saving ; and that the wages paid are in all cases only the cost of sustenance of the laborer, with just enough added to enable him to propagate his class without increase or diminution ; that mere exchanges of commodities do not create values, hence that the functions of the capitalist, enterpriser, and trader are all needless, Karl Marx is able, through the necro- mancy of bald assumption, to convert a division between two equal partners, in the ratio in which they contribute to production, into a spoliation or "exploitation " of labor,! by capital, to the ex- *" Kapital," vol. i., page 375. + The choice of the word "exploitation" by the socialists is particularly happy, since it is in fact tiiithful when accurately understood. Exploitation does not mean " spoli- ation," but simply creating or causing exploits or achievements where otherwise there would be inaction. It implies that capital energizes labor, but this implication is ignored. Its perversion into a term signifying robbery is part of the general system of " exploitation " of economic terms carried on by socialist writers. ALL CAPITAL A LOAN TO LABOR. 185 tent of 100 per cent, on what labor produces. He constantly styles the cost of the sustenance of the laborer his natural wages, under the iron law of Ricardo and Torrens, and assumes that he gets no more, ignoring the fact that most capitalists start in life as wage laborers, and begin their capitals through the savings from their wages. All the value commodities have, at any time, over the cost of sustenance of the labor which produces them, he denominates "surplus value," exploitation, or robbery. Thus that form of economic "criticism " which begins by assuming that lack of the means to woi*k with, which is what we call labor-power, creates all values, speedily ends in that form of war on society and in- dustry known as Anarchism or Thuggism. The first truth to be embraced by one who would really com- prehend the plexus, or interlocking of labor with capital, in the present organization of industry, is that all reproductive capital — the machinery with which the profit-maker works, is in use by the workers themselves, and is their means of earning wages. In his " Chapters on Socialism," Mr. Mill, who was himself in many senses an avowed socialist, says : " Another point on which there is much misapprehension on the part of soc ialists, as well as of trades unionists and other partisans of labor against capital, relates to the proportion in which the produce of the country is really shared, and the amount of what is actually diverted from those who produce it — " Mr. Mill here falls into the very socialistic error which he is attempting to rebuke, by assuming that all that wage laborers do not get is so much ' ' diverted f I'om those who produce it " — — " to enrich other persons. When, for instance, a capitalist invests £30,000 in his business, and draws from it an income of, suppose, £3,000 a year, the common impres- sion is, as if he were the beneficial owner both of the £20,000 and of the £2,000, while the laborers own nothing but their wages. The truth, however, is that he ouly obtains the £2,000, on the conaiiion of applying no part of the £30,000. to his own use." And of loaning its use in some form to labor, i. e., to relative destitution — He has the legal control over it, and might squander it if he chose ; but if he did he would not have the £3,000 a year also. For all personal purposes, they have the cap- ital, and he has the profits, which it only yields to him on condition that the capital itself is employed in satisfying, not his own wants, but those of laborers. A truer statement would be that the capitalist has the power to steer industry in the direction of what lie deems to be the profit, which is always that of the effective social demand. For this power he takes the profits, and incurs the losses, incident to the employment of reproductive capital. Operative workers have 186 ECONOMIC PHILOSOPHT. the loan of his capital for their use, as the condition, or means, or partnership by aid of which they can produce, and without the aid of which they would loaf in idleness. And the customers of the business or purchasers of the product of their joint labors, who are nearly equivalent to society at large, have its services, as they do those of labor, by paying for its product. 72. Does the Risk of Loss Give Valid Title to the Profit ? — Many socialists concede that, in the present organiza- tion of labor, the rule of the profit-maker over the wages-earner is temporarily just, so long as it is made necessary, by the lack of ownership, by the wage-earner, of the job, implements, means of subsistence and capital, from which to make up to the wage- earners and to others, the ultimate loss of wealth which will result to society if industry is steered toward the production of unprofitable products. But they desire us to believe that it is not intrinsically and economically just, and will not be perpetual. In short, they hold, with Mr. Mill, that ' ' it rests upon the arbitrary institutions and customs of men, and not on irreversible economic law." If it be possible for society to evolve into such a condition that all men will own their own jobs, implements, means of subsis- tence, and capital, from which to make up losses, the social problem would have been solved by the elimination of the wages class, and by the fact that none but capitalists would remain. But the prediction of such a state of things falls within the domain of prophecy, presumption, or quackery — of the first if true, of the second if undemonstrable, and of the third if false. Economists can only say that in the kind of world we live in, the reign of the enterprisers and profit-makers over the wage earners must continue, so long as any class of men need to work in order to live, and have not the means to work with. Henry George declares that creation alone gives title. We ac- cept this definition for the profit-maker's title to his profits. When ten thousand men lie idle, who would gladly do their share toward building a railway, if some profit-maker will but come and incur the risk of loss implied in the furnishing the means with which to build the road, but who are powerless and starving because he does not come, can it be said that it is this inertia of destitution that alone builds the road ? The profit-maker comes. Instantly they spring to their feet and commence building. Why? Because they have sold themselves, their muscles and their time, to him for a day. What for ? So that he might out of their BUYING LABOR-TIME. 187 idleness create labor — out of their incoherence create co-operation ^-out of their babel create unity — out of their destitution and incapacity create wealth. He does create all these, buys them by buying the laborer's time, and the right to command his obedient will. Having created them, shall he not own what he has created ? If so, then, for the purposes of the day's work, he is owner, and the laborer is implement. He is Mind, Force, Energy, and the laborer is cart-horse and harrow, mere clay in the hands of the potter. How, then, shall the clay say to the potter, " I am the producer?" The universal conscience of man, and even the very definitions laid down by socialists, alike agree that when the profit-maker, by incurring a risk of loss, where others will not, leads forward the industrial host into enterprises in which others dare not, and so creates labor itself where others Avould let it rust, and the result proves that he has met and satis- fied a social demand which others did not see, he shall have a valid title to the profit because he created it, as well as a valid command over the labor which he evokes, because he creates that also. The moral and legal right of the profit-maker is to rule industry, subject to its power to rule him. By this we mean it is his right to select the kind of work on which he shall enter or continue solely with reference to whether he sees a profit in. it, and to refuse or stop when he sees no profit, to prescribe the hours on which he will consent to run his industry, subject, of course, to such opposing foi'ces as society may bring to bear. It is his right to get all the effective service out of his working force which he is willing to buy and pay for, as it will naturally devolve on his working force to get all the wages out of him which they can make the services rendered bear. If he exploits their labor, so do they exploit his capital. But he becomes one power, and their aggregate becomes another, in an equal contest. Each unit of capital, or sum necessaiy to employ a man, acquires an equality in exchange as against that man. Its indispensability in produc- tion is worth as much as his. Its capacity to earn equals his. Its capacity to bless or curse mankind, to do good or harm, equals his, because, if he declines to labor on its terms, it can usually find one who will. What the laborer produces, therefore, by laboi'ing, is not the commodity which figures as the joint pi'oduct of labor and capital. A laborer is the sole producer, only, of a diversion to himself of wages which would otherwise go to another laborer. In himself alone, he is exactly as productive as any other commod- 188 ECONOMIC PHILOSOPHY. ity, for that, by its sale, produces a diversion of a price which would otherwise have gone for another commodity ; so does he sell a commodity and another takes its place. Discharge a laborer and another takes his place. Hence Karl Marx's phrase, surplus value — meaning the value a laborer produces above the wages he receives — defines a modicum of moonshine. He produces his wages, or rather their diversion from another to himself — no more and no less. All that remains above his wages is the share which accrues to the profit-maker, who is the sole producer of the commodity, process, or result which commands both the wages and the profit. If a profit-maker produces that which society does not want, he is punished for it by loss of capital ; if he continues in his course, by bankruptcy. He is as severely dominated by society as his workmen are by him. That which he produces without adequate demand, he must sell for as much less than it cost him to produce it, as society has less need of it than of other things which might have been produced by the same effort. Having no power to compel society to pay him more for his product than it pleases, as society pleases to pay him less than its cost, the difference is his loss, penalty, and punishment for igno- rantly assuming to lead social industry into any other form of work, or to any greater cost for a particular form of work, than that tor which there was most effective social demand. It is upon condition of sustaining all these losses, that the profit-maker enjoys his counter-privilege, of collecting, as profits, the excess of price which demand puts upon his product, over its cost of produc- tion. " Nothing ventured, nothing had." It is the courage to risk this loss that constitutes enterprise and creates all industry. Hence the title of profit-maker rests on his utility as a creator, and is valid. 73. Loss as Well as Profit an Economic Force. — The fear of loss brings often as much suffering to the successful as the dread of want brings to the poor. All men have a nearly equal capacity for painful and pleasurable emotion, and the tendencies to emo- tion of either kind are a nearly constant quantity. The portion ot a rich man's wealth which he deems secure, and the portion of a poor man's living which becomes habit, fall out of the emo- tional range of their natures, and cease to affoi'd pleasure or pain. These spring from the periphery of uncertainty which surrounds the habitual, and in this sphere the sweets of pleasure and the pangs of pain live on, as in a tree the sap circulates only between tlie LOSSES. 189 growing roots below and the growing leaves above, leaving the interior channels of fixed habit to decay and hollow death. Man living at his points of growth only, which are his points of utility to himself and his fellows, finds a nearly equal chance to keep green and fresh those emotions which are the ultimate and final wealth of his nature, whether he be poor or rich. All values evanesce rapidly. All wealth is constantly losing its value. Bankrupts discovered, settled, and cleared America. But the bankruptcy came after the service. They that founded its cities, built its railways, inaugurated its inventions, also be- came bankrupt. Columbus found in Spain a prison. Hudson met in the northern seas a dagger. The wife and children of Goodyear were buried as pau^Ders by charity. Even Prof. Morse was lifted out of destitution by private friendship. Arkwright, too, by his talent for organization principally, like Siemens and Edison, attained to princely wealth, while Har- greaves, a greater inventive genius than Arkwright, from a tech- nical point of view, had to bear all the hardships of extreme pov- erty.* An experienced Frenchman, Godard, estimates that in France, of one hundred industrial enterprises attempted or begun, twenty fail altogether before they have so much as taken root ; that from fifty to sixty vegetate for a time in continual danger of failing altogether, and that at farthest ten succeed well, but scarcely with an enduring success, (Enquete Commerciale de 1834, ii. 233.) Pioneers of enterprises in which fortunes ultimately arise often die beggars. Losses are seldom summarized or collected. They represent only the vacancies left by explosions, the nothing which takes the place of something. We all hear of Cyrus W. Field, for he laid the cable which was rescued from oblivion by profit. We do not hear of those who sought to perform the same service by a telegx'aph line, through Alaska and Russia, from New York to London. The success of the cable was their failure. The reasons why the mass of mankind are wage-workers is not that they have always lacked the means to become profit-makers. It is that they once possessed them, i^layed at the game, and lost. For when they lose they die, or fall back into the ranks of wage- workers. Very few men work for wages that do not at some time attain as lai'ge capitals as those with which Vandei-bilt began to row his passengers from Staten Island to New York, or with * Note to Roscher, Am. Edn. p. 140, 190 ECONOMIC PHILOSOPHT. which Peter Coopei' started his cofFee-stand on the sidewalk, or with which Bennett began the Herald. To-day the deposits, nearly all of which belong to wage-work- ers, in the savings banks of the United States represent a capital of about $1,200,000,000, which is a sum equal to the entire aggre- gate deposits of the business men in the State and National banks combined. The average deposit to each person is |360. Every such person is a wage- worker from preference, because he fears the risks of business. I am aware that the wage- worker points to the lock-outs, strikes, commercial crises, times when he is out of work, or works for an insolvent employer who does not pay him, and insists that he, too, shares in the losses of industry due to its being turned into chan- nels where its product is not demanded. In the cases of lock-outs and strikes, the wage-worker is paid while he works, but his work stops. There is no loss of pay for woi'k actually performed, con- sequently no wealth passes out of him to compensate society for a mal-employment of labor. On the contrary, he may have grown richer by that very mal-employment of labor by which society would have grown poorer, but for the fact that the whole loss to society is paid for out of his employer's capital. In commercial crises labor and capital botli stand still. Labor contributes no value which is capable of compensating society for a loss. But the capitalist who has invested $50,000,000 in build- ing a railroad worth $5,000,000 has sustained a net loss of $45,000,- 000, which, if society in the aggregate were the capitalist, would have to be borne by society at large. And if thousands of small capitalists were the owners, it would send ruin into as many fam- ilies. In 1883 to 1885 railway shares in the United States shrank in value by one-third, without, it is believed, causing poverty to be felt in a single household or the discharge from employment of a single workman. The only case in which the wages- worker makes a loss which makes him a sharer in the punishinent due to an unprofitable guidance of industry is when he works for an employer in creat- ing reproductive wealth and his employer so fails as not to pay him. In this case the wages- worker "adventures," or risks, his labor intentionally on his employer's responsibility onlj^, but vir- tually on the success of the enterprise. Nearly everywhere he is given a lien which guards against his loss if the improvement ever attains value. To make the adventure fair, his wages ought TIME IN PROFITS. 191 to be enough higlier than he could earn elsewhere to cover this risk. As a rule, and in the large, the profit-maker relieves society of all pecuniary loss by the unprofitable misdirection of labor in the production of that for which there is less than the highest current demand. He exempts society from all waste of labor by paying the penalty of such waste himself. . Who can estimate the value of the vast saving to society which accrues, and the vastly more I'apid growth of wealth which re- sults, and the prodigiously greater amount of mental service ren- dered by each part of society to every other, under a system which, by shoving over all uneconomic and unprofitable effort on those who cause it, resolutely holds the great mass of workers to effort that may be perhaps distasteful and uncongenial to nearly every person engaged in it, but which, by the fact that it pays a profit, is inexorably proved to be the most demanded of any service that could be rendered. The instinct which draws society toward profit is analogous to the attraction in nature which draws jjlants toward light. 74. The Rate of Profit.— Prof. H. D. MacLeod, with great force and acuteness, points out* that the rate of profit varies, directly, as the excess of the price of the product above the cost of production, and inversely, as the time in which the profit is made. Hence, if the capital advanced be £100 and the profit £20, the rate of profit depends on the time within which it is made. If it be made in a year, the rate of profit is 20 per cent, per annum ; if in a month, it is 240 per cent, per annum ; if in a week, it is 1,040 per cent, per annum ; if in a day, it is 7300 per cent, per annum. Thus the same profit may, if made in a different length of time, be a very different rate of profit. The profit is, in all cases, the difference between cost of production and price of product. The rate of profit is, in all cases, the percentage of the return earned, to the capital invested, within a given time. The rate of profit, therefore, as between different industries, depends largely on the proportion of the capital which can be brought into active use, or, as the phrase is, turned over, and the time required to turn it over, as well as on the percentage of the gross return to the principal. In American farming at least two-thirds of the capital is in the land, which is not turned over in the economic sense except as it rises or falls in value, and this rise or fall is not * " Principles of Econ. Phil.," vol. ii., p. 41. 192 ECONOMIC PHILOSOPHY. efPectively realized unless it is sold. The farming implements, though capital, make no separate profit on their own turn over, as they decline in value each year. The live stock and crops, and the cut of grass and forest, are the yearly portion of capital turned over, and these usually only from once to twice a year. Most manufacturing concerns, however, turn out a product from once to five times their capital, or virtually turn over their capi- tal as many times each year, and most large banks loan from four to six times their capital. It may he asked, if the rate of profit is so much greater in hank- ing and manufacturing than in farming,* why does not farming capital go into banking and manufacturing until the rate is equalized ? The answer is that the risks of farming, where the farmer owns his farm, are reduced to the minimum, and are lower probably than in any other occupation. This at least is true of farming in the Eastern States. Where, however, as in the West- ern States, farming is marked by an increased addiction to a single crop, produced by an application of a large capital to a very large area of land, the risks increase, losses are frequent, bankruptcy almost as frequently overtakes the farmer as the merchant, and as great fortunes and as high a rate of profit is made in farming as in any other occupation. Adam Smithf supposed that there is an "ordinary rate of pi'ofit " on capital sufficient to meet the losses to wdiich it is ex- posed, and leave a certain other "ordinary rate of clear pi'oflt," or business would not be carried on. This was because he began with labor as the eSicient agent, instead of with enterprise — with matter instead of with mind. In fact, there is no ordinary rate of pi'ofits, and no two investments of capital, in any country, that agree either in the volume or the rate of their profits. To allege * MacLeod (Vol . ii , p. 61) regards tlie'oppDsite view, as held by Adam Smith ("Wealth of Nations, "Bk. ii., Ch. v.) as most extraordinary, and contrary to the plainest facts of history. Dr. Smith says : " No equal capital puts iu motion a greater quantity of pro- ductive labor than tliat of the farmer ... no equal quantity of productive labor employed in manufactures-can ever occasion so great a reproduction. In them nature does nothing, man does all ; and the reproduction must always be in proportion to the. strength of the agents that occasion it. The capital employed in agriculture, therefore, not only puts in motion a greater quantity of productive labor than an eqnaUquantity employed in manufactures, but in proportion, too, to the quantity of productive labor which it employsdttadds a much'greater value to the annual produce of the land and labor of the country, to the real wealth and revenue of its inhabitants. Of all the waya in which a capital can be employed, it is by far the most advantageous to society.'" t " Wealth of Nations," by McCuVloch, p. 41. HALF-PROFITS MAKE INTEREST. 193 such an agreement would impeach their balance sheet as effectu- ally as an alleged Chinese census is impeached when two large provinces are given exactly the same area and the same popula- tion. What ordinarily takes place is not that those who lose their capitals have them made up to them by succeeding profits, but that they are eliminated as profit-makers and fall back into the ranks of wage-workers. They go at something else. There is an ordinary transfer of the capitals of losers into the hands of winners, and in this way capital is steered out of losing invest- ments into profitable investments. Adam Smith was nearer the truth when he estimated that half the average rate of profit Avould be the ordinary rate of interest. ='' For the principle uj)on which we have supposed the division to be made between the profit-maker and the wages- worker would also apply between the borrower of capital and the lender. A. man will borrow capital to work with when the profit he can make by borrowing it, or the residue he will have left after pay- ing interest on it, amounts to a better compensation, for his care and risk in superintending the work he will set on foot with it, than any other use he can make of his time and risk at the same cost. If his own capital enable him to employ ten men, but by bor- rowing as much more he can employ thirty men, the increased capital increasing the efficiency or the losses of his establishment by more than its own quantity, he may obtain on the labor of the thirty men a gross sum out of the product twice as large as the wages of the thirty men, and he may only get a product half as large as the wages he pays. If he and the lender of the money meet at the point where each is equaljy indispensable to the other, he furnishing the lender with an investment he lacks, and the lender furnishing him with a profit he lacks, to make the exchange equal he should divide equally. Profits are so much more unstable than interest, and losses to the profit-maker, are so much more frequent than to the money lender, that any comparison between the two is necessarily one of instability with stability. The same consideration applies to any comparison of rates of pi'ofit with rates of rent on land. Adam Smith, starting with the proposition that rates of profit on capital would conform to a certain standard, assumed that *Booki., Ch. ix.. McCiillough's Edn., p. 41. 194 EGONOMIO PHILOSOPHY. capital would migrate from the better to the worse soils as fast ag it could earn in the new location this ordinary rate of profit, and would leave behind it for the landlord in the form of rent what- ever excess it might earn above this ordinary rate of profit. The highest rates of profit, however, are sometimes made where the highest rents are paid, and sometimes where no rents are paid. The London and provincial banks of England quite generally make dividends of twenty to twenty-five per cent. , though their rents are as high as any known, since their business demands as good locations. Whaling-ships and privateers also may make high rates of profit and pay no rent at all. Perhaps no vessels can px'operly be said to pay a rent. Nor does capital show any disposition to seek out a landlord for vessels which pay a high profit, and pay to him the difference between what it can earn m the use of those vessels and what it can earn by sailing the meanest hulks afloat. That there is a very uniform ratio between rates of interest and rates of rent is familiar to all. But this arises partly because rates of rent are always estimated, not upon the actual cost of land and buildings, but upon a capitalized sum which is virtually arrived at by calculating the principal sum on which the actual rents will pay the interest at current interest rates, together with taxes, insurance, and a moderate profit for the greater trouble of real estate investments. Hence the ordinary so-called rent-rate is, in fact, not a rent-rate in any original sense, i. e., it is not a sum computable from facts relating to the land, its area, cost of improvements, or the like, but the rent is itself the original factor, and from this the value of land is arrived at as the prin- cipal on which the rent will pay interest.* A good deal of efPort has been expended to prove what Mr. Mill calls "the tendency of profits to a minimum" and what Henry C. Carey styles "the diminution in the value of capital as indicated by the diminution in the share of its product which is given for its use by those who, unable to purchase, desire to hire it." As relates to each particular enterprise in which profits are won, this is more than true, indeed, it is inadequate to the truth. Profits may be said to begin at unlimited figures, and to recede rapidly until, as profits proper, they totally disappear. Each par- ticular mode of investment of capital invites a competition from * Adam Smith (Book ii.,Ch. iv.) Bays "the ordinary maiket price of land depends everywhere on the ordinary market rate of interest. " PROFITS ARE IN THE NEW. 195 others, a rise of wages, rent, and interest, until these swallow up all the returns. If this were not so, profit would not be the migra- tory force which pioneers the way to new fields, processes, and modes. But when this doctrine, of the tendency of profits toward elim- ination, is transferred from a law of each individual investment of capital, and is stated as a " tendency of profits to fall as society advances," as Mr. Mill plainly puts it, and as Dr. Carey and Mr. Atkinson seem to, it is a palpable absurdity which would be at war with the potential progress of society if it could be true, and in conflict with daily observation. Capital in mining, at the out- break of the California and Australian mining epoch, made such profits that percentages were lost sight of. Bonanza farming has made profits of five or six hundred per cent, per annum. Divide A. T. Stewart's fortune of $80,000,000 over fifty years, and esti- mate it as a "profit" on the capital of $4,000, with which he started. It would be $1,600,000 a year, or an average of four hundred times his first capital each year. So of other large for- tunes. All observation indicates that as large profits are arising in the new industries as the old gave rise to when they were new, or, to use the old adage, there are ' ' always as good fish left in the sea as ever were caught out." CHAPTER VI. CAPITAL. 75. Definitions. — Capital is that portion of wealth employed in distributing' or producing wealth or commodities. The dis- tribution, consumption, and production of commodities is to be carefully distinguished from the distribution, consumption, or production of the wealth, or the values, at any time embodied in those commodities. When corn is sent from Dakota to Massachusetts, Pennsylvania, and Liverpool, commodities are disti'ibuted. The agents in the distribution of commodities are trade, commerce, and transporta- tion. When the price which the corn brings is divided between the transporter, the middleman, the merchant, the banker, the landowner, the land-farmer, the laborer, the tax-collector, the school-teacher, and all others who get any share of it or whose services aid in its production, that process is called the distribution of wealth. The two movements are therefore in opposite direc- tions and of opposite kinds. One is production or taking to market— satisfying want. The other is payment— getting home with the price — being rewarded. The former is visible, material, easily understood. The latter is subtle, evasive, and concealed. In the process the prices received for the corn must, on the average, pay the freight of the transporter, the interest of tiie banker who loaned money to the farmer to help him produce the corn, the commissions of the middleman, the taxes paid on the land, the teacher who taught the farmer's children, and perhaps the preacher who pi'eached to them. But the most obvious things to be paid for are the use of the land, the interest on the capital, the reward to the enterprise, and the wages of the labor that produced the corn. If the wealth were not distributed among the producers, the commodities, in which it is embodied, would not be produced. But IJroducing the commodity is not identical with i^roducing the wealth it embodies. Corn, when reaped in Dakota, is, as a com- modity in the ordinary sense, as completely produced as it will CAPITAL ORE A TE8 LABOR. 1 9 7 ever be. This ordinary sense is not a very true sense, since things are commodities only as they commode people, and as there is no body in Dakota who wants that portion of the corn which is sur- plus, it is much less a commodity there than it will be in New York. The word commodity is a word of value, and the value in the corn will keep inci'easing- as it approaches nearer to those consumers of whose esteem and need the value is the measure. Since capital is the portion of wealth which is devoted first to bringing the corn into existence as corn (viz., land, plows, cul- tivators, money for seed, etc.), and then to enhancing its value by forwarding it to those who value it, it may be said that the function of capital is to create labor, commodities, and values, as labor, commodities, and values, whenever employed in certain ways, become capital. Capital is etymologically that which leads or commands or has the headship in industry, froixi caputs head. Economically it is exactly what it is etymologically. It would never have seemed to be any thing else, had not a desii'e grown up to define words in a way to win votes, instead of with a view to scientific precision. As capital has no vote, while those whose labor it creates have, it was deemed courteous to call attention only to the fact that labor creates capital, without calling counter-attention to its complement, that capital creates labor. The circle is the same as in the case of the Qgg and the living animal. "All life from the egg'''' is no truer than "every %gg from life." Omnium vivum ex ovo finds its complement in omnium ovum ex vivo. So of capital and laboi', each hatches the other. Nor is the consumption of commodities the same as the con- sumption of wealth. When an egg is hatched out into a chicken a commodity is consumed, for no egg exists, and a new com- modity is produced in its stead. But there has been no con- sumptioia of wealth, as in each stage of the process value was inci'easing. So in drawing a train of cars coal is burned, but this, though a consumption of a commodity, is no more a consumption of wealth than is a laborer's sweat, for, as in human labor more than the value of the labor, and generally twice as much, passes into the commodity, so in the transportation of corn to market by rail more than twice the value of the commodities consumed in effecting the transportation are embodied in. the corn, i.e. the purchaser in New York or Liverpool values it higher as it draws nearer to him by more than the cost of the fuel and wages, freight, intei'est, rent, and profits incurred in bringing it. 198 EVONOMIG PHILOSOPHY. When consumplion of commodities is pai't of the mieans of enhancing value, it is reproductive consumption, and is a phase of productive energy. Nor does destruction of wealth always imply destruction of the commodity. When things are made at a loss commodities are created but wealth diminishes. Capital is frequently designated as fixed or circulating. Fixed capital implies all reproductive wealth that can be used again and again in its function without change of efficiency or change of ownership. Fuel and food are circulating capital, because in a single use they lose their efficiency as fuel and food. Money is circulating capital, as to the person who pays and receives it, because capable of but one use, for the tiixie, by one person. But the unexportable stock of money, at any time existing in a country, may be viewed as fixed capital as to the aggregate society of that country, because its social efficiency is greater the oftener it changes hands.* 76. Distribution of Wealth Precedes and Causes Production. — If we are right in the foregoing definitions, it will be evident that, as it is the consumption of commodities that creates the effective demand for them, so it is the distribution of wealth that causes the production of commodities ; for men co-operate in producing commodities, only as they are presently or efficiently incited to co-operate, by being paid to co-operate. Hence it is that distribution precedes and causes production, viz., rent must be paid, I'aw materials must be bought, men must be hired, machinery must be collected, subsistence for the men must be had and maintained, a contract for a job must be agreed upon, all before production can begin. But each of these acts involves a distribution or paying out of wealth, viz., rent of plant, interest on capital, wages of labor, and profits on raw materials. It is because distribution precedes production that only those who have the power to distribute wealth can produce it in person and originally. All who have no capital are mere instruments of production. They can neither dictate its course, its mode, nor its * Mr. Moody (" Land aHd Labor," p. 179) objects to the statement that circulating capital, i.e., money, to the amount of $270,000,000 was converted into fixed capital iu 1882 by the expenditure of that sum in building railroads, because, as he says, the money is still circulating. This is true as to society, but noc true as to those who paid out the money. They no longer have it for circulation. If we assume that had they not built the railroads they would have paid it for the same labor to raise wheat, and that the added wheat would have been worth it, there would have been $270,000,000 more wheat and less railroads where now there is that value more in railroads and leea in wheat. SOGIETT IS JUST. 199 terms. If they seek to do so through strikes or labor contests, it is only by distributing wealth out of their own funds that they can secure the degree of co-operation necessary to produce even a strike. Hence, even in producing an obstruction to industry, distribution precedes pi'oduction. Hence, too, it is hopeless to attemj)t to comprehend the phenomena of social industry excej)t by. beginning at the distribution, not of commodities, but of wealth. And it is chiefly because, Adam Smith, Ricardo, Malthus, and Mill have begun at labor and production (meaning by labor the condition of unaided destitution, and by production whatever labor does) that they have founded not only their own school of laissez faire economists, which make unaided labor the sole producer, but indirectly and by reflex action they have also founded the German, English, and American school of social anarchists, who propose that unaided labor, having produced all the wealth, shall have it all. 77. Is Economic Distribution Just? — The unequal dis- tribution of wealth has been confessed to be unjust and unneces- sary by the mass of mankind, by many statesmen, and by most economists, without discussion or examination. The more dis- posed the mind is to regard undirected and empty-handed labor as transacting the whole business of life, a disposition which in many minds rises into an infatuation easily mistaken for benev- olence, the more plaintive will be its outcry against one man having more than another. Thus, Adam Smith,* after speaking of servants, laborers, and workmen of different kinds as ' ' mak- ing up the far greater part of every great political society, " says " it is but equity, besides, that they who feed, clothe, and lodge the whole body of the people should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged. " The answer to this is, it is but equity that they who obtain the initiative in all industry, who set all labor in motion at their own risk, and provide it with its work, implements, and subsistence, and market its product, should be recognized by a professional economist as having done something toward the creation of labor, instead of being maligned as the crafty purloiners of what they have had no hand in producing. If it were true that " servants, laborers, and (wages) workmen" do "feed, clothe, and lodge the whole body of the people, " then Adam Smith would not be teacli- * McCiilloch'8 " Wealth of Nations," p. 30. 200 ECONOMIC PHILOSOPHY. ing sound equity in saying that the robbers should give up enough to feed and clothe the producers comfortably. An honest conscienced world will spurn with scorn any such inealy-mouthed compromise with felony as Smith i3roposes. Karl Marx would be right in saying the profit-makers should give up all, which they did not produce, to the last red cent. Political economy must prove society to be in accord with exact and minute justice, and with true, profound, far-reaching philanthropy, as well as with natural law, before it can become the satisfactory science of society. We believe the philanthropy of economic science to be the major key in social harmony, and the philanthropy of im- pulse and sentiment to be excellent within jDroper limits, but a n:iinor and subordinate key to human welfare. It is the rains and the rivers of natural economic law that chiefly bless mankind, not the levees, stop gaps, umbrellas, dams, and make-shifts, which enable us to fight the rains and rivers at times. So the principles of economic law which govern social industry claim scientific recognition as the commanding forces which contribute to the woi'ld's comfort, without in any way denying that when these fail, or are too crude or brutal, finer and n:iore delicate impulses summon us to works of impulsive charity. So in the Hebrew economy, they who plowed and sowed the fields with grain reaped, as the major rule, but the widow and fatherless, who neither sowed nor reaped, must also be allowed to glean after the reapers. This was the minor rule. These two rules refiect the relation which business bears to charity at all times. But when industry is so misinterpreted as to become robbery, charity, by the same token, becomes insult. Hence it is that even the right apprehension of the true nature and mission of the altruistic senti- ments becomes impossible imtil the proper exercise of the egoistic is justified and defended. Society denies the right of industry to be kind or generous, until what is characterized as industi'y is first shown to be inhei'ently just and humane. That can not be done on the bases assumed by Smith and Mill. Mr. Mill says* that, ' ' while the laws and conditions of the pro- duction of wealth partake of the qualities of physical truths," in which there is "nothing optional or arbitrary," it "is not so with the distribution of wealth. That is a matter of human insti- tution solely. . . . The distribution of wealth depends on the laws and customs of society." * " Political Enonomy," vol. ii. MILL ON DISTRIBUTION. 201 It is amazing tliat Mr. Mill should think that, if legislatures chose to enact it, wealth and capital could be maintained in a state of constant equal distribution among all j)ersons, or that it could, perchance, be distributed in such unequal portions that honesty, piety, learning, complexion, personal beauty, or popu- larity, should get whatever excess over the share which would befall the lack of these qualities a legislature should see fit to enact. But ' he distinctly affirms that wealth-disti-ibution depends on parliamentary and judge-made law, and on such customs as society may choose to enact for itself. "The rules by which it is determined," he says, "are what the opinions and feelings of the ruling portion of the com- munity make them." But how comes there to be "a ruling portion of the community ?" Why should one portion of the com- munity be ruled by another ? Only because one portion has wealth and the other is in poverty. If Crusoe has a boat, fish- ing-tackle, and bait, and Friday has none, then Crusoe is capital, and Friday is labor, i. e., Crusoe has got in his power the results of work already done, Friday has got a hungry body which is willing to work if enabled to do so. Work done commands the mei'e willingness to work. This is the rule of capital over labor. It is plenty commanding destitution, distribution commanding production. Mr. Mill holds that wealth is unequally distributed because those who have it distribute it unequally, between themselves and those who haven't it. That inequality whereby a jiortion of society rules, is due to the fact that the portion which rules rules unequally. Inequality causes the persons, laws, and customs of society to be unequal. Mr. Mill's cause, is the consequence of its own effect, and his effect produces its cause ! 78. Dispersion of Capital Is a Mode of Destroying It. — Wealth being a power, and all power being poAverless when re- sisted by an equal power, it follows that to equalize wealth, as be- tween those who are to wield its power and those over whom it is to be exercised, is to destroy it. Wealth does not consist in means, but in inequality of means. Portions of wealth co-oper- ating, as among shareholders, to control labor, strengthen each other. But two portions of wealth, each seeking to com- mand the service of the possessor of the other, paralyze each other. Hence, between two persons of equal powers in all re- spects, and of equal wealth, the phenomenon of one employing the other to do any thing whatever, would be an absurdity. The 202 EGONOMIG PHILOSOPHY. story is told of Mr. Stephen Girard, of Philadelphia, that, bemg one day at the market purchasing provisions for his family, a pompous fellow of great pretense, but of small means, mistook the plainly clad millionaire for a laborer or porter. "Here, my good fellow," said he to Girard patronizingly, " don't lose your time moon-gazing, but shoulder this basket of mine, and earn a shilling by carrying it home for me. I live just beyond the residence of that tight old fellow, Stephen Girard. If you don't know me, you may know him. Will you go ? " " Certainly, " said Girard. Shouldering the man's basket, he followed the stranger to his door and received his fee. " By-the-way, " said his customer, " I may have occasion to use you again; have you a card with you? " ' ' I have no card, " replied the rich man ; ' ' but you can j)rob- ably find me by inquiring. My name is Stephen Girard." Here the absurdity of a jDOor man employing a rich one to render a menial service is so palpable, and the willingness of the millionaire to render it becomes so liumiliating, that only the sheerest combination of effrontery and ignorance on one side, and of quiet wit and equanimity on the other, could effect the climax. Essentially, the rule is universal that only the relatively poor are open toenjployment, and only those having more means can employ them. Out of this inequality grows the only power that wealth possesses, as one can very soon learn by undertaking to employ one much richer than himself to render any physical service. The same point may be tested in another way. Divide the whole wealth of the people of the United States, $54,000,000,000, among the whole people equally; $54,000,000,000 divided among 54,000,000 persons gives to each person $1,000. No one has more, no one less. Of this sum $600 is in land, and $400 is in personal property. If the land were divided according to area, instead of value, each one would have 43 acres. If a person now has either of these sums, what can he do with them? He can use them only for consumption, or for storing value temporarily against immediate want. But neither consumable values nor stored values are capital. Hence, as capital, they have ceased to exist. But no person having so small a sum could safely invest it in any railway, bank, factory, municipal debt, or like seciu'ity. No corporate enterprise could be permanently conducted which con- sisted of so many small shareholders. It would be a mob, not a directoi'ate. The New York Central Railway w^ould have 200,000 EGONOMIG LA W IS HUMANE. 203 shareholders, or as many as there are adult males in New York city. Hence the great concerns which now constitute our capital enterprises, and which employ probably three-fourths of the labor of Great Britain, France, Germany, and America, could have no existence. For, as large foi'ces of workmen practice a division of labor which small ones can not, so large capitals can effect a subdivision of their potency in the form of credit to many more persons, functions, and places than a small one. This increase in the potency of capital, through credit, magnifies much more rapidly than the capital. (A penniless adventurer who caused it to be believed that he had come over from England with five millions to loan, but had not, in fact, the means of paying a single hack hire, was enabled on this false credit to open a bank- ing house in Wall Street, receive deposits, buy a country estate, horses and carriages, entertain largely, etc. His credit worked in all ways and dii'ections.) To subdivide capital is, in this sense, to destroy it. But without these banks, manufactories, shipping lines, mining enterprises, all commercial interchange and association arnong men, in the degree adequate to maintain existing industries and civilization, would be not only impeded but paralyzed. Equality would be annihilation. What the socialist describes as justice would be famine. The radically equalized mob would surrender to military force, in order that through an abject abnegation of its liberties it might begin again in social slavery, and thence emerge and return to its present condition of reciprocal heljpf ulness and mutual freedom. 79. How Distribution of Wealth Attends Its Cumula- tion, and Getting Ricli Is Doing- Good.— Is there any economic law which causes men to create and distribute the com- modities of which others have need, and in so doing to distribute the price of the commodity back among its producers with that perfect equity which shall reward each according to his economic mei'it, but, if he fail of economic merit, shall still supply him according to his need? Why should Chinamen interest themselves in carrying bales of tea, or raw silk, on then* backs over the mountains, so that we may enjoy them ? It is because the wage of his day's service comes to him at sundown, indirectly and through various bankers in advance, but ultimately, and very straightly, from those who will wear his silk and drink his tea. But for this distribu- tion of wages to him, he would not be producing, but probably 204 ECONOMIC PHILOSOPHY. fighting or hunting. A process of mutual obsequious service goes on hourly between strangers all over the vs^orld, commerce consisting of a duplex system in which commodities and services are going one way, and their equivalents are returning. As the commodities unite in the currents of transportation, they become great cargoes. As the payments divide in the return currents of distribution, they become as small as the finest atom of sugar that can be detected by the nerves of taste. Mr. Jevons happily states this iaw to be, that value is due to need, and declines witli satiety, in each individual. Owmg to the fact that his capacity to con- sume any one thing is very limited, while his capacity to produce many things is almost boundless, as is also his desire to possess the products of others, a decline, in the value of all he produces over his own need, can only be prevented by his forwarding the surplus to him who needs it most, such last named need being expressed economically by the value of the return service he is "willing to render. As there is no limit to the degree in which one can desire the products of others' labor, so there can be ■ no limit to the degree in which he shall be stimulated to produce, however small may be his capa- city to consume the verj^ thing he produces. Every com- moodity declines in value in the degree that it exists in surplus at the point of production, but advances in value as it approaches him who most needs it. This law of declining and advancing values is the steam which propels the social mechanism. It is the involuntary philanthropic force which mainly feeds, shelters, clothes, employs, nerves, sti)nulates, educates, and governs the world, first in its industries, and then, where its industries fail to give relief, in its charities, which are as it were, its industries '\\\ the minor key. For charity is evolved among men because it is valued ; it comes in obedience to demand. Where gifts are highly esteemed they are made ; where effort for others is appre- ciated it is put forth. For all moral and religious, heroic, humane, and charitable effort results in a subtler and more spirit-- ual form of profit, carrying with it an increase of social and spirit- ual capital and power, which to finer natures, is more regarded than money. 80. The Greater tlie Accuniiilatioiis of Reproductive Wealth the More Equal the Diflfusion of Enjoyable Wealth. — To insure a complete and effective distribution of wealth among mankind, involves the expenditure of an enormous labor power, and the pressure of the most terrible persistency of WHAT AVARICE COSTS. 205 motive. It is accomplished so perfectly that cases of physical suffering' are extremely rare in all parts of the world, are usually associated with gi'eat imprudence or with stubborn vices, and are easily connected by even a brief return to prudent ways. To insure this pressure of motive, wealth is divided into two kinds, one of which can be the object of only a limited avarice, and then immediately satiates, viz., enjoyable or consumable wealtli, and the other of which, reproductive wealth, is the subject of custody and the means of social power, and can not be directly enjoyed.* So instinctively do all men assume this truth that to assume the opposite surprises us with a sense of humor. Col. Ingersoll effects this surprise, which is of the essence of hnmor, when he says, "How absurd that a man who already has 1,000,000 neckties, of which he can only use one a day, should work all day to get another necktie." The absurdity consists in selecting as the object of avarice a form of consumable wealth, instead of those forms in which wealth may be stored for ostenta- tion, as gold and diamonds, or by which it may be reproduced, as money, houses, lands, ships, banks, factories, machinery, etc. The passion of avarice can not be excited in favor of consumable wealth, except as it may constitute a merchant's stock of goods while it is in reproductive use. No miser works all day for an- other necktie, or apple, or orange. The passion of avarice can only be felt for those forms of wealth whose accumulation in large masses is a means of production, or of distribution, or of os- tentation, or of security, or in some way ministers to more per- manent wants than enjoyable wealth does, chiefly in the organi- zation of society. The one might be called individual, pleasui*- able, sensational, transient, emotional, perishable wealth. The other is social, instrumental, indirect, reproductive, capitalistic wealth. Food, raiment, shelter, works of art, entertainment and instruction, music, books, pictures, etc., are enjoyable wealth, though all of them become reproductive capital when gathered in stocks for sale, and the more permanent of them approach re- productive wealth, and often cross and recross the boundaries. Power's " Eve " or Church's " Niagara," exhibited for an admis- * Prof. Henry Sidgvvick (" Principles Political Economy," p. 86) says there is " need of a broad distinction between the two pirtions of a country's material wealth, which may be distinguished as consumer's wealth and producer's wealth respectively. By consumer's wealth I mean such material things as . . . are directly available for satisfying human needs and desires, producer's wealth (and similarly of course pro- ducer's services) being only useful indirectly ag a, means of obtaining the former." 206 ECONOMIC nilLOSOrHT. sion fee, is reproductive wealth. Placed in a private residence it is an aesthetic and high grade of enjoyable w^ealth, useful, also, like gold or diamonds, for storing wealth, and resembling repi'o- ductive wealtli in tlie fact that while the title to it may be private, its highest uses are social. Arms, factories, roads, and their means of conveyance, mines, ships, sliops, stores, banks, machinery, money, are all reproductive wealth. Mankind are chiefly in- terested, both from the economic and the humane point of view, in a distribution of these several kinds of wealth in divers ways. Consumable commodities need to be so distributed that the capacity of each individual to consume, especially clothmg, raiment, and shelter, shall be satisfied. Consumable wealth, when returning in payment for commodities, needs to be so dis- tributed that each agent in xiroduction, capital, labor, land, skill in management, etc., shall be paid in proportion to the degree in which it aids production. Reproductive wealth, since it can not be directly enjoyed by the body, needs to be so allotted that man- kind shall get its most abundant and effective use on the most economic terms and in the most convenient way. The farmer's wheat is governed in value by the law of satiety. All that he and his family can not eat becomes worthless, except as he can send it to those who produce no wheat. The question, what distributive share of the price the farmer will get, depends on how much of the price which it sells for in New York or Massachusetts will have to be deducted for railway freight, and paid out for wages and rent of land, or interest on capital. This depends on the economic laws governing the use by society of reproductive wealth. One of the most important of these is that, the greater the accumulation and concentration of reproductive capital under a single control, the lower will be the rate per cent, at which society can get its use, and the greater will be the number and variety of the use, it will render. Here, therefore, are two laws, both appealing to the same pas- sion of gain, with equal potency but in opposite directions. The law of satiety, confined to consumable commodities, says to their owner, " Away with them to those who are in need, send them swiftest to where the want is greatest. " The Law of Economy of Capital says, ' ' The greater your capital the cheaper must its use be lent to the producers and consumers of consuma- ble wealth." Society's interest, therefore, is in making con- sumable goods repulsive to the owner, producer, and capitalist the instant a supply sufficient for hnmediate need is obtained. WEALTH GETTING IS LIFE GIVING. 207 But society's interest is also that the accumulation of repi'oductive wealth, which is mere control or management, and not consump- tion, shall g'o on under the sway of an ambition that is insatiable, until it results in a power larger than its owner has the capacity to use profitably — a fact which is both made known, and cor- rected, by the fact that he begins to in vest unprofltably — therefore to lose on his investments, and thereby to disperse his capital. The function of all reproductive wealth, i. e. , wealth that earns or makes wealth, is either to create consumable commodities, as is done by the farmer, manufacturer, mechanic, artist, etc. ; or to forward the consumable commodities as rapidly as possible to their consumers, as is done by ships, railways, carts, and wagons, steam-powei', mule-power, porter-power; or to distribute the ownership, and subdivide the title to it, among all these con- sumers, as is done by merchants, traders, exporters, and middle- men ; or to fi.x stable and uniform j)i'ices on commodities, so that profits and wages may be made steady, by steadying that surplus, of price over cost of production, out of which profits and wages arise, as is done by produce exchanges and boards of trade ; or to receive from consumers and transmit to producers the returns or means of payment, as is done by banks, by coin, and by all agencies that issue money ; or to distribute these means of pay- ment among pi'oducers according to their several shares, as is done by the entrepreneur and capitalist in employing labor, hiring land and money, and paying out rent, wages, and interest; or to maintain order, observance of contracts, and integrity among all these interests, as is done by courts of law ; or to create such a popular conscience, as will alleviate the cases of failure and suf- fering to which the industrial life is in exceptional cases subject, as is done by religious, masonic, co-operative, philanthropic, and benevolent agencies for aiding the bereaved, defective, delin- quent, and unsuccessful classes. Reproductive capital is to society, relative to consumable com- modities, what the engines, tunnels, aqueducts, and water-pipes of a great city are relatively to the water which they bear to the thirsty, viz., means of forcing it from the point where it exists iu sui'plus, and is therefore useless, to the million points where it is not only needed, but most needed, the degi'ee of need being al- ways certified in economics by the return of effort or price the supply will bring. The question whether unequal diffusion of wealth is favorable to all the other interests of society as it is to production, whether 208 ECONOMIC PHILOSOPET. it promotes the highest development of intellectual ability, a wide diffusion of education, free republican institutions, or good morals and kindly and neighborly feeling among men, is im- portant but not strictly economic. It is because, what has been so freely and frequently said, and conceded, on these grounds, in behalf of equality in the diffusion of wealth, has caused a part of society to question the economic necessity and justice of any in- equality, that a defense of inequality from the economic stand- point is necessary. 81. -Capital as a Laborer. — Who first made the estimate, that the machine-power of England is equal to the manual labor- power of six hundred millions of people, I can not say. It has been widely current nearly fifty years, and, whether accurate in detail or not, expresses a general truth of the first importance, viz., that in modern history, since the advent of steam and steel, capital, through these agencies, utterly dwai'fs manual labor in its power to produce commodities. If labor be defined, as the direction of effective natural force toward the production of commodities or services for the relief of human want, which is manifestly its broadest purpose, it occurs that by far the lai'gest portion of the world's work is now done by capital, not in its employing capacity, but in its capacity as a physical toiler and a displacer of human toil. Capital, in the form of engines, boilers, tracks, and other rolling stock draws all crops to market in Western nations, leaving men to carry them on their backs only in China and parts of India. Capital, in the form of spinning jennies and power looms, does all the weaving of cloth. Capital, mainly, lifts the coal, and melts the ore, and hammers the iron. Capital sets the type, prints the newspaper, and transmits the news electrically over its wires. Capital constructs watches, predicts the weather, engraves, sews, and carves. Almost all of what is called skilled labor now consists in the wages-worker acting as tender, feeder, or regulator to the working machine. Hence old-time positions are reversed. Once labor toiled physically and capital superin- tended. Now, in the mam, capital performs the physical toil and labor superintends the machine while it does the work. Thus, on the elevated railways in New York city, all that tho employes are hired to do, is to simply do a little hnowing. The. change-taker must know that the ticket does not pass out to the passenger until it is paid for. The ticket-man must know that the ticket is dropped when the passenger passes through to the platform. The gate-man must know that the train has stopped CAPITAL EXPELLING LABOR. 209 before the passenger tries to get on or off — and that all are on or off before he signals the engineer to start. Finally, the engineer must know that he is signaled before he starts. Not one of all these employes performs a stroke of work that could not be pei*- formed by touching a spring with the little finger. This revolution has several economic effects of the utmost im- portance. It makes every effoi't of human labor, to work produc- tively without the aid of capital, impossible. A man can not walk, from New York to Chicago, so cheaply as he can pay his fare. The difference in cost of subsistence and lodging while going would make walking the costlier of the two. So, on no tei^ms of cheapness, can unaided labor compete with capital, in the form of machinery. Yet, as capital in these machines does the same work as labor would otherwise do, it fixes the wages of labor, or the value of the share which manual labor can earn by doing it. This is admitted by Kaii Marx, and forms the chief reason why he says the mass of society should be the owners of the instru- ments of production. On the introduction of spinning and weaving machinery in England, the spinners and weavers felt their suj)ersedure so keenly that they gathered in wild, riotous mobs and broke the machines. Pretty soon their services came into use in working the new machines, and the demand for En- glish labor was rather greater than before, and wages rose. But this rise was due to the fact, that the services of a very much larger number of spinners and weavers were undei'going displace- ment in China, Turkey, Portugal, the United States, and India. The housewife ceased everywhere to be the manufacturer, but only in Lancashire did the housewife get the profit of her super- sedure, in the form of employment on the new looms. But for this widening of the market, the class who went out of employ- ment in England must have remained without, at least in any de- partment of weaving. The performance of work, by capital, always works an immedi- ate supersedure of the laborer, and only re-employs him in the same general industry in case the market for its commodity is widened. What would become of laborers, asks the socialist, if capital should advance in the use of machinery until it could per- form absolutely all labor without invoking human aid at any point? It could do all, and possess all, and where then would labor be? The logical answer to this question would be that, if capital could manufacture the machinery of production without the help 210 ECONOMIC PHILOSOPHY. of labor, it would turn it out so cheap that a soiig would buy an engine, and the machinery of production could not, by the terms of the proposition, any longer bear a price. An increased amount of co-operation in production, a spirit of greater mutual subserviency, is necessary in consequence of the great part of the work done by capital. Tlie only men who can fit into the new industrial order are tlie the men of tact, wlio can accept discipline readily and obey orders implicitly, for only through such men can a wide organization of labor and capital, in industry, be effected. This causes the highest rewards of indus- try to come to the organizers. Their value is so generally recog- nized that it makes but little difference in their income, whether they work with their own capitals for profit, or manage the capi- tals of others for salaries. On the contrary, it becomes difficult for the recalcitrant, " cranky," indej)endent, and insubordinate class of workers to work in the more condensed center's of industry. Their best interest is to move out toward the periphery of the societary circle, where less subserviency to central headship is re- quired and moi'e personal independence is jDermitted. Hence the desire of every man " to be his own boss " prompts the class whose individuality is strong, to leave the centers of industry, where capitals rule, for the pioneer life, which can still be had by those who seek. On the frontier the capitals are still small, machinery has not yet superseded hand-labor, and there is less power, but more liberty. 82. Forms of Capital. — Are land, debt and credit, money, reputation, good- will, forms of capital when employed reproduc- tively and for a profit ? If they are capital, as between individuals, do they necessarily become additions to the aggregate capital of all the individuals in a country, to the same extent as they become capital between borrower and lender ? And if so, what distinc- tion is there between manufacturing capital and running in debt ? The difficulty in assigning to land the quality of capital arises partly from the fact that "capital" has been by some defined as the "fruit of abstinence," while title to land is, on the contrary, the fruit of appropriation. The power to appropriate land, however, arises always in connection with a prior expenditure in the nature of abstinence of various kinds, but more usually abstinence from the attractions, and high rewards, and high wages and ready amusements, of a compact social life. A century ago the tendency of economists was to speak of capital as the fund expended upon land, rather than as including the land itself. WHAT IS CAPITAL. 211 We tliink it more exact, to regard every economic term as bear- ing a cliange of definition, according to the clianged aspect in which it is presented, or the change in tlie function it performs. Land may be cajDital to one, and a mere burden on the cajjital of another. If a publislier have $50,000 of capital invested in his business, and withdraw $15,000 of it to ijivest in a residence, in this case, and so far forth, his land is a deduction from his capi- tal. If, however, he farms his land, or converts it into a driving park, in a manner that intends profit, it" becomes capital, even though he lose on it, but it is an unprofitable investment of capi- tal. • So far as giving mortgages on land, or otherwise incui*ring debt, leads to a profit which otherwise could not be had, they are capital. The antithesis of capital is not properly labor, but either lack of means — destitution — or means not set in motion to pro- duce pi'ofit — i. e., a hoard. Capital is means in motion — wealth at work — financial energy in action. It differs from a mere hoard as steam from water, or a river from a pool, or life from death. The incurment of a great national debt, during war, is frequently spoken of as an unx'edeemed waste of capital, as the firing of Avealth out of the mouth of cannon, etc. This mode of expres- sion comes into conflict with a broad popular sense that such periods are also periods of an extraordinary activity of exchange, stimulus to production, and creation of wealth. To whatever extent running in debt, or the creation of credits, or even the de- struction of values, gives rise to profits which else would not have existed, and increases production as well as consumes products, it becomes capital. Much of the loss by the great Chicago fire of 1871 was offset by the increased activity induced by the rebuild- ing. Much of the apparent possibility of gain which attends long periods of peace is converted into relative loss by the increasing timidity with which capital shrinks from enterprise. Hence the histoi'y of the period of England's wai's with Napoleon was, in both England and America, one of rapid growth of capital. The history of the ensuing peace, from 1816 to 1837, was marked by stringency succeeding stringency, and great individual distress, and private and public bankruptcy. In outward symptoms an expansion of credits lias all the ap- pearance of a gro\^i;h of capital. A shrinkage of credits affects industry in all its departments as a destruction of capital. Busi- ness men will repeat with great conservatism of manner the saying that tilings are getting down to their intrinsic values, or down ' ' to 212 ECONOMIC PHILOSOPHY, hard pan, " when property of various kinds declines in value under the influence of a general collapse of credit. If it were generally undei'stood that value is merely the esteem in which the things are held which constitute capital, it would be seen that the process of reduction in esteem might go on until all capital and civilization had disappeared, and but one inhabitant would be left in the world, and he might be fleeing before a pack of wolves, in which case " hard pan " would still be just before the fugitive, and his in- trinsic value, to the wolf, would not be realized, so long as he was able to maintain his flight. 83. Capital as an Emancipator. — The greatest service, per- foi'med by capital for man, consists in having abolished forcible slavery, as the means of organizing labor, and substituted for the lash the stipulated wage in money. It was not merely necessary that money should exist, and be generally and actively circulated, before masters would come to see a more ready persuasive in wages than in force. It was in- dispensable that money should take the form of capital and machinery, that it should involve calculations so intricate, and labors so arduous in its direction, customers so numerous and markets so distant and employes so multiplied, that em- ployers should lose both the time and the desire to exert a per- sonal tyranny over their men. Workmen may grieve at the heartlessness of a given number of hours of their labor being treated as a commodity, but how priceless to the slave was this boon when it was first granted. It was the very substance of emancipation — the essence of freedom. The relegation of the former " servant" into a member of the " proletariat," over whose hours outside the shop the employer had no control, was also in its time emancipation.* It may now be said that among all the largest employers of labor the desire to rule laborers, for the sake of ruling only, has essentially ceased to exist. The model capitalistic employer has now no more desire to rule a laborer, apart from the motive of profit, than he has to dictate styles to his customers, or prices to his sellers of raw materials. The animus toward despotism has gone out, and its place is filled by a desire simply to do the * Griinlund, " Modern Socialism," p. .56, says : " Progress takes place only when either some individuals control other individuals, or when they voluntarily co-operate together. But voluntary co-operation is a hard lesson for men to learn, and therefore progress has to commence with compulsory organization, with control of every thing, with slavery." WHAT BECOMES OF WEALTH. 213 most profitable thing. But this also the workman desires to do. If, as we have contended, all the employment of labor is a loan of the certain unit of capital essential to employ the laborer, and hence is a fair and equal exchange, the laborer dividing the joint product equally between himself and the share that hires liim, it is obvious that the true and final emancipation from the wage condition will consist in tlie laborer buying and owning the capital that hires him. He will then be drawing the profit as well as the wages. In railroad enterprises tl;e laborer can accomplish this result by owning $8,000 of the stock in the road. In manufac- turing enterprises he need own only $2,500 of the stock. In farming enterprises $1,200 will suffice. When he has bought this amount of the capital of the enterprise for which he labors, he will be reaping the entii^e profit on the capital with which he labors. When all the workmen, on all the roads, shall have placed themselves in this position, it can no longer, with truth, be said that any one is making a j)i'ofit out of their labor but themselves. This would consummate emancipation absolutely. 84. Redistribution of Ill-Used Wealth.— That invest- ment in property of every kind, is a mode of distributing wealth in the direction of the greatest demand, appears from the fact that to make the property pay a return it must either be improved, or it must be reserved for improvements more valuable than it will now bear, or its holder will lose all he invests. If he loses all he invests, this is certainly an effective distribution of his wealth. If he reserves it for improvements more valuable than it will now bear, this is part of the process of improvement; itself. If he improves it, i.e., puts on buildings for rental, he multiplies the supply of shelter and working and living space, and makes one investment of his whole capital in labor in the act of putting up the buildings. If the profit -maker, by means of employing labor and investing capital successfully, becomes so wealthy that he desires to live luxuriously and ostentatiously, he enters on tlie systematic disper- sion of his wealth among the laborers of distant lands, and among those classes of the earth's population whose existence is most precarious, and who stand most in need of financial help from the centers of civilization, because of their distance from civiliza- tion and wealth. Luxurious living is best adapted to the I'elief of the precarious and distant workers, while reproductive industry is best calculated to help the near, sure, and strong workers immediately around 214 ECONOMIC PHIL080PHT: us. For the near, sure, and strong workers immediately around us will generally be found producing the necessaries of life, since the production of the necessaries of life always commands the surest returns and pays the steadiest rates of interest on capital. Therefore, the investment of capital reproductively employs the raisers of the crop, builders of the houses, preparers of the food, clothing, and shelter in and on which we subsist. As human subsistence depends on these occupations, a fair return must always accrue to them somewhere. If the farmers in Ireland suffer it must be that farming is carried on in America under more favorable conditions, and these the Irish farmer comes to America to obtain, Lintil, by the mobility of labor, the conditions are pi'oximately equalized. 85. Distributiou by Luxury. — The luxuries, on the con- trary, are precaiiously produced. The hai'dy Norway or Spitz- bergen savage ruoves each year ne.arer to the pole in order to get with more ease the ermine which is worn by kings and judges in the courts of Europe, and the eider down which makes the princess' pillow or lines the duchess' cloak, as well as the seal- skin which protects the fine lady from the cold in the winter of our warmer clime. The negro on the Congo brightens his home in the jungle with the return he gets for the ostidch feathers or ivory which he sends hither to be worn in ladies' hats or carved into elegant designs for ornamenting their bureaus. The moun- taineer in Peru or Hindostan toils hard with his herd or pick or drill in the mountains, knowing that he can live on the flesh and milk of his few goats, and now and then may be made rich with the price of the crystal of value which he finds, or even a diamond. The Ceylonese pearl-diver is lifted higher, in worldly comfort, by the fact that fine ladies in Paris pay for, and wear, the trophies which he brings up from the ocean's depths. The Parisian lace- maker is poor, and her life precarious, because fine laces can never be a strict necessity of life ; but lace-making wards off the wolf of hunger, and makes her grateful for the vanity of the wearer of fine laces, which are to their maker life itself. The diamond- cutters are poor. The diamoiad- wearers are rich, but the diamond- cutters are less ijoor than they would be if no one wore diamonds. The Spanish peasantry, cultivating grapes and making wine on the Pyrenees, are poor, but they are richer than if the distant rich abstained from wine. The silk and tea growers of China jDroduce what is felt to them to be a necessity, and are in such a condition of comfort that BELIEF THRO UGH L UX UR Y. 2 1 5 Adam Smith, though with some error, sj)eaks of China as the wealthiest of nations. The growers of roses in Bulgaria, from which attar of roses should be made, are poor amidst their flowers, but richer because of the foreign market for their luxury. Art is a luxury, except in so far as it is a popular amusement. Hence, great artists have struggled hard for life, but not so hard as if fevver patrons of art had been willing to scatter wealth on pictures. Historically, the fine arts have depended on the rich for their patronage. These instances show that luxury is often and generally the almoner whose benefaction carries relief to the most diversified classes, and to the farthest distance, both geographically and socially. 8G. Its Hiinianity Arraigned. — " But, " asks the socialist, "is it economically just, or necessary, that wealth shall be so unequally distributed that the use of luxuries, by one class in one part of the world, shall be necessary to relieve the misery and squalor of the poor, in others? " Much of the vigor of this anthithesis consists in the assump- tion that luxuries are identical with happiness, and that poverty is identical with misery and squalor. No social fallacy can be more apparent. Those who use luxuries may live in great misery. Those whose lives are straitened by want, in a way that deprives them of many of the conveniences of life, may have better health, sounder minds, and happier lives than those who are surrounded by luxuries. Therefore, luxury can not be used as the antithesis to misery, but only as the antithesis to plainness of living. Prince Albert of England died in his palace, of breath- ing sewer gas. Hence he died in and of squalor or filth as truly as if he had lived in " Tom-all-Alone's." A. T. Stewart died of dys- pepsia. Hence he died of slow starvation, for, if nuti^ition can not be carried to the blood, it is starvation to the body, whether it is stopped by lack of bread in the pantry or by lack of gastric fluids in the stomach. Sir Isaac Newton laboi-ed at times under a de- gree of nervous exhaustion through overwork which rendered him irritable and unreasonable in his treatment of his friends. Profoundly as they admired him, they at such times could not en- dure him. Feeling that his own condition bordered on insanity, he may not have been as truly blest in his career as the healthy and vigorous glass-blower who shaped the lenses for his tele- scopes. The economic government of the world is such that the prime requisites of life, food, clothing, shelter, and society, come to all 216 ECONOMIC PHILOSOPHY. the inhabitants of earth, with casual exceptions that are rarer than death by fire or flood. The human body and mind are also so elastic that they everywhere depend, for absolute ability to be happy, only on these four conditions. Servants are as generally happy as masters, the woi'kers as the idle, the poor as the rich, the obscure as the famous, the weak as the powerful, the ignorant as the learned. The true question, because the true antithesis, must not be between wealth and misery, but between luxurious living and spare or frugal living. The question, as thus modified, be- comes this: Is it economically just, or necessary, that wealth shall be so unequally distributed that the use of luxuries, by those who have more wealth than they can expend upon necessaries, shall conduce to supply those who produce these luxuries with the necessaries of life. Viz., food, shelter, clothing and society. In this form nothing can be more just, social, or humane. There seems to be as strong an inherent necessity in the nature of economic science that wealth should be unequally distributed as there is in human seiitiment to oppose inequality. The un- equal distribution of the ownership of reproductive capital is es- sential to the most economic steering or direction of industry, the most judicious inauguration of the enterprises which employ capi- tal and labor, to the most universal and equal employment of labor, to the greatest diffusion and cheapness of the products of labor, to the most general equality in the wages of labor, to the most rapid and effective production of enjoyable commodities, and to the most far-reaching and equal diffusion of these commodities for consumption, both with reference to space, time, and numbers. We have defined reproductive wealth as that portion vvhich can not directly satisfy any want of man, but is employed to promote the production of enjoyable commodities. It includes land, labor, in certain aspects, machinery, ships, railroads, beasts of burden, and all means of transportation, money, whether coin or credit, banks, title deeds, and contracts, and the courts of justice for en- forcing them, buildings rented for either residence or individual occupation, theaters, chui'ches, schools, manufactories, stocks of commodities held for Avholesale jobbing and retail, and generally every thing that will not be eaten, drunk, worn, or otherwise en- joyed, and consumed in being enjoyed, by its present possessor. Enjoyable commodities are food, the shelter of home, clothing, ornaments, books, and all reading matter, society, instruction, amusements, entertainments, plays to him who attends them, songs to those who sing and hear them sung, and every act or SA VING AND SPENDING. 217 thing possessing the element of cost or value which ministers directly to human gratification or produces pleasurable or desired emotion. Eeproductive wealth, considered with reference to the use its owner will make if it, has three stages, viz. : the j)eriod of absti- nence or hoarding, which results in its accumulation ; the period of power, in which it is employed to steer or direct the course of in- dustry, to inaugurate new enterprises, employ labor, and produce commodities and wealth ; and the period of dispersion, waste, or altruism, by which it passes to other hands. These three periods marking the rise and fall of fortunes, correspond to the periods of growth and decay in living organisms. 87. Society's Gain by Economy. — In the period of absti- nence, the worker is working for small returns. Perhaps it is Cor- nelius Vanderbilt rowing a boat as a ferry between Staten Island and New York for $1 a day or John Roach working in an iron foundry for $2.50 a day. In either case, many others are gettin^g as much, but few others are saving as much. If another, getting the same wages, spends ten cents a day for tobacco, ten more for beer, ten more for riding in a stage when he could walk, and thirty cents a day for good clothes when he could wear as comfortable but less genteel for ten cents, and the penurious man saves the entire fifty cents, it is plain tliat while the hoarding is going on, the one who does not hoard has more enjoyments, more ease and a better time than the one who does. Hence, as to this period, the one who will never be rich, has no ground of complaint, and feels no sense of injustice, against the one who will. When the saving of fifty cents a day has gone on for a year, it represents $150 capital. If the ferry line consists of three boats worth $40 each, Cornelius can now buy out the boats, or buy new boats and start an opposition line. If the line usually carries thirty passengers a day at one shilling each (old New York money) and earns freights to the amount of $10 a day, here are $13.75 to be got by hiring two men and working himself, after buying the three boats for $120. In short, he suddenly rises from wages of $1 a day to a profit of $10.75 a day, while he continues, by his work in rowing one of the boats, to earn also $1 a day. But he staiids a chance of losing his $120, for something may happen by which travel may cease, or the boats may be wrecked, sunk, or burned. This chance he ventures. Hence his increase of income is due to three qualities — abstinence, sagacity, and courage. Having now an income of $11.75 a day, if he continues 218 ECONOMIC PIIILOSOPIIY. to live at fifty cents a day he can in fifty days buy a sailing sloop which will cost |500, and increase his earnings to $20 a day, while lessening his labor and expenditure. In every step of tiiis process he benefits tlie labor that needs employment and the people that need transportation. The people of Staten Island get a public ferry established, greatly f;o their profit, without being at any expense in its establishment. If it proves to be a mistake of judgment, and a losing affair, the loss all falls on Cornelius. This is a saving and gain to society in the first instance, as com- l^ared with the cost of imposing a general tax whereby to start the ferry — a project so doubtful that it would perhaps be a more costly labor to get the people to vote for it, than to start it at private risk and run it at private cost. Hence, alike in the period when hoarded capital assumes the responsibility and risk of inaugurating new enterprises, steering industry, and employing labor, the public at large make a great saving in being relieved of all risk and cost in a matter which will inure to their great advantage. The qualities of character which fit a man to employ labor and direct industry are : (1) Parsimony. — This disposes him to devote the minimum of his means to personal consumption of himself and household, and the maximum to reproductive purposes. This is what society itself at this stage most needs, since it wants reproductive industry to go on. most actively. (2) A Keen Perception of Values. — This enables him always to so adjust his purchases of raw materials and of labor, and his observations concerning the tendencies of demand or the future wants of his customers, that he will buy and produce for less than he can sell. Only thus can he achieve that expansion in his capital, by which to expand his purchases of materials and labor and the magnitude of his sales. Hence the community are interested that every attempted producer of wealth should have a keen sense of value. Without it his business can not obtain that magnitude which is essential to cheapness. Finally, financial courage, or the will to let money go when money is to be made by risking it, is required. Without this, one's capital will slowly consume in expensive timidity and unpro- ductive idleness, while one is waiting for those ideal opportunities to arise in which the profits are large, the returns certain, and there is no risk of loss. Such chances never come. Producing on a large scale promotes production on a cheap LARGENESS AND CHEAPNESS. 219 scale ; (a) by the sub-division of labor it makes possible ; (b) by the substitution of machinery for manual labor which usually accom- panies it ; (c) by getting control of a larger demand for consump- tion ; (d) by the substitution of credits for cash in its expenditures ; (e) by passing securely through reverses which would wreck industries conducted on small capitals ; (f ) by paying wages of superintendence to but few persons in proportion to the whole number employed ; (g) by the skill and delicacy of judgment con- cerning questions of profit which is developed by a long habit of doing only profitable things.* *Example A.— Effect of large cajntals to induce subdimsion oflabm\ — Adam Smith be- gan his great work (" Wealth of Nations," BIj. i. Ch. i.) by pointing out that while one man, working alone, might not be able to make more than one pin a day, certainly not twenty pins, ten men, each making a particular part, one drawing out the wire, another straightening it, a third cutting it, a fourth pointing it (or rather, pointing numbers of pins at once), a fifth grinding it at the top for receiving the head, the other three making the head by as many distinct processes, and so on, the whole ten could make about 48,000 pins a day. Each one would thereby increase his make, by mere sub-divi- sion of functions, from one or twenty pins to 4,800 pins. Many persons can earn their own living by rag-picking, street-sweeping, chimney- sweeping, and other peculiar occupations, very simple, and requiring no skill, strength, or endurance, in a community where there is a great division of labor, who, if required to live by farming, hunting, or systematic work at a trade, would die. Some writers appear to so mistake the fact that very helpless and inefiicient workers crowd into the great cities and live there as to infer that, because such are only found in the great cities, therefore there is something in the construction or management of society in great cities which makes them helpless and inefiicient, whereas the fact is, the sub- division of employments in great cities reduces them down to processes so simple that the simplest minds and weakest bodies are there able to find something which they can do. Hence Henry George says : " To see human beings in the most abject, the most helpless and hopeless condition, yea must go, not to the unfenced prairies, and the log cabins of new clearings in the backwoods, where man, single-handed, is commencing the struggle with nature, and land is yet worth nothing, but to the great cities where the ownership of a little patch of land is a fortune." Conceding this to be true, it only indicates that thousands of people can get a living of some kind, where there is great subdivision of labor, who would perish if presented with a quarter section of land and obliged to get a living from it. Example B.—Subftitution of machinery for manual labor brought about by large capi- tals. — Mr. Moody* computes that on the Grandin farm in Dakota wheat worth 70 cents per bushel is produced at a total cost in all ways of only 16 cents per bushel, leaviug a net profit on the first jear of farming of 54 cents per bushel, or over 300 percent. Mr. Edward Atkinsont says: "If we convert the work done in the direction of machinery upon the great bonanza farms of far Dakota into tlie yearly work of a given number of men, we find that the equivalent in a fair season, on the best farms, of one man's work for 300 working days in one year, is 5,500 bushels of wheat. Setting aside an ample quantity for seed, this wheat can be moved to Minneapolis, where it is converted into 1,000 barrels of flour, and the flour is moved to the city of New York. By similar processes of conversion of the work of milling and barreling into the labor of one man * "Land and Labor in United States," by Wm. Godwin Moody, p. 53, + "The Kate of Wages," p. 75, 220 ECONOMIC PHILOSOPHY. 88. Society's Gain Tby Liarge Accumulations. —Large capitals draw lower rates of interest than small, notwithstanding that equivalent quantities of capital in them often, and except in for a year, we find that the work of milling and putting into barrels 1,000 barrels of flour is the equivalent of one man's work for one year. By a computation based upon the trains moving on the New York Central Railroad, and the number of men engaged in the work, we find that 120 tons, the mean between 4 500 bushels of wheat and 1,000 barrels of flour, can be moved 1,7C0 to 2,000 miles under the direction of one man, working eighteen months, equal to one and one-half men working one year. When this wheat reaches New York City, and comes into poFsession of a great baker, who has established the manufacture of bread on a large scale, and who sells the best of bread to the working people of New York at the lowest possible price, we find that 1,000 barrels of flour can be converted into bread and sold over the country by the work of three persons for one year. Let us add to the sis and a half men already named the work of another man six months, or half a man one year, to keep the machinery in repair, and our modern miracle is that seven men suflice to give 1,0^^0 persons all the bread they customarily consume in a year. If to these we add three for the work of providing fuel and other materials to the railroad and to the baker, our final result is that ten men working one yenr serve bread to 1,000." '■Again, iron lies at the foundation of all arts. At an average of 200 lbs. per head in the United States, the largest consumption of iron of any nation, we yet find that the equivalent of one man's work for a year, divided between the coal mine, the iron mine, and the iron furnace, suflices for the supply of 500 persons. One operator in the cotton factory makes cloth for 200, in the woolen factory for 300 ; one modern cobbler (who is any thing but a cobbler), working in a boot and shoe factory, furnishes 1,000 men, or more than 1,000 women, with all the boots and shoes they require in a year. So it goes on, and the more effective the capital the higher the v/ages, the lower the cost the more ample the supply." Of course, if the general cost of producing wheat throughout the world could be brought down to the low figures of production in Dakota, wheat would soon fall every- where to about twenty cents a bushel, and bread to one cent a loaf. In printing, seventy -five men can do as much work on a modern printing press as ten thousand men could have done with the hand-presses in use in the beginning of the century. In building, the planing machine does the work of twenty men. In boot and shoe making, one man fifty years ago would make two hundred pairs of boots and shoes in a year — now three hundred pairs. One woman will sew on a machine as mtich as twelve with the needle. Example C. — 0/the use of large capitals in controlling a larger demand for consump- tion. — This is conspicuously seen in the operations of competition between rival rail- ways and great manufacttiring companies, and underlies their tendencies toward consolidation. Mr. Vauderbilt purchased the Harlem Road when its shares were worth from eleven to nineteen cents only, and when it was almost without business. He then offered to carry ail the traific coming into Albany over the New York Central for one fifth of what had previously been paid to the Hudson River Road for the same service provided the Central would make a like discrimination in favor of the traffic coming to Albany over the Harlem against that coming by the Hudson River. The induce- ment was too great to be resisted. In a few days Hudson River Railroad stock fell so enormously, and Harlem rose so rapidly, that Vanderbilt was seen to be master of the three roads by owning one. He soon passed into legal control of all the three. By massing his capital, so as to effectively control the largest possible demaudfor the work of his road, he revolutionized the railway business, and, applying the same tactics to the other roads, compelled their virtual consolidation with the New York Central, thus converting railways from single roads into systems. This made him the richest man living, and did much to improve railway transportation and cheaper freights. DECLINE OF PROFITS. 221 farming- usually, effect a larger production of wealth ; and thus the community makes an economy out of large capitals which it could not effect with the same quantity of capital subdivided The rates at which railway freiglirs were clieapened, largely through the increase of traffic and cheapness of service brought about by this system of concentrated control, are shown by the following table,prepared by the Hon. Joseph Nimmo, Jr., late Chief of the Bureau of Statistics : By lake By lake By By lake By lake By Years. and and all Years. and and all canal. rail. rail. canal. rail- rail. Cents. Cents. Cents. Cents. Cents. Cents. 1868 24 54 29.0 43.6 1877 11.34 15.8 20.3 1869 23.12 25.0 35.1 1878 9.15 11.4 17.7 1870 17.10 23.0 33.3 1879 11.60 13.3 17.3 1871 20.24 25 31.0 1880 13.27 15.7 19,7 1872 24.50 28.0 33.5 1881 8.19 10.4 14.4 1873 19.19 26.9 33.2 1883 7.89 10,9 14.6 1874 14.10 16.9 28.7 1883 8.10 11.5 10.5 1875 11.43 14.6 24.1 1884, Jan. to Sept. 6.00 9.75 13.0 1876 9.58 11.8 16.5 Q,uotatious are wanting for 1885. It is shown by this table that since 1868, when the statistics commence, the freight on wheat from Chicago to New York has declined to one-fourth its original value in six- teen years. Example Z>.— The subjugation of the Confederate rebellion by the Union arms was financially, perhaps, the most remarkable triumph ever witnessed of the substitution of credit for cash values. At the outset the Federal Government had no money, and not more than $.50,000,000 in gold, all told, exifted in the country, and hardiy any of this was in the hands of the government. Secretary Chase met the bankers of New York, by appointment, to obiain a loan. They offered him $50,000,000 at a high rate, and said "that must be their ultimatum." " Gentlemen," said Mr. Cha?e, "it is for the government of the United States to propose ultimatums. Since you can not lend me the money on which to run the government, I will compel you to run your banks on my money, if I have to issue government notes until it takes a bushel of notes to buy one breakfast." The war was fought through almost wholly without any other than credit money, the only tie connecting it with gold being that itwas, fora time, fundable into gold-interest paying bonds', the gold interest on which was secured by collecting the customs duties in gold only. For every other use in the United States, except that of paying customs duties and interest on the public debt, tte credit of the government was substituted. This substitution of government credit, in the form of greenback notes and bonds, for the previous attempt to use gold, became in reality, since very little gold had been in fact used, in substitution of public for individual credit, or of government notes for book accounts, which had the effect of bringing business over from a private credit basis to a private cash basis, through the use of government credit, as the equivalent of cash, in all domestic trade. Goods which had previously been sold on long time, i.e., on the buyer's promise to pay in 60 or 90 days, were now sold for government notes. These became so abundant and so cheap, relatively to gold, that debts which prior to their issue could only be paid with $100 in gold could now be paid in notes, t*^ c gold value of which was only S70, $60, or, at least for a few weeks, $45. As every body who had money preferred something else to it, cash payments were i)romptly made on every side, and prompt- ness in meeting liabilities had almos^t ceased to be a virtue. The bankruptcy of the government made every body flush. The business failures shrunk in the United States from 6,993 in 1801 to 495 in 1805, from a total liabilities involved in IStll of of $307,310,001 to a total liabilities involved in 1803 of only $7,899,000. Crimes against person and property fell off in like proportion, jails were empty, and the courts dc- 222 ECONOMIC PHILOSOPHY. among many holders. A newsboj' with fifty cents capital will buy fifty papers at one cent and sell them for two cents each in a day. Although he combines a good deal of labor of running and shouting, yet no part of the fifty cents is wages of labor, because no person employs him, and he places his whole capital at risk. If he should happen to lose his i^apers, or they should be destroyed, or remain unsold until the next day, he would ha.ve lost his entire capital. Hence no part of his gain is wages, but all of it is profit ; for profit may, as well as wages, be an inducement to labor. The profit on the fifty cents is 100 per cent, a day. When he has made a dollar he can employ a comrade who has no fifty cents to help him, giving him half the profits; and at the end of the next day, if successful, he will have seventy-five cents as the gain of that day, fifty cents on his own work, and twenty- five cents on that of his conn-ade. His return on his second fifty cents is only 50 per cent, a day. When he has $10 his income would rise to $2. 50, if he could get 25 per cent, a day on the whole, and he Avould be a bright financier if he could do better ; for the quantity of leg-woi-k and shouting which he can do in connection with each dollar of the ten is only one-tenth as much ' as he could do for the first dollar. As capital increases, the amount of labor the owner can give to a given sum of it declines, and therewith his profit declines. When the capital rises to $100, the newsboy or peddler of any kind who can make it earn him $10, or 10 per cent., a day would be a genius. When it becomes $2,000, and the newsboy has graduated into a merchant selling books or groceries, he could not hope, still with the utmost aid of his own labor and that of two assistants, to come out of the year with a gross profit of more than $2,000, so that the rate per cent. eerted. Shortly after the close of the war the former average of failures and crime again returned. Thesubstitutionof credit formoncy, which the nation as a whole then underwent, has sometimes been imitated on a small scale by private firms and corporatioBS, but the stringency in means, which usually suggests it, is not favorable to success, except in the cases of such notable trading firms as the Hudson's Bay Company, the Alaska Fur Company, the East India Company, whose promises or accepted orders would circulate among large populations in lieu of money. Example E. — Oftheuse of large capitals to pass securelij through reverses which ivoitld ' wreck the same industries if owned by small capitals.-— Ji\ the shrinkage of railway stocks in the United States 1882-4, shares whicli had been worth $0,000,000,000 in 1881 became worth less by |2,000,000,000 in 1884. All this loss occurred without the suspension of traffic on any road tr any interruption to business. Had all the roads been owned by small stockholders the ruin to individuals would have been uldesprt'ad and the suffer- ing very great, as one will readily see by assuuiing a similar shrmkage in the values of fjii ins or other private properties. GREAT CAPITALH AND SMALL PROFITS . 223 has declined from 1 per cent, a day to 100 per cent, per annum. With $100, 000 he is fortunate if he makes $10,000 by safe and regular business, without speculative investments, a still further decline of nine-tenths. When a man's fortune rises over a million he begins to invest at 5, 4, and 3 per cent., because he can there- by put his money where it needs no watching, and he is sure of his interest. It is, therefore, a law of economics that the rate of interest, at which capital lends its services to society, declines as the volume of capital held by one owner increases. Large capitals also serve the public more cheaply than small ones. A merchant, having $1,000,000 capital, can and will sell goods cheaper than one having $10,000. A bank having a very large loanable capital can, and will, lend cheaper. The I'ailways, representing $50,000,000 capital, each, in the Northern States, carry passengers at two cents per mile and freight at one-third to one-half a cent per ton per mile. Southern and frontier railways, having smaller caj)itals and less traffic, charge twice or thrice higher rates. The large factories manufacture cheaper than the small. Instance the great cheapen- ing of goods everywhere, when the system of spinning and weav- ing in every house merged into the large factory system. Even the large landlords rent cheaper. Under the great landlords of England rents are far lower than in the United States or France, and, in the city of New York, those who can rent of the Astors or Trinity Church are estimated to fare about 15 per cent, better than those who rent of the small landlords. The concentration of productive capitals, into few hands, pro- motes the most far-reaching and equal diffusion of enjoyable prod- ucts or commodities for consumj)tion, over the widest area, to the greatest number, and in the shortest time. Reproductive capital, not being itself enjoyable v^ealth, can be used for no other purpose than to forward enjoyable wealth to its consumer. The banker does this when he cashes the check of a traveler making the tour of Europe, or a merchant buying goods. The merchant does the same when he sells goods and buys again. The manufacturer does this vs^hen he weaves carpets. Since all these men can, as we have seen, and do render this service more cheaply, the larger the capitals they have to work Avitli, it follows that consumers must secure an increase of enjoyable wealth, by reason of the existence of the large concentrations of caj)ital, which they could not get if those concentrations of capital were smaller. He gets his goods carried four times as far, for the 224 ECONOMIC PHILOSOPnT. same sum, by reason of these concentrations of capital and control,* 89. Liarge Capitals Lessen Consumptiou. — The control or custody of a large amount of reproductive capital into the liands of one owner inci^eases very little, if at all, the quantity of enjoyable wealth he can, or will, consume. On the contrary, it may in many ways diminish his capacity to consume wealth. t * That the actual distribution of all enjoyable and consumable commodities is af- fected with marvelous equality amont; all the members of society is shown, by com- paring the total amount produced in the country with the amount each one gets. Mr. Edward Atkinson* l^ays "that the total value of the annual product of all industries in the United States by the census of 1880, including the part tnat is sold and the domes- tic consumption upon farms and in families, would not exceed $10,000,000,000 in the cen>us year at the retail prices for final consumption." He then says: " If the census esti- mate be divided by the population of substantially 50,000,000 people, we reach $160 to $170per year as the sum representing the average annual product for each person, or a fraction less than forty-four to forty-seven cents per day for 365 days." Mr. Atkinson believes from other data the annual product is flfty-flve cents per capita, or a little under $200 for each person . The census, however, it must be remembered, only enumerates principal agricultural products and principal manufacturing products. In the matter of meats it fails to enumerate the annual growth and slaughter of meat for food, confining itself to the meats which pass through the the packing houses, viz . , $303,000,000. It enumerates the total quantity of food-animals existing, but not the annual increase or consump- tion, not any of the meats killed by our 76,241 butchers throughout the country, nor by farmers on farms, nor the poultry, game, geese, ducks, etc., which are killed and consumed at home. These and other omissions in the census, amount, in the judgment of the present writer, to an error of 50 per cent, in the entire computation; for it is not probable that the meat-bill of the American people is less than $1 per head per week, or ten times the sum named in the census. If so, this error alone would bring the an- nual production up to $3,700,000,000 more than that stated by Mr. Atkinson. Whatever the total production may be, the whole force of reproductive capital is expended in speeding it to the point of greatest demand. Very little actual loss or waste occurs ex- cept in the unsaved sewage of the large cities. As Mr. Atkinson says, "if no more is produced no more can be had." t The hoarders of small sums of money, say from $200 to $2,000, have in most coun- tries so great a distrust of banks that they prefer to keep their hoard in go'd, buried in the ground, or locked up in chests, or, as the phrase goes, in old stockings. This operates as a withdrawal of the hoard from circulation, and, in France particularly, the amount so withdrawn is an important and nearly constant quantity. As a rule, the large capitalists withdraw nothing from actual use by society in the form of a treasured hoard. Being well acquainted with banks, they deposit their entire hoard with them, and thus place it where, through the loans made by the banks, it will have all the cir- culation that can be given to it. Their stocks, bonds, shares, and other evidences of <1ebt are not actual reproductive capital, but only claims upon reproductive capital. The railway shares represent engines, cars, tracks, and depots, in actual use by the em- ployes of the company in serving the public. So of their shares in factories or other stock concerns. The rich, therefore, have no hoard, and withdraw a smaller idle capital from active use than the poor. * " The Distribntion of Products," p. 70. LIMITS ON C0NSU3IPTI0N. 225 The poor usually have more healthy labor and less harassing' care than the rich, and physical labor has a better effect pn the health, ordinaiily, than mental solicitude. The plain, substan- tial food of the toiling classes promotes digestion better than tliat of the rich. As the poor man is not ashamed to select an expert cook for his wife, while the rich man would usually marry one who knew little about cooking, the poor man, at least throughout the United States, is rather more likely to eat well-cooked food than the rich. He therefore eats better, sleeps better, digests bet- ter, and consumes more food iier day at the average, than one who has more money to buy food with. Nature has so limited the capacity of all men to consume wealth that it is difficult to pass its barriers. No man can eat more than three meals a day, and this all poor men get, with exceptions that are as rare as rail- road accidents. No man can wear at once more than that limited supply of clothing which all poor men Avear. If he buys more, he must, sooner or later, give it away unworn. No man can sleep in more than one room at a time. If lie build an extensive palace, he must either leave it vacant and gloomy, or he must fill it with his guests and friends, or his ser- vants. If with the first, he makes his palace a temple of hospi- tality and sociability rather than a private residence, and the maintainance of such a palace becomes a most rapid and effective means of dispersing his wealth. If with the second, his palace becomes a comfortable asylum for the many poor — who will gladly render him the slight services they may be able to, in return for home — and a means of ostentatious, though soixiewhat lonesome, splendor to him. Adam Smith regards an expenditure upon a costly retinue of servants and retainers as at all times an unprofitable expenditui'e. But it may be doubted if, all things considered, those who main- tain the servants may not ordinarily be better judges than a dis- tant observer, both of the cost of maintaining them and the profit. In the feudal and old baronial organization of society, in the patrician families of the Romans, and on the Southern slave plantations, there was a system of maintaining many dependants, each of whom would seem, to an observex', to do very little toward the common support. Yet this w^as a system, in effect, of indus- trial co-operation and reciprocal exchange, organized on the basis of rank instead of capital. But, where rank and authority have the effect to cause each to do toward the common supx^ort the thing he is best able to do, the effect may. be as productive ecou- 226 ECONOMIC PHILOSOPHY. omically, and somewhat more stable, dignified, and honorable! socially, than if the designed object of the general employer were to make money, and the sole motive of the employe were wages. Many of the Roman patricians, Southern slave-holders, and feu- dal barons contrived, notwithstanding the large force of servants they had to feed, to grow rich out of the profit made from their aggregated labor. If in patricianism the command of the supe- rior insures the obedience of the inferior, it becomes a substitute for wages. Those who are supposed to keep a large number of servants, for display, will usually plead that they can not accom- plish the results they desire, with fewer. There may be an econ- omy of time, an economy of patience, or an economy of social prestige and respect, connected with living at a given rate of ex- penditure, which may make it j)ay the person who indulges in it, better, pecuniarily, than the more stringent mode of living which a parsimonious adviser would recommend. " There be that scat- tereth and yet increaseth, and there be that withholdeth and yet it tendeth to poverty." Parsimony is not always economy, and costly expenditure is not necessarily waste. If a Stewart or Vanderbilt expend $1,000,000 on a residence which will continue to hold at the average, including family, ser- vants, and guests, thirty persons, every year for 500 years, the consumption of wealth incurr-ed in its cost when distinbuted over all persons accommodated is reduced to the very moderate sum of $66 per year, or but little over $1 per week to each person, which is as low a rate as newsboys can hire their lodgings for by the night. So, when a poor sewing-girl purchases a piece of cheap jewelry for a dollar, which in one year she will throw away as worthless, the amount of wealth stored by her in the commodity is very small, relatively to the amount stored in a diamond, for which a duchess pays a thousand guineas. But the amount of wealth consumed by the sewing girl is the greater, since the diamond, unless burned up, will incur no waste of wealth in a thousand years, while the bauble wastes its value in one year. The greater permanence, durability, and fixity in the purchases and possessions of the rich, makes them as a class, therefore, the means of consuming little, if any, more per capita., and possi- bly less, than the poor who have the custody of very little, but actually consume a large part of what comes into their cus- tody. 90. Effect of liarge Capitals on Kates of Wages. — What effect does the concentration of capitals, so as to bring the control NO CAPITALISTS, NO WAGES. 227 of large masses into one hand, have upon the rates of wages of labor ? Reproductive capital may be used to obtain a profit, either in the employment of labor and sale of its products, or in erecting and letting buildings, for the shelter of so many of the laboring class as must rent homes, or in effecting exchanges of tlie prod- ucts of labor. So far as it is used to make a profit by directing and employing labor, its concentration in large masses increases the fund from which labor is to be paid, and increases the steadi- ness and certainty of the demand for labor. In all countries where one man is worth about as much as an- other, labor does not admit of being organized and made efi^ective for large undertakings, society is nomadic and isolated, distrust, suspicion, falsehood, and deception, reign in place of confidence and co-operation, the trader and usurer borders on the robber, and the rate of production is low. Such are Arabia, Tartary, Negroland, and all tribal life. Hence, wages must be proportion- ately low, since they depend on rate of production. In India the large native caijitalists were effectively stripped of their wealth under the rule of Clive and Hastings, in the manner set forth by Burke and Sheridan on the great occasion of Warren Hastings' trial. But since India was thus stripped of her capitalists by foreign oppression, rates of wages have been lower there than in any other country in the world, being for a good worker, in provinces distant from railroads and large towns, as low as $10 per year, or 4 to 10 cents per day. If India could be filled with capitalists wages would go up. Mr. Brassey* says of the Indian laborers : "In many districts black bread and water are the only food of the people, and the cost of this meager dietary varies from 5s. to 6s. per month" ($1.25 to $1.50). In Eussia rates of wages are lowest where the people rely for a sub- sistence on the communal ownership of the land. The payment of the wages of labor with steadiness, perma- nence, and amplitude being the chief function of capital, and payment of wages being the function for performing which cap- ital is the implement, the larger and better handled the imple- ment the more perfectly it must perform its function. * In America, during our Colonial period, though Adam Smith speaks of rates of wages as higher than in England, they were but a third or fourth of their present rates. Working men and women would think it no improper tiling, if possessed of a pair of shoes, to carry the shoes in their hands on Sunday until they api)roached the church door, there put them on and wear them during the service, remove them again on going out. and walk home barefoot to save the shoes. 228 ECONOMIC PHILOSOPHY. Payment of wages can never cease to be, in eflPect, a division be- tween the entire capital invested in an enterprise, and the entire labor employed by it, of the fund which remains out of the price received for the joint product of tlie two co-worlcers, after paying the cost of raw materials. It is, therefore, in a permanent sense, a division between partners, the whole capital being one i3artner, and the whole labor another. Carey, Bastiat, and Atkinson have agreed upon the formula which is true when applied to the history of any one enterprise — a cotton factory, for instance — that as the capital and labor invested in a permanent, successful, and profitable enterprise go on increasing ' ' the absolute share of the value of the annual product falling to capital increases, but its relative share diminishes, while the share that falls to labor increases, both absolutely and relatively." When the aggregate of enteriDrises in a prosperous country, or indeed, perhaps, in an unprosperous one, though of this we have fewer opportunities to observe, is taken into view, the principle of division employed is a perpetually recurring return toward that of equal division between the aggregated capital and aggre- gated labor employed. 91. Constancy of Returns. — Capital tends, on the first in- auguration of new enterprises and the first introduction of labor- saving machinery, to get, as profits, a return graduated accord- ing to the cost of attaining the same result by manual labor, by the previous processes in use, or by the actual competition that exists. It is not until many capitalists compete in producing the same thing that it is brought down to the standard of interest on the capital required ; and, anterior to such reduction, it gets as profit a continually reducing sum based on the value of the wages saved, or the rate at which the same service could be ren- dered by hand labor. Also, in carrying on enterprises under more favorable conditions, capital gets at first, as profit, the difi'erence be- tween cost of production under anterior conditions an d under these new ones. This is shown in the high rate of profit obtained by the first great bonanza farmers of Dakota, which was upwards of 300 per cent., while farmers might be found in the older States whose profits had declined to even 3 per cent. So, on the first introduction of a new railroad, the road will charge the rate which will secure the freight as against the overland team, thus obtaining for steam carriage only a trifle less per ton per mile than would be charged for carriage by animal power. It is this choice of new fields for the investment of capital, PROFITS MIGRATE. 229 which keeps capital migrating, from old investments to new ones, and hence retiring from points where rates of return have de- clined, in the manner pointed out by the law of declining returns contended for by Carey, Bastiat, and Atkinson, and passing into new forms of entei'prise where it will either be sunk alto- gether, or largely, or will reap a much larger profit. The law, therefore, must not be interpreted to mean that the aggregate of capital in the world reaps a declining rate of profit. Such a con- dition of things would lead to a final paralysis of industry. It is essential to high wages that there shall somewhere be industries in which, and points at which, capital and enterprise are reaping high profits. It is only by the division of a high rate of diiTerence, between cost of production and price of product, that high wages can be maintained, and as this division will be made by capital, it will make sure first of its own high profits. Hence, high wages can not be permanently had, except as high profits precede and cause them. 92. What Makes Hig-li Profits ?— High rates of profit are due to the advance of a large body of consumers to a higher standard of living, at a lower cost of effort and exertion on their part, either through an expansion in the area, or cheapening in the processes, of j)i'oduction, or an increasing perfection in the distribution of wealth. This may be due to discovery of new and more fertile areas for tillage, of new plants or animals for food, of new processes in manufacture or transportation, of new sources of money, new modes of exchange, and even of new institutions and law^s better adapted to secure a large development of industry. It may be due also to new forms of government, great wars, or great migra- tions of populations. Hence high rates of profit are a mark, or sign, that industry and progress are making a successful advent into new fields or modes of industry. They can not be expected to continue, in any industry, after it has become of long standing, except as it may be made a new industry, by new processes, new conditions, or a new demand. Nor is the earth, by past advance- ment in art, or by increase of population, approaching the period when large or high profits can no longer be made in industries of any kind, or when migrations of populations to new regions, and transitions of old populations to new industries, can not take place. Such a period is, practically, as far removed as ever. The world's entire population, estimated at 1,400,000,000 persons, 230 ECONOMIC PHILOSOPHY. could stand on an area tea. miles square, and could be fed on the products of an area much less than that of the United States. Less than one-twentieth of the land of the United States capable of producing wheat has been improved. Although the United States heads the list of agricultural and pastoral producers with an annual valuation of $3,020,000,000, Germany, Avhich is not so large as Texas, yields in farm and pas- ture products more than two-thirds as much in value as the whole United States, viz., $2,280,000,000. France yields $2,220,000,000. Russia, with her immense superficies and 90,000,000 inhabitants, produces of food products only $2,545,000,000, which is barely twice as much as is produced by less than half her population in Great Br«itain, viz., $1,280,000,000, though Great Britain has an area about equal only to the two States of Illinois and Indiana. The whole present cotton crop of the world could be produced on one-fourteenth of the soil of Texas, No man yet knows the capacity of an acre of land for pi'oduction. Although China is reported to be overcrowded, the absence of beasts of burden and means of transportation leaves vast and fertile steppes in her in- terior without habitation or tillage. Many centuries must pass before the question whether ' ' population can press on means of subsistence "* will become a practical one. Indeed, it seems to be rendered untenable, even as a hypothesis, by the law that the lower the organization the greater the fecundity, or capacity for reproducing its species. As the lower organizations constitute the food of the higher, and possess the greater fecundity, it is not possible to conceive of the less prolific outrunning the means of subsistence furnished by the more fruitful. 93. Malthus' So-called Law.— Prof. Bonamy Price, of Ox- ford, speaking of the Malthusian law, so called, says : ' ' What is the essence of this theory but the well known fact that human beings, like all other animals, have a power of multiplying faster than their food? " Is this a well known fact ? * A mere numerical calculation of the rate at which a person's descendants may mul- tiply, in successive generations of posterity, is of no more value to prove that the world will at any future date be more crowded than it now is, than a like calculation of the rate at whicu the same person's ancestors multiply as we go backvrard, would be to prove that the earth must formerly have held a greater population than now. Each ex- isting inhabitant of the earth has but to go back a few centuries to find that his an- cestors number by millions. Such calculations omit the crossings, or the degree in which the descendants, and ancestors, of each unit, count again and again as descend- ants and ancestors of the others. MAN AND HIS FOOD. 231 Since, as human beings are the food of all other animals, and all other animals are, or may be, the food of human beings, and as the ppwer of multiplying faster than their food pertains both to human beings and to all other animals, it follows that Prof. Price has affirmed both that human beings have a power of multiplying greater than that of other animals, and that other animals have a power of multiplying greater than that of human beings. Each being alternately the food of the other, if each multiplies faster than its food, each must multiply faster than the other. The greater multiplying power of food, compared with that of man, may be seen in the case of a married couple and a grain of wheat. In the colonial period of the United States, it is said that, one woman has produced as many as twenty -five children, though at present the production of from eleven to fifteen is extraordinary. Calling the age of man seventy-five years, a birth of twenty-five childi'en to two parents would be thirty-three per cent, per annum to the two, or sixteen and a half per cent, to each unit of population. The highest actual increase in the United States is, with immigration, three per cent., and without immigration two and a half per cent, per annum. American wheat-growers sow 50,000,000 bushels of wheat an- nually to produce 500,000,000 bushels of wheat, being only ten-fold. But this is sixty times the highest alleged rate of increase in the human species in our colonial period, and is 300 times the present actual rate of increase. But this is far short of the potentiality of wheat under higher processes of production. Major Hallett, of Brighton, England, in 1857-61, by planting wheat in rows a foot aj)art, and selecting best gi^ains from best ears, and best ears from most abundant stools, attained the follow- ing I'esult, beginning with best grains selected from best ears, four and three-eighths inches long, and containing, forty-seven grains per ear, which he found in a common field : — Containing No. of Ears on Year. Ears Selected. Height, Inches. Grains. Finest Stool. 18.^8 Finest Ears 6 14 ro 10 1850 " " v« 91 ~3 3860 Ears Imperfect from Wet Season u 39 1861 Finest Ears ^Vi 123 53 In an ordinary wheat field, thickly sown, only one and a half ears grow from one stool. Here is an increase in fecundity from one ear having forty-seven grains (forty-seven fold) to fifty-two 232 ECONOMIC PHILOSOPHY. ears, carrying in the best ear 123 grams, or 6,396 fold per annum. Such a hypothetical rate of increase would produce in the second year from a grain of wheat 40,908,816 grains, or seventy bushels, supposing the grains to retain only their previous size under im- proved planting. In fact, however, Major Hallett's processes very largely increased the size of the grain, causing 460.000 grains to make a bushel, instead of 700,000. Adding this quality, the pos- sible productive power of a single grain of wheat, in two years, would be about 130 bushels. And yet the fecundity of wheat is small compared with that of maize or potatoes. A single potato, planted on newly cleared ground in Northern New York, on which, in clearing, the resinous forest trees have been burned to ashes, will produce seventy-five potatoes in a single hill, one bushel in two hills, or 500 bushels per acre, and if cut up so that each " eye " becomes a hill will produce pi-obably several times as many. In Dakota the small number of potatoes required to plant one acre have pro- duced 1,000 bushels. The fruitfulness of the lower animals is as much greater than that of man, as that of plants is greater than that of the lower animals. Beside the fact, that the lower organizations and forms of life are more prolific than the upper, other causes tend to increase the means of support for man, as population increases. The utilities of things increase with their use, human progress being an evolution from the less perfect to more perfect means of production. Things, at first noxious, come to have great value. New varieties of food and medicine become known. A continually increasing regularity of diet promotes health, while a wider diversity of diet increases the nerve force and promotes intellectual labor. Beginning at the zero point where, perhaps, man first attempted to outwit the gorilla by sharpening his long club into a spear, and we must perceive that, to this savage, nothing has utility — still less value. The forests are useless, for he can not fell or hew the trees for want of the ax, saw, chisel, and aug(;r. Iron is useless, for he can not distinguish it from the red clay, and he knows nothing of fire, except as he trembles before it in the volcano, or worships its counterfeit in the lightning. Glass does not exist, nor does nature furnish any model which would suggest it. The beasts are all ai'med, while man is Jiot. Even the mountain goat and the ram master him, while the wild boar is a terror. He flees for his life from the very patrimony which his children ai'e to inherit FEW MEN, LESS FOOD. 233 -=from the cattle on a thousand hills, and the flocks and herds which are one day to be his own. The apple, known only in Siberia, is not yet a fi'uit, but a mere berry, and stings the mouth with its acrid flavor. The potato, known only in Brazil, is poison. Indian corn, unknown to Europe, Asia, or Africa, is an unnoticed Mexican weed, dwindling beside the spindling dahlia, in Avhose single whorl of- colored leaves no botanist would foresee the- present beautiful flower. Wheat was, perhaps, a bold and confident style of grass, which a few thousand years of culture in Egypt would develop into a valuable grain.* Even if it were fully equal to modern wheat it would be useless to our nomad, as he would not know how to grind or cook it. All things are so void of utility that only among the date groves, and naturally fruited jungles of i^frica, could he survive long enough to learn the utilities of any thing. 94. Fewer Producers— Less Production. — But m this wretched nomad state, how are all values magnified ! A bead, or an inch of cloth, would be worn around his neck to charm away evil spirits. A master, who would promise him protection from hourly danger, and furnish him a daily brisket of raw beef, would be hailed with the gratitude due to a descended god, loved as Friday loved Crusoe, adored as a dog adoi-es his master. The richest boon he could desire would be well-fed slavery. He would kiss, as ornaments, those iron chains in which the philanthropy of later epochs, when money had become abundant, would see only degi^adation. In slavery begins his slow upward march, for at last he is a part of organized labor. Each day teaches him some new utility in metal, plant, flower, fruit, or animal. A million things become useful which either did not exist or were useless to him of old. The labor, that he would gladly have expended for a bead, would buy his successor a house. At flx'st even labor is use- less, for it has nothing to work with (tools), nothing to work for (motive), nothing to work upon (job or employment), and lacks the knowledge how to work (skill), except as snatching the things he would consume (appropriation) is work. Hence, though the world at no time needs so much labor as when man is in his savage state, yet there is no stage in which it is so little worth one's while to woi*k, or when so large a proportion of men * The student will emphasize the " perhaps." It is not meant here to affirm that any traces of an evolution from a less perfect form have yet been observed in wheat. On the contrary, history opens with wheat as perfect as to-day. as 4 ECONOMIC PRILOSOPHT. are idle, and despise work. Mr. Carey points out that, security being- so much nioi'e important than fertility, cultivation begins in the higli. easily defensible positions, among the rocky cliffs, and on the poor soils. It is a sort of adjunct to the chief business, viz, , intrenchment, fortification, and war. All arts begin with the poorest implements. Grain is pounded between two stones to make flour. Wool is sj)un first with the hand alone, then with a wheel. Sewing skins develops into weaving cloth, and the nee- dle becomes a shuttle. Soon the canoe hoists a sail. Iron arrow- heads, tempered toward steel, supersede flint. As machinery takes the place of muscle, more men are willing to work, and the rewards of industry slowly begin to exceed the rewards of crime. Virtue, conscience, honor are born. As new and better soils, new and better implements, new and better sciences develop, man becomes free in body — in government — in social action. Steam engines are set to work printing books and drawing railway trains, and man the victor rides and reads by the toil of those same elements which at first he dreaded. The supply of the means of subsistence is on the whole greater in large and compact populations than in small and si^arse, and gi'eater in each country when its population is many than when it is few. In short, everywhere profits and wages depend on the activity and success with which human in- dustry supplies all human wants. While in each indiWdual enterprise, wages tends to obtain a continually increasing share of the joint product, in the aggi'egate of enterprises at any time existing, the division is made pi'oximately even by the fact that capital and enterprise are continually on the lookout for new fields, in which, or new modes by which, the shai-e of labor shall be relatively less, and that of profit more. 95. "Wages Are also Capital. — Is the ascendency of capital over labor an accident of a particular period ? Can it, by j^roper ari'angements, be dispensed with ? Or is it inherent in the nature of things, and therefore indispensable, except as the laborer may buy the capital that hires him.* *Ba8tiat* says truly: " Sentimental philanthropists, who see in this a frightful ine- quality which they desire to get rid of by artiiicial, sometimes by unjust and violent means, do not consider that after all we can not change the nature of things. An- terior labor (capital) must necessarily have more security than present labor, simply for this reason, that products already created, must always present more certain resources than products which are as yet to be created; that services already rendered, received, and estimated, present a more solid foundation for the future than services which are still in the state of supply. If you are not surprised that of two fisher- * "Harmonies of Political Economy," 377, WAGES ABE SMALL CAPITALS. 235 The instant that capital loses its j)ower over labor, wages must lose their power over means of subsistence. Money, and wealth of every kind, in any form or quantity in which the laborer now seeks to possess them, must lose their power to command whatever comforts the laborer now commands by means of his wages. Cap- ital and money being one thing, can only lose its power in the hands of him who has much of it, by simultaneously losing its power in the hands of him who has but little of it. The twenty-five cents, men the one who, having long labored and saved, possesses lines, nets, boats, and some previous supply of flsh, is more at ease as regards his future than the other, who has nothing but his willingness to take part in the work, why should you be astonished that the social order presents, to a certain extent, the same differences ? ]n order to justify the envy, the jealousy, the absolute spitefulness, with which the laborer regards the capitalist, it would be necessary to conclude that the relative stability of the one is caused by the inability of the other. But it is the reverse which is true. It is precisely the capital which pre-exists in the hands of one man which is the guarantee of the wages of another, however insuiiicient that guarantee may appear. But for that capital the uncertainty of the laborer would be still greater and more striking. Would the increase, and the extension to all, of that uncertainty be any advantage to the laborer ? . . . The questions which the work- man ought to ask himself are not, ' Does my labor give me much ? Does it give me little ? Does it give me as much as it gives to another ? Does it give me what I desire?' The questions he should ask himself are these : ' Does my labor give me,less because I employ it in the service of the capitalist ? Would it give me more if I worked in a state of isolation, or if I associated my labor with that of other men as destitute as myself ? I am ill situated, but would I be better off were there no such thing as capital in the world ? If the part which I obtam in consequence of my arrangement with capital is greater than that which I would obtain without that arrangement, what reason have I to complain ? If it be indisputably established that the presence of capital is favorable to my interests, and that its absence would be death to me, am I very prudent or well advised in calumniating it, frightening it away, and forcing its dissipation or flight ?'.#.. Take the first workman you meet with on the streets of Paris— and thus address him. " We are about to annihilate capital and all its works ; and I am going to place you in the midst of a hundred thousand acres of the most fertile land, which I shall give you in full property and possession, with every thing above and below ground. You will not be elbowed by any capitalists. You will have the full enjoyment of the four natural rights of hunting, fishing, reaping the fruits, and pasturing the land. True, you will have no capital ; for if you had you would be in precisely the situation you censure in the case of others. But you will no longer have reason to complain of landlordism, capitalism, individualism, usurers, stock-jobbers, bankers, monopolists. The land will be absolutely and entirely yours. Think if you would like to accept this posi- tion.' •' This workman would no doubt imagine at first that he had obtained the fortune of a monarch. On reflection, however, he would probably say : 'Well, let us calculate. Even when a man possesses a hundred thousand acres of land, he must live. Now, how does the bread account stand in the two situations? At present I earn half a crown a day, At the present price of corn (wheat) I can have three bushels a week, just as if I myself sowed and reaped. Were I the proprietor of a hundred thousand acres of land, at the utmost I could not, without capital, produce three bushels of corn ill two years, and in the interim I might die of famine. I shall therefore stick to my wages." 236 ECONOMIC PHILOSOPHY. with wliich a laborer buys a meal, must lose its potency to induce the restaurant-keeper to sell the meal, at the same instant as the $25,000,000 with which a syndicate proposes to build a railway will lose its potency to induce laborers to work at the railway. The poor live by capital and wealth as well as the rich. To abol- ish the power of capital is to abolish the power of wages and put an end to all human association and co-operation. CHAPTEE VII. LAND. 96. Values of Laud. — Beforelabor can beperforued, orman can exist, there must be space for him to live and work in. This si^ace will, by reason of the changes in the societary movement, be left in many places, as now at Icy Cape in Alaska, unsought for and utterly undesired. In those places all efforts at profit- able production would, at least at first, result in loss, owing to the commodity produced being too far removed from the demand. In other's every foot of available space is eagerly bought up and paid for. Tlie title is taken of whomsoever will show the best chain of transfer from the first appropriator, accom- panied by possession in the same chain of persons in whom the title has existed, from the first appro p;:-iator to the present holder. The rate, at which space will be paid for, depends upon the num- ber and value of the uses which compete for its possession, and these in turn depend upon its location, or centrality, with refer- ence to the social plexus, current, or sum of activities, which we call human society. As we have heretofore seen, in our chapter on ' ' Title and Use, " all working and living space, or as it is usually styled land, is, in the contemplation of economic science, every moment exposed at auction to whomsoever will pay, or forego, more than any other for its possession. If he already ]30ssesses it, he foregoes what the highest bidder Avould offer him, in order to keep it. If he does not possess it, and desires it, he pays more than any other bidder to obtain it. All land, therefore, is at all times, except in so far as law may trammel its transfer, economically in possession of the highest bidder. The sum thus bid, for the possession of land, is called the value of the land, where land is pur- chased in fee, or by a title that is absolute except against the right of eminent domain by tlie state, and it is called econo- mic rent, in communities where land is held by large proprietors, and occupied chiefly l^y tenants for terms of years. The value of land is the capitalization of its economic rent, or, in other words, the price at which it will sell is the principal, on which the sum, 238 ECONOMIC PHILOSOPHY. obtainable for its annual rental, would bear the same ratio of per- centage as the profits or interest obtainable for capital invested with equal security, and ease of return, bear to the sum invested. The reasons why land bears its value, the causes which control its rise and fall in value ; the proportion in which the value of products, produced upon land, is divided, between the cost of the labor expended upon them (wages), the cost of the capital loaned for their production (interest), the cost of occupying the working space (rent), and the I'esidue (profit) remaining to the undertaker of the industiy {entrepreneur) are supposed, by some, to consti- tute the very substance of the science of political economy. The current of English discussion, from Ricardo to Mill, has con- nected rent with fertility, or the inherent productiveness of the soil, and has almost confined the discussion to agricultural land.* Rent, however, has almost nothing to do with *Adain Smith ("Wealth of Kations," Bk. i. Ch. xi., p. 67) says: "The rent'of land not only varies with its fertility, whatever be its produce, but with its situation, vphatever belts fertility." Dr. Smith seemed to hold that whatever the land produced more than was required to replace the stock (capital) employed in working it by a farmer and the ordinary rate of profit on capital, would go in rent to the landlord. But the notion that there is such a thing as an ordinary rate of profit on capital, is essentially visionary where some farmers will be losing their capital while others double it. But if there was an ordinary rate of profit on capital, then the capital in- vested by the landlord in the purchase of the land, and the capital invested by the tenant in working it, ought both to produce the same ordinary rate. But, in fact, such an "ordinary rate" nowhere exists. Dr. Smith again says (ibid.) : " Such parts only of the produce of land can commonly be broiight to market, of which the ordinary price is sufficient to replace the stock which must be employed in bringing them, together with its ordinary profits. If the ordinary price is more than this, the surplus part of it will naturally go to the rent of the land. If it is not more, though the commodity may be brought to market, it can afford no rent to the landlord. Whether the price is or is not more depends upon the demand." If it was, in Dr. Smith's mind, a satisfactory solution of the reasons of the price of corn (wheat)' to say that it depends upon the demand, why should it not have been an equally satisfactory explanation of the rate of rent of land to say that it depends on demand, and that the demand depends on the rate of profits on capital which the tenant expects to make by working it ? The rent is evidently that sum which the land- lord will take for the use of land rather than run the risk of getting a less sum, and which the tenant will pay rather than forego the use of the land. Its average rate may depend on considerations connected with security from enemies in war, its healthful- ness, its nearness to forts, mills, schools, commons, churches, fairs, factories, game, fish, stores, rivers, towns, forests, its improvements, its newness or oldness, its deposits of guano, gold dust, sea shells, coal, marl, lime, etc., or its availability for manufac- ture or exchange, its salt licks for cattle, its nests for birds, its sightly view, or the form in which the landlord will take his rent, whether in service, crops, or money, and even on the sentimental attachment the tenant may feel for it as his home, and the fact that his ancestors are buried tliere. McCidloch (note to "Wealth of Nations ") says: " The truth is that rent is entirely a consequence of the decreasing jiroductivencss of the soils successively brought under HOW BENT ARISE ti. 239 fei'tility, even in the case of agricultui-al land. In the case of residence, manufacturing-, and commercial rents, the stars or the tides, the weather or tlie fashions, might claim an influence greater than fertility. If a pageant will pass down Broadway at 1 P. M., continuing until five, a window fronting on Broadway, and previously of no value, will rent for perhaps $5 for the brief period wliile the cultivation as society advances, or rather of the decreasing productiveness of the capi- tals successively applied to them." The last statement is particularly unfortunate, as rent of land diminishes as we ap- proach the frontier of civilization and of cultivation, yet the productiveness of the capi- tals applied to them increases, measured by the percentage along these frontiers, as the fact is that no one will there apply capital to cultivation at all, except where a high rate of return can be obtained on the small capital he usually applies. Moreover, a " decreasing productiveness of the soils successively brought under cultivation" is a totally unlike fact to tlie " decreasing productiveness of the capitals successively brought to bear on them." McCulloch, therefore, contradicts in the last half of the sentence the criterion laid down in the first half. Ricardo says: "Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil. On the first settling of a country in which there is an abundance of rich and fertile land, a very small proportion of which is required to be cultivated for the sup- port of the actual population, or indeed can be cultivated with the capital which the population can commanJ, there will be no rent ; forno one would pay for the use of the land where there was an abundant quantity not yet appropriated, and therefore at the disposal of whoever might choose to cultivate it." Ricardo's Works, by McCulloch, pp. 38-39. Even this statement is not true in principle, since, however small the population might be, if it contained only two persons there would be a liability that these two might both desire the same spot, and if so it would have a value for which the person out of possession might bo willing to pay, and this payment would be a price paid for space, of which rent is the annual equivalent. In the fairs held in savage liinds the booths acquire a rent value. The fact thiit abundance of unoccupied land exists does not pre- clude a competition for the possession of the occupied, and this gives rise to rent. Ricardo further says (ibid.) : " On the common principles of supply and demand, no rent could be paid for such land, for the reason stated why nothing is given for the use of air and water, or for any other of the gifts of nature which exist in boundless quantity." This also is an error, s'mce land having a pm'ticular location never exists except in one limited quantity. It can not be duplicated. Suppose the very simple case of two savages fishing on adjoining rocks, one of which is only large enough for one person to stand upon. The savage standing on this rock is catching fish as fast as he can take them from the hook. The other can take none whatever. After enduring this several hours and taking no fish, the savage on the inferior location says to the savage on the superior location, " If you will surrender your rock to me, I will give you half the flsh I catch while there." The offer is accepted and fish are caught there by the new man. The fish he pays for the rock are rent. Hence the presence of a continent of unappro- priated land is utterly futile to prevent a payment for appropriated land. Ricardo continues: " If all land had the same properties, if it were unlimited in quan- tity and uniform in quality, no charge could be made for its use, unless where it pos- sessed peculiar advantaegs of situation.^'' 240 EOONOMIG PHILOSOPHY. pageant is passmg. The principle which governs the price of the ■window exactly defines all economic rent. It is a payment for space, which is competed for actively, because of its nearness to the societary movement, in which the tenant desires to participate. It is the pageant going down Broadway, and the competition between the many desirous to see it, that puts a rent on the win- dow. Fertility is like the placiug of chairs at the window. If Prec'sely as Karl Marx, in treating of the cause of value, sets out by affirming that it is labor only, and then introduces the qualification of " socially neces- sary " labor, which changes the cause of value from labor to demand, so by a similar shift Ricardo, ill the midst of his argument that fertility causes rent, qualifies it by saying, '■ except where location causes it." This really gives away his whole point. For if it depends on location relatively to the demand for its products, then it can not depend on fertility, since land having the right location can have its fertility supplied ; but land, whatever its fertiliiy, can not have its location changed relatively to popula- tion, except by changing the movement of population. Eicardo further says (p. 36 ibid.): " Thus suppose land— No. 1, 2, 3— to yield, with an equal employment of capital and labor, a net produce of 100, 90, and 80 quarters of corn. In a new country where there is an abundance of fertile land compared with the population, and where, therefore, it is only necessary to cultivate No. 1, the whole net produce will belong to the cultivator, and will be the profits of the stock which he advances." What a bold assumption! The cultivator may give half his crop to some man with a lance or on horseback who protects him from savages. The first cultivators were non- fighting serfs and villeins, who paid rent in service chiefly that they might be protected by the military power of their lord from marauders and robbers, or at least might es- cape his own power to rob. They paid rent to power for security, and may have chosen, as Mr. Carey points out, the poor and thin lands near the baronial castle rather than the more fertile lands where less facilities would exist for safety. " Past, Present, and Future," by II. C. Carey. Ricardo continues : "As poon as population had so far increased as to make it neces- sary to cultivate No. 2, from which ninety quarters only can be obtained after support- ing the laborers, rent would commence on No. 1, for either there must be two rates of profit on agricultural capital, or ten quarters or the value of ten quarters must be withdrawn from the produce of No. 1 for some other purpose." Here it will be seen Ricardo bases his whole notion of rent on the sublimely stupid generalization that there can not be two rates of profit on agricultural capital, whereas the truth would be more nearly that of the many capitals employed in agricultural produc- tion in any country no two derive the same rate of profit. Of course but one average rate can be arrived at by striking an equation among all the rates of profit on agricul- tural capitals, just as one average height for all men might be reached by dividing the aggregated height of all men among the total number of men. But thus having arrived at an average stature for all men, how absurd would it be to argue that " either there must be two grades of stature among men," or, etc. There are as many rates of profit among agricultural capitals as there are grades of stature among men, and hence through the vent furnished by Ricardo's own exception to his theory of rent the entire theory escapes. Roscher, like Adam Smith, blends the two causes of rent, viz., fertility and favorable situation. He says (" Political Economy," by Lawlcr, Vol. ii. p. 14) : " Rent is that portion of the regular net product of a piece of land which remains after deducting tlio wages of labor, and the interest on the capital usual in the country, incorporated into it. Hence it is the price paid for the using of the land itself, or what Ricardo calls the LOCATION AND RENT. 241 the location is satisfactory, the seats will be brought there. If poor land has the right location, relatively to lai'ge populations, it will be so tilled as to make it fertile. In the hanging gardens of Babylon, soil, subsoil, and sti^ata must all have been carried to the suspended structures. The land itself was brought to the location. The indestructible pi'operty of the soil, on which English economists have laid so much stress, was brought to the point where it was demanded, and there created. 97. True Cause of Kent.— MacLeod well says : ''The only original inexhaustible forces of the soil, which are capable of being appropriated. This price also depends, of course, on the relation between demand and supply; tlie de- mand in turn on the wants and means of payment of buyers, but the supply by no means on cost of production, which from the definitions above given is here unthink- able. However, land has this in common with other means of production, that its price (value) is mainly determined by that (an;gregate value per acre) of its products." Again tp. 18) he says : " The favorable siiuation of a piece of laud opera;es in almost every politico-economical respect in the same manner as its fertility. If a market to be fully supplied needs to be fed from a cu'cuit of ten miles, the price must be sufli- cient to malse good not only the other cost of production, but the freight over ten miles. Hence, therefore, all producers living nearer to the market, who have to obtain a smaller outlay for transportation, and yet obtain the same market price for their pro- duce, make a profit exactly corresponding to the advantage of their situation." The degree of stagnation in the European land-market, and especially the infrequeucy of sales of the estates of the great land-holders in England, seems to have wholly ob- scured to the European economists the view which makes land an investment of capi- tal, as it is so generally regarded in America. As an investment of capital, rent is the effort of the owner to get a return on his investment, and it represents the sum the tenant is willing to pay for leave to use it as au implement of his industry. 5as(!ia< ("Harmonies Economiqnes," Ch. 9) considers rent as the interest on the capital laid out in bringing land under cultivation, and Hamilton in his report to tlie Congress on the manufactures of the United States, 1793, treats rent as the result of the capital employed in the purchase of land to produce an interest. It is very certain that in the United States Hamilton's view, though deemed a vulgar error by Roscher (" Political Economy," Vol. ii. p. 21, note\ is in harmony with the fact that rents of real estate, after deducting taxes, insurance, and charges for trouble of superintending real estate, conform very exactly to rates of interest on money — so exactly that there is no substantial difference economically between being the mortga- gee to the full or nearly the full value of land, collecting interest on the loan, and being the landlord collecting the rent. The rate in both cases would be the same — showing that the principle which governs rents of real estate is the interest and profit which the capital invested in them would earn in other modes of investment. So MacLeod says (Vol. ii. "Econ. Phil." p. 21) that rent of land in England rarely exceeds 2;^ to 3 per cent, on the value of land, whereas in the United States it is usually from 7 to 10 per cent, in neiver and 3 lo 6 in older communities. Locke t"Considerations on the Lowering of Interest," Work?, ii. 17, ff) maintains the clo.>;e parallel between rent and interest. This may be truer, however, vhere laud is freely exchanged into money, and vice versa, as in America, than where it is not. John Stuart Mill (" Principles," Vol. i. p. 516) says: " The land is the principal of the natural agents which are capable of being appropriated, and the consideration paid for its use is called rent. Landed proprietors are the only class of any numbers or importance who have a claim to a sliare in the distribution of the produce, through 242 ■ EUdNOMlG PHILOSOPHY. original and indestructible power the earth has is that of extent. "* Fertility is as variable a property in soil, as health is in man. Soils in England which once produced five bushels of wheat per acre now produce fifty-five. Some in Indiana which once produced thirty bushels produce but seven. Location, with reference to the societary movement, is also a variable quantity, changing with every change in the societary movement. When the societary movement centred in Nineveh and Babylon, x'eal estate was their ownership of something which neither they nor any one else have produced. It is at once evident that rent is the effect of a monopoly— though the monopoly is a natural one which may be regulated, which may even be held as a trust for the commu- nity generally, but .which cannot be prevented from existing. The reason why land- holders are able to require rent for their land is that it is a commodity which many want, and whicli no one can obtain but from them." This is not giving a definition of economic rent, but of private title or "appropriation, which is the condition precedent to rent, as we have seen, and which rests in seizure or monopoly, and is not rent itself. To define rent, Mr. Mill should have explained why men pay high prices for the monopolized portion of land, when there is always at someplace an unmonopolized supply in vast quantities to be had for nothing. Evi- dently, because they want not merely land, but land in a certain location. But why do they want land In this location? Because food when there produced can be sold at a profit on its cost of production. But why could it not in Patagonia or Siberia? Be- cause of cost of transportation. Men pay rent then chiefly to avoid transportation on persons, goods, or customers. Mr. Mill's view of rent is crude and tinctured by his socialistic tendencies. To him rent is despotism, which may be mitigated in degree or amount, but when mitigated ever so much what remains is despotism . A French writer, M. de Fontenay ("Du Eevenu Foncier," p. 260) says : " It may be as well to say somettiing here of one of the most striking instances of the advantages of position. I mean the high price paid for buying or hiring spaces in a great city. Some economists have thought they see in that the rent of land. They have let them- selves be duped by a word, as Montaigne would say. To think that it la really for a piece of land that one pays in Paris two or three hundred f raucs the meter, is as if one were to think that in buying the number of a hackney coach, it is for three yellow num. bers that he pays six to eight thousand francs— and that when a notary sells his prac- tice, it is a double knob of gilt copper, twenty paper cases or so, five or six shabby tables, and a bad earthenware stove, that he sells for 500,000 francs. The space of ground, like the number, the practice, is only a representative sign of the acquired rights, a title to advantages and profits, which may be discounted. What one pays for, in the price of the space of ground, is a share in the enjoyment of innumerable improve- ments of an advanced civilization; it is an immense opportunity to exert oneself and to shine, to know and be known. It is a powerful agglomeration of rich consumers, if one is a producer; of producers and products of all kinds, if one is more especially a consumer. It is a multitude of free enjoyments — the pavement, the troltolrs, gas, water, /«/«s, theaters, palaces, walks, museums, shops, libraries, marts of all kinds of wealth, material and intellectual. The inhabitant of Paris, who gives wp to a stranger his ' share in these advantages, has the perfect right to sell them to him at a good price. For it is he, or they, whose right he represents, the citizens of a great city who have gradually made it what it is. It is they who by their labor, their sacrifices, their strug- gles of every kind, by their gold as by their blood, have acquired and paid for these rights, this security, this progress, this public luxury, these works of general utility, * " Principles of Economical Philosophy." CITY RENTS. 243 high there; now it is low. But it is solely with reference to this element, that rent, or value of land, rises or falls. In point of fact, tlie one law Avhich governs the value of real estate, in city or country, and whether to sell or to rent, is the same, viz.: Demand for it ; i. e., the number of possible, and profitable, uses which compete with each other for its occupation. Land is like an object put up at auction — its price depends on the number and intensity of the bidders, and these, in turn, on the variety and value of its utilities. On the leading corners of a great city, say of Wall Street and Broadway, in New York, land attains its highest value, because these refiuements of civilization, this immense development of intellectual and. ma- terial life." Of the pretended distinction between profits of capital and interest on money and rent of land, De Fontenay says (" Du Kevenu Foncier,'' p. 3): "We propose here to abolish these false distinctions, incompatible witli the character of harmony and sim- plicity which the laws of economics ought to have, and to prove that there is one and only one law of value, income, and capital, under all its forms." MacLeod (" Principles of Econ. Phil.," Vol. ii. p. 18) says : " Fontenay, in his re- markable volume on rent, has at least point-ed out tlie fundamental fallacy of breaking up economic phenomena into Sep irate classes and finding a separate law of value for each; and he has shown most irrefragably that rent, profit, and interest all proceed from the same cause— the excess of the value above the cost of production, which caa only be affected by the intensity of the demand and the limitation of the supply." Both Fontenay and MacLeod ti'eat the Ricardo-Mill tlieory of rent as tending logically to the scheme of confiscating the rent of land by taxation, in which they preceded Henry George. Jevons, Sidgwick, Fawcett, and Bonaniy Price adopt essentially the Mill-Ricardo theory of rent, viz., that it is a price paid for a clioice of more productive over less productive lands, and that the amount which will be paid for the choice will be commensurate witli the greater productiveness of the laud, so that the landlord will get the entire value of the greater productiveness of the land, never once dividing the advantage of that greater productiveness with the tenant. But is it fair towards the tenant to suppose that, in looking for a better situated or more fertile farm, his hope of getting any of the advantage of its better situation, or fertility, is always a delu- sion? Why is it that the economists, who strenuously insist that an exchange profits both parties, lose sight of this principle wholly when they treat of the exchange which a tenant makes of money for the use of land? Whatever may be the advantages of its occupation for a year, and whether they arise from fertility or location, why will not the competition among landlords compel them to divide the value of this advantage, equally between themselves and their tenants, so that one-half of it should inure to the tenant and take the form of profits on his capital? Is it true that a tenant never has any interest in selecting a good, fertile, or well-located farm, over what he would have in selecting a poor one? He could have no such interest if it were true, as matter of economic law, that the landlord would get the entire difference in value as rent. And if there be such a law, concerning the rent of the one implement land, why should it not apply to all other implements and agencies which we hire and pay for? Di^es the bestlawyer absorb, in fees, the whole difference between what his services are worth to his client and what his client could get those of the poorest lawyer in practice for? Does the best means of transportation, say the railway, absorb in freights the whole difference between what the shipper can get his products carried by rail for over what it 244 ECONOMIC PHILOSOPHY. all those kinds of business in which most profit can be earned by the use of the smallest space, such as banking, stock brokerage, insurance, first-class law oSices, bank note engravers, and man- aging offices of great corporations, compete with each other for its use, on account of the facilities it affords for dealing with a large number of people within a few hours of time. Land a lit- tle less valuable is taken for great hotels, newspaper and book publishing houses, importers' palaces, restaurants, and retailers of all grades. Land still less valuable answers for private resi- dences, manufactures, storage, etc., the price of every lot, how- would cost him for the slowest and M'orst means of transportation in use? Does the best equipped and most productive factory absorb, in its profits of manufacture, the whole difference between the value of the work it will do, and that which the poorest means of manufacture in use by man would accomplish ? No one would answer any of these questions in the aifirmative. As applied to the hire of lawyers' services, of railways as an implement of transportation, or of machin- ery as a means of manufacturing goods, the Ricardian law is not dreamed of. A law- yer can not charge according to the difference in the a alue, to his client, between his services and that of the worst lawyer in u^e, because that difference is not calculable or practicable, and because there are so many other competent lawyers competing with him, the resul t of whose services would have been the same as if he had been employed, that he is compelled to charge simply according to the labor-time, i. e., the sum he could afford to take, rather tlian risk being unemployed, during the time required. Why then will not competition between farm owners compel them, like competition between lawyers, to hire out their farms solely with reference to the number of farms equally productive and well located, out of which a tenant can make as good an interest on his capital as on the farm in question, and out of which it is reasonably certain that some will not be rented? In that case it is not a question between the product of the best and worst lands in use which determines the rate of rent, but rivalry between the lands equally fertile and well situated, which shall escape a loss of return on the capital it represents, which is a motive of the same nature as the lawyer's effort to avoid losing his time, the railway's effort to avoid loss of traffic, the factory owner's competition with other factories for business, or the competition of merchants with each other for trade. No one supposes that the purchaser of any other commodity, than the use of land for a year, has no possible interest in the question whether he is buying a good or a poor commodity, as the d'fference in price which he will be charged will so exactly offset any difference in quality or advantage that the merchant and manufacturer will get it all, and the buyer will get none. Why, then, should this precise formula be sup- posed to apply to the purchase of a year's use of land? In fact, it is well known that in all classesof rentals, whether of land or city property, as the quality of the property rises, the rate of return the landlord can get for it falls, partly because on high class property the preservation of the quality of the property becomes a much more important consideration than the annual rent, and partly because the number of tenants capable of hiring first class property is much fewer than the number capable of hiring fifth class. Hence, a high class country residence on the Hudson River worth $100,000 would not ordinarily rent for more than four per cunt, on its value. A residence of equal value in town might rent for five. If built in flats for families, it would rise to ten per cent., and tenement houses for laborers rent for 15 to 20 per cent. But in saying that rents are graded according to the capital represented, it maybe objected that we travel in a circle, as the capital represented is always based on the rents it yields. This is true, and in this sense all economic argument travels in a circle SUBURBAN RENTS. 245 ever, being accurately determined by the number of possible and profitable uses which compete for its possession. Within a cir- cuit of ten miles of the city, land has a suburban value so great that poor men can hardly atford to get an acre of it for floral and hot-house gardening. From ten to thirty miles from the city, gardening, however, prevails, and the labor of two or three men will be expended on from one to five acres of ground, so numer- ous and valuable are the'crops it produces, under the high state of cultivation to which they bring it. From a grape vine, which occupies but two feet square of space, they pluck enormous clus- since all the phenomena of Vcalue also travel in a perpetually varyln? circle, in which we are always measuring varying quantities, according to standards which themselves vary only a little less than tlie quantities they measure. We conclude that rents, in the infancy and origin of the relation of landlord and tenant, are like wages, too closely associated with the reign of military force to be graduated according to fertility of land. The land is given to the tenant as a reward for fighting for his lord in battle, and bravery is the thing his lord chiefly wishes to buy, and pay for, in land, while security and the protection of the clan, or baronial horde, is what the tenant seeks. Hence he takes land according to his faith in the prowess of his chief. As Fawcett says* : "Lands obtained by force had to be held by force; and before law had asserted her supremacy, and property was made secure, no baron was able to retain his posses- sions unless those who lived on his estates were prepared to defend them. There thus arose almost universally some personal relations between landlord and tenant, and the personal services which such a feudal tenure required formed a considerable part of the rent which was paid for the land," In this condition of things, military security, as Carey says, would cause lands to be rented according to their inaccessibility, nearness to the haronial castle, or to ores from which armor could be made, and other elements of safety which would involve mountainous or hilly situations, and poor land would often first pay rent, not because of its poverty, but of us defensibility, and the form of rent paid would be per thrust and per blow, and not per acre or per bushel. Fawcett continues : "As property became secure, and landlords felt that the power of the state would protect them in all the rights of property, every vestige of these feudal tenures was abolished, and the relation between landlord and tenant has become purely commer- cial." ("Manual of Pol. Econ.," p. 115.) If so, why can not the terms, on which the landlord sells the use of land, be stated according to the purely commercial for- mula, which certainly is the one applied when the capitalist, who desires to become a landlord, attempts to buy the title in fee to the land? The landlord then pays for the fee that sum which the previous owner would regard as calculated to procure for him a " larger quantify of the necessaries, conveniences, and comforts of life" than the title to the laud itself would. The price is regulated according to the quantity of land about equally desirable then being offered in the market, and the number of purchas- ers seeking to buy. Landless desirable was wholly out of the competition. It was as far removed from the problem as stones are when one wants to buy bread, or as fence- rails are when one is looking for oranges. All land, at all times, depends for its money price, on the rates at which capital will seek investment in it. If capitals hold aloof from investmen*. in land it must fall until they again buy. Hence the ultimaie rates of rent must be the ordinary rates of profit on capital in business generally, at the time and place of renting the land, allowance being made for relative dearrees of trouble in- volved in superintending the land, and prospects of rise of value by holding it. * ("Manual of Political Economy," p. 115.) 246 ECONOMIC PHILOSOPHY. ters, whose price would buy the product in wheat of an acre of land in Iowa. The same grapes could be raised in Iowa, so far as the soil is concerned, but only a large city furnishes a suiScient number of luxurious customers to create a market for fruit re- quiring such rai'e skill in its culture. Fi-om the next two feet square he plucks twenty pears, which sell at ten cents each, or $2. A plot of half an acre produces $500 worth of strawberries, no better than could be raised in Iowa, save that in Iowa they would have no market near enough to admit of transportation. So, within a circuit of twenty miles of a great city, a thousand ci'ops compete with each other for the occupation of the soil, be- cause near at hand a thousand customers compete with each other for those crops when raised. Nevertheless, the competition between grapes, pears, currants, strawberries, blackberries, cran- berries, quinces, plums, etc., for the occupation of land is so much less valuable than the competition between bankers, brokers, lawyers and railroad presidents, that a year's rental of a room in a fourth story of a building on the corner of Wall and Broadway, is worth as much as the fee of an acre of land for gardening pur- poses, both ranging at fi-om $500 to $1,000. If we take the map of the United States, and draw around each large center of population a series of concentric rings, one series, for instance, around New York, another around Philadelphia, another for Boston, Chicago, New Orleans, and San Francisco, the successive areas bounded by these rings mark, as they recede from their centers, a rapid diminution in the number of uses to which the land may be put, and, consequently, of the competitors for its purchase, and of the value it beai's. From five to ten miles from Chicago the land is gardening and suburban, and is worth, generally, several thousand dollars per acre. From ten to twenty it is chiefly small farming, and falls to from one to two hundred, except as it is raised by vicinity to new suburban centers of population, like Evanston, South Chicago, etc At tovij miles from Chicago it is available only for ordinary Western farming, which consists of raising live stock, dairy pi'oducts, wheat, rye, corn, and other crops which put the product of a good many acres of land into small bulk, and small value for transportation to consumers, most of whom are one thousand miles away. Here the number of crops available, instead of being several hundred, as ill gardening locations, is only four or five, and the production of those must be at the minimum of profit, because millions of farmers equally distant from a market are competing with each REDUCING BENTS. 247 other in producing the same crops. Hence, the value of land de- pends simply on the number of uses to which it can be put, owing to its nearness to the consumers of its products. Now, as at all times far more increase in ivealth takes the form of an increase in the values of lands than is found in all other modes of profit combined, it follows that the growth of men and communities in wealth depends largely upon their nearness to, and cheapness of, communication with the consumers of their products. 98. Rent aufl Transportation. — It is singular that Mr. Mill should have stumbled upon the proposition that perfectly gratuitous transportation would annihilate rent,* without follow- ing it out to its obvious corollary that it is the cost of transporta- tion to and from the lands that bear no rent, or a lower rent, that fixes the rate of rent that can be asked for those whose pi-oduct involves less transportation ; in short, that rent is chiefly a j)rice paid to avoid transportation. In this point of view, rent is the centrifugal force, which dis- perses men from the centers toward which commerce and ex- change attracts them, and obliges them to form new and smaller centers. As men go from the centers they avoid rent and land values, but lose and incur transportation. As men draw near the centers they save time and transportation, but increase rent. If there be some locations better adapted than others for production in any form, the highest economy of society, as a whole, requires that these locations which admit of a higher rate of production should fall into the possession and custody of those who will im- ♦ Mill, "Political Economy," Vol. i. p. 528, says : " The tendency of improved com- munications is to lower existing rents, by trenciiingon tlie monopoly of tlie land near- est to the places where large numbers of consumers are assembled. Roads and canals are not constructed to raise the values of the land which already supplies the markets, but (among otlier purposes) to cheapen the supply by letting in the produce of other and more distant lands ; and the more effectually this purpose is obtained, the lower rent will be. If we could imagine that the railways and canals of the United States, in- stead of only cheapening communication, did their business so effectually as to anni- hilate cost of carriage altogether, and enable the produce of Michigan to reach the market of New York as quickly and as cheaply as the produce of Long Island— the whole value of all the land of the United States (except such as lies convenient for building), would be annihilated ; or rather the best would only sell for the expense of clearing and the government tax of a dollar and a quarter per acre, since land in Michigan, equal to the best in the United States, may be had in unlimited abundance by that amount of outlay. But it is strange that Mr. Carey should think this fact incon- sistent with the Ricardo theory of rent. Admitting all that he asserts, it is still true tliat, as long as there is land which yields no rent, the land which does yield rent does so in consequence of some advantage which it enjoys, in fertility or vicinity to markets over the other, and the measure of its advantage is also the measure of its rent." 248 ECONOMIC PHILOSOPHY. part to them the highest rate of production of whicli they admit. The economic force which provides most room for all, by obliging each to economize and curtail in the use of room, so as to occupy no more space than he can use to the best advantage, is rent. In agriculture, the chief need of society is that the laud shall be used for tlie production of those crops of which there is most economic need, as shown by the degree of effective demand. Near to great centers of population, flowers, bulky vegetables, roots, fruits, and grass for hay, are most needed. At the least, the last-named item will continue to be among proxi-mural cro^js, as long as horses do most of the intra-mural transportation of large cities. Agricultural rents, therefore, reserve the land near the great cities for the bulky crops, in which a little ground worked over with great labor produces a more valuable, but less transporta- ble return than is obtained from the great farms at a distance from the social centers. On the other hand, as we go out through Ohio, Illinois, and Iowa, and still more, as we reach Dakota and Wyoming, with every fall in the values of land, there is an in- crease in the degree in which extensive crop-raising takes the place of intensive, or in which that form of agriculture is fol- lowed, which derives products of smallest bulk from the largest area of land. Finally, in Buenos Ayres and Patagonia land is sold, not by the acre, but by the number of heads of cattle it contains, and these are estimated, not for their meat, but only for their hides and tallow. Nor is there any variation in the economic law, which thus economizes space at the extremities, and that which does the same at the center. Everj^where it is expressed by saying that rent distributes working space according to the number and value of the uses that compete for its possession. In the heart of a great city, a family occupies two rooms at a cost for rent of $8 per week, when four miles out toward the suburbs they could hire a cottage of six rooms for $4 per week, and by going out twelve or twenty miles they could hire an acre of land, a cottage of ten rooms, and fruit garden for perhaps |3 per week. If asked why they do not go where they can get more room for less rent, they answer, " What is economy to one family, may be waste, or loss, to another. Those of us who think we can incur the loss of time, and increase of transportation involved, and support ourselves in the short hours left in the day do so. But many of us could not keep our places, and lose the time and pay the fares, involved in so much daily travel to and fro," COMPETING USES. 249 Reverting now, from the social centers to the periphery, we find the same economic law. In Alaska, at Icy Cape, the sea-lion competes with the bear only, for the possession of land. This is anterior to the existence, in land, of any economic value. But when the fur and seal companies begin to compete with each othei", it first attains a value, because two possible uses compete with each other, viz., taking bear and taking seals. But as it cannot be cultivated, its value is small. Coming down to Sas- katchawan, in Canada, wheat, buckwheat, and potatoes can be cul- tivated, and with five possible uses its value rises. In Minnesota ten grains, five grasses, and six root crops can all be cultivated, and successfully carried to consumers, without the cost of carriage consuming the entire price. Besides, cattle, sheep and hogs can now be grown upon it. Twenty-four uses compete for the land, and its value rises to from $20 to $50 per acre. Near St. Paul and Minneapolis small gardening, dairying, poultry raising, bee cult- ure, fruit can be marketed, and thirty possible uses compete, and the value rises to $250 per acre. Then it is sought, if within two miles of the town, for residence and garden spaces but not for trade. Drawing nearer, it is sought for retail but not for wholesale — or for manufacturing, but not yet for exchang'ing or banking. With these competitions it rises to $100 a front foot, unimproved. So, as the competitions increase in their number and value, the A^alue of the land rises, until, in the heart of the large cities, as high a price will be paid, for a few cubic feet of space, as would be paid in remote districts for a mile square. 99. Rent as a Balance to Transportation. — In no other way can the situations or locations in which most business is possible, be secured for those who have the requisite means, skill, prudence, and ability to do it. Even comjDeting workers, in differ- ent countries, find their rents adjusted by the same economic law. In Iowa, farm-land rents for $3 an acre, in England for $25 an acre. The acre in Iowa will produce only twenty bushels of wheat, because its distance from market makes a hasty and cheap tillage, without fertilizers and with little labor, yield the largest return from a given capital. The acre in England, being nearer the market, can be jDrofitably brought up to a higher state of till- age, averaging thirty bushels per acre. The wheat in Iowa is worth only seventy cents, because costs of ti'ansportation and handling, amounting to sixty cents, are necessary to get it to its consumer in Pennsylvania, New England, or Manchester, Eng- 250 ECONOMIC PHILOSOPHY. land, where it is worth |1.30. Hence the Iowa farmer gets from his acre twenty bushels at seventy cents, or $14, out of which he pays $3 rent, leaving him $11. The English farmer gets $1.30 for thirty bushels, amounting to $39, out of which, if he pays $25 i*ent, he has $14. Supposing the English farmer to pay $3 per acre for fertilizers, which the Iowa farmer does not use, the final returns to both would present that perfect equalization of returns from capital and labor, toward which all investments and employ- ments are constantly tending, but which they never exactly reach. On the other hand, suppose cost of transportation for the Iowa farmer to be diminished by thirty cents per bushel, he makes an advance in profits of $7 per acre, an event which the English ten- ant could only meet, either by getting a reduction in his rent, or labor, or an improvement in his crop. The transportation tax of the Iowa farmer, by an economic law of unstable equilibrium, is thus held in a state of equality with the rent tax of the English tenant, allowance being made for the higher average rates of profit required on capital in Iowa than is necessary in England. Suppose the English farmer to pay $3 per acre for fertilizers, and that the Iowa farmer would manure his lands as highly, and raise their productive power to the same standard as that of the English farmer, if he got as good a price for his wheat, it would then follow that the tax t)f transporta- tion which the Iowa farmer now pays is as follows : Diminished product of 10 bu. per acre at $1.30 per bu. $13.00 Diminished price of freight on 20 bu. 60c 12.00 Total, $25.00 ; while the English farmer's tax on the production of the same value in corn is Rent £5 per acre, $25.00 ; or the equivalent of the Iowa farmer's tax for transportation. Of course it is the fact that capital and labor, invested in wheat, growiiig in the Western States, do reap a larger profit- and-wage fund, than in the Eastern States and in England, that causes the line of cultivation to push further westward each year. But that this tends toward equalization, between English capital invested in wheat-raising, and American, is shown by the " Report of Read and Pell on American Agriculture," in which they assume that the Western wheat-grower gets his land gratis- They say : WRAT RENT SAVES. 251 £ s. d. Cost of growing a quarter of wheat (480 lbs.) in the West including delivery to local depot 18 Freight to Chicago 6 8 Theuce to New York 5 2 New York to Liverpool 4 9^ Handling in America (which may be avoided on through rates) 1 1 Liverpool charges 2 1 1 17 9K The estimate may possibly, ere long, be affected by a reduction in the freights from the farms to Chicago to the extent of one-half. Allowing a deduction on this head of 'is. 9(;., or about %d. a bushel, the estimate would be brought down to 44s., or, without Liverpool charges, to 42s. the quarter. This report shows a clear cost, of $10.50 per quarter of eight bushels, to the American wheat-raiser, against whicla the Enghsli grower has to offset his rent of land and wages. If the Englisli grower raises thirty-two bushels per acre, the local protection which he derives, on his thirty-two bushels, from the transportation tax on his American comxDetitor, amounts to $42 per acre, less the wages he pays per acre for cultivation. If he pays £5 per acre rent, and $17 per acre wages, he is even with his American rival in his chances of profit. The fu'st merchants, in all countries, are peddlers. In this eai'ly period the value in the peddler's pack exceeds, perhaps, that in the land over which he travels.* The peddler pays no rent, but takes all goods to his customers. When he opens his store, so that his customers may come to him, his rent rises pretty nearly in proportion to the amount of trans- portation he avoids, relatively to the number of sales made. The degree, in which it falls short of so rising, measures the profit he makes by the change from traveling to paying rent. The first manufacturers and artisans were traveling shoemakers, tailors, blacksmiths, tinners, spinners, and weavers, who went fi'om house to house doing work for, or carrying it to their patrons. When they open a shop or factory, they save a large cost of transporta- tion on their goods, machinery, and persons, and, as there are many competitors, all trying to make the same saving, the com- petition between them, for the possession of land, enables the land- lord to charge them as rent a sum about equal to the average profits on capital when invested in land, and the remainder of his saving by transportation accrues to the manufacturer as his profit of substituting rent for ti'ansportation. * In 1624, the site of the present city of New York and its suburbs was sold for $5. (" Condition of Nations," by Kolb, tr. by Streater, p. 803.) In 1815, Chicago was sold for £6 10s. About 1810, Cincinnati was sold for a horse. (" English Laud and English Landlords," p. 283.) 252 ECONOMIC PHILOSOPHY. 100. Rent as a Dispersive Force on Population. — Essen- tially, therefore, rent is a natural social force operating to dis- perse population, and economize working space, by imposing a tax upon the occupation of the more valuable localities, proportionate to their value for worMng purposes. This tax is prevented from being a monopoly, in favor of the land-owning class, by the fact that the profits of capital invested in land-owning tend constantly toward equality with the profits on capital invested in other kinds of business. It is prevented also from oppressing the labor, or wages, of one part of the world, at the expense of another, by the fact that it is equably balanced, by an equivalent tax for transportation of persons and commodities, against those who seek to escape the rent-tax by locating at a distance from the social centers, but where the pi'oducts of their industry are not in local demand. This tax of transportation is recoi'ded in the reduced prices of products requiring transportation, at points distant from the centers of consumption or demand, as shown in the following table prepared by the Department of Agriculture. It shows the average production of corn per acre, and its cash value per acre, and average price per bushel at the place where grown, in eighteen Northern States, for 1865 : State. Bushel per Cash value Value per acre. per bu. acre. 431/3 $1,151/2 $48.89 Sl'A 1.22V. 38.28 31V. 1.22 V. 38.58 33V3 i.iov. 36.83 43=^/4 1,151/4 50.42 34 1.21 41.14 33 1.21V. 40.10 24 .95 22.80 40 .80 32.00 41V. .44V7 18.43 38V2 .601/9 23.14 40 2-5 .38'/:o 15.63 35V4 .291/4 10.32 411/. .46 19.09 42V. .30 12.78 38 .51V. 19.57 461/. .59 27.43 411-6 .53 21.82 New Jersey. . Connecticut. . Rhode Island . Massachusetts . Vermont . . Maine . . . New Hampshire New York Pennsvlvania Ohio ■" . . . Michigan . . Indiana . . Illinois . . . Wisconsin . . Iowa .... Minnesota . . Nebraska . . Kansas' . . . Illinois was in 1865 a corn-growing State, dependent largely on consumers east of the Alleghanies for the disposal of her surplus. From the value of her corn, therefore, was deducted the cost of THE TRANSPORTATION TAX. 253 shipping' from 800 to 1,200 miles, so much of it as was con- sumed in this countiy, while, from the portion consumed in Europe, there was deducted, relatively to its price in Europe, the cost of transporting it 3,000 miles. Hence her product in 1865, of 117,095,852 bushels averaged but 29'/4 ceilts per bushel. Had her consumers been in the Northwest, she would have received the average price paid for New England corn, $1.20 per bushel. Her tax for transportation, thei'efore, was 90V4 cents per bushel, amounting on her entire crop to $105,473,856.06, or four times her actual returns for the crop. This tax is the all-controlling in- fluence in determining the values of products in all parts of the United States, and, through its influence on the values of prod- ucts, it determines the mode of tillage which will be pursued, and especially whether it will be such as to exhaust or enrich the soil. 101. Exhaustion of Soils.— Prof. Henry, the late eminent Secretary of the Smithsonian Institution, estimated "that more wealth was invested in our soil, in fertilizing matter, at the moment this continent was discovered by Columbus, than there is at present above the surface in improvements and all other invest- ments. The fertilitj^, which ages had accumulated upon its surface, has been the capital upon which the farmer has been drawing, with reckless pi-odigality, from the first settlement of the country." The wastefulness of the chief part of Southern agriculture, deserted houses standing in the midst of exhausted plantations, which were once fertile, were formerly attributed to slavery. Both it and slavery were in harmony with the waste consisting in the export of the soil in the form of cotton, molasses, and tobacco. This, by keeping the country constantly burdened by an increasing poverty and debt, made the enslavement of the laborer seem a consequent necessity, since the work was too hard and the net returns too small to enable the planter voluntarily to pay wages. He was generally eighteen months in debt for the means to feed and clothe his family and servants, and had often hardly more purchased luxuries than many mechanics at the Noi'th earning three dollars a day. But it is not so generally known that the Southern s^^stem of agriculture was only more wasteful of the soil than the Northern, in the degi'ee that it was further removed from its markets. Wheat near Albany, New York, declined from an average yield of from 20 to 40 bushels per acre in 1775 to 16 to 20 bushels in 1785, to 12 to 15 bushels in 1815, while, by the State census of 1845, Albany 254 ECONOMIC PHILOSOPHY. County gave T'A bushels per acre, Dutchess 5, Columbia 6, and Westchester 7. Wheat declined in Ohio, in the 50 years preceding 1860, from 30 to 15 bushels per acre, and five yeai'S later to an average of 13. Indian corn, in the same State, in the five years from 1850 to 1854, both inclusive, averaged 38.81 bushels to the acre, while in the next five it fell to 32.95 bushels, and in 1863 to 28.96 bushels. That these are no necessary results of cultivation, is shown by the fact that Massachusetts, whose soil was originally as jjoor as that of any State, has so advanced in ave«'age fertility that it appears in the census of 1860 as producing the lai'gest average crop of wheat to the acre — 16 bushels — while Georgia produced the smallest average crop — 5 bushels. Connecticut, originally a poor sandy State, but full of manufactures, must have greatly im- proved her soil to appear, in the same census, as producing the largest average crop of corn per acre — 40 bushels — while South Carolina produced the smallest. The Ohio Agricultural Eeport of 1862, referring to the decline in the wheat-product in Ohio, and its advance in other countries, says : " The lowest average of wheat in any county in England is 34V2, and from that up to 50 bushels per acre. It is a historical fact that, within the past two hundred years, the best soils in England did not produce to exceed six bushels of wheat per acre. " A like improvement is going on in the soils of France, Belgium, Holland, Prussia, and Northern Germany, and in much of China and Japan ; a waste and decay in the soils of Mexico, most of the West India Islands, Brazil, India, since its possession by the English, Ireland, Portugal and Turkey. All of these are engaged in exporting the raw product of their soils for foreign consumption, while the countries in which soils are advancing in fertility, are those which export nothing until it is finished ready for the consumer. The same improvement is occurring, for the same reason, in the horses, sheep, cattle, hogs, poultry, and other domestic animals in the manufacturing States, and the same deterioration in the breeds in the States x^ui'ely agricultural. Formerly the Illinois farmer went to England for improved breeds of cattle, horses, and hogs, and prized his Durhams, Devons, and Berkshires for their blood, while he passed heavy j)enal statutes and made it a crime to even drive cattle across the State from Texas. The latter spread contagion and death in his dreaded path ; the former imparted beauty, growth, weight, and health to all the flocks with which his blood might mingle, ROTATION OF CROPS. 255 Until at last it faded out among the infeinor stocks of the prairies. The order of agriculture rises in proportion to its nearness to its market of consumption, and declines as it is removed therefrom, and hence, soils increase in fertility as the producer and consumer take their place side by side, and decline as they are distant from each other. But the reason of this is, not so much, the Avithdravval of the nutritive matters contained in the crop ex- ported, as the fact that the farmer who is far removed from his market can not sell all the crops which he ought to raise in order to practice that fair rotation of the crops which would renovate, manure, and enrich the soil. Some plants grow principally from the atmosphere, and these enrich and restore soils. Others draw from the soil peculiar elements, as wheat drains it of silica and potassium.* If, therefore, the preservation of the fertility of soils depends on the rotation of crops, and if a fai-mer distant from a market can And sale for only a few of the crops needed in practicing such rota- tion, here is a source of decline in fertility analogous to, but not en- tirely identical with, the deiiortation of the constituent elements of his soil in the crops he exports. For, if he sent his crops but ten miles, their elements might never return directly to his lands. But at a distance of ten miles from an adequate market of con- sumption he could raise clover on lands exhausted by wheat, and sell his hay, unbaled, for more than he could have sold the product of the same land in wheat. But the farmer fifty miles from his consumer of hay must bale it before he can send it, and if 100 miles distant he can only send it by water, baled, while if 250 miles distant he can not send it at all, the freights consuming the whole value. The grasses which ripen slowly through long periods are the best renovators. But if no return can be got for them they are merely pastured, i. e., trodden underfoot and wasted. Besides these, a farmer whose market is near may raise root crops — the beet, turnip, and carrot which derive nearly their whole growth from the air, and hence restore ten-fold more to the soil in t^eir tops than they extract from it for their tubers. By the fact that he can utilize his entire land, and need let none lie fallow or waste, such a farmer economizes his manures, and makes it a -part of his system to restore to the soil, in manures, every part of its produce which is not sent to market in the form of butter, cheese, poultry, pork, and the like. The farmer of New * See American Eucyclopedia, Art. Agricultural Chemistry. 256 ECONOMIC PHILOSOPHY. Jersey, with Philadelphia on his right and New York on his left, takes his choice of a thousand crops. The herder of South American pampas can not sell any grain, corn, or potatoes, and rarely even the flesh of his herds. He kills them, therefore, for their pelts and tallow, and leaves the meat for carrion. Of the price of his pelts and tallow in Liverpool, five thousand miles away, he pays nine-tenths as a transportation tax, and the other tenth supplies him with a plug of tobacco and a few pounds of sailor's hard tack each year, together with the satisfaction such a person will sometimes feel, in the thought that though he gets but little worth enjoying, what little he does get is imported, and must be, therefore, of the veiy best quality. 102. Values of Land Due to the Consumers of Land. Products. — Demand being the cause of all value, it follows that the value of the farm lands, farm in- comes, farm products, and wages for farm labor, must depend upon the immediate presence of a population engaged in other pursuits than farming, and chiefly in manufactures and who ai'e, therefore, consumers of farm products. This has been well shown by Mr. J. R. Dodge, statistician of the American Depart- ment of Agriculture. He divides the States into four classes, with reference to their proportions of consumers to producers of farm products. All States having less than 30 per cent, of agricultural workers, and seven-tenths of whose population are in other in- dustries, are placed in the fii'st class. These ai'e necessarily distrib- uted among the most diverse kinds of industries, and are sub- jected to the greatest activity of the societary movement. All States having less than 50 per cent, of agriculturists and more than 30 are put in the second class. Those having more than 50 and less than 70 per cent, are placed in the third class ; and those having 70 per cent, and upwards of farmers are in the fourth. For instance, Virginia and Pennsylvania have nearly equal natural fertility, and essentially the same natural characteristics, stretching in the same way across the same chain of mountains from the Atlantic to the Great Valley of the Ohio River. Virginia in 1880 had 51.41 per cent., or a trifle more than half of her people engaged in agriculture. The value of her farm lands was $10.89 per acre. Pennsylvania, owing to her large mining and manufacturing, banknig, and i-ailroading, populations had only 21 per cent. of her workers employed in farming,and her farm- lands wei'e worth $4i).30 per acre. Qf course, her lands )iot de- WORKERS IN AGRICULTURE. 257 voted to farming, but to uses with which farming could not com- pete, were worth very much more. Even her mountain and timber lands, which in Virginia would be abandoned as waste, were made valuable by great populations seeking to utilize their ores, rocks, streams, and timber. Illinois had 43.65 per cent, of her workers in agriculture, and her farm lands were valued at $31.87 per acre. Iowa had '57.46 per cent, of farmers, and her farm lands were worth $22.92 per acre. In the whole United States the result is as follows : TABLE NO. 1. Classes. No States and Territories. Acres. Value. Value per Acre. Per cent, of work- ers in ag- riculture. Ist Class 2d Class 15 13 13 6 77,250,742 112,321,257 237,873,040 108,636,796 $2,985,641,197 3,430,915,677 3,212,108,970 562,434,843 $38 05 30 55 13 53 5 18 18 42 3d Class 58 4th Class 77 In the diagram, page 259, Mr. Dodge exhibits the value per acre, of each class, as four pyramids combined upon one base, that stands for the entire volume of American industry. The diagram page 260 exhibits, in like manner, the relative values of farm incomes, in States where consumers of farmers' products preponderate over competitors in their production, as represented in the second table. That the values of space, in which to produce crops, are gauged accurately, according to the market value producible within such space, appears from the following, showing the value of the prod- ucts in the aggregate and per capita which gives rise to this higher value in the land. TABLE NO. 2. Proportion Classes. No. engaged in Value of Products Value per Woriiers in ag- Agriculture. of Agriculture. Capita. riculture, per cent. First Class 1,060,681 $484,770,797 $457 18 Second Class. ... 1,566,875 616,850,959 394 42 Third Class 3,017,071 786,081,420 261 58 Fourth Class... 2,024,966 324,2.37,751 160 77 That the value, both of the land, and its products, is determined by the demand for them, is shown by the fact that, though the land of Illinois and Iowa averages far better and more fertile by nature than that of New York, Pennsylvania, and New Jersey, yet the far-ming land, which in Iowa is worth only $22 per acre, rises in New York to $44.41 per acre, in Pennsylvania to $49.30 258 EOONOMIO PlIILO SOPHY. per acre, and in New Jersey, a country of primeval rocks and sand, to $65.16 per acre. New Jersey lies between the two great cities of New York, embi*acing, with its suburbs, 4,000,000 people, and Philadelphia and suburbs, embracing more than a million more. This focuses upon New Jersey a demand for food nearly as intense as is felt m any part of Europe, and affords an inducement to the most intense cultivation of the soil. One hundred feet square of land, devoted to the culture of Gen. Jaqueminot or Princess Alice roses, may produce roses to the value of $8,000 per year, or at the rate of $32,000 per acre. These, however, could only find market near a center of population so large as to contain some persons who would think it not wasteful to expend $10,000 on the flowers for a single ball. Stx^awberries also can be produced in a manner to reap from a quarter acre of land a larger return, and expend upon it more labor and capital, also, than would often be ex pended upon or gathered from a quarter section in the Western States. Owing to the intensive system of agriculture thus practiced, land rises in fertility in the States where markets are near and high, instead of declining by exhaustion, as it usually does when farming spreads a little labor over large areas. The States of the fourth class include North Carolina, South Carolina, Georgia, Alabama and Mississippi, and have in all 108,637,796 acres of farm lands. The proportion engaged in agri- culture is 77^Vioo percent., the balance being chiefly in tran- sportation, professional service, and trade, with very little manu- factures, mechanics, banking, or commerce. The social movement here is slow and stagnant. No large cities, capable of diversified or intense demand, exist. Indus- try, until twenty years ago, had been mostly carried on by forced labor, instead of under the inducement, to the workers, of either wages or profits. Through all these causes the average value of the farm lands is only $5.28 per acre. The low price of farm lands indicates that they are near to the margin of cultivation, and, in fact, vast quantities of land in these States lie unculti- vated, because they are far away from that demand which alone could give value to their products. And except as their products have value, no values can be reflected from their products upon their labor and land. In the second table we see that the product of agriculture per man falls as the percentage of persons engaged in agriculture rises. This is another way of saying that the product falls as the 10 Ifj WorKers i/i all Indilstries. 35 1^0 lis 50 k GO ds 70 ^ .^ 75 SO 8^ Op 9,5 ijy uu DISTANT MARKETS. 261 demand falls, for one who produces agricultural products, can not form any part of tlie demand for the products he produces. An extremely slight demand may arise on the part of those who con- fine themselves to producing one crop, for a crop which they do not produce, as the cotton planters of the South formerly thought it cheaper to buy the "hog and hominy " on which they fed their slaves, in Illinois. But the true market of the farmer is not reached except in the manufacturer, as the manufacturer's chief mai'ket is the farming population. Hence, the demand for the products of States of the fourth class is chiefly from 1,000 to 3,000 miles from the point of production. In the manufacturing States, 1,060,000 farm workers get $484,- 770,797 per annum for their products, while in the agricultural States 2,024,866 farm workers get for their products only $325,- 099,388. Comparing the States which make up these four classes, we find the average value of production for each farmer and farm laborer is $431 for Pennsylvania, $501 in New Jersey, $467 in Illinois, $394 in Ohio, $376 in Minnesota, $199 in Kentucky, $180 in Virginia, and $178 in Mississippi. If returns upon capital in- vested were considered, as a rule, those making the smallest re- turn to each worker would be found returning the largest per- centage on the capital invested. For where population is sparse, capital scarce, and the returns precarious, there capital is slow in being "turned over," but exacts a high rate of profit on each "turn over," or investment it gets, as labor also exacts a high wage in proportion to the value of its pi'oduct. Hence, rates of interest are high, the nominal rate of profit on capital is high, and wages ai'e high in the sparse districts, relatively to the value of the product, but as production is slow, when these rates of capital, interest, and wages are spread over a given period of time, instead of over a given value of pi'oduct, they become low, rela- tively to those prevailing in a country of more diversified activi- ties, where capital can be turned over oftener, where loans are better secured and more promptly paid, and where labor can be more continuously employed, and the value of its product, per year, is greater. The average rates of wages in the period of depression in 1879, and the normal rates of 1882, for the groups of States as hereto- fore classified, not only show the effect of unemployed labor in reducing prices, but present fairly the differences in the several groups, the distinctively agricultural class showing the lowest rate : 262 Economic philosophy. 1882. 1879. CLASSES, j With Board. Without Board. With Board. Without Board. 1st. 2nd. 3d. 4th. $24.14 23.51 19.51 13.67 $15.10 16.93 13.04 9.24 $21.31 21.13 16 84 12.01 $13.10 13.45 11.03 8.15 The diagram opposite exhibits the relative rates of wages paid for farm labor in States having many consumers and few pro- ducers of farm products, compared with rates of wages in the same capacity in States where these conditions are reversed.* 103. Machinery in Fanning-. — Intensive farming, as car- ried on near great markets, tends toward small farms fenced into small lots, and the expenditure of much labor over small areas, the use of many fertilizers, and the increase in the fertility of the land. Extensive farming, as carried on at a great distance from markets of consumption, tends toward the greater substitution of machinery for hand labor, and the cultivation of large tracts of land to one crop and under one ownership, and of fewer crops by one farmer. Finally, in Dakota, Wyoming, New Mexico, and parts of California, this system culminates in the great bonanza farms, where a life more like that of the factory, the mine, the fur-station, or the whale-ship, supersedes the home life of the farm. A large force of men are temporarily hired during the busy season, who, when that is over, leave the vast estate in the hands of a few resident keepers for the winter. Whether this feature of the bonanza farms is permanent or temporary it may yet be too early to predict. The chief method in all extensive farming is to till the largest area, at the greatest saving of labor, for the crop that will bear greatest transportation with least deduction fi^om its value. This necessity has given rise to the two classes of machinery in which the American inventors have won special eminence, viz., means of transportation and of rapid cultivation. The introduction of this new machinery in agriculture, has had the same economic effect in superseding hand labor, as it has had in the factories of Europe. In the census report of 1860, under the head of agriculture, attention was called to the fact that the inti'oduction of locomotives on railways had greatly in- creased the demand for horses, since in taking possession of the * Mr. Dodge has carried out the same comparison to the agricultural and manufac- turing counties in each State with like results. See "Farm and Factory," by J. R. Dodge. 264 ECONOMIC PHILOSOPHY. larger routes of travel, on which it superseded the horse, it greatly multiplied the number of shorter routes on which horses are still necessary. But Mr. Moody is of the opinion * that should steam he successfully applied to common roads, and streets, and general farm work, it may yet supersede the horse instead of increasing the demand for him. The first patent issued in the United States after the organiza- tion of the patent office was in June 1797, to Charles Newbold, of Burlington, New Jersey, for a cast-iron plow which combined the mold-board share and land-side all in one casting. During the early part of the present century, however, the plow most in use was of wood, iron-shod, large, ill-shaped and cumbersome, drawn by fi'om one to six yoke of oxen, requiring one and often two men at the handles, another to ride on the beam to keep it in the ground, another to keep it clear, and several drivers for the oxen, often four and six, but never less than two, to turn one acre a day.f Successive improvements in the cast-iron plow were made in 1810 by Josiah Ducher, of New York, in 1814 by Jethro Wood, of Scipio, New York, and in 1836 the implement was brought to a degree of perfection by Joel Nourse, of Worcester, Massachusetts, One man with a single horse will now plow two and a half acres in light soils, and with two horses, by means of the sulky attach- ment, will ride while driving, breaking two-and-a-half acres of prairie per day. With a gang plow one man and two horses will plow five acres a day, a saving as compared with our first example of ten men plowing one acre, amounting to forty-nine men out of fifty required to do the same work. One man, with a cultivator and a pair of hoi-ses, works one acre of corn per hour, whereas he would formerly, with a hoe, work half an acre in a long and hard day, thus saving the labor of nineteen-twentieths of the men form- erly required to cultivate corn. The first American patent for harvesting grain issued in May 1803, to French and Hawkins, of New Jersey, was followed by mowers, cutters and threshers in endless number. In 1828, Samuel Lane, of Hallo well, Maine, patented a machine for cutting, gathering and threshing grain in one operation. The Hussey Machine, t in 1833, cut as fast as eight men could bind. In 1834, Cyrus H. McCormick, of Virginia, patented his first reaper for cutting grain of all kinds. In 1836, Moore & Haskell provided * " Land and Labor," by Wm. Godwin Moody, p. 17. t ibid. p. 20. % Obed nnssey, Cincinnati, Ohio. FARMING BY MACHINERY. 265 one which would cut, thresh and winnow the grain at once. In 1860 one man with four horses would cut twenty acres a day. Now machines are used whereby one man and team, travelling three miles per hour, will cut eighty acres in ten hours, or as much as could be done by 320 men with sickles. Formerly threshing out a few hundred bushels of grain, with a flail, would fill up a farmer's leisure days throughout the winter. Now the steam thresher threshes, winnows and sacks the grain as fast as twelve or fifteen men can feed the machines and clear away the straw — turning out 1,000 to 1,500 bushels a, day. In California, machines are used which find the grain standing, and leave it in sacks, com- bining the cutting, threshing and winnowing in one operation, and putting it in sacks in another. Formerly men took the ripened ear of Indian corn from the stalk by hand and husked. Now a machine drawn by two horses picks off the ear, gathering all the ears whether the stalks stand up or are bent down, husks as fast as eight men, leaves all the husks on the stalk, and does not pull up or cut up or break down the stalks. Forty years ago, by scraping an ear of Indian corn across the end of a shovel, on which the worker was sitting, he would shell from five to twenty bushels a day. Now two men, with a cornsheller, shell twenty- four bushels an hour, or with the three classes of horse-power shellers, four men will shell 1,500, 2,000 and 3,000 bushels per day respectively ; one man doing the work of 75, 100 or 150 men. Formerly the farmer paid a toll of an eighth or a tenth to get his grain ground. Now the mills run so automatically, that little more than a watcher at night with his lantern is needed, and the cost per bushel is hardly appreciable. 104. Effects of Releasing- Liabor by Machinery. — A vast force of persons are thus released from the labor of producing food, for one is enabled to produce as much as scores can consume. Some persons see, in these facts, a reason for alleged stagnations in industry and increased difficulty in obtaining employment.* But before rushing passionately to such a conclusion, there should be a very careful analysis of the fact that formerly nearly every person's occupation had to do almost directly with the visible creation of food, clothing or shelter. Now vast numbers of indus- tries, employing millions of persons in all, are not directly, and many are not even indirectly, connected with either of these. In the United States half a million persons are creating transporta- * Jloody on " Land and Labor," p. 30. 266 ECONOMIC PHILOSOPHY. tion by railway, an employment which sixty years ago did not exist. A vast number more are creating intelligence through books and newspapers, a large daily newspaper involving each day some part of the time of 1,000 persons. Hardly did such an occupation then exist. Others by thousands are creating pianos, organs and other musical instruments, an occupation which did not then exist. Others are making works of art, especially photo- graphs, electrotypes, chromos and cartoons — furnishing people with insurance against every known calamity, and indemnifying widows and oi'phans against ]Decuniary loss by the death of those on whom they are dependent. Others are transmitting intelli- gence by electricity, tending power looms, constructing public parks, making matches. India-rubber articles, gutta percha, cellu- loid, and a thousand things then unknown, from materials not then discovered. Others are obtaining petroleum and refining it, or collecting and transmitting instantaneously to Washington the data from which the weather bureau determines what the weather will be, forty-eight hours ahead, in all parts of the countiy. With such a vast and complicated army of new femployments, and with the visible spectacle before us hourly of almost our entire population, young and old, poor and rich, able and infirm, working steadily all the time, and at least as industi-iously as be- fore these labor-saving appliances were introduced, it would be a rash generalization to say that the means of employment had in any degree lessened. In fact it accords far more consistently with the incessant industry we continue to see among all classes and conditions of men, to revert to the well-known law, heretofore referred to, that the satisfaction of a lower want only begets the desire for not merely one, but for many, higher waats. If the wants of mankind multiply in geometrical ratio, in proportion as they are satisfied in arithmetical ratio, if as our wants are met, our ambitions expand, how is it possible to base a theory of the suspension of employment, for any human being, on an increase, however great, in the multiplication of the means of satisfaction ? It is supposed that the quantity of sewing, which ladies now put upon their gowns and other apparel, has been multiplied in a degree fully equal to the increased economy with which the same amount of sewing can now be done by the machine. Meanwhile, however, millions of persons have found employment in the new industries connected with the manufacture and trade in sewing WOEK FOE ALL. 267 machines. So, relatively to the absence ,of all means of transport tation formerly existing, the manufacture of iron and steel for railways, of cars and locomotives, is a new industry. So the vast increase in the quantities of paper, furs, silks, plate glass, watches, jewelry, bijouterie, books, furniture, capacious residences, oil paintings and higher engravings, standard libraries, and the like, involve an immeasurable increase in the need for human labor. Moreover they minister to enjoyments of a kind to which few could then aspire, but which are now open to the millions 'without reserve. By reason of the cheapness, with v^hich this extensive introduc- tion of machinery has enabled American farmers to produce agri- cultural products, the sophistry is sometimes indulged in, by poli- ticians, that dear human labor can underwork cheap human labor. American agricultural products, in the production of which dear human labor participates, do undersell European agricultural products, which are almost wholly produced by cheap human labor, unaided by machinery. In many parts of Europe, and even in parts of Great Britain, wheat is still planted by hand-sowing and reaped witli a sickle. This competition is not however between dear and cheap human labor, but between human labor kept dear by the utilization of machinery, or per- haps between machinery itself, and cheap labor. 105. Tenant Farms and Large Holdings in America. — The census of 1880 showed that of a total of 4,008,907 farms in the United States, 1,024,701, or more than one in four, were ten- ant farms. Estimating the number to have increased with the subsequent growth of population to one and one-quarter millions, it far outnuinbers the total number of holdings in Great Britain and Ireland, which now amount to 1,069,827. From 1870 to 1880 also the number of farms containing over 500 and less than 1,000 acres grew from 15,873 to 75,973, and the number containing more than 1,000 acres rose from 3,720 to 28,578. Simultaneously with this tendency toward large farming, and as a part of it, there has been an apj)lication of very large capitals to farming, not merely in the purchase of agricultural implements adapted to extensive tillage, but in a general elevation of the breeds of sheep, horses, and cows by the substitution of the best English blooded stock for the mongrel breeds. The tendency during this decade was to make blooded stocks very general, whereas, previously, they had been the hobby of a few only of the more aristocratic farmers, who were looked upon as farmmg more for taste and 268 ECONOMIC PHILOSOPHT. pleasure than for profits. Farmers generally have awakened to a keen sense of the fact that the blooded stocks are hy far the more profitable, and that large capitals can nowhere be used more profitably than in their dissemination. Mr. Moody has written a fervid and denunciatory book ; * re- sembling in its rhetorical intemperance Mr. George's attacks upon land tenure,! Mr. Hudson's assault on railways, | Mr. Lock- wood's indictment against the office of President,! and similar zealous productions. All these serve to mark that crude state of economic and political incandescence, in which our intellectual fuel expends itself with more of heat and smoke than of illumi- nation. Mr. Moody would have us believe that the tendency towards large farms and tenant farming indicates a revival of villeinage, serfdom, and slavery, a view that is in harmony with his previously enunciated doctrines concerning the effect of the factory system and of machinery. The working of land, and the stock and capital necessary to run it, upon equal shares by labor is, however, usually a contract that is equitable to both parties. Mr. Moody, like many philanthropic men who treat economic subjects emotionally, mistakes the poverty, from which this form of contract is the tenant's best avenue of escape, for a poverty which the contract produces and perpetuates. § Permission, to a man wholly without any fruits of past labor in his possession, to enter into possession of all the fruits of another's labor, of land which he has cleared, fenced, drained, ditched, supplied with orchards, implements, seeds, cattle, and herds, and by his labor to earn a title to half the profits which result, cannot be con- strued into cruelty successfully, so long as men retain the facul- ties essential to common sense. The fact, that in America tenants pay half the crop (or from one to two thirds), while in England rent is based on the proportion of a fourth of the crop, instead of establishing the case of hardship against the American tenant which Mr. Moody contends, shows simply that in countries of large capitals the value of capital declines relatively to that of labor, and that large landholders, holding many farms or estates for rental, are under the same economic necessity to rent them * "Land and Labor," by Wm. Godwin Moody, t " Progress and Poverty— Social Problems— Ttie Land Question." X " The Railways and the Republic," by James T. Hudson. II "Abolition of the Presidency," ))y Henry C. Lock wood. §" The Displacement of Labor by Improvements in Machinery," by Wm. Godwin Moody. BONANZA FARMING. 269 low, as large money lenders are to lend at a lower rate of interest than small money lenders, as large manufacturers are to manu- factui^e at a lower cost, as large carriers, by land or sea, are to carry at lower rates per ton per mile, etc. * At the Cass, Cheney, and Alton farms near Fargo in Dakota, 290 men at the highest in summer, and six or eight in winter, working with thirteen seeders, thirty self -bin ding harvesters, and five straw-burning steam threshers for the Cass farm (6,355 acres), and with nineteen seeders, twenty-six self -binding harvesters, and four straw-burning steam threshers for" the Cheney farm* (5, 200 acres), and with the same ratio of implements for the Alton farm (4,000 acres), are able to till, in wheat, 10,477 acres, lying contigu- ously, and to produce therefrom twenty-two bushels per acre, at a cost of about sixteen cents per bushel, and for a return of from seventy to ninety cents per bushel. The crop brings $161,065.80, of which four-fifths are profit, It is contrary to every sound principle of political economy to weep, wail, or indulge in de- nunciatory epithets, over the substitution of economies like these for the old methods of producing wheat, which maintain its * NUMBER OF TENANT FARMS IN THE UNITED STATES Br CENSUS OF 1880. Money Share Money Share Bent. Rent. Rent. Rent. Alabama ,22,888 40,761 Missouri 19,843 39,029 Arkansas 9,916 19,272 Montana 17 ' 63 Arizona. 42 59 Nebraska 1,943 9,476 California 3,209 3,915 Nevada 63 73 Colorado 165 419 New Hampshire 1,237 1,378 Connecticut 1,920 1,206 New Jersey 3,608 4^830 Dakota 72 606 New Mexico '33 '386 Delaware 511 3,197 New York 18,124 21,748 District of Columbia 150 60 North Carolina 8,G44 44,078 Florida 3,543 3,692 Ohio 14',834 32I793 Georgia 18,557 43,618 Oregon 748 1,538 ^^^o 33 57 Pennsylvania 17,049 28,273 Illinois 20,620 59,624 Rhode Island 939 '047 Indiana 8,582 37,468 South Carolina 21,974 25,245 Iowa 8,421 35,753 Tennessee 19,266 37 930 Kansas 4,438 18,213 Texas 12,'o89 5.3I379 Kentucky 16,824 27,203 Utah 60 '373 Louisiana 6,669 10,337 Vermont 2,164 2,598 Maine 1,628 1,153 Virginia 13,392 21,594 Maryland 3,878 8,661 Washington 209 262 Massachusetts 2,293 848 West Virginia... 4,292 7,700 Michigan 5,015 10,396 Wisconsin 3^719 8^440 Minnesota 1,251 7,202 Wyoming '5 ' g Missiseippi 17,440 37,118 " United States 322,357 702,244 270 ECONOMIC PHIL SOPHY. average cost at seventy cents. These farms are small compared with those of Dr. Glenn of California, who annually shipped to Liverpool wheat worth $1,000,000 a year in his own ships. On the Thompson and Kendall farm (Dakota), 1,600 acres of wheat, accurately estimated, involved a cost for production per acre of $8.69, and left a profit (in a selling price of seventy cents per bushel) of forty -nine cents per bushel, or $7.84 per acre, or $12,- 544 for the 1,600 acres, producing only sixteen bushels per acre. The economic value of these instances consists in the emphatic denial they afford to any general theories that the rate of profits on air industries are at any time lower than in previous epochs, or that they evince any general and universal tendency to de- cline. All such theories must be confined to specific cases or to single industries ; but it must always be implied that, at other places, or in other industries, new wells of profit are gushing forth at the old rate of several hundred or several thousand per cent. , so that the average inducement to the human family, as a whole, to move forward to new fields of endeavor and of fortune- making, remains an essentially constant quantity. The Grandin, Dalrymple, and Glenn farms will, in a few years, have sunk to seven per cent, profits per annum, but the same rate per cent, will have broken out afresh, perhaps, in Borneo or in Tartary, Measured merely by acres, the great land-holdings in the United States far exceed those in Great Britain,* and while some of our own large holdings t will be broken up, yet, so long as large * SIZE OF ALL ENGLISH LAND-HOLDINGS OF MORE THAN 50,000 ACRES. Names of Owners. Names of Oiuners. Marquis of Ailesbury 55,051 Lord Londesborough 52,655 Duke of Beaufort 51,085 Earl of Lonsdale 67,950 Bedford 87,507 Duke of Northumberland 191,480 Earl of Brownlow 57,799 Duke of Portland 55,859 " Carlisle 78,540 Earl of Powis 64,095 " Cawdor .51,538 Duke of Rutland 70,039 Duke of Cleveland 106,650 Lady Willoughby 59,912 Earl of Derby 56,598 Sir W. W. Wynn 91,033 Duke of Devonshire 148,629 Earl of Yarborough 55,370 Lord Leconfield 66,101 t Says Moody, "Land and Labor in United States," p. 88: "But in the United States we have a saw maker, in Philadelphia, with his four million acres ; two butch- ers in California with their eight hundred thousand and more acres ; a cattle raiser in New Mexico with his seven hundred and fifty thousand acres ; and numbers of them in Texas whose acres are counted by hundreds of thousands. In the great Northwest the land-holdings for agricultural purposes — for grain, grass, and vegetables — by hun- dreds, range to fifty thouband acres and upwards, occupied by tenants or machinery, or by both. The whole country, from the Mississippi to the Pacific, is dotted — no, they FARM LABORERS. 271 capitals can make the large rates of profit incident to ' ' bonanza " farming' which is above pointed out, the tendency to large hold- ings will increase. The objection urged to these large holdings is that they tend to differentiate society into capitalistic and proletariat grades, to "make the rich richer and the poor poorer'' to ci'eate dominant or master classes On the one side and servile, landless, and dependent classes on the other. This objection ap- plies, however, in the same sense to the advance from the hunter life to that of the herdsman. For, in hunting, there is no aristoc- racy of noble lords, who own the bows and arrows, and servile slaves who carry them. But, the instant herding begins, there are those who own the flocks and those who tend them. Still herding is less unequalizing than tilling the soil, for with this comes in the wide distinction between those who own the soil and those who do not. Most usually, in early periods, the former own the latter. Yet the inequalities created by agriculture are less than those created by trade and manufactures — for now society grades from millionaires to beggars. Thus, with each advance of society in activity, there is a continually increasing differentia- tion in ranks and gi*ades of power, but it does not follow that the poor grow poorer at either of these advances, for it may happen that this increasing inequality is only an inequality in the degree in which all rise, but that none actually descend. This depends on whether the pauper and criminal, confessedly the lowest ranks in civilized life, are below or above what they would be in savage life. The real question is not whether the hired worker on a bonanza farm is better off than an independent farmer on a New England farm, for he may have neither the training nor capacity to be the latter. Men can be used, on the bonanza farms, of a training and capacity in farming far inferior to those which would be essential in a good Middle State farmer. But inferior men need a race in life, and an opportunity to live, as well as superior men. The real question is, whether the class of men who now hire on the bonanza farms, would be doing better if this employ- ment were denied them. They are not profit-sharers, they do not bring their families — do not make permanent homes on the farms, and are less permanent than factory hands, as these are usually induced to stay if they will. But the fact that they seek are not dots— is patched with these huge holdings. In comparison with the monopoly of the lands here shown, that of the English landlords appears quite insignificant. And yet we are only in the third decade of our movement." 272 ECONOMIC PHIL080PHT. this employment, at the wages offered, iudicates that, relatively to any other field of labor open to them, it is the best.* 106. Large and Small Laiid-Holding iu England. — The " Democratic Federation " of England, a leading socialist organi- zation, says, in its manifesto : ' ' Thirty thousand persons own the land of Great Britain . against the thirty millions that are suffered to exist therein." Like erroneous statements on this point are frequently made. The census of 1883 shows in England 958,800 owners of land distributed as follows, t The landed aris- tocracy, all told, number 5,000 owners, and have a rent-roll of £30,000,000 annually out of a total rent-roll for all the land owners of England of £99,000,000, thus making the aristocracy the owners of less than a third of the rent-roll of England. Next to the aristocracy come 133,800 smaller rural proprietors, made up as follows, viz. : 4,800 owners with estates that average 700 acres, then come 32,000 with estates that average 200 acres, then 25,000 with estates that average 70 acres, and then 72,000 with estates that average 20 acres. All of these 133,800 rural proprie- tors enjoy a rent-roll amounting to £33,000,000, or one-tenth more than that of the aristocracy. Finally there come the urban pro- prietors, owning less than a fourth of an acre (four city lots) and suburban proprietors owning less than four acres, which two classes combined number 820,000 owners, and have an aggregate rent-roll of £36,000,000, or one-fifth more than the aristocracy. The landed proprietors are thus seen to have two classes of owners below the aristocracy, either of which, if property were repre- sented in the House of Lords exactly according to its value, could outvote that aristocracy, which is now exclusively represented iu the House of Lords. Rather the House of Lords consists of mem- bers of a class, comprising one-third of the land-owners in value, assuming to represent the other two-thirds. While the total annual income of all the people of England is £1,300,000, 000, the amount distributed in wages to the ' ' workers " in the proper sense is, according to Mr. GiflSn, £800,000,000. To workers who had less than £150 per year per family, according to Mr. Giffin, £620,000,000, according to Prof. Leoni Levi £450,- * On the Grandin farm (Dakota), besides board, the wages are, from November Ist to March 3l8t, $15 per month; from April Ist to April 30th, $18; from May Ist to July 31 3t, $16; from August 1st to August 15th, $2 per day; from August 16th to September 15th, $1.50 per day; from September 16th to October Slst, $18per month. (Moody on "Land and Labor," p. 47.) •|- Mallock, " Property and Progress," p. 215. WAGBS AND INCOME. 273 000,000, and according to Mr. Hyndman, socialist, £300,000,000. Taking the estimate made by Mr. Giffin, £800,000,000, as cor- rect, and we see a division between wages-workers on the one hand and all other classes combined on the other nearly equal. This is strikingly in harmony with the facts indicated in our chap- ters on Profits, and on Capital, as to the rates of division between capital and labor in the United States. It may yet be found to be a general law that labor and capital never effect so even a division of their joint product, between the owners of all the capi- tal and the workers, or that labor never works so nearly " at the halves," as when the division is wholly unintentional. The custody of the reproductive capital is so distributed that, according to Mulhall, 2,046,900 families of the upper and middle classes possess together property to the value of £7,562,000,000; but of these 222,500 families own £5,728,000,000. Averaging the first total over the larger number and they have £3,700 per family. Averaged over the smaller number they have £26,000 per family. Meanwhile there are 4,629,000 families which own only £398,000,000, or less than £90 per family. But while the average amount of capital owned by a working class family in England is only £86, the average income of the family is £100, or about 112 per cent, on its capital, the average income of those .who have a thousand pounds is £260, or twenty-six per cent, on their total capital, and the average income of those who have £26,000 is £1,500, or about five per cent, on their capital. Thus the annual income of the rich is one-seventeenth of their wealth, the income of tlie middle class is one-quarter, and that of the working poor is ten or twelve per cent, more than the value of what they own. Mr. Mallock * presents the following curious fact : In 1851 the gross income of the country was £620,000,000, of which the in- comes of the rich (those having incomes of more than £150) were £200,000,000. To-day the gross amount of incomes under £100 is £620,000,000, whereas in 1843 they were £235,000,000, showing an increase of £385,000,000, or of £185,000,000 more than the total income of the richer classes in 1843. In other words, says Mallock, ' ' the poorer classes to-day, are as a body, in precisely the same situation as they would have been in if at the time of the * " Property and Progress," by W. H. Mallock, p. 179. * " Property and Progress," p. 219. 274 ECONOMIC PHILOSOPHY. first exhibition the income of every rich man then in the country had been made over to them in perpetuity." Tliese figures, of Mr. Mallock, may grow partly out of a more perfect or different mode of taking the census in later than in earlier years, or out of an expansion in the volume of currency "whereby the same values are measured by larger numbers. The fact that the population of England has remained so nearly sta- tionary, and that, notwithstanding the immense efforts made by its government, bankers, merchants, manufacturers, and in some cases its armies, to hold its foreign trade, the migx'ation nearly equals the difference between its birth and death rate, does not quite bear out Mr. Mallock's argument.* Still, as it seems to be based on statistics honestly and intelligently handled, the student is entitled to the result and will make his own allowance for Mr. Mallock's supposed optimism. 107. Liaiicl In Ireland. — The causes of the depopulation of Ireland need a more careful analysis than can here be given, but the effects of that event upon land tenure and cultivation are ap- propriate in this chapter. In 1846 the population of Ireland was over 9, 000, 000, t and in 1883 it is slightly more than 4, 500, 000. | In 1841 there were 310,375 cotter holdings (tenancies) of under five acres ; in 1861 there were 88, 083 ; and in 1880 there were but 64,292. Here were 246,083 small farms extinguished as homes, which must have contained at least one million, and probably nearer two mill- ions, of people, w^hose labor had, in the main, reclaimed them from moor and waste. That neither the tenant system, nor the absentee landlords, were the cause of the depopulation of Ireland seems indicated by the fact that in the jjeriod from 1780 to 1810 Ireland had both, and yet grew in population from 5,000,000 to 8,000,000. In 1851, in a return which purported to distinguish "arable" land from "uncultivated," there were returned as " arable " 14,802,581 acres. In 1871 and 1881 the returns were as follows : 1871. 1881. Under crops, including meadow and Acres. Acres. grass, 10,071,285 10,075,424 Grass or pasture, .... 5,621,437 5,195,375 Bog, waste and water, . . . 4,289,432 4,708,047 * The population in 1846 was 28,002,094, and in 1851 it was 27,393, 337. t A M. Sullivan in Nineteenth Century for July, 1883. X Mr. Sullivan says about 5,000,000. DECLINE OF IRELAND. 275 The average yearly acreage under oats, between 1851 and 1860, had been 3,074,381 acres. In 1881 it had fallen to 1,392,365. Wheat acreage, in the like period, fell from 460,802 acres to 154,- 009 ; barley from 221,150 to 210,152 ; turnips from 378,482 to 340,- 097 ; potatoes from 1,039, 921 to 854, 294. Cabbage, alone, increased by 318 acres, and flax by 20,969. Cattle increased from 3,480,623, in 1851-60, to 3,954,479, an increase of 473,856. Sheep decreased from 3,297,971 to 3,258,583, a decrease of 29,388. Pigs fell off from 1,194,303 to 1,088,041, a decrease of 106,262. Horses decreased from 572,219 to 547,662, a dechne of 24,557. The value of stock, in the hands of farmers holding less than five acres, had, in 1841, been £14,771,483 ; by 1846 it was probably £6,000,000, and in 1851 it had fallen to £1,002,156. Between 1871 and 1881, 418,615 acres went back, fi'om pasture and tillage combined, to moor and waste, and yet these were regarded as the fat years of Irish husbandry, owing to the relief afforded by the Land Act of 1871. Had the census afforded careful returns of the land remitted to bog and waste in previous years, there is no doubt that it would have been quite as large, and we think it would prove to be largest in the years when the decline in population was largest, viz. , from 1846 to 1857. The depopulation of Ireland has not been arrested, or even checked. And there is no reason to believe that the pressure upon the means of subsistence diminishes as the popula- tion lessens, since the means of subsistence are all the product of land and labor conjointly. As the quantity of labor declines, the quantity of labor av^ailable for cultivation of the land declines, by means of which the quantity of cultivated land, and of consumers, also declines. The fei'tility of the land, declining with the supply of labor, points to no relief from the mere policy of depopulation. • 108. EvoliitionofCultivatedPlants as Sources of Food. — A large part of the increase in the fruitfulness of the earth in modern, as compared with ancient epochs, arises from the greater number of plants and animals made available for human food, and for the manufacture of clothing and habitations, in the later periods. Nor does it yet appear that the end of this source of in- creased production has been reached. China, Egypt, and the table lands of Mexico, Central America, and Peru, are known to have been the three independent centres of cultivation from whence many, or most, cultivated plants and flowers have origi- nated.* Of these, the wonderful vegetable resources of China * " Origin of Cultivated Plants," De Candolle, p. 19. 276 ECONOMIC PHILOSOPHY. remain almost unknown to us, though our ambassadors thei'e are served with dinners in thirty courses, consisting of grains and fruits, many of which have never been brought to our Western world. In China, 2,700 years before Christ, the Emperor Chen Ming instituted a ceremony at which, every year, five species of useful plants are sown — rice, sweet potatoes, wheat, and two kinds of millet. In Egypt, in the Pyramid of Gizeh, which dates from 1,500 to 4,200 years before the Christian Era, figs are cut in stone. In Mexico and Peru maize, tobacco, potato, and the sweet potato, date back probably 2, 000 years. In China the records, known as Pent-sao, written in our Middle Ages, state that Chang-Kien, during the reign of the Emperor Wu-Ti, in the second century before the Christian Era, returned from a mission to the nations of Western Asia, bringing with him to China the bean, the cucumber, the lucern, the safi'ron, the sesame, the walnut, the pea, spinach, water-melon, and other Western plants previously unknown to the Chinese. Wheat precedes civilization, or his- tory, from Japan to the Canary Islands, throughout Asia, Africa, and Europe, and is shown to be older than all existing languages, by having a different name in each of the very oldest. The com- mon notion, however, that a species of modern wheat called mummy w^heat is derived from seeds of wheat found in the sar- cophagi of the mummies is denied by De Candolle. Barley was nearly as widely known as wheat. Cotton originated in India, though a species is also believed to have been native in Mexico. It was brought by Alexander from India, but its cultivation was so neglected by the ancients as to be again brought into Europe by the Arabs, and in the tenth century it passed into China, and its extensive cultivation in China and India preceded its use or cul- tivation in Western Asia or Europe. The peanut is believed to have been native of Brazil, and to have been carried thence, in the fifteenth century, into India. Neither the ancients nor the Crusaders knew of coflFee or tea, though coffee was native in Abyssinia and Arabia from the earli- est periods, and tea was abundant in China from 3,700 B. C. It was hardly known in Europe two centuries ago. Its utility in superseding wine and strong drinks is strongly indicated by the fact that, though the vine and grams flourish in China, wines and * " Origin of Cultivated Plants," p. 362. GROWTH OF FOOD SUPPLY. 277 liquors are almost unknown and unused. Flax was cultivated by the ancient Egyptians and Hebrews, and hence flax and its product (linen) are frequently mentioned in the Old Testament and on the monuments. The sumac is native throughout the Mediterranean and Caspian region, whence it has been imported into America. Indigo was native, probably, in India, but seems to grow wild in many parts of Asia. It dates back, in Egypt, only to the Middle Ages, and is believed not to have been iden- tical with the plant from wliich the Mexicans extracted their blue dyes. Throughout North America, to the Isthmus, the Indians smoked tobacco in pipes, and in most parts of South America they chewed and took snuff before the arrival of the Europeans made this plant known to the latter. Hemp, known in China and India 500 years before Christ, was not known to the ancient Egyptians or Hebrews, and yet was known to the early Scyth- ians, who brought it with them from Asia and Russia about 1,500 B. C, and before the Trojan War. It is wild in Siberia, Southern and Central Russia, and the Caucasus. Sugar was unknown to the Hebrews of the Bible period, as well as to the Egyptians, Greeks, and Romans, as a commercial product, though it was first cultivated in Southern Asia, and was brought by the Arabs into Egypt, Sicily, and the South of Spain. The hop extends from Germany to the Caspian, and Eastern Siberia, as a wild and native plant, but the Greeks and Latins were almost entirely ignorant of the use of beer as a bevei'age, and it appeared in En- gland only in the reign of Henry VIII. The orange originated in China and Cochin, with a probable extension by seed into India, but was only brought into Europe, by the Portuguese, in the fifteenth century. Citrons, lemons, shaddocks, and manda- rins, have the same origin. The vine grows wild in all the coun- tries contiguous to the Mediterranean, Black, and Caspian seas, whence it passed into China about 132 B. C. The strawberry was not known as a cultivated plant to the Greeks, Romans, Egyp- tians, or Hebrews, though as a casual wild berry its habitat prob- ably covered most of Europe and America. Cherries and plums were known to the ancients, and cherry-stones were found in the lake dwellings of Bourget. Apricots have their home in Western Asia, and China, where they were known two or three thousand years before the Christian Era. The almond grows from Persia to the Mediterranean, and was known to the Hebrews, Greeks, and Romans, the latter calling it the Greek nut. The peach was cultivated in China from the remotest antiquity, and appeared in 278 ECONOMIC PHILOSOPHY. Europe at about the date of the Christian Era. The pear is men- tioned by Homer, and has its habitat throughout Europe, and eastward to Persia. Tlae lake dwellers of Switzerland and Italy gathered wild apples abundantly, and with them some pears. The pre-historic area of the wild apple extends from the Caspian Sea nearly to Europe, and forests of sweet wild apples have been seen in the region between Trebizond and Ghilan. It is not known in Siberia. The quince has the same habitat as the apple. The Greeks regarded the quince as a sacred fruit, which would preserve from evil spirits, and Solon prescribed its use in connec- tion with the mai-riage rite. The pomegranate has its home in Persia, and was familiar to all the cultured races. Wliile wheat, barley, rice and millet are very ancient grains, rye and oats are very modern, originating among the Thracians, Germans, and Russians. Pumpkins originated in Mexico, Brazil, and South America. Melons originated in Central Africa, and on the Nile and Niger ; water-melons were known to the ancient Egyptians. They were also independently cultivated in Asia. Cucumbers have been cultivated in India for three thousand years, in China from the second century before Christ, and by the ancient Greeks. The olive grows from the Punjaub in India to tlie Ma- deira Islands, and was one of the fruits best known to the Hebrews. It has, however, no Sanscrit name, and hence has reached India at a recent date from Western Asia. Peppers, cap- sicum, tomatoes, and cactus are all American. The fig is native in the Mediterranean basin, from Syria to the Canaries, and was, of course, familiar to the ancients, and only recently known in Eastern Asia. The date-palm exists, from pre-historic times, from Senegal to the Indus. The banana is native in India and Southern Asia, though Hum- boldt contended that it was native also in America. Pliny men- tions it, but the ancient Egyptians and Hebrews did not know of it. Certain' varieties of peas, beans, soy, lentils, cai-rot, ground- nut, or similar leguminous plants, are pre-historical in the Medi- terranean basin, where the garden pea was cultivated by the lake dwellers of Switzei'land, while other varieties extend over Africa, and still others originate in China and Japan. The garden pea was not, however, known in ancient Egypt or India, though the chick pea was common to ancient Egypt, Greece, and India. Buckwheat is native in the Himalayas, and came into Europe in the Middle Ages through Tartary and Russia, and is first mentioned in Germany in 1436. Chestnuts, of the Italian varieties, foi'm occa- FOODS MULTIPLY. 279 sional natural forests from the Caspian Sea to Portugal, while the American and Japanese varieties have each its independent habi- tat. Millet, rice, and sorghum are of Chinese and Indian origin , and were not known to the Hebrews, ancient Egyptians, and Romans, though millet reached the cave-dwellers of Switzerland probably by way of Thrace and the Caspian, while rice became known to the Greeks through Alexander's expedition, and began to be cul- tivated in Egj^pt about 100 B. C. Maize, Indian coi-n, though called " Turkish wheat " in most of the European languages, is purely American, as is also the bird which is graced with a Turkish name throughout America and Europe. Maize was a leading staple of native agriculture, at the period of the discovery, from the Valley of the La Plata to Canada. The poppy is native around the Mediteri-anean, and was familiar as a medicament to the early Greeks and Egyptians, though the latter did not culti- vate it, nor is it mentioned in the Bible. Recently its cultivation has become extensive in India and China. The castor-oil bean is found in the Egyptian tombs, was of course known from an early period, and grows wild in Tropical Africa. The cocoanut- palm, now extensively gi'owing in Africa, was brought there from Western South America, and the islands of the Pacific, and the Indian Archipelago. The beet root was used as a vegetable, from the Canary Islands to the Caspian, three or four centuries before the Christian Era, but is not mentioned by the Hebrews, and was of slight importance, until made a means of obtaining sugar in France, in 1815-35. Clover, red, white, and yellow, grows wild from Spain to the Caspian, and was known to the ancients, but was not cultivated until the fifteenth and sixteenth centuries, when the Protestants expelled from Spain carried it into Germany. Out of 247 species classified as to their origin by Candolle, the old world has furnished 199, America 45, and 3 are still uncertain. The United States, notwithstanding its fertility, only originates the Jerusalem artichoke and the gourds. Forty -four species only are very ancient or prehistoric, but among these many, like tea, reached Europe latest. De Candolle says, " The original distribu- tion of cultivated species was very unequal. It had no pi'oportion with the needs of man or the extent of territory." The system of cultivating grasses and roots, as the food of ani- mals who in turn become the food of men, and the consequent evolution in the quantity of flesh and muscular power obtained in cultivated animals, by means of the increased supplies of food 280 ECONOMIC PHIL SO PHY. produced for tliem by human labor, is another chief cause of in- crease in the earth's capacity to maintain a dense population. Our fat stock shows consist of oxen developed by human labor and art to three or four fold the size which they attain in a wild state, of sheep whose fleece has risen from three pounds to an average of twelve pounds, and occasional instances of thirty -five and even fifty-three pounds. Although the chief of the cultivated species of plants and animals were old at some one locality in the world 3,000 years ago, to all other localities they were new until Avithin one or two centuries. Thus maize, the sweet potato, buck- wheat, rye, bananas, were all old in their several habitats, but the world of Socrates, Seneca, and Plato knew nothing of them. CHAPTER VIII. LABOR. 109. Definition of Labor. — No word would seem to be more definite or easily defined than labor, and yet few so suc- cessfully elude definition. If we say it is " buman effort put forth to obtain means of subsistence, " we are met by the objec- tion that this definition includes something- more than labor, viz., the exchange, which the laborer, makes of the compensation re- ceived for his labor, for the means of subsistence. Most kinds of labor are not direct effort put forth to obtain means of subsis- tence, i. e., the labor per se without exchange does not obtain any means of subsistence. One who feeds or drives an engine for a day labors directly only to keep the engine moving by means of the effect of the steam supplied by his fuel on the piston rod. The act has no direct relation to the means of subsistence of the laborer. On the other hand, two men may be fishing side by side. The sportsman in catching his fish intends to have it cooked for his own repast, and therefore, as far as food are means of subsistence, he is putting forth effort directly to obtain means of subsistence. Yet this is not to him labor, but strictly and merely sport or play — as purely as if lie were playing chess or base-ball. By his side, however, in a fishing smack, is a man who makes a business of fishing, and who does not intend tocon- smne the fish he catches, but to sell them. To him the same process of fishing is labor. Therefore, effort put forth to obtain means of subsistence is not always labor, and labor is not always effort put forth to obtain means of subsistence. Yet, to make efi^ort laboi-, it is not necessary that the worker shall sell his services, or their product. A farmer labors when he toils to fence his farm, which he expects never to sell. It must have the motive of necessity, and is usually combined with the idea of x^hysical exertion. But a burglar who breaks into one's house at night, to carry away gold or plate, does not labor, though he combines great physical exertion with the hope of gain ; for crime, however much toil and gain it may involve, is 282 ECONOMIC PHILOSOPHY. not labor. But when the burglar is sent to prison, though he works without hope of gaining through his work, that is labor.* If we say it is effort put forth in production, or in producing * C. S. Devas, " Groundwork of Economics," § 53, says : " The term labor or work {labor, ergasia, travail, arbeit) is not easy to define. But this is no excuse for those who leave it altogether undefined, nor for Mill, who leaves it obscure. He says (Pol. Econ., Bk. i., ch. i., § 1) that it is ' either bodily or mental, muscular or ner- vous, and that it is necessary to include in the idea, not solely the exertion itself, but all feelings of a disagreeable kind, all bodily inconvenience, or mental annoyance con- nected with the employment of one's thoui^ht or muscles, or both, in a particular occu- pation.' This leaves us in the dark as to whether that plowman labors whose plowing is a pleasure to him, and whether playing is laboring, not to speak of this description of labor being applicable to the action of those wlio weep around a tomb, a stronger use of the term. Adam Smith is vague. McOiilloch defines labor ' as any sort of ac- tion or operation, v.-hether performed by man, the lower animals, machinery, or natural agents, that tends to bring about any desirable result.' But this is to distort ordinary language, and to turn men into machines, without any gain, that I can see, for the pur- pose of economics. To say labor, in 'political economy,' is only that exertion that demands something for itself in exchange (Perry), in its obvious sense, excludes the ex- ertions of slaves for their master, and of self-sufficing peasants for themselves and their famUies. To define it the exercise of any human faculty for a definite object (H earn) would turn all play into work. To limit it to human activity directed towards the acqui- sition or preservation of property, is nearer the mark, but too narrow ; for all unpaid exertions, literary, artistic, political, religious, would be evidently excluded, and too obscure, for a judge who performed his office for the sake of his pay would or would not be laboring, according as we understand the word " directed " to apply to the end of the operator {finis operantis) or to the end of the operation {Unis operis). " It is best, I think, to look only to the end of the operation, and to define labor as hu- man action, of which the proper end, or natural purpose, is some good external to itself. Thus, whenever the action in itself gives a reward to the agent, it is not labor. So none of the natural functions of the body, as eating ; so no recreation, though it entail the greatest exertion, as hunting; or though to the given individual it may be most un pleasant, as a tiresome banquet. Conversely, whenever the reward is not in the action itself, this is labor, as the tilling of laud, whether by the peasant with joy, or the hire- ling with sorrow ; and the action of the night porter, though it be mainly to sit motion- less ; and of the boatman, though the same physical act of rowing when doue by the holiday maker at his side is not labor ; for the end of rowing, when done by a holiday maker, is different when done by a hired boatman. . , . " The best solution of the problem, how to classify labor, seems to me to begin by discarding the terms, productive and unproductive, as misleading and unnecessary, and then not to divide labor according to its results, for these are too vague aud disputable, but, rather, accoraing to the proper object, purpose, or end of the particular operation (finis opei'is). According to this principle of division, four kiuda of labor can be dis- tinguished, industrial, public, ministerial, and predatory, having as their end, the first, production ; the second, some function of government ; the third, some personal ser- vice (ministration) ; the fourth, the unlawful acquisition of others' property. Under industrial labor would come that bestowed on agricuUure, manufactures, and com- merce ; under public labor, that of the civil and military service in the widest sense, from the highest to the lowest ; under ministerial labor, that of the clergy and teachers, of literary and scientific men, of the legal and medical profession, of musicians, actors, and the like ; under predatory labor, that of thieves, smugglers, pirates, false coiners, common usurers, and the like." LABOR ELUDES DEFLNITLON. 283 commodities, this is no definition, unless we have first defined commodities and production. Even then it would be incorrect, as labor may be employed to destroy as well as to produce. When the Turks captured Constantinople, they proceeded to virtually destroy the Church of St. Sophia, as a temple of Christian art, adorned with statues, images, and i)aintings, by covering them all with a plain white wall, underneath which, in the Mosque of Omar, they are supposed still to remain. The toil of those who had created these statues and images would hardly be called labor by most persons, because it was art, and it has not been usual to call fine art labor, even where it is constructive of commodities of great value. But the toil of those who covered up these statues was certainly labor, and would have been equally so if they had been employed to break them up into paving-stones. Its effect was destructive, as to the objects of art, though, in the belief of the Turks, it was constructive of a higher form of temple for re- ligious worship. If a man carries mortar from the street to the roof of a build- ing in a hod, that is certainly labor, if he is free and is working for wages. If be is a slave, being himself capital, it would seem that his work must also be capital, since it is only for his work, as the end, that he is himself owned, as the implement. If he bi-ings a horse, rope and pulley, and lifts the mortar by horse power, charging for the hire of horse, rope and pulley, sitting still himself, is he now charging for his own labor, or for the use of capital ? But if his capital can labor, dispensing with his own work, will the charge he gets be interest on capital, wages of labor, profits of enterprise, advantage of monopoly, or premium on idleness ? And if capital invested in machinery can be said to perform labor, as when it grinds flour, or draws trains of cars, why does it not equally labor when it takes other equally efficient forms, such as sailing ships, nets for catching fish, implements of all kinds, including money ? And if implements labor, then land itself, being the chief of implements, is the chief of laborers, and to speak of land and labor, is to add a part to the whole. If labor is capital when it works fi'om fear of the lash, how is its nature changed when it works from fear of starvation ? And if working from fear converts labor into capital, why is not a man who works, from fear that he cannot pay a note, capital ? It was not wholly from oversight that Adam Smith avoided economic definitions. Exceedingly comprehensive terms, like matter, force, time, and space, that can be easily apprehended 284 ECONOMIC PHILOSOPHY. without definitions, become mysterious in proportion to their sim- plicity when we attempt to define them. Metaphysicians prove that matter is only force, and that force is only matter, but when no metaphysician is around, a child can tell force from matter unerringly and without difficulty. Yet the word labor has a meaning-, and possibly the difficulty of defining it correctly aiises from the sentimental objection we have to remember that labor has sprung from slavery, and in trying to designate the child we have omitted the surname which connects it with its origin, which is servile. Labor is servile e&.ovi—i. e., effort that would not be put fortii for the intrinsic pleasure of the effort, but solely because such circumstances exist, that one man feels constrained to serve another. This is why the expenditure of effort in art, science, sport, statesmanship, crime, enterprise, eloquence, or re- ligion, is not labor. But work by the convict, or slave, though performed without hope of the reward, through mere constraint, is labor. We are not fashioning these instances to fit an eco- nomic purpose, but are simply evolving the true meaning of the word labor from its envh-onment, since it may contain an im- portant economic result. 1 10. Work Differs from Labor. — When effort is divested of the servile, consti-ained, or necessitous idea, and is performed to satisfy an innate passion, the term used, both in common speech and throughout literature, changes from ' ' labor " to " work." * Men say of such an one, " he works for the love of it," but it becomes awkward to say he " labors from the desire to laboi'." The terms, "love's labor lost," and " labor of love," are now used to express something done under the compulsion of a moral or passional coercion, which would otherwise be undone. An autlior's writings are his " works," so far as tliey are written from artistic motives ; but when, as in the case of Sir Walter Scott, an author is involved in bankruptcy to a large amount, and sits down deliberately to write a " Life of Napoleon," to pay * Cyras Elder, in " Man and Labor," p. 96, says : " Man, like other animals, and in a higher degree than the other animals, because more richl}' endowed with innate im- pulses to vaiious labors than all of them, is naturally a toorker ; he is not naturally a tramp or a loafer." Mr. Elder here shifts the term from labor to work, as he was obliged to do by a sense of literary exactness, which forbids that aman or animal working from innate impulse should be said to labar. Even an engine works when it runs smoothly. It labors when it is obstructed, or is unequal to the task. A ship in a heavy sea labors. The lightest adaptation of means to ends, even a political plan, " works like a charm." Think of one who should say of the Homestead Act, " It labors like a charm." LABOR SERVILE. 285 off his creditors, he is said, also, to "labor" on this portion of his works. The economic reason why labor shall not, and can not in most cases, consist of services which it is a pleasure to perform, is, first,' that many of the tasks required to be performed for the support of man are not of a kind intrinsically pleasurable to any body ; secondly, those who perform the labor can not by any possibility get the pleasure which their labor is designed to subserve (the miner of coal, for instance, can not make digging coal under ground delightful, because somewhere else a cheerful parlor will be warmed and lighted by the coal) ; and, thirdly, if all labor were pleasureable in itself, labor-capacity would expend itself wastefully upon the first labor that offers, whereas labor j)ower needs to be carefully economised and saved, for those forms of labor only for which there is a social demand or need, and this social need can only be determined by the willingness of those who are in need to make a return effort, or to pay for the effort expended. Hence the economic use of labor-force requires that no labor shall be per- formed except as it is paid for, since it is the fact that pay can be got for it that is the index that points out the ulterior fact that it is needed . In this way, as we have seen in our chapter on ' 'Value, " demand steers labor, and inertia, or the indisposition to labor, except as we are paid for it, economises labor-force, so as to ensure the expenditure of it where needed, and nowhere else. It is a delight to Gladstone to chop down trees, but if it were a delight to all men to do so there would be no trees left. Chopping down trees must be made irksome to the mass of mankind, in order to limit the expenditure of human force in this way to cases wherein a tree needs to be chopped down, and to ensure, then, an adequate reward in wages to those who perform the task. The ultimate economic necessity that labor should be irksome consists in the necessity of economizing human effort. For we all see that Avith nearly the whole population of the globe working actively during all their waking hours, and with all enjoyable commodities tend- ing irresistibl}^ toward their proper consumers, and all ultimately consumed, and the consumption of each limited by nature so that he can not if he would consume more than his share, and Avith the like economic necessity that all the surplus of enjoyable wealth that any one man gets, over what he can consume, shall be invested in some foi^m of reproductive wealth, and that the sole function of this reproductive wealth shall always be to promote the production of consumable wealth, and to forward it to its 286 ECONOMIC PHILOSOPHY. consumei's, i. e., with every economic law working toward equality in the distribution of consumable commodities, and with all these consumed, and with all human effort economized by be- ing expended only where it is paid for, there is still none too large a supply of commodities and services for the world. Obviously, therefore, if there were less economy of effort, as there certainly would be if all effort was pleasurable, there would be a less aggregate of comfort. In the psychological nature of man, it is further necessary that economic effort or labor shall be painful in order that the alter- native to those efforts which result in dispersing and expenditure shall be pleasurable, and it is necessary that the dispersion of wealth shall be rewarded by pleasures which do not attend its accumulation, or mankind would not, after toiling to accumulate, also toil to disperse it, as we constantly see them doing in enlarg- ing their scale of expenditure, multiplying their wants with every addition to their income, buying parks, country seats, yachts, pictui'es, traveling in foreign lands, sojourning at watering places, etc. Those, therefore, are in error who assume that all labor should be pleasurable and passionate, as Plato, Fourier, and the socialists generally have done, and as some who repudiate socialism as a creed still fall into from what they deem to be proper moral sentiment.* Only that form of effort to which man has some aversion is labor, and only his aversion to it causes him to economise his effort by confining it to remunerative effort, and only by confining it to remunerative effort can he be sure that he is working in a line for which there is social demand, and only by working in the line of social demand can he be really useful. Hence aversion to labor has both a basis in human nature, and an outcome of social utility. 111. All Labor can Not be Agreeable. — Having defined labor as servile, constrained, or necessitous effort, it next becomes necessary to recognize the fact that the necessity does not proceed * Cyrus Elder, in " Man and Labor," p. 28, says : " It can not be that man has a natural aversion to labor, nor can It be true of that peculiar kind of man called by the political economists a working-man. Somebody or something is to blame if labor has lost its natural delight. If this be true, we may ask in the language of the great mother, " ' Who his drugged my boy's cup ? Who has mixed my boy's bread ? Who with sadness and madness !Ias tuniod the man-child's hca:?'" ZABOE 18 IRKSOMK 287 from the mere coercion of the strong over the weak, but from the inherent economy of nature which intends, and plans, that man- kind shall live only by rendering mutual services to each other, including many of the most painful, disgusting, unhealthy, sliocking, and disagreeable kind. In compact city life, dead ofPal and excrement must be removed, and the more puti'id, offensive, and even unhealthy it is, the greater the social necessity of removing it. Loathsome, contagious, and malignant diseases such as yellow fever must be treated at the risk of one's life, and, the more fatal or loathsome they are, the greater the social neces- sity for their treatment. The dead must be buried, the sick, insane, and paupers must be cared for, criminals must be arrested and punished, even if need be to the death penalty, bad passions and base propensities must be met and reformed, or restrained by the coercive force of law. The differences that arise in society from conflicts of interest must be adjusted in the courts, and occa- sionally wars must be resorted to for the settlement of disputed questions between great masses of people or different races. To pei'form all these functions well, there niust be an organiza- tion of industry, a differentiation of function, and a subdivision of labor whereby each individual shall become the atom or mole- cule, the grain of flbrine or the particle of gluten, as it were, in the more comprehensive individual, called society. Division of labor implies the continuing, by each individual, in one mode ©faction, until the purpose of society is accomplished. The same atom of iron can not be, at once, a cog in the driving-wheel and a rivet in the boiler. If transferred from one of these places to the other, the wheel breaks or the boiler bursts. So in the organization of man in industry, the same person can not, at the same time, act as shoe-maker, school-teacher, farmer, and lawyer. To the extent that he attempts to do so, he disorganizes the machine, and indus- try refuses to make use of him. But while the organization of industry requires him to do one thing, or class of things only, in order to be productive to society, the psychological constitution of his mind requires that he shall find much of his pleasure in tran- sition from one thing to another. These two demands can not often be met at the same time, and hence arises a division of most men's time into business hours and hours of leisure, or working- hours and hours of rest, or, economically, the time we sell to others for pay, and the time we reserve to ourselves for pleasure. The sale of our time to others, whereby they become entitled to claim or compel from us the performance of acts which would 288 ECONOMIC PHILOSOPHY. be intrinsically unwelcome and disagreeable, if we were not paid to perform them, is what is generally understood by labor. The payment for labor-time generally, is usually called wages ; * the * Adam Smith (" Wealth of Nations." Book i, ch. viii, p. 29) assumes an " original state of things " to have subsisted when the laborer got the whole produce of his labor, a state of things which historically never existed. He says: "The produce of labor constitutes the natural recompense or wages of labor. In that original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labor belongs to the laborer. He has neither landlord nor master to share with him." So far is this from being true,the history of labor opens either with tribal communism in which the produce of labor belongs to the tribe, or with slavery, in which the laborer himself is owued. He continues : " But this original state of things, in which the laborer enjoyed the whole produce of his own labor, could not last beyona the first introduction of the appropriation of land and the accumulation of stock. "As soon as land becomes private property, the landlord demands a share of almost all the produce which the laborer can either raise or collect from it." The fact is that no labor that is appropriative, as hunting and fishing, is done upon land uutU the land itsel f has first been appropriated. Then the landlord works his land with such help as he needs, at first owning his workers, until ownership is gradually softened into wages. Smith assumes that the farmer's profit then comes in as a second deduction from the produce of labor, and the wages of labor are what is left of the produce of labor after paying the landlord's rent and the farmer's profit. In fact, however, the hired labor of a country does not first produce and then submit to a robbery, after the manner sup- posed by Smith. It is the man who has something, not the man who is destitute, that marks out work to be done, furnishes implements, and sets the idle man at work. Roscher ("Pol. Econ." by Lawler,Vol. i, p. 137) does not define labor, but in dividing it treats it as synonymous with industry. He says: "The best division of economic labor is the following : "(a) Discoveries and inventions. "(6) Occupation of the spontaneous gifts of nature, as, for instance, of wild plants, wild animals, and of minerals (appropriation). Where this is the only kind of economic labor, man is necessarily dependent on nature in a high degree. "(c) The production of raw materials; that is, a direction given to nature in order to the production of raw materials by stock-raising, agriculture, forest culture, etc., but not by mining. ^\d) The transformation (verarbeitung) of raw material by means of manufactories, factories, the trades, etc. "(e) The distribution of shares of goods among those who are to use them directly, whether from people to people, or from place to place (\vholesale), or among the indi- viduals of the same place (retail). To this class also belong leasing, renting, loan- ing, etc. "(/) Services in the more limited sense of the term which embrace personal as well as incorporeal goods. As for instance the labors of the doctor, teacher, virtuoso, of the statesman, judge, and of preachers, whose office it is by way of eminence to pro- duce and preserve the immaterial wealth known as the state and the church." Eoscher, however, is greatly in error in saying: " The order followed in the above classification is that in which the different classes of labor are wont to be historically developed." He wholly omits the industry in which all other industries begin, viz., fighting, and subdu- ing. The soldier, medicine-man or conjuror, and priest, are the first organizers <■{' industry. The first product sought is security from the enemy. The first source of NAMES FOR WAGES. 289 wage paid for a specific act is sometimes called a fee. If the time and service paid for is associated with official rank, high social service, skill, responsibility, and dignity, the wage is called life is the lance. The first form of surplus wealth is in amulets and charms to drive away evil spirits. But he is right in placing appropriation before production. In savage life a man owns whatever he can appropriate. In civilized life a thief, by taking what he can lay his hands on, simply declares his preference for savage life over civilized. J. R. McCuUoch, in his notes to Adam Smith, p. 435, defines labor as " any sort of action or operation, whether performed by man, the lower animals, machinery, or natural agents, that tends to bring about any desirable result. In so far, however, as it is done by natural agents it has no value." The last statement is not altogether true. The first man to invent a wind-mill got, as profits, the whole difference between the cost of grinding the corn by the power previously in use, and the cost of grinding it by wind power. It was only as wind-mills were multiplied that his profits were reduced to the ordinary rates of interest on the capital invested in the mill. The gratuitousness of new natural agents is a gratuitous fallacy. Ths first rates of transportation by steam were graduated on those by sail. So far as steam was cheaper the engine owner made a profit. The first rates of transmission by telegraph were graduated according to what the companies thought the public would pay rather than send by mail. Capital em- ployed in using natural agents for the first time, does not at once, and while it has a monopoly, come down for its profiis to current rates of interest on capital. H. D. MacLeod (" Principles of Econ. Phil.," Vol. i, p. 273) says: " If the money be paid for personal services, it is called wages, or salary, or pay, or fees, according to the different species of service." Mill (Book i, Ch. i, § 2) says : " Labor is always and solely employed in putting ob- jects in motion; it can only create utilities and not substances, and it is productive when it results in bringing into existence a commodity, and unproductive when it only gives rise to an emotion or pleasure." Jewns (" Theory of Pol. Econ.," p. 183) says: " Labor is any painful exertion under- gone partly or wholly with a view to future good. The amount of labor is a quantity of two dimensions— intensity and time. Quoting Adam Smith's definition, Adam Smith said: "The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it Labor was the first price, the original purchase money, that was paid for all things." Mr.Jevons says; "This celebrated passage might not prove to be so entirely true as it would at first sight seem to most readers to be." Mr. (7a?'«2/ (" Social Science Condensed," by McKean, p. 90) points out that both Smith and McCulloch begin by asserting that labor is the sole source of all value, and then proceed to say that man can fence in a water-fall and by his monopoly get pay for its gratuitous services, thus making monopoly a source of value as well as labor. Ricardo (Works by McCulloch, p. 50) says: " Labor, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price. The natural price of labor is that price which is neces- sary to enable the laborers one with another to subsist and perpetuate their race with- out either increase or diminution. " It is when the market price of labor exceeds its natural price that the condition of the laborer is flourishing and happy, that he has it in his power to command a greater proportion of the necessaries and enjoyments of life, and therefore rear a healthy and numerous family. When, however, by the encouragement which high wages give to the increase of poptilation, the number of laborers is iucreased, wages again fall to their natural price, and indeed from a reaction sometimes fall below it." 290 ECONOMIC PHILOSOPHY. salary. If the wage for service rendered is blended with a profit, and is made contingent upon a risk, it is a commission. If the labor is expended in the production of an article like a patent, book, or copyright, of which capital and enterprise incur the risks and take the profits, subject to compensation to the author or inventor for his labor by a percentage on the sales, its pay is called a royalty. If the labor is performed by the means of capital of others loaned to it for the purpose, and is paid for by an equal share in the profits, it is called profit-sharing or working on shares. 112. Labor Less Broad than Production. — Labor must not be confounded with production nor with industry. Produc- tion is the work of the employer of labor, since it is his act of employment that produces the labor. What the laborer produces is a diversion of a certain quantum of wages to himself in return for a certain quantum of services to his employer. The contract assumes that the employer is engaged in producing a commodity or a result, be it a railroad or a pin, and that in the course of that work of production he pays a definite sum for the service, i. e. , the obedient physical and mental action of the laborer, the em- ployer usually furnishing subsistence, implements, working s]jace, raw materials, job, associates essential to the division of labor, machinery, and marketing the product at his own risk as to whether the commodity is in demand or will pay any return whatever. Industry comprehends the grand total of employer and em- ployed, space, capital, contract, machinery, competing supply, demand, wages, and every other element bearing on the two parties, employer and employee. 1 13. Tlie Wage Fund Doctrine. — It is hard to be sure what certain economic writers have meant by what they call the wages fund.* A usual mode of stating it is to say that the rate of wages * Mr. Cairnes ('' Some Leading Principles, etc.," p. 159) quptea Mr. Mill as stating the wages-fund doctrine (" Principles of Political Economy," Book ii, Ch. xi) thus: " Wages, then, depend mainly upon the demand and supply of labor; or, as it is often expressed, on the proportion between population and capital. By population is here meant the number only of the laboring class, or rather of those who work for hire; and by capital, only circulating capital, and not even the whole of that, but the part which is expended in the direct purchase of labor. To this, however, must be added all funds which, witnout forming a part of capital, are paid in exchange for labor, such as the wages of soldiers, domestic servants, and all other unproductive laborers. There is, unfortunately, no mode of expressing by one familiar term the aggregate of what may be called the wages-fund of a country; and as the wages of productive labor form nearly the whole of that fund, it is usual to overlook the smaller and less important part and to eay that wages depend on population and capital. It will be convenient to AMUSING DULLNHSB. 291 is the quotient arrived at by dividing the whole sum applicable to the purchase of labor among the whole number who find em- ployment. Of course it is. But so is the price of wheat per bushel the quotient arrived at by dividing the whole number of dollars, applicable to the purchase of wheat, among the whole number of bushels actually sold. Yet we do not sujDpose that this truism in arithmetic is a proposition of an}' kind in economics, or that it gives rise to a wheat fund. The price of any quality of dry goods, per yard, is the quotient which would be arrived at by dividing the whole sum of money applicable to the purchase of that quality of dry goods, among the whole number of yards pui'chased. Does this give rise to a dry goods fund ? And so of rent, railway freights, and so on throughout the whole range of prices. If a boy were asked the distance from where he was standing to the next town, and should answer, "That, sir, is the quotient which may be arrived at by aggregating all the instances of like distance, which exist in the world, and then dividing it by the total number of distances so aggregated, " it would require a per- son extremely deficient in humor to fail to see that he was joking. And yet Mr. Mill seems to be not in the least conscious that he is joking, when he says the average rate of wages is arrived at, by employ this expression, remembering, however, to consider it as Ciliptical, and not as a literal statement of the entire truth." * Upon the above, Cairnes says: "As I understand this passage, it embraces the follow- ing statement: First, ' wages-fund ' is a general term, used, in the absence of any other more familiar, to express the aggregate of all wages at any given time in possession of the laborina; population; second, on the proportion of this fund to the number of the laboring population depends at any given time the average rate of wages; third, the amount of the fund is determined by the amount of the general wealth which is applied to the direct purchase of labor, whether with a view to productive or to unproductive employment." And yet Mr. Cairnes, on p. 161, defines the wages-fund in a very different way. He there says: " It seems to me that Mr. Brassey has mistaken the statement of the prob- lem for its solution. It needs no proof surely to see that if £40,000,000 be added to the exisiing capital of a country, and the greater portion applied to the direct purchase of labor, the 8u])ply of labor and other things continuing the same, wages must rise, or that the withdrawal of a great sum from the payment of wages, as on the occasion of a commercial collapse, must on the other hand, ceteris paribus, involve a fall of VFages. To us this is not to solve the question, but to state it. What we want to know is what determines the relation of supply and demand— of the wages-fund to the laboring popu- lation. Why is that relation such as to yield one rate of wages in the United States, another rate in Great Britain, and a third rate on the continent of Europe? If Mr. Braesey would fairly address himself to this problem, I think he would find that the political economy of the wages question is not quite so simple as he supposes." (" Some Leading Principles," etc., p. 161 ) * "Labor,'' i). 84. 292 ECONOMIC PHILOSOPHY. dividing the total sum expended on labor, among the total number of laborers. Mr. Mill's doctrine was attacked by Mr. Thornton on the ground that the alleged wage fund, to be of any value in economics, must be a determinate sum, i. e. , we must be able to know first in the case of an individual employer, and then in the aggregate cases of all employers, how much money, if any, had been set apart in advance for the payment of wages, for if it was a wholly indeter- minable abstraction it was of no use. Mr. Mill gravely yielded to the validity of Mr. Thornton's objection. But neither gentle- man seemed to see the broad humor which renders the whole proposition on an exact level with the schoolboy's plan for find- ing the distance between two points, viz. : guess how much four times the distance would be, and then quarter it. Political economy can never make raj^id progress in England, until missionaries of humor are sent into that country, to incul- cate, or in some way develop there, the faculty of apprehending the distinction between stupidity and profundity. Malthus' law of population, as stated both by himself and Ricardo, illustrates the same point. The law is, that as the laborer's income expands, his power and tendency to procreate expands at the same rate, so as to hold the laborer, ordinarily and naturally, down to the same standard as if his wages had not been raised. Now, if an English- man had any sense of humor, he would see that there is no physiological distinction between the effect of an increase of income on a laborer, a profit-maker, and a landlord, as to his tendencies to procreate his species, as they are all laborers of some sort. Hence, if A. T. Stewart married on an income of say $1,000 a year, or say $500 each for himself and wife, the so-called law of Malthus would have required when his income reached $6,000,000 a year that Mrs. Stewart should have borne him 12,000 children. In fact she did not bear him one. Yet Englishmen like Bon amy Price keep on declaring that the Malthus Law has to do with Political Economy, when it is only a form of uncon- sciouo liumor, designed to enable persons to be most amusing when they imagine they are most authoritative. When Mr. Cairnes, however, says that the object, of a wages fund doctrine is to explain why wages are higher in the United States than in Great Britain, and higher in Great Britain than on some parts of the continent, it immediately bfecomes evident that the word ' ' fund " has no business in the title, and that what we are searching for is the cause of the rate of wages. THE CAUSE OF WAGES. 293 114. The Rate of Wages and Margin of Profits.— Tlie natural price of labor, and the actual rate of wages, is that price at which the employer, if he is a profit-maker {entrepreneur) believes he will find it more profitable to pay the wage, than to lose tlie cliance of pi'ofit by dispensing witli the service. The motive, which determines the employment, is tlie same as deter- mines the price in buying land or goods. If it be said tliat this definition runs in a circle, and that what it needs to set forth is the cause why the profit-maker pays more in America than in England, the ready and true answer is that the difPerence between cost of production and price of commodities is greater, and, "profits being the mother of wages," the larger the mother the larger the offspring. And if it be said that we are still defining in a circle, and that what is needed to be known is why the profits are larger, we answer because all profits grow out of an economy of human effort in effecting the maximum of consumable wealth at the minimum of human exhaustion, and that this economy is so facilitated in the United States by the union of the highest intelligence with the most untiring industry, in the application of the greatest diversity of occupations to the evolution of the products of the most abundant areas of fertile land, that more human comfort is created, per head of population, than elsewhere exists. The smaller the effort by which comforts are created and enjoyed, and the higher the standard of comfort attained, the higher must be the rates of profit and wages, since what we call profits and wages are only comforts expressed in the anterior form of the money which will buy them. Hence it is the success of industry, or of the war whereby man overcomes nature, that makes high profits and high wages, the division of the gross re- tvirns of each industry between capital and labor maintaining always that essential equality which we have pointed out in our chapter on " Profits and Loss. " It is believed that the average rates of profit on capital, in all countries, periods, and modes of business, bear about the same ratio to the wages of labor in the same countries, periods, and modes of business, McCullocli says :* "The common and ordinary rate of wages in any country really depends upon the magnitude of that por- tion of its capital which is appropriated to the payment of wages, compared with the number of its laborers." But what does the * Note to Smith's " Wealth of Nations," p. 30. 294 . ECONOMIC PHILOSOPHY. magnitude of the sum to be appropriated to the payment of wages depend upon ? The appropriation is in all cases made by the profit-maker, and always with an eye single to the profit he can make. Hence the total sum appropriated to pay wages is not the cause of the rate of wages ; it is the wages itself in their totality. Hence the cause of wages is profits.* But the cause of rent, of interest, and of all production is also profits. Hence profits are the one equalizing standard of value into which all other modes of income known to political economy are exchangeable. Wages, rent, and interest are all modes of profit, the first being a profit on the rendering of service or the performance of labor, the sec- ond being a profit on the ownership of land or the capital invested in its purchase, and the third being a profit on the loan of money. All profits tend constantly toward an equality of return on past efforts, but an inequality and exorbitance of return on all new efforts which achieve a larger measure of satisfaction to human desires from a smaller expenditure of effort. Hence profits are the migratory or steering principle in industry, whose guidance, rent, interest, and wages all await and follow. Profits impel to the great inventions, discoveries, innovatioiis, economies, improve- ments. They are the pillar of cloud by day and of fire by night in the onward march of industry. They keep breaking out in the most unexpected spots, and perpetually surprising the world. * Adam Smith so faintly recognizes as almost to conceal the most important fact connected with the wages system, viz., that wages are due to and vary with profits. He says (p. 38) : "The liberal reward of labor, therefore, as it is the necessary effect, so it is the natural symptom of increasing national wealth. The scanty maintenance of the laboring poor, on the other hand, is the natural symptom that things are at a stand, aud their starving condition that they are going fast backwards." Gen. Francis A. Walker (," The Wages Question," pp. 129-130) hag clearly enunciated the relation of profits to wages. He says : " If a person have wealth, that of itself constitutes no reason at all to him why he should expend any portion of it on labor, on machinery, or on materials. It is only as he sees that he can increase that wealth through production that the impulse to employ it in those directions is felt. But for the profits by which he hopes thus to increase his store it would be alike easier and safer for liim to keep his wealth at rest than to put it in motion for the benefit of others." ... So long as additional profits are to be made by the employment of additional labor, so long a sufficient reason for production exists ; wlien profit is no longer expected, the reason for production ceases. At this point the mere fact that the employer has capital at his command no more constitutes a reason why he should use it in production wliere he can get no profits than the fact that the laborer has legs and arms constitutes a reason why he should work when he can get no wages." J. E. Cairnes (" Some Leading Principles ") p. 462, says : " Capitalists and laborers receive large remuneration in America because their industry produces largely." Edward Atkinson, in " What Makes the Rate of Wages," states the same principle thus : "I have attempted to demonstrate that in all productive employment the rate of NATURE 18 NIGGARDLY. 295 It is not clear, however, yet in what definite relation profit- making stands to wages-earning^ — in the comparative comfort and ease of life it brings to the average of those engaged in the two modes of life. For profit-making includes also loss-incurring, and the means of estimating the totality of losses, incurred by the profit- makers, are veiy defective. The New Yoi-k Chamber of Insurance once put forth the estimate that the losses arising through the destruction of property by kerosene, used for lighting purposes, exceed the entire value of all the petroleum extracted from the wells to that date. There is a prevalent belief, among those most experienced in gold and silver mines, that the amount obtained from the profitable mines so little exceeds the losses on the unprofi- table ones, that the net result makes raising ore less profitable than raising corn. The number who fail in mercantile life is fre- quently stated at from 90 to 95 per cent. But those who succeed constantly make a percentage of loss which tends to reduce their profits to the average level of the salaries usually paid to men of their capacity. 115. Is Population a Check on Wages? — Adam Smith taught the germ of the doctrine, which Malthus elaborated, that there is a sort of food fund in nature, apart from human labor, which may properly be spoken of as the ' ' natural means of sub- sistence ; " * that population is abundantly supplied in proportion wages which can be paid in money must depend on tlie sum of money which is re- ceived from the sale of the product. Inasmuch as those who work for wages in strictly productive occupations constitute by far the largest portion of wage-receivers, the rates of wages for personal services, which are only indirectly productive, are gauged by the same standard. All profits and wages must come out of the gross product. Further- more, all profits, wages, earnings, or other income, must be substantially derived from each year's product, because the year corresponds to the series of seas^ons in which one crop is made. A part of the product of each year is carried over to start the work of the next year upon ; but a part of the product of the present year was brought over from the previous year to start the work of this upon. Therefore the measure of what there is to be divided by tlie measure of money must, in the long run, depend upon what each year's product will bring in money. If, then, the annual product is large, because the resources are great, because capital is ample, because labor is effective, be- cause the army is but a border police— then the sum of money derived from tlie sale will also be large, for the reason that in spite of all natural obstructions between one nation and another, the product of one nation, as a whole, comes directly or indirectly into competition with the product of the world." * " Wealth of Nations," by McCuUocb, p. 36 : " Every species of animals natmally multiplies in proportion to the means of their subsistence, and no species can ever multiply beyond it. But in civilized society it is only among the inferior ranks of the people that the scantiness of subsistence can set limits to the further multiplication of the human species, and it can do so in no other way than by destroying a great part of the children which their fruitful marriages produce." 296 EGONOMIG PHILOSOPHY. as it remains small relatively to this natural means of subsistence ; that, as it increases, it presses upon these natural means of sub- sistence ; that if, from any cause, this means becomes abundant, the multiplication of offspring- among mankind is a check reduc- ing the rates of wages, checking procreation, until the means of subsistence again catch up with the number of men. The fallacies in this doctrine are, (1) that it is only in the savage state that the food fund, which sustains man, is supplied by nature, and even then the average labor of appropriating, what nature is supposed to have gratuitously supplied,makes division of labor, and therefore increase in the number of laborers, a source of gi'eater abundance in the supply. In hunting deer ten persons and twenty dogs wfll get more than ten or twenty times the quantity of deer that one person can, because they can "corral" the deer, and drive him within their range, or where they want him. (2) The poor always multiply faster than the rich, and men are always more reckless in multiplying their species in the degree that they are poor. Families continuously rich soon become extinct. (3) As every species of animal, including man, constitutes a part of the means of subsistence of other animals, the faster they all multiply, the more means of subsistence there must be. Man, by cultivating crops, g-rains, and grasses for the food animals, increases immeasurably the means of subsistence of horses, asses, mules, horned cattle, including milch cows, sheep, goats, turkeys, geese, chickens, hogs, hares, and all domesticated animals, and of many wild ones. He thus makes the excess of the activity of the procreative power, in the lower grades of life over that of man, a guarantee of the far more rapid increase in human food than man himself can possibly effect in his own numbers. (4) The check on consumption of means of subsistence, which is found in checking procreation, checks, in an equal degree, the means of production. For all human means of subsistence are not only the product of labor, but the facility of their production increases with the increase in the number of laborers eraploj^ed in their production, far more rapidly than the number of laborers does. (5) The check on decline of wages, if any could be effected, by diminishing population, would take effect years after the necessity for it is felt, if it is ever felt, and when perhaps, scarcity may have given place to abundance. Even the one year required for the gestation of the child, is too long- a period for a laborer to predict LITTLE ECONOMIES. 297 whether it will increase or dim-inish his store, and he certainly will not extend his glances over the eighteen years required to convert the prospective offspring into a competing worker. During the first live years after the birth of a child, the cost of his support does not exceed the increased value of the laborer s work through the greater stimulus, steadiness, and sense of responsibility which ordinarily comes with the parental relation. It is only when the child begins to be about eight or ten years of age that the cost of his maintenance is felt as a tax, but by that time, in most conditions of life, he can be worth his board as a helper. Upon a farm he can gather the eggs, feed the chickens, drop the corn, ride the horses to water, and often catch and harness them, pick the berries, and on the great farms of the West he can, perhaps, sit on the sulky of the cultivator, and do part of the mowing or harvesting. In cities he can be cash -boy, messenger, answer the bell, and perform many kinds of light, useful tasks. It is doiibt- ful if there is, or need be, an unproductive period, in the full eco- nomic sense, in any human life. To suppose, then, that a passion which nature has made one of the most difficult to resist, since on it depends the continuance of the human race on earth, would be checked in its action by the apprehension that twenty-one years later it would place the labor supply in excess of the demand, is so pi'ofoundly dull as to be seriously funny. 116. Countries of Higli and Low Wages. — The reasons why some countries maintain a higher wage-rate than others are not unlike those by which some individuals, in the same country, maintain a higher wage-rate than others. China, relatively to Europe and America, is made a very slow country by the absence of beasts of burden as a means, of agriculture, labor, and rural transportation, and by the consequent absence of agricultural machineiy, and of interior roads, and an almost exclusive re- liance on human labor, whereby the population are packed in the towns, and along canals and rivers, while large portions of the country, which, with better transportation, would be studded with farms, are left in solitude. Hence the aggregate earnings are lower and enjoyments fewer than in Europe and America. Yet, of what the Chinese do produce, nothing is wasted from hu- man consumption by the demands of horses, cattle, and means of transportation. Their saving in railroad building alone amounts to six thousand millions of dollars for every fiftj^ millions of pop- ulation comijai'ed with the United States. Their labor is all directly bestowed on the production of food and drink and very little on 298 ECONOMIC PHILOSOPHY. mere means, machinery, implements, and buildings. Hence a wage very mucli lower produces a degree of average comfort only a very little lower than is known in Europe and America, or the difference in comfort is far less than the difference in the money used in paying the wages. There are even many compensating economies, so far as human comfort is concerned, in a stationary civilization. As industry is matiifesting no enterprise, it is making no losses by enterprise, but only those very great losses which it makes through lack of enterprise. It is not expending its efforts on great railways not needed, great wars for mere " ideas," great contests for abstrac- tions or theories, nor is it expending its force like the Egyptians on great pyramids and monuments, like the Greeks on great architectural temples, statues, and carvings, like the Romans on great roads, or wars and conquests, like the Germans and French on great standing armies, or like the Americans on great railroads. Needing less force of character, a vegetable diet suffices, nor is this reiiiforced by alcoholic poisons. Hence, simultane- ously with this low wage-rate, there runs an economy of effort, which makes all the efforts actually made tell effectively on promoting the sustentation of life. This is accomplished perhaps more successfully and evenly, taking long periods of time and great numbers of population together, than among any other race, leaving to all classes of the Chinese neai'ly the same ratio of time for cultivation and amusement as is devoted to those purposes in other countries. * As the Chinese are slower in production than Europe and America, in like manner do the rural and peasant populations of most of the continental states of Europe, and of many parts of England, fall behind the farming classes in America. A lower rate of agricultural profit has called forth a lower range of enter- prise among farmers, less use of machinery, and a slower and finally a dearer and more slavish and laborious mode of produc- tion. Contrary to a very frequent assumption, cities are the sphere of more productive labor than the country, capital earning higher * Adam Smith (p. 33) says : " China has been long one of the richest, that is, one of the most fertile, best cultivated, most industrious, and most populous countries in the world. It seems, however, to have been long stationary,— but it does not go backward. Its towns are nowhere deserted by their inhabitants. The lands which have once been cultivated are nowhere neglected. The same, or very nearly the same, annual labor must continue to be performed, etc." EFFECTS OF MA CHINER Y. 299 profits and labor higher wages. Points fifty miles apart dilfer by from 50 to 100 per cent, if the one is sparsely settled and the other densely. Adam Smith observed that wages a few miles out of London were much less than they were for the same ser- vice in London. The same holds in New York as compared with points only thirty miles distant. 117. Labor-Saviiig- Machines. — The introduction of labor- saving machinery has some tendency to enhance wages, in the fact that the employer of the machinery makes at first as a profit the whole difference between the cost of performing the work by the old and by the new process, which rate of profit is only grad- ually reduced as other capitals compete in the performance of the same work by the new machinery. Until the higher rate of profit is thus reduced by competition, extraordinary rates of profit are being made on the capital invested in performing the work by the labor-saving process, and wherever extraordinary rates of profit are being made, there capital will forego a part of its profits in the form of increased wages, in order to increase its output rapidly and to ' ' make hay while the sun shines. " As the suc- cessful working on new forms of machinery nearly always in- volves some degree of skill, it is often better economy to enlarge the wages of those who have some degree of skill than to take on new and unskilled hands. Probably every labor-saving inven- tion has witnessed the increase of wages to labor, through the increased profits to capital obtained by saving labor-cost in the production of commodities, during the interval in which the former selling price of the commodity had not yet fallen to the new cost of production. One of the most intricate problems in political economy is to measure the gains to wages-woi-kers against the losses to the same class, through any of the causes connected with an expan- sion of dimensions in production, whether it be the increase in the division of labor incident to the large industries relatively to the small, the introduction of machinery, the extension of markets, the widening of competition and consequent equaliza- tion of prices over a large area, the employment of large capitals, the exclusion of effective competition, or any other. If it be sought to determine whether women were better paid or more esteemed before or after the distaff and spinning-wheel were superseded by the power loom, and the needle by the sewing nmohine, the problem becomes involved by the fact that loss and profit alteriiate to the same class, from the same cause, as rapidly 300 ECONOMIC PHILOSOPHY. and inextricably as the threads in a woven fabric alternately suc- ceed each other as upper and under. The flowing- robes of the ancients economized time in sewing, but wasted cloth relatively to the degree of warmth afforded, since they involved little or no cutting, sewing, or fitting to the figure. Sewing in its first effect economizes weaving or makes more clothing out of fewer skins or less cloth or other materials. But by roeans of the economy of materials effected by sewing, so many more garments come to be worn and kept for wear that there is more use for the weaver than if the economy of the needle had not been practised. The sewing machine seems to dispense with the needle. But no sooner has it done so than styles of ladies' apparel so change as to absorb far more sewing "per front foot "than had previously been in vogue, many gowns being made up expressly to expend upon them all the sewing possible, and being so draped as to ren- der the services of the machine subordinate to the taste of the draper. Thus the demand for the needle has rather increased than diminished through the introduction of sewing machines. So in the absence of statistics it might with reasonable safety be affirmed that in America, where steam is so largely sub- stituted for human labor in transportation, as large a ratio of the population are still employed in transportation as in China, where it is accomplished wholly by human labor. The increase in the division of labor has the effect to educate workmen only in one part of a process, and thereby to render them dependent on the co-operation of a large number of others, so that loss of work to one in many cases means loss of work to all. Per contra, this same increase in the division of labor furnishes some form of work adapted to the powers of the most crippled or incompetent, and so lessens the need of idleness, and therefore of the depen- dence of the idle on the industrious. lis. Lalbor Conibinatious. — The degree in which the state can regulate rates of wages depends on the degree in which it desires to be the responsible entrepreneur in all productive indus- tries. A state which says to an employer, ' ' You must pay a given sum for a certain labor-time " should be prepared to run the indus- try itself at the same rate of wages if the employer fails to do so. Now that the government of England has, by its several land acts concerning Ireland, adopted the principle of " tenant right," /. e., that the tenant has as much a right to occupy land, upon paying a fair rent, as the landlord has to receive the rent, it is impossible to predict that governments may not in the near future, if the CORNERS ON LABOR. 301 pressure toward socialism continues, acknowledge a droit du tra- vail, or right to be employed at a fair rate of wages, by any one who has the requisite means of employment. At present, how- ever, such legislation would seem to be visionary and subversive of liberty. • If labor relations can be adjusted in this manner, why should not the sale of all commodities as well ? On this basis thei'e would soon be no such fact as individual interest left, and the state would become the sole organizer of industry. It is not the province of economic science to revolutionize society by demonstrating the theoretical inadequacy of all existing condi- tions, but rather to elucidate the laws which are operative in mak- ing existing conditions what they are. Hitherto the province of the state has been to supplement individual enterprise, and to facilitate co-operation in industry, but not to compel it — to aid by relief the sufferer who so fails in industry as to run short of the means of subsistence, but not to acknowledge that if he can find no other purchaser for his labor the state will buy it at a stipulated price. Laws forbidding laborers to combine to put up the price of labor, and laws forbidding employers to combine to put it down, have a historical value as the expression of the prevailing public conscience at the time, like laws fixing the rates of interest, or the weight and price of a loaf of bread. The purpose of all tirade unions is to mass large numbers of laborers into a conti'ollable organization, with the view of withholding it from market until its demand as to compensation, hours, terms, or other details is complied with. It gets a " corner" on labor, to force it up, in the same manner as buying, holding, and refusing to sell large masses of wheat, cotton, or stocks gets a corner on those commodities, and tends to force thena up. The statutes heretofore passed against corners in grain, in this country, do not differ in principle from those foi'merly passed in England to discourage corners in labor, or combinations to withhold labor, in order to raise its price. The fu«idamental fallacy underlying such laws is that, while they assume that a laborer is entitled to all his labor is worth, they assume that he can only combine to get more than his labor is worth, whereas there is, in practice, no test whereby to draw the line between combining to get the true value of laboi-, and com- bining to obstruct industry by setting upon labor an impossible price. For laborers to combine to get the true value of labor can hardly be called objectionable. And yet employei-s have the same right to combuie to avoid paying more. The limit can only 302 ECONOMIC PHILOSOPHY. attach, to the acts to be performed under the combination. McCulloch* says "a criminal act cannot be generated by the mere multiplication of acts that are perfectly innocent," meaning thereby that a thousand men have the same right to combine and ask at once for higher wages, and stop work if the request is not granted, as one man has to withhold his labor. Mr. Jevons t com- bats this doctrine strenuously, holding that for 1,000 workmen to withdraw their work at once, in order to cripple an employer on his contracts (or a car company on its franchise of carrying pas- sengers), is like the act of 1,000 bank-depositors, combining to withdraw their deposits at once, in order to break the bank, or like a combination of 10,000 persons, to walk at one time in a certain street, in order to block it. The English Conspiracy and Protec- tion of Property Act is drawn on this line, and makes it criminal to break a contract of service or of hiring, knowing or having reason to belive that the probable consequence of so doing, either alone or in combination with others, would be to endanger life, limb, or property. » " On Wages," 2d Ed., p. 90. t " The State in Relation to Labor," pp. 129-131. " There is no bank in the country which could stand a run on the part of a considerable number of its depositors. It must be quite apparent that any agreement between bank depositors to draw out money, in order to overthrow a bank, is a totally different thing from drawing out in the ordi- nary course of business, and is in fact a serious matter." "There is hardly one of the ordinary arrangements of trade which may not be entirely upset by concerted action. The bakers and butchers might starve us out ; the cab proprietors might refuse to carry us away ; innkeepers might decline to harbor us; our neighbors might tacitly avoid assisting us. No man's life would be safe if unlimited boycotting were regarded as legal . " "Industrial Treason ... I venture to think that a great strike, if carried suffi- ciently f ar,might assume the character of social treason. As in the case of the great rail- way strike in the United States in 1877, it might bring society to a dead lock. If 10,000 Torkshiremen were to march upon London, with the very best arms they could muster, the government would probably surround and capture them in twenty-four hours by the aid of railways and telegraphs. But if ten thousand railway men were to form a con- spiracy to obstruct and destroy the railways and telegraphs of the kingdom, they would create infinitely greater alarm and injury, and would be checked with far greater difficulty." Mr. Jevons' point involves the fact, which so frequently escapes considei^tion in con- nection with labor troubles, that civil legal process acts only on capital. Executions for damages are collectible only against property. Hence the quiver of civil law reme- dies contains no arrow which will reach labor, i.e., compel the performance of a con- tract to work by a laborer, or punish its non-performance. We do not urge or argue that there should be such laws enforceable against labor, but there should be a frank recog- nition of the fact that there are no such laws. If the law is to recognize a right in the wages-worker to continue at work at a rate which arbitrators may regard as reasonable, a proposition which it would be very pre- mature to affirm, it might follow as a corollary that some mode should be devisfd whereby the law would nt least attempt to hold tlic wages-worker to perform his con- tract. LABOR MAT COMBINE. 303 Shall the laborers, who combine, be permitted to overawe and intimidate other employees who seek to take their places ? What species of arguments and inducements shall be deemed to be a fair exei'cise of persuasive speech, and what shall be styled threats and intimidation ? These have been made questions for determination by a jury, the law contenting itself by saying the workmen may conabine to stoj) working, and peaceably to dissuade others from working, but not to coerce, threaten, or intimidate those who propose to fill the places they have vacated. It is prob- able, however, that as long as " strikes " and " lockouts " occur, something like threats and intimidation will be their usual incident. There is a disposition among economists generally, to concede that labor unions, to protect wages, have, on the whole, had much the same effect to enhance the rate of wages, as wars between na- tions have had to promote national rights, and to compel the con- cession of national demands. Their costs are great. Their sacri- fices often seem far more cruel than the wrongs they are incurred to resist. It is, however, as idle to argue against them as to argue against war of any other kind, or even against litigation in the courts. Wherever there are conflicts of interest, sentiment, and belief, there must be war in some form, the most important ques- tion being in what manner it shall be conducted. Whether wise or otherwise, they will recur, and their recurrence leaves in its path generally much temporary loss and some small measure of permanent gain. 119. Arbitration and Labor Courts. — To some minds it seems apparent that it is as illogical and impracticable to attempt to vest courts or officers with the power to decide future rates of wages, as between employer and employees, as to decide the prices at which commodities should sell in every particular case. Mr. Jevons denies that such laws can be efficacious,* but admits that in the reign of Elizabeth, of George II., and finally in that of George III., statutes were passed conferi'ing this power, though finally, in the last-named reign, the principle was reasserted that the magistrates and arbitrators should not bind any parties to future contracts, except by consent of both parties. Others think there is a certain heartlessness in treating labor wholly as a commodity, and that the fact must be recognized that the laborer is made, by various circumstances, immovable as to his * "The Stii e in Relation to Labor," p. 150. 304 ECONOMIC PHILOSOPHY. place of residence, and unchangeable as to his location, and must either be supported by taxation as a pauper, where he is, if he loses his work, or must be kept in work, or must be allowed to starve. That society does not claim the right to allow him to starve is suf- ficiently shown by the prevalence of the poor laws. The degree of coercion upon the tax-paying employer, involved in requiring him to pay a given rate of wages, does not seem to be necessarily more odious than in requiring him, and men of his class, to support the worker outright by reason of his loss of employment. We believe the arbitration laws, hitherto passed in the United States, do not involve the right, on the part of the courts, of determining future rates of wages, nor do we perceive by what process or machinery such provisions, if enacted, could be enforced. Virtually, there- fore, the function of courts of arbitration between employers and employees must, for the present, be conciliation. 120. Labor Agitations for a Social Revolution. — The proposal to reorganize society upon a basis that shall be unselfish, public-spirited, and kind to all, and that shall make men happy in proportion to their unselfishness, instead of, as now, giving them wealth in proportion to their possession of the enterprising and accumulative faculties, was first prominently made by PJato in his republic, and has been reiterated, by visionaries and enthusi- asts, in nearly one identical form, for twenty-three centuries. It rests on certain false assumptions in political economy, chiefly that all human possessions, powers, rights, and opportunities ought to be, and can be, equalized, a condition which would be fatal to the very existence of all these possessions, rights, powers, and opj)ortunities. The so-called economic arguments of these agitators generally consist in representing all forms of invested capital as resulting from the robbery of labor, and as being in fact " stolen wages." They make no account of the fact that all invested capital is employed in social uses ; that the greater its quantity the lower the rate of compensation at which society gets its use ; that society gets the use of that portion of capital which is privately owned, at least as cheaply as it gets the use of that which is publicly owned ; and that, were there no gi-eat reservoirs of j)rivate ownership, into which the successful could profitably invest their earnings and savings, society could not be tided over its periods of lower production, without great famines, and indeed civilization could not exist; women aiid children could not be maintained after the death of their immediate husbands or fathers ; the very implements of the great industries, such as railways, AT LAST LABOR GETS ALL. 305 banks, steamship lines, and factories, could not exist, and society would be remitted back to the condition in which it now is in Central Africa. The principle of absolute free speech implies the unlimited polit- ical right to teach economic and social falsehoods, the aim of which is to stir up the destitute class of society to believe that they can by some undefined uprising, coiq) d'etat, or revolution, come into tlie possession of plenty of every thing they desire. Under- neath these complaints there lies a misconception of the social use that is actually made of all stored-up wealth, and a misintei'pre- tation of the utility of wealth-accumulation, as a means of promot- ing equality of wealth-consumption.* The instinct to hoard enjoyable products is manifested by squirrels, ants, bees, and hibernating quadrupeds. In primitive stages of society misers might hoard gold coin. But in the mod- ern organization of industry there is no hoard. The supposed hoard is not aboard, but merely a power over, or claim upon, some form, of reproductive wealth, like shij)s, cars, or locomotives, of which labor has the loan and custody as implements, the public has the product, viz. , ti'ansportation, society has the net result, viz., cheapness and equality of consumption, and the so-called hoarder has a power to draw dividends on stock, the whole of which — except the small fraction required for his clothing, shel- ter, food, and fuel — he must sooner or later, and directly or indi- rectly, and at home or abroad, pay out for labor. It is singular that the socialists, who begin by affirming that labor is the sole cause of all value, fail to infer that the only use to which wealth can be ultimately put must be to pay for labor, and hence that, in the long run, labor must get it all. Thus Mr. Griinlund first arrives at the rate of working on * Robert Ingersoll, in a lay sermon, at Chickering Hall, delivered to an audience chiefly socialist, said : " It is an insanity to get more than you want. Imagine a man in this city, an intelligent man, say with, two or three millions of coats, eight or ten millions of hats, vast warehouses full of shoes, billions of neckties, and imagine that man getting up at four o'clock in the morning, in the rain and snow and sleet, working like a dog all day to get another necktie ! Is not that exactly what the man of twenty or thirty millions, or of five millions, does to duy ? Wearing his life out that somebody may say, ' How rich he is ! ' What can he do with the surplus ? Nothing." The investments of Vanderbilt in railways, of which society has the entire use in transportation, of which labor has the entire loan and keeping, for productive purposes, and of which Vanderbilt has the control and government, only on the single condition of paying more for its stock, and running it more economically than any competitor, hear only a humorous, not an economic, resemblance _to an investment in billions of 306 EOONOMIG PBIL0S0PH7. shares, which, as we have shown in a previous chapter, is carried on between capital and labor, by adding- the value of the raw ma- terials, and allowing- 5 per cent, of the total value for annual depreciation of machinery, implements, and buildings — deduct- ing- the total of these two from the value of the finished products of manufactures. The remainder g-ives the total jomt eai^nings, or fund for division, between the labor performed in the factory during the year and the labor stored in the form of capital in the factory, good-will, stock, land, machinery, losses, bad debts, ex- tensions of plant, profits, and all other modes in which capital has been invested, or sunk, in creating the business in which labor is employed. Mr. Griinluud assumes that labor, instead of being permitted to work the factories on equal shares with capital, ought to take the whole, and that all that capital gets is " fieecings." * This is equivalent to holding that there ought to be no means of investing the savings of labor in any reproductive form what- ever, but that civilized society ought to return to the African state, in which no reproductive capital exists. But, because labor agitators can formulate no remedies which it would be within the province of a legislature to enact, it does not follow that they may not bring about a state of feeling in the neckties. The basis of the socialist complaint is that the wealth, accumulated in large fortunes, is wealth capable of being privately csed. It is not. It is social wealth pub- licly used and privately controlled. * " The Co-operative Commonwealth," by Laurence Griinlund. Mr. Grtinlund continues, through 278 pages, to anathematize society, but the follow- ing is absolutely the only line of exposition he gives of the mode in which things are to be mended. On p. 102 he defines his whole remedy as follows : " For what is ' the Co-operative Commonwealth ? ' " Extend in your mind division of labor and all the other factors that increase the productivity of labor ; apply them to all human pursuits as far as can be ; imagine manufactures, transportation and commerce conducted on the grandest possible scale, and in the most effective manner ; then add to division of labor its complement,— Coij- CEET ; introduce adjustment everywhere where now there is anarchy ; add that central regulative system which Spencer says distinguishes all highly organized structures, and which supplies ' each organ with blood in proportion to the work it does ' and — behold the Co-opBEATivE Commonwealth ! " The Co-operative Commonwealth, then, is that future social order — the natural heir of the present one— in which all important instruments of production have been taken under collective control ; in which the citizens are consciously public functionaries, and in which their labors are rewarded according to results. " A definition is an argument." Imagine a legislature, or constitutional convention, assembled and asked to enact the above vision into law. The act, would read : " Be it enacted that division of labor and all the other factors that increase the productivity of labor shall be applied to all human pursuits as far as can be ; that manufactures, transportation, and commerce be con- ducted on the grandest possible scale," etc. The act would be useful only as a joke. WHAT HOLDS A MAW DOWN. 301 minds of many men wliicli may call for legislative as well as judicial action. There is a point at which the teaching of a false system of political economy merges into incitement to assassina- tion, thugism, and ti-eason, jvist as thei'e is a point at which the doctrine of Malthus, concerning population, merges into becom- ing accessory before the fact to a criminal abortion, and just as there was a point in the doctrine of the duty of suppressing relig- ious heresy by coercion, where even the supposed preaching of the Christian gospel merged into an attempt on the life of innocent persons. The infei'ence, in logic, is short, and reasonably correct, that if all returns upon capital were a robbery of labor, then it would be the. duty of the laborer to avenge his poverty on the capitalist. The premises being false, can society long continue to hold that every man has, under the sacred guise of free speech, the right to recommend and urge crimes, which nobody can be permitted to commit ? 121. Causes which Compel Men to Work for Wages. — Law and government have almost nothing to do with determin- ing whether a man shall continue destitute — working for wages all his life, or shall accumulate a fortune and emploj^ thousands of laborers. Birth and education influence it almost as little. Neither race, sex, color, nor even health, are more than second- ary aids. Honesty is not indispensable to money-making, and though knavery, thatkeeps within the law, is often consistent with great business success, yet those who are highly successful as money-makers compare, on the whole, very favorably with the unsuccessful, even in integrity. The qualities which take a man out of the wages class, or, on the other hand, condemn him to wages labor for life, are clearly definable, and work with a precision nearly invariable. Haste in forming judgments, egotism in contesting the aims or thwai't- ing the plans of one's superiors or associates, inability to defer to the will or judgments of those on whom one is dependent for suc- cess, making uj) the qualities known as "big head," will keep very bright men in the wages class. Animalism, or the inability to resist the temptation to sensual indulgence of the appetite as soon as the means are obtained, prevent that exercise of parsimony at the outset which is usually necessary to emancipate one from wages work. Timidity in investing one's money in doubtful en- terprises, for fear of losing it, may often concur with love of the ease of life which belongs to a person earning comfortable wages. 308 ECONOMIC PHILOSOPHY. to retard enterpi'ise, and as a rule, unless a person becomes a handler of capital, and an employer of labor on his own respon- sibility, before he reaches thirty years of age, he will work for wages all his life. Multiplicity of aims, when one is trying to do business, as, if one desires also to be a patron of art, music, politics, religion, literature, philanthropy, or social reform, cause "too many irons in the fire," a fatal objection which remands many, who have once acquired capital, back to the wages life, or, at least, to salaried positions. A defective sense of value, or an inaptitude for discerning in what directions values will rise, will keep a man in the wages life. A captious, quarrelsome, or litig- ious temper, peremptory in asserting its own way, and quick to terminate business relations without compromise, strewing a man's life with unadjusted enmities and severed friendships, will often limit greatly one's ability to become an emploper of labor. Yet, it must be admitted that, not seldom, there are men who, by one or more acts of sharp-grasping, and even criminal injustice, have attained the beginnings of large fortunes, thus beginning, in villainy, lives which have been distinguished by great economic success. The qualities which keep a man in the wages class, when an- alyzed, are generally, though not always, those which would make it least to the interest of society that he should organize and control labor. Usually it is being unfaithful over a few things, that prevents his being made ruler over many things. Animal- ism, egotism, precipitancy, insubordination, sensualism, timidity and indecision, love of ease, fear of risk, versatility of aims in life, lateness in learning how to make money, defective sense of values, inaptitude to adapt production to demand, uncompx'omis- ing quarrelsomeness and imperiousness, are all reasons which will cause one's use of money to be unproductive, and one's influ- ence over industry to be disjointing and disastrous. But the fact that one gets his money by a trick or fraud, as Jacob in cheat- ing Esau, does not indicate that the use he will make of the money will be of a kind to lessen, derange, or demoralize indus- try. The kind of men society is interested in having placed in con- trol of industry are those only who will, when an enterprise is small, devote the minimum of its returns to personal indulgence, and the maximum to productive effort. This kind of man may be opprobriously styled a mean, sharp, or overreaching man, but he has the qualities which will impart to industry, in its earlier strug- ASSORTING MEN. 309 gles, success and permanency. On these qualities laboi' depends for its employment, and consumers for cheapness. When, by these means, as much effective industry is brought under the control of one will, as one intelligence can wisely guide, then the possessor of this will and intelligence has risen to his greatest possible utility and dignity, usefulness, and profit, as an accumulator of capital and organizer of labor. Meanwhile the lack of the qualities which will cause a man successfully to accumulate capital, always implies the lack of those whereby he could employ labor with profit to itself, since all wages work is, as Mr. Griinlund's own diagrams show, a system of product-sharing, and hence the ' ' boss " who cannot make profits for himself cannot, continuously, make wages for his men. But if a man lacks the qualities essential to make the jDossession of capital profitable to him, it is no social wrong, but a very great blessing to him, that a class of men exist possessing these quali- ties, and able to give useful direction to his industry, which he could not usefully direct himself. Whoever has seen any thing of the two classes of men knows that precipitancy, misinformation, generosity, insubordination, lack of calculation, and yet lack of courage, characterize the de- liberations of nearly all workingmen's assemblies, while those of capitalists, however grasping, compi-omising, or corrupt they may be, are superior in a spirit of calculation and forethought. The wages relation does exalt the profit-maker to the position of master, and sink the wages-earner into that of servant, but it arises out of psychological causes as clearly a part of the necessary con- stitution of man as the causes which distinguish force and matter are in physics. Out of this relation grows an organization of in- dustry which is anarchic, in the sense that its essential principles are not due to, or affected by, human law ; but which is of far more value to mankind than any and all government or law can possibly be. 122. The Organization of Labor in Industry. — Any organization of labor which fails to include within itself the capital necessary to the employment of labor, evidently implies the existence of another organization of labor, exterior to, and more or less independent of it, viz. : the organization of labor by capital, which employs the labor, gives it all the means of sub- sistance it actually receives, and even the means with which it sustains all collateral and secondary attempts at organization, including the means with which labor organizes itself, to fight 310 ECONOMIC PHILOSOPHY. capital, when war between the two is necessary. Hence it is the primary organization of social industry, through the co-operation of labor with capital, under the inducement of wages to the worker and profits to the employer, that now constitutes the ex- isting organization of labor as an agent in actual industry. All other organizations of labor, such as the Knights of Labor, the Central Labor Union, and the trades unions, are organizations effective to aid in settling, with capitalists, the terms upon which laborers shall enter into the final compact with capital. Thereby they finally become, in the only true sense of the word, organ- ized labor, i. e., labor organically set in motion to effect indus- trial results, viz., to increase the consumption, production, and distribution of commodities. What are ordinarily called organi- zations of labor, i. e. , societies to adjust the terms on which men will work, bear the same relation to the actual organization of labor, or to society at work, as primaries in politics bear to the real government. When the actual officers of government have been selected, the primaries dissolve and lie dormant until another occasion for selection arises, while the government moves on in the hands of the ofiicers, whose choice the primai'ies have aided to determine. When the Knights of Labor, trades unions. Brotherhood of Locomotive Engineers, and other similar orders have done their work, labor is not yet organized. It has only fixed the terms on which it will organize. Its real organization is only arrived at when the wheels of industry are again set in motion, with every man at his post, the loom deftly weaving its product, the Besse- mer cauldron blazing with its silvery draft of liquid flame, the engine toiling smoothly under its tremendous burden, and the car gliding "o'er the stony street." Labor is really organized only when society is again at work.* An example of a true organization of labor may be found in the * In a paper read before the Cleveland convention in May, 1886, by Lavyrence Har- mon of Peoria, it was stated that the fact of 200,000 men striking between April 24th and May 13th, and 125,000 men being out in the week ending May 12th, had entailed a loss of wages amounting to $3,COO,C00. and of gross returns to capital rising to $3,500,- 000, of $4,000,000 in losses upon deferred and cancelled contracts, and of $20,400,000 upon building contracts ; the entire loss upon strikes in the three mouths immediately following the first of May aggregating many hundred millions of dollars. To this must be added the efEort of the anarchists in Chicago to convert the strikes into a social revolution, the slaughter of the police by dynamite, and the impending sentence upon leading anarchists consequent upon the tragedy. No one mistakes these events for an organization of labor. They are the disorganization of labor in its most short-sighted, cruel, and criminal form. Sue note to j). tJCo, UNCONSCIOUS PARTNERSHIP. 311 following- illustration : Every one recognizes that working a farm on equal shares, where one person finds the land, improve- ments, buildings, seeds, fruit trees, implements, and, perhaps, cattle and flocks and poultry, w^hile the other, brings only the labor-power of himself, his family, and those whom he may hii*e, is a fair bargain, or, to put it more emphatically, a just partner- ship. For the farm, as it stands, represents many years of labor already done. The working tenant, who proposes to work the farm, offers one year of labor to be done, against many years of labor already done. This is the metayer system of Europe. In- deed, most parts of the world in all ages have been tilled under it, and its equity still remains to be questioned. Now fifty-four railways, which cost to construct and equip them $1,251,795,029.74, make annual returns to the Railway Com- missioners of Illinois. Their par capital is more than twice that sum, but with that we have not at present to do. These railways employ 156,007 workers, of all sorts, from president to brakeman. Their gross earnings are about one hundred and sixty -three and one-half millions of dollars, and yet all these railways are worked upon shares by the naked labor, i. e., labor not backed by the least capital employed in the business. The sharing comes out so evenly, though no effort at even sharing or profit sharing is thought of in adjusting any workman's salary, that there are paid in salaries and wages $81,936,170.81, and there are paid to the capital (labor previously done in constructing and equipping the roads) $81,720,265.53 yearly. 123. The Terms of Partnership. Labor and Capital. — Working on shares is not an accident, in that natural organiza- tion of labor which arises through each man fitting into the niche that he finds made for himself, and doing simply the best he knows how to do, minding always his own business, and leav- ing other people to mind theirs. For instance, the total manu- factures of the United States have first to pay for their raw materials purchased, all of which have been the finished product of one or more previous industries, and have been created by a joint partnersliip of labor with capital, resulting in a joint shar- ing of wages of labor with returns to capital. Having paid for these, there remains out of the whole price received on sale of the products, a gross fund, out of which the capital (or labor done before the year began) had to divide with the labor done during the year. The division in 1880, for the total manufactures of the United States, was : 312 ECONOMIC PHILOSOPHY. To wages (exclusive of those earned on raw ma- terials) % 947,953,795 To capital for all purposes 1,024,801,837 The share taken by capital includes payment for erect- ing plant, procuring orders, marketing product, extend- ing works, making repairs, insurance, machinery, interest, losses by bad debts, and losing contracts, etc. The principle here carried out is evidently that of working on shares. In the salt manufacture the division was : To wages (not earned on raw materials) . . . $1,260,023 To capital (for all purposes) . . . . * '. 1,495,594 In the mixed textile fabrics, the division was : To wages (not earned on I'aw materials) . . . $13,216,753 To capital (for all purposes) ...... 15,677,109 In the iron and steel manufacture, the division was : To wages (of same process for which returns of capital are counted) $55,476,785 To capital (for all purposes) 49,809,750 Where the nature of the business, or the inventions made in it, are such that caijital invested in machinery performs almost the whole of the labor involved in it, or where the nature of the busi- ness is essentially a commercial rather than a manufacturing one, the slight work performed in the manufacture being a mere inci- dent in a process essentially of buying and selling, as in meat packing, lumber, leather, etc., the transaction is less a partner- ship and the share of labor diminishes. Where, on the other hand, men and skill are nearly every thing, and machinery next to nothing, as in the ship-building, at a time when it consists, as now, in the United States, almost wholly of repairing, and the silk manufacture at a time when new processes have to be introduced through new workmen, and a generation has to be educated up to the art, the share of capital sinks, and the share of wages expands to three-fold the partnership share. Compare : Slaughtering and S Wages to labor meat packing. . . \ Gross returns to capital . Woolen goods \ Wages to labor manufacture. . . \ Gross returns to capital Lumber. . . Wages to labor . ( Gross returns to capital Leather i Wages to labor * \ Gi'oss returns to capital . $10,508,530 25,314,981 25,836,392 33,924,718 31,845,974 55,226,360 4,840,413 7,199,375 CO-OPERATIVE SHABING. 313 And again compare the arts in which machinery is of little im- portance, ship repairing, or in which skill is being developed by an educating process (silk manufacture) : Ship-building, re- S Wages to labor . . . $12,713,813 pairing. . ) Gross returns to capital . . 3,350,156 Silk and silk goods i Wages to labor . . . 9,146,705 manufacture. . . \ Returns to capital . . . 3,805,217 It is idle to deny that these figures prove that under the exist- ing wages system all industry is product-sharing, in fact. Though the proportion in which the two factors share with each other varies, according to the relative importance of the service which capital renders to labor, when weighed against that which labor renders to capital, equivalent values exchange between the two. Where labor can say to capital, we can perform this work three times better without you than you can without us, as in ship re- pairing, it takes a three-fold share, and vice versa. It would be interesting to compare the unintentional profit- sharing, thus pointed out in the aggregate industries of the United States, with the intentional profit-sharing practiced by M. Godin in France, by the Pillsbury Flour Mills at Minneapolis, by the Peacedale Woolen Manufactory, and by Brewster & Co. , with a view of determining whether the share of the value of the aggre- gate product which goes to wages is larger in proportion to the share which goes to capital, in the intentional system of profit- sharing, than it is in the unintentional system. It would probably be found that the wage-workers get the highest ratio of the aggregate product, in those industries which depend the most for their profits upon the efforts of the wage-workers. The editor of Le Devoir makes the very remarkable calcula- tion concerning M. Godin's enterprise at Guize, "that if all the working population of France were employed in 12,333 simi- lar co-operative workshops, and if similar cash sums had been dispensed in each one, since the Familistre Society has been regis- tered, it would have given an increased purchasing power of no less than £292,880,000 during that short period." But how would an addition of more than one hundred thousand millions of dol- lars, to the wages bill of the manufacturers of France, aflfect them in their competitions with those of England, Germany, and the United States ? Does the stimulus of profit-sharing enhance the quality or rapidity of the work, in a degree as great as it increases the cost ? If not, would not the deduction from the profits lessen the degree in which wox'ks could be extended, new machinery 314 ECONOMIC PHILOSOPHY. supplied, and the number of manufactures that could continue their woi'ks, and would not curtailment in these directions react against the wages of labor ? The Pillsbury Flour Mills, at Minneapolis, pays dividends only to those workmen who have continuously remained in service for five years, and to men in certain positions of responsibility, with- out regard to grades of service. It has paid three dividends of $25,000, $26,000, and $35,000, and the number of dividends is con- stantly increasing. To estimate the exact value of the profit-shar- ing policy, to the employers and the employed, it would be neces- sary to know the gross annual earnings, which constitute the fund for real division between capital and labor. This is arrived at by deducting from the aggregate value of the annual product the cost of the raw materials used, only. The difference will be the total fund for division between labor and capital. Adding together the wages and dividends paid to labor, and comparing the ratio of this total to the total received by capital, with the total received by labor and capital respectively in other establishments, would show whether the owners of the mills do or do not make a profit by profit-sharing, and whether this system will aid or handicap them in their contests with competitors. Few working-men will claim that co-operation or profit-sharing should be resorted to from philanthropic or charitable motives. If resorted to at all, it must be shown to profit the profit-sharer, as well as the profit-re- ceiver. The motive for it must be a business motive. The report of the Massachusetts Labor Bureau holds that profit-sharing must not interfere with the right to discharge workmen for negligence and inefficiency. And the experience of Brewster & Co. shows that profit-sharing does not wholly prevent strikes. Their work- men struck for eight hours a day, when they had it in their own power to reduce their day to eight hours, and when by striking they lost a dividend of $11,000 which would have been due a month later, besides losing $8,000 in wages. At the end of two weeks they went back to work on the old plan, of simple wages without the profit-sharing. In what degree the wages system may change into one of profit- sharing, may not yet be judged with certainty. The tendency as society increases in complexity, and as industry grows in intensity, ' is to get away from monthly and annual salaries to piece and job work, and away from partnerships to joint stock concerns, or cor- porations, and salaries. Whether thei'e may, in certain kinds of business, be a reaction toward profit-sharing and co-opera- HOME AND FOREIGN LABOR. 315 tion, it is too. early to determine, but we see no reason to pre- dict it. 124. Effect of Importation of Competing Products on the TVag'es of Labor. — In proportion as transportation is cheap- ened, the competition between both capitalists and laborers, in the production of such commodities as admit of ready transportation, extends the war of competition to the i^opulations of all countries having like natural facilities of production. If cost of transpor- tation between England, France, Germany, Russia, or India, and the United States were reduced, in jjoint of both direct money cost and delay, to (zero) or nothing, so that a commodity, at the in- stant of production anywhere, could be sold in the United States at as low a figure as at its point of foreign production, and if the foi'eign country made equal use of machine power in production with ourselves, so that our labor could compete with theirs on equal terms, it is obvious that wages of labor expressed in money in all these countries would be equalized, those having the lowest rates being raised, and those having the highest de- pressed, until one common level would be obtained. In what- ever degree our wages are higher than those of the other countries named, we owe the fact either to the inequality of our competition owing to our greater use of machinery, or the ob- structions to traffic afforded by distance. For, abolishing these two inequalities, the foreign and domestic labor market would be- come one mai'ket, and it is a fundamental pinnciple in economics, that one commodity can only have one price in one market, where competition is free, and all purchasers are in equal possession of all the facts. Our profits of enterprise would of course suffer a like deduction ; but with that we are not now concei'ned. Higher profits of capi- tal, and liigher wages of labor, are the industrial foi'ces at work to induce the migration of populations from old to new centres of industry. When these stop, national growth by immigration will stop. Wages of labor, in the countries named, bear to each other about the following proportions : United States, England, France, Germany, Russia, India, 150. 110 to 90. 70. 60. 30. 10. Multiplying these rates of wages into the wages-working popu- lations of the respective countries, and striking an equation throughout the entire mass, would show that if inequalities arising from machinery, and protection arising from cost of transpoi'ta- 316 EGONOMIG PHILOSOPHY. tion were both removed, we might look for a wage rate of perhaps 20 or 30 in place of 150, since the nation with which we would ultimately equalize would be India with her 230,000,000 of people, among which a fall in our wage-rate of 12 cents could only be ex- pected to make a rise of 2 cents, owing to their greater number. Setting out, therefore, with the axiom, that differences of value in labor and all other commodities arise from the relative obstruc- tions that exist either in the production or transportation of both labor and commodities, between the countries of higher and those of lower prices, and that in order to maintain two markets or, what is the same thing, two market prices, on one commodity, labor, for instance, there must be intermediate obstructions, pre- venting a perfectly gratuitous interchange, or free trade, between the two markets, we arrive at the conclusion that to countries paying high wages and high profits, perfect free trade in com- modities involves the simultaneous degradation of labor and bankruptcy of capital. 125. Effect of Military Protection to Foreign Trade on Home AVages. — The supposed question between free trade and protection is sometimes obscured by confining the discussion to one mode of protection, and assuming that countries that do not adopt that particular mode of protection, as, e. g. , by tariff, are examples of free trade. But a country may send its armies throughout the world, invading the territory of every weak bar- barian state, planting fortresses in its harbors, and forcing trad- ing stations into its rivers, and with its bayonet at the throat of 500, 000, 000 of people, may plant its bankers in their towns, its ships in their harbors, and its flag over every coaling station by which ocean-going steamers may reach it. Its bankers may be supplied with money and credit at 3 per cent, per annum because capital at home is untaxed. Its steamers may be subsidized out of the national revenues instead of being left to the earnings they can make by carrying cargoes cheaply. With all these wires laid and nets spruug, this nation may say to these barbarians "Buy where you can buy cheapest, i. e. , of me, or I'll conquer you. I will open your ports to commerce with me, and will close your factoi'ies and farms to commerce among yourselves, by grape, and canister, whether it bankrupts your native industries and disorganizes your native labor, or not." This may be called for sweetness and purity's sake free trade, but it is the protection of for- eign trade by miUtary force. And if, by this forced conquest of all foreign markets, so large a foreign trade is built up that the MILITABY PROTECTION. 317 interests of its farmers become subordinate in importance to its f oreig-n trade, and it therefore admits foreign corn free of duty, this is not free trade, but the sacrifice of its rural industries to an en- forced foreign trade. Tlie Empire of Rome was even more ungra- cious to the farmers of Italy, since with the proceeds of its for- eign conquests it bought the foreign corn and gave it free to the citizens, thus rendering it impossible for the fai'mers of Italy to raise corn at all. But this was discovered to be no triumph of free commerce, but only an armed destruction of home industry. It only bankrupted the government, to attempt to give away a supply of corn, equal to the cessation of production in Italy, caused by the free corn. Instead of cheap bread it brought waste lands and a bankrupted peasantry. Modern England repeats the Roman example. But of this in another chapter. Military protection to foreign trade must not be mistaken for free trade. It is a form of protection. It accounts for the higher rate of wages maintained in England than that which prevails in France and Germany. 126. Diversity of Industries Essential to High Wages. — In a country where few industries are carried on, many persons must toil slavishly and spend large portions of time in idleness, vice, or crime, or some form of social revolution or war, because they fail to find the industry that is congenial to them ; and, on the other hand, many people must suffer a severe restriction upon all their artistic enjoyments and rarer capacities, because they are not brought into contact with good social, intellectual, artistic, scientific, religious, and philosophic means of culture. Thus prodviction is scanty, and consumption is meagi^e, and of a mei'e animal scope and kind. So hard and barren of incident is tlie life of herdsmen and shepherds in Australia, that they have been known to forget their powers of speech, and degenerate into imbeciles, for lack of an opportunity to exchange ideas with their fellows. Among a very sparse population the ratio of time spent in idleness, physical and mental, so increases, that in a life it must often have the effect of enabling a person to live only one year of sensations in many years of duration. Compared with such a barren and slow life, an active life in town is characterized as "fast, "or as '' living many years in one." The capacity to "'live fast" arises, therefore, from the diversifi- cation of industries. It must not be supposed that, within reason- able limits, living rapidly and vigorously shortens life. On the contrary, no one fact tends so essentially to lengthen life, as the 318 ECONOMIC PHILOSOPHY. ability to fill up all its moments with transitions from each form of exertion to some other, before the pleasure involved in the exertion while it is novel shall have degenerated into satiety, disgust, or weariness. The development of man mentally, morally, and socially is therefore the product of diversification of industry. The progress of society in wealth-production, only faintly measures his corres- ponding increase in the capacity to obtain from wealth tlie enjoy- ment it is capable of bestowing, and to infuse into life the joy with which it can be filled. In the degree, therefore, that a gov- ernment pursues a course calculated to cause sixteen industries to be carried on instead of eight, or thirty-two where but for its action only sixteen would be prosecuted, it gathers up the idle hours of millions of men and women, and consecrates them to productive industry, while it brings into their mental culture the relief and intellectual profit found in a greater diversity of amusements, instruction, and mental commerce. At the outset, in a new country, no industry is so profitable as the same indus- try would be where all the processes of commerce are established. Even farming and fishing, in the early settlement of New England and Virginia, involved greater hardship and suffering than would have been performed at all, if the fish and food could have been got by as small an effort as would have sufficed in the old world. Emigrants never go to new countries in seai'ch of ease and repose. Every house has to be built, and every farm fenced, and every crop reaped, at far greater than the old-world cost of time and effort. Grradually, however, the new country begins to develop modes of industry in which it becomes superior to the old. By dis- covering the proper haunts of fish and game the hunting and fishing, at first precarious, becomes abundant. Then it is ascer- tained that potatoes, tar and rosin, hewing timber for shipping, and lime, can be got out cheaper than in the old world. As exchanges multiply, profits rise, time and tools become productive, and men feel entitled to wages for their time. Profits, however, are for the time only obtainable in the ])roduction of those things which depend on forest trees, such as tui-pentine, or on wild game, such as pelts, or on cheap land. At length the country has produced every form of land pro- duct, but some of these products require so small a labor to manu- facture as, e.g., wheat into flour and flour into bread, and pelts into furs, and hides into leather, that the attempt is made, Tlio NATURAL PROTECTION. 319 instant it is made an international competition sets in. Owing- to the existence of grist mills, tanneries, and furrier establishments in the old woi*ld, and the difficulty of inaugurating the smallest new enterprise in competition with one already established, it is only a question of freight, on the wheat to England, and on the flour back, whether ever a grist mill can be started. Make the transportation low enough, and quick enough, and the new colony can not grind its own corn, weave its own wool, distil its own turpentine, dress its own furs, or even educate its own childreii, or hold its own church service. Certain industries, however, find a natural protection in the three thousand miles of sea which intervene between the new settlers and the countries of old and cheap productions. Education is not importable and children can not be sent across the seas to be taught, nor can parents cross the ocean to pray or attend worship. Hence, the school-teacher and clergyman have natural protection, and first among the manufactures that grow up are those factories in which ignoi'ance of those things which our fathers have known is converted into knowledge, and doubt into faith. So buildings are not importable, and this fact protects the carpenter. Horses must be shod near the farm whereon they draw the plow, and this protects the blacksmith. At length, however, the country says we have all the ores, coal, lime, and other materials to make iron and steel ; and we can never introduce these industries at all if we wait until they can be started here at a profit, since the time will never come when one producing these things in a small way can produce them as cheaply as one producing them in a large way. But before we can produce in a large way we must produce in a small way. Hence, we must produce these things at a loss first, in order ever to produce them at a profit. They find by examina- tion that this ai-gument applies to far more industries in number, and that their value and profits, if inaugurated, would be far greater than the entire category of industries on wdiich producers have natural protection. Tliereupon they impose such a d\xty on the importation of the competing product, as will cause it to be superseded by the domestic product. Thereupon they multiply the number of industries pursued first two-fold, then twenty-fold. There will probably always be those who will argue that tliis multiplication of industries does not increase the rate of wages. But there will always be a sufficient preponderance of opinion in favor of the policy to make it pai't of the inevitable and necessary 320 ECONOMIC PEILOSOPHT. action of every self-governing country, unless we may possibly except a country lilce Turkey, which indulges in a religious scruple against import duties lest they may have the effect to cause a part of the revenues of an orthodox Mohammedan government to be contributed by alien infidels and Christian Giaours.* 127. Exclusion of Iinmigratiou as a Measure to Pro- mote Wages. — As wages are the result of a nearly equal division, between capital and labor, of the gross earnings of all industry, and as all earnings of industry, when ultimately analyzed, become exchanges of mutual service, it follows that no increase of earnings can be effected by diminishing the number of those who in this country exchange service, i.e., by excluding new workers, either by preventing births or excluding immigra- tion. Wherever the policy of increasing wages, in the whole population of a country, by diminishing population, crops up, and whatever form it assumes, it is a mischievous error. It results from reasoning from a particular industry to the case of all industries, forgetting that as industries are the complement of each other, what may be the surplus, and hence the poison of * One of the ingenious fallacies, by which this manifest dictate of coTnmon prudence is assailed, is to assert that the population of a country may be divided into those wlio are protected, and those who are not. As well might we assert that the rains of heaven benefit those only who are caught out in the sliower without an umbrella. A late free trade organ, The Million, which died of inanition, at Des Moines, Iowa, divided the workers of the United States into those engaged in agriculture, 7,670,493; personal and professional service, 4,074,238; trade and transportation, 1,810,256; manufacturing, mechanical, and mining, 3,837,112. It tlien deducted from the manufacturing group certain classes of industries, which it classes as not protected by the tariff, such as bakers, blacltsniiths, box factory operatives, tinners, millers, butchers, carpenters, carriage maimers, tailors, and others, numbering in all 2,147,631. Wherefrom, it concluded that the workmen of the United States were divided into: Protected , 1,605,253 Unprotected 15,786,253 Total 17,392,095 A like argument might be framed against the protection of forts by counting the few who dwell near enough to be immediately under their guns and walls with the vast number who do not. The 7,670,493 farmers are cliiefly protected in the fact that while tliey produce only their crops, it is consumers only who can produce prices on those crops, and a crop without a price is not a commodity, but a discommodity. Whatever is the difEerence between the price of a farmer's product on his farm, and at its place of consumption, is to the farmer a tax for transportation of his products. This he knows can only be removed by a transfer of tlie manufacturing business in its totality to near his farm. Whatever removes this transportation tax is to him not a tax, but a boon. If protection br.ngs the factory to the farm, and whether it does or not is simply a question of fact, to be verified by observation, tlien one might as well classify the people into those who are benefited by the sunshine and those who are not, as into those who are and are not " protected workers." IMMIGRATION AND WAGES. 321 one becomes the source of supply, and hence the salvation, of another. In excluding immigrants by wholesale without selection, each industry would be excluding its customers in a larger degree than its competitors. Suppose that to benefit the wages of shoe- makers we exclude all immigrants. An analysis of those who would come shows that only one in fifty-eight of the immigrants who would come would make shoes. But one in fifty-eight of our entire population make shoes. Therefore the shoemakers would have shut out fifty-seven customers in order to shut out one competitor. But, the fifty-seven customers whom they would have shut out would have added as much to the demand, as the one excluded shoemaker would have contributed toward the supply. All immigration distributes itself among the various occupations in proportion to the demand for it ; it is this demand that determines the distribution. In doing so, it necessarily maintains the adjustment among industries at the most useful economic level, and hence can not do otherwise than bring a ratio of consumers to producers, in any one occupation, exactly corresponding to what it Avould have been had they not come. The case of the Chinese formed an exception in this respect, since they nearly all followed one or two occupations, viz., washing, cooking, domestic sei'vice, and cigar folding, which had previously been perfornaed by women. To the extent, however, that they became miners, railroad builders, shoemakers, and the like, the principle would apply. The resident Chinese, therefore, were quick to recognize the advantage which would come to those already here from the exclusion of further comers, and rejoiced over the event, their argument being "more Chinee, less wagee ; no more Chinee, more wagee." In the economic sense every new worker, the moment he arrives, becomes an American worker, consuming, say, ninety- seven per cent, of American products and three per cent, of foreign products ; whereas, as a worker in Europe, whose com- modity, or the product of whose labor is brought here, he is a foreign worker in the sense that he consumes only three per cent. of American products and ninety -seven per cent, of foreign prod- ucts, the imported product acting only and simply as a displace- ment of American by foreign labor, until worn out. 128. The Barter of Domestic Labor for Domestic La- bor Promotes Domestic Wag'cs. — ^The vastly greater em- ployment given to domestic labor by consuming objects of domes- 322 MGOmMlG HttLOSOPHt. tic production, and the consequent effect of this policy to promote American wages, where the country has its choice between native and foreign products, is seen where the raw raaterials and fuel used in producing the product in question are very bulky and do not admit of transportation to the foreign country, while the fin- ished product is very compact and admits of ready transfer over long distances. In such cases the country which pays somewhat more for the finished product, may make a profit several times greater than this loss, in having raw materials, which perhaps are the incident of another production, or are the spontaneous gifts of nature, raised in value f I'om mere worthless waste substances to a value which makes them a leading staple. Thus where a country packs its meats, before shipping them, it gives value to its salt, sawdust, cooperage, ice, staves, boxes, etc. When it makes its paper it gives value to its streams of water, straw, wood, coal, bread-stuffs, cornstalks, x'ags, and many other domestic products, which it could never sell to the paper-makers of a foreign country, but can sell in the form of paper to its own people. When it tans its own leather it gives value to oak bark, sumach, and a dozen other worthless things. In making glass it gives value to clays, sands, mill-sites, coal, and chemicals of various kinds. In making iron, it gives value to ores, coal, lime, wood, railways, canals, vegetables, and hundreds of other unexportable products which could not be sold abroad. A man's freedom, in trading straw for paper, depends more on the price he can get for his straw, than on that he must pay for his paper. If all trade is barter, as contended by the advocates of so- called free trade, when a choice is offered between the foreign article and the domestic, the interest, as it appears to the individual buying the paper, may not be identical with the interest as it actu- ally is to the nation as a whole. For, to the buyer, it is not barter at all, but a purchase for money. But, to the nation at large, it is bai'ter, and will be paid for in commodities, with the difference that, if it be American paper, it can be bartered for by giving any one of a thousand domestic products in exchange, including land, labor, instruction, fuel, vegetables, hay, clay, brick, lime, sand, rocks, fruits, forest trees, etc. ; but if bought abroad it can be paid for only in cotton, wheat, beef, or pork. Though the domestic price may range higher than the foreign (an incident to protec- tion which is by no means invariable), yet the trade or commerce in the domestic article is freer, at the higher price, than the trade in the foreign at the lower price, because, in the latter case, the SOCIAL ESTEEM AS WAGES. 32S • actual privilege of barter, when it comes to be applied as it must always be in fact, allows the domestic paper to be paid for in either of several hundred or a thousand articles, in which the foreign paper can not be paid for. It was, moreover, very truly pointed out by Adam Smith that the domestic paper gave employment to two domestic capitals and two domestic sets of laborers, viz. , those employed upon the paper itself and those employed upon the product given in exchange for it, while the foreign paper give semployment to only one domes- tic capital and one force of domestic labor, viz., that employed upon the product given in exchange for the paper. '129. Wages of Social liabor.— The distinction is made by some economists '^ between the wages paid by the profit-makers, and which are paid from motives of profit only, and those which are paid for domestic professional and official service. Many of the most useful services to mankind, however, are compelled upon economical principles to be rendered gratui- tously. No capitalist could afford to pay a Copernicus to discover the ti'ue theory of the solar system, partly because he would be him- self unable to discover the Copernicus, and partly because the num- ber of men who desire to perform as great a service as Copernicus, and who, with perhaps equal ability, will fail in doing more than propound a chimera, is so great that the ambition to do great things for mankind needs rather to be checked than encouraged ; since, with most men, the ambition can lead only to great inutil- ity and bitter failure. Hence I am unable to agree with Mr. Elder's ingenious hypothesis, that social services of great spiritual * Cyrus Elder, in '■'■'bILa.n and Labor," p. 64, Bays: " As to that more important, because more largely productive lazier which directly originates immaterial utilities only, the natural law of its reward is not so obvious. It can not be paid with the whole, or a part of its product. The doctor who cures a patient can not be paid in health ; the professor who educates a pupil can not be paid in knowledge ; the jurist can notbe paid with a part of the principle of justice which he establishes. Looking at our ascending and widening column of labor, and considering all that is involved in it with reference to the teachings of history, we conclude that men naturally tend to rate this higher labor as to its honors and rewards according to the proportion in which it performs a social use. That labor which serves the whole community in its protection, direction, leadership, ranks highest; and this order descends by degrees, through service to smaller numbers, until it ends in that labor which, performing a material use only, is governed by another and different law of compensation. " The analysis we have made corresponds broadly to the social degrees, distinct, yet overlapping each other ; the first and lowest, in which labor fixes itself in things ; the second, in which labor fixes itself in institutions ; the third and highest, in which labor fixes itself in man. It is just in the proportion that this last and highest form of labor 324 ECONOMIC PHILOSOPHY. utility are necessarily paid for in lofty material rewards. The utmost that could be said is that there is a crude sort of justice in the degree in which the economic value of intellectual service prevails that productiveness increases, and that man ipcreases in value, while institu- tions and things decline in value and increase in utility. " As to institutions— the state and the church— these in a progressive society ohey the same law of declining values and increasing utility. In the ruder conditions of life, as n the early periods of history, the community is exhausted in the effort to preserve it- self. The head of the state requires and has control of the lives and labors of the people. The value of government, is enormous, its utility small. The like holds good as to ecclesiastical institutions, the machinery of which in the ruder stages of society is infinitely costly as compared with the services which it renders. An illustration in the form of diagrams may be helpful, and will at least provoke criticism. Let the following ascending columns represent the stream of history : POLITICAL INSTITUTIONS. Free Government. Limited Monarchy. Despotism Utility. Val ue. Taxation under General Laws. People have a voice in imposing taxes. Li fe and Labor belong to the Kuler. ECCLESIASTICAL INSTITUTIONS. Free Church. Clerical Hierarchy. Supreme Pontifical Power. Utility. Value. Voluntary Support. Government Support, Tithes, etc. Human Sacrifice. Lands ab- sorbed by the Clergy. WOlIEIf AS WORKERS. 325 corresponds generally to its material reward. Yet the wife and children of the inventive Goodyear were buried by charitable contribution, and the magnificent invention of telegraphy left Prof. Morse to be provided for by the donations of his friends. While the children of the artist-inventor have derived a modest income from the cultivation of flowers upon the estate presented to him by his neighbors, the vast invention he bequeathed to the world, and no small share of the great fortunes to which it has given rise, have become the property of one who is known to the patent office only as the inventor of a mouse-trap. Social labor of the highest value is paid in a currency of its own, when it is paid at all. But much of it is wholly unpaid. The fame of great usefulness settles often, like a mantle, on the complacent shoulders of entertaining charlatans and eloquent impostors, and the men who most convulse and shake society, by their blunders, are as often laid to rest under the heaviest burden of the flowers of social esteem. 130. Wages of Women. — Women offer themselves in a limited number of occupations, rejecting usually the coarse, vul- gar, enterprising, arduous, and dangerous. In clinging to occu- pations which are deemed becoming to woman as a sex, they come chiefly into competition with those women who, as members of a household, can, if necessary, perform the same work, in a man- ner which has the efi'ect of gratuitous competition, since the lat- ter will receive the same support and maintenance, if they do not, as if they do work. It may well be questioned whether society can afford to adopt the theory that woman ought to, or can, with average profit to herself or to men, be a self-supporting competitor in the labor market. It could only be avoided by returning to the Roman idea of the family, whereby a woman could not, by the death of her husband or father merely, be thrown on her own exertions for support. She was still a member of some Roman household or gens, and entitled to its protection while rendering it her service and obedience. Perhaps, in our modern life, there are many women to whom even the restraint of a family relation, selected by choice, seems unbearable, and who would not be grateful for a title to dependence on a relative moi'e distant than husband, father, or son. There are, however, many cases of sisters, ruth- lessly thrust out vipon the world, whom it is within the power of their brothers to support ; of nieces in severe straits, whose uncles are in affluence and the like. The gi'owing disintegration of the 326 ECONOMIC PHlLOSOPlIT. family, and the facility of divorce and remarriage, operate in some instances to reveal to woman a capacity of self-support and of independence far more enjoyable than any support she would have as a wife. In other instances, the end is as painful as it could well be. There are many circumstances which render a woman's work, year by year, less valuable to her employer than that of a man, even where she performs much of the work equally well. Her prospective marriage constantly threatens to terminate her work, while the marriage of a man confirms his steadiness as a worker. She does not enter the bolder and more riskful as well as gainful occupations, wherein her product and not her labor is sold, such as farming, house-building, and manufacturing, and from which, therefore, it would not be practicable to exclude her by mere opinion. Yet among the women who do enter these managing occupations, there are many that evince the highest skill. In 1880, in the United States, 14,744,942 males and 2, 647, 157 females were working for gain out of a total of about 26,000,000 persons of each sex. About one in ten females and three in five males are toilers for hire or profit. In New York, out of 2,031,369 fe- males over ten years of age, there were 360,381 money-makers, while a male population of 1,960,059 contained 1,524,264 toiling for gain. There were, therefore, 1,670,988 women and 425,795 men not productively employed, or whose toil was not for sale. Each man at work supports one woman, and every four men at work support one idle man; every fifteenth man supports two women, and four-and-a-half women are supported by men where one even tries to support herself; 2,247 women and 375,213 men do some kind of farming or manage farms. Although land de- scends equally to daughters and to sons, and though there can be no discrimination on account of sex against woman as a farmer — since it is the product and not the labor that is sold, and no one buying hay or horses can tell whether a man or a woman raised them — yet only one farmer in 180 is a woman, and in most cases she is a farmer only temporarily, while she is a farmer's widow. In professional and personal service — the life nearest like that of a wife or daughter in the household, as it involves no risk and little heavy toil, and gives wide room for personal favor in selection — the women rise to 205, 829 in New York and the men to 332,068. How closely women in their choice of work adhere to the family WOMANLY WORK. 327 order, even when out of the family, is shown by the fact that in the United States 12,294 women to only 1,189 males find work as nurses, 108,198 women to 13,744 men work as launderers, 938,910 women to 136,745 men work as domestic servants, 1,615 women to 781 men work in charitable institutions, 12,313 women to 6,475 men keep boarding-houses, and 13,182 women to 17,255 men teach or live by music. On the other hand, in trade and tz'ansportation, in New York, there are 324,304 males to 15,215 females. In m.anu- factures, mechanics, and mining, there are 492,674 males and 137,190 females. Thus, women seeking employment gravitate toward the family type in their selection, and virtually say: " If we cannot have households of our own, we will toil as nearly in the household as we can. " The industrial question is, therefore. How many women outside the family can be employed in a manner essentially like employ- ment in the family ? Woman's ofPer of labor in the market is not free as is that of a man — " I will do all work," but is encumbered by this condition: " My work must be womanly woi'k; i. e., it must resemble as nearly as possible that which woman performs in the family." But woman in the family is a gratuitous worker, i. e., she works for love, affection, and favor, and takes her pay in kindness, generosity, and indulgence, and not in wages. Hence the 360,381 women in New York, who offer to toil for hire, really offer to compete with and underbid the 1,670,988 women, or many of them, Vv^ho ask no wages, and can at a pinch do the same things without pay, which the toilers are trying to earn pay for doing. In domestic service, the competition is not so much between one cook and another, as a choice, by the matron of the house, whether she will hire a cook or do it herself. Hence nearly every woman works against an unpaid competitor. For though the wives and sisters, daughters and mothers, of the well-to-do in America especially, are the conspicuous and accepted centers of all luxur- ious and aesthetic living, yet as all this is done for favor, their influence, in controlling and depressing the price of the labor of the women who are compelled to work, is very nearly, especially in periods of adversity, that of a vast fund of gratuitous compet- ing labor. Such a fund, whether it take the form of machinery, foreign pauper labor, or " ladj' " labor ready to become " help " on demand, can not fail to exert a depressing influence on the wages of the class whom it affects. The occupations selected by women are also usually those in 328 ECONOMIC PHILOSOPHY. which combination by workmen to raise wages is less effective.* But even where women are engaged in work in which unionism may be made effective, they have only very recently begun to take part in the unions. * Cost of strikes and results. The Textile Hecord, of Philadelphia, for February, 1888, presents the following : The following shows the number of strikes that occurred ia this country in each of the successive years: 1881, 471; 1883, 454; 1883, 478; 1884, 645; 1885, 1412. These involved 22,356 establishments in all. In 1887 about 853 strikes occurred, but full details are not at hand. During the period named. New York State had the largest number of establishments affected by strikes and lock-outs, the wiiole number beii\g 10,775. Of the strikes about 47 per cent, succeeded; about 13 per cent, were partially successful, and 40 per cent, failed. In the six years the losses incurred are estimated as follows : to strikers, $51,- 816,165 ; and to locked-out persons, $8,132,717, a total wage loss of $59,948,882. This makes a loss of about $40 to each striker. Losses to employers in six years, $34,164,914. The disturbances occurred mainly in 13 industries, namel}-, boots and shoes, bricklaying, building, clothing, cooperage, food preparations, furniture, lumber, metals, mining, stone, tobacco and transportation. Out of the 23,336 establishments engaged, building trades furnished 6,C60, or more than one-fourth. The total number of employees involved during the six years was 1,318,624. The number employed in all the establishments before the strikes was 1,662,045; afterwards. 1,636,247, a loss of 25,798. There were 103,038 new employees engaged after the strikes. Of the whole number engaged in striking, 88.56 per cent, were males, and 11.44 per cent, were females. New York, Pennsylvania, Massachusetts, Ohio and Illinois contain 49 per cent, of all the manufacturing establishments in the country, and 58 per cent, of the capital invested in such industries. In them about 76 per cent, of the strikes and 91 per cent, of the lock-outs occurred. Of the strikes, 82 per cent were ordered by labor organizations. The remarkable increase of the number of strikes in 1886 seems clearly to be due to the activity of the Knights of Labor. CHAPTER IX. MONEY. 131. What Is Money? — Money is that for which all men will sell or serve ; the one commodity for which all others exchange. As language is the one idea which expresses all others, so money is the one value which states, measures, and transfers all others that can be stated, measured, or sold. The functions of money are to hoard, exchange, preserve, estimate, state, and distribute values ; to induce, organize, employ, and re- ward free labor ; to stimulate human effort to its highest capacity in the production of wealth, and to the most equal possible dif- fusion of wealth among men, for enjoyment. Through it, as an economic agent, the instinct of accumulation or gain in man is propelled forward in industry, invention, discovery, investiga- tion, art, science, religion and philosophy, charity and philan- thropy, law and government, until by it, as an economic force, man is evolved out of slavery into freedom, out of idleness into industry, out of poverty into wealth, out of barbariq superstition into enlightened scientific knowledge, and out of crime and vice into refinement and mutual kind services, and reciprocal friendly regard and love.* In thus outlining the economic functions of * Mr. Jevons, in his work on " Monej'," seems to regard the term money as too vari- able in its meaning to be capable of definition, since it applies, he says, " to bullion, standard coin, tolicn coin, convertible and inconvertible notes, legal tender and not legal tender, cheques of various liinds, mercantile bills, exchequer bills, stock certificates," etc., each of which "requires its own definition." To this Mr. Sidgvvick replies that it implies that it is logically correct todefliieanumberof species where it would be logi- cally erroneous to try to define their common genus. ("The Principles of Pol. Econ." p. 230.) Mr. Jevons distinguished four functions which money fulfils in modern socie- ties. It is (1) a medium of exchange ; fS) a measure of value ; (3) a standard of value [i. €., as Mr. Walker saj s, a standard for deferred payments] ; (4) a store of value. Mr. Sidgwick adopts, approvingly, the definition given by F. A. Walker in " Money, Trade and Industry," p. 4, viz. : " that which passes freely from hand (owner) to laand (owner) throughout the community, in final discharge of debts and full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it, and without the intention of the person who receives it to con- sume it. or enjoy it, or apply it to any other use than in turn to tender it to others in 330 ECONOMIC PHILOSOPHY. which money is the essential instrument, the economist is not called upon to define the spiritual forces and metaphysical pow- ers, human and divine, which make use of this instrument, still less to substitute one for the other. The analysis of these forces constikxtes a field of investigation sufficient to tax and exhaust the utmost powers that can be applied to it. A few economic writers have sought to strengthen their discussion of economic questions by asserting that economic science can only lead to right conclusions, accordingly as it is subordinated to some par- ticular school of thouglit in metaphysics.* The conception of this treatise is to remit religious, moral, meta- physical, and theological inference and discussion entirely and absolutely to those works and persons which make these depart- ments of thought their specialty. discharge of debts or payment for commodities." A convenient summary of this definition would be, " Money comprises all current means of payment and purchase." Hume says: "Money is not, properly speaking, one of the subjects of commerce. but only the instrument which all have agreed upon to facilitate the exchange of one commodity for another. It is none of the wheels of trade : it is the oil which renders the motion of the wheels more smooth and easy." To this Carey (" Principles," condensed by McKean,p. 352) says: " Had he, however, found it asserted that corn, wine, and the flesh of sheep and oxen, had been ' agreed upon ' by men as the food they were to use, he would certainly have asked for some evidence that they really had come to such an agreement, and had not been led to act as they do, by the fact that such commodities had been provided by the Creator for men, while creating food of other descriptions for the nourishment of cows, horses, f heep, and other animals. He would naturally have asked the question — ' Suppose they did not eat these things, what others could they eat ? ' and when the answer had been made, that they must either eat of them or perish, he would have regarded it as evidence that their course had been determined by a great law of nature, and had not been ' agreed upon ' by themselves." Roscher ("Pol. Econ.," Bk. ii. ch. iii. §cxvi.) says: " Such a commodity, universally in favor, and which, on that account, is employed as an intermediary in the efiecting of exchanges of the most varied nature, in the measuring of all exchange values, and as a value-carrier in time and space, we call money." Tlie question, whether the term money shall be deemed to be confined in its proper signification to coins of gold and silver, or shall extend likewise to any generally ac- ceptable means of payment, depends on the connection in which the term is to be used. In a question of legal interpretation, as where the Constitution of the United States clothes Congress with the power to " coin money and regulate the value " (weight and fineness) thereof, it would be mischievous to hold that paper money was here intended, as that is incapable of being coined. But if the question be as to the volume of money which regulates prices, as in the article on " Commercial Crises," by Horace White, in "American Cyclopedia of Political Economy," it is equally erroneous to make gold bullion, or even coined gold, the sole money. * C. S. Devas, in " Groundwork of Economics," following Sisraondi, subordinates economics to Catholic ethics, and Chalmers, Wayland, and Mill reflect their metaphys- ical and th'ological bias in their economic discussion, MONET BEGINS AS TREASURE. 331 To perform tlie functions above outlined, money must be an article attractive in its uses and compact in its quality, or it can not first be hoarded as treasure. It is the tendency of barbarous tribes and simple minds to hoard a metal, and to deem it precious, that gives it its first requisite for use as money, viz., general ac- ceptability. Silver in India, to-day, is found performing this first simple function of mere treasure, i. e., of hoarding. The severity of famines is often measured by the degree in which the silver ornaments of the ryot are offered for sale, or for coinage at the mint, to purchase food, for among the Mahometans and Hindoos the holiday costume becomes a sort of savings bank.* This seeming extravagance of dress is really parsimony and econ- omy, and rebukes those simple-minded persons who wonder at the folly of barbarians in investing largely in ornaments instead of clothing. In times of distress white muslin and kid gloves would not procure them as many pence as their silver ornaments would pounds.! The transition of the precious metals from hoarded treasure into medium of exchange, and, perhaps, back into hoarded ti^easure, took place in a marked way at the capture of the treasure hoards of Asia by Alexander, of Mexico by Cortes, of Peru by Pizarro, and, to some degree, occurs daily. The metal for use as money needs, next after being treasure, to be malleable, so that it may easily receive the coinage stamp that shall indicate its weight and fineness, and dispense with the ser- vices of an expert at every trade. Diamonds, therefore, while attractive, and invaluable as a means of storing wealth, are of no use as money, since they cannot be stamped at all, nor can they be divided without a great loss of value. The moment an acceptable article is arrived at, into which all other values can be translated at will, all other commodities, and * " Groundwork of Economics," by Devas, p. 413. Monier Williams, " Modern In- dia," 2d edit., p. 30. t Devas, " Groundwork of Economics," p. 414, says : " The average tender of silver ornaments every month, at the Bombay Mint, before the year 1876, was £600 ; but in November, 1876, owing to the famine, it reached £7,000, shot up to £100,000 in Decem- ber, and then kept steadily rising till, in September, 1877, it reached £189,754, and the total for the two years, 1877 and 1878, was £1,946,158 {Quarterly Review, April, 1879, p. 389). Le Play gives examples from Russia and Turkey of peasant women wearing mul- titudes of silver coins in their dress. And gold and silver ornaments have been conspic- uous in many of those peasant costumes of Europe, which grew up when the mediaeval sumptuary laws fell into decay. So, in Friesland, the golden cap of the peasant women is worth .300 gulden, or about £25. In Portugal they wear jewelry of Moorish designs worlh from £5 to £30." 332 ECONOMIC PHILOSOPHY. especially labor, offers itself iii the market, and commerce among men, or the exchange of mutual services, begins. The instant the article ceases to be generally acceptable, commodities and services are hoarded in lieu of money, and commerce stops. In the case of labor-capacity, to hoard it is to waste or lose it, since, if not employed or exchanged at the instant of production, each hour and moment of labor-capacity is lost forever. Hence any cessation in the efficiency of money involves and includes a cor- responding cessation in the rendition of voluntary mutual ser- vices by men to each other. If mutual services are rendered at all, they must then be rendered from some emotional or relig- ious reason, or from compulsion or force. Money is thus the economic spring which moves all voluntary industry, the mediator that effects every exchange, the agent that employs all free labor, and the medium in which all worth is stated and paid for. Without it, little emulation would be possi- ble, and hardly any excellence would be sought, or civilization attained. It bears the same relation to human commerce as the blood sustains to the body, or the circulation of plants to their life. It is the most useful of purely physical agents in industry. It ranks only next below the metaphysical principles of the hu- man soul as a force in economics. So, in nature, water is perhaps the most fruitful of purely terrestrial agents in promoting growth. Yet it ranks below the mysterious potency of the sunlight, in whose immediate generative action all life finds its birth. Money is below man in social utilitj^, as moisture ranks below the sun's ray in vegetative utility. Yet, in our efforts to define the limits of its potency, let us not fall into the error of under- stating or denying its value. Let us, rather, magnify man by showing his capacity to comprehend money, than belittle him by training him to denounce it. So the poet tacitly praises the sun- light, without mentioning it, when he utters that beautiful trib- ute to water, since none of the powers he attributes to water could be manifested did not the sunlight bring them into action : Pure element of waters, wheresoe'er Thou dost forsake thy subtei-ranean haunts, Greeu herbs, bright, flowers, and berry -bearing plants Else into life, and in thy train appear ; And through the sunny portions of the year, Swift insects shine, thy hovering pursuivants. But when thy bounty fails, the forest pants. And hart, and hind, and hunter with his spear Languish and droop together. CAPTURE PRECEDES TRADE. 333 All these powers are noue the less inherent in water because they imply the superaction of the sun's ray ; so all the powers of money are none the less inherent in money itself, because they imply and presuppose the superaction of man as a thinking, will- ing, acting being. As the action of water, however, can be elu- cidated without agreeing upon any particular theory of light, so the economic action of money does not necessarily imply har- mony in the theories we may entertain concerning man's meta- physical nature. 133. Origin of Money. — It is usual, or frequent, among economists to assert that trade began with barter, and that trade by barter gradually gave way to trade for money. This suppo- sition was rendei-ed plausible by the fact that Europeans, trying to trade with the savages, found gold and silver money not avail- able, and had to resort to barter. As barter, however, instead of being simpler than trading with money, is much more difficult, it seems likely that seizure by force or piracy, and plunder, and not barter, is the real precursor of commerce. Savages would never try to overcome the difficulties of barter, since until money is introduced there are no terms in which values can be thought of, and hence the notion of equivalence of value in commodities which underlies barter can not be entertained. The fact that surpi'ised Stanley, in going down the Congo, was that the natives, beyond the region where money was in use, had no conception of barter, and no use for a stranger except to eat him. In attempt- ing to barter with them, he had to arrange the terms of the trade, and then, by fighting, compel them to make it. He was a pirate, who paid for his captures. It is clear in Homer that, before money was in use among the Greeks, the value of things was estimated in oxen, as it would now be in pounds or dollars, and sometimes oxen were used in payment.* But at the period of the wi-iting of the narrative of Abraham's purchase of the cave of Macphelah for ' ' shekels of sil- ver, current money of the merchant," silver had come into gen- eral use as money. * MacLeod, " Principles of Econ. Phil.," Vol. i. p. 186, cites as follows ; "Thus we have, Iliad, vii. 468 : " ' Prom Lemnos' isle a numerous fleet had come Freighted with wine . . , All the other Greeks Hastened to purchase ; some with brass, and some With gleaming iron, some with hides, Cattle, or slaves.' 334 EGONOMIG PHILOSOPHY. In Judea, at a very remote antiquity, gold was familiar, as it was also to the red race in Egypt, since they made war upon Nubia and Ethiopia for possession of the mines.* Singularly enough the date of banks, and paper money, seems to be coeval with that of coin. The Chinese claim to have records of the issue of ' ' flying money " as eai4y as 2697 B. C A speci- men, said to have been issued in 1399 B. C. , is in the Asiatic Museum in St. Petersburg, printed in blue ink on paper made from the fiber of the mulberry tree. The Chmese bills bore the name of the bank, number of the note, value, place of issue, date and signature of the proper bank officers. The value was ex- pressed in figures, words, and in some cases in pictorial represen- tations showing coins or ingots equal to the face value of the paper. In the Metropolitan Museum of Art, New York, are Babylonian tablets of banking transactions of the year 601 B. C, or the reign of Nebuchadnezzar. They record loans made in silver shekels, drafts, pledges of security, etc. Probably the period at which iron was used in Sparta, as money, followed naturally upon that in which oxen were used through- out Greece, as described in Homer. Certainly the Spartans- passed to silver and gold as their prosperity increased. Copper was at first the sole money of ancient Rome, and the same word continued to denote both money and copper, long after gold and silver had to a great extent supplanted it.f In England, silver was coined by the government for many centuries before gold, which latter was first coined to a limited extent in the reign of Henry III., but has been the prevailing metal in England for most of two centuries past, and especially since 1816, when England adopted the single standard by making gold its sole money of unlimited legal tender. 133. The Form of Money. — Money, when considered with reference to the basis on which it circulates, may be conveniently divided into (1) coin or value money, (2) paper or " In II. ii. 448, Minerva's shield, the ^gis, had 100 tassels, each of the value of 100 oxen. In II. vi. 234, Homer lauglied at the folly of Glaucus, who exchanged his golden armor, worth 100 oxen, for the bronze armor of Diomede, worth nine oxen. In II. xxiii. 703, Achilles offers as a prize to the conqueror in the funeral games in honor of Patroclus a large tripod whicli the Greeks valued among themselves at twelve oxen, and to the loser a female slave, which they valued at four oxen ; and in the same book, 883, Achilles stakes a spear and a cauldron worth an ox." * Brughsch's " Eg>pt under the Pharaohs," Vol, ii. j), 81. t Shadwell's " System of Pol. Eeon.," p. 256. I.g.l S 3g3Sg|S|SS3S' 2 • 2 2 B 2 2 S S 'i: .8 '5 ,' * !- ? S§S^5SSg? ' s I 2 S - » l|!l nil II III nn nil nil nil Ill III IIH ll|i nil i|n II!! nil M iiriiininii nil iiii|iiiiiiin|iiiiiiiiihiiiiiiiiiiiiiiiiiii!iii|iiiiiii{iiiin|iiniiiii|iiii III! 1111 nil nil iniiM , '"' — - , \ — — ■ -^ II' 1 — - ^ 1 ,|_^ ] V'- i 1 1 1 1 1 1 ~ 1 "0 — — — — — — — —- — 1 — — — ^ — — — — ' 'll DSl nr — - — — — — ^ — — ^ " — - ; 1 — -^ -~' \\ — — :=:; :^ ^" "— — ^ — ^^ ' ^1 ^ ---. ^ i j \ \ I ^0~^S^ S ' ■ 1 \ ^ Ml 07.ftl I / \ if I: r 1 1 ■''ill 1 g ,^ •^ / 1 "'"' ' ''■ ''■ III ^ / S ^ /XA<^^' 6ln) 3 i II \ 1 ' iiii § - / s xy^^'X Wy H I \ 1 ' H ^£ / XXt^-^^M^^'*-^' S3-?l ""' 1- \ / ;|, ; jS ^^ ^sos.iw).'""' £ ^ ^ .'i CSi. \ / JQ !i \ 1 ■•■ 111 -'9. ot\ ^5.0*'"'"' ^^^^/ 1 3 s \ 1 1 I !' v\ ■■"1 1 o ' y^'ii'*'/ ° / 30..sJii5i^-__efl.^^, ^ 342 ECONOMIC PHILOSOPHY. COINAGE. GOLD. £ Under WiUiam and Mary, 443,328 " William HI., 2,975,550 " Anne, 2,484,531 From 1787 to 1798 silver coins became so scarce in England that it was sought to supply the deficiency by coining Spanish-Amer- ican dollars and half-dollars countermarked with the head of George III. They passed current at 5s, aiid later at 5s. 6d. Since the recoinage of 1816, crowns, half-crowns, florins {2s.), sixpences, threepences, and groats of silver have been issued. From 1685 to 1694 tin halfpennies and farthings were coined. Pennies, half- pennies, farthings, half-farthings, and quarter-farthings have been coined of copper in most reigns since Charles II. In 1874 the London mint coined fifty-four tons of copper pence and half- pence, and one hundred tons of bronze pence, halfpence, and far- things. Its largest issue of bronze coins was 134 tons in 1875. Silver and copper coins of small value facilitate the minute sub- division of the results of labor among a large number of persons, and at the same time make it possible to gather up small values from an infinite number of customers in a way to promote great enterprises. The great daily press depend on a copper coinage, as the retail trade generally depends on one of silver. So of cheap fares, drinks, and food. The pound sterling, or twenty shillings, of England has contin- ued for centuries to be the unit of account, though seldom any silver coin representing it existed or could circulate, owing to the fact that gold was continually the cheaper and cheapening metal. The sovereign, the broad, the double-angel, and the guinea have at various times stood for the pound sterling because the quantity of gold in these coins was worth less than the standard value of the coin, while the quantity of silver required for the silver pound would have been worth far more. As silver pounds, if coined, would have been melted, it was impracticable to coin them. It is usual to say that, prior to 1717, England had the silver basis, with gold rated according to its value in silver ; that from 1717 to 1816 gold and silver both had free coinage and unlimited legal tender ; and after 1816, silver has constituted a subsidiary coinage and gold has been the one standard unit of coinage.* * Mr. S. Dana Horton (" The Silver Pound," Introduction) shows that in common discussion the term standard may have one or the other of nine distinct meanings, viz. jt may mean — DIVERSITY IN MONET. 343 136. The Standard. —The influence of the volume of each kind of money, or means of payment, in circulation, upon the value of the other, forms one of the most complex topics in finance. An increase in the volume of each kind of money, including paper, tends first to cheapen itself relatively to the others. If its convertibility into the others be so sustained, as to prevent it from dropping out of currency into a mei'e commodity, it must soon effect a greater absolute cheapness in all kinds of money, rela- tively to commodities. This cheapness of money, or fall in its purchasing power, is indicated by a rise in the prices of commod- ities generally, and is known as inflation. It has usually attended periods of special prosperity and activity. The disputes among economists, as to the effect of an increase in the volume of money on prices, grow largely out of their differences of opmion as to what 'shall be called money. The bullionist, who deems only gold and silver money, will hold either that paper money does not raise prices, or that, if it does, the rise is mischievous. The inflationists will vary also among themselves as to the kinds of paper credit which have the effects of money, in increasing or lowering its purchasing power. Many who freely admit that large issues of bank notes, or government notes, may inflate prices, will deny that bank deposits and discounts, or interest-bearing government bonds, or railway bonds or other forms of exchange- able credit, will have the like effect. Thus money is a subject which begins on the solid earth, and, without well-defixied lines of demarcation, passes upward into the clouds. The degree in which it is composed of value, or of credit, changes by insensible gradations. Economists strive to draw a line where it shall stop, but cannot agree on the line. One, with Amasa Walker, says only coin of full weight and fineness is 1. The fineness of money metals, or whether it has a giveu proportion of pure metal to cheap alloy. 2. The fineness prescribed by law for a coin- 3. The weight prescribed by law for a coin. 4. The national unit of account (pound, dollar, franc, marc), regarded as a denomina tion, name, or title, as distinguished from the coin which may at various times be its body or substance. 5. The national unit of coinage, being the coin in body and substance of which the unit of account is the abstracted idea. 6. The full legal tender money of a country. 7. The kind of such money chiefly in use. 8. The kind of money the manufacture of which is free, and which is the par or nom- inal standard by which the other moneys of a country are rated. 9. The monetary system of a country in general terms . 344 ECONOMIC PHILOSOPHY. money. Another says coin and notes issued on deposits of coin, after the method of the Bank of England, are money. Another will include all bank notes, while redemption in coin is main- tained on them. Another defines money to include all exchange- able credit, and affirms, with MacLeod, that even coined money circulates on credit. Another includes bank deposits and dis- counts, and so on. These differences, as to what constitutes money, are accompanied by divergent views as to the nature of the actual standard, or measure of values, against which values of property balance and jDrices result. The bullionist will say it is the quantity of coin in use. The banker will say it is the quantity of coin and redeem- able paper. The advocates of a credit currency will say it is the aggregate volume of gold and silver coin, and of exchangeable credit, in any one country. Finally, the internationalist will say, it is the general volume of all three, in all countries which ex- change together. The former quantities are nearly computable for a single country. The latter is incomputable, even for one country. Still more so for all. Thus money, like the ladder in Jacob's vision, has its feet on the earth and its summit in the clouds. It may be added that such is its utility in whatever form, that there are never wanting those who can see the angels of heaven descending and ascending upon it. 137. The Ratio between the Money Metals.— England uses more silver money than the United States, because she makes no provision for the issue of small notes of from $1 to $10 in denomination. Germany also, though aiming to have a cur- rency of gold only, uses far more silver than France or the United States, because the condition of the German people, their frugality and low rate of production, render silver more indispen- sable to them than gold. The coined and paper money of thirty-eight of the world's prm- cipal nations (excludmg China) was compiled by the director of the mint in 1883, in the following chart (in which each number represents millions of dollars) : Gold. Silver. Total specie. Paper. Full tender. Limited tender. Total paper and specie. 3,833 3,333 2,277 434 6,045 9,875 Gold and silver bullion maintain the same value relatively to other commodities, only proximately and not absolutely. Usually THE RATIO. 345 for a century, and in a less perfect manner for several centuries, gold has been worth from fifteen and one-half to sixteen times its own weight in silver, and on this expected ratio the coinage of the two metals in Europe and America has been adjusted, the legal ratio being one to sixteen in America, and one to fifteen and one-half in Europe. Since 1878 silver bullion has declined relatively to gold bullion in purchasing power, until at the present time it requires about twenty-two times a given weight in silver to equal in value the same weight in gold. Adam Smith says that, before the discovery of the mines of America, an ounce of gold was worth only from ten to twelve ounces of silver, but by 1650 they came to bear the relative values of one to fourteen or fifteen. Both metals sank, in their pur- chasing power, relatively to labor and coramodities, but silver the more rapidly, owing to its moi'e rapid increase of production. The Western continent has ever since been the source of supply to the Eastern— the migration of the precious metals being al- ways in the opposite direction to the migration of population. In India silver has always been held in higher esteem, relatively to gold, than in Europe, as both the money and the ornaments of the people are of silver. At the mint of Calcutta, a century ago, an ounce of fine gold was held worth only fifteen ounces of silver, and in the markets of Bengal and Madras somewhat less. In China the proportion was then and is now only one to ten, and in Japan, at least until recently, one to eight. The population of China and India are so large, and their customs so fixed, that they maintain a higher relative value on silver, as compared with gold, than is maintained by Western nations. Silver and gold are produced, in America, in about the relative quantities of twenty-two in weight of tlie former, to one of the latter, but of these twenty-two parts about seven were, for a cen- tury, drawn off annually to India, leaving only fifteen parts of silver to one of gold to supply Europe and America. The theory was propounded more than a century ago by Mr. Meggins, and combated by Adam Smith,* that the relative values of gold and silver depended on the relative quantities produced for circula- tion in Europe. Meggins held, therefore, that if the drain of silver to India should stop, the ratio between the two metals would fall to one of gold to twenty-two of silver. Smith thought it would not. But in 1873-6 the dz'ain to India stopped, or nearly' so, and. " Wealth of Natio is," Book i. p. 97. McC'iillojh's Ed 3^6 ECONOMIC PHILOSOPHY. whether from this or other causes, the relative value of silver fell as Meggins predicted. Ml European nations, and the United States, have judged fit, in consequence of this fall, to cease to coin silver, at the will of the holder, in the proportions of one to fifteen and one-half, or sixteen, as they had previously done. 138. Exchangeable Credit as Quasi Money. — Credit consists in giving faith or belief to a promise or to a statement of a fact. If the promise or statement relates to a value, and is of a kind which many persons will have faith in, one of these per- sons will take it from another, as equivalent to the fact which it states or the value it promises. Hence, about as easily as goods became exchangeable, credit becomes exchangeable. Exchange- able credit has so many effects analogous to money that certain economists treat it as credit money. It is not necessary to the creation of credit money, so-called, that its issuers shall suppose or intend it to be money. It is only necessary that it shall act as a convenient substitute, and perform the functions, of money. In finance as in the enlistment of troops, the substitute, being ac- cepted for service, fights as principal, and that for which it acts as substitute goes about other business, or is retired. Bills of exchange, and promissory notes of private persons and firms, bank notes issued to circulate as money, bank deposits and checks, government notes, commercial accounts, store orders, government and corporate debts, all help to make up this indefi- nite volume of exchangeable credit. It includes all credits which are capable of easy subdivision, like bank accounts, or ready exchangeability, like negotiable notes, so as to be used with more or less frequency and regularity as means of payment of debts, and purchase of goods and services. In so far as commodities are exchanged, through the use of either of these media, without any payment for them in coin, they become substitutes for money, doing its work upon very differ- ent terms as to cost. 139. Bills of Exchange and Notes. — Bills of exchange are used as substitutes for gold and silver in international trade. A bill of exchange is a draft or order for the payment of a certain sum of money, drawn by the vendor or consignor of merchan- dise, either sold or sent to the consignee to be sold, whereby the consigner of the goods requests the consignee to pay their price to a person named, or to some one to whom he shall order it paid. As to the bill, the consignor becomes the di-awer. The person, on BILLS OF EXCHANGE. 347 whom it is drawn, becomes the drawee. The person who is to receive the payment is the payee, and when he transfers the bill he becomes endorser. If but one such bill existed, it would not supersede coin, but would have to be paid in coin by the drawee. But when many such bills are drawn, they come to represent, not only the several prices of all the merchandise shipped from place A to place. B, but also all the return merchandise shipped from B to A. The bills drawn by Rio Janeiro merchants on London merchants for the price of coffee, hides, caoutchouc, diamonds, silver, wool, and ti'opical fruits, shipped from Rio to Loudon, ai'e found to nearly equal in amount the bills drawn by London or other foreign merchants somewhere, on those in Rio for cloth, hardware, furniture, machinery, etc., shipped by them to Rio. If both classes of bills could be got together in one place, with the persons from whom they are due, and to whom they are due, it would be found that the Rio exporters had shipped to London just coffee, hides, caoutchouc, diamonds, silver, wool, and fruits enough to pay for the cloth, hardware, furniture, etc., shipped by the London merchants to Rio.* London and Rio are even within a few dollars, not more than two or three per cent, of the whole. Obviously, therefore, no gold need be paid or shipped on any of these bills. It is only necessary for the Brazil- ian importer, who owes money in London, to pay it to the Bra- zilian exporter, to whom money is owed in London, and for the London merchants to do the same, provided what each pays at home is credited on what he owes abroad. This is done by the importer in Rio buying the draft made by the exporter in Rio, and the importer in London buying the draft made by the exporter in London, and using it in payment of his own debt. The price of exchange, or the rate at which drafts can be bought, is said to be in favor of Rio when drafts on London are so plenty in Rio that they can be bought there for a small discount from their face value. It is against Rio when drafts in Rio, on Lon- don, sell at a i^remium. The amount of this premium or discount is supposed to be adequate to cover the risk of being obliged to incur the cost of transmitting the specie, including interest, in- surance, and profits. Thus no payment at all, in money, need be made for these pur- chases, on either side, so far as their values offset each other, and * Where this is not in fact trne as to the shipments between any two places, it is made true in effect by taking in such other places as have made shipments ftnci drawu drafts which in the aggregate will balance. 34» ECONOMIC PHILOSOPHY. money as a medium of exchange is dispensed with, but the bills on both sides become, for the time being, substitutes for the money, and hence a form of credit money. Promissory notes of private persons and firms become sub- stitutes for money, and a species of credit money, when given in payment for merchandise in such numbers as to be offset against each other, and so paid by cancellation. When the con- dition of private credit is such that notes of ordinarily solvent customers, payable two or three months ahead, can be taken by their holder to a bank or broker, and cash or credit obtained for them by their holder, wherewith to pay his old debts, or buy new goods, and when, over long periods of time, private credit remains so stable and secure that, on the maturing of each set of notes, they can be taken up or paid with the proceeds of the sale of the goods for which they were given, and when these proceeds are often themselves the notes of persons to whom the goods were sold, it is obvious that many goods will pass from producers to consumers on a currency or means of payment which consists wholly of private promises to pay. And when all the pi-omises to pay given by merchants in Syracuse for cloth and iron are taken to New York, and there compared with like promises given by New York merchants for salt, purchased in Syracuse, it is obvious that the system of offsetting these notes against each other will pay them, as in the case of bills of exchange. To the extent this is done all the merchandise, for which they were given, is in fact exchanged without any interposition of money. And, to the extent this is done, the notes themselves have been a sub- stitute for money, and therefore a form of credit-money. 140. Money of Account. — Commercial accounts of all kinds may assume a payment in coin as to be made, which in fact is never made in coin. Hence the term money of account comes to mean ideal money — not coined money. A shoemaker and farmer reside near each other. The shoemaker can do $1,000 worth of work each year in making shoes, and wants $500 w^orth of crops from the farm, but the farmer can only take $100 worth of shoes. He opens an account with the shoemaker, and in the course of the year sells him $500 worth of food and buys fi'om him $100 worth of shoes, leaving the shoemaker owing him $400. But the shoemaker has also made and sold $100 worth of shoes each for the butcher, blacksmith, wagon-Avright, and carpenter, against each of whom he has accounts for shoes furnished, $100 each, be- ing just enough to pay the farmer. If now the butchei', black- DEPOSITS AND CHECKS. "849 smith, wagon-wriglit, and carpenter have also done work for the farmer, whereby he owes them $100 each, evidently the shoe- maker need only cancel his accounts against them and let them cancel their accounts against the farmer, to place the farmer where he can cancel without loss his accounts against the shoemaker. Thus $1,200 worth of services have been ex- changed nominally for money, but really for the abstract idea or conception of money. Each service when rendered was charged for at a certain sum in money, but really no money was used. Hence, the book accounts were a substitute for money, had the effect of money, and are therefore a form of credit-money. From these the term " money of account " has been borrowed, to mean, at first, that kind of money which consists of accounts which off- set each other, and enable payments to be made without the act- ual use of money. From this the term " money of account " rises to mean money considered as an intellectual and financial concep- tion merely, as one might say " money in your mind's eye," or money in thought, as distinguished from money physically pre- sent. "Money of account" is thus the pound, the dollar, the marc, the fi'anc, when considered not as a coin, but as a denomi- nation, name, or title — a mere idea of which the coin is the body or substance. * All forms of credit tend thus to idealize money, and enable exchanges of commodities to be made, by the use only of instruments which express money of account, without the inter- vention of coined money, t 141. Bank Deposits and Checks. — These, also, become a form of credit-money. The system of bank checks, on deposits, is a system devised by the minor banks of England to thwart an act of Parliament which was designed to limit to the Bank of En- gland, and a few others, the privilege of issuing their own notes as a means of discounting, or "cashing " the notes of their cus- tomers. The minor banks said to their customers : ' ' We can not, owing to this act of Parliament, issue to you our notes, but we can give you a credit on the notes you may leave with us, as if a sum named had been deposited by you in our bank, and on this you can draw at pleasure, by your check. In this way the act of Pai'liament was wholly thwarted, and a new form of credit-money was created, more effectually than if every bank had been permitted to discount its customers' notes with its own bills. To such an exteiit have the deposits and checks become a substitute for money, and a means of payment and of credit, that * " The Silver Poimd," by G. Dana Horton, p. sxi. t Vide Note to Sec. 157 />w^ 350 EGONOMIG PEIL080PEY. in the payments made through checks, for goods sold, in the city of New York, amounting to from $80,000,000 to $100,000,000 daily, only about three per cent, are usually paid in coin or bank-notes. 142. Bank Notes. — Bank notes are the form of exchangeable credit which it is most easy and natural to regard as moneyi A bank is a shop for the sale of money and credit, coined money, and credit money, in exchange for securities which ensure to it the payment of money after an interval of time. All the obliga- tions of a bank to its customers are, at all times, payable on demand. Most of the securities and assets will be obligations payable at a future period.. It is of the essence of all banks that they are in- solvent if all the holders of their obligations call for them at once, since they have not the right or power to call upon all the persons indebted to them to pay at once. Banks are founded upon aggre- gated credit, deal in credit, rest on credit, and require a certain condition and stability of general credit for their continuance. They are storehouses for the aggregation and storage, purchase and sale, of credit and cash, in the same manner as merchants' ware- houses are storehouses for the aggregation and sale of goods, and as elevators and boards of trade, together, constitute a market for the collection and sale of grain and agricultural produce. In Russia, grain is dealt with in a manner so nearly analogous to banking, that grain markets are called grain banks. Credit must be aggregated, in founding a bank, before banking business can be done, because, if a bank loaned only its own capi- tal, it would no sooner get all its capital loaned than it would be out of business. But, by presenting to the business community an imposing aggregation of credit, and compelling confidence, it attracts the deposits of its customers to an amount from two to six times greater than its capital, and thereupon its profits chiefly ensue from lending the money of its depositors. The credit aggregated, in the degree necessary to give the bank the confidence of the public and of depositors, in various ways, in banks of large business and long standing, is due chiefly to many years of safe, prompt, aiid honorable dealing. In the first instance, however, there is usually a stacking together of public securities, or credits of some kind, such as government or state bonds, national debts, gold or the like, in whose stability the ])ublic have confidence, and the bank virtually says to the public : " Look at these and trust us on their account." * * When the government of Russia desired, in 1834, after " scaling " the government paper money, whicli had circulated at only one-fourth its par or nominal value, to A NATIONAL BANK. 351 The banks of Venice (founded in 1711), Genoa, and England originated in loans made to governments, on the faith of which government x'e venues wei^e indirectly or directly pledged, and the banks, as chief creditors of the government, became its fiscal agents. The Bank of France, Imperial Bank of Germany, that of Austria, of the Netherlands, of Russia, are national institutions of great magnitude, modelled in a more or less imitative spirit after the Bank of England. One of the burning questions pending in the politics of the United States from 1790 to 1833 was whether the United States should have a national " Bank of the United States, " which should perform. lilce functions toward the government and banks of the United States as those performed by the Bank of England. Alexander Hamilton was the principal advocate of the policy, Andrew Jackson its final opponent. The first national bank was founded nearly simultaneously with our government, under Mr. Hamilton's influence, and the second national bank expired under the veto of the bill to renew its charter, which veto constituted one of the salient features of Jackson's administration. Banks of issue and redemption issue paper money, and purport enter into a joint arrangement witli the banks of Russia, whereby the banks should, as agents of the government, redeem at par the new government notes, to be issued in exchange for tlie old at the rate of one of the new for four of the old, the Czar collected in the fortress of St. Petersburg 130,000,000 roubles in gold as this basis of redemption, and invited the bankers and merchants of the empire to come in and look at his gold, as a means of inspiring confidence in the ability of the government to redeem the new currency at par. Again, under the existing national banliing system, in founding a national bank, $100,000 in government bonds were purchased by the founders and deposited in the Treasury at Washington, as security for the redemption of every $90,000 of bills issued by the bank, all of which were furnished them by the government, engraved at the government office and delivered to them in exchange for the bonds. This secures the redemption of the bills. At present the government of the United States leaves the business of banking open to free competition, so far as banking consists in receiving deposits and discounting notes. So far as it consists in issuing notes, the redemption of the notes is secured by pledge of government bonds. No system has yet been devised or conceived whereby depositors can escape the risk involved in the custody and lending of their money by the baniJS on losses by defalcations of its officers. The capital of the bank, however, when called in from its function of securing the redemption of the bills of the bank, which is ii.s primary liability, is then liable to depositors to the extent it will go, for any inadequacy in the assets on which the bank has made its loans to pay its depositors. The quarterly statements which our national banking law requires the bank to publish of their assets and liabilities is sup- l)osed to throw some light to guide depositors as to the degree of credit in whicli the l)ank should be held, and the government system of inspection is supposed to be imper- fectly and in some small degree adapted to detect substantial untruths in these quar- terly statements. It has, however, seldom been equal to the task. 353 ECONOMIC PHILOSOPHY. to redeem it in coin. Banks of deposit and discount are those which, make loans on time bills, and derive their incomes chiefly from lending deposits. As to their form and organization, they may be either (1) quasi government banks, like the Bank of En- gland, Bank of France, Imperial Bank of Germany, etc., or(2) cor- porate and joint-stock banks, founded wholly by private capital ; and the latter are, in the United States, still further divided into (1) national and (2) private banks, the former meaning those which issue bills secured by deposit of government bonds, and the latter those which at present issue no bills, being restrained from issuing bills by a fedei'al law, taxing them more for issuing bills than they could afford to pay. What have been known in the United States as State banks were corporate banks, based chiefly or wholly on private capital, but authorized by the laws of the several States. In a few cases as in that of the State bank of Iowa, and of Indiana, they were institutions in which the State held stock and had a part control. In most cases, however, they were formed under a general law which authorized any three, five, or seven, or more jjersons to go into the business by putting up securities to the amount of the alleged capital, which might consist of bonds of the State, or of some city or town, or private mortgages on real estate. So pre- carious were many of these securities that the currency or notes issued upon them had a very fluctuating value. The banks acquired an unsavory reputation, being called "wild-cat banks," and the like, until at the outbreak of the I'ebellion in 1861 most of them collapsed and the circulating notes of the remainder wei'e retired. The national banking system Avas devised to take their place. Among these State banks, however, those of Massachusetts, Rhode Island, New York, Indiana, and Iowa bore a good repu- tation and in great part redeemed their paper. So unpopular had the principle of banking become in many of the iiewer States that in one at least, Michigan, the constitution prohibited the creation of a bank. 143. Government Notes and Debts. — Government debts are seldom recognized as an issue of credit-money, and some mis- takes in legislation have been due to this oversight. In the war of the American Revolution, 1776 to 1783, the paper money known as "Continental money " was an issue of government debt in- tended to circulate as money, which was repudiated and became worthless ultimately, for lack of any provision for redeeming it in coin, for funding it into interest-pay^ing bonds, or for making HANDLING THE WAR DEBT. 353 any other valuable financial use of it. A government debt must be made a source of income to its possessor or it will lose all value. Hence, to issue such a debt without' provision either for redeem- ing it, paying interest on it, or funding it into interest-paying debt, is to repudiate it in advance. The Confederate debt of 1861-4 met the same fate as the Con- tinental money, for the same reasons. The last official sale of Confederate money was made at tlie rate of $1 of coin for $1,200 of the notes. The government avoided repudiation by what was then deemed, and felt to be, the most drastic system of taxation tlie people could bear. The duties on imports were raised to rates which could only have been enacted after the majority of the representatives of the free-trade idea in Congress had with- drawn, leaving the protectionists in the ascendency. Fifteen years after the war was over, the free-trade theorists and oppo- nents of "inflation," including Prof. Adams, in his work on "Debts," Prof. Laughlin in his "Elements," and others, have raised tlie cry that the timidity of the government caused the debt, as it should have raised the entire expense of the war by taxation as fast as it was needed. In fact, it was only by getting anti-infla- tionists and free-traders of these views out of Congress, or into a helpless minority, that the potency of the revenue laws could be increased in the degree that they actually were. The ' ' boom in prices," and the confidence in profits, caused by the rapid inflation through government money, set on foot an energy of pro- duction, by means of which heavy taxes were freely paid. The feeling of capacity to pay heavy taxes arose only as the people found that the stagnation in business, which had oppressed the country for the seven years prior to the war, had given place to an era of large profits and intense prosperity. The duties on imports were pledged sacredly to the payment of interest on the bonds. Holders of notes bearing no interest were, until near the close of the war, invited to exchange them for the bonds. The bonds, during the war, fell with defeat, and rose with vic- tory. As the notes 'ke\}t pace with them, and were the nominal standard, in which even gold coin was quoted, the fall in both bonds and notes was indexed by what was called the premium on gold. With the final success of the Union arms, the bonds I'ose to 75 per cent. , and at the end of fifteen years passed to a premium. Tlie bonds at 6 and 7 per cent, were then exchanged for those bearing a lower rate of interest, until a 3 per cent, bond could be 354 ECONOMIC PHILOSOPHY. negotiated at par. The greenbacks remained below par, as was indicated by gold being quoted at a premium, until 1879-80, when specie j)ayments were resumed. No portion of the national debt, except the greenbacks, was regarded as ci'edit-money within the United States. In our ex- changes with Europe, however, the national interest-bearing bonds performed a most impoi'tant function, in which, by virtue of their easily transferable credit, they came to resemble money. At the close of the war, about $2,700,000,000 of them had been issued, and of these all, but a few scores of millions, were held in the United States. They formed, however, an excellent security, more acceptable in Europe than private or corporate bonds, because better known and better secured as to their interest by our coin revenue. The people holding them could make more than their rate of interest in other investments, as indiistries of all kinds were intensely active to the verge of " kiting," which is the phrase when profits are rapidly and easily made on many things. The bonds were therefore exported at the rate of about $200,000,000 per year, until 1873, when it was computed at least $1,900,000,000 had been sent abroad. At this period the supply of bonds available for export was exhausted, and, hence, the period of inflated prices came to a sharp conclusion, known in finance as the panic of 1873. From 1873 to 1879-80, we were engaged in buying back these bonds or calling them in, and paying them off. The process pleased the people. They resisted or ignored the argument that the principal of the debt would earn more in the hands of the taxpayers than in those of the creditors. It has continued ever since, and the debt is now less than one-half its amount in 1865. The United States, at least, won the fame of being the only nation in the world Avhich pays off the principal of its debts. The easy exportability of the bonds enabled the country, from 1865 to 1873, to consume more than it could pay for in products. This postponed for nine years the sense of exhaustion and impoverishment which it was the natural effect of the war to produce. In these respects the debt acted, inter- nationally, as a substitute for an export of gold, and as a form of paper money and inflation, sustaining prices and prosperity, both in Europe and America. Since 1873, on the other hand, the rapid return and extinguishment of the debt, at the rate of nearly $200,000,000 a year, has operated in Europe and America as a contraction or withdrawal of currency, the effect of which has been everywhere visible in a declining scale of prices and a pi'e- OOST OF" COIN AND CREDIT'. S55 carious condition of ijrofits, with gi'eat shrinkage in values, timidity in enterprise, and discontent on the part of labor. 144. The Volume of Credit. — This survey of the nature of credit shows that it consists of the aggregated faith of millions of individuals, in the future of the declared intentions of millions of other individuals, as to whether such intentions will be per- formed or not. The law can neither regulate the formation of these intentions, IJie faith of others therein, nor their perform- ance. Hence, it can only regulate the volume of certain forms of credit, not of all forms. If it forbid bank notes, government notes, small bills, it will increase the degree in which the note which A gives to B on sale of a horse, or for a day's work, will circulate, perhaps with the endorsements of C, D, E, F, and G. If it enact that only the Bank of England shall issue its own notes for the notes of its customers, the other banks will check- mate the law by the system of deposits and checks. If it make paper money scarce, merchants will be obliged to give long credits, which are another form of credit-money neither so secure nor satisfactory as paper money. Hence, in legislation con- cerning the volume of paper or credit, the legislator is liable to be foiled by the elusiveness, subtlety, and variability of the principle of human faith. 145. Relative Cost and Economy of Coin and Credit — Fiat Money. — However simple may be the object, or commod- ity, of which we attempt to compute the ultimate and true cost, the calculation carries us out into an infinitude of values which are iiicomputable, and back to the very origin of things. To com- pute the ultimate and true cost of the inkstand from which I take my ink, I must assess it with its share of the losses that have been made in the manufacture of glass, and this, at the outset, is im- possible. How, then, shall we attempt to solve a problem so much more difficult as the relative economy of coin and credit currency ? Each is as essential to the other as sunshine is to rain, and air to sunshine. Economists, with the exception of Amasa Walker, are nearly united in the belief that credit money is more economical than coin, by nearly the whole cost of the coin. The employment of gold and silver, exclusively, as money, is a matter no more within our choice than it would be to employ artificial irrigation, exclusively, as a means of moistening the fields. Credit attaches to those who show that they possess the gold and silver, as naturally as the rain descends. But if a cur- rency' of coin only, without credit, were possible, it Avould sub- 356 ECONOMIC PHILOSOPHY. ject the nation, or aggregate society, using it, to an annual charge nearly or quite equal to the annual interest on the whole volume of currency so used, relatively to the comparative cost of credit money in any of its forms. But even this would be a vast saving on barter. For gold and silver have an intrinsic value equal, in every instance, to the commodities they exchange. This intrinsic value keeps pai*allel with the cost in labor of producing, though, as we have seen, it is the value they have that causes the requisite labor to be expended in their production, and not the labor so expended which causes their value. Having this in- trinsic value, the ability of a possessor of cloth to effect an ex- change thereof with the possessor of iron, through the services of an intermediate possessor of gold, involves, the previous expendi- ture of as nmch labor, to produce the gold necessary to the ex- change, as to produce the cloth or iron. But, by means of either of the forms of credit money we have named, the same exchange is effected through a medium which has no intrinsic value, and whose existence, ordinarily, does not involve an investment of an amount of actual capital equal to its whole volume. Hence Adam Smith says : " The substitution of paper, in the room of gold and silver money, replaces a very expensive instrument of commerce with one much less costly, and sometimes equally convenient. Circulation comes to be carried on by a new wheel, which it costs less both to erect and to maintain than the old one. " Yet we must not fall into the common error of supposing that the actual cost of credit money is merely the cost of printing or engraving the instrument of credit ? It is the cost of maintaining the credit, of which the printed or engraved paper is merely the instrument of transfer. In the case of the greenback note, the form of credit money most familiar to Americans, the cost of maintaining the credit may have been the whole cost of maintaining the Government against the Re- bellion, say $9,000,000,000, and the lives of one million men. On the other hand, some may assert that had the Southern Rebellion not been subdued, the Northern States would still have had wealth and honor enough to have paid the debt incurred, and redeemed the greenbacks issued in the effort. But this no man knows. It is certain, howevei", that the money cost of maintain- ing the credit represented by the greenback, in the mode in which it was actually maintained, Avas far greater than the volume of both the greenbacks and the national bonds, since to these must be added the swollen volume of annual taxation, from 1861 to COST OF CREDIT MONEY. 357 date of payment. Such complex facts are not reducible to accu- rate computation, but it is clear that the greenback note cannot be instanced as a form of credit money that cost little, or that cost only the cost of engTaving the paper on which it was written. The Bank of England note is just as far from being cheap, when we estimate the whole cost of maintaining the Imperial Government, whose national debt constitutes the basis on which the first £17,000,000 of Bank of England notes are issued. For every note issued by the bank, over this sum, there must be a sov- ereign in gold deposited, to remain in the vaults of the bank until the note for which it is issued returns for redemption. An accurate computation of the exact cost of maintaining the credit of the various forms of credit currency is a very difficult one to make. The losses incurred on those forms of credit cur- rency which have failed of ultimate redemption, such as the Con- tinental money of the American Revolution — both that issued by Congress, and the similar issue by the several colonies — the losses by bank failures to redeem, which were common in the United States prior to 1860, the losses by the failure of the French assign- ats,*and of Law's credit-money schemes,! and the more I'ecent losses by the collapse of the Confederate debt and money, all con- stitute part of the general tax imposed by credit moiaey on the world. The annual cost of paying interest on the credits, or secu- rities, on which a system of redeemable credit money is usually based, cannot, of course, be wholly charged to that credit system. England would still have had a debt if no Bank of England notes had been issued. America would still have incurred a vast ex- penditure if no greenback note had been issued, perhaps a greater one than was actually incurred, Still the forms of credit that actually exist are involved in origins so expensive that they re- mind us of Lamb's ingenious story of the discovery of the excel- lence of roast pig by the Chinese, in burning down a barn in which a pig was accidentally roasted. It is difficult, in such a case, to sep- arate the cost of burning down the barn from the cost of roasting the pig. So, gi'eat aggregations of credit money have usually been connected, directly or indirectly, with the struggles of govern- ment for self-preservation. It may seem severe, or even absurd, to say that great credits cannot be built up without great sacri- fices, antl it, at least, amuses us to suggest that this is as unneces- sary as it is to burn down a barn in order to roast a pig. In fact, however, thus far all efforts to establish a sound and redeemable credit money, apart from the concurrence of national struggles * Vide p. 369. t Firfep. 369. 358 • ECONOMIC PHILOSOPHY. and great debts, heavy taxation and stringent popular burdens, have only resulted in a bogus form of credit money, which was a discredit to all parties. Experience leads us, therefore, to doubt whether this particular kind of pig can be roasted without burn- ing down a barn. But if the cost of maintaining a credit cur- rency is not accurately computable, how can it be known to be absolutely economical ? It is not so clearly known to be economic, by computation, as felt to be economic, by experience and use. In jjeriods when the efforts to maintain a credit currency have failed, and involved a great loss, the system has been severely denounced. In periods when the basis for its maintenance has existed, its great popular- ity has caused visionary schemes to be propounded for maintain- ing it without any basis whatever. Proposals to establish " labor money," and "fiat money," on the theory that credit money is merely an implement of exchange, which requires only common consent to manufacture and use it, ovei'look the nature of credit itself as being, not an independent and original fact, but only, as it were, the shadow or effect of an antecedent fact, viz. : achieve- ment. Credit can only be made to follow where achievement, power, victory, success of some kind, has gone before. Some- thing creditable must be done before ci^edit can exist. It cannot be conferred of man's voluntary will. Hence the notion, pro- pounded by visionaries, that men can agree together, to give every man who will work an hour a certificate that he has done an hour's work, which cei'tificate, on presentation to any person having a meal of victuals to sell, will cause hina to sell the meal, is merely one of the amusements of idle minds. It has no place in economic science, and will never be actual in human ex- perience. The extremists called bullionists contend that no money but that which has intrinsic value should circulate. The opposite ex- tremists called " fiatists " propose to adopt a money, by consent, behind which there is no previous basis of achievement, power or capital capable of commanding confidence or consent. Between these two the average common-sense world must walk, continu- ing to accept, as money, that which the circumstances of their envii'onmeiit and education enable them to believe will exchange for money when they want it. 146. Variations in the Volume of Money. — Mr. Hume says: "In every kingdom into which money begins to flow in greater MONET FREES MEN. 359 abundance than formerly, every thing takes a new face ; labor and industry gain life ; the merchant becomes more enterprising, the manufacturer more diligent and skillful ; and even the farmer follows the plow with more alacrity and attention." It is claimed that a signal service was rendered by the Mace- donian Empire to mankind in seizing the collected treasure stores of uncoined gold and silver which, according to the barbarous customs of an earlier epoch, the mouarchs of the East- ern world had massed at Gaza, Persepolis, and like points, coining it into money, and issuing it to the world in payment for labor. All payments become, in the last analysis, payments for labor. It is asserted that more gold and silver coin were in the hands of men, in the third and fourth century before Christ, than all Eu- rope possessed at the beginning of the eighteenth century after Christ. The civilization and the emancipation of man under the Roman Empire were largely due to an increase in the volume of money. Certainly the tendencies toward the abolition of slavery, and the equalization of races and conditions, which marked the culmination of the Empii'e, were but the legal expressions of an industrial equality, wherein money had superseded the lash, as the inducement to labor. It is doubtful if, without money, it is pos- sible to organize labor on any large scale, or bring about the association of men, except by force and in slavery. Money, by affording the medium in which wages can be paid, and services and commodities obtained, by an easier mode than fighting, be- comes the first substitute for force, and hence the most efficient cause of emancipation. On the other hand, "the fall of the Roman Empire," says Sir Archibald Alison, " so long ascribed in ignorance to slavery, heathenism, and moral corruption, was in reality brought about by a decline in the gold and silver mines of Spain and Greece, from which the precious metals for the circu- lation of the world were drawn, at the very tune when the vic- tories of the legions and the wisdom of the Antonines had given peace and security, and with it increase in numbers and riches, to the Roman Empire." Commenting on this remarkable passage. Gen. F. A. Walker (in "Money, Trade, and Industry," p. 114) says : ' ' Doubtless this claim is far too large. Causes distinctly political and social had to do with the downfall of that mighty fabric of military enterprise, legislative wisdom, and administi*a- tive skill ; but it seems to me that there can not be an intelligent doubt that the steady rise in the value of money, due to its in- creasing scarcity, contributed greatly to the impoverishment of 360 ECONOMIC PHILOSOPHY. the people, the decay of commercial enterprise and the abandon- ment of agricultural lands, which sapped the foundations of the Roman Empire." Equally evident is the connection between the modern revival of liberty and learning in Europe, since the fifteenth century, and the return of gold and silver into abundant circulation, through the draining of the Mexican and Peruvian treasures by Cortez and Pizarro and their followers, and the subsequent active work- ing of the American mines. Even the recent additions to the supply of the jjrecious metals, by California, Australia, Nevada, and Colorado, have imparted a wonderful impetus to all indus- trial movements and changes in social condition. This expansion in the volume of money increases the rapidity of industrial pro- duction. By means of its apparent effect in raising the prices, ultimately, of all commodities, even including land, but imme- diately of the more exchangeable and exportable ones in a higher degree than others, it thus appeals to the sense of profit in all men and causes them to ti-ade with more rapidity. In order to trade they produce, for purposes of trade, and in order to produce, they employ, and in order to employ they raise wages, thus stimu- lating all to a larger production of commodities, and furnishing all with the means to maintain a larger consumption of com- modities. The rise in prices of commodities, which results from an increase in the volume of money, is due to a decline in the purchasing power of the money itself, and not to any actual in- crease in the value of commodities. In theory it must be admitted that the rise in prices felt by the speculative public in such periods, is at fij^st an economic illusion rather than an increase of real values, but the illusion is so fruit- ful in calling into employment all idle time, idle money, and idle capital, by the appearance of being able to make money in every way and out of every thing, that a far larger amount of work is actually done, and more commodities are made, and to absorb these all men rise to a higher standard of living. Illusions may, therefore, be more fruitful of prosperity than facts, since the in- creased volume of mutual service they cause to be rendered by the members of society to each other is not an illusion, but is a part of the fact called Wealth, which is the subject of our study. It would not matter if every belief under which an increase of service, and an increased production of commodities, should occur among man- kind, were an illusion. The growth of wealth caused thereby would be none the less substantial and solid. CHEAP AND DEAB MO]SEY. 361 It must be confessed also that, simultaneously with this expan- sion of prices and production by the cheapening of money, there are tendencies to charge immorality on those who are flooding the country in question with the cheap^money, and on those who are availing themselves of the cheap money to pay off their debts or to speculate in commodities. Yet the country that allows, or causes its people to redeem, at par, with their commodities, this cheap currency, is eninched in a threefold way — (1) it increases its own volume of currency, pinces, and production ; (2) it stimu- lates its exports ; (3) it finds the currency after all as good as that possessed by any other country. Nor does it matter whether the country is taking in a flood of new gold and silver, as Portugal, Spain, and ultimately all Europe wei^e in the sixteenth century, or a flood of new paper, as England was during her wars with Napoleon, and the United States during her struggle with the re- bellion. Hence it has often resulted that the most direct way to have good times was to have what the banJ^ers would call bad money ; as the money gets better (dearer and scarcer) the times get worse. 147. The Single and Double Standard. — A country is said to have the single standard when it makes money, coined of one metal only, an exclusive legal tender in payment of all debts, public and private, and receivable for all taxes, and provides for its fi'ee coinage at its mints. England is a single standard coun- try on the gold basis, because since 1816 its mints have coined no silver coins which are by statute unlimited legal tender, and it gives free coinage to gold, however abundantly it may be pro- duced. By free coinage is meant that the holder of the quantity of bullion, required by law to be in a standard coin, may tender it to the mint, together with the cost of coinage, called seignorage, and will receive the coin in return. England, the United States, Germany, and Fx'ance give free coinage to gold only. In England, from 1256 to 1663, the statutes made certain coins of gold and others of silver a legal tender in payment of debts, or, as it was called, the " legal measure " of property. The quantity of silver circulating greatly exceeded the gold until about 1710. In 1663 silver Avas made the exclusive standai'd or legal measure, and so continued until 1717, when gold again divided the mone- taiy throne with silver, the standard continuing bimetallic until 1816. In 1816, by the statute ascribed to Lord Liverpool, gold was for the first time accepted as the material of which the unit of coinage 362 ECONOMIC PHILOSOPHY. "was made, and silver coins ceased to be legal tender in sums greater than £2. Mr. S. Dana Horton * seems to show that the Act of 1816 contemplated, on its face a free, coinage of silver, but that this result has failed for reasons of detail which were not fully contemplated by its framers. India gives free coinage to silver only, and is therefore a single standard country on the sil- ver basis. France and the United States had, prior to the fall in the value of silver bullion in 1873, given free coinage to both metals. France, since 1873, in company with Italy, Greece, Spain and other countries, forming what is called the Latin Union, has suspended the coinage of silver, to avoid the supposed drain of gold involved in its further coinage, while it is depreci- ated. France, Italy, and the United States, therefore, are double standard countries in principle, but are temporarily denying free coinage to silver, and therefore are temporarily running with gold as the only metal of unlimited coinage. Still, in all these countries, their own silver standard coins are absolute legal tender, to an unlimited amount, for all debts. Thej are, therefore, bi- metallic in pi'actice, with a temporary preference for the single gold standard not stronger than has on former occasions pre- vailed in behalf of the silver standard. G-ermany began in 1871 an effort to change from the silver to the gold basis, under the mistaken impression, as Lord Beacons- field declared, that it was the gold basis that made a country foremost in commerce, instead of its being its foremost position in commerce that would make the gold basis possible or fit for it.f Prior to this experiment of 1871, Germany had a total coinage of 539 million marks of gold to 1, 940 million marks of silver, or 3 2-3 marks of silver to 1 of gold. After twelve years of the experi- ment, the nature of the reserves held by the Imperial Bank of Germany, and which fairly indicate the kind of money in circu- lation among the people, was as follows : * " The Silver Pound," by S. Dana Horton, p. 161. t " Our gold standard," Baid Lord Beaconsfield, " is not the cause of our commercia' prosperity, but the consequence of our commercial prosperity ; and it is very well fo^ us to have it ; but you can not establish a gold standard by violent means. It must arise gradually from the large transactions of a country, and the consequent command it may have over the precious metals. When the various states of Europe suddenly determined to have a gold standard, and took steps to carry it into efiect, it was quite evident that we must prepare ourselves for commotions iQ the money market not occa- sioned by speculation or any old cause which has been alleged, but by a new cause with which we are not yet sufficiently acquainted, and the consequences of which are very embarrassing." (Speech at Banquet, Nov. 19, 1873, at City of Glasgow,) VALUE OF GOLD PRODUCED IN 357YEARS. 1493-1850. 3,314,553,000 DOLLARS. VALUE OF SILVER PRODUCED IN 357 YEARS. 1493-1850. 6,741,705,000 DOLLARS. VALU:E of GOLD PRODUCED IN 25 YEARS. 1851-1875. 3,317,625,000 DOLLARS. VALUE OF SILVER PRODUCED IN 25 YEARS. 1851-1875. 1,395,125,000 DOLLARS. RELATIVE VALUES OF GOLD AND OF SILVER PRODUCED IN TWO SUCCESSIVE PERIODS. SILVER IN GERMANY 363 Bank of Germany. Aug. 2, 1883. GOLD. SILVER. £7,667,850 £23,003,550 Aug. 2, 1882. GOLD. SILVER. £6,985,000 £20,955,000 The circulation was still 3|- times as largely composed of silver as of gold. In her experiment, Germany called in one hundred million marks of her old gold coinage, and left out 440 millions which she was not successful in calling in — perhaps in circula- tion, perhaps gone into other countries. But of her old silver she called in two hundred million marks, and left 440 million marks not found. Thus she had called in one-fourth of her gold, and two thirds of her silver. Between 1871 and November, 1878, Ger- many coined 1656 million marks of new gold coins and 426 mil- lion marks of new silver, or four of gold to one of silver.* But she did not succeed in changing her circulation, in the degree that she changed her coinage. In the Imperial Bank of Austria-Hungary the reserves are nearly two-thirds of silver, and in the Bank of the Netherlands they are about four of silver to one of gold. The standard of coinage of a country furnishes no index, there- fore, to the relative proportions in which the two metals will cir- culate in it. It may fix upon the single standard of gold and yet the chief part of its circulation may be silver. The economic judgment of Europe and America concurs with substantial unanimity, both among practical bankers and theo- retical economists, in the proposition that the two metals make a better equipoise against commodities than one alone would. If we suppose at random two lines of variation in value relatively to commodities, one for silver and one for gold, and then run a line midway between the two, the last will be most nearly straight. Thus : * Prof. Soetbeer in 1878 stated the coin circulation at, gold, 1,500 million marks, and silver, 807 million marks. He both ignored the old silver not called in, and assumed that the ratio of the two coins circulating was correctly indicate i by the change in the coinage, whereas much of the new German gold coinage went immediately into France. 364 ECONOMIC PHILOSOPHY. So the line of fluctuation, in prices influenced by the joint action of both metals must be more uniform than one would be which was uifiuenced by either singly. Prices of commodities, however, are not influenced solely by their own volume, and those of gold and silver, but also by the volume of credit money which may be put forth, and by the ex- tent to which people may choose to give each other credit, and so substitute faith for value. Thus if A have a house, or mer- chandise, which he wishes to sell for $10,000 in order to meet a note, when, were it not for the note coming due, he would not sell for less than $12,000, no sooner does a friend offer to cash his note or advance the credit, than his merchandise or house advances from $10,000 to the $12,000 in price. So if silver bullion be sell- ing in London at 46d. per ounce, and a purchase of 1,000,000 ounces would shift the market to 47cZ. per ounce, as it probably would, then a loan of $1,000,000 to a person willing to invest in silver would enhance the price of the silver by two cents on the dollar. Thus the price of the precious metals themselves would be gauged, to a degree, by the condition of the credit market. It has been objected, by a few theoretical economists, that the so-called double standard is in their view only an alternative standard — mankind always in fact making an exclusive standard of the money metal which is, for the time being, the cheaper of the two, and virtually relegating the dearer to the rank of a commodity, not only as to its bullion, but its coined value. Upon this pomt, Baron Alphonse de Rothschild, testifying befoi'e the French mone- tary commission of 1869, said: " Whether gold or silver domi- nates for the time being, it is always true that the two metals concur together in forming the monetary circulation of the world, and it is the general mass of the two metals combined which serves as the measure of the value of things. In countries with the double standard, the principal circulation will always be es- tablished of that metal which is the most abundant." It is also faintly and undecidedly estimated, by Gen. F. A. Walker,* that the process of substitution of the cheaper for the dearer of two metals, in a nation which maintains the double standard, involves some degree of loss, or friction, to the latter nation. Let us see whether this is true. Suppose silver to have fallen in value five per cent, relatively to gold, and France to be the double standard country, while England and Portugal have the single gold stand- * " Money, Trade, and Industry," p. 178. — ■ 1 — ' L — —i — 1 T 1 7 1 1 7 1 8 7 i o 7 1 7 1 CO 7 to g 7 o 7 1^- 7 o 7 7 o 7 1 13 7 CO 7 CO 7 1 7 7 i o to 1 7 1 CO 7 38 7 in. 7 .-I W M IM C4 C4 Ratio in weijxLt of Silver production to Gold production— on a scale of one (perper- dicnlar) section to the total production of Gold. PRODUCTION OF GOLD AND SILVER. 365 ard. As bullion has but one market and one price for tlie whole world, the fall in silver bullion in London is the same as in Paris. There is, however, in London, silver bullion enough to coin 5,000,000 francs from, and it goes to Paris to be coined. Being coined, it is worth five per cent, more than uncoined, hence it can not be melted up or returned to England. It is an addition to the volume of French currency — not tempora- rily but jiermanently. It may be said it releases 5,000,000 francs of gold in France, which will therefore go to England; but wherefore will it ? Money does not flow to the points where there is least of it, but to those where there is most of it, i. e., where there is most use for it. The addition of the silver sup- posed, has a definite tendency toward a rise of prices in France. But wherever prices are rising, money has a new chance of profit. Gold may stay to get this profit. If it is at five per cent, premium in France and at no premium in England, who- ever changes the imported silver into the French gold pays the premium in France, and it stays there. France gets it. If, on taking the gold over to England, there is no premium on it there, then the premium is lost to the exporter. If the pre- mium there is the same as it is in France, he has made nothing. But if France steadily coins all silver that is presented into standard coin, which circulates in France on a level with gold, then silver bullion must inevitably advance to a level with gold bullion. Conceding that the double-standard country parts with a portion of her gold in the process, she makes two profits in doing so, viz., the iDi'emium on the gold she sells while silver is below par, and the rise, on the silver she buys, from its de- preciated price to par. An a priori probability exists, of the intrinsic profitableness of a country acting as a double standard country, and accepting a cheapened currency in exchange for the dearer one, since it always gets the premium on the dearer one, and the profit or rise to par on the cheaper one. There has, heretofore, been no other outcome to the double-standard process, when continued long .enough, than that the two money metals return to an equivalent value with each other at some ratio. This theory is confirmed by the fact that France, the most per- sistent of double-standard countries, has also been the country at all times most abundantly supplied with the coin of both metals. 148. Rate of Pioductiou of Gold and Silver.— The ac- companying chart, of the rate of production of gold bullion and silver bullion, shows that nature imposes no limit, and exacts no 366 ECONOMIC PHILOSOPHY. equality or ratio, in the production of the money metals, gold, however, having been, since 1850, the most unequal of the two. The far greater inequality, in the production of gold than of silver, appears in the fact that, in the twenty-five years from 1851 to 1875, the gold production of the world exceeded the total gold production of the world for the preceding 357 years, making the inequality one of fourteen-fold for ^ period of twenty-five years. On the other hand, the silver produced in the latter period was only one-fifth that produced in the former, while the time was one-fifteenth, being, therefore, only three-fold the pre- vious rate of production, an inequality only one-fifth as great as pertained to gold. Dr. Soetbeer's estimate on this point is as follows : 1493-1850, 1851-1875, Gold. 13,314,553,000 3,317,625,000 Silver. ^6,741,705,000 1,395,125,000 Upon this basis. Prof. Laughlin* presents the annexed dia- gram, illustrating the relative rate of production of the two metals by areas during these two periods. The diagram is in- genious. It seems, at first sight, to make out a case of equality in the production of gold, the nature of the equality being be- tween two periods, one of which is 14| times greater than the other. If the rate of production, per year, over the average of of the two periods, had been made the basis of comparison, gold would have shown a rate 14^ times greater in one period than in the other, and silver a rate 2| times greater. Prof. Laughlin, however, computes from Dr. Soetbeer's table of the production of the precious metals, the following figures, show- ing the comparative rate of production, by weight, of the two metals, viz. : Number of times Average yearly pro- Average yearly pro- the average yearly PEEIOD. duction of silver in duction of gold in production of silver kilogrammes. kilogrammes. was ereater than that of gold. 1493-1520 47,000 5,800 8.1 1521-1544 90,200 7,100 12.6 1545-1560 311,000 8,510 36.6 1561-1580 299,500 6,840 43.7 * " Bimetallism in U. S.," p. 110. IN DIFFERENT AUSTRALIA. 1852-1875. Isold, $i,263,87o,ooo SILVER, 117, 405 MILLIONS -225- -200- 150— -125- -lOO— -50 — l.soi- ISIO ISU- 1820 1S21- I.S.S1- 1S30 IS 10 IHU 1^-: ls.-,0 MEXICO. 1521-1875. GOLD, . .-$I8*,865,*00 SILVER. 3,429,243.000 CHART SHOWING THE PRODUCTION OF GOLD AND SILVER IN DIFFERENT COUNTRIES ACCORDING TO VALUE, 1493-ISSO. POTOSI AND BOLIVIA. 1-545-1875. GOLD, $205,065,000 SILVER, 1,697,292,000 Silver.. Oold.. UNITED STATES. 1821-1875. GOLD, $1,413,204,750 SILVER, 237,217,500 PERU. 1833-1075. GOLD. •114,076,12.1 SILVER, 1,404,990,000 AUSTRALIA. 1852-1079. GOLD, $1,263,070,000 SILVER USSIA. .5720.074. 302 AU«TR)*-M I4t3-1879. GOLD, t3t0.30l.0OO OOLO, $321 SILVER, 349 J z RATE OF PRODUCTION. 367 Number of times Average yearly pro- Average yearly pro- the average yearly PERIOD. duction of silver in duction of gold in production of silver kilogrammes. kilogrammes. was greater than that of gold. 1581-1600 418,900 7.380 56.8 1601-1620 422,900 8.520 49.6 1631-1640 393,600 8,300 47.4 1641-1660 366,300 8,770 41.7 1661-1680 337,000 9,260 36.4 1681-1700 341,900 10,765 -317 1701-1720 355,600 12,820 27.7 1721-1740 431,200 19,080 22.6 1741-1760 533,145 24.610 21.6 1761-1780 652,740 20,705 31.5 1781-1800 879,060 17,790 49.4 1801-1810 894,150 17,778 50.2 1811-1820 540,770 11,445 47-2 1821-1830 460,560 14,216 3-2.4 1831-1840 596,450 20,289 29.4 1841-1850 780,415 54,759 14.2 1851-1855 886,115 197,515 4.4 1856-1860 904,990 206,058 4.4 1861-1865 1,101,150 185,123 5.9 1866-1870 1,339.085 191,900 6.9 1871-1875 1,969,425 170,675 11.5 1876-18S0 2,500,575 172,325 14.5 To accompany this table, I have constructed a chart, which shows very clearly the ratio of production of the two metals (the unit of measurement being the total gold production, of each period, whatever its quantity might be, by weight or qiiantity and not by value) from the discovery of America to date. The accompanying charts show the production of gold and silver in different countries, according to value, and in all countries over the period of time from 1492 to 1880. (From Dr. Soetbeer's " Edel. Metal Production," 1879.) The very considerable difference in quantity between the aggre- gate of the gold and silver produced, and the portion used in the coinage, expresses the portion used in the arts and as jewelry, and lost by abrasion and wear. Standard gold coin in use loses about ^J-u part of its weight each year by abi-asion. We are now in possession of most of the facts essential to de- termine what is called the silver question of 1872, to the present date. The causes of the cheapness of silver for fifteen years past may be divided, as to their relative potency, about as follows : TENTHS. 1. Increased production of silver, from 1863-73, 1 2. Diminished production of gold, and rise in value of gold relative to commodities, 1 368 ECONOMIC PHILOSOPHY. 3. Cessation of the drain of silver to India, 3 4. Attempted change of Germany from silver mono-metal- lic standard to gold standard, 3 5. Declaration for limited coinage of silver by France and other European States, . . . ~. 1 6. Cessation of free coinage by U. S. in 1873, 1 Total, 10 Of these influences, the latter five-tenths are reversible. Mean- w^hile, the action of the United States, in refusing to discredit silver altogether, has done something to sustain its value. The disasti'ous consequences of diminishing the world's money one- half by discrediting silver altogether have been averted. Either Germany, the United States, or France, could probably have brought silver to par with gold by giving it free coinage at any time since 1878. Not having done so, silver will probably remain at a discount until one or more governments concur in giving it a freer coinage, or until an increase in the production of gold relatively to silver, or in the use of silver relatively to gold, either in coinage or in the arts, restores the parity. The relative rate of production of the two metals has no necessary or natural ratio. The rock on which Bimetallism, as a theory, rests, is that the perturbations in value of a currency depending on the pi-oduction of two metals will be less than in a currency depend- ing on the pi'oduction of either singly. The quicksand which has done most to undermine this rock has been the frequent and fallacious citation of what certain partially informed weather-prophets have supposed to be the operation of " Gresham's law." Sir Thomas Gi^esham stated very truly that if pai^t of the gold or silver coins of a given denomi- nation were adulterated, or made cheaper than the rest, by the extraction of part of their true metal, and the substitution of alloy therefor, the more alloyed coins would, if they succeeded in circulating at par, cause the melting or exportation of the pure. In this sense he taught that "bad money would expel good." But he never taught, as monometalists have so persistently urged, that if the entire bulk of pure bullion of the one metal, whether silver or gold, should fall in value relatively to the other, such a fact would tend to the exportation of the metal of higher bullion value.* As there would be no other country in * Jevons, in " Money and the Mechanism of Exchange," on p. 72, says : " Gresham's remarks concerning the inability of good money to drive out bad ocly referred to moneys of one kind of metal." CREDIT. 369 which the fall would not be the same as in this, obviously, the coin of dearer metal would have no motive to flee to another market, since it could not gain in value by doing so. Yet on this basis, the years since 1878 have lowered with predictions that if if the United States continued to coin silver it would lose its gold. In fact, its stock of gold never increased 'so rapidly as during the next seven years. The factor wliich is more potential, in controlling prices of all commodities, than the supply of either gold or silver is credit. Credit does not have to be mined, assayed, coined, or weighed. In health, no economic factor is more useful. But in its epidemic fevers it becomes a fierce intoxicant. It then becomes a form of social insanity which may bear all before it. At the head of these epidemics of credit stand the Mississippi scheme of 1717 to 1720,* the assignats of the French National Assembly in 1790, f and the silkworm speculations of 1829-30. J * John Law incorporated his Company of the West in 1717, with a capital of 200,000 shares of "SOO livres each, with power to trade in Louisiana. It then comprised the present territory of the United States from the Gulf eastward to Florida and the Atlan- tic States, northward to the Hudson's Bay Company's grant, and west to the Pacific. It was to have exclusive power to trade, farm the taxes, and coin money, and was to be to two-thirds of the present territory of the United States what the British East India Company was to India. To this, in 1719, it added all the privileges of the French East India Company, with the monopoly of trading in the East Indies, China, and South Seas. Not only the street in which Law lived, but all Paris, was blocked by the hun- dreds of thousands anxious to get stock in the new concern. Law had been made Director-General of the Finances of France, 'The " Company of the Indies " merged with the National Bank, and 300,000 persons applied for its shares. Law promised an annual dividend of 200 livres per share, and received in payment the depreciated billets clebat (state notes), which made the promised dividend virtually 120 per cent. Early in 1720, holders began to convert their shares into gold and secrete the gold. Severe laws were passed against hoarding gold. But in July, 1720, the Bank stopped, the scheme collapsed, and Law fled from France. tThe asdgnats purported to assign to the holder national domain to the value of a certain sum. The land supposed to be assigned were the confiscated estates of the Church, and of the wealthy emigrants who fled to escape the terrors of revolution. The assignats, after falling (in 1796) to l-30th their par value, were redeemed at that rate in mai\dats, which gave the holder the right to take possession of lands at an estimated value, without a sale. These in turn fell to l-70th their value, in which stage they were gradually re-absorbed by the government in taxes or converted into rentes. t See " Silk," in ch. 16, jaost. CHAPTER X.. CRISES. 149. Crises Definecl. — A crisis, panic, or revulsion is a with- drawal of confidence, and a reig-n of distrust, during which busi- ness is brought to a standstill, or to a chaos, by the voluntary re- fusal of those who are dealing in money or goods, to let them go on the ordinary terms. It viay be a refusal of the holders of gold or goods to accept bank-notes in payment, whereupon the holders of the notes pi'esent them for redemption in quantities larger than the banks can redeem. This is a run of notes for re- demption. It arises from a belief in the public mind that more notes have been issued than the banks can redeem. It was one feature of the crisis of 1837, in the United States, when the volume of notes was thirty-nine times in excess of the quantity of specie held for redemption. It had no part in the crises of 1797, 1807-9, 1816 to 19, 1825, 1847, nor 1867 in England, nor in that of 1857 in the United States. It may be a refusal of depositors to allow their deposits to re- main in the custody of the banks, which were previously deemed secure. In such cases they withdraw, either to hoard privately, or to place them in some other bank. Private hoarding is very cum- bersome, as a man would need a cart to carry away a very mod- erate sum. Removal to another bank immediately becomes a void act, if all the banks stand together. A run for deposits as- sumes that the bank loans have been unwisely made. But it would be necessary that it should not have loaned its money at all, if it is to pay all its deposits without breaking. A bank should be ready to redeem its notes, but solvency does not imply that it can stand a run for all its deposits, without selling out or collect- ing the securities on which the deposits have been loaned. But to be forced to do this instantly is liquidation, not banking. The crisis of 1857 in the United States was a run for deposits, and was met by all the banks shutting down together. The crisis of 1868 in England was a run on three or four leading banks, and the crisis or " obstruction " consisted in the fact that only the Bank of Eng- PRICES AND PANICS. 3 VI land could issue the additional quantity of bank-notes needed, and it refused to ask permission to do so, on the ground that it did not need them itself. More than one of the twenty leading banks could have drawn a check on the Bank of England, which would have closed its doors, or compelled it to ask permission to issue bank-notes on a deposit of secui'ities, which was all that was required to relieve the other banks. Failiiig to do so, the business and deposits of the banks which could not obtain the notes, were frightened into the Bank of England, generosity being thus rewarded with bank- ruptcy and churlishness by profit. The bank gained one-half in its deposits, and made the largest profit ever made by it in one year. Tliere has been no general run on deposits in the United States since 1857. All the above-mentioned are bank crises, monetary crises, or "money panics." These are a loss of faith by merchants in their banks. Where banks lose faith in merchants, by refusing to discount notes and bills, it is a commercial crisis. Tliis usually winds up a period of several years of ascending prices and quick- ened speculation, which, if they apply equally to all forms of property, are the exterior signs of a decline in the purchasing power of money, and will generally be traceable to an increase in the volume of money itself, or of some one or other of its many credit substitutes. In the crisis of 1825-6 in England, prices of all commodities rose from 70 to 100 per cent, within one year, and fell to their former level in the next, besides the whole people engaging in wild investments in South America mines. Insurance bubbles, Mexican projects, Darien Canal companies, etc. Shares would no sooner be i3ut out than they would be eagerly bought up at par and sent whirling up by competing bidders, as if their profits were certain, instead of impossible. A rise in prices pi^ecedes nearly all panics, whether commercial, banking, or financial. Hence it sometimes becomes a question whether the rise in prices has caused the inflation of paper money and credit, or whether the inflation of paper money has caused the rise in prices. In the crisis of 1825-6 ni England, three causes concurred to produce the inflation which began in 1821-2, and cul- minated in four years. These were : 1. The resumption of specie payment in 1820-1, after the business of the country had been run)iing on paper only for nearly thirty years, had the effect to add to the effective currency the whole quantity of gold and siver coin which, during suspension, was 372 ECONOMIC PHILOSOPHY. totally out of circulation, concealed, and selling as a commodity at a premium — and therefore exercising very little influence over prices. This great addition of coin to the circulation followed suddenly, at the close of a period which had necessarily been marked by the issue of paper enough to take the place of tlie coin hoarded during the war. The paper issues themselves, together with the scarcity and high profit of the war period, had main- tained a high rate of prices during the period, until the collapse in prices which came with the peace. Low prices, on all home products, concurred with a large increase in the volume of effec- tive money, to stimulate investment in foreign loans. Owing to the increase in the volume of money, something had got to go up in pidce. Domestic products, and means of subsistence, could not go up, because known to be so abundant. But the distant, the novel, and the unknown can always be made the theme of exaggeration. 2. In 1820 to 1822, the government reduced the rate of interest on consols, and in so doing caused many holders to desire new invest- ments of like kind, in appearance, i. e., of loans. This caused a readiness to invest in that peculiar class of South America loans, and mines, and joint stock companies, wdaich marked the crisis of 1825. A vivid picture of the result is given by Miss Martineau * The failure of returns from the foreign investments came first. Then a contraction of its accommodations by the bank of England. Then failure, in December, 1825, of about sixty country banks, besides several leading banks of London. Then long lists of factories closed, riots by discharged weavers, who in one day destroyed every power-loom in Blackbourn or within six miles of it. At Carlisle the weavers demanded free corn, and at Trow- bridge people insisted that the gardeners and green-grocers were cornering the potatoes. In Dublin the starving silk-Aveavers de- manded that the subscriptions raised for them be applied to clear off the manufacturers' stocks, thus creating a demand so that they might go to work again, f Economists have not usually applied Gregory King's law of the effect of scarcity and excess of supjily of commodities, to money, itself the standard of prices. Evidently, however, as in the case of wheat so in the case of money, a scarcity, or superabundance, would tend to produce a rise, or fall, of prices, in a ratio much * " History of the Peace, " vol i. p. 354- i- Martineau's "History of tlie Peace," vol. i. p. 367. FALLACIOUS PREDICTIONS. 373 greater than the actual scarcity or superabundance. Panics break out in an unexpected manner, without definite prognostication on the part of tliose supposed to be experts, and run in a rattling thunder of successive failures and downfalls, concerning which many will afterwards say significantly " I knew it," but of which no anterior warning could by the most inquisitive process have been obtained. The financial experts frequently predict crises, and crises frequently occur, but by some singular maladjustment of the prophetic power, or some obstinacy in finance, the crises which are predicted never occur, and those which occur ai'e sel- dom predicted. Thus Cernuschi came from France, in 1878, to assure Congress that, if it should adopt the act for the limited coin- age of silver, its action would immediately result in a monetary crisis, and a drain of gold. The act was adopted, and under its operation the quantity of gold in the country accumulated more rapidly than ever before, and about twice as rapidly as the silver. Yet, occasionally, monetary crises are foretold with a degree of accui'acy, through some correct estimate, based upon a sound principle. Thus it appears from Adam Smith's allusion to Mr. Meggins,* that that nearly unknown economist, reasoning that the annual production of silver was twenty times greater than that of gold, but that the drain of silver for India left its supply for Europe only from fifteen to sixteen times greater, inferred that it was the drain of silver to India that maintained the ratio of values between the two metals in Europe at one to fifteen and a half or sixteen ; hence, that if the drain should cease the ratio would fall to that of one to twenty, or one to twenty-two — ^the ratio of their production. Both. Smith and McCulloch combated Meggins' prediction satisfactorily to them- selves, but in 1871 the drain from India ceased, and forthwith the value of silver fell exactly as Meggins more than a century previously had predicted , thus producing, at least in jjart, that monetary crisis in the precious metals which has now prevailed thi'oughout the world for sixteen years. The pretended ability to predict financial crises is often resorted to in practical politics as a means to the accomplishment of immediate results, or to carry an election. Thus in 1872 the chief and most effective cry i-aised to defeat Mr. Greeley, as a candidate for the Presidency, was that his pressure for an early resumiition of specie payments would bring on a financial crisis. General Grant was elected, * " Wealth of Nations," by McCulloch, p. 97. 374 ECONOMIC PHILOSOPHY. and without any such pressure the financial crisis came in 1873, and lasted during- his entire term. In England there were financial or commercial crises of a marked character in 1793 to 1796, 1817 to '19, in 1821 to '26,* in 1836-7, in 1846-7, in 1857, and in 1867. In 1877 there was a wide- spread derangement of industry, but it did not reach the banks. In the United States there were simultaneous and sympathetic crises in the same years, except in 1827, 1847, and 1866. It is a cur- rent saying among experienced merchants, therefore, that in America a crisis is due every twenty years, and in England every ten years. The truth of this saying has been subjected to a recent crucial test by the fact that according to both maxims a crisis was due in both countries during the year just past. In the United States its recurrence at the accustomed period seemed the more probable from the fact that a long-continued process of extinguishment of national debt, which, as we have seen in a pre- vious chapter, is a form of international credit currency, closely affiliated in its effects to paper money, was terminating in an impending extinguishment of the national bank currency through the calling in by the government of the bonds on which the notes of the banks rested, and the enforced retirement of the notes by the banks in consequence. Nevertheless, no crisis came. 150. Crises Produced by Excessive Importation of Coinpetiiig Products. — The incidents of commercial crises are so much alike, and are told by all writers in so nearly the same terms, that the following desci-iption by McCullochf of the crisis of 1847 in England, which followed the repeal of the duties on the importation of corn in 1846, and the general bankruptcy of the farming interest resulting therefrom, may be taken as a sample and example of all crises. The act of 1844 had provided that no new joint-stock banks should be created, that the banks then ex- isting should be limited to the amount of notes they had issued during the twelve months preceding the passage of that act, and that the Bank of England should issue no new notes except on the deposit of a gold sovereign for every pound note issued. This restiiction was suspended to enable the Bank of England to sup- ply, by paper, the money that could not be obtained in coin. It will be seen, in McCulloch's statement, that the "unprecedented im- * A detailed account of the exterior incidents of the commercial crisis of 1824-6 may be found in Miss Martineau's "History of the Peace." The economic incidents of the periods 1819 lo 1837 are analyzed in " Carey's Harmony of Interests." t Note IX., on Money, to " Smith's Wealth of Nations," by McCuUoch, sect. v. p. 507. A DRAIN OF GOLD. 375 portation of foreign food " is the cause of that drain of gold which brings in the crisis. He says: "The crisis of 1847 was a conse- quence, partly of the railway mania of the previous year, and part- ly of the failure of the potato crops of 1845 and 3846. The failure in the latter year deprived fully two-thirds of the people of Ireland, and a considerable portion, also, of those of Great Britain, of their accustomed, supplies of food. In consequence of this de- ficiency, and of government having come forward to provide the means for its relief, there was an unprecedented importation of all sorts of corn; and the demand for bullion for exportation to meet this importation, occurring simultaneously with a vast rail- way expenditure, pecuniary accommodations were obtained with the greatest difficulty, and the rate of interest rose to an extraor- dinary height. Instead, however, of being increased by the Act of 1844, it is abundantly certain that the operation of the latter contributed to alleviate the severity of the crisis. The restraints it imposed on the issues of the country banks had hindered them from embarking to any great extent in railway adventures, so that they were better able to assist their customers ; and it also pre- vented the Bank of England from attempting to meet the exigen- cies of the case, otherwise than by raising the rate of interest, and restricting her issues. And besides being the natural and proper, these were, in fact, the only means by which the value of bullion could be raised in this country, its demand for foreign remittance checked, and the exchange turned in our favor. A great many mercantile houses that had been trading upon very insufficient capitals, or which had previously been virtually in- solvent, were, of course, swept off during the crisis ; and the alarm that was thereby occasioned, though for the most part without any good foundation, gave rise to a species of panic. During the prevalence of the latter, government consented (25th October, 1847) to a temporary suspension of the Act of 1844. But there is, we believe, little doubt that this was an unwise proceed- ing. When it took place the violence of the crisis had abated. The drain for gold for exportation had not only ceased, but it had begun to set in our favor ; and the probability is that in a few days all alarm would have passed off, without the dangerous pre- cedent which was set by the interference of ministers." The repeal of the corn laws had not made corn cheaper to the people of England in any material degree, if at all. It had changed the source of supply from Ireland, Scotland, and Eng- land to foreign countries. The ' ' Encyclopedia Britannica " says, 376 ECONOMIC PHIL SO PHY. "The production of wheat in Scotland and Ireland fell ofT one- half," and "in the seven years ending Christmas, 1846, the prices of wheat and its substitutes per bushel had been : Wheat, 7s. id. ; barley, 4s. ; oats, 2s. 8id. ; total, 13s. 9d. ; while the prices for the seven years endijig- 1875 were: Wheat, 6s. 6id. ; barley, 4s. lOd. ; oats, 3s. 2id. ; total, 14s. 71d." The free importation of foreign corn did not permanently reduce the price of corn, but substituted the foreign for the domestic supply. The domestic production declined one-half, in Ii'eland and Scotland, to make room for the increased importation of foreign food. The drain of gold required to pay for this increased importation caused the financial and commercial crisis of 1847 in England, at a time when there was no financial crisis in any other country. Hence has resulted two syllogisms, which are alike as to their major and minor premise, but differ only as to the conclusion. They may be called the corn law syllogisms, and run thus : Major Premise. — The free importation from abroad, of products which a country has the natural facilities for producing, or has produced or can conveniently produce, does not cheapen per- manently or substantially the supply of the product, but displaces the domestic by the foreign product, thus tending toward a dis- ruption of domestic industries, a drain of gold, a run on the banks, and a financial crisis. Minor Premise. — ^Eugland attempted, in 1846, to get cheap bread- stuffs by withdrawing protective duties from her farmers and accepting free importation from abroad, and in so doing she got no cheaper breadstuffs and no more of them, but caused a cessa- tion in her domestic production, exactly equal to her importation, thus resulting in a disruption of her industries, a drain of gold, a run on the banks, and a commercial crisis. Conclusion, among distant economists, that the repeal of the corn laws caused the crisis of 1847. Conclusion., among English economists, that the crisis of 1847 was due to causes unknown. 151. Competing Imports Again the Cause. — In treating the crisis of 1857 in England, the same English economist, Mr. McCulloch, fully agrees with our American economists, and with the American people generally, in holding that it was caused in England as a reflex effect of general bankruptcy in the United States, and that it was caused in the United States by buying of England goods which competed with and disj)laced our own pro- ducts, and which we had no means to pay for, and ought not to ' ' VERTBADING. " 311 have bought. The deftness with which Mr. McCuUoch admits all the facts, while endeavoring to conceal their economic inference, leads us to quote also his statement of the crisis of 1857. He says : * "The circumstances that led to the suspension of the Act of 1844, in 1857, were somewhat similar. The real value of our exports to the United States in 1856 amounted to 21,476,000Z., and, in addition to this immense sum, a large additional amount was due to this country, on account of dividends on state, rail- way, canal, and other stocks, etc. Unluckily, however, all, or nearly all, the American banks stopjjed payments in 1856 and 1857 : and the losses that were thus occasioned, coupled with the consequent reduction and cessation of remittances, produced much distress among great numbers of the merchants and others engaged in the American trade. And it was among them, or those immediately connected with that trade, that the greatest overtrading and abuse of credit had taken place. Some firms in Glasgow, which had been notoriously overtrading for a number of years, were the first to give way ; and, their failure being on a very large scale, the banks by which they had been principally supported became the objects of suspicion, and from suspicion to distrust there is but a step. Notwithstanding the numbers and wealth of the shareholders responsible for the banks in question, they were subjected to a run on the part of the inferior class of note-holders and depositors, and, their resources being either anticipated or locked up, they were obliged to suspend paj^ments. And had they only failed none could have regretted the result. On the contrary, it would have been nothing more than they deserved, for they had for a lengthened period grossly abused the ample resources at their command, and resorted to the most ques- tionable means to bolster up the speculators with whom they had become identified ; but the mischief is that the disastrous effects of such proceedings can not be confined to the guilty parties. A fire originating in a pig-sty may destroy a palace. The suspension of the offending banks, by generating uneasy feelings and sus- picions in the public mind, led to a run on some of the other banks. And to provide for their own safety, these establishments immediately began to sell securities and to adopt other means by which to obtain supplies of gold. Large amounts of it were in consequence carried to Scotland. And, in addition to the demand for gold, the demand for discounts, notwithstanding the high i-ate ♦ " Wealth of Nations," etc., p. 507. 378 ECONOMIG PHILOSOPHY. of ten per cent, charged by the bank, continued undiminished, so that the reserve in her possession was reduced on the 11th of November to 1,462, 153Z.; and it was the general belief that this inadequate reserve would be forthwith either much reduced or wholly swallowed up. To avert the possibility of such an event occurring, the directors were authorized, on the 12th of November, to issue notes without being bound by the conditions of the Act of 1844. This, though a brief, is a sufficiently accurate account of the leading circumstances that occasioned the suspension of the Act in 1857." Victories and reverses attend all forms of warfare. The com- petitions among the producers of populous nations, in the produc- tion of the same products, are a state of economic war, and are attended by some of the wastes of war. These are shown to be a leading factor in causing commercial crises. 152. Exhaustion of Capital. — Crises are also, by some, attributed to the exhaustion of capital in great public improve- ments, and in great wars, or in mines, ships, factories, or other forms of reproductive wealth, that do not at first produce a profitable return. Prof. Bonamy Price has pressed this theory strenuously. He says : ' ' The causes which make the receipts of bankers dwindle away are in the main two — first, a diminution of the sale of goods, such as occurs when trade is bad, and stocks of merchandise accumulate for want of purchasers, or when the harvest is deficient, or when cotton is scarce and dear, and the consumers of cotton goods reduce their consumption ; and, secondly, a diminution of profits, leaving small margin for savings, and reducing the quantity of uninvested savings, which form a large portion of the means at the disposal of bankers. These two causes may be summed up in. one — loss of wealth, whether positively, by its actual destruction, or negatively, by a failure in its ordinary rate of accumulation. Here I must point out a mode of impoverishing a nation for a time, which is little heeded in the city, though it tells most powerfully on the resources of bankers. Most persons are satisfied if an undertaking is sound in character — if it is no bubble, but a solid investment. They make no further inquiry ; they press it forward, and preach to bankers that they are safe, and even patriotic, in promoting such enterprises. Such are works of drainage, railways, docks, canals, and the like. No doubt they are all highly promotive of wealth. The growth of a nation in well-being and greatness largely turns on the prosecution of such works. But no one stops to reflect PRICE ON CRISES. 379 that such operations destroy wealth and diminish resources, until they are capable of yielding- profitable returns. Nothing enriches a country like a well-planned railway ; yet railways are nothing but a gigantic destruction pi wealth till they are at work. They employ an enormous mass of labor; they use up huge quantities of iron and other materials which have been produced by the consumption of wealth. Hosts of laborers have been fed and clothed during their construction; tools have been worn out; materials have been used up. And what has been the result ? A change in the surface of the land. No one doubts that, if the laborers employed in making the railway had been set to dig holes in the ground and fill them up again, a flood of poverty would have overspread the country. The food of the laborers would have been lost and not replaced. In what respect, for the time, do the embankments and tunnels of a railway differ from such holes ? In the future they may and will generate vast wealth — for the present, they are a pure and uncompensated loss of the public wealth. Nations ought to make railways ; they will be far richer by making railways ; and bankers, in days to come, will have much more to lend to borrowers. But, if nations are not to feel impoverishment during their construction, they must be made out of savings, that is, out of the food, clothing, and materials produced in the country in excess of the quantity consumed. ' ' New enterprises there ought to be and will be in a growing na- tion ; but they should be limited by its means, that is, by its sav- ings. It is a most momentous question to determine what these savings are, as a matter of fact, and unfortunately it is a most difficult one. It is always very hard to say how much drainage, how many railways and openings of mines and new factories England can afford to make, and an estimate of its amount is necessarily vague. Still, the signs of excess become sufficiently prominent to enable a watchful eye to detect them." Reduced to a nut-shell. Prof. Price's theory would be that a sufficient lapse of time between the investment of circulating cap- ital (money) in the creation of fixed capital (reproductive wealth) and the reaping therefrom of a satisfactory income, might bring on a financial, monetary, or commercial crisis. This remains a mere priori .speculation, however, iintil it shall be con- nected with such facts, in a specific instance, as satisfy the mind that a crisis was produced by lapse of time between investment and the returns from reproductive capital. 380 ECONOMIC PHILOSOPHY. 153. Great Wars Seldom if Ever Produce but Often Avert or Remedy Crises. — Great wars are sometimes assumed to be fitting causes to which to attribute commercial crises. They involve, however, a double action. They exhaust resources, but if these resources happen to be a glut of unsalable products, this exhaustion by removing the glut sets the wheels in motion, hav- ing the effect of a wider market or an increased consumption. They call for large expenditures of money, but they frequently manufacture most of the money they call for, and by adding to the volume of paper money they raise prices and induce that feel- ing of profit and success in all occupations which stimulates effort. They also, by endangering the accumulations of the rich, render them generous in giving part to save the whole. They stimulate the feeling of mutual dependence and reciprocal sacri- fice in both poor and rich, terminating for the time the parsimony of the latter and the discontent of the former, and welding society into a more highly organized unity. All these influences increase the activity of the societary movement and the rate of production. Hence many nations have made their most rapid advancement, and the rise from poverty to wealth has been most easy, during or immediately after great wars. In the Northern States, during their war with the Confederacy, the bounties offei'ed by Federal, State and municipal authorities on enlistment rose to from $1, 000 to $1, 500 per man, thus making manhood more valuable relatively to capital. Long periods of peace, however, tighten the ascendency of capital over labor, and it is doubtful if they do not increase the timidity of capital in embarking in new enterprises. The period from 1805 to 1816, botli in the United States and England, was a period, the first part of which represented partial or total embar- goes on foreign trade, and the last years of which were war. Yet these were years of great prosperity to the common people, while the ten years of peace and free intercourse, immediately following, were years of destitution in both countries. Wheat in the United States for the five years, 1810 to 1815, held an average price in the United States of $11.60 per barrel, while in the ten years after the war it was from $4 to $1.25 per barrel, or twenty cents per bushel. At Pittsburg a ton of bar iron cost eighty barrels of flour. The cotton manufacture had increased ninety-fold under non- intercourse. Instead of absorbing 1,000 bales it absorbed 90,000. The intimate relation between the high prices for products, that are incident to periods of war, and the prosperity of the working and business classes, may be seen by noting the rise in the prices -IfiA 150 140 130 120 110 100 90? 80 70 : 1 1 , 1 i •• O tn. o •* 00 00 QO 00 00 } -> ^ 1 - p ;/./. 6 ) PEACE AND DISTRESS. 381 of different commodities shown by the accompanying chart pre- pai'ed by Prof. Jevons for England, with modifications by Prof. Laughlin. It applies equally to the United States as to the first war period, and far better as to the period from 1860 to 1866, since as to the latter the chart expresses a rise in England which was only sympathetic with the far greater rise in the United States. In tlie United States, in 1816, the vast importations caused by the sudden removal of the discriminating duties which had pi'evailed since 1790, caused an immense cessation in domestic production. Young as our industries, and sparse as our population, then were, 70,000 operatives were discharged in a single year, and driven into idleness or agriculture. Although in theory the world was open to our products, Avhile during the war it had been closed against them by the Berlin and Milan decrees and the English and French navies, yet in fact the breaking down of our manufactures so impaired the prices of agricultural products that crops would hardly pay for mai'keting, and the cost of producing them was a net loss. The return of peace caused so great a prostration of manufac- tures and agriculture, partly because the commercial treaty of 1816, though designed to be protective, provided no adequate pro- tection to the industries that had been called into existence by the war. Our imports rose from about $20,000,000 in 1814 to about $150,000,000 in 1815. American workmen had the benefit of cheaiJ markets for a few months, and, in return, were turned out of employment for many months. Instead of buying the farmers' crops, they went to raising them as long as there was a hope of a market, and, when that stopped agricultural industry was as pi'ostrate as manufactures. England could sell us our hardware, clothing, tools, furniture, and many of our groceries; but she could not buy our hay, j)otatoes, oats, very little of our corn, and none if European crops were abundant, nor any of our timber, butter, eggs, cheese, milk, or lard, veiy little of our meats ; and she could not hu'e our workmen, or employ our labor, or use our idle factories, furnaces, mines, or machinery. In 1818-19 there came ujDon the country the severest commercial crisis it had ever known — the result of three years of that kind of diminution of domestic production which results fi-om freer importation of foreign competing goods. In review of this period, 1819 to 1824, Andrew Jackson, thesi a candidate for the Presidency, wrote to Dr. Coleman these words : " I will ask what is the real situation of the agriculturist? 382 ECONOMIC PHILOSOPHY. Where has the American farmer a market for his surplus pro- duct ? Except for cotton, he has neither a foreign nor home market. Does not this clearly prove, where there is no market either at home or abroad, that there is too much labor employed in agriculture, and that the channels for labor should be multiplied ? Common sense points out the remedy. Draw from agriculture the superabundant labor. Employ it in mechanism and manu- factures, thereby creating a home market for your bread-stuffs, and distributing labor to the most profitable account, and benefits will ensue to the country. Take from agriculture in the United States six hundred thousand men, women, and children, and you will at once give a home market for more bread-stuffs than all Europe now furnish us a mai'ket for. In short, we have been too long subject to the policy of British merchants. It is time that we shall become a little more Americanized, and, instead of feeding the paupers and laborers of Europe, feed our own ; or else, in a short time, by continuing our present policy, we shall be paupers ourselves." 154. The American Crisis of 1837.— The crisis of 1837 is generally known as a bank or monetaiy crisis, due immediately to excessive inflation of prices, by large issues of paper money by banks. It manifested itself in a general suspension, by banks, of specie redemption on their notes, and inability to pay deposits in accept- able bills. Among merchants, farmers, and business ixien of every class, there was no money of any value, and trade returned largely to trust, barter, or no trade at all. This inflation in paper money, however, was itself an effect of anterior causes, and rightly to apprehend these it is necessary to begin with the year 1824. In 1824, after ten years of peace, stagnation in trade, and agita- tion of the question of protection to American industries, a pro- tective tariff was enacted, and in 1828 its rates were increased.* * The changes made in the tariff as indicated below are a fair exhibit of the multi- plicity of objects on which a protective tariil must rest, in order to do justice to all and be invidious towards none in a country which possesses all the natural facilities for producing nearly every thing, and where the object of the duty is to cause the artificial facilities, capital, machinery, etc., to be applied. Adzes and axes, free from 1816 to 1828, were subjected to an import duty of 35 per cent. Ale, porter, and beer payiug, 15 cents per gallon from 1816, were put up to 20 cents. Anvils, free from 1816, paid 2 cents per pound from 1824. Arms, paying 20 per cent, in 1816, paid 30 per cent, from 1834. Bacon and hams, at first free, paid 3 cents per pound. Beef, at first free, ])aid 2 cents per pound. THE TARIFF OF '28. 383 The effects of the tai'iff of 1824-28 were to stop, and reverse, the expoi't of gold and silver, with which we had previously been paying for our excess of imported mei'chandise over exported products. Having bought more than we could pay for, with our products, we were in the position of a farmer who is compelled to part with his implements, in lieu of his products, in order to pay his debts. The fact that gold and silver were then, in some small degree, a product of our mining, did not lessen their far greater importance as the implement of our domestic commerce. From 1821 to 1825, according to H. C. Carey,* the excess of exports over imports of specie wei^e $12,500,000 per year, besides which we were using up in the arts as much more of gold and Blacksmiths' hammers and sledges, free from 1816, were made to pay 2}^ cents per pound from 1824. Blankets of wool, free from 1816, were placed in 1824 under a duty of 25 per cent ., which was increased in 1828 to 35 per cent. Bonnets of silk remained at 30 per cent, as in 1816, but those of straw, palm leaf, leg- horn, and chip were raised in 1824 to 50 per cent. Books, for schools, colleges, and the Congress library were left free, but those in Latin and Greek were in 1824 put up to 15 cents per pound, and all others to 26 cents bound and 30 cents per pound unbound. Boots and shoes, both men's and women's, remained as in 1816, under a duty of $1.50 per pair. Brass and its manufactures were raised from a duty of 20 per cent, to one of 25 per cent. Butter, in 1816 free, paid from 1824 5 cents per pound. Carpets, in 1816 free, passed under a duty in 1824 of from 20 to 50 cents per square yard, which was increased in 1838 to from 30 cents to 70 cents per square yard. Car- riages continued at 30 per cent., cheese at 9 cents per pound, china-ware at 20j)er cent., and cinnamon and cloves at 25 cents per pound, cocoa at 2 cents, and coffee at 5 cents per pound. Eaw cotton remained at 3 cents per pound, while cotton bagging, which had been free in 1816, was put under a duty of 3% cents, in 1824 increased to 4i^, and 5 cents in 1828. Cutlery had been from 1816 under a duty of 20 per cent, to 25 per cent., and on cutting knives 30 per cent., which was increased in 1828 to 40 per cent. Drugs for dyeing were advanced from a duty of 7J/^ to one of 12i^ per cent. Russia duck. Ravens, and Holland were advanced from a duty of $1 .25 to $2.50 a piece to one of 9 cents per square yard. Flannels, free in 1816, were raised to 30 per cent. Raw flax in 1828 was dutied $35 to $60 per ton. Duties on glass were raised according to quality. Raw hemp was put up from $1..50 per cwt. to $45 and $60 per ton. Hosiery in 1828 ■was made to pay 35 per cent. Iron was scheduled in twenty-three forms, of which bar iron, which had paid $1 .50 per cwt. from 1816, was raised in 1828 to $.37 per ton. Laces and jewelry were put up from a duty of 7)^ per cent, to one of 12}^ per cent. Pig lead was put up from 1 cent per pound to 3 cents. Paper was taken from a 30 per cent, ad valcyrem duty and placed under a series of specific duties ranging at from 3 cents to 20 cents per pound. Brown and white sheetings remained unchanged at $1.60 per piece for brown and $2..50 for white. In all, 821 articles were classified as paying duty. * " Social Science," condensed by McKean, pp. 292-5. 884 ECONOMIC FHILOSOPEY. silver coined or uncoined, being a total subtraction from circula- tion of the chief instrument of commerce of $35,000,000 a year. Nor was there any production of precious metals, in the United States, prior to 1850, or coinage at the mint, adequate to supply this drain. Frem 1790 to 1852, the mint only coined $3,506,890 in silver dollars in all the seventy-two years, and only about twice that sum in quarter-eagles. From 1811 to 1834 we coined no gold, and from 1833 to 1834 no standard coins of silver. Being virtually dependent on imported Spanish and Mexican coins for our specie money, a drain of specie such as that which ensued from 1817 to 1834 left us without trustworthy money, and dependent wholly on the paper issues of the banks. By the tariff of 1824 the drain of gold was so far reversed that the following four years witnessed the small total, net excess of import over export, of $4,000,000. The ensuing years from 1830 to 1834 show an active growth of manufactures, an excess of import over export of the precious metals of $4,000,000 a year, an extinguishment of the national debt, and an agitation of the question of dividing the surplus moneys in the Ti^easury of the United States among the States, which did not, however, become a law until 1836, when the epoch of general bankruptcy was ap- proaching. By 1833-3, however, a tide of agitation against the tariff of 1838 rose, in South Carolina, into threats of secession. Mr. Clay proposed, and President Jackson sanctioned, as a compromise, a sliding.scale of reduction, which went into effect March 3, 1833. The effect was greatly to increase the importations of competing goods in many lines, which, under the protection of 1838-30, the country had begun to produce with energy. The period of 1888 to 1830 had been marked by the introduction in the legislatures of Virginia and Kentucky, for the fii-st and last time, of a propo- sal to emancipate the African slaves, whose average value was then about $350 per head. The belief was then gaining ground that emancipation would gradually reach t-he South, in the same easy manner as it had triumphed in the Northern States. The same expansion of the cotton crop, in the Southei'n States, which incited South Carolina to oppose protection to the cotton manu- facture in the United States, also caused a rapid rise in the price of slaves to $1,000 and $3,000. This put a quietus on all projects looking toward emancipation. Meanwhile, imports of merchan- dise, which had been $67,000,000 in 1829, and $02,000,000 in 1830, rose to 101 millions in 1833, 108 millions in 1834, 101 millions in THE CRISIS OW 1857. 385 1835, aud 106 millions in 1836, resulting in an excess of imports over exports of $112,000,000 in the three years 1835, 1836, aud 1837. These large importations of foreign goods, sent to our auction rooms by importers and traders, Avere sold at low rates, if for cash, and on long credits, if for time. The notes given for them swelled the volume of commei^cial paper seeking discount, and the large "shave," or rates of discount paid, increased the profits of banking, and the temptation to found new banks for the issue of paper money on very flimsy securities. With the proceeds of these notes, new goods were bought abroad, and, with the infla- tion in the volume of paper money, prices of lands, as well as of goods, rose on every hand. Hence most, if not all, the causes operating to produce the crisis of 1837 begin their operation with the repeal in 1833 of the pi'otective system of 1828, and the de- struction of domestic industries by the large influx of competing goods. To these are to be added the feverish nature of the pros- perity imparted to the South by the rapid ex^jansion in its cotton , sugar, and tobacco industries, under the stimulus of cheap Afri- can labor, and the great expectations felt in the North, under the stimulus imparted by the discovery that steam transportation was about to make the vast and fertile territory, to the north and west of the Ohio, easily accessible to the mai'kets of Europe. 155. Crisis of 1857. — Commercial crises have in some in- stances been immediately preceded, and possibly in part produced or heightened, by the increase in the volume of the precious metals, through them of credits, and finally of importations. The crisis of 1857 in the United States followed upon an expan- sion of credits, which reached its climax in the years 1851 and 1852, and which by the winter of 1853 had collapsed into a period of commercial stagnation known as the " hard times " of 1853-4, which continued growing more severe, until the bank crisis of 1857. Industries generally met with no relief until the revival of business in 1862 and 1863. This entire period seemed to have for its two exciting causes the heavy importations of competing English goods induced by the low duties adopted in 1846, and the vast expansion of credits incident to the additions made by the gold mines of California and Australia to the world's supply of specie. The total gold coinage of tlie United States from 1792 to 1849 had been only $85,588,038. That of Great JBritain from 1816 to 1851 had been only $480.- 105,755. That of France from 1793 to 1851 had been only $314,- 386 ECONOMIC PHILO SOPHY. 491,516. in the fifteen years, from 1851 to 1866, there was coined of gold a sum equal, In Great Britain, to, : $455,233,695 In France, to, 987.728,298 And in the United States, to ... . 665,352,323 Total, .... $2,108,314,316 At first it would seem that this enormous addition to the money supply ought to have made money abundant, and business of all kinds prosperous, in the United States, instead of producing stringency as early as 1853-4, continuing for the next seven years. In the winter of 1853-4 processions of the unem- ployed paraded New York. Soup-houses, for the gratuitous feed- ing of the starving poor, were opened in all parts of the city, as well as in the other cities of the Atlantic coast ; manufactures and agriculture were in a state of prolonged prostration, and at the outbreak of the war of the rebellion in 1861, as well as during most of the preceding seven years, there was neither gold nor silver anywhere to be had. Secretary Chase computed the total amount of both metals in the country, at the outbreak of the re- bellion, at not to exceed $50,000,000. The quantity coined had never gone into use, in the United States, except as a basis of re- demption for bank-notes, and through these had inflated bank discounts, deposits, and prices. Bearing in mind that the two years of financial crisis were 1837 and 1857, and that the premoni- tory symptoms of these two crises were an inflation in the circu- lation of bank-notes, and in the bank deposits and discounts, the relation between this cause and its effects will be plainly seen in the following table, prepared by the Secretary of the Treasury in his report for 1863 : * On or Deposits Circu- near and circu- lution janu- lation per per aryl. Circulation. Deposits. Specie. capita. capita. 1834 194,8-10,000 $75,677.000 $11.83 $6.58 1835 103,692,000 83,081,000... $43,937,000 12.61 7.00 1836 140,301,000 115,104,000 40,019,000... 16.77 9.15 1837 149,186,000 127,397,000 37,915,000 17.66... 9.52 1838 116,139,000 84,691,000 35,184,000 12.46..! 7.21 1839 135,171,000 90,240,000 45,132,000 13.59 8.15 1840 107,000,000... ...75,696,000 33,105,000 10.70 6.26 1841 107,290,000 64,890,000 34,813,000 9.79 6.10 1842 83,734,000 62,408,000 28,440,000 8.07 4.02 * With an addendum of the last column showing circulation per capita, by Mr. Weston, " Money," p. 195. ^XPANSIOISr Aj^D PRIGElS. 387 On or near Janu- ary 1. Circulatimi. Deposits. Specie. 1843 58,564,000 56.1t)8,000 33,000,000... 1844 75,168,000 84,550,000 49.898,000 .. 1845 89,608,000 88,031,000 44,241,000... 1846 105,552,000 96,913,000 42,012,000... Deposits Circv- and circu- lation lalion jjer per capita. capita. ... 6.15 3.14 ... i8.31 3.91 ... 8.96 4.52 ... 9.90 5.11 1847 105,500,000 91,812,000 35,132,000 9.35 5.00 1848 128,506'000 103,227,000 46,300,000 10.65 5.90 1849 114,740,000 91,182,000.. 43,620,000 9.17 5.11 1850 131,367,000 109,586,000 45,380,000 10.39 5.66 1851 155,165,000 128,957,000 48,070,000 11.87 6.48 1852 .... 13..31 1853 146,072,000 145,553,000 47,338 000 13.66 .. 5.71 1854 204,689,000 188,188,000. 1855 187,000,000 190,400,000. 1856 195,747,000 212,706,000 1857 314,779,000 230,351,000. 59.410,000 14.97 7.80 53,944,000 13.95 6.92 59,314,000 14,66 7.03 .58,300,000 15.52 7.48 1858 155,208,000 185,9.32,000 74,412,000 11.56 5.26 1859 193,307,000 259,568,000 104,537,000 14.91 6.37 1860 207,102,000 253,802,000 83,594,000 14.66 6.59 1861 802,005,000 257,229,000 87,674,000 14.13 C.21 In the same Treasury Eeport for 1863 are tables of the average wholesale prices, in the New York market, of ten articles (coffee, leather, molasses, mess pork, clieese, rice, sajt, sugar, tobacco, and wool), from 1834 to 1859, both inclusive. The following tables, also prepared, in part, by the Treasury Department, and in part by Mr. Weston,* show how closely an expansion in the volume of the circulation must be attended by an expansion in prices of commodities, and how the culmination of the two marks a finan- cial crisis. I s 1 C 1 S 33 - t- J 5 c 1 1 t 1 1 II 1 i i ■■£> IS , A o; .-V \ ^i \ i^ 7 V ^^ \ 12 \ i ^7 r ■4 V -4, ■S'^ M K. >;. n ^, ->'' iV _ [— N ^ / ^/ J " / \ -y H-i J f- / \ r/ p. ^" A ■A \ / V. 7 (. ^^ / \ / -^ \ ,><^ / \ .y \ xt -> ^ l> 1 1 — 1 Rise and Fall in Volume op Currency in Crises op 1837 and 1857, attended BY Like Rise and Fall in Prices of Ten Commodities. * Weston " On Money," p. 201. 388 ECONOMIC PHILOSOPHY. Circulation Circulation Average per capita, Average per capita. Year. of prices. January 1. Year. of prices. January 1. 1834 $19.13f $6.58 1847 $20.83i $5.00 1835 22.81i 7.00 1848 16.531 5.90 1836 29.46^ 9.15 1849 16.45 5.11 1837 28.404 9.52 1850 16.20i 5.66 1838 28.35f 7.21 1851 19.421 6.48 1839 22.21f 8.15 1852 21.421 No returns 1840 20.73i 6.26 1853 22.47f 5.71 1841 17.93f 6.10 1854 20.84 7.80 1843 13.80i 4.62 1855 22.781 6.93 1843 14. 82^ 3.14 1856 25.071 7.03 1844 14.65i 3.91 1857 25.13J 7.48 1845 18.56i 4.53 1858 31.93 5.36 1846 16.69 5.11 1859 22.114 6.37 While the expansion in the volume of specie and credits, in England and in Europe, in 1851-7, was as great as in the United States, the collapse of credit in Eugland w^as less severe than in the United States. Indeed, the prevailing vievf , among American protectionists, is that the crisis vpas due in 1850-1 owing to the great advantages given to foreign over domestic competing productions by the low " Tariff for Revenue only " adopted under the lead of Robert J. Walker, in 1846. Under the operation of this "Free Trade Tariff," there was an excess of imports of merchandise over exports, and an export of gold and silver to pay for them, as follows : Year ending Excess of Imports over Ex- Excess of Exports over Im- June 30th. ports, Merchandise . ports of Gold and Silver. 1848 $10,448,129 $ 9,481,332 1849 855,027 1850 29,133,800 2,894,203 1851 21,856,170 24,019,249 1852 40,456,167 37,169,091 1853 00,287,983 23,285,493 1854 60,663,479 34,342,162 1855 38,899,205 52,587,531 1856 29,212,887 41,537,853 1857 54,604,583 (Excess of importation of commodities.) 56,675,133 1858 8,672,620 . 33,358,651 1859 38,431,290 56,675,123 1860 20,040,062 33,358.651 1861 69,756,709 56,453,623 The great outflow of specie was made possible by the influx of new gold from California and Australia. But happening to occur so soon after the tariff of '46, it deferi-ed until 1857 a crisis due in 1851-3. BANK OF ENGLAND FINANCE. 389 156. The Crisis of 1866. — Tooke and Miss Martineau, as historians of the panic of 1825, agree that the Bank of Eng- land's liberality in discounting bills stimulated the inflation which preceded the panic. In that of 1865, Mr. R. H. Patterson * is equally sure that the Bank of England virtually created the panic for its own profit, as well as reaped an enormous profit from it. The Act of 1844 authorizes thn Rank of England to raise its rates of interest, at disci'etion, when there is a scarcity of money, and in suspend- ing that act it empowers the bank to issue notes in excess of the statutory limit, but does not oblige it to do so, and neither author- izes the other banks to issue notes nor to demand their issue by the Bank of England. That bank, though performing public func- tions, is still a private bank, and not a government bank, so far as the profit on its capital is concerned. The great fall in values and prices, which attended the close of the American war, had converted an extended line of securities, on which certain banking houses had loaned, into doubtful stoclvs. A feeling of distrust set in, relative to these houses, and the Bank of England, in the first week of October, raised its rate of discount from four and a half to seven per cent. The banking house of Overend, Gurney & Co. had held fi^om twelve millions to eighteen millions pounds sterling of deposits. A slow but per- sistent run on these had obliged it, at last, to ask assistance from the Bank of England on other than valid commercial secui'ities. The aid was refused. The firm failed, and the result showed it to be entirely rotten. One or two other banks failed in consequence. As the entire deposits of the kingdom, in all its banks, were £400,- 000,000, and the amount of banking currency was only £40,000,- 000, of which only half was available for paying them, the re- maining £20,000,000 would have to circulate very nimbly to suffice for the payment of twenty times its sum in deposits. Most of the depositors who withdi'ew from the other banks would transfer their deposits to the Bank of England. If the other banks suspended, the law transferred their deposits to the Bank of England, as custodian, until they were out of bankruptcy or chancery. Every failure of the other banks only added to the deposits, the coin, the discounts, and the business of the Bank of England. Hence, when the government, to arrest the panic, authorized the Bank to extend its issues, it chose to regard this as a privilege to itself, and not as a means of relief to the other * " Science of Finance," p. 231. Sgo ECONOMIC PIIILOSOPHT. banks. The profits of the bank rose to £975,655 for the half- year, of which £679,000 were earned during tlie fourteen weeks when its rate of discount was ten per cent. All this because the law enabled the Bank of England to issue all the notes it chose, to banks or merchants who applied to it as its own customers, but did not compel it to issue any notes whatever to banks which desired them for their own relief, and that of their depositors. The bank was thus enabled to break a number of the other banks which, until the act was suspended, could have broken the Bank of England by simply checking for their entire deposit.* 157. The Crisis of 1873-9. — The revulsion of 1873 in the United States is sometimes spoken of as a crisis, but it differs widely from any we have been considering, in the fact that it neither brought panic to the banks, nor bankruptcy to the merchants or manufacturers on any serious scale. It brought only a period of falling prices, extending over all sorts of commodities and continuing almost uninter- ruiDtedly for seven yeai's, with the effect of checking pro- duction and causing apprehension and great caution, with fre- quent closing of large factories and workshops, some suffering, and much agitation among wage- workers, followed by the for- mation of the most extensive and closely bound labor organiza- tions, some of them numbering their members by hundreds of thousands, and commanding large treasuries, with able officers, to whom were paid good salaries. In one sense, the fourteen years following 1873 have been a continued labor crisis, meaning thereby, not a period of starvation, or suffering, or extended fail- ure of employment, but rather of just enough closeness in busi- ness, and meagerness in pay, to keep working-men dissatisfied, while profits in many lines of industry seemed hardly to justify employers in keeping their establishments running. The causes were national, and grew out of a large contraction in the volume of transferable credits, occasioned partly by the policy of rapidly paying off the principal of the United States war debt, and partly by the fall in the value of silver relatively to gold, which set in in 1873, and culminated in the spring of 1876. The war for the suppression of attempted secession, in 1861 to 1865, was fought out to its close with American capital. European bondholders, in the spring of 1865, had not been induced to lend the United States more than one-thirtieth as much as the Government had borrowed from its own people. * " Science of Finance," by R. H. Patterson, p. 223-347. A CONTRACTION CRISIS. 391 With the advent of peace, a lively European demand set in. The bonds were exported, at the rate of from two to three hundred millions worth per year, until 1872. Dr. Edward Young esti" mates that in 1873-6 from twelve hundred to one thousand three hundred and fifty milhons of dollars' worth had gone abroad, and the portion lield at liome was narrowing down to the quantity needed by the national banks, as the basis of their note circula- tion. While these bonds were going abi'oad our balance of trade with Europe appeared as if heavily adverse to us, the fact being that our export of bonds was paying for our import of goods- Internationally, the bonds performed, for the time being, the function which gold, or other products, would have performed. They added to the buying capacity of the American people, to the extent of their face, and hence deferred the real period of payment of the very debt they represented. As between America and Europe, it was the incurment of a new loan, by the people of the latter to the people of the former, pari passu with the export of bonds. In 1873, the supply of bonds was exhausted. The borrowing resoui-ce, which had made the Amei'ican people appear so flush of money, for the eight years following so exhausting a war, was ended. It was now necessary to greatly restrict importation , and to pay for what we got, year by year, in goods or gold. So long as money was flush we could keep on building railways for the profit of contractors, though the prospect of paying returns from them might be ten years ahead. We had many enterpi'ises like this on hand, but the least needed of them all was Jay Cooke's Northern Pacific scheme. The crisis opened with the failure of Jay Cooke & Co., and collapse of the Northern Pacific, and con- tinued in a shaking out of value from what were called " watered railway stocks." Many of the railways were closely identified Avith the iron and steel manufacture, which had a chief hand in supplynig their tracks and rolling-stock. This greatly depressed prices, and the iron manufacture suffered, the consumption of pig-iron — which is the measure of the aggregate iron industry —falling off one-fourth, viz., from 2,500,000 tons in 1874 to 1,090,- 000 tons in 1876, and the price of bar iron falling from $96 in Janu- ary, 1873, to |40 in Januaiy, 1879, or more than one-half. Such a decline in both production and prices marked many industries both in the United States and throughout Western Europe. The decline in prices extended so generally over all commodities, and, except w^here oscillations were occurring in modes of production, 392 ECONOMIC PHILOSOPHY. or in the extent of the demand, it operated so evenly on all that Mr. Giffen, Mr. Goschen, and others of the best English economists held that it showed an advance in the purchasing power of money, equivalent to what would be produced by some extraor- dinary contraction in the volume of money. Meanwhile, the bonds which, until 1872, had been undergoing export were returning to America for payment, nearly as rapidly as they had been exported. The American people cared little for the economic effect of extinguishing this large issue of readily ex- changeable credit. They thought little of the question whether it amounted, in its effect upon prices and production, to that which would be produced by sinking $200,000,000 each year of coin into the Atlantic, or by extinguishing an equal quantity of Bank of England notes or consols. If a count of ayes and noes were taken, whether among the people, the statesmen of both political parties, or even the writers on finance, the very general verdict would be that the retirement of national debt of whatever mag- nitude, by payment, has no effect whatever on prices. The burn- ing of a few of the non-interest-bearing notes of the United States, when attempted by Secretary McCulloch in 1866, was promptly vetoed by Congress, because of the effect such a contraction was presumed to have upon prices. But the burning of two thousand millions of notes (bonds) of the same debtor, bearing interest, after they had staved off national distress for eight years, by their paying qualities in international trade, is set down as something that should not be discussed in any connection with prices what- ever. Bonds that bear interest, however, are, as between Europe and America, as ready a means of purchase as coin, bullion, or bills. Their issue is inflating to the money markets of the world, and has its effect on prices, as positively as if they were bank-bills. Their retirement and cancelment must therefore be a correspond- ing contraction of the price-making medium. Looked upon as a contraction in the volume of international means of payment, the retirement of the American debt, in the degree it has taken place since 1865, the whole of which has been felt since 1873, is of itself sufficient to account for the fall in prices, of all commodities, which has marked this period.*- * Mr. W. L. Fawcett in "Gold and Debt" describes tbe period from 1850 to 1859 as the Era of Gold, and estimates that prices of commodities generally were enhanced between 1850 and 1854 by 45 per cent, but as the new gold supply declined in annual volume from 1855 to 1800, commodities lost nearly half this rise, fallino; back to a scale of prices 25 PAYING FOR IMPOBTS. 393 158. TUe Balance of Trade. — The doctrine of the balance of trade after enjoying the highest repute for two centuries, has passed of late into some contempt, and is often treated as an exploded theory. The growth of wealth in a country, however, must be proportionate to the increased activity of its production and exchanges in every form. As these are eilected chiefly by the use of gold and silver, these two metals will move towards those countries whose rate of pro- duction is increasing, and from those whose rate of production is diminishing. If it appear that a country's exports of commodi- ties, of its own production, exceed its imports, it is to be inferred that other countries are becoming indebted to it, and must pay the debt, sooner or later, by shipments to it of the precious metals. Therefore, in the absence of other causes, an excess of exports over imports, and a resulting inflow into a country of the money of other countries, are to be deemed evidences of its pi'osperity. This doctrine was fairly stated by Lord Bacon, in 1615, as follows : " This realm is much enriched of late years by the trade of mer- per cent, above those of 1845. This was the effect, on prices, of increasing the stock of gold coin in the world, in thirtj'-five years, from 1477 millions of dollars to 2700 millions, or nearly doubling it. He describes the period from 1801 to 1876 as the Era of Debt , since the national debts of the world were increased in about this period from 9033 mil - lions to 33,439 millions, or Z% times ; the railway debts from 2,000 millions in 1860 to 5,000 millioES in,1880, also2i^ times; and the municipal and state debts in the same proportion, This increase of debt was accompanied by increase in average prices of all commodities, of from 60 to 65 per cent, above those of 1845, thus giving the increase in debt an efficiency in making prices as great as that in gold. i/acieoc? (" Principles of Econ. Phil.," vol. i. p. 204) says: "Adopting this defini- tion, we may enumerate the different species of currency as follows: " 1. Coined money; gold, silver, and copper. " 2. The paper currency; i. e., promissory notes and bills of exchange, with all their varieties. "3. Simple debts of all sorts; such as credits in bankers' books, called deposits, book debts of traders, and private debts between individuals. " It is obvious that there is no distinction in principle between the two latter species. They each denote that a transfer of some sort has taken place, and are a title to future payment. As a matter of convenience some of these are recorded on pieces of paper. It is certainly true that some of these descriptions of currency are more eligible and secure than others, and perform the same duties with different degrees of advantage. The metallic currency rests upon the credit of the state, that it is of the proper weight and fineness, and the universal readiness of people to receive it in return for services. Paper currency, in this country at least, rests entirely upon private credit, and is of all degrees of security, from a Bank of England note down to a private I O U. These different species of currency, therefore, though they possess different degrees of cir- culating power, though they may be more or less eligible or secure, represent but one fundamental idea— Debt. From these considerations it follows that the amount of cvirrency, or circulating medium, in any country is the sum total of all the debts due to every individual in it.'" 394 ECONOMIG PHILOSOPHt. chandise which the English drive in foreign parts ; and, if it be wisely managed, it must of necessity very much increase the wealth thereof, care being taken that the exportation exceed in value the importation, for then the balance of trade must of ne- cessity be returned in coin or bullion. " That a country may, for a period of years, be consuming wealth beyond its rate of produc- tion, and hence running in debt to other countries, and that this process of running in debt will be indicated by an excess of im- ports over exports, and that for an ensuing period it will be as actively engaged in paying off its foreign debt, or recalling its bonds, and that this process will be indicated by an excess of ex- ports over imports, is clearly shown by the experience of the United States from 1865 to 1883. From 1865 to 1873 the United States was exporting its national bonds, and by the close of 1872 it had sent abroad about $1,800,000,000 of its debt. In the ensu- ing years it was recalling this debt and paying it off. The result is seen in the following table, showing the excess of imports over exports in the first of these periods, and the excess of exports over imports in the second : Excess of Excess of Domestic Foreign Total Exports over Imports over Exports. . Exports. Exports. 190,670,501 Imports. Imports. Exports. 1882 179,644,024 11,026,477 189,356,677 1,313,834 1863 186,003,912 17,960,535 203,964,447 243,335,815 39,371.368 1864 143,504,027 15,333,961 158,837,988 316,447,283 157,609,395 1865 136,940.248 29,089,055 166,029,303 238,745,580 72,716,277 1866 337,518,103 11,341,430 348.859,523 434,813,066 85,952,544 1867 279,786,809 14,719,332 294,506,141 395,761,096 101,254,955 1868 269,389,900 12,563.999 281,952,899 357,436,440 75,483,541 1869 275,166,697 10,951,000 286.117,697 417,506,379 131,388,682 1670 376,616,473 16,155,295 392,771,768 435.958,408 43,186 640 1871 428,398,908 14,421,270 442.820,178 520,333,684 77,403,506 1873 428,487,131 15,690.455 444,177,586 636,595,077 182,417,491 1873 505,033,439 17,446.483 522,479,922 643,136.210 110,656,288 1874 569,433,421 16,849,619 586,283,040 567,406,343 18,876,698 1875 499,284,100 14,158,611 513,442,711 533,005,436 19,563,735 1876 535,582,247 14,802,434 540,384,671 460,741,190 79,643,481 1877 589,670,224 13,804,996 602,475,230 451.333,126 151,153,094 1878 680,709,286 14,156,498 694,865,766 437,051,532 257,814,234 1879 698.340,790 12,098,651 710,439,441 445,777,775 264,661.666 1880 833,946,353 11,692,305 835,438,658 667,954,746 167,683,912 1881 883,925,947 18,451,399 902,377,346 642,664,628 259,712,718 1882 733,239,732 17,302,.525 750,543,257 724,639,574 25,903,683 1883 804,223,632 19,615,770 823,839,402 723,180,914 100,658,488 159. Doctrine of Balance of Trade. — The doctrine of the balance of trade is still accepted as true among practical states- men and by judicious economists. Even McCulloch, in the ex- tracts cited concerning the crises of 1847 and 1857, virtually rec- ognizes it as the law governing both crises. Captious writers have made so much of certain qualifications of the doctrine as to assume THE USE OF CRISES. 395 that they overthrow the original doctrine. In fact, they are in pei-fect harmony with it. For instance, a creditor country, like England, which is largely engaged in lending its capital on in- terest, in other countries, will become entitled, in payment of in- terest on these loans, to a large inflow of money, and it may choose to take this inflow in food and raw products instead of money. In this case, as the food and raw products imported ap- pear in its trade returns as imports of mei'chandise, and the capi- tals it loans do not appear as exports, there will be a continually increasing apparent balance of trade against it, where there would be none if the foreign loans of its capital were treated as an export of a commodity, which they certainly are. Hence this qualification is not a qualification or exception in principle to the doctrine of the balance of trade, but only a fact going to show that, owing to the failure of the trade i^eturns to include exports of capital among exports of commodities, the apparent evidences of the balance of trade, in great money-lending countries, is marred by an error of statistical omission, which needs to be supplied before attempting to state the true balance of trade. Again, where the money-lending country happens also to be the ship-owning and carrying country, it will be entitled to freights on the imports and exports of both countries. These freight earnings will lessen the quantity of domestic merchandise it needs to send abroad in order to balance its accounts with them, and hence, by lessening its necessary exports, will appear on the trade returns as increasing the excess of its imports over its exports, or the adverse balance in its trade. This, also, is evidently an error in its trade returns to show the true balance. In correction of this error, its annual exports need to be increased by its annual freight earnings, as these are, in eflPect, an export of services in carrying goods to the countries for and to which the carrying is done. With these corrections of the trade returns, and such others as may be necessary to bring them into conformity with the actual facts, the doctrine as stated by Bacon remains true. 160. Are Crises Useful or Penal ?— Commercial and monetary crises perform, in certain ways, a useful function in industry, and tend ultimately to promote production, while at first discouraging it. They cori-ect a tendency of industry to continue in given channels after they have become unproductive, or less productive than those to which they need to be directed. The production of gold and silver, in increasing quantities, is at 306 EGONOMIG PHILOSOPHY. all times, in one sense, one of the most profitable of industries. Yet it is easy to conceive that a sufficient force of the world's labor might be diverted from producing food, clothing, and shelter, to producing an increase in the volume of money, to have the effect of rendering money almost valueless and food, clothing, and shelter almost unpurchasable. The sevei'e crises which follow large additions to the volume of money of either kind, whether it be bank notes, as in 1837 in the United States, gold and notes, as in 1824 in England, and 1851-7 in America, or government debt, as in 1865-73 in the United States, are usually, and perhaps neces- sarily, followed by a diminution in the number of persons who seek to supply a circulating medium for commerce and an increase in the number who till the soil, spin, weave, dig ore, build houses, and provide food, clothing, and shelter. Commercial crises remit a people from an excessive manufacture of media of exchange, such as money, credit, means of transportation, ships, railroads, and the like, to a larger relative manufacture of products for exchange, whether cloth, corn, or iron. They rectify the steering of industry, which tends naturally to keep on forever, unless checked, in routines of profit-making which have for a time been profitable, but which become unprofitable to the world at large when persisted in too long. Commercial crises, in these instances, are a means of correcting undue persistence in the beaten ways .of industry, and of turning labor and capital into the new and unbeaten ways where they are more needed. Industry needs to be migratory in order to attain its highest evolution. It must carry the old pursuits, stock-raising, farming, lumbering, and housebuilding, to new countries, and carry them on under new conditions. It must carry them on in the old countries with new methods, processes, and machinery. It must discover new utilities in well-known substances, new economies in familiar callings, new plants and animals for the food of man, new soils for producing them, and new manures for restoring exhausted soils. So long as old industries, pursued in the old way, continue to be a means of certain livelihood to those engaged in them, the tendency of employers will be to meet that declining rate of profit, which attends the long-continued employment of capital in any one direction, by cutting down wages, rents, and interest. But this is to substitute parsimony, or meanness, for enterprise and migration. The interests of the woi'ld forbid it. A commercial crisis, sweeping all values away like a whirlwind, by making failure universal, prevents it from being mortifying or pax^alyzing. CBI8ES STEER TOWARD PROFITS. 397 All couductors of industry and employers of labor, whose position is weak, ai*e weeded out and must look for " something new." In the universal search for "something new" those new industries are found and developed, in which society is chiefly interested because in tliem lie eventually the great profits and the great utilities. The crisis of 1816-19 in the South turned capital into the production of cotton, resulting in 1846, according to Dr. Carey's computation, in the production of six times as great a quantity of raw cotton for the same cost. The crisis of 1836-7 in America diverted vast quantities of capital and labor to the tillage of land in the Northwestern States. That of 1857 turned American capital away from shij^-owning to railway building, away from foreign transportation to domestic transportation, and resulted in the development in America of a railway system equal in mileage to that of all Europe. In some cases, as in that of Vanderbilt, the very men who had struggled against the 'difiiculties of conducting a profitable carrying business at sea, found the same degree of enterprise and courage rewarded with overwhelming success when diverted to the development of the railroad system and internal commerce of the United States. That there was an immediate economic need of this diversion of capital, is shown by the fact that, from 1851 to 1860, the fortunes invested in trying to bring us into relations of close ti'ade depend- ence upon England, by fast steamer-lines and gi-eat importing- houses in New York, were all wrecked, shattered, or diverted to other channels, while from 1860 to 1880 those invested in develop- ing the internal trade between different portions of the United States by railway, and in evolving American industries in all forms, rose into commanding importance. In other, and perhaps the more numerous class of cases, com- mercial crises are the penalty for economic mismanagement, and generally on the part of government. The indirect good that may come of them, as some indirect good comes of all evil, should not blind us to the fact that they are, as a rule, the penalty of some untoward disaster to the currency, or of some sub- version of domestic by competing foreign industry. Sucli were the crises of 1817-19, 1833-37, 1857-1860 in the United States, and of 1834-6 and 1847 in England. CHAPTER XI. THE STATE. 161. Government is Natural.— All mankind, like the higher animals, are endowed by nature with a desire for power, and a tendency to worship such powers as they suppose to be above their own power. The former induces them to lead, the latter makes it their pride to obey leaders whom, they feel to be stronger than themselves. By this conjunction of ambition and fear, the buffalo of the broadest shoulders and stoutest horns, or even the elephant of longest tusks and greatest sagacity, leads the herd. The wild goose of strongest wing guides the flock in its migrations, and the sparrows battle in the road-dust for leadership. In the human race the qualities which excel in fight — viz., courage, craft, cunning, and prompt assumption of responsibility, or readiness to usurp power, together with physical strength — are those which first promote to leadership. It is only when men are far advanced that eloquence, argument, public spirit, and later a sense of fair- ness and equity, begin to prevail. In the first instance, the governing class incur the danger and contests necessary to lift them to power, because they crave the power for the sake of the dignity and command over others which it brings. Later, this harsh selfishness of ambition is invested in politer forms, and is softened by public spirit and desire for the general welfare. It would not be safe to assume, however, that the dominant passion of ambition or love of power ever becomes, in fact, wholly sub- ordinated to unselfish aims, or that any system of society would be successful, if its success depends upon such a subordination of ambition. The statesman calculates upon the perpetuity of the fundamental and basic passions of human nature, such as the love of power, of freedom, of life, of property, of law, of sex, of , religion, of art, of beauty, and of society, as being constant and nearly unchangeable factors, with which government must deal, and whose existence it must assume, as the chemist assumes his simple substances, or as geometry assumes the three dimensions. Grovernment exists, therefore, because man is, by virtue of his G VERNMENT B Y INTEREST. 399 iuliereiit structure, a governing' and obeying creature, in the same sense as life exists, because he is a breathing creatiu'e, and as pleasui-e and pain exist because he is a sentient creature. We could as easily" think of man without sensation, or without breath, as without government. Nature, in constituting man, kindly ordains that the functions of life which are essential to his existence, shall not be subject to his will in any degree. These are the circulation of his blood, the digestion of his food, the transmission of his sensations, and the reaction of his passions of anger and resistance against those forces which threaten his life. Above these are a class of functions which can, in a partial degree, be left to his choice, but concerning which he is nerved to action by forces so predominating as to be but partially repres- sible factors in conti-olliug his will, leaving him a measure of choice as to means, opportunities, and occasions, but binding him by the strongest ties of emotion to the general result. These are the maintenance of the family, the reproduction of his kind, the accumulation of property, and the appropriation of land. In relation to these duties man occupies an intermediate position between choice and necessity, or between judgment and instinct. He is permitted, as a race, no choice as to the general result, but is permitted, as an individual, to believe in his freedom as to means and occasions. Midway between the first and second class of functions is that of government. It is somewhat more con- sciously voluntary than the circulation of the blood or digestion, but it is far less so than industry or reproduction. 162. Interest Organizes Industry. — In the broadest sense, man in society may be said always to be under two forms of government, one of which, though involuntary in its origin, is conscious in its action, and this is that which is ordinax'ily called government, or the state. The other is a far more perfect and searching mode of government than the state, being that govern- ment of interest, inherent in human nature, arising ui the desire to acquire property, which places mankind in the several relations to each other, of merchant and customer, employer and employee, seller and buyer, landlord and tenant, borrower and lender, the aggregate of wliich relations constitutes the organization of modern industrial society through capital. Industry, or business, is not ordinarily treated, or recognized, as a mode of government, because it is an unconscious government. The men who take part in it do not consciously intend to govern or to be governed. Tliey in- tend, each and all, only to benefit, each man himself, and those 400 ECONOMIC PHILOSOPHT. immediately dependent on him. But the whole operates thx^ougli the instinct of gain to effect a thorough, though unconscious, organization of society, in which each is assigned to the work he shows himself most nearly competent to do, is rewarded according to the value of his service to society, and is promoted according to his skill. In it promotion in command depends on economy in expenditure, sagacity in investment, and activity in promoting production. That it is a mode of service is shown by the ordinary phrases : ' ' The merchant's success depends on the assiduity with which he serves his customers." "The manufac- turer must be quick to perceive changes in the public taste and comply with the public demand." " The borrower is servant to the lender." Those who would secure employment and thrift, in serving the powerful, must defer or bend in judgment to those they purport to serve, as neither the powerful nor the weak can make any trustworthy use of the services of one who substitutes his own judgment, or lack of judgment, for that of his employer. This rule is expressed in the mottoes, " Obey orders if you break owners "; " Hew to the line, let the chips fall where they may," etc. The same social action is subject to be described either in terms of praise or dispraise, according to the momentary bias of the describer. Thus Shakespeare at one time sneers at subser- viency, in words of dispraise. It " — Crooks the pregnant hinges of the knee That thrift may follow fawning." At another he describes the opposite feeling of pride, which will not defer as a " Vaulting ambition doth o'erleap itself, And fall on 'tother— " Merchants, accepting the services of clerks, require that they shall be "of good address and possessed of tact," meaning thereby the faculty of discovering adroitly, and serving readily, the wants of those seeking to buy. Society, outside the family, is thus welded together by links of reciprocal interest, and mutual service, into an ox^ganized body, having far more than the efficiency of an army, in accomplishing the daily miracle of equal, or nearly equal, universal supply of the necessaries required for human consump- tion. That this unconscious form of government, through in- dustry or business, is more searching and pervasive in its influence over human conduct, than the conscious government which we call the state, is shown by the fact that the majority of men are WANT AND wealth: 401 seldom brought into contact with the state in any manner. It is only as they pay taxes, vote, sue, or are sued in the courts of law, are punished for some crime, sit as jurors or hold an office, that they are reminded of, or in any way governed by, the state. But every time they do any act, for hire or profit, buy, sell, or produce, contract or discharge, earn or pay any thing, indeed every move they make to better their lot, or increase their means of living, is an act of association or commerce with their fellow-men, whereby they, by an instinct of which they are themselves unconscious, become links, cogs, wlieels, weights, pulleys, or pivots in the social mechanism commonly called industry or business, the aggregate effect of which is to compel each to work for all, and all for each, in mutual helpfulness. 163. The Motive Force in Industry. — The government, which is effected through industry, knows of but one form of coercion or punishment, viz., want. Tlais spectre, stalking behind and stimulating all men to energy, can be laid only by one exor- cism, viz., wealth, which is, in all cases, labor performed. Between these two natural inducements, want and wealth, the human soul swings like a pendulum, in all its efforts. These driving forces impel man on his career, being, in economics, ex- actly what ignorance and wisdom are in thought, what right and wrong are in ethics, what hope and fear are in emotion, what pleasure and pain are in sensation, and what time and space are in being, viz., the ultimate or first principles which must be assumed to exist before we can think of economics, ethics, thought, emotion, sensation or being, as having any existence. Nor is any one form of the state necessarily more favorable than another, to the promotion of Industry. In the domain of economics, the state is regarded as the product of the social conditions in which it arises, although, upon being ci'eated, it has also vast power to change and improve social conditions, for those who are to come. It may be likened to an individual. Every man is, in one sense, produced or caused to be what he is, by his environment, i. e., his parentage, race, health, sex, place of birth, education, etc. But, being so pi'oduced, he becomes an efficient actor in controlling the conditions into which future generations are to be born. So a state is wliat its antecedents in history make it, but it is the author of its own consequents, and to this extent, while previous history^makes it, it makes_subsequent history. The causes of the constitution of a state, thei-efore, must be 402 ECONOMIC PHILOSOPHY. sought in the material conditions of its people. If their posses- sions are both equal in distribution, and small in value, as among the North American Indians, and especially if their land be held in common, their mode of government will be that of a democratic tribe, choosing their chief, debating as equals, but as savages. If their properties are more considerable, and still equal, they will be a democratic state like Sparta, or if like the Spartans arid Athenians they own slaves, the state will still be democratic as to the free citizens, and aristocratic as to the slaves, as was Sparta. The ownership of equal properties by the citizens of a state will, in turn, usually spring from certain race peculiarities, such as were possessed by the Greeks and early Romans, such as bravery in the contest for personal rights, monogamy, tlie inviolability of the family relation, and the mountainous and easily defensible condi- tion of the country, a diet of meat, mixed foods, and wines on the part of the people, a moderately fertile soil, such an access to rivers or the sea as favors commerce, and such a variability of climate as makes forethought necessary to existence. A pojoulation of industrial, physical, and mental equals, like that of Switzerland, develop into a democracy in government. If they acquire wealth, like Athens, the democracy becomes aesthetic, poetic, philosophic, artistic. If they remain poor, like the Spartans, the government becomes heroic, truculent, barren in art, and warlike. Deprived of the stimulus of a changeable climate, as is China, which is shut in on the north by great ranges of mountains, and left open to the southward, a people will accept a vegetarian diet, will abhor innovation, and will shirk all contest, change, and revolution, — hence will come under a bureaucratic, paternal despotism. If, as in Tartary, the climate be severely changeable, the people will be wandering, nomadic, and tribal. A permanent subdivision of the land into large estates gives rise to a nobility and the union of the church with the state helps still more to render the government aristocratic. Activity in manufactures and commerce causes money to be a potent factor in government, and eloquence to decline. In the infancy of society, power is apt to be in either the soldiers or the priesthood. Later on it is in the sol- diers and lawyers. As suffrage extends to the masses of the people it passes to those who are apt popular orators or political leaders. Among these the great capitalists and coi'porations often buy their way to power. Rome, and probably Egypt, reached this stage shortly before either passed by conquest under barbarian sway. GOVERNMENT BY PARTIES. 403 Hence governments grow out of social and material conditions. That form wliieli to one people will be spontaneous and inevit- able, to another would be unnatural and impossible. 164. Forms of Goveruuieut Depend on the Evolution of Occupations. — Each form of government being the out. growth of the conditions under which it comes into existence, the presumption for all practical pui'poses is that each government is that which is best adapted to its own people, at the time and un- der the conditions in which it arises. But, under every govern- ment, there is a majority, to whom the govei^nment may seem to be the best possible, and a minority, whomay prefer another, or think it even the worst possible. The question, which painty has the ma- jority, is detei'mined, in ruder times, by conspiring and fighting, and in moi-e republican periods, by debating and voting. Under either system, the change of a small number of influential persons may change the majority into a minority, and thus effect a change of government. The inference that each government is, for the time being, the one which is best adapted to the welfare of its own people, is subject therefore to a degree of doubt proportionate to the numerical strength and intensity of dissatisfaction of the minority, and the probability that the minority will, at any time, obtain the ascendency. To-day a secular, anti-clerical republic exists in France. It confiscates the prerogatives, and, in a degree, the property, of the chui'ch, and limits and curtails the power of the priests and religious orders. Its strength lies in the fact that it represents the banking, manufacturing, and business men, or bourgeoisie, of France, and therefore its material interests. Against these are arrayed the Catholic or ultramontane party, which includes the priesthood, peasantry, or small farmers, and the Bonapartists and Bourbonists. It rests on the still surviving strength of those elements of rank, loyalty, moral conservatism, and social fealty which once organized society, almost without the help of money, or commercial motives, but which now are inferior to these more modern social forces. At present the Republic affords the pre- sumption that it is the best government which France admits of, by being in power, and controlling an effective majority. It is, at all times, possible that the numbers opposing it exceed the numbers favoring it. Should it go out of power, in behalf of a government composed of the elements which now oppose it, the like presump- tion would immediately attach to its successor, subject, like the present government, to a doubt proportioned to tlie numerical, 404 ECONOMIC PHILOSOPHY. intellectual, economic, and military streng-th of the elements of that party which is now in power, but would then be out of power. All governments, even the most imperial, hereditary, or des- potic, are created and maintained by parties, but, in periods of military force, the co-existence of the minority party is a sup- pressed fact. However despotic the form, and however military force may be necessary to maintain and change it, the utmost that any government can obtain is a party, or section, of the people, in its favor. Russia, under the czars, is governed by a Pan-Slavist party, and this government is opposed by the races which do not like the ascendency of the Slavs, aiid also by the Nihilists. China has been governed, for centuries, by a Tartar party. Italy is governed by a party favoring a kingdom distinct from the papacy, and resisted by a party desiring no king but the Pope. The persons who come into prominence as czars, kings, em- perors, csesars, popes, presidents, or governoj^s, legislators and notables, can not escape being the representatives of majority parties, compelled to suppress, by coercion, any minority party that may oppose them, by methods in conflict with the funda- mental law, or constitution, of the country. All countries have a fundamental law, or constitution, or body of ancient customs, in professed subordination to which the mon- arch, executive, and other officials for the time being, hold power. In countries which have no written constitution, there are the ancient customs and usages of the realm. Every monarch enters upon his duties by promising, in some religious fox'ui, to protect, defend, and obey these ancient usages, customs, and laws. 165. Governments Classified. — A government, whose administrators can be changed only by fighting, may be classed as despotic. One whose officers can 1)6 changed by voting, or the ballot, may be classed as popular, or free. Governments are frequently classified as Monarchical, Aristo- cratic, Bureaucratic, Hereditazy, Imperial, Kingly, Parlia- mentary, Republican, Repi^esentative, Democratic, and Respon- sible. These are useful names, but are liable to vary greatly in the essence, or meaning, they are made to cover. In Ancient Rome, under thoroughly Republican names, csesars and tyrants became dictators. On the other hand, under monarchical forms, as in modern Great Britain, a comparatively perfect liberty of chang- ing the government by ballot may come to exist. Pope's couplet, MODES OF RULE. 405 " For forms of government let fools contest, That which is best administered is best," to express the American view, should be so modified as to read : *' For forms of government the wise contest, Since that wherein the people rule is best." The experience of republics, and especially of America, has probably served to satisfy many persons, though not a majority, that the pi'erogatives of government may, in some subordinate localities, be devolved on persons who will make so bad a use of them as to bi-iug limited examples of free government, at least in great cities, into unfavorable contrast with the governments of other cities which are presumed to be less free. There is strong ground to claim that London, Paris, Berlin, Madrid, Rome, Vienna, and St. Petersburg have better municipal governments than New York, Philadelphia, Buffalo, Chicago, and San Fran- cisco. There is also ground to claim, however, that this is in part owing to the more rapid growth of the American cities, in wealth, and the more unstable and shifting character of their population. If so, it is believed that it may be corrected in time. The concentration of all the elements of rule in one person constitutes monarchy. Usually, it is accompanied by the principle of the hereditary transmission of this authority to the heir ; but in exceptional cases, like that of the Pope of Rome, the King of Poland, and a few others, the transmission has been by election. An aristocracy occurs wherever a small number of persons or families, by reason of wealth, of inherited rank which originally implied wealth, or by military services and rank, or priestly power, or learning, or other personal quality, obtain as a class an ascendency in the State, which mere numbers can not, by voting, ovei'come. As the word aristocracy means a government by the best men, and those who oppose aristocracies always deny that they are composed of, or result in, the selection of the best men, the woi'ds " oligarchy," meaning government by a few, and " plu- tocracy," meaning government hj the rich, have been, by those opposing them, substituted for the word aristocracy, to avoid this implication. Athens and Sparta were aristocratic, as respected the relations of the citizens to the helots. Hence Aristotle's work upon econom- ics and politics breathes tln'oughout a most aristocratic spirit. Aristocracy has been a strongly molding principle in all the governments of modern Europe, and in the Republic and Empire 406 ~ UCONOMIO PHILOSOPHY. of Rome, from which they are, in great part, derived. In England the nobility and land-owning gentry represent the aristocratic spirit, and have usually furnished the entire House of Lords, two- thirds of the members of the House of Commons, a large portion of the officers of the army, the church, and the civil service, be- sides contributmg, in more than their numerical proportion, to the bar, the bench, and the literature of the country. "Bureau- cratic" government is an irregular word in formation, since it is compounded of a French word with a Greek, but convenient in use to express a government by a monarch, through adminis- trative officers only, without a parliament, or national deliberative assembly, as in Russia. Sometimes, as in Germany, it indicates that the function of the parliament is advisory merely, and that the monarch, through his administrative bureaus, can, if he chooses, govern without a parliament. Bureaucracy signifies much the same as absolutism, except that absolutism relates to the principle or the effect, while bureaucracy defines the means employed to render the monarch absolute, viz., the bureaus or departments, or subalterns of the executive. The bureaus, or departments, correspond to what in America would be called the cabinet, the civil service, or postmasters, revenue collectors, mar- shals, etc., and the judges. Hence, in a bureaucracy, the mon- arch dispenses with the guidance of a parliament, or legislature, by substituting for it the advice of his counsellors and officers of every grade, civil, military, and religious. 166. Parliamentary and Representative States. — Parliamentary government is government by a deliberative body, or a government wherein the nominal monarch is under a con- stitutional obligation to defer to, and obey, the will of the national legislature. England, Italy, Spain, Austro-Hungary, Greece, and Servia are parliamentaiy governments. Germany is parliamen- tary in a proximate degree, but its present monarch denies that he is bound to obey parliament any farther than he believes its laws to be right, and consistent with public safety. Parliamentary government is also essentially identical with responsible government, though the latter relates to the position in which the ministry is placed under the system, while the former expresses the supremacy it imparts to the legislature. Responsible government is the system wherein constitutional advisei's of the crown, usually styled his ministers, heads of de- partments, or cabinet, are required to obey the dictation of the national legislature. The mode in which this is effected is by re- RESPONSIBLE RULE. 407 garding them as having advised every act of legislation proposed by the crown, and every administrative policy or order adopted by it ; and by holding them obliged in honor to resign, if an ad- verse vote is given, against such a measure, in the popular branch of parliament. The ministry, however, instead of resigning, may dissolve pai'liament, which is called appealing to the country. In the new election of members of j)arliament, which is then held, the people are supposed to vote for members who will either agree with the previous action of the ministers, or with the pre- vious action of parliament. If the new parliament agrees with the previous action of the ministers, they remain in office, as legislation can then move on in hai'mony. . The bill, which the previous parliament voted down, will then pass. If, on the con- trary, the new parliament agrees with the previous parliament the ministers will resign, and the monarch will be called upon to select a new ministry, in harmony with the views of the two suc- cessive parliaments. Hence, under the responsible system, the veto power of the monarch becomes obsolete, and parliament becomes supreme. The governments which embody the responsible sys- tem are: England, in which it originated; all the English colonies which have legislatures, except West Australia; the French Republic, the Empire of Austro-Hungary, Italy, Spain, Servia, Greece, Belgium, Holland, and Denmark. It is equally applicable to republics, monarchies, aristocracies, democracies, and empires. It had not taken form, in England, at the date of the separation of the United States from England, and was not therefore known, or discussed, by those statesmen who framed the American constitutions, state and federal. Its originating germs are to be found in the execution of Charles I., in the supersedure of James II. and election of William of Orange, and in the various constitutional laws settling the suc- cession to the crown, and prescribing the qualifications and con- ditions on which it may be held. The doctrine that the throne is bound to obey the House of Commons, either as it now is (when a question arises) or as it shall be after one election has tested the popular will on that question, has grown up so mysteriously that it'is difficult to find a date for its origin. It is the exterior sign of the evolution of England from the military through the aristo- cratic into a commercial state. The kingly office originates in and is vital during the military stage. Of dukes, marquises, earls, counts, viscounts, barons, and knights, all are military titles, and reflect the military life, except earls and barons. It is because the 408 ECONOMIC PHIL080PHT. House of Commons reflects business, commerce, and profit tliat it existed only bj sufferance in the military period, but leaves the throne to exist by sufferance in this modem life. We find George III., in 1782-83, refusing to retire Lord North's ministry, which had led the war for the subjugation of America, and accepting the new Shelburne ministry, in which Pitt and Fox, the champions of American independence, were to be leading spirits. He declared frequently that his honor demanded that he should abandon the throne and return to Hanover, rather than submit to the aggres- sions of the Commons. A royal yacht was actually summoned, and was several times in waiting to bear him away. In time he yielded, content to gscape the threatened necessity of having Fox himself, whom he chiefly hated, as premier. So comparatively modern, however, is the blunt statement of the doctrine that the king is subordinate to the Commons, that there seemed a flavor of radicalism in the exclamation of Mr. Roebuck in 1858 : " The crown, it is the House of Commons ! " The growth of the House of Commons itself is as gradual as is the rise of England's indus- tries. Under the Saxon constitution (to 1060) there was no House of Commons. The Witenagemot * included in a crude way the rudiments of a council of state, a court of justice, and a house of lords, but with the informality of a town meeting. It was more like the consultation of an Indian chief with his braves, or of the leader of a hunt with his associates in the chase. Prof. Free- man holds that it was a council of all who chose to attend, and that the present House of Lords is the regular successor of the early mass conventions of the people, irrespective of rank, reduced to paucity of numbers only by the inability and disinclination of the poorer classes to sustain the expense of attending. Guizot f holds that at first the clergy, nobles, county knights, and burgh- ers each sat or met by itself, and voted by itself in contributing taxes, one voting perhaps a tenth, another an eighth, or other proportion. Prof. Freeman's theory seems at war with the rule that the more barbarous and military the epoch, the more mon- archical or aristocratic is usually the organization of society. Local magistrates and county knights may have occasionally sat in the same body as the lords, but the evidences are rather that as early as they sat at all they sat separately both from the lords and from each other, as a petitioning or complaining body, while the lords were a consulting body. In 1265, fifty years after Magna * See E . A. Freeman in International Beviev) for November, 1876. t On " Representative Government." RESPONSIBLE GOVERNMENT. 409 Charta, borough representation was first actually witnessed. A century later the House of Commons was strong enough to com- plain of the king's ministers, and, for the first time, to exercise its power of impeachment. Hallam declares that at the close of the fourteenth ceutury their consent was necessary to the levy of money taxes, and to the enactment of laws, and that they had frequently exercised the power of inspecting and controlling the administration of government. From this period to the present the king's ministers have been complained of by the House of Commons, at first very meekly and humbly, as an oi)j)ressed ten- ant might complain to his lord of a despotic or hard steward, but in due time grown stronger, through impeachments and execu- tions, until finally their slightest dissatisfaction with a minister has come to be politely deferred to, through resignations. Yet, down to the reign of Henry V. (1413) the House of Commons, in form, merely petitioned. * The king enacted, with the advice and consent of his lords. An impeachment was in form only the humble petition of the Commons that the king's evil advisers might be arraigned and tried before the Lords. Thus gradually the ministers passed, by a transition which extended over 600 years, from being favorites and lackeys of an absolute monarch, whom they could advise only because they pleased him, into rulers selected by the House of Commons to do the actual work of governing, while the king merely reigned. The responsibility, which began as an individual one on the part of each minister, began to be a collective responsibility on the part of " the ministry " after the revolution of 1688. A century earlier Queen Mary had thought it no infraction of the constitu- tion to dissolve several successive parliaments, with the view of getting one subservient to her wishes. Since the accession of William of Orange, and especially since the failure of the last "personal" reign, that of George III., in the matter of America, the theory that the king must have no personal policy, but that the House of Commons must fix the policy of the king, has slowly ripened into constitutional law. Sir William Blackstone, writing exhaustively upon all the tassels and tinsel of royalty in the four- teenth to eighteenth years of the reign of George HI. (1774-8), wholly fails to detect the doctrine. Alexander Hamilton, in the sixty-ninth letter in The Federalist, would have stated the doc- trine with judicial fairness if he had ever heard of it. But lie * Guizot ou Representative Government, pp. 4C6, 467, 482, 507, 513, 517. 410 ECONOMIC PHILOSOPHY. says that the king's veto was then in disuse only because the crown had. found it more easy to control parliament by its arts than by its prerogative.* Blackstone may have ignored the doc- trine through toryism, and Hamilton may have written sarcas- tically ; but there is haixlly any evidence that, in their period, this had yet become even a tenet of Whig politics, still less that it was an accepted doctrine of the English constitution. History must, therefore, award chiefly to Queen Victoria's reign the credit of having first displayed the conscientious and admirable non- partisanship which was necessary to engraft this principle firmly into the British constitution. The queen has done this without seeking to influence personally either the popular elections, by which the complexion of the House should be determined, or the course of discussion by which its majorities should be controlled. The English ministry at present consists of thirty-one per- sons, of whom from eleven to sixteen form the cabinet, the others being usually heads of bureaus, but not consulting offi- cers of the crown. The cabinet includes the first lord of the treasury, chancellor of the exchequer, lord chancellor, president of the council, lord privy seal, secretaries of state for the home department, for foreign affairs, for the colonies, for war, and for India, first lord of the admiralty, first commissioner of works, chief secretary for Ireland, and generally also the president of the local government board, vice-president of the education commit- tee of the privy council, and the chancellor of the Duchy of Lan- caster. The actual executive officers who administer the govern- ment are known as " ministers with a portfolio," i. e., having the responsible headship of a department, and are cabinet mem- bers. The selection of the cabinet from among the ministers is not always the same. Generally the premier has been the first lord of the treasury, sometimes the chancellor of the exchequer, sometimes both ; and sometimes, as in the case of William Pitt, a secretary of state. Tlie crown, through its ministry, takes the initiative usually in * In Letter LXIX. of The Federalist, Alexander Hamilton says : " The King of Great Britain, on his part, has an absolute negative upon the acts of the two houses of parliament. The disuse of that power for a considerable time past does not affect the reality of its existence, and is to be ascribed wholly to the crown having found the means of substituting influence for authority, or the art of gaining; a majority in one or the other of the two houses, for the necessit}"^ of exerting a prerogative, which could seldom he exerted without hazarding some degree of rational agitation." LEGISLATION IN ENGLAND. 411 legislation, preparing, proposing, and defending in parliament the bills and measures on which it stakes its success as an admin- istration. So long as these measures are concurred in by the last elected House, they are presumed to accord with the will of the voting constituency. For securing harmony toward the minis- terial measures, certain members of the ministry need to have seats in the House of Commons ; as these do not accrue to them by virtue of their selection as ministers, they must be elected by some constituency to a seat in the House. A member of the British cabinet is usually also a member of the House of Lords or House of Commons, the latter being in modei'n times the more effective position ; he is also a member of the queen's privy council, a somewhat indefinite body of eminent persons, including many not in the cabinet or ministry. It is somewhat as if the President of the United States should, by usage, select his cabinet from among the more prominent mem- bers of the Senate and House, these members combining to per- form their representative functions in addition to their cabinet duties. The chief legislative duty of the leading cabinet officers, after devising measures for the consideration of parliament, is to defend these measures on the floor of either house. The chief duty of the leaders of the opposition is to carefully avoid opposing a government measure otherwise than by criticism of its details, unless they have something better and more in harmony with the public will to propose. This insures that habitual moderation, caution, and candor which distinguish English speeches in par- liament. They seem inferior to American speeches in statistical and legal acquirement, are less patriotic, and get down less fre- quently to bases of fundamental right and equity. But they are more guarded, discreet, and, as a rule, politic, and rest their case on expediency and exigency more than on principle. When the wary and prudent leader of the opposition sees his antagonist adopt a policy on which he thinks he can be over- thrown, first in the House of Commons, and then, if necessary, before the people, he attacks the offending measure, and the struggle in debate is not for the empty applause of the gallei'ies, but for the control of the government. Each party puts forward its most powerful yet most judicious combatants. It is not a set speech or lecture, to be followed by handshakings of friends, printed and sent to one's constituents, and that is all. If success- ful it means a change of office and policy, and almost of necessity that the critic will succeed in office the statesman he is criticisr 412 ECONOMIC PHILOSOPHY. ing. Such a struggle sorts men and develops statesmen, by an analysis far finer than any that can be made by any politicians in national conventions, or by any voters at the polls. The man it brings forward is, however, a great debater chiefly. It is worthy of note that great debaters are seldom regarded as the best admin- istrators. A government in which all power is conferred, either immedi- ately or ultimately, by election or choice of the people, or of the majority of military force of the people, and no part of it by in- heritance, purchase, or direct military force, is a republic. If the people elect a legislature, which enacts la\YS by virtue of the power thus delegated, as in the United States, it is a representa- tive republic. The parliament of Great Britain is also a repre- sentative legislature, as respects its House of Commons. In the Roman republic, however, the representative j)rinciple did not exist. The people voted directly for their officers, and upon all statutes, or leges, submitted to them, according to one or the other of three modes of mustering or grouping, in one of which the power was chiefly in the patricians,* in another of which it was chiefly in the wealthy and the army,t and in the third of which it was in the plebeians or commonalty. J These modes of voting distinguished respectively the infancy, the ascendency and the decay of the state. In the earliest mode, known as the Comitia Cur lata, only the patricians or aristocracy voted, but the vote of one patrician was equal to that of another, as in the British House of Lords. From that, Rome passed to the more complex vote by centuries, known as the Comitia Cen- turiata. The people were divided at the census into six classes, according to their wealth. As the purchasing power of Roman money can not be accurately expressed in modern money, it may be proximately accui'ate to say that all worth upwards of $1,000,- 000 wei'e in the flrst class, and had thirty -five parts in a hundred of the voting power of the state, and furnished thirty-five hun- dredths of the army and the treasury. Those worth less than $1,000,000, and more than $500,000, were in the second class, and furnished one-quarter of the army and of the reveime, and en- joyed one-quarter of the voting power. An absolute union of the first and second classes, therefore, could carry any measure, and the vote of the other classes needed not to be taken. If, however, a vote of the first and second classes failed to exhibit a majority * Comitia Curiata. + Comitia Centuriata. J Comitia Tributa. BESPONSIBLE GOVERNMENT. 413 of the whole, then the third class, worth say $100,000, or the fourth, worth $50,000, or the fifth, worth $10,000, or the sixth, worth $500, would be consulted. In practice, the $500 class was seldom consulted. Taxation and representation were bi'ought into their logical coherency in a masterly way in this Roman system of voting by centuries. The right to cast a certain voting power grew out of the possession of a corresponding amount of assessed capital, and carried with it inseparably the obligation to contribute a corresponding ratio of the army and the revenue. This identity of taxation and representation did much toward advancing Rome to be the ruler of the world. The third system of voting, known as voting by tribes, or Coniitia Tributa, admitted the plebeians, freedmen, aliens, and non property-holders to vote on an equality with the aristocracy, whereupon, of course, the aristocracy stopped voting altogether, and the Roman mob became the saddle on which the Caesars rode into power. Universal suffrage, divested of the counteracting influence of capital, became the stepping-stone to the complete abolition of all suffrage, first in value and then in use. To this subject, among American statesmen, Mr. Calhoun in his celebrated "Disquisition on Government," and Mr.Webster in many of his speeches, have alluded. Whatever were Mr. Cal- houn's inducements to reflect upon the insecurity of capital under a rule of numbers alone, he took the ground that governments are constitutional and enduring only when they combine the concurring majorities of each of the distinct forces which go to make ui) the power of societj^. If the priesthood and religion i-eally govern society, as they do in Turkey, Italy, Spain, and Mexico, then they will have power enough to overturn any state in which they are not represented. If the landholders are the chief social force, as in Germany, France, and England, then a government which ignores the landholders, and rests, for instance, on the jDriests, must fall or give place to one in which the landholders are represented. If the army and the aristoc- racy are the chief forces in the state, as they were in Rome, then their ascendency must be acknowledged in the constitution, or they will overthrow the constitution which ignores them. And finally, if the church, and the army, and the landholdei's and capitalists, all cease to be a force in the state, as they do in com- munities whei'e capital is equally diffused, and there are a hun- di'ed sects, and no standing army exists, there numbers become a 414 EGONOMIG PHILOSOPHY. ruling power, and any constitution which fails to respect them, will fall. Mr. Calhoun defined a despotism as being a government which attempts to rule society exclusively by one of its forces, whether such force were the church, the army, the landholders, or mere numbers. He defined a constitutional government as one which provided for gathering up and representing the views of each of the ruling forces of the state in a co-ordinate branch of the leg- islature, in such a manner as to give to its united voice a veto on the action of the other forces of the state. If numbers, therefore, were represented in the lower branch of a state legislature, and capital in the upper, he called this a government by concuiu'ing majorities, i. e., the majority or voice of numbers concurring with the majority or voice of capital ; whereas, if numbers naerely elected both branches of the legislature, the government not having provided itself with any machinery by which it could take the views or listen to the voice of capital, would be, as to capital, a hostile despotism, tending toward frequent encroach- ments and periodical culminations of force. Mr. Calhoun thought the majority would tend not only to tyrannize over the minority, but to vest so large a share of power in its individual chieftain, for the time being, as would extend his powers into absolute- ness, while still wearing the title of an elective officer. Sooner or later he would brave both the will of the legislature and of the judiciary, perhaps also of his constitutional advisers and of his own party. According to Mr. Calhoun's definition, our American govern- ments represent but one of the forces of society, there being no provision for affoi'ding an authoritative expression to either cap- ital, culture, character, or experience. In marked contrast with the quasi-aristocratic views of men like Calhoun, Webster, and Hamilton, the socialist school in- veigh with great bitterness against the ascendency which capital or individual capitalists obtain in all modern governments, and quite as much in those of the United States as in those which are more aristocratic in form. They point to the increasing ratio in which, with each recurring election, the millionaires seem to take the places which were formerly filled by orators and great lawyers in the Senate of the United States. They cite the vast expenses of conducting, not only presidential elections, but elec- tions of members of Congress. These expenses are so great that it is alleged syndicates of capitalists, or at least a concurrent FORMS OF REPUBLICS. 415 action and system of contribution among capitalists, are essential to decide every election. In this manner, under the forms of equality and univei'sal suffrage, a return is made to a government by the few. Between Mr. Calhoun, on the ultra-aristocratic side, and Karl Marx, on the ultra-democratic, society at present maintains a com- placent inertia. It is not terrified at the degree in which capital is now represented, nor alarmed lest it has not representation enough. A time may come, however, when it will consider whether a mere choice of capitalists sufficiently answers the re- quirement of a representation of capital. But that time is not yet. The Greek repubhcs were not representative, but questions were submitted to the whole people dii'ectly, in a manner resembling that of the American town-meeting. 167. Diversity of Form in Republics. — A republic there- foi'e maj^ be aristocratic, military, or democratic, representative or direct, and responsible, or having fixed terms of office for its legislators. If it consists of many states confederated into one, it becomes also a federal republic. The United States of America are a democratic, federal, representative republic, constituted on the principle of fixed terms of office for its legislators, and there- fore without the principle of ministerial responsibility. Each State in the Union is a republic, of the same quality as the United States, except that it is single and not federal, and sovereign, as regards other States of the Union only, but subordinate as regards the federal government, and municipal merely as regards foreign nations. The judicial tribunal, with which it lies to decide in the last resort, for all judicial purposes, what are the relative powers of the national and State governments, is itself a part of the national government, viz., the Supreme Court of the United States. The executive and legislative branches of the government of the United States did also, in the war for the suppression of the rebel- lion of the Southern States, in 1861-5, successfully decide, by mili- tary force, that it was the province of the general govei-nment to coerce a seceding State. Hence it may be assumed as settled that while the several States have a qualified sovereignty relatively to each other, to the extent recognized by the constitution of the United States, and while the United States is a government of limited and delegated powers, yet within the scope of these limited powere the sovereignty of the United States is supreme, and that of the several States is subordinate. As resjoects foreign nations, 416 EGONOMtG PHILOSOPHY. the State of New York is as completely a subdivision of the Ameri- can nation as Yorkshire or Scotland is of Great Britain. France, relatively to the United States, is a highly centralized and military republic, which exercises the power of appointing mayors of cities, and controlling the police of the country, in de- tails which, in the United States, are remitted to the several states. Mexico, on the contrary, is, relatively to the United States, an ex- tremely decentralized republic, in the nature of a league of states. Each Mexican state levies import and export duties, independently of the central government, a power the denial of which to the several states under our system imparts a more perfect unity to the nation, than pertains to Mexico. Forms of government differ chiefly in the mode of selecting the officers who are to constitute the mechanism, and vary compara- tively little in the nature of the mechanism, or in the mode in which it runs when constituted. The mechanism itself always consists of a single controlling executive will, whether it be that of the emperor, czar, chancellor, premier, king, or president, in whom, in most cases, centers a power so large, that the whole power of the national legislature becomes, for the time being, ad- visory, and, in a practical sense, secondary, though (in parlia- mentary and republican governments) overruling, at least in theory. This central will is influenced by four classes of checks : (1) those imposed by an immediate groux3 of personal advisers, the cabinet ; (3) those imposed by the legislature, or national' council, through permanent laws ; (3) those imposed by the ju- diciary, and (4) those imposed by the constitution. The admin- istrative force of the United States, numbering in the civil service upward of 100,000 persons, is subordinate to the executive ; so are the army, and navy, and diplomatic force. These consti- tute, together, the entire administrative force, and this does not differ greatl}^, in personnel or duties, from what are called the bureaux in bureaucratic governments. All the machinery of the most absolute government exists, therefore, in a republic, and does the practical work of governing in the same manner as it is done under bureaucratic governments, so far as the absolute authority of the central head, for the time being, is concerned, except so far as it is held in check by the constitution, the judi- ciary, and the legislature. Of the three departments, the executive, legislative, and judi- cial, the judicial is that which, at most times, seems to. reach the citizen with most coei'cive force, since it is that alone which SELECTING A PRESIDENT. 417 is in the habit constantly of commanding his presence by its "writs, of compelling his obedience by its i^unishments, and of arbitrarily overruling his judgments by its own. The legisla- tive department, of a republic like that of the United States, affects him chiefly through its power to regulate tariffs on im- ports and money, to encourage navigation and maritime com- merce, to provide for transporting the mails, and to influence war and peace, and the terms on which he shall render militaiy service. The declaration in the American Constitution, that only Congress can declare war, is virtually futile, since declara- tions of war, as a usage of nations, have nearly ceased to exist, and in fact the steps which lead to war ai^e, almost of necessity, acts of policy determinable only by the executive. It was so in the war with England in 1812, with Mexico in 1848, and with the Confederate States in 1861. The powers of a republican president are thus practically as absolute, for the time being, as those of a British premier. So long as he avoids a vote overruling his veto, by two-thirds of both houses of Congress, he is not inferior to a Russian czar in actual potency. He has the same bureaus at command for en- forcing his will, and the same control of the army and navy. Natui'ally, therefore, the machinery for selecting the president is of prime importance in a republic. Law governs only the formal act of voting. But anterior to the vote there is a campaign. This campaign knows no law. In monarchies the king reigns ! This is fixed by law. But who governs ? This is " Variable as the shade By the light-quivering aspen made." Perhaps the courtiers, or the premier, or the chancellor. Philip of Macedon declared that Alexander, while a child, ruled Mace- don. How ? "His mother rules me, and he rules his mother ! " So, in republics, the people reign — i.e. , they may change their rulers. But to change one's rulers is not to x'ule. Those rule who manage the machinery for selecting rulers. For thirty-five years, from 1790 to 1825, the men already se- ^ lected for office managed the machinery of election. This was when a caucus of Senators and Representatives of each party selected the candidates for President and Vice-President, to be voted for either by the people or by one party. The men who took part in it were necessarily familiar with practical legislation, with economics, with the presidential candidates, and wdth the duties of the presidential office. 418 ECONOMIC PHILOSOPEY. A clause of the Federal Constitution provides that the electors of President and Vice-President should meet at the several state capitals, and there vote by ballot, and therefore in secret, as to the names of their candidates. Mr. Hamilton, in The Federalist, shows that it was expected to be a marked excellence of this sys- tem that no one would know beforehand, and that no one would need to know, or would have the right to know afterward, for whom any presidential elector should cast his vote. The framers of the Constitution had no experience to draw upon, of the effects which would be wrought upon the machinery for the selection of candidates, by so expanding the right of suffrage as to include all the male adult citizens, of widely separated states, in the one act of selection, and at the same time so extending the offices to which voting would apply, as to subject the chief executive office of a nation of 50,000,000 of people dii^ectly, or indirectly, to the popu- lar choice. The only elections, with whose machinery they could have been familiar, were the Greek, Roman, English, German, Polish, Papal, and Colonial. The first were simple town meet- ings, and did not involve the element of voting for the sarr^ officer simultaneously by different constituencies, at widely sepa- rated polling places, and therefore did not call for an anterior series of party conventions to nominate candidates, in order that all who are in one party might vote for one man, and so secure the greatest strength possible for its real or supposed principles. At the English elections of members of Parliament the sheriff summoned all the voters of the county to the county-seat, one or two nominations were made viva voce, and a show of hands, or a gathering of the voters on opposite sides of a fence, enabled the sheriff to make the count, and he returned accordingly. The Roman system was more extended and complete. None afforded any precedent for the United States, except the Papal. The ap- plicability of the latter, as a precedent, was observed, but not entirely followed, by those who framed the Federal Constitution. The College of Cardinals which elects the Pope is usually made up chiefly of Italians. It contains, however, many representa- tives of the Church in other nations. It therefore represents, though in very unequal ratio to their numbers, widely separated constituencies and about three times as many persons, as, even now, make up the American population. This college meets and votes in virtual secresy. Each cardinal has his individual independence of choice, in the full degree that the framers of the American Constitution intended the members AMENDMENT BY USURPATION. 419 of the American Electoral College to have. No anterior nomina- tion of a candidate for the Papacy could avail if made, and there is no temptation to make one. The entire college, or body of electors, meet in one place. All the nominating, intriguing, and, if there be any, all the bargaining, must be done in this body, to be effective. The framers of the American Constitution sought to remove the temptation to bargaining and corruption. They would pre- serve the independence of the presidential electors whom the people of the several States should choose, to make the choice for them, by having them vote at widely distant places. Then they could not bargain. Hence, they provided that the presidential electors should meet at the state capitals of their respective States, then 13, now 39, in number. The effect was the wholly unforeseen one, that a bargain had first to be made, whom these electors should vote for. Precisely what the Constitution forbade, the people wanted, viz. , a bargain. They did not want independent electors, but subservient electors, who would obey the popular will. They caused candidates for each party to be nominated in advance of the popular vote, not merely for electors as the Constitution designed, but for the chief ofiicers themselves, with the implied result, that the elec- tors would be bound by a political honor, stronger than law or covenant, to vote only for the one man for each office, who had been nominated by this anterior machinery of nomirfation. Until 1828, it was a caucus of members of Congress of each party. Since that date, it has been a national nominating convention of the members of each political party, selected by voluntary assem- blies. All this lies wholly outside the constitution and the statutes. Probably, from its very nature, it can not be made law. Thus the electoral colleges become as many dummy bodies as there are States. The actual choice passes from the electoral college, in two fractions: one half of its intended powers is usurped by the nominating convention; the other half of it is usurped by votei's at the polls. The privilege of choosing from among the whole people two or more candidates for President and Vice-President, so that each political party can, in pretending to vote for electors, in reality vote for its candidate, is usurped by the national conventions. The privilege of voting between these two or three candidates is usurped by the voters at the polls. The presidential electors abdicate their powers in favor, in part, of the voters directly, and, in part, of the nominating assemblies. 420 ECONOMIC PHILOSOPHY. While they take an oath to support the Constitution of the United States, they foi^ego the proper exercise, in their own per- sons, of that supreme judgment and choice, which the Constitution intends them to manifest, without outside dictation or suggestion. In order to render such a dictation as that to which they sub- mit, an impertinence, they are required to vote by ballot. They vote by ballot, but they accept the supposed impertinence as being strictly pertinent and proper. The departure, from the constitutional intent, is popular, because of the supposed necessity of making political parties represent principles. To this end they must unite in the assertion of these principles, in advance of an election, which they do by their platform. It is felt that the power of the people is thus increased; since, instead of voting merely for electors, they vote virtually for President. It is assumed, also, that the diffusion of intelligence through the press, among the people, is so general, that the voters in their primitive capacity are as good judges as the electoral colleges would be, both of the qualifications and qualities required in the presidential office, and of the possession of these requisites by the candidates. This democratic correction of the Constitution, with- out amendment, is no longer questioned. The document is popu- larly regarded as having shown an unnecessary and aristocratic distrust of the wisdom of the common people. Under a reign of the people this is the most unpopular of crimes. Thfe effect is that the people vote for candidates, whom not more than one in 100,000 of them knows personally, or has met in conjunction with any act of official duty. The pretended "information " communicated to them through the press, as the day of election draws near, degenerates into slanders for one candidate and fulsome overestimate of the good qualities of the other. The great mass of voters have no means of sifting the truth from the falsehood. They believe nothing, and "go it blind." To cause the constitutional system to be adhered to in its spirit, would require that, by amendment, the pi'esidential electors should meet in one body, instead of in forty. This would abolish the function of the national conventions, and revive the electoral college, as a constitutional machinery of selection. The voters of each congressional district would then, in voting for one or more electors from their district, vote for a man whom most of them would know personally, and at the same time the electors of President and Vice-President would, when convened, consist of men of the rank of Senators and Con- MAJORITIES RULE BY ONE. 421 gressmeii, and who would know personally much of the practical working's of the px*esidential office, and all the persons suggested by either party as candidates. In any system of voting by majorities or pluralities, the two parties neutralize each other's votes up to the point where their equal voting ends. The majority only counts. Moreover, of all the votes in that majority, none but the first one has any legal efficiency in deciding the question. Hence, in a strict mathe- matical sense, all popular voting is decided by one vote. Thus, in the vote between Blaine and Cleveland for the Presi- dency, the votes for Cleveland wei'e 4,911,017. Those for Blaine were 4,848,334. The plurality was 62,683. The 4,848,334 votes cast for Blaine were neutralized wholly by the equivalent num- ber cast for Cleveland. Of all the 62, 683 votes which are supposed to form the effective plurality, only one vote has any legal effi- ciency. A conceded plui'ality of one would have been as effective, as one of 62,683. Hence all majority rule becomes, in the last analysis, the rule of one. In the vote between candidates Hayes and Tilden in 1876, the vote as counted in the electoral college was one of 185 to 184, a decision by one vote. The question, however, whether it should be so counted was decided by a vote of 8 to 7 in an electoral commission, which had to be so constructed as to render such a decision possible, in order to render any decision whatever certain. The passage of the law, creating the electoral commission, was effected in each house, by votes of which none had any efficiency, except the one vote that effected a majority. When passed its existence as law depended again upon the single vote of the President. The question to be decided in the election, turned upon the votes of a single State, Louisiana, and depended upon a popular vote, which was divisible into three parts, as follows: USELESS. EFFICIENT. USELESS. 422 ECONOMIC PHILOSOPHY. The ultimate crisis, wherein the one or the few govern, may arise at one election in one place, and at another in quite a different jilace. When reached, there is always an equation between bal- ancing- quantities, which virtually eliminates them from the con- test. Then there is a useless surplus, always thrown away. Cutting off all these, one vote decides. This is felt in national conventions. Local primaries of every ward and town send delegates to the congressional or state con- vention. This in turn elects delegates to the national conven- tion. In the first, so little interest is felt that it is difficult to get one-fifteenth of the persons entitled to vote at them, to take part in them. They know their votes there are mere counters, to be set off against opposing votes. The actual motive, for attending, is usually one of employment. Those who want political favor do this work to secure that favor. In the state conventions the in- terest is still listless, as respects their action in selecting delegates to the national convention, unless it is perceived in advance that THE UNIT VOTE wliicli is to decide the national result is in that state convention. Then all is vim and fire. In the national convention, as each ballot is taken, there is merely anxious in- quiry, until the vote nears the point where mathematicians on both sides have set off all the fixed and unchangeable votes against each other. This brings two candidates where the change of one vote will elect one or the other, at least to the candidacy. This, if parties are equal, brings him one chance, in two, of the election. In the Chicago conventions, of each party, in 1884, the excitement was of an intensity that indicated that it was actually and in fact here, in this wholly extra- constitutional body, that a President was being made. The prospect, that one vote would speedily determine the question, could be figured out by all. _ Through 36 ballotings, in the Republican convention of 1880, the call had been for Blaine 284 or thereabouts, for Grant 304 to 309, settling finally at 306, and the deadlock had worn every body out. When it becomes known that neither of the two preferred can- didates can be elected, some other must be taken. As it is little matter, to many of the delegates, who the other may be, it goes by panic. One vote from either side, and another and another, to- ward the new candidate, converts the action into a stampede. The effect of these straggling votes is foreseen by the immense assemblage. Each vote at this crisis is drowned in cheers and yells, because it is seen to be the one vote that tells. The rising' THE FEW THAT 0H008E. 423 of the vast assemblage, and the waving of hats and nandker- chiefs, laughing and weeping, crying, cheering, and embracing, all indicate the emotional crisis. Here, and not in the electoral college or at the polls, the true efficient choice is made, at least it is either in that convention or in its rival. When it is seen how the tide can be made to go by their votes, chairmen of the dele- gations of twenty States at once will rise to announce the change in the vote of their State. At the convention referi'ed to, Garfield received no votes until the thirty-first ballot, and then only one ; one on the thirty-second, and one on the thirty -third. On the thirty-fourth he rose to seventeen, on the thirty-fifth to fifty. Tliis revealed him as the ' ' dark horse " in the race, and on the thirty-sixth ballot he received 399, the number essential to a choice being 378. The persons who thus reduced the choice of the x\merican people at the polls, to a choice between General Garfield and General W. S. Hancock, whose selection by the Democratic convention was arrived at in the same manner, were as few in number as those who would have decided it in the electoral college, had the spirit of the constitutional provision been found or made practicable, but they were not the same few. So in the subsequent contest between Messrs. Cleveland and Blaine, the " few" whose casting votes determined the selection, in convention, of Cleveland on one side and Blaine on the other, were politicians of New York, to the number of a dozen in each party. Finally the contest was decided for the nation by a plu- rality, Mr. Blaine has said, of less than one-eleventh of one per cent, of the voters of New York at the polls. But, in theory, and in legal efiiciency, every voter even of this small fraction existed as a useless surplus, after the one vote necessary to avoid a tie. None will be so obtuse as to suppose we overlook the value of a larger majority as a means to avoid a strife over the question whethei- this plurality of one exists. But the legal and constitu- tional efficiency all centers in the one vote. As all government by majorities is thus reducible in final analysis to a selection by a few, and a decision by one, it is a delusion to suppose that dem- ocratic institutions can impart governiiig efficiency to each indi- vidual of the whole numerical mass. The number of persons, in whose breasts it lies to exercise a final efficient choice, on eco- nomic or administrative questions, is somewhat larger in republics, than in monarchies, but it is by no means so much larger as many suppose. In America the governing class, as represented by the officers filially chosen to perform the work of the federal and 424 ECONOMIC PHILOSOPHY. state governments, is very large, and may be larger than in most counti-ies. In some phases it shows greater cost. Thus the six hundi'ed members who sit in the House of Commons of England, the members of the House of Lords, and we believe the governing councils of most or all of the cities, still do, or until very recently did, serve without pay. In America the national Congress, thirty-nine state and several territorial legislatures, and the com- mon councils of most of the cities, comprising probably 5,000 persons, draw regular salaries. In England thirty-five judges of the courts of record seem to have performed the genei'al and appellate judicial work for 28,000,000 people. We have no similar number of people, among whom the performance of judicial work does not call for the services of a number of judges, at least ten times as large. Republics are generous in expenditure. No throne-room in Europe, it is believed, costs more than the chamber of the New York councilmen. No palace or public building, for representing the dignity of an equal number of people, equals in expense the state capitol at Albany, or that at Springfield, 111. The most virtuous and meritorious quality, in the practical working of a republican government founded on manhood suffrage, when brought into comparison with governments professing to represent wealth, land, religion, the ai-my, or other special but powerful interest, is the largeness numerically of the class to which it tries to do the greatest possi- ble good. It may still continue exclusive toward any non- voting class, or despotic toward any class which is sure not to come into potency as a constituency. It is nearly certain to do far more for education, for the dependent, defective, and delinquent classes, for the general promotion of industry, and i^robably to raake more public improvements, than a government which arises out of a condition of industry wherein the voting constitu- ency is more narrow in i-elative numbers. It will tax capital if it can, and so far as it can, rather than labor. There is great breadth of purpose, and in general a shrewd perception of the drift of the jDopular weal, as well as wishes, in American politics. In the politics of republics which have a less ample treasury of national earnings to draw upon, the economic results must be less binlliant. The anticipations of the founders of the American re- public have not been fully met in several respects. They did not suppose that success in obtaining office would depend so much more on skill in nuanipulating the machinery of selecting candi- dates for office, than on skill in performing the duties of office. CONVENTION-MADE KINGS. 425 They did not desii'e so frequent a displacement, of one inexperi- enced officer, by another equally inexperienced, as often occurs. They did not foresee the costly political convulsions of the first magnitude, and consequent incurment of expense for armies and navies, which, when spread over the intervening years, would render the military expenses of an unarmed I'epublic fully equal to those of any armed empire. Questions which it Avas hoped to submit to the arbitrament of the whole people, or, if of a few, at least of a well-selected and highly intelligent few, seem often to turn on political accidents, in far out-of-the-way constituencies of small intelligence. The question whether Hayes was elected turns for the moment on the point whether a negress named Eliza Cranston, in an obscure parish in Louisiana, speaks the truth. Accidental segments, insignificant fractions, and small self -constituted and self-seeking coteries of party conventions of manipulators, remind us by their vehemence and power, that temporarily the pyramid of state rests on its apex. The few who control are too accidental, too. un- informed, too vmtrustworthy and too extra-hazardous, to deserve to have such a load of responsibility thrust on them. * An aristoc- racy that becomes such by commanding armies or by acquiring lands, is not, in the long run, inferior to one that becomes such by skillful management of primary conventions. In adjusting the slavery question by popular convulsion, instead of, as in Russia, by executive disci"etion,t the Ameincan Republic has shown that where a very large number of the people are interested in an evil, a government wherein the initiative may be said to spring from the common people, and go upward, may be less awake to the de- mands of economic, ethical, and moral progress than one in which a single enlightened ruler may enjoy an absolute confi- dence and unchangeable tenure of power. * Upon this, Mr. deTocqueville, in his " Democracy'in America," remarked : "In the immense crowd which throngs the avenues to power in the United States, I found very few men who displayed that manly candor and masculine independence of opinion which frequently distinguished the Americans in former times, and which constitutes the leading feature in distinguished characters wheresoever they may be found. It seems at first sight as if all the minds of the Americans were formed upon one model, so accurately do they follow the same rouie. A stranger does indeed sometimes meet with Americans who dissent from the rigor of these formularies, with men who deplore the effects of the laws, the mutability and the iarnorance of democracy — who even go so far as to observe the evil tendencies which impair the national character, and to point out such remedies as it might be possible to apply, . . . but . . . they hold a different language in public." t Tide "Russia," j30«/, § 594, Ch. XIII. 426 ECONOMIC PHILOSOPHY. The feat are which is most original and admirable is equal representation of population according to numbers in the House of Representatives, and of large and small States as equals with each other in the Senate. This has introduced into the United States Senate a spii'it whose aim is to temper power with equity. It has been, at most times, the ablest because the most equitable deliberative body in the world. The British House of Lords might be restored to vitality by such a federation of the empire as would embody in it something of the dignity of the American Senate. Capital might be represented in it more per- fectly than^now, and in addition the various states and dominions, now governed by Parliament. 168. Diversity of Fuuctions and Objects. — Governments are further classified as either military or civil, provisional or permanent, constitutional or absolute, of mutual checks and bal- ances or sovereign in some one department, tributary or supreme, temporal or spiritual, religious or secular, general or local, cen- tralized or distributed (decentralized). An absolute government has some one department, or body, which possesses at least legislative omnipotence, and which, in the last resort, can effectively control all other departments. In this sense, Great Britain is an absolute government, and its parliament possesses legislative omnipotence, in itself, and final absolute power over all other departments. It can declare the throne vacant, as it did on the occasion of the forced abdication of James II. It can change the succession, as it has done on several occasions, elect- ing a new family to reign, and prescribing a new order of inher- itance for the crown. Doubtless, on what it deemed a sufficient provocation, or reason, it could terminate the heritable quality in the crown, and make it elective. This would be styled, in English parlance, a revolution, and a change in the fundamental law. The English parliament, however, has tlie power to cliange the fund- amental law by whiclx it is bound, and this makes it absolute, or a law unto itself. It lias power to impeach, and execute, all judges who should oppose its will, as well as all ministei's of the crown who should nullify its laws or disobey its commands. The pi-o- ceedings of the Long Parliament, and of the Protectorate imder' Cromwell, including the execution of Charles I. , are, out of def- erence to the kingly principle, usually assumed, in English dis- cussion, to be unconstitutional and revolutionary. They were, however, assertions of the practical omnipotence of parliament, which underlie and cause the present supremacy of the House of UNITED STATES OOVERNNENT. 427 Commons. Without these, and the subsequent parhamentary revolutions, it would not to-day be the theory of the English gov- ernment that parliament is supreme over the crow^n, and that in parliament the House of Commons is supreme over the House of Lords. Still, the particular machinery through which the Com- mons assert their supremacy, over other branches of the govern- ment, is that, by means of the principle of responsible government, the House of Commons controls the ministers of the ci'own, and) as these have the power at all times to appoint new peers, they can at all times, through the appointment of new peers, control the House of Lords. The United States, on the other hand, is a government of mu- tual checks and balances, or wherein absolute sovereignty is not lodged in any one department, but each may check the other. The departments for this purpose are(l) the executive, of which the President is chief, and which includes the cabinet and all subordinate officers (about 120,000 in all) of the civil service, the diplomatic officers and consuls, the army and navy ; (2) The legislative department, consisting of both houses of Congress ; (3) The judiciary, comprising all the federal courts, viz. , the Supreme Court of the United States, cii'cuit courts, district courts, territorial courts, court of claims, and courts of the District of Columbia. The executive, legislative, and judicial departments act as checks upon and balance each other in certain ways. If the ex- ecutive and Congress are dissatisfied with the workings of the Supreme Court they have the power by law to reconstitute the court, expand or reduce the number of judges, and, in case it is expanded, the President has power by the selection of the added judges to determine the political complexion of the court, and in some degree the quality of its judicial decisions upon the class of legal questions he has in mind at the time he makes the ap- pointment. Action of this kind is held in disfavor, however, as large numbers of the people regard the Supreme Court as a body that should not be subordinated to the views of the President and Congress in its judicial decisions, even where they bear in their effect upon the political departments of the government. The two houses of Congress have also the power to impeach and remove either the President, or the judges of the Supi'eme Court, for high crimes and misdemeanors. Tlie Supreme Court has, by judicial construction, in consequence 428 ECONOMIC PHILOSOPHY. of the existence of our written Constitution, a power to declare an act of Congress, regularly passed, null and void, if it holds the act to be in conflict with the written Constitution. This is a power not possessed by the courts under any other form of gov- ernment, unless it may have been copied, from ours, into the con- stitutions of some of the Spanish- American states. The President, through the veto power, can check any action of Congress not capable of being passed by a two-thirds vote over his veto. In practice, each of the departments of our government has, at times, exerted a powerful check on the action of the others. The distinction between temporal and spiritual government is essential to a clear view of the science of comparative govern- ment. A government is temporal if it has charge of the bodies, prop- erties, and legal rights of its subjects, with power to inflict cor- poral and pecuniary punishments, and to regulate the transfer and descent of property. Such are the governments of England, France, Italy, and Spain. It is spiritual, if it have charge of the consciences of any class of subject persons, with a purporting power to dictate to them what is right and what is wrong, or what will make for their supposed weKare in a present or a future world. Such is the government of the Pope of Rome, of the Patriarch of Con- stantinople as the head of the Greek Church, and of the Czar of Russia as the competing or antagonistic head of the same Greek Church. Such also, under the Mohammedan faith, are the Sultan of the Ottomans, and the Sheik ul Islam of Mecca. In England spiritual and temporal powers combine in the queen. In Germany, they unite in the emperor. In Spain, Aus- tria, and Brazil, the Spanish- American republics, and all the har- moniously Catholic countries, the temporal power is in the state, but it acknowledges the spiritual supremacy of the Pope of Rome. In France the republic is a secular republic, entangled with the embarrassments growing out of a former union between the monarchical state, to which it succeeds, and the church. In the United States the distinction between temporal and spir- itual powers does not exist, but the federal and state governments are seculai', exercising no influence Avhatever over religious affairs, and no such thing as a spiritual government is recognized by law. Secular and religious government ai-e distinguished in GENERAL AND LOCAL. 429 the United States as follows : A state is secular, when it identi- fies itself with no religious faith of any kind as a state, hut leaves its citizens and its officials, when acting in their moral capacity as individual persons, free to perform or neglect, to observe or to avoid, any and every religious duty or pi'inciple as each j)er- son shall for himself elect. In the United States, therefore, all religious organizations are simply private corporations which are permitted to exercise a merely persuasive and not in any degree a coercive power. Nor could a coercive power be conferred upon them, by the consent of their members, which would not be re- buked and set aside, or punished, by the civil courts. General and local government are distinguished as follows: General government consists of such of the functions of govern- ment as ai-e exercised by the same authority, according to the same rules, and by persons selected in the same general manner, for extended areas of country and large and widely separated and numerous populations. Local government consists of such of the functions of government as are permitted to be broken up, subdivided, or " morselized, " so as to be exercised by diverse au- thorities, by officers selected according to different rules, and act- ing in diverse ways in different parts of the country. 169. Liocal Goveriiinent. — All the subdivisions of gov- ernment, according to their form, which have been heretofore named, whether as monarchies, aristocracies, democracies, or re- publics, whether as bureaucratic, hereditary, or imperial, wheth- er as responsible or of fixed terms, whether as parliamentary and absolute, or of checks and balances, whether as despotic or free, whether as temporal or spiritual, religious or secular, have liad reference to the general government. The general compares with the local government as the spires, domes, towers, and loft- ier architectural features of an edifice, as seen from without, com- pare with its inner apartments, its parlors, kitchens, sitting- rooms, and conveniences for home life. The comfort of a people dwelling within an edifice may depend more on the mode of get- ting the kettle over the fire, or ventilating the sleeping-rooms, or expelling flies fi^om the larder, than upon the question whether a tower is true Gothic, or a pillar is absolute Corinthian. So the amount of real liberty and prosperity enjoyed by a people may depend chiefly upon the administration and form of the local government, which lays out r-oads, builds bridges, schools, and sewers, docks, markets, and baths, provides gas, water, and paved gtreets, licenses street railways, cabs, and carts,, and also trades 430 ECONOMIC PHILOSOPEY. and amusements, lays out parks, opens public libraries, regulates health, buries the dead, and feeds the homeless poor, and which, in some countries, lays out farms as well, and divides their pro- duce among the workers, or collects their wages, or shuts out or licenses alcoholic drinks. Local government gets nearer to the people in many things than general government, and may be of a very unlike character to that of the general government. In Russia, for instance, each mir or village commune is a little communistic democracy, in which no peasant can lose his title to his home, while in Ireland each landed estate is a little absolute despotism, in which nothing but a revolution could insure to the peasant his home against his landlord. Thus the freer character of the general government, in England, is a less valuable boon to the Irish peasant, than the freer character of the local government of Russia is to the Russian peasant. Hence, in estimating the relative freedom, and effects upon industries, of various governments, it is more important to look at the substance than the form of all governments, and to look at the mode in which the local rather than the , general functions are administered. In the United States general government is not confined to national government, nor are local functions strictly identical with state, city, and county functions. So far as the national government runs a post-ofiice, light- house, harbor, court, revenue, or customs oflBce, in a town, that becomes local government within that town. All governments, therefore, have some local functions. In the United States, how- ever, most of the functions of local government devolve on States, counties, and cities. Their economic influence is felt chiefly by the action they take, or omit taking, concerning : 1. The opening up and surveys of new lands, and the denuda- tion and restoration of forests, destruction of animals, etc. 2. The construction of highways, roads of all kinds, including railways and canals, the building of aqueducts for cities, the improvement of rivers as highways, protection from rivers, and ii'rigation. 3. The construction of residences and their insurance, including, in cities the regulatioii of their materials, height, kind, and quality. 4. Creating, registering, and vindicating titles to land, including the regulation of transfers and descent of lands. 5. Their protection to persoiaal liberty and to the security of the INDUSTRIAL RELATIONS. 431 family relation, to freedom of contract and association, and their provisions as to corporations and trades. 6. Their provisions for education, and the quality of the educa- tion they impart. 7. Their provision for the relief of the poor, the maintenance of the incompetent, defective, and delinquent classes, and detec- tion and punishment of the criminal classes, including prisons, and colonization. 8. Tneir action as respects vice and intemperance, food, drinks, popular amusements and public morals, including in cities public parks, libraries, fountains, and baths. 9. Their methods of taxation and theory of the purposes to which it is adequate. 10. Their provisions for rewarding discoveries in science, inven- tions in the useful arts or masterpieces in fine art, and for granting by letters patent to inventors and by copyright to authors the monopoly of the profits accruing upon their works for a period of time. 11. Their provisions as to coast and naval defences, armies, police, and such coercive means as may be essential to the per- manence and good order of the State. 170. The State as Related to Industry.— In estimating the relation of governments to industry, especially with the view of determining whether the aggregate experience of mankind goes to show that the functions of government are alike in all states or different in each, and whether they have been injuriously or beneficially exercised, it is important first to grasp in their entirety all the functions of all parts of the government, of the local as well as the general, the colonial as well as the home government, and of the army as well as of the tai'iffs. No assumption is more frequent, in economic discussion, than that England not only practices, but stunningly illustrates, free foreign trade. No fact has entered so prominently into modern history as that England has constantly made use of her armies in India, Ireland, Turkey, Egypt, Africa, New Zealand, Borneo, China, Japan, and among all barbarous peoples, to coerce foi'eign trade, or, as she expresses it, to " open barbarian ports to civiliza- tion." If one nation practices military protection on behalf of her foreign tirade, the result may be as efficient, in its way, as another nation, differently situated, may achieve, by practicing tariff pro- tection in favor of its home trade. As the Roman empire was circumstanced, the building of great 432 ECONOMIC PHIL080PHT. roads, all centering in Rome, may have been the most eflBcient form of protection to a state whose chief industry was military conquest. In the modern British Empire, on whose dominions the sun never sets, lines of steamers and coaling stations may take the exact place, and perform the precise function, of Rome's great roads. In the Middle Ages, when money was scarce and produc- tion reduced to a low stage, the owner of land, seeking security against the marauder, would beg to become the vassal of a ruthless baron in order that he might exchange weakness for protection, and would pay rent in military service, of course neither for capital expended, nor for fertility, nor for location, but for security. But he would consult his own best interests at the time, as certainly as he did later on, when money became plenty, in commuting his military rent into a money rent. The exterior or visible government of society, known as the state, must, however, always be recognized by the student of economics, as a sort of apparel thrown over that real and involun- tary^organization of society, under industry, which may be called the industrial state. The industrial state has a different set of chiefs, or heads, from the civil state, whose ascendency is indicated only by the rate of remuneration they can command, the quantity of capital and la- bor they can control, and the quantity of business they can trans- act at a profit. Voting is performed in the industrial state every time a contract is made, merchandise is transferred, or a commod- ity is created. An employer says : "I will give you $20 per week ; will you work for me ? " The employee says : " I will." Thence- forth both are integral units organized into one larger body — so- ciety. One commands, the other obeys. One steers, the other rows. One sells his time for wages, the other sells what this time has aided to produce — the product, for profit — if he can. If he can not sell it, having produced something not wanted, his steering capacity is cut down, and lessened, by the fact that he has lost a part of that capital in right of which, alone, he does the steering. Every time, therefore, a retailer says to his customer, " Will you buy," and the customer says, " I will," the i-etailer is promoted or approved in his office, as, by his customer's vote, that he has usefully supplied a demand. Thus the organization of the indus- trial state is, at once voluntarily and involuntarily, extended every time a purchase is made or a business act performed. The custom- er's act elects the retailer. The retailer's act elects the whole- THE INDUSTRIAL STATE. 433 saler. The wholesalers elect the manufacturer, and the manu- facturer must foresee the demand correctly, or part with his capital. The employer's choice elects the workers, and the workers are relieved of the necessity of watching the markets of the prod- ucts of their labor, and need only watch the markets of labor it- self. As votes in the political state give the title to office, so capi- tal in the industrial state, which can only be preserved by success, gives title to command. Every capitalist can comtnand all the labor he chooses to pay for. By simplifying their task, to the single one of selling their labor-time and labor-force to whoever will pay the highest price for it, laborers are enabled to give far more time and foi^ce to the work actually to be done. By simplify- ing the retailer's task to the single one of buying at five what he can sell for seven, the retailer saves all his time and force for efforts which have profit in them. And by the conjoint action of every member of society, in the line in which he can be paid, and in no other, he most closely serves demand, which is the most comprehen- sive name for human need, or for the relief of want. Thus, in the industx'ial state, the higher and more intense is the egoism or desire of profit, as the motive of human action, the prompter and more efficient is the satisfaction of demand, the relief of want, or the attainment of practical altroism as the effect. The political state is the garment, or apparel, of the industrial state. Governments are but the expression, for coercive or at- tractive purposes, of the interest and will of society, as it is formu- lated by their material condition and occupations. Where the masses of the people have the means of comfortable living, by nearly continual labor (and without the continual labor of nearly all it is impossible, in the nature of things, that any should live comfortably), there, persons will be free ; governments will rest lightly on the shoulders of the people. But little coercion, either by governments or by employers, will be required, and both gov- ernment and industry will become attractive rather than coer- cive. 171. Coercion and Attraction in the State. — The attrac- tive functions of government, as distinguished from its coercive, consist in the education of youth, the establishment of light- houses and life-saving stations, the distribution of seeds to secure the inti'oduction of new branches of agriculture, the creation of artificial corporations, having perpetual life, as a means of at- tracting the capital of investors into investments of a perpetual character, the building of levees to restrain floods, and of canals, 434 :aCOnOMlG PHtLOSOPHT. works of irrigation, and aqueducts, and building or aiding rail- ways, common highways, sewers, drains and bridges, the author- ization of banks for the issue and loan of credit-money, and of savings banks for making the hoarding propensity in the poor productive ere yet the accumulation is large enough to be used as a working capital ; enacting laws of descent, whereby human affection and love, in one generation of workers, may be attracted onward in their toil, by the hope of being able to make provision for those they shall leave behind ; authorizing the creation of insurance companies and trust funds, for tiding over the calami- ties of fire and death by the interested co-operative aid of those who do this good to others, on a bargain that others shall pay them for the service ; the regulation and check of international competition in industries by tariffs ; the diversification of indus- tries by securing certain valuable markets to producers, the estab- lishment of colleges, the propagation of fish in rivers, the tunnel- ing of mines on occasions when individual enterprise might neg- lect a much-needed work, the attractively encouraged emigration of the poor to new and better homes, the collection and universal diffusion of an accurate bulletin of the weather one day in advance, the assortment of letters for transmission by routes selected and paid for by the government, the granting of patents to inventors, and a hundred others. This enumeration might be extended, but it suffices to show how vastly, in modern government, the attractive, or educing, or educating, functions of government have risen above and come to outi'ank the coercive. In most of the Northern States of the Union from two-thirds to three-fourths of the revenue of the State is expended on the single purely attractive function of educating youth, a function which, until barely a century ago, it was not supposed that government had anything whatever to do with. With the advance of government to functions more and more attractive, there has been a recession, in all newer and freer counti'ies, from the despotic, military, and coercive functions, to which government was formerly confined. Where, a century ago, 134 crimes were punished with death, now only from one to four are so punished. In America, and the British colonies, standing armies and coast defences are of the past. Titles, the survival of military rank and soldierly life, are fading out and less esteemed. Finally there is a growing feeling that woman, debarred by her sex from founding the coercive or military state, except she offer COERCIVE GOVERNMENT. 435 herself for military service, is not by the same logic barred from taking- part in those functions of government which are intellec- tual, moral, and attractive. The eai'liest, and perhaps, next to education, the most iinportant instance in which government has passed from coercive to attractive functions has been in practicing protection to national industries against foreign competition. 172. Governnient by Force. Voting by Males. — The coei'cive functions of government bear toward the attractive much the same relation as coin bears toward credit money. Had there never been government by coercion, a government by attraction could not have arisen. The tramp of contending armies precedes respectful obedience to the law and the courts. The memory of hostile encountei'S overshadows the courteous language of diplomacy, and gives efficacy to arbitrations. It is a funda- mental maxim that "the law always implies force." All gov- ernment implies an army, navy, and police capable of enforc- ing its will. In fact all governments have been established, as against those who opposed their establishment, by armed force. The summary manner in which the Tories, who opposed in New York, New Jersej^, and elsewhere, the formation of the American Government, were driven out of the United States, as fugitives, places the United States in the same category as all other govern- ments in this respect. The "Continental Congress" met, not to deliberate with Tories as to whether it should itself exist, but to deliberate among Whigs, and as a purely Whig government, how all opposition to itself could best be forcibly ovei'come. As armies are the immediate authors and sponsors of all government, whether republican or monarchical, it is natural that, when voting comes to supersede fighting as a means of selecting the officials who are to govern, the voting should devolve exclusively on the sex which had done the fighting. This alone, and not any differ- ence of intelligence between the two sexes, has caused the male sex to monopolize the right of suffrage. In Sparta, and one or two other of the States of Greece, accord- ing to Aristotle, women bore arms in war, owned most of the property, and voted. In whatever state they should be admitted to vote it would logically and natui'ally follow, if not at first, yet in the long run, that they would bear arms also, if only from a sentiment of honor. For as women are far more exacting than men in their standard of requirement as to the number of sup- posed good objects the government should be called on to elf ect, they would constitute the class of voters most given to enacting 436 EGONOMIC PHILOSOPHY. high-keyed, reformatory, and exacting laws, which would raise the number voting against them to close proximity with the number voting for them. Such laws, which ai^e barely passed by a small plurality of votes, and which imply a large interference with the personal liberty of many citizens, of perhaps the poorer class, excite a degree of opposition to their enforcement which the ordi- nary laws against crime do not arouse. The difficulty of their enforcement renders much personal collision necessary, and in- such case somebody must give and take the blows, or the enforce- ment of the law would be abandoned. In a state in which women should vote on equal terms with men, the laws would soon come to be divided into those which bore the general sanction of both women and men, and those which sought to press the magistrate's club into the work of en- foi'cing as law the finer sentiments of chastity, temperance, purity, and religion, which men are content to remit to the domain of morals and persuasion. In this manner there would be two kinds of laws, the men's laws and the women's laws. The former would be enforced ; the latter would not, unless women should talce it upon themselves to do so. To remit these laws to mere persuasion would leave them just where the sentiments they embody are now. The attempt of women to enfoi'ce them would convert them, as a logical corol- lary, into an arms-bearing sex. That the female sex would accept the right of suffrage, if accompanied by the condition that they bear arms and perform police duty, is hardly contended. It is doubt- less the opinion of the great mass of women, that no exigency of their situation calls for action so revolutionary, and, to nearly all of them, so distasteful. The exclusion of women from the right to vote can only be logically ascribed to the fact that gov- ernments are an affair of armed force, in which it is contrary to the course of nature and civilization that woman should partici- pate. This monopoly of the fighting function by the male is, in its turn, an evident consequence of the pliysiological necessity that motherhood shall be made secure, and motherly attention adequate in delicacy, to the needs of infancy. The germs of this division of functions between the sexes appear in neai'ly all of the higher forms of quadrupeds and bii'ds,and are wholly absent only among reptiles and fishes. A division of functions between the sexes which is so much broader, even, than the human race, and so much older than history, is not likely to become capable of over- ORGANIZED ARMIES. 437 throw in fact, however interesting- may be the grounds on which its obhteration is pressed. 173. Annies, and Their Cost. — In ancient times, war was a struggle between all the members of two hostile populations. In modern times, the principle of division of labor is applied to it. It is a physical fight only between the two organized armies in the field ; the populations on both sides take part in it only as tax- payers, or as their transit and trade may be interrupted, or as they are recruited, drafted, or enlisted into the army. Armies ai'e now recruited by two modes — voluntary enlistment, and the draft. Great Britain adheres to the former system, which in prac- tice usually degenerates into an abuse known as the press-gang — a dozen armed men setting upon one, and compelling him to "voluntarily enlist," either through the blandishments of intoxi- cation or the force of a sound drubbing. Blackstone, a century ago, denounced the press-gang as unworthy of a free country. Either it, or very high bounties, are necessary under the system of voluntary enlistments. It was by the conscription, or drawing among all citizens by lot, that Napoleon was able to sustain the arms of France against the Allied Powers from 1793 to 1815. It has since been adopted or revived in all the European states, and was resorted to by the United States in its war of 1861 to 1865. The relative economy of the policy of maintaining a large army, or a small one, is not so simple a problem, since the war last named, as it had previously beeii assumed to be, by many advo- cates of the doctrine that " that government is best which gov- erns least." In 1790, Congress fixed the rank and file of the American army at 1,216 men. In 1814, a small English force of only 3, 500 men was able to seize and burn the Capitol and the city of Washington, though the country had then a population of 8,000,000 persons, or about as many as Egypt contained when, under her first great military leader, Sesostris, she extended her empire over Ethiopia and Southern Asia, eastward to the Ganges, and northward to the Caspian. During the war of 1861-5, the government of the United States called under arms 2,759,049 men, of whom 2,656,053 men were actually embodied in the armies. Adding to these the 1,100,000 men embodied by the Southern States into their armies, the total force called into the field, in a countiy whose hobby it was to liave no armies, amounted to the enormous number of 3,756,053 men, whereas the entire standing armies of Great Britain, 438 ECONOMIC PHILOSOPHY. France, Germany, Russia, Austro-Hungary, and Italy combined, when on a peace footing, amount to only 3,265,000 men, their active army during war to only 5,101,000 men, and their entire nominal forces, including their active army, depot troops, garri- sons, and reserves for 244,000,000 of people, sum up to only 6,470,- 000 men, or but fifty per cent, more than the United States actu- ally mustered into the field in five years. The entire annual expenditure of these six leading nations, on their armies, is £96,- 000,000,* or $480,000,000, an expenditure about half as great per day as that to which the United States alone was subjected dur- ing the gi'eater part of the war, and the total of which, for twenty years, would be required to pay the cost of the American war (19,000,000,000) t for five years. The military expenditure of Great Britain is $3 per head per year, for the population of Great Britain and Ireland, or one cent per working day, being about one- sixth the cost of intoxicating liquors. The military expenditure of France is 10s. sterling (about $2.50) per head per annum, or about two-thirds of a cent per working day. That of Germany is fifteen and a half millions of pounds sterling ($78,000,000) for 41,000,000 of people, or say one-half cent a day for each person. That of Russia is $1.25 per capita per year, or one-third of a cent a day. And those of Austro-Hungary and Italy are about the same. Since the war of 1861-5, the American expenditure, per capita, for interest on the war debt and pensions, about equals the European rate of expenditure per capita for standing armies and interest. It cannot be assumed, therefore, that the American experiment, of dispensing wholly with a standing army, has proved economi- cal to American tax-payers, unless it be also assumed that the maintenance of a standing army would not have prevented the war for secession in 1861-5. It is difficult to imagine, however, a government having 100,000 armed men at its command calm- ly waiting until eleven States had, one after another, met in their legislative sessions, and resolved to withdraw from the Union, when a single regiment of obedient troops would have proved competent to disperse, or place under arrest, either of these bodies. Since 1860, the United States, as an integi'al state, indis- soluble at the will of any one or eleven States, owes its existence to the army it was able to create. The collision between Ger- many and Austria, ending at Sadowa, and between Germany and * Encyclopsedia Britaunica. t Estimate of David A. Wells. ARMIES CREATE THE STATE. 439 France, terminating' at Sedan, have converted Prussia into a German empire founded chiefly by an army. The kingdom of Italy under Victor Emmanuel, is an army-made kingdom in effect — the irregular bodies of carbonaiu and lazzaroni, under Garibaldi, counting' for an army because of the absence of any effective op- position. England's rule over Ireland and India rests on military force, more or less nascent, and hence, in her reign over 200 out of 225 millions of her subjects, England is an army-made state. Russia, Austro-Hungary, and the Ottoman Empire do not aspire to be other than army-made states. Hence, in the industrial sense, armies may be defined as the factories which take in races, quarrels, and superstitions as their raw material, employ sol- diers as their working operatives, make use of money, credit, taxes, loans, guns, powder, ships, and shells, as their circulating capital, and turn out states, empires, and republics, and indirect- ly popular elections, settled constitutions, legislatures, laws, courts, and political and civil oi'der, as their finished products. They stand in the same relation to the states which they estab- lish, as strikes and lock-outs do to the subsequent rates of wages. Army expenditures, therefore, stand on the same footing, econom- ically, as expenditures for education, for elections, for courts of justice, and the punishment of crime. They have been classed, by many economists, as wholly unproductive, or as simply de- structive. When viewed in perspective, over long distances of time, they often seem more productive than periods of peace. The treasures of gold and silver, obtained by Alexander from the hordes of East- ern princes, introduced money in Western Europe. The con- quests of Rome were missionary in their effect. Many modern wars have directly produced the most wide-spread industrial benefits. No feature in economic history is so difficult of accu- rate adjustment as that of the relative cost of wars and of armies,* * Col. Colley, professor of military administration at Sandhurst, writing in Encyclope- dia Britannica on' 'Army," says of military expenditure : "Perhaps it might more fairly be called indirectly productive, as necessary to the maintenance and extension of civiliza- tion, and the production and development of trade. Further, the value of property in- creases with increased security, and military expenditure within certain limits thus tends to repay itself. Broadly, however, it may be treated as a tax for insurance, and as so much withdrawn from the productive power of the nation. The object of all mili- tary institutions is to develop the highest fighting power— that is, to attain the greatest security with least strain on the industry of the country— the latter being measured not by the cost of the army, as shown by the budget, but by the amount of productive labor withdrawn and disturbance produced. All questions, therefore, have to be considered under two aspects, military and economical — that of efficiency and that of cost." 440 ECONOMIC PHILOSOPHY. of navies, and fortifications, as compared with the often more costly experiment of attempting to dispense with them, or of failing to maintain them with adequate vigor. Peru, for many centuries a cultivated, aristocratic, populous, and wealthy country, inheritor of the pride of the Castilian and of the sources of the wealth of the Incas, accustomed to despise the base-born and grovelling Chilians as a coarse, brutal, and half- savage nest of mountain starvelings, has within three decades past been reduced to a bankrupt and subject province, the prey of the cruel savages it had despised. History is full of melancholy proofs that agriculture and com- merce, banking and exchange, manufactures and finance, all de- rive their liberty to exist in peace and security, either recently, presently, or prospectively, from the soldier. After all is said, that can be, in favor of holding the military power at all times subordinate to the civil power, the historic fact remains that the civil power owes its existence to the military, and, if adequately resisted, falls back for defense upon the author of its being — the army. In this last resort the productive power of the state, in its totality, becomes bound up in, and is dependent, upon its military power. 174. Crime and Its Punisliinents. — Crime is little else than a continuance, by sporadic individuals, of that warfare against order, which, if carried on by organized bodies of men in military array, is called war. It consists in gratifying our desires by the commission of acts which the state condemns and punishes. In the United States about 30,000 convicts, in the penitentiaries, attest the fact that, in the most favored industrially of nations, about one in 2,000 of the population is a criminal. Owing to the very large number of criminals that escape punishment, the propor- tion of those who at times and in sudden heat, as well as profes- sionally and as a settled business, make war on society, is some- what larger. There are also 11,000 lesser culprits. The state does not punish, priraai-ily or chiefly, to reform the criminal, but to protect itself, and preserve that order, without which there could be no productive industry, or settled liberty. No ethical perfection can be claimed for its statutes or decrees, whether executive, legislative, or judicial. Its right to govern does not depend on its governing always rightly, since that would be to require infallibility from the fallible, and since no other criterion more wise than the state it- ,self can be found to determine whether it is right. THE PROBLEM OF CRIME. 441 " No thief e'er felt the halter draw. With good opinion of the law." Except as the minority, which has to be overruled in all gov- ernment, may agitate with the view of converting itself into the majority, and so becoming in fact the state, the opinions of such minority are pi-actically immaterial. The state is therefore as wise, as just, and as humane as the aggregate opinion which goes to make up its decisions, and no more so. It expresses a grand average. In the view of later or distant peoples, a state may itself commit great blunders, crimes, and 'inhumanities, and in no sphere is it more possible to do so than in its punishments of crime. In its own view it can not err, because there is no cri- terion by which to adjudge its action to be error, unless it may be the very flimsy criterion of popular clamor. But a clamor may be raised as easily when the state is right, in the judgment of its best minds, as when it is wrong. For popular clamor also has its errors and its crimes. Crime is at bottom a problem in economic science (as well as in moral) for four reasons, viz. : 1. Men, in most cases, become criminals only as they fail in productive industry. 2. In a like vast majority of cases their reform can be best effected, if at all, by improving their facilities for making a living honestly. 3. The modes of punishment usually adopted eliminate the criminal, temporarily or permanently, from among industrial pro- ducers, and render him a burden on them. 4. Crime itself is, in most cases, an attempt at a redistribution of wealth, power, or privilege, in a manner which assumes that the criminal will not abide by the mode of economic distribution brought about by natural and social law. He is not content with his own. M. Quetelet * took a less economic view of crime, but while he compared crime with age, sex, occupation, education, geographical districts, etc., he neglected to compare it, systematically, Avith mei'e poverty. Of course he could not find a correspondence for which he did not look. After noting that instruction has less influence than is generally supposed, and that instruction which consists only of reading and writing, to the neglect of morals, may become a new instrument of crime, he says : ' ' The same is true of poverty. * " Kecherches sur le Penchant au Crini"." A. Quetelet, 1833. 442 ECONOMIC PHILOSOPHY. Most of the departments of France, reputed the poorest, are at the same time the most moral. Man does not generally resort to crime because he has but little, but rather when he is suddenly reduced from a condition of ease to one of distress, and of insuf- ficient means to gratify his accustomed wants." M. Quetelet's specification does not completely justify his position. The poorer districts of France might be more moral than the richer, and yet if the immoral class, in these districts, were all the poorest class, it would still establish that their immorality, and their poverty, were either due to each other, or to like caiises. The comparison must not be made between districts, but between the richer and the poorer population of any one district. The comparison (cited ante, ch. 1, § 15, of this work) in the case of Austria would be duplicated in any other country in which the statistics should be collected. It would be found that the trial and punishment of well-to-do people, for crime, is so rare as to prove that crime stands chiefly related to poverty. M. Quetelet says, as to the sexes, in France, ' ' that only one woman, to four men, comes before the tribunals." This pro- portion of females is larger than in America ; but, even in America only one woman, to four and a half, makes the struggle for subsistence in person, by engaging in an industrial occupation. In a visit to the penitentiary at Joliet, 111., the writer observed that there were but thirty women to 1,500 men.* But it may be doubted if in Illinois the number of women who make the strug- gle for subsistence, wholly unaided by any male protector, exceeds one in fifty. M. Quetelet found that both in warm weather and in warm climates, as compared with cold, crimes of violence and against persons prevail, but that in cold weather, and in cold climates, crimes against property multiply. He found that the country in which there are most frequent changes, and the greatest admix- ture, of population, in which industry and commerce bring people into most active collision, and persons and property circulate most actively, and in which there were greatest inequalities of fortune, there was the highest ratio of crime to population. The higher the rank of society, and grade of instruction, the less the culpabil- ity of women relatively to men, and the lower the rank the less the moral difl^erentiation between the two sexes. The liberal pro- fessions tend toward crimes against persons more than to those * Census of 1880 makes it 1487 males. 33 females, C0NDITI01S8 OF CRIME. 443 against property ; tlie ouvrier (wage- workers) and servile class tend most to crimes against property. So far as women are in a con- dition of dependence, lead sedentary lives, or are physically weak, their pi'oportion of crime is diminished. The impulse toward crime was strongest in the period of the culmination of physical strength and animal passion, declining after the age of twenty- five in the ratio .shown in the diaarram. Eelative Tendency to Crime at Different Ages. In America the pei'iod of epidemic absence of crime was simul- taneous with the like absence of bankruptcy, viz., during the war of 1861 to 1865. In many counties in every State the jails were continuously empty for long periods, so that it attracted the comments of the courts. The war seemed to exhaust the crime propensity by its intense demands for slaughter, and all minor strifes lacked the passion to fan them into crime. M. Quetelet concludes his researches by expressing his " aston- ishment at the constancy which we observe in the results which each year appear in the records of the administration of justice. Nothing, at first blush, ought to be less regular than the march of crime. Nothing, above all, ought more completely to defy human foresight, than the number of murders which would arise without provocation, and in encounters altogether accidental. Neverthe- less expei'ience proves that not only murders are annually nearly the same in number, but that the instruments which serve in their commission are employed in the same proportions. Thus is pre- sented to us the same sad perspective of the reappeai'ance of the same crimes in the same order, and assuming in minute detail the same form. Sad condition of the human race— the portion due 444 ECONOMIC PHILOSOPHY. to the prison, chains, and the scaffold, seems as fixed as the reve- nues of the state." * In the very earhest condition of society, crime, as distinguished from the disobedience, by the slave, of his master's commands, could hardly be said to exist. Crime is the offspring of liberty, as is also virtue. The tendency of earlier society was to punish crime by expulsion or extermination — vindictively. Exile to an island is mentioned in Job, and appears in the earliest Roman law. Labor in mines, and slavery, took the place, until a recent date, which is now held by penitentiaries and jails. Forfeiture of goods, and, in a few cases, of land, branding and slitting the ear, maiming and torture, crop out in history as expressive of the sense of social justice toward crime. Throwing from the Tarpeian Rock, casting among lions, the drinking of poison, beheading, crucifixion, and burning are prominently broug'ht to view in ancient and medieval history, while hanging is recent. In administering the death penalty, no account is usually made of the value a man may still be capable of conferring on society, notwithstanding the commission by him of a very great crime. Common rumor reports Shakspeare as having incurred the death penalty, for poaching, before he had written any one of his'piays or poems. Had the law been executed, in his case, the human race would have suffered an immeasurable loss. Jeremy Bentham assails vigorously t what he calls the "lavish and unnecessary use that is made of the invariable, unequable, incommensurable, uncharacteristic, unfrugal, unpopular, uncompensatory, irremis- sible punisliment of death." Since his, day the number of crimes so punished has been reduced from 134 to 4, of which the latter all involve the taking, or endangering, of human life. The most successful treatment of crime in modern history, and * Note (in French) from Quetelel; 1826. 1827. 1828. 1829. Meurtres en general 241 234 227 231 Pusil 47 52 54 54 Pistolet Sabre, epee, et autres armes permises Stylet, poignard, et autres armes prohibites Couteau Baton, canne, etc 23 Pierres Hache, fourche, et autres instrumens tranchants ou piquans Marteau et corps coutoudans non autrement designees Strangulations En precipitant ou noyant Le feu Inconnus 17 1 t " Bentham's Works," by Bowring, vol. 1, p. 186. 9 12 6 7 8 2 6 6 7 5 2 1 39 40 34 46 23 28 31 24 20 20 21 21 13 20 16 14 22 20 26 31 2 5 2 2 6 16 6 1 1 1 FROM KILLING TO CUBING. 445 the only treatment that could be called economic or reformatory, is the colonization of the criminal, as practiced by England, in- directly in America, and directly in Australia, the Cape, New Zealand, and Tasmania. Notwithstanding all the efforts which philanthropists have made to bring reform out of the penitentiary system, the admission of practical pinson workers is that the sys- tem almost never produces penitence. It fails to recognize that most men become criminals, not because increased restraint and a close fitting "jacket of the law " is what they need, but because the degree of restraint and jural limitations they are under in civilized life, and in a state of liberty, is greater than their na- tures are adapted to. A society more relaxed, with fewer re- straints and greater self-dependence, is furnished them by colo- nization, and, in many thousands of instances, the transported convict in a few years becomes the firm friend of law in his new home. The substitution of the penitentiary so largely for the gallows has been due to the increased value of man which arises with the growth of capital, the facility of subsisting and employing the prisoner, which attends the introduction of machinery and the subdivision of labor,* the sensitiveness of the public conscience in view of occasional instances of convicting the innocent, and the general growth of humanity and regard for human life. 175. Social Crimes and Insanities. — Quetelet found that both the weather, and the seasons, had the same influence on crimes, and on insanities. The ancients recognized, or imagined, so close an influence, or sympathy, as existing between the moon and mental aberration, as to call the latter after the former, lunacy, or moonstroke. Absurd as this has been held, modern medical science drifts around to the same point, by atti'ibuting much mental derangement to malaria or diseased air, and then making the symptoms on the 7th, 14th, 21st, and 28th days the test as to whether the disease is malarious, since these are merely moon periods. Both views may be mistaken, and the latter merely a survival, in a scientific fonn, of the earlier superstition. On the other hand, it is possible that a force which can lift the ocean ninety feet, in the Baj^ of Fundy, may excite tides in the atmosphere which have their effects on the mind and will. Whether any of these hypotheses be true or not, there is a strong analogy between the epidemics of unreason, cyclones of cruelty, * In the penitentiaries of Illinois, 17 mechanical trades were taught in 1870, 446 ECONOMIC PHILOSOPHY. and outbreaks of social war, which occur in the world of collective humanity, and the storms and tempests of the physical world. These epidemics of unreason enlist great masses of men, even mil- lions at a time, in their phantasies. As these millions could only cohere through the leadership of their noblest and purest minds, their most zealous, self-sacrificing, and just men, it is found that in these great social upheavals it is the very best men that lead in the work of mischief, if mischief it is to be called. The perse- cutions of the Christians by the Eoman Emi^erors, the tendency of dying persons to bequeath their lands and goods to the church, and to overestimate the virtue of charity as compared with indus- try, led into the middle or dark ages. The exaggerated value which men, during several centuries, attached to the work of bringing the whole world under one religious government — a fanaticism which had its outcome in a sacrifice of industry to monasticism and in a waste of European life and energy upon the crusades — in religious persecutions, and in the prosecution and burning of witches, and the religious wars, all threatened to quench civilization in Europe wholly. There is little doubt that these veritable cyclones of human hate, black with all the de- structive possibilities of reviving barbarism, were led on by the very best, purest, and noblest minds, the most spiritual and self- sacrificing, as they were judged at the time, in the world's best cir- cles. There is equally little doubt that it was the substitution of the spirit of gain, of industry, and of business, caused by the re- vival of trade in Europe under the stimulus of the discovery of the Indies and of America, which rescued the world from the darkness into which it was ever more deeply plunging, by bringing back the thoughts of mankind to their secular and ma- terial interests. Looking at these social tendencies, it becomes evident that they go far toward equalizing the ultimate influence of the more suc- cessful and the less successful, or of what are usually called the good and bad classes of society. The latter drift into the petty stage of individual crime, and are eliminated by society through some mode of punishment. The former take the lead in great holocausts of suffering and slaughter, which equal, in the evil and misery they inflict on the world in a single year, or genei'ation, all that its combined criminal and vicious classes would inflict in a century. At the rate of 240 murders per annum, in France, the individual wickedness of that country would in seventy years take as many lives as its social and collective fanaticism, acting AMBITIOJSf AND GRIME. U1 in the name of justice and jmblic spirit, took in one year of the French Revolution,* and it would require four French Revolu- tions to make one St. Bartholomew's uight. t Roug'hly estimating, as many lives were destroyed in the cru- sades I as have been ended in Europe by private murder in 3,240 years, or since King Sesostris led the armies of Egypt against Asia. Yet it would be doing injustice to the leaders in the cru- sades to suppose that their motives seemed to them less sacred than the absolute righteousness itself. It becomes those who have charge of the state, therefore, in its executive, legislative, and judicial functions, to observe with a waiy and watchful eye the movements of those who have influence, popularity, and power, rather than those of the burglars, hall-thieves, and mid- night assassins. The latter will be reached by the police and the courts, and opinion is united as to their quality. But the great upheavals and oppressions, holocausts and sacrifices, civil wars aud revolutions, will originate with the public-spirited, patriotic, pure, and virtuous. The people who give the statesmen most trouble, and the generals and armies most business, are those ■ 1 1 / - / / Tn / / f 1 10 1 Vz 1 1 to / / n 10 9 8 / / y y «i y /' 3 2 ^ _^ »— — — — _- -^ _, — — " 1 ^ ' 5 S %'\i i. l ri rv l"s l^ { i ^1 I c % r a c :>" c \% ! f 3 % S ^ ■>. ■: ? V I i %l ^^: - 5 \ i 3 S Eate of Growth of the World's National Debts since 1714, on a Scale op 81,000,000 TO the Section Line Perpendicularly, and 5 Teaes to the Section Line Horizontallv. * 17,000. t 80,000. § 7,000,000. 448 ECONOMIG PHILOSOPHY. who are intent on making the world better, or on obtaining for some of its people enlarged rights and gi-eatei" purity, and for them- selves a higher niche in the temple of fame. 176. The Recent Growth of Debt.— The growth of the aggregated debts of the nations which borrow in the money market of Europe forms the unsettled problem in modern politi- cal finance. Since 1714 the world's national debts have multi- plied fifteen-fold, viz., from 1,500 millions of dollars to 26,970 millions.* Measured by half decades, the rate of increase appeal's in diagram on page 447. Mr. Adams t says of a loan to government : ' 'Its full effect is to check further industrial expansion, and this it does by turning the energy of the country into other channels." Yet Mr. Adams says that ' ' employed capital will not be placed at the disposal of the state, and that a public loan at normal rates of interest can not exert any decided influence upon established industries, since there is no motive presented to one whose capital is well invested to withdraw any part of it from its accustomed employment, and place it at the disposal of the state." Mr. Adams infers that it will take the fund that would have gone to new enterprises, because no man having a fund well in- * The Iron Age, referring to an address to the National Board of Trade by Mr. Price, quotes Lord Derby as haviflg predicted that European nations must repudiate. The annual burden of $800,000,000 of interest is a load they can not carry. It continues : " Spain, Portugal, Austria and Greece are bankrupt ; Russia and Italy are without credit; and the great States of Great Britain, Prance, and Holland are exhausting every measure of taxation to maiHtain solvency and credit. " To the constantly growing sum of obligations which constitute our credit system must be added an enormous total of public indebtedness contracted by minor divisions of the state, corporations, firms, and individuals. For our own country the showing is assumed to be about as follows : Present national debt, December 1, 1887 $1,675,816,660 State 226,597,594 County and municipal 821,486,447 Railway 4,163,640,144 Banking 4,581,706,203 Private banking 1,500,000,000 Record 6,000,000,000 Mercantile 3,000,000,000 Individual, otherwise than above 6,000,000,000 Aggregate $27,969,247,048 " This total is more than one-half the entire census valuation of 1880. If our popula- tion is 60,000,000, it means a per capita indebtedness of $465, or more than the average income of the family in Massachusetts." Singularly enough, while some are distressed by these predictions, Prof . MacLeod, of Cambridge, counts all this volume of debt as " currency," and therefore " means of payment," as well as principal to be paid. f "Public Debts," p,C2. EFFECTS OF DEBT. 449 vested in established enterprises would see sufficient profit in it. But, as we have repeatedly seen, the fund that goes into new enter- prises demands as a rule a far higher rate of interest than is earned in established enterprises. Capital migrates only under the inducement of higher rates of profit. If it will not abandon its established enterprise, in which profits are fast descending to ordinary rates of interest and rent, and wherein perhaps they are fifteen per cent, per annum, why should it be withdrawn from the prospective venture in which 50, 100, or 500 per cent, are looked for ? Mr. Adams says : " If filled at all, it will be filled from that fund of free capital which would otherwise have been invested in new industries." On the contrary, the class of persons who buy gov- ernment bonds are at the very opposite pole of the industrial world from the class which invests capital in new ijidustries. The latter are the class full of ideas, but without a surplus, generally borrowers of the means they invest. The lenders to government are a class seeking safety by avoiding the risks of industrial iu- vestinent, either because their capitals are too large to admit of their superintending industrial enterprises, or, as in the case of women and salaried employees, they feel too distrustful of their own judgment to venture. Prof. Adams' suggestion of the effect of loaning to govern- ments overlooks the fact, also, that no person could be deterred from investing in any new enterprise by the fact that he had al- ready invested in bonds, since the bonds are as convertible as money. The ready answer of those who solicit him to invest, if he should object that he had already invested his money in government bonds, would be, ' ' That is an aid rather than an obstacle, as we will take your bonds as even better than cash, for they will di'aw interest until we wish to use them, and whenever we wish to use them they are as good means of payment as money." The confusing element, in tracing the economic effects of loans to government, is that the bond which is purchased is in the economic sense "'money," or "inflation," as truly as if it were an additional issue of paper money. Hence, by its effect on prices generally, it has the same effect to stimulate new enterpi'ises in- stead of discoui-aging them, which all additions to the volume of the currency have. Mr. Adams * fully explains this use of government bonds as in- * "Public Debts," pp, 55-7. 450 ECONOMIO PHtLOSOPBY. ternational means of payment. He shows that when France, as a means of paying the German indemnity, called for a loan of 2,000,000,000 francs, more than four times that sum were offered. About two-thirds of the sum offered were offered from outside of France, one-tenth of it from Germany itself ; that in fact it was only a readjustment of credits which did not involve any drain of capital from the industries of France, but only an addition of new "international values " to the security market. Mr. W. L. Fawcett * regards it as inconceivable that such an increase in the volume of national debts should have any other outcome than early general bankruptcy among all the weaker nations. Mr. Adams cites the attempt of the foreign bondholders to con- quer Mexico and enthrone Maximilian, which failed, and the later successes of English bondholders in Egypt, of French bond- holders in Tunis, and the abject subservience of Peruvian politics to foreign bondholders. He also holds f that it is the fact that the possessing or property-owning class, the moneyed interest, has captured the machineiy of government that ' ' affords such guarantee as exists, that moneys borrowed by government will be repaid." Here again Prof. Adams clings to the " debt " idea and forgets the " intei'national value" function, or currency office, which he explains so fully in the case of the French debt. The national creditor not only does not cling to the notion that his debt will be paid, but in the case of the debts of most of the governments of Europe the notion does not exist. All the European debts are interminable. They never fall due. They are mei'ely permanent savmgs banks in which the people may make their deposits at interest when not needed, and when needed may, by sale of the bond, draw out their deposits. Of all financial investments they are that in which the people may most nearly ' ' eat their cake and have it left." If the govei'nment, by paying ofi' its debt, deprives the people of the privilege of lending to it, they take their money to the savings banks, or deposit it in the national banks, to be loaned out by them to merchants and manufacturers. In this case it is, usually, the substitution of a social loan of a narrow sort for a social loan of the broadest sort. For, all surplus uninvested funds have to be loaned in some way. Wherein lies the danger of lending them to the collective people through a * " Gold and Debt." + "Public Debts," p. 9. THE DEBT PUOBLEM. 4.51 national debt, as compared with lending them to the banking class ? We do not present these suggestions as solutions. The debt question is the nearly unexplored problem in existing political economy. The facility with which governments borrow money is pushing tliem onward toward a more and more socialistic order of society. The tendency is toward a rapid increase of the enterprises, such as schools, telegraphing, internal improvements, of which the state will take chax'ge in the interest of production of commodities. The socialists demand that it shall take charge also of the disti'ibution of wealth, of interest, rent, and profits. Meanwhile, the novel fact in finance is that in the manufacture of debts governments are at the same time sup- plying means of payment, if not in the full degree asserted by Prof. McLeod, at least in the full degree in which the debt so issued is readily negotiable. The debt is money. The paradox is orthodox. Socialism rails against intei'est, yet seeks nationalization of land, raihvays, mines, manufactures, schemes whose carrying out involves increase of debt, and hence of interest. It pro])oses to confiscate rents, yet thrives upon that rapid increase of town population, relatively to rural, which chiefly swells rents. The modern state is a new factor in finance. Once the state conquered and plundered — now it borrows and pays. Then it was the General. Now it is the Banker. Poets loved the former, for verse can deal wnth slaughter, but not with profits, rent or interest. When the people prosper the poets are in pain, but the economists smile. Tennyson complains about the fleet, and Lowell declares that France and America are nursing little men. Aristophanes anticipated both "Gresham's Law" and Tennyson's and Lowell's complaint, by twenty centuries, in these lines : " Oftentimes we have reflected on a similar abuse In the choice of men for office, and of coins for common use ; For your old and standard pieces, valued and approved and tried, Here among the Grecian nations, and in all the world beside, Kecognizcd in every realm for trusty stamp and pure assay, Are rejected and abandoned for the trash of yesterday ; For a vile, adulterate issue, drossy, counterfeit and base, Which tlic traffic of the city passes current in their place ! " —{.Aristophanes, " Frogs," 891-898 ; Frerc's Translation. CHAPTER XII. TAXATION. 177. Origin of Taxes. — Inscriptions, on some of the oldest monuments of Egypt, indicate that tribute was levied on con- quered tribes ; enforced contributions were obtained from prov- inces, to sustain the cost of the funeral honors due to the sacred ox ; spoil in gold and silver, and in various products of the land, was wrung from subject tribes, in a manner that brought the methods of taxation into close resemblance to the plunder prac- ticed in war. So, American merchants, after a short residence in China, have returned from that country, with the fixed impression that thieves were licensed by the government. So little resem- blance exists between the collection of taxes there, and in Amei'ica, that tliey had not recognized the tax-collector in the Chinese depredator, but supposed him to be literally a "licensed thief." This would be the natural effect of that system of "farming the revenues," as it is called, which, from the very dawn of time, has been the prevailing system of levying taxes in most parts of Asia and Africa. The revenues are "farmed " when the governments rent a province, or district, to the chief satrap or governing officer thereof, for a stipulated annual sum, leaving him to collect as much more as he may, or as the district will bear without rebellion, by such methods as he finds most con- venient. Usually the satrap or governor sub-lets to smaller farmers, and these to others, and all collect partly upon the standard of ancient customs, and partly according to ' ' what the district will bear," le., what the people will pay without mur- muring or rebellion. From the system of "fai^ming the revenues," which is but one I'emove from licensed robbery, the first advance toward equity, among commercial and trading nations, is to a fractional rate one- half, fifth, eighth, or tenth of certain specified products of the soil. This is the system described in the Old Testament as operative among the Hebrews, and, combined with certain elements of the system of farming the revenues, it still prevails in Turkey. In India, by the institutes of Manou, a tax of one-sixth, one- ECONOMIC PHILOSOPHY. 453 eighth, or one-twelfth was levied on grain, one-sixth on sales of goods, one-twentieth on sales of lands, and one-fifteenth on the net annual revenue of cattle, gold, and silver.* Traces of a poll- tax (an equal sum on each person) also are found.f Heavier duties, even at this early date, were levied on the importation of silk fabrics than on the raw material, \ in order that the wages and profits of weaving and dyeing silks might be secured to the Hin- doo artisan. On emergency, in India, a right between our right of military seizure and of eminent domain existed, to take one- fourth the property of the subject as a tax. In Egypt, according to Brugsch, certain inscriptions, in the reign of Usurtasin, indicate that taxation was levied on prov- inces in proportion to income, but whether proportionate to the income of the province, or of the people, is not clear. Among early nations the government is often itself a trader, as in Tyre, Sidon, Phenicia, and Carthage. In such countries, as well as in those wherein the government is the sole land-owner, as in modern India, and in those wherein the ruling families are the chief landlords, as in England in the feudal period, taxation as- sumes the form of rent of land. In England, in the feudal period, this rent was paid mostly in military or personal services, and taxes in money were little known. Hence Blackstone treats the old feudal forms of revenues as the *' ordinary revenues " of the crown, while excise and customs duties, and all the ordinary modern forms of taxes, are classed as " extraordinary revenues," which do not belong to the crown of strict right, but require to be granted to it by a special act of par- liament. This is the origin of the theory that "taxes," in the modern sense of the word, are only grantable by the representa- tives of tlie people. These are in England the House of Com- mons, to whose powers, in the main, the lower House of Congress, and of our several State legislatures, succeed. Hence arises the practice in England of making up an annual budget, or account of revenues and expenses, on the presentation of which an op- portunity is afi'orded to criticise government policies, and to vote upon or reject them by making a modification or change in them a condition of gi^anting the budget. Tliis budget is supposed to be presented by the premier, or actual head of the government, whose function it is to govern, while tliat of the queen or kiiig is mei'ely to reign. By this maeliinery a division is ert'ected between * Marigny. + De Parieii. % " Government Revenues," by Roberts, p. 31. 454 ECONOMIC PHILOSOPHY. the dignity of the government, which rests in the crowned head, and the wisdom or poUcy of the particular persons conducting it, which centers in the premier, who may hold either or several of the chief cabinet portfolios, viz., he may be first lord of the treasury, chancellor of the exchequer, secretary of state for foreign affairs, etc. Out of these customs have evolved our own constitutional prin- ciples, that measures relating to the revenue must originate in the House of Representatives and not in the Senate, and that the President and several heads of departments shall make up a budget, or annual report to Congress, of the condition of the finan- ces and business of their several departments, at the opening of each session of Congress. In Rome there were three systems of voting, one of which, that by centuries, divided the people into six different grades, accord- ing to wealth and the number of their retainers and dependents. It then gave them a power in determining public questions, es- pecially of peace or war, proportionate to their wealth and mili- tary resources, and compelled them to contribute to the bui'dens of war in like propoi'tion. Gibbon says: "History has never perhaps suffered a more irreparable injury than in the loss of the curious register bequeathed by Augustus to the Senate in which that experienced prince so accurately balanced the revenues and expenses of the Roman Empire."* Guizot and Wenck estimate the annual tributes, deiived by the Roman Empii'e from subject nations in the time of Augustus, at not less than $200,000,000, Asia paid $31,000,000 a year, Egypt $11,000,000, and Carthage a war indemnity of $20,000,000 spi-ead over fifty years. Julius Caesar laid duties of from an eighth to a fortieth on im- ports, and Augustus introduced the excise or internal tax on sales, legacies, successions, and inheritances, and the license tax on occupations, even down to petty retailers and panderers to vice. The system of farming the revenue prevailed, and in the New Testament we get a graphic view of the contempt and hatred felt for the tax gatherer. In Gaul, the taxes amounted, according to Gibbon, to $45 a head, and were in part a land and in part a poll- tax. This Gibbon calculates at four times the average rate of French taxes in his day. Throughout the empire mines and quannes, salt, fisheries, and forests were subject to special charges, and tolls were collected on post-roads and bridges. * Gibbon's " Decline and Fall," vol. i. p. 187, EQUALITY IN TAXATION. 455 Constantine in the Eastern Empire practised the system, which continues in Turkey to the present day, of taking a share of the px'oduce of tlie land. A sum was apportioned to a province, and this was divided among the population, until it became a definite sum per head to each. China has, from the dawn of time, taxed the land from one-fifth to one-third its gross product. Transit duties, next to the land-tax, reap the largest retui'u. Then follow taxes on stores, markets, corporations, salt, on the manufacture of porcelain, silk, and var- nish, on the sale of offices and degrees, on rank, and finally duties on imports and exports. In India, a land-tax or rent is collected by the government as the national landlord, amounting to a half or third of the annual produce, while a very heavy tax, 2s. Qd. per pound, is levied on salt. This salt-tax has occasioned the habit, in the people of certain districts, of eating the dirt which contains the salt, as it is dug from the earth, in order to escape the revenue tax collected on it, under very harsh penalties if it is refined. This dirt-eating system in its turn has produced peculiar diseases of the digestive organs of the ryots who participate in the habit. * 178. Standards of Equal Taxation. — Taking society as it has existed in all ages, the chief, and almost the sole, object of taxation has been to provide an income and means of expendi- ture for those engaged in administering the government, and for the maintenance of their armies and police. The chief motive of those engaged m administering the government, in earlier peri- ods, was to maintain their own power, and, as the securest mode of doing this, they gradually gave more and more attention to administering justice between citizens, promoting the arts, intro- ducing learning, giving an intelligent direction to superstition, and ameliorating the tendencies of their savage populations toward violence and fraud. At last, in modern times, education, internal improvements, the promotion of industries, the care of the poor, defective, and delinquent classes, the intei'pretation and adjudication upon contracts, perfecting means of transportation, including highways, canals, steamship lines, and stimulating dis- coveries and inventions, have become leading objects of govern- ment. Even the coercive administration of justice has become secondary in importance, and cost, to the means taken to further industr^^ and general enlightenment. Theories of taxation have varied with these changes in its * Seymour B-eay's " Spoliation of India." 456 ECONOMIC PHILOSOPHY. objects. So long as taxes were laid as a means to keep the gov- erning classes in power by military force, the chief motive held in view would be to levy them where the most revenue could be collected, with most ease, at least cost. When the state became itself engaged in the work of production, as France is to-day in the manufacture of tobacco, and as the Phoenician kings were engaged in foreign commerce, taxes or prohibitions would be imposed on all rivals in the same trade. The English govern- ernment maintains, in this spirit, a monopoly to itself of the opium production in India. When theories of equality began to be broached by the French and English philosophers of the eighteenth century, they natu- rally concentrated their efforts on some plan of ideal equality in taxation. Here, however, arose endless themes for disioute, ow- ing to differences of judgment as to whether possessions, per- sons, incomes, consumptions, occupations, processes, descents and inheritances, contracts, profits, acres, or productive or idle capi- tal should be equally taxed. Each of these forms an independ- ent standard of ' ' equality in taxation " wholly irreconcilable, in its practical workings, with all the others. One will say it is equal taxation to tax each man in proportion to the value of the prop- erty he owns. This is the basis or standard, at which all the state, coimty, and local taxation aims, in most of the states of the United States, but not in the General Government. The objec- tion to this is that capital that is earning nothing, and that per- haps is in the way to be swallowed up by losses, is so taxed as to hasten the ruin of its owner, while men who are making large incomes, but expending them as fast as they make them, are not taxed, though they are enjoying far more of the world's wealth than those whose possessions are considerable, but whose incomes are small. Hence, the demand for the equal taxation of posses- sions is met by the counter-demand for the equal taxation of in- comes, or of expenditure, or of consumption. Another will say, tax manufacturing processes equally, according to the product turned out. Another will conscientiously think it equal, to tax occupations equally, according to their earnings. Still another will deny that taxation should be equal, and will allege that taxation should rest more heavily on superfluities, luxux'ies, and vices, e. g. , on tobacco, spirituous liquors, licenses to sell liquor in drinking saloons, on shows, brokers, money lend- ers, peddlers, usurers, on people who keep dogs, silks, diamonds, carriages, many servants, large retinues, etc. One holds that IDEAL OF TAXATION. 457 unoccupied land should be specially taxed to punish the wrong to society of keeping- it out of the market. Ricai'do holds that to tax any form of capital is a discoui-agement to labor, since, in his view, capital is the wage-fund from which labor must be paid, and, intrinsically, all capital is unproductive except as it is made a means of employing labor. In this conflict of theories, first, as to whether taxation should be equal at all, and, secondly, what element or aspect of man should be selected in estimating equality, there could be no other feasible course, open to governments, than to combine taxation on nearly all these conflicting bases in the degree that a national legislature, or bureau of taxation, would be able to agree upon. This is what is meant by saying that taxation is a practical question, or, largely, a compromise between conflicting theories. Obviously, nothing would be more despotic than to seize upon one only of these standards of equality as being the true and absolute standard, as, for instance, " incomes,'' when as many persons favor an equal tax on every person, or equality ac- coi'ding to the value of one's possessions, or taxation according to consumption, or the taxation of vices, luxuries, monopolies, etc. 179. An Ideal Theory of Taxation. — Adam Smith has laid down four rules which are supposed, by some, to embody a system of taxation which ought to be satisfactory to every mind. They are good rules, relatively to certain others which would be worse, and very poor rules relatively to the actual practice of many governments, which is better than these rules. We shall examine them consecutively : " 1. The subjects of every state ought to contribute to the support of the government, asnearly as possible in proportion to their respective abilities ; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation." The opening words begin by tlie assumption, so common among free traders, that only " the subjects of a state " ought to contrib- ute to the support of its government. This is to ignore, at the outset, a cardinal point in the protectionist experience, that not only the subjects of a state, but aliens who seek to do business or sell their wares within its borders, or in any way to get the bene- fits of its markets and scale of values, ought to, and under pro- .tectionist duties do, in many cases, contribute to the support of its government. The protectionists claim to be able to tax an inter- national constituency of producers and consumers on all interna- 458 ECONOMIC PHILOSOPHY. tional trade, i. e., trade between citizens of different nations. Whether they do so or not will be fully discussed in our next chapter. Meanwhile, the opening passage of the above rule is defective in ignoring this important fact, which limits the accept- ance of the rule to a class of closet theorists who have never yet given a fiscal policy to any nation in the world, and doubtless never will. The two recommendations that follow are that sub- jects contribute in proportion to their respective abilities, and in l^roportion to what they enjoy. Their abilities to enjoy will be measured, by one man, by their possessions, and by another, by their income. A tax on the first is a tax on capital, while a tax on the second is a tax on income. Thus the single word ' ' abil- ities " covers two very unlike modes of taxation. But both are distinct from "what they enjoy," for this last again is measured by expenditure, and by intellectual capacity to obtain enjoyment. To tax expenditure is to tax consumption, ostentation, and lux- ury. So far as we tax consumption, it becomes very nearly in effect a tax on persons, for the poor man with a large family will consume as much, directly, as the rich man with a small family. Taxing ostentation and luxury is taxing that very dispersion of wealth, and breaking up of hoards and estates, in which the pro- fessed champions of the poor are so deeply interested. For, nothing tends so directly to the dispersion of wealth, by the richer among the poorer, as most forms of luxurious and ostentatious living. Thus Dr. Smith's first prescription divides itself into seven, viz. , into taxes on capital, on incomes, on expenditure, on capacity, on consumption, on ostentation, and on luxury. Tax-gatherei^s can not travel far together, on a road that forks so often. Dr. Smith's next precept is : " 2. The tax which each individual is bound to pay ought to be certain, and not arbi- trary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every otiier person. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experi- ence of all nations, is not near so great an evil as a very small degree of uncertainty." This might seem self-evident to a man in a closet, but it does not agree with any experience we have of society, and it is not of the least practical importance to either the statesman or the tax- payer. The tax to which each individual is subjected, in every relation of life other than citizenship, is both uncertain and arbitrary. The degree in which he is taxed in his strength and vital force, first, to support himself, then to make for himself a good name and WHO PAYS THE TAX. 459 estate among his fellow-men, then to maintain, provide for, and conduct his family, are all uncertain, unequal, and often very arbitrary, and of a kind to involve absolute heroism to endure. Out of these social taxes, howevei', come all social heroisms and nobility. Whei'e then in natui'e do we get the basis for assuming that a social state, which is full of social inequalities, and of un- equal bui'dens on every hand, and wherein the prime duty of the virtuous is to help carry the derelict and delinquent, wherein also the wise must help bear the foolish up above and out of their folly, and wherein the strong must be taxed often to their full ability to secure the survival of the weak, the healthy of the diseased, and the competent of the incompetent — how is it that when this unequally-yoked -together mass of citizens are conglom- erate into a state, there must perforce suddenly spring out of this compost heap of inequalities a fair, white, ideal flower, which shall embody in its purity a principle on which no two minds can agree ? To the man that desires nicotine this flower shall contain nicotine and no other essence, to the man who desires cocaine it shall contain cocaine, and to the man that wants lavender or rose it shall be lavender or rose. But neither the statesman nor the citizen, in fact, cares or needs to know who pays the tax, any more than the citizen needs to know what particular Sing-leng-foo in China cultivated the tea which he sips, or what negro in Georgia hoed the cotton which he wears, or what were the features of the sheep whose wool adorns his back. . The question, who pays the tax ? is often a wholly insoluble conundrum to the economist, the tax being passed on, in its incidence, from one hand to another, until its exact incidence is lost in the tangled network of social causes and effects. But so are all other costs of living lost, if we attempt to follow them, in the same tangled network. An English parlia- mentary committee on local taxation, presided over by one of the foremost of England's practical and theoretical economists, George J. Goschen, rejjorted in 1872 that they could not tell, and no man could possibly find out, whether the tax on the occupier of houses was paid by the tenant or the owner of the land.* But shall no houses be rented until we find out whether the landlord or tenant pays the occupier's tax ? Mr. Mill is in an absolute mud- * The report says (" Goschen on Local Taxation," p. 178) : "That your committee have examined mauy witnesses, and received at their hands very conflicting opinions as regardsthe proportion in which the burden of rates at present falls relatively on owners and occupiers," 460 EGONOMIO PHILOSOPHY. die, as to whether taxes on exports are paid by the foreign con- sumers or by the domestic producers of the exported product, but inchnes to the opinion that they are paid by the foreign consum- ers, and that a nation may often greatly benefit its own trade by taxing its exports.* The very able economists, who framed the constitution of the United States, must have differed toto coelo from Mr. Mill on this point, or they would not, with such unanimity, have prohibited duties on exports. Indeed, if any considerable portion of the people of the United States should think as Mr. Mill does on this point, it would be but a very little while before the Constitution of the United States would be amended, and a duty on raw cotton imposed. We do not mean to express a difference from Mr. Mill as to duties on exports, but only to point out that where, in rela- tion to so many taxes, it is impossible for statesmen to agree as to where the incidence of the tax actually rests, yet the tax produces the revenue, and the citizen prospers, the question where it rests becomes a mere philosophical and metaphysical subtlety, of no more practical importance than the question where the ultimate responsibility for human conduct rests, or where the human will begins, or where in economics the cost of production begins — whether with the final process, or with the production of the im- plements, and if so whether production shall be deemed to include invention of the implements, in which case the effort to compute the cost of producing a bushel of corn would carry us back to the beginning of the world. Such subtleties may be, and largely through Mr. Mill's infiuence are, raistaken for economic science, but they have nothing to do with it, but belong to the widely dif- ferent domain of metaphysical gymnastics. Students must gradually learn the distinction, between the men- tal daze that comes from reading propositions like those of Mr. Mill, which begin with a " let us suppose," then carry you through the meshes of a tangled but non-existing hypothesis, and finally dump you with a triumphant " thei'efore " in a quagmire of con- clusions, which agree only in being at war with the existing sys- tem of things, whatever it may be — and political economy, at least as taught by the historical school. Dr. Smith's third rule is : * Book V. ch. 3 (p. 574, Loughlin's ed.) he says : "By taxing exports we may, in certain circumstances, produce a division of the advantage of the trade more favorable to ourselves. In some cases we may draw into our coffers, at the expense of foreign- ers, not only tlie whole tax, but more than the tax ; in other cases we should gain ex- actly the tax ; in others, less than the tax. In this last case a part of the tax is borne by ourselves ; possibly the whole, possibly even, Jis we eball show, more than the whole," SUPPBESSIJYG A PRODUCTION. 461 " 3. Every tax ought to be levied at the time, or in the manner, in which it is most lilcely to be convenient for the contributor to pay it. Taxes upon such consumable goods as are articles of luxury are all finally paid by the consumer, and generally in a manner that is very convenient to him. He pays tliem little by little, as he has occa- sion to buy the eoods. As he is at liberty, too, either to buy or not to buy, as he pleases, it must be his own fault if he ever suffers any considerable inconvenience from such taxes." Tliis rule emphatically and tlirouglioiit contradicts the last. For the most convenient time and manner in which to pay a tax is when we pay it without knowing it, whether we are the producers of goods, workuig for a profit, and paying- the tax in order to get them into a particular market, or whether we are consumers and buying the product. It is not true that taxes upon such consum- able goods as are articles of luxury are all finally paid by the consumer, or that a different rule prevails for articles of luxury from those that govern other products. Indeed, there can be no distinction in economics between luxuries and necessaries, as may be illustrated by the very simple fact that in civilization clothing is necessary, in Central Afi'ica it is a luxury. In Uganda, more- over, bamboo is necessary, and most kinds of money have little or no value. In civilization bamboo is nearly worthless, and money is constantly necessary. Dr. Smith's fourth rule is : "4. Every tax ought to be so contrived as both to take out and keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state." This rule in practice contradicts the second rule. For the sec- ond rule assumes there are many taxes, concerning which it is true that the quantity each person pays, and even the question which of several persons pays, is uncertain, in the sense of un- known, i. e., is not capable of being known. Now, where we can not know who pays the tax, it is obviously fruitless to try to measure the proportion of the amount paid which does not go into the treasury, against the amount that does, so as to make the ratio of two unknown quantities to each other the gauge by which to determine the justice of a tax. Again, there may be great difference of judgment among men, as to which of two modes of tax does take out, or keep out, of the pockets of the people, most money relatively to what it brings into the public treasury of the state. Great Britain taxes the importation of leaf tobacco 3s. 6cZ. ster- ling, or 87 cents per pound. To prevent this import duty from causing Irish and Scotch farmers to cultivate tobacco, as they could do at an enormous profit, by reason of the duty thus ini- 462 ECONOMIC PHILOSOPHY. posed on the foreign article, the government pi-ohibits absolutely the domestic production, making it criminal to cultivate the leaf anywhere in Great Britain. This suppression of the domestic pi-oduction is supposed to have the eilect to cause the entire sum, by which the price of tobacco to the consumer is increased, to go into the treasury, i. e., no part of it goes to any domestic producer. But lo ! to accomplish this result, there is kept out of the pockets of the people, not merely the amount of the tax paid, but the en- tire profits of the possible domestic production of the leaf. No one can tell how peculiarly the climate of Ireland might have proved to be adapted to the culture of tobacco, if it had been al- loAved. It might have proved to be as much superior to any other point in the woi'ld, for the culture of the leaf, as the Southern States are for the culture of cotton. In that case Ireland could have produced the tobacco crop of the world, and, instead of famine and decline, might have maintained a population of nine to twelve millions of people. Yet we are told that the signal merit of this tobacco tax is, that it takes not a penny from, the pockets of the people, that does not go into the treasury. In fact, by suppressing a domestic produc- tion, it keeps out of the pockets of the people the profits of a pos- sible national industry, the value of which no man can compute. 180. The Search for the Incidence of Taxation and of Specific Taxes. — By the incidence of a tax is meant the fall, " blow," or deduction from wealth, which it efi'ects on a particular person, and this involves the defining of the final person upon whom the tax rests, and beyond whom its burden does not go, and has no effect. It has never occurred to the writers on this subject, that if the ultimate incidence, or final deleterious effect, of a tax or burden can be defined, much more by parity of reason ought we to be able to define where the benefits of production, or of a new aid to production, stop. We ought to be able to point out the ex- treme outward j)erson upon whom the beneficent effects of the invention of printing, the discovery of America, or of gold in California rests. A tax, considered as a diminution of production, .can hardly be measured until we can assign limits to the effects of aids to production. For, peradventure, the tax itself may be an aid to production, and in that case it has no incidence, properly speaking, since its supposed "blow "is converted into a caress. In discussing Adam Smith's ideal theory of taxation, we else- where point out that standards of equality may be as numerous as the persons who propose tliem. • WFIEK ARE TAXES " EQ UAL " .? 463 , A would think it equal that B pay the same as C. This calls for a poll tax. In interior or barbarous races, where no capital exists, a poll tax would be as equal as any other. B thinks it equal, that A and C pay according- to what they possess. This calls for a tax on capital, or savings, or principal. This is equal in as far as capitals and incomes are equal. C thinks it equal that A and B pay according to what they earn or receive. This calls for an income tax. Income taxes are equal wherever incomes are equal. D thinks it equal that A and B pay according to what they enjoy or expend. This calls for a tax on consumption or rate of living, which is an equal tax as to all who live at an equal rate of expense. E thinks it equal, that A and B should pay taxes, at the point where it will, incidentally, cause industries not pre- viously possible to become equally possible to both A and B, whereby they can be supplied with the means to pay the tax and make a profit besides, so that by paying a tax of say five they are l^enefited to the extent of fifteen. This calls for taxes for im- provements, schools, lights, sewers, and protection to domestic industry. These are equal except as to such persons as do not intend to live by industry, and who have therefore no interest in its j)rotection or defense. F thinks it equal that A and B should be taxed according' to their respective utility to the community. If A is rendering valuable service, say in teaching school or in- venting machinery at small pay, or in introducing capital into new avocations which will be presently unprofitable, but ulti- mately of great public benefit, and B is getting high profits out of a business deleterious to the general welfare, as gambling, sell- ing spirituous liquors, or prize-fighting, lotteries, bull-baiting, or vice, then B should be taxed a sufficient sum to at least make A's means of living as secure as his own, and this sum should be paid over to A for teaching school, or inventing machinery, or invest- ing capital, or otherwise working for the common good. Mr. Mill holds tliat true equality of taxation consists in equality of sacrifice, or suffering, in paj'ing the tax. But this is chimerical, as those who have abundant means can not be made to suffer by any payment whatever. Dr. Smith holds that taxation should be equal according to the ability of each to pay. But who shall define ability to pay ? Mr. Mill was strongly of the opinion that the increase of value in laud, growing out of increased public ap^jreciation, should be taxed. But if so, should the state compensate for the decrease of value ? and why should the rise in land, more than the rise in 464 ECONOMIC PHILOSOPHY. stocks, in good will, or in personal popularity and reputation, be taxed ? Labor has as little to do with causing a man to grow in public favor as with causing a lot of land to grow in price. Horace Greeley was wont to say : ' ' Popularity is a happy acci- dent of life, and political preferment is an affair of luck." Whj'' should they not be taxed as well as the unearned increment of land ? If a particular kind of business be taxed, on the ground that it is inimical to public intei'est, a half or third of the persons that would else engage in it go out of it, thus enlarging the ratio of customers to those that remain, and hence removing from them the tax. Many sellers of liquors prefer a high tax on liquor, as it dignifies their calling and makes them collectors of revenue, and therefore agents of the state. When the increase in their monopoly of the custom reimburses to them the effect of the tax, upon whom does the tax rest ? The customer will declare that he is not taxed, as he gets his goods of as good quality and at as low a price as before, but from fewer merchants. The persons who go out of the business can not be said to pay the tax, since they go into other kinds of business and are not in the line from whence the tax comes. The liquor seller who remains certainly does not pay it, as the increase of custom resulting from driving his competitors out of the business has reimbursed him. Thus, though the state treasury has certainly received an increase of revenue, no person can be proven to have sustained the actual burden of this increase. So suppose a tax be laid upon land, with the effect to lessen the profits of investing capital in it. The number of competitors for its ownership diminishes, the same capital acquires more of it, and virtually the monopoly of those wdio choose to invest in it increases, with a corresponding increase in their i^rofits, in the same manner as we have indicated in the case of tax on an occupa- tion. But with this result, — on whom has the tax fallen ? Mr. Mill holds that, in taxing incomes, all that portion of the income which is laid by as savings should be exempted, since to tax savings is, he says, to condemn prudence. But, in such a case, the tax would rest on that which a person can not afford to save, but needs to consume. This is in conflict with his other principle that the tax should be so distributed as to equalize the sacrifice. It certainly involves a far greater sacrifice, to tax a man out of what he needs to expend for his support, than to tax him on the surplus he is able to save. INCIDENCE OF TAXES. 465 Annual taxes, being a portion of the year's production — the money proceeds of its crops and earnings — might be supposed to be in the first instance a deduction from the returns of the pro- ducers, at least until they I'eturn into the channels of production, as seed, or cause, in part, of the next year's production. As a deduction from production, they must ultimately come out of the producers, either of commodities, or of their values. If an owner of land pays taxes, he pays them out of that portion of the year's annual production which he is able to appropriate. If the land enabled him to ai^propriate it, i. e., if he pays the tax from an income derived from the rent of the land, then the tax is a deduction from the earnings of the industries carried on upon that land. If the land lay idle, earning no income, then the tax on it must have been earned in some industries carried on upon other land. But in each and all these industries one set of men, viz., the producers, ordinarily so called, create or bring to market the commodity or service, while another, viz., the users, employers, or consumers, by their demands give it value. Hence the production of commodities, and sei^vices, proceeds from one class, and the production of values proceeds from another. The commodity may be produced in London, while the value may be given to it, in Moscow or Buenos Ayres. The tax may be col- lected in London ; its chief effect may be felt in Louisiana. , There are those who feel competent to decide, amidst this con- geries of mazy influences, radiating outward indefinitely through all the transactions of mankind, what the ultimate incidence of a tax may be. To me it seems as hopeless as to attempt to set bounds to the causative operations of a winter's snOAv or a sum- mer's rain. To trace the degi-ee of burden, effected by a tax, upon him who pays it, involves a difficulty which does not apply, however, to ti-acing the benefits of its expenditure among those to whom it is paid, or in whose midst it is distributed. The former involves a disappearance of values, the latter a re- appearance. In the former case the clews disperse as when water sinks into the sand. In the latter the visible wealth is reproducing itself before our eyes. Hence, those who contrast the beneficial effects of the expendi- ture of taxes within a country, with the draining of a country by foreign tax-gatherers, are not to be likened to the metaphysical philosopliers who are seeking to found an ideal theory of taxation on speculations as to its ultimate incidence.* * Thus, in the Political Science Quarteiiy for December, ISVr, a report of Colonel Sir 466 ECONOMIC PHILOSOPHY. A part of the incidence of King Grsorge's tax on tea was the American Eevolution, and the Constitution of the United States. A part of the incidence of Caesar's decree, that all the world should be taxed, may have been the birth of Christianity and the disintegration of the Roman Empire. As the French Academy was compelled to declare that the announcement, on the part of any man, that he had solved the problem of the quadrature of the circle, should be deemed conclusive evidence of lunacy, so the notion on the part of an economist, that he can define tlie ultimate incidence of any tax, must consign him to the limbo of vision- aries needing, if not the restraint of coercion, at least the tender rebuke of pitying regai^d. One or two links in the chain of cau- sation set in motion by a tax may be traced. Then the trace is lost in the great ocean of aggregate effort and common welfare. The taxes collected to promote education are like the one-eighth of a farmer's crop, which he I'eserves for seed for the next year. It may be said to be a tax on his energies to be compelled to pro- duce in any one year a quantity one-eighth greater than he can either enjoy or sell, and of which his only use is to throw it back into the ground as the condition of reaping the next year's crop. Yet the seed-tax imposed by nature is the source of all produc- tion. All well-expended taxes are certainly in the same cate- gory. This is proved by the fact that, in addition to paying the regular state taxes, men freely tax themselves to support chain- ties, religions, amusements for others, political parties, or the George Wingate makes the following very clear statement of the effects of taxation as a mode of wealth distribution. He says: " Taxes spent in the country from which they are raised are totally different in their efEect from taxes raised in one country and spent in another. In the former case, the taxes collected from the population at large are paid away to the portion of the population engaged ia the service of govern- ment, through whose expenditure they are again returned to the industrious classes. (More accurately, to the general circulation.) They occasion a difEerent distribu- tion, but no loss oi* national income (capital). . . . But the case is wholly different when the taxes are not spent in the country from which they are raised. In this case they constitute no mere transfer of a portion of the national income from one set of citizens to another, but an absolute loss and extinction of the whole amount withdrawn from the whole taxed country. As regards its effect on national production, the whole might as well be thrown into the sea as transferred to another country, for no portion of it will return to the taxed country in any shape whatever." The economic principle involved here is not altered, when the nation which receives the money exported sends goods in exchange instead of rendering services in the shape of protection from foreign or domestic violence. The economic effects described are due to the depletion of the wealth of the country that parts with its money for any kind of services rendered by foreign parties (whether in the nature of protection from violence or protection of commodities), instead of having those services rendered by its own population.— iV. Y. Pixss. DIRECT TAXATION. 467 exti'a-coustitutional part of state work, and many other social benefits. In all tliese cases men count the ijresent tax to be only tlie seed sown of ultimate profit. In the degree, therefore, that men are far-sighted, sagacious, and enlightened, they are willing to sustain momentary taxation to effect ultimate results in which they feel that all have a common interest. Adam Smitli thought it extremely important that taxes should be direct and certain, so that each man should know exactly tlie extent of his burden. Cui bono ? The assumption is that the man who feels them keenly will resist their unjust imposition. But is it a civic virtue so much higher to resist taxation, than to pay taxes, that special pains should be taken to make it painful ? And are men to be deemed so mean, and void of public spirit, that no man will be supposed capable of resisting a tax unless he pays it himself ? Of what great value is it, to any man, to have burdens made so extremely evident ? Besides, if he on whom the burden first falls, after enduring all the pain of paying the tax, really passes it over, without knowing it, on some one else, would it not have been more painless, and just as true, to have collected the same amount of tax, by a mode in which no person whatever would have been paine(^ by this unnecessary consciousness of being taxed ? If the wisest economist can not define the cases in which a tax is transferred, why should the humblfest tax- payer be pained with the belief that he is bearing a burden which, perhaps, he is only transferring to anotlier ? The English ratepayers are taxed for the dwellings they occupy. Do they, or do they not, get their rents for a sum made less by the amount of the rate, than if they paid no rate ? Economists like Mr. Goschen are wholly unable to say. If they do, then the land- lord bears the buixlen. But the landlord is so wealthy that pay- ing a tax, or accepting a lower rent, is a mere affair of figures to his steward. How can a tax be a burden to one who does not know of it, and to one who perhaps produces nothing, but osten- tation and ennui ? The notion, tJiat the incidence of taxes should be made certain, is like the kindred notion, that the law should be made simple. It demands an impossibility in finance. If the search for the inci- dence of taxes has brought to light any one valuable principle in taxation, of general application, it is that the taxpayer bears with most ease three classes of taxes, viz. : 1. Those which indirectly promote the energy of national pro- duction, in a degree which more than supplies to the taxpayer the 468 ECONOMIC PHILOSOPHY. means of paying the tax, so that where a penny is taken out of one pocket in taxes, a shilling is put into the other in the form of bettei' wages, more industries, or higher profits. These ai-e the protective taxes, educational taxes, and all taxes that perform the seed-sowing function. 2. Those of which the returns come into the treasury of his own country, while the taxes are paid by the producers of other coun- tries. These, too, are the protective taxes. 3. Those whose first incidence is a temporary scarcity of some product, but whose speedy effect is to greatly cheapen its supply. 181. The Practice of Modem Govermneiits in Taxa- tion — The United States. — Taxation, nearly everywhere, is distinguished into general, or national, and local. The latter is both raised, and disbursed, within a small fractional district, or sub- division of a state, to wit, a county, parish, town, school district, or the like, by some form of local board. The local taxation, in the city of New York, amounts to upwards of $20, 000, 000 a year, which is several times more than that of the State, and in 1860 equalled the expenses of thirty state governments combined. Mere state taxation must not be mistaken for the index to the local taxation. Illinois has about 3,500,000 people, and raises for sfate purposes about $3,500,000. If this be a fair standard for the country at lai^ge, the total state taxation would not exceed $60,000,000 a year for all the states and territories. Adding, how- ever, the cost of local, city, park, and district expenditures of all sorts, probably the aggregate local taxation of the country equals the aggregate of national taxation. The latter is shown by the following budget for 1883 : UNITED STATES BUDGET, YEAR ENDING JUNE 30, 1883. [In millions and tenths of millions.] Becelpts : Customs $214 7 Internal Revenue 144.7 Direct tax .1 Sale of public lands 7.9 Miscellaneous 30.8 Net ordinary receipts $398.2 Expeiiditures : War Department $48.9, Navy Department • 15.3 Indians 7.3 Pensions 66.0 Miscellaneous 68.7 Net ordinary expenditures $206.2 Interest on public debt 59.2 Total 1265.4 TAXATION IN THE UNITED STATES. 4G9 The accompanying- chart shows the total amount of revenue for each year, the general course of expenditure, and the degree in which the national i^evenues of the United States have been derived from customs duties, from the foundation of the government. It is a plausible aphorism of Mr. Mill that customs duties, so far as they are protective, can produce no revenue, for they pro- tect the domestic j)roduction, only in the degree that they exclude the imported article, and they produce revenue only on the quan- tity they admit. No instance illustrates more signally the im- portance of studying economics in the school of history and ex- perience, instead of burrowing under a barren debris of ruinous metaphysical assumptions, however acute they may seem to be. The above aphorism of Mill is on a par with the ancient demon- stration, by the sophists, that motion is impossible, because as to any body in space there are only two portions of space in which it can move, since all space is comjirised in these two portions, viz., the space where it is, and the space where it is not. It can not move in the space Avhere it is, because, so long as it continues in that space, it moves not. And it can not move in the space where it is not, because it can never be in the space where it is not. Hence it can not move at all. As specimens of mere chop logic, one of these is as good as the other, and both are worthless. Bodies do move, and not only do protective duties collect revenues, but the entire body of tariff laws which include protective duties, always collects more revenue than those which aim not to protect. This will appear clearly from the following table of relative pro- ductiveness of customs tariffs in the United States during the so- called free trade or low revenue periods, compared with the more intentionally protective periods : TABLE SHOWING AVERAGE IMPORTS AND AVERAGE CUSTOMS, REVENUE UNDER "FREE TRADE" ASCENDENCY, AND THE SAME DURING PERIODS WHEN PROTECTIONISTS WERE IN POWER. Years. Amount Imports per Year. Average Revenue from Customs. Ratio of Reve- nue to Imports. 1821-3 Inc. 1824-33 Inc. 1834-41 Inc. 1842^6 Inc. 1847-61 Inc. 3 years F. T. 10 years Protect'n. 8 years F. T. 5 years Protect'n. 15 years F. T. $ 50,758,073.33 66,515,935.30 108,407,276.00 91,126,945.40 239,167,587.00 % 16,557,543.17 23,066,272.30 17,183,741.60 21,331,320.03 47,605,530.45 Eev. Im. $1 to $3.06 1 to 2.88 1 to 7.03 1 to 4.27 1 to 5.02 4V0 HGONOMIO PHILOSOPHY. Or, varying the mode of expression, we find tliat, from 1821 to 1833, a "tariff for revenue" collected only $3.26 of revenue on every $10 worth of imports, while in the next ten years, over most of which a protective tariff extended, we collected under a protective tariff $3.47 of revenue on every $10 worth of goods, in- creasing our average importation by $16,600,000 per year, our average revenue by $6,500,000 per year, and the ratio of revenue to goods imported. From 1834 to 1841, inclusive, eight years of free trade, and of disaster caused by excessive importations, our average importations nearly doubled, while our tariff for revenue fell off nearly $6,000,000 per annum, and we collected only $1.46 of revenue on $10 of imports. In the five protective years from 1842 to 1846, inclusive, our importations were less by $16,000,000, and the duties collected more by $3,000,000, the ratio of duties rising to $2. 34 per $10 of imports. Fi'om 1846-61 the imports were made large by our great supply of gold from California, by our increased opening up of Western lands through our extending railways, by the great demand for our exports occasioned by the Irish famine of 1846-9, monetaiy crisis in England in 1847, repeal of English duties on bi'ead-stuffs in 1847-9, Crimean war in 1851-4, French, Hungarian, and German revolutions in 1848, and the like. But the revenue on every $10 of imports fell to $1.98, thus showing that in no instance have duties "for revenue only " been so productive of revenue on a like volume of impor- tations nor so productive absolutely as duties levied for both revenue, and protection. In the light of these facts, Mr. Mill's "obvious tmiism," that " duties which protect can produce no revenue and duties which produce revenue can affoi'd no pi'O- tectiou,"* becomes a practical falsehood. From 1861 to 1870, under protective tariffs the revenue advanced from $39,000,000 to $180,000,000, each increase of protection being attended by a steady rise in the I'atio of the revenue collected to the goods imported. In 1861 we collected $1.18 of revenue per $10 of imports ; in 1870 it is $5 of revenue per $10 of imports. Under the " fi'ee trade " tariff of 1857-60, the government col- lected, in the latter year, on an importation of goods to the value of $334,350,453 a revenue of only $39,583,125.64, or $1 of revenue to. $8.50 worth of goods imported. Under the tariff known as the Morrill or war tariff, the rates were increased at nearly every session of Congress during the war, especially on iron and steel, * Mill's " Political Economy," vol . 2, p. 538 (book v, chap. x. sec. 1). THE MORRILL TARIFF. 471 cottons and woolens, and we collected in 1869 a customs revenue of $177,151,136 on a total importation of $415,560,872, being $1 of revenue on every $2.37 of goods imported. Purely in productive- ness of revenue the tariff of 1869 was three and a half times more effective than the tariff of 18G0. To collect the revenue Ratio of Kbvenue to' iMroKT? during 40 Teaks. Scale, §10,000,000 to Section Line. - 10 Years' Pi-o.tective Duties Aiv.era'gedi 8 Years' ^ Low Duties Averaged. 5 Years' p'rote'ctive Duties Averaged. 15 Years' Low Duties Averaged. - IMPOR T =? —^ — — I — — — ' 200 ~| |S 1 _ 100 1 1 1 1 1 80 70 60 50 •40 30 - 1 Wl POF J 5 ir ^P 1 — "^ E - - — K i'V-b NU 1 1 1 Tf E? r, - :. R t 1/i-wu E- - 1? B! 1^ 'NIU E^ - 1 RE> "10 -J ... Rate op Revenue Collected on EVEKy $10 of Impokts. 1 1 1 1 1 1 1 1. " " 1 1 7 1 ~ ■" ■ 1 1 Jul- ^-'- L T77 v!^ ?■ t C T ON FR'E'E T RAD'E =ROT ^ •RtE TRA Dt _ — ] 1 _ _ 1 " n 1 _ _ _ — — rr — _ _ _ _ - _ _ — — — I] — - — — — ^ - - $3 ?fi -k L -A7 - 1— L - - k $')!•:« n -^ p ^ = £: ^ — =P^ = - 1 iriT -n«i-f^ J L L. L L _ iL _ _ of 1869, under the tariff of 1860, would have required an importa- tion of foreign goods to the value of $1,200,000,000 per anii'am, a quantity whose im})ortation was practically a three-fold impossi- bility, because (1) Europe could not take so large a quantity of our products as would be required to pay for tliem ; (2) we could not produce lliem, and (3) the importation of so large a quantity 472 EGONOMIG PHILOSOPHY. of manufactured goods would have completely destroyed our own manufactures. The following table shows the rapid increase in the efficiency of the tariff during this period : Year. Value of Merchandise Imported. Revenue. Ratio of Revenue to Imports. 1861 1862 1863 1864 1865 .■ 1866 1867 1868 1869 $334,350,453 205,819,823 252,187,587 328,514,659 234,434,167 437,638,966 389,924,977 357,436,440 415,569,873 $39,582,125.64 49,056,308.00 69,059.942.00 102,316,153.00 85,928,260.00 160,000,000.00 176,417,810.88 164,464,500.00 177,151,126.00 $1 to $8. 50 1 to 4.01 1 to 3.65 1 to 3.21 1 to 2.76 1 to 2.73 1 to 2.43 to 2.11 1 to 2.34 The following table presents the contrast between a term of years of " free trade," and the like term of protectionist yeai'S : COMPARATIVE POWER TO COLLECT TAXES UNDER CONTRASTED TARIFF POLICIES. Under Free Trade. \] Under Protection. Years ended June oO. 1847 . 1848 . 1849 . 1850 . 1851 . 1852 . 1853 . 1854 . 1855 . 1856 . 1857 . 1858 . 1859 . 1860 . 1861 . Total Total Ordinary Receipts. 126,467,403.16 35,698,699.21 30,721,077.50 43,592,888,88 52,555,039.33 49,842,815.60 61,587,031.68 78,800,341.40 65,350,574.68 74,056,699.24 68,965,812.57 46,655,365.96 52,777,107,92 56,054,599.83 41,476,299.49 ^79, 605, 256. 45 [I Total Years ended June 30. 1867 . 1868 . 1869 . 1870 . 1871 . 1872 . 1873 . 1874 . 1875 . 1876 . 1877 . il878 . il879 . .1880 , ,1881 . Total Ordinary- Receipts. $462,846,679.92 876,434,453.82 357,188,256.09 395,959,833.87 364,431,104.94 365,394,229.91 322,177,678.78 299,941,090.84 284,020,771.41 290,066,584.70 281,000,642.00 257,446,776.40 272,822,136.83 333,526,610.98 360,782,292.57 ;5, 032,539, 138.06 Whether this enormous increase of revenue, under protective duties, was attended by greater disadvantages or advantages to the industry and prosperity of the country, may more properly be considei^ed when we come to discuss the merits of protection as an economic policy, i.e., as it affects the people. No one test of the general prosperity of a country, however, is more satisfactory than the rate of immigration into it, aa PROTECTION STIMULA TES IMMIQBA TION. 473 that measui-es its general economic desirableness, relatively, to all competing countries. In the period of low duties, many extraordinary exterior circumstances concurred to stimulate immigration, such as the new gold crop of Califoi-nia, the new railroad epoch in the United States, the Irish famine, Crimean war, and revolutions in Europe. In the pi'otective period all these were wanting, and no prominent cause but the prosperity induced by protective policies, and an abundance of paper money, existed to invite population. Yet the immigration in the first period, viz., 3,817,931, was far exceeded by that in the second, 5,998,334. In short, in a period of high duties, when the amount of revenue collected was 6-i- times greater than under low duties, the immigration was still twice as great as under the low duties, indicating a condition of labor capable of attracting twice as many persons. These facts are shown in the diagram : Comparative Power to collect Taxes. 1847-1861. ■ Free Trade. 1867—1881. - Protection. Comparative Power to attract Immigrants wJdle collecting these Taxes, 1847—1861. ^= Free Trade. 1867—1881. ■ Protection. As a mere fiscal policy for the promotion of revenue, the foregoing figures, embodying much of the experience of the United States, show that tariffs designed to protect do, in the aggregate, produce most revenue. The state and local taxation rests, in most of the States, on land and its improvements, and fixed capital generally, aided by license taxes on the sale of liquors at x'etail, taxes on personal property, and in some States on railways, and on certain occupa- tions. It is all, or nearly all, claimed to be direct taxation, as that word is used by the economists, i.e., it can not, it is thought, be transferred, by the party that pays it, so that its ultimate burden shall rest on another. Whether, however, taxes on land are paid by the landlord, or by the occupier, has of late been much disputed. In England, where the occupier pays them, in the first instance, it is often asserted that ultimately the burden is shared by the land-proprietor. In America, where they are at first paid by the land-owner, it is often asserted that he is able to add them to his rents. This can not be proven, and is very doubtful. The rates of land rent are determined by the competition of tenants to hire, and by 474 ECONOMIC PHILOSOPHY. the average earnings of capital in other occuj)ations. For hind- lords are presumed not to seek to extend investments in real estate, beyond the point where as large an average return can be got from the capital invested, in the pui'chase both of land and im- provements, as could be derived from the same capital, invested in other forms of property, which would require no more care. It is by no means clear that laying the taxes on land either in- creases their value to tenants, or increases the returns from the general avenues for the investment of capital. Eents are very much lower in England, where land is untaxed, than on like values of property in France and America, where it is taxed. But there are too many factors, more potent than this, to justify attributing it to this chiefly. Hardly any of the state taxes rest on consumption. Nearly all aim to tax capital. This is the outcome of universal suffrage. In the rural districts about one-half of the voters are taxpayers, under a system which aims to tax capital and land only. In the cities, only from one person in five, to one person in twelve, is a taxpayer. The effect of having taxes laid by the non-property- holders, and paid by the property-holders, is to infuse a commu- nistic spirit into all tax voting, the non-taxpaying classes com- bining together to have as much money expended as they can, since, the more money is expended, the greater their chance of getting some of it. A school district, in one of the suburbs of New York, had, a few years ago, so many wealthy taxpayers, who were too aristocratic to send their children to any public school whatever, and so many voting parents of poor children, determined to give them all the accomplishments of a fashionable education, at the cost of their wealthy neighbors, that by introducing instruction in modern languages, music, etc., the cost of instruction was brought up for a time to $600 per pupil per year, a cost greater than the wealthier parents were paying, for the tuition of their own children, at Harvard or Yale. Thus, the theory of Adam Smith that, where taxes are most certain in their incidence, they will be most economically laid and expended, undergoes an explosion, due to the fact that Smith . made no account of the interest which should govern their laying or expenditure. It was because, in this case, the tax was certain to fall on the rich, and they were in the minority, and was certain to benefit the poor, and they were in the majority, that the tax was laid wastefully. TAX ON LIQUORS AND TOBACCO. 475 The chart shows that nearly the whole means of maintaining the National Government, from its foundation to the present time, have been derived from duties on imports, except that in 1835 to 1836 nearly half the expenses of government were paid by sales of public lands, and since 1862 the revenue from the internal or excise taxes was for several years greater, and is still nearly as great, as from duties on imports. Both these forms of taxation rest on consumption, except as they may in certain instances rest on the producer of the taxed product. The degree in which they so rest will be discussed in chapter xv. Taxes on alcoholic beverages and tobacco are so popular in the United States, owing to the hostility to the accustomed use of these two articles, on moral and hygienic grounds, that it has thus far been dangerous to any politician to advocate their repeal, notwithstanding they were imposed only as war taxes, and the revenue derived from them is a surplus and a burden which it is desirable to get rid of, and which interferes with the most happy adaptation of our revenue system to the real wants of the coun- try. Whether the taxes on liquor and tobacco do in fact dis- courage their use, in any degree, is open to question. The pre- vailing modes of partaking of both, by the custom called ' ' treat- ing," imply that the person who pays for them usually does so from some motive of hospitality or ostentation among his friends, or to cultivate the good-will of persons with whom he desires to ingratiate himself. All these purposes ai'e more com- pletely subserved by the dearness of the article, rather than by its cheapness. Perhaps the masses of the buyers of liquors and tobacco prefer them to be high-priced rather than low-priced. Human nature has never Avholly escaj)ed that infatuation for the ostentatiously expensive, which induced the gourmands of Rome to melt pearls into their wine, not because they improved its flavor, but because they increased that display of cost which was a chief purpose in all their entertainment, or to make their soups of the livers of singing bii'ds because they were high-priced. It is certain that an indirect effect of the high taxes on wines of every kind, is to promote lai'gely their adulteration, and to in- crease the difficulty of making any use of wine for medical pur- poses, which would be an economic consideration, in case it shall be finally determined that wine has any medical utility. Nor have the Americans ever adopted the practice, which pre- vails in England, of destroying the flavor of high wines, or alcohol needed for chemical and manufacturing purposes, without destroj^' 476 ECONOMIC PHILOSOPHY. ing its utility, by infusing into it a portion of wood-naphtha. It thus becomes methyllated spirits, which in England are free of the excise tax. Here, therefore, alcohol used in the mechanic and manufacturing arts is unnecessarily and wastefully taxed, while many good objects, and no bad purposes, would be served by freeing it from tax. 182. Taxation in Great Britain — Local. — The total taxation of the United Kingdom of Great Britain and Ireland for the year of 1872-3* was £102,434,866, or £3 3s. 2d. per head of the population.! Of this the local burden was £40,991,- 770, and the national taxes were £79,763,298. Of the local tax- ation 33.9 millions were contributed by England and Wales, 2.8 millions by Scotland, 5.1 millions by Ireland. The following is a complete statement of the receipts for local purposes : Amount of Direct and Indirect Taxation, and of other Sources of Receipts for thepur- poses of Local Expenditure. Levied by Rates. England & Wales. Scotland. Ireland. Total. Direct £18,619,378 £1,683,008 £2,514,691 £22,017,677 Indirect, from Dues, Tolls, etc. 3,939,838 455,454 300,234 4,694,916 Total of Taxes £27,511,993 Other Sources of Receipts. Sales or Eents of Property 923.001 285,060 30,961 1,239,032 Government Contributions.... 962,895 183,738 1,900,059 2,087.592 Loans 6,583,812 145,653 169,995 6,899,460 Various Sources 2,926,984 138,763 187,946 3,253,693 Local Taxes 22,558,616 2,148,462 2,814,915 Total £33,955,308 £8,831,676 £5,103,876 £40,991,770 The rates are taxes paid by the occupier of lands and houses, and for the collection of which a warrant issues authorizing only a seizure of the occupier's goods and chattels. They are fre- quently spoken of, in English economic works, as a tax on lands, but differ wholly from an American tax on land, in the fact that for delinquency in the payment of the latter, the title to the land itself is sold, while, for failure to pay the English rate, only the goods of the occupant are distrainable. This distinction probably determines the incidence of the tax. The English rate-payers will never succeed in putting the burden of their rates in the first instance on the land-owner, until they enact that the warrant issued to collect the tax shall sell the land itself, and not the goods of the occupier. The rates levied are liable to be increased in number, by any act of parliament which discovers a new local object for which * " Condition of Nations," by Kolb, translated by Brewer, p. 61. t Each pound sterling equals $4.87. ENGLISH TAX RATES. 477 money needs to be expended, or diminished by any act consolida- ting- ox* repealing previous rates. They consist of two classes, viz. : rates levied in primary districts, such as a parish, which may be likened to what Americans would call township taxes, and rates levied in aggregate districts, such as a count3^* There are twelve principal kinds of parish rates, viz. : (1) the poor rate, (2) the high- way rate, (3) the burial board rate, (4) the lighting and watching rate, (5) the general district rate, (6) the sewerage rate, (7) the towns improvement rate, (8; the animal contagious diseases rate, (9) the chtu'ch rate, (10) the sewers rate, (11) the genei-al sewers rate, (12) the drainage, embankment, and enclosure rates. This is by no means a complete list, as Mr. Fawcettf mentions also a public library and museum rate, parish improvement rate, bor- ough lunatic asylum rate, borough library and museum rate, borough baths and wash-houses rate, boi'ough improvement rate, and borough burial-board rate. Mr. Fawcett regards these rates as a feasible mode of carrying out, not only gratuitous instruction, and all forms of special education, but state emigration, provision for children whose support is found inconvenient to their pai-ents, the encouragement of co-operative associations, the purchase of land from landlords for the tenants, and advance of capital to work the land, and other forms of socialistic relief. This con- stantly increasing demand upon the rates, he says, is encouraged by the opinion that the wealth of England is so great that thei'e is no need for economy. Besides the ]3arish' rates, there are the county rates, which are expended chiefly for county bridges, gaols, shire halls, county kmatic asylums, and county police; the hundred rate for mak- ing good the damages occasioned by a riot ; the borough rates which ai'e levied in cities for like purposes to those for which county rates are levied in the country. Mr. Chalmers J says that local government in England may be fitly described as consisting of a chaos of authorities, and a chaos of rates. With few exceptions, all the various areas intersect, and overlap. A very jungle of jurisdictions is brought about by the circumstance that all these areas are governed by different au- thorities, elected or selected at, different times, by different means or bodies. These defects, and difficulties, have resulted from the * Report of select committee on local taxation, Goschen, 152. t "Manual of Political Economy," p. 607. X " Local Government." The " English Citizen Series," by Mr. Chalmers, McMillan &Co.. 1883. 478 ECONOMIC PHILOSOPHY. English nabit of legislating by piecemeal, the shortcomings of existing mstitutions being remedied, from time to time, by a species of patchwork. This system, or want of system, it is not altogether easy to replace, numerous vested interests being enlisted in favor of its permanency. Under it, offices are unnecessarily multi- plied, and, there not being a redundance of talent available for the local public service, the latter suffers in an appreciable degree. Under the cii^cumstances, it is not singular that confusion and extravagance should be the cliaracteristic features of the whole system. The paupers number 843,000. They multiply in proportion to the adequacy of the provision for their support, and the unwil- lingness of the government to protect industry, though they sup- port the idle. The rule is universal, that if taxpayers convert their backs into a comfortable saddle, they will always find persons obliging enough to ride, particularly where walking is made pre- carious and difficult. The paupers cost a sum equal to nine-tenths of the amount required to maintain the navy and fleet* equipped with all the appliances of modern warfare, and the number of adult able-bodied paupers is about the same as that of the army and navy combined, excluding soldiers serving abroad. There is no system of town government, and no town budget. The areas from which taxes are collected overlap each other in endless confusion. No particular local area can accurately tell how much it pays, except for some one purpose, for when it comes to pay for a diffei'ent purpose it will find itself part of a different area, and its rate for that purpose will be levied by a dififerent board, or by different officers at a different time, and on a different valuation. Very few of the towns are incoi'porated, and those that are incorporated are not thereby delivered from the jurisdiction of conflicting local boards. Mr. Goschen says : "There is no labyrinth so intricate as the chaos of our local laws." Mr. Chalmers says : " There is neither co-ordination nor subordination among the numerous authorities that regulate our local affairs." Some attempt has been made to lessen extravagance in the levy- ing of local rates by causing the local boards, which levy these various rates, to be elected on the plural system, so as to accord to taxpayers a voting influence proportionate to their burdens. For instance, the board of guardians which disburses the poor rates * Cost of Navy for 1878, £10,978,593 (" Condition of Nations," Kolb, p. 56). tCosJ. of the Poor, 9,771,000 (Gosclien on " Local Taxation," p, 15), THE ENGLtSH B UDGET. 479 consists of the justices of the peace resident within the union (district under one set of officers for poor relief), and of a cer- tain number of elected guardians who are voted for by the rate- payers, upon a plural scale, under which both owners and occu- piers of property renting- for less than £50 have one vote, if renting for £50 and less than £100 two votes, if for £100 and less than £150 three votes, and an added vote for each £50, up to six votes, where the increase of voting power stops. Members of the various boards are required to possess cei'tain property qualifica- tions, those of a town councillor being the ownership of real or personal property of the value of from £500 to £1,000. 183. General Taxation in Great Britain. — The principles, which govern the adjustment of the general tax system of Great Britain, are so often travestied in their statement, that a more care- ful survey of the facts, than is usually made, should precede any discussion of their principles. Each year's budget is nearly alike. In 1882 the total revenue, national and local, was £148,371,- 480, or in dollars $741,857,400, to a total population of 35,262,762. The following budget for an earlier year may serve our use : GROSS PUBLIC EEVENTJE. Year ending March 31, 1878. Customs £19,969,000 Excise 27,464,000 Stamps 10,956,000 Land Tax and House Duty 2,670,000 Property and Income Tax.. 5,820,000 Post OtHce 6,150,000 Telegraph Service 1,310,000 Crown Lands 410,000 Interest on Advances and Miscellaneous 5,014,298 Total £79,763,298 GR OSS PUBLIC EXPENDITURE. Interest and Management of National Debt £28,412,750 Civil List and Civil Charges 16,387,139 Army 14,607,445 Repayment to Army Funds 500,000 Army Purchase Commission 504,719 Navy 10,978.592 Charge of Collection of Revenue 7,012,850^ Total £82,403,495 Since 1840 the gross revenue collected from duties on imports has never been above 25| millions of pounds, nor below 20, until 1877, when it fell to 19 millions. On the whole, however, the average customs revenue has declined, in the forty years, from the larger of these figures to the smaller, or about one-fifth, 480 EGONOMIG PHILOSOPHY. and is still declining. The rate of this decline is shown by the following figures : In 1858 £23,382,141 "1860 24,391,084 " 1862 23,692,955 "1864 23,234,356 " 1866 21,302,239 "1868 22,664,981 In 1870 £21,499,843 "1872 20,235,892 " 1874 20,323,325 " 1876 20,020,000 " 1877 19,922,000 " 1878 19,969,000 In the year 1861, of the total customs revenue of £23,500,000, sugar yielded nearly £6,500,000, tobacco over £5,500,000, spirits and wine nearly £4,000,000. In 1870, sugar yielded £5,396,561. In 1871 the duty was reduced, and in 1874 it was repealed. For fifteen years, from 1863 to 1879, there was an average annual increase, in the yield from the same rate of duty on tobacco, of £158,140, thus nearly compensating for the repeal of the duty on sugar. As the post-office represents an expenditure fully equal to its earnings, this item of £6,150,000 may be estimated as not forming any part of the actual revenue. The government is supported therefore by duties on imports, excise (on the domestic manufac- ture and sale of liquors and tobacco), by stamp duties and tax on incomes. Of the duties on imports at present collected, about one-half ($45,000,000) are collected on tobacco, and about one-half of England's importation of tobacco, to wit, 30,000,000 pounds, comes from the United States. The duty ranges at from 3s. 6d. (87 cents) sterling, to 3s. 9v\\SiXj2Q,K8^,i& an essay on "Historical and Recent Famines in India," by F. C. Downs, containing a catalogue of all known Indian famines. The Famine Commission estimate that for the two years 1876-8, in a popula- tion of 190,000,000, there were 5,250,000 deaths in excess of what would have occurred if the seasons (supplies) had been ordinarily healthy (abundant). General Prendruf t estimated the government had expended £24,500,000 in works of irrigation, all of which had paid good dividends, and had sunk £33,500,000 in hopelessly trying to mitigate famines in which at least 10,000,000 lives had been lost during the century. In some of these famines the number of bodies exposed on the highway was so great and their appearance so hideous that even the horses of the British officers would not ride by them. The stench was so pervad ing that sappers and miners were sent ahead to bury the bodies before the governor-general could pass through. In the corruption of these exposed bodies the Asiatic cholera, called by the Hindoos '■ The British Cholera," •riginated. 486 ECONOMIC PHILOSOPHY. the average salary of an English officer is $6,000 a year. Out of a total white population of 68,000 persons, exclusive of the army, 25,402 are governing officers, and their salaries amount to $63,- 882,865, while 11,231 native officers draw in all less than $11,000,000. A native army of 125,000 men is officered by 2,800 British offi- cers, while an English army of 64,000 troops, with 3,200 British officers, is required to hold the native army to its work. The mer- cantile profits of English traders in India are upwards of $70, 000,- 000. A heavy burden of railway loans, and private loans, renders all parts of the population tributary to London. The money that is loaned to them is but a small portion of the profits that have been made out of them. Whole cities in England have been built up on the profits of conducting, 17,000 miles away, the ex- changes of food for cloth and iron which the people of India could, far more economically and securely, have conducted with each other. India cotton was shipped from the city of Calicut, where the manufacture of calicoes began, to Manchester, to be there spun and woven after designs borrowed from India, and thence shipped back, 34,000 miles in all, one-seventh of the distance to the moon, to be sold to the very ryots who were deprived of bread by the substitution of these foreign wares for their own. Justice is administered in the courts, chiefly as a means of pro- moting the collection of revenue, by the sale of stamps. The aver- age annual income of the majority of the people is $10, out of which they pay in taxes $1.50. The cultivation of 120,000,000 acres of land is taxed directly $105,000,000, though the value of the crops derived from the land is only $7 per acre. All the land of India is nationalized, and is taxed to nearly the value of the ground rent. At all times a large proportion of the population is on the verge of starvation. More frequently than in any other part of the world, great famines set in, and the people perish by millions. Meal boiled in water, or boiled rice, is all the food the agricultural classes desire. The government collects on salt a direct tax of 2s. 6c?. on every pennyworth, or 3,000 per cent. — a sum which represents the value of a laborer's services for a month. It is collected from the poorest classes as, a poll tax, without regard to whether they have made any salt or not. The horrors of the salt tax are inci'edible. Instances have occui'red in which the laborer, wlio, in digging a foundation for his hut, found grains of saline earth, and laid them in the sun to dry, was lashed for eat- ing the dried earth without paying the salt tax, Tlie ryot who SPOLIATION OF INDIA. 487 scooped out a channel for the sea-water with his hands, and sucked up the salt crystals from the sand, has been pursued bj^ the revenue officer, and lashed for the back tax.* An important difference between the English spoliators of India and all previous conquerors, whether Parsee or Mohammedan, was that the earlier conquerors became part of the country, and tlieir spoils of conquests, fines, and rents of land, remained and were expended iii the country. The English sj)oliators stayed only long enough to grasp their plunder, and then return to Eng- land. Since the Suez Canal has shortened the route to India the average stay of Englishmen in India has been still more tran- sient. Especially is it far more destructive of the industi'ies of the country, to pay a land rent of one-half or more of the raw product of the soil, to foreign, than to domestic landlords. In 1831, the native manufactui'ers and dealers in cotton and silk piece goods, the fabrics of Bengal, petitioned the British govern- ment, showing that of late years they had found their business nearly superseded by the introduction of British fabrics, to the suppression of the native manufacture. They said the fabrics of Great Britain came into Bengal free of duty, while the manufac- tured cottons of Bengal paid 10 per cent., and the manufactured silks 24 per cent., to get into Great Britain. They very rashly, but politely, asserted their confidence that ' 'no disposition existed * Mr. Keay, in " Spoliation of India," iViwefefw^/i Century for July, 1883, says: "I despair of giving any adequate idea of the miseries inflicted on a helplees people, too poor to consume aught save the bare necessaries of life, by this method of compelling them, on pain, as it were, of death itself, to contribute to the support of our expensive government. Even to wash a little salt out of the earth is held to be a heinous crime. Here is a story vouched for by a member of the Madras Civil Service, and quoted in a recent publication : " ' A laborer in Madras, having shifted his place of residence, made himself a new mnd hut. When he came to occupy the hut, he found the earth floor strongly impreg- nated with saline particles . He scraped up some of the dirt, separated the parts as well as he could, and put the salt he had collected outside to dry. This was observed by a revenue collector, and the man was proceeded against. He was imprisoned, and was condemned to receive some lashes.' " The mass of the poverty-stricken classes in India dare not risk euch punishments as these. For bare life, however, salt must be had. It is a crime to separate the precious saline particles from the earth, but it is not a s:atutable offense to swallow the salt along with the earth itself. Nothing remains, therefore, for many poor people, but to consume the revolting compound. Darwin has familiarized us with the fact that there is a class of worms which gain nutriment by passing the soil through their tube-like bodies. It has remained for our British Government of India, to reduce large numbers of human beings to ihe same expedient. In the state of Hyderabad, where I have lived for the last twenty years, the people are entirely dependent on British salt, and great moitality is caused among the poor by their eating earth for the sake of its saline flavor. The practice is common throughout India." 488 ECONOMIC PHILOSOPHY. in England to shut the door against the industry of any part of the inhabitants of this great empire." They asked either that Bengal fabrics might come into England free, or that English fabrics might pay the same duty on entering India as Indian fabrics paid to enter England. The government denied the request. So completely were the cotton manufacturers of India crushed, that certain cultivators, who had paid 78 per cent, of their product to the government as a ground-rent, made manure of the remainder for want of a market. Though the population of India is more than three times greater than that of the United States, Dr. Carey estimated twenty-five years ago that all its proprietary rights of every kind in the land of India would sell for hardly more than those of the State of New Jersey.* 185. Taxation by Profits of Enforced Trade — Turkey. — The motto of England might well be, ' ' Let me make the tariffs of a country, and I care not who wears its crown." A country can be subjugated by treaty, more cheaply than by armies, if it will only make a satisfactory treaty. In 1675 Turkey bound her- self to G-reat Britain, to charge only 3 per cent, duties on imports, 16 cents per ship anchorage, and no internal tax whatever to any resident alien. The Turks are said to have been seduced into this treaty by the notion that, their government being established to convert the world to Moslemism, it was an impiety to permit Christians to contribute to its revenues. Certainly, the Chris- tians were very willing to profit by this kind of scorn. No duty paid by foreigners, therefore, has ever exceeded 7.6 per cent, in all the Ottoman Empire. The native farmers and grazers pay as high as 62 per cent, of their profits, a special tax on sheep, olive- trees, fig-trees, tithes of all other products, and finally a tax on exports. But even foreigners residing in the country, are not permitted to pay a tax, even for paving or lighting their own * Dr. Carey says (" Social Science," by McKean) : " The gross land revenue obtained from a country tliat is, naturally, one of the richest of the world, and with an area of 300,000,000 acres, is $73,000,000. In no case docs the land subject to taxation seem to be worth more than four years' purchase ; while over a large portion of the country it appears to be wholly destitute of exchangeable value. There being, however, some lands tax free, it is possible that the whole may be worth, on an average, four years' purchase, giving $288,000,000 as the money value of all the rights in land acquired by the people of India in the thousands of years it has been under cultivation. The few people of the little and sandy State of New Jersey, with its area of 6,900 square miles, have acquired rights in the land valued at $150,000,000 ; while the little island on which stands the city of New York, would sell for almost twice as much as all the proprietary rights to land in India, with its hundreds of millions of acres, and its 150,- 000,000 of inhabitants ! TURKEY PL TICKED. 489 streets.* Prior to the treaty of 1675, Turkey represented, without decline or decay, the skilled industries and numerous populations, inherited through generations, from the Byzantine and Eastern Roman Empires, invigorated rather than enervated by the new blood of the barbarian Turks. "Her soldiers," says Freeman, "excelled those of any Euro]3ean nation." The names which still cling to many fine products of art, such as Ottomans, Damasks, f ' ' Turkish " velvets and carpets, rugs, robes, and chairs, Morocco (then tributary to Turkey), Turkey leather, Damascus steel, Tur- key red, Afghans, Cashmeres, Astrakhan, Snayrna goods of various kinds, Tyi'ian dyes, attar of roses, Arabian horses, all in- dicate the high superiority which Turkish industry then main- tained in the useful arts. England, with her paltry 2,000,000 of people, was hardly more feared, as a rival to Turkey, than Uruguay would now be feared by England. The proud Sultan of the Ottomans deemed it scarcely worthy of his notice, that the obscure island of the north was charging Turkish iron and steel with duties of from $25 to $150 per ton, in the hope of one day developing its own manufactures. After 1700 it prohibited the importation from Turkey or elsewhere of calicoes, chintzes, and muslins. Until 1842 it prohibited the exportation to Turkey, or elsewhere, of machinery for working flax. In 1720, to compel its people to patronize the dear woolens and linens of England, in- stead of the cheap calicoes of Turkey and India, England fined every person found wearing a printed calico five pounds, and the seller twenty pounds. While this uni'eciprocal condition of the duties did not mate- rially affect Turkey, so long as Turkey and England continued to use like processes and machinery, it innnediately exerted an effect upon Turkey, more disastrous than war could have done, when England (from 1767 to 1846) strode upward on her career of * " Modern Turkey," 1872, by Farley, says : " In no other country in the world, having equal rank as a slate, .... do foreigners hold such a privileged position as in Turkey. For example, they are exempt from all imposts wnatsoever, either state or municipal, customs dues alone excepted ; they may lead a life of pleasure or of business ; may settle and amass wealth ; or may travel and spend it ; and at all times may claim the fullest protection which the laws of the empire are capable of affording, without con- tributing one piastre to the expenses of the state, and without being amenable in the smallest degree to Ottoman jurisdiction. If the Porte construct a road, light a town with gas, or pave or cleanse the streets, it can not compel the foreign residents to con- tribute a para towards the cost, while the whole system of taxation is rendered irregu- lar and difficult in consequence of the mischievous obstructions offered by these char- acters iu nearly every relation between the foreign population and the government." t From the place of manufacture, Damascus. 490 ECONOMIC PHILOSOPHY. invention, substituting coal and steam for human muscle, while forbidding the export of either her machinery or artisans to Tur- key. Immediately Turkey became "the sick man of Europe," because the only power, in Europe, that ever admitted all foreign goods free. The Oriental and Levant Trading Company rivalled the East India Company in the magnificence of its j)rofits, and the exhaust- ing suction it was able to practice upon a country still nominally under its own flag. The ruin of Turkey by foreign trade tvas more complete, as respects its commerce and industries, than the ruin of Poland by partition, or than the prostration of Rome by barbarian subjugation. Liverpool, London, and Birmingham grew by the fabrication of wares, not merely of a kind which had previously been made for other markets in Turkey, but at prices which excluded Turkish products from their own home markets.* From the commercial creditor, England has gradually become the mortgagee of Turkish revenues and provinces. Egypt is in pawn. The Suez is an English highway. The Eastern question * In London Academy of Nov. 25, 1876, an English writer says : " Tliroughout beauti- ful lauds, once the garden of the world, the human species is becoming extinct. Works of irrigation, the masterpieces of by-gone dynasties, are indistinguishable ruins. The Great Desert of Arabia, encroaching on the once fertile Syrian champaign, has crept onwards year by year, overlapping and overlapping, till the sandy ocean has joined hands with the Mediterranean. Around Aleppo alone, in the space of twenty years, a hundred villages have disappeared. From Smyrna to Ephesus the traveler may ride through fifty miles of the most fertile soil, blessed by the finest climate under the sun, without seeing an inhabitant or a cultivated field. Vast and fruitful tracts of country in Turkish Armenia, the Troad — nay, the very environs of the Bosphorus — tilled only twenty or thirty years ago with all the care of garden husbandry, are to-day a howling wilderness, scattered here and there with graves and ruins. On the borders of Armenia rises still, with lofty walls and large storehouses, a city, peopled, it is said, within the memory of man, with 60,000 souls ; but it is a city of the dead. ' The finest country in the world,' says Sir George Bowen, ' has been more wasted by peace than other lauds have been wasted by war.' " Farley in "Modern Turkey," p. 194 (1872), says : "The manufactures in steel, for which Damascus was so famous, no longer exist ; the muslin-looms of Scutari and Tir- nova, which in 1812 numbered 2,000, are now reduced to less than 200 ; the silk looms of Salonica, numbering from 25 to 28 in 1847, have now fallen to 18 ; while Broussaand Diarbekhr, which were so renowned for their velvets, satins, and silk stuffs, do not produce a tenth part of what they yielded thirty years ago. Bagdad was once the center of flourishing trades, especially of calico-printing, tanning, and preparing leather, pottery, jewelry, etc. Aleppo was still more famous, for its manufactures of gold thread, of cotton tissues, cotton and silk, silk and gold, and pure cotton called' nankeens, gave occupation to more than forty thousand looms, of which at present there remain only about five thousand. Various causes have contributed to this de- crease of manufacturing industry ; and now Sheffield steel supplies the place of that of Damascus ; cloths and every variety of cottons have supplanted silk ; English mus- lins are preferred even to those of India, and the shawls of Persia and Cashmere have given way to those of Glasgovy and Manchester." MISGOVERNMENT OF IRELAND. 491 is fast becoming one, of the degree of seciu^ity obtainable by Eng- land for the Indian Empire, in consideration of permitting Con- stantinople to become a Russian capital. 186. Taxation by Profits of Enforced Trade— Ireland. — From 1698 to this day. Great Britain has been one nation and Ireland another, as respects taxation. Never in a single instance has a British Parliament, or influence of any kind, aimed to legislate or administer in a manner to foster Irish interests, or to l^lace them on an equality with English. Every act of British taxation has treated Ireland as an alien country, whose interests were to be subordinated to Englishmen's profits, so far as English- men themselves could see clearly where their own profits lay. This summing up of three centuries of history is the cause, both of the chronic disloyalty of Ireland, and the conviction, so gen- erally felt by intelligent men of other nations, that England, not having the moral sagacity to rule Ireland fairly, lacks the moral right to rule Ireland at all. Englishmen usually charge the ex- pression of this conviction, by native Americans, to the desire to "cater to the Irish vote." In this way only can Englishmen hear Great Britain's ixioral vaci;ity, in governing Ireland, suitably de- nounced, without blushing. This charge, however, is as morally wide of the truth as England's misgovernment in Ireland has been wide of ethical decency. Americans, by their Federal Union, be- come instinctively educated to the principle of equity among states, and fairness on the part of large states toward small, as distinguished from the English notion of absorbing and sacrificing inferior states to the one dominant state. An American, there- fore, no sooner learns the facts which show that Irish interests have invariably been sacrificed to English, than he feels their in- justice, with all the force of an ethical training in equal politics, w^hich Englishmen do not possess, and can not borrow . In 1698, William III., Prince of Orange, on hearing a deputa- tion of woolen manufacturers of England complain of the increase of woolen manufacturing in Ireland, as something prejudicial to the interests of English manufacturers, had he possessed the modern American sense of right and equity among states, would have answered, "Sirs, it is no part of my business to prevent Irish manufacturers from outstripping English. You are both subjects of a common realm and entitled equally to the care of government." Instead he promised to "do all that in him lay to discourage the woolen trade of Ireland." In 1698, a majority xu the Ii'isb Parliament, which Mr. Gardner, 492 ECONOMIC PHILOSOPHY. chairman of the Ways and Means Committee of the same body in 1782-3, denounced as ' ' corrupt, " was induced to lay an export duty on cloths sent to England, instead of an import duty on cloths brought from England, the effect of which was to deprive Irish manufacturers of the English market. At this time the French, by raising their protective duties against England, were getting that foothold which soon enabled them to undersell En- gland in woolen cloths in all the markets of Europe. On measures introduced in 1783 by Mr. Gardner, the Irish Par- liament adopted a definitely pi'otective policy, which England suffered her to do without open resistance, owing to her own humiliation in the loss of America. So prosperous was Ireland for a brief period that her Parliament appropriated £50,000 to assist Swiss immigrants, principally artisans, in locating in Water- ford. Her population increased by 3,000,000 in twenty years.* In 1799, when the act of union with England was first proposed in the Irish Parliament and defeated, the House of Commons, in its address to the King, stated soundly and cogently the reasons for defeating it.f The late premier has recently given the seal of his emphatic approval to the statement that the means by which England cozened and bought the passage of the Act of Union thr-ough the Irish Parliament were intensely corrupt. Gladstone thus gives his sanction to the specifications of corruption embod- ied in Plowden's and other narratives of this transaction. Un- * Lord Clare, speaking about the condition of Ireland at this period, says : " There is not a civilized nation on tlie face of the habitable globe which had advanced in culti- vation, in agriculture, in manufacture, with the same rapidity iu the same period as Ireland." Lord Plunkett, deecribing Ireland at the same time, says : " Laws well arranged and administered, a constitution fully recognized and established, her revenues, her trade, her manufactures, thriving beyond the hope or example of any other country of her extent." t The address said : " Giving the name of Union to the measure is a delusion. . . , In manufactures any attempt it makes to offer any benefit which we do not now enjoy is vain and delusive, and wherever it is to have effect, that effect will be our injury. Most of the duties on imports which operate as protection to our manufactures, are under its provisions to be either removed or reduced immediately, and those which will be reduced are to cease entirely at a limited time, though many of our manufactures owe their existence to the protection of these duties, and though it is not in the power of human wisdom to foresee any precise time when they may be able to thrive without them. Yoiir Majesty's faithful commons feel more than ordinary interest in laying this fact before you, because they have under your approbation raised up and nursed many of these manufactures, and by so doing have encouraged much capital to be in- vested in them, the proprietors of which are now to be left unprotected, and to he deprived of the Parliament, on whose faith they embarked themselves, their families and properties, in the undertaking." Plowden's 7?eyi«2(;, vol. v. Appendix, page 34. THE ACT OF UNION. 493 questionably, Gladstone would not have sanctioned the charge without knowing, not only that it was true, but that it would not be in the power of any Englishman to deny it. Moreover, no Englishman of note has denied it, and it therefore stands virtu- ally admitted by the whole English nation.* The Act of Union was designed to promote Englishmen's profits by transferring numerous branches of industry from Ireland to England. This was effected by removing all duties, or nearly all, from English goods shipped into Ireland, while leaving con- siderable duties on those shipped from Ireland into England. The doctrine that the "consumer always pays the duty," and hence that Englishmen would only be taxing, instead of benefiting, themselves, was forgotten. The practice of English legislators, in passing the Act of Union, contradicts the English economists, almost without exception. The following schedule of rates of duties, from Plowden's Revieiv, shows how England kindly gave free goods to Ireland and labored on under the burden of tariff taxes on all goods purchased by her own people from Ireland : Irish Goods shipped into England. £ s d Beer 8 Bricks, tiles, etc 5 12 10 Candles lb 8 1 Cordage ton 4 10 3 Cider hhd 19 2 Glass sq. foot 2 2^ " flint or enameled, .per cwt 2 3 6 Leather lb l^d to 4s Paper, glazed per cwt 6 Silkribbon per lb 5 Gold mixed ribbon "068 Silk stockings, gloves, etc " 8 Miscellaneous silk, silk ware, per lb 4 Soap " 2^< Spirits per gal 5 IJ^ Starcli per lb 5% Confectionery "220 Tobacco "017 Snuff " 110J4 English Goods shipped into Ireland. £ s d Beer 4 6 Bricks, tiles, etc free Candles per lb free Cordage ton free Cider hhd free Glass sq. foot free " flint or enameled. per cwt free Leather per lb Id to 28 6d Paper, glazed per cwt 5 Silkribbon per lb 2 1 Gold mixed ribbons... "0 2 9 Silk stockings, gloves, etc "0 1 3 Miscellaneous silk, silk ware per lb 18 Soap ... free Spirits .per gal 3 7 Starch per lb free Confectionery " 10 Tobacco " 1 ^4 Snuff "00 lOJ^ * The charge is thus set forth in Battersley's " Kepealer's Manual ": "The amount of salaries given to those who held places during the King's pleasure, and whose votes mainly contrived to carry the Union, is set down at £G8,877; in addition there were twenty-six lawyers who received places ; two hundred borough mongers, who received for their votes £1,500,000. iVew Titles— 61 were given for marquises, 6 earls, 13 vis- counts, 3 viscountesses, 23 barons, 12 baronets. . . . The price of a single vote was familiarly known— it was £8,000, or a civil or military appointment to the value of £2,000 per annum. They were considered by the government party simple, who only took one of three. The dexterous always managed to get at least two of three, and it would not be diflicult to mention the names of twelve or twenty members who con- trived to obtain the entire three— the £8,000, the civil appoiutraent, and the military appointment." 494 ECONOMIC PHILOSOPHY. The decline in the manufacturing industries of Ireland, in the thirty years following the repeal, and even prior to the breaking out of the potato rot, and the Irish famine of 1846-9, reduces the problem of the unfitness of any one race of men to rule another, to the definiteness of a demonstration in mathematics. The thirty years, preceding 1800, were years of as great prosperity in Ireland as in England, and of a growth in population which, if continued to the present, would have given Ireland to-day 20,- 000,000 people. It is difficult to estimate the amount of profit, made by English manufacturers and merchants, out of the sub- version of Irish industries.* They sold increasinglj-, in Ireland, the goods of every kind which Irish artisans had been making previous to the Act of Union. Temporarily, therefore, in all these thirty years the Union must have brought to English mills exactly the grist they sought. Up to 1846 the Irish people, who were so largely driven out of manufactures, continued to have some protection on then- agri- culture in the form of a duty on the importation of corn. In * The following tables show the subversion of Irish industries : NUMBER OP MEN EMPLOYED ATi'TTl'Tt BEFORE THE UNION. 1800 Limerick, one branch of trade 15,000 1831 None " Cork, glove makers, " '• 3,000 " 500 " " shoemakers, " " 300 " 100 " Toughal, 7 large tanneries " None " " wool combers ^200 " 12 " Dublin, all trades 30,000 " 10,000 " " prosperous weavers 5,000 " 100 " " stocking making 600 " None " Drogheda, stocking making 2,000 '* 600 " Dublin, liberty's weavers 4,000 " 100 " Kilkenny, 1 parish, St. Canice 4,000 " 98 " Carrack, one branch of trade 5,000 " 40 " in all Ireland, working at cotton 30,000 " 500 " ' " liuenyarn 20,000 " 3.000 " Dublin, silk weavers 15,000 " 441 Dublin, 1800, master woolen manufacturers 91 1840 13 " " hands employed 4,918 " 603 " " master wool combers 30 " 5 " " hands employed 230 " 66 " " carpet manufacturers 13 1841 1 " " hands employed 720 " None Kilkenny, 1800, blanket manufacturers 56 1822 42 " hands employed 3,000 " 925 Balbriggan, 1799, calico looms at work 2,500 1841 226 Wicklow, 1800, hand looms at work 1,000 " None Cork, " braid weavers 1,000 1834 40 ■' " worsted weavers 2,000 " 90 " " hosiers 300 " 28 " " cotton weavers 2,000 " 220 " " wool combers 700 " 110 " " linen check weavers • 600 " None " " cotton spinners ble 20 ^ cent $168,563 12 874 Brick $64,374 Candles, lbs — Star, stearine 6.824 10;754 2,289,257 21,568 415,728 701,323 .5c. ^ lb 362 Parafflne, sperm. . 8c. ^ B) 860 Cheese, ttis 46', 479'" 184,542 4c. ^1? ft 91,570 5c. %^ ft $1.25 ^ ton 1,078 519,661 Coal, tons Copper ore 3c. ^ ft 22,839 9,349 36,913 1,718,051 1,367,261 8,400 20 lucent 20 ^ cent 2c. 1? ft 30 ^ cent Ic ^ ft Glue Lead, lbs 80,916,724 4,554,260 Beef and Pork 840,074 138,599 129.557"' 6,228,285 Bacon, hhds 2c lausibility on a superficial examination. Its economic state- ments, however, without a solitary exception, all rest finally upon falsehood, either of fact or of inference, or grow out of the tendency to mistake protection in a disguised form for free trade. It remains a criticism, not a policy. A policy succeeds when it accomplishes desired results. A criticism may succeed in merely obstructing a policy. Protection stands as the sole policjjr of jiations, 606 ECONOMIC PHILOSOPHY. 212. Protection Universal. — "Free foreign trade" is, on its face, a term of complaint, which implies the pre-existence of some legislative policy which is charged with restricting foreign trade. The argument between tariff protection and free foreign trade, therefore, opens with protection in possession, i. e. , embodied in the statutes and jurisprudence of the following nations, viz. : The United States of America France Germany Austro-Hungary Russia Italy Spain English Colonies Population. 62,000,000 42,000,000 42,000,000 42,000,000 90,000,000 28,000.000 18,000,000 9,000,000 Total 333,000,000* Free foreign trade (so called) has dominated England for only forty years, out of the three hundred and fifty years in which England has had an international trade. During these forty years, the proportion of revenue, collected by duties on foreign trade in England, has been greater than in any other country, except the United States. Fully half the amount of revenue collected by England is, as we have seen, protective of the domestic manufacturer (of tobacco, gold leaf, and the like), and peremptorily destructive to the producer of domestic leaf tobacco. A tariff which forbids one industry, and protects another by a duty whose strictly protective portion is three or four-fold the value in foreign countries of the article on which it rests, is very far from being a non-interference with industry. Protection holds that " possession " of all countries, which is "nine points " not only in law but in logic. This universality of protection proves it to be a "natural" element in government — just as profit is in trade. With the same readiness with which we would predict that ' ' given two producers, each of whom has a surplus of what the other needs, they will trade," so we may also afiirm that, ' ' given two nations, whose people trade with * If to these we add the nations which would gladly enact protective tariffs if per- mitted by English bayonets to do fo, the list would be doubled by the addition of Cliina, Japan, and India. And if to these we add those countries the chief part of whose commercial ascendency was won under and through protective policies, it would add the Netherlands and Great Britain. If we add those which still practice partial tariff protection to home industry and armed military protection to foreign trade, Great Prjfain woiilcl stand chjef m\d facile princejis among protective nations. ALL NATIONS PUOTEOf. G07 each other in competing commodities, each nation will seek, by duties, to protect its own producers in its own markets, to the extent of deriving a revenue from taxes on the impor- tation of the commodities of their rivals." Protective tariffs between nations whose maiiufacturers, traders, farmers, or other producers compete, are as natural as trade itself is between x^er- sons or nations whose productions differ. A free foreign trader can only, with the same logic, charge a protectionist with obstruct- ing the natural laws of trade, as a ]3rotectionist can charge every free trader with seeking to obstruct the natural principles of government. The uniform action of all other nations in levying protective tariffs, sustained by nine-tenths of the record of Great Britain herself, proves ' ' protection " to be as natural, inevitable, and necessary an element, in government, as exchange is in Industry. On a question of this kind the universal man knows more than the one man, and universal usage establishes natural law. Just as it is a law of nature that all governments shall practice coercion towards the disobedient, and that all peoples shall render homage to those in power, so is it a law of nature that all nations, whose people have international trade in competing merchandise, shall protect their own people by dis- criminating duties. They have always done so, and they always will. None should be so grateful to them for doing so as those whose function is criticism, since if it were possible that govern- ments could cease to levy protective tariffs, the function of those economists, who reduce criticism or fault-finding to a system, would, so far as this question is concerned, be gone. Those who live by finding fault, like those who live by finding dia- monds, should be grateful for what they find. This chapter should have made apparent to the student the dis- tinction between criticism as a force in society, and Policy, Action, Human Nature, or whatsoever we choose to call the exist- ing and governing social forces. The enactment of protective statutes I'epresent the latter, the clamor of free-trade pedants and theorists for the abolition of these statutes the former. Protection is the mountain. It is eternal. Free trade is the mirage. If it advances it dissolves. It can only make with pro- tection the same kind of an issue as the non-existing and im- possible makes with the universal, natural, and inevitable. It is a fight between something and nothing. Protection is an econ- omy; free t)'ade is a give-away, a waste. Protection is con- structive ; free trade is destructive. Free trade may be talked, 608 ECONOMIC PmLOSOPHT. while one is out of office. Protection must be practiced, the in- stant one comes into office, or inevitable disaster ensues. Protection investigates, consults, harmonizes, unites. Free trade disintegrates, divides, slanders, besmirches, and disorgan- izes. Protection collects facts. Free trade is oracular, pompous, and issues dogmas. This chapter opened with several refresh- ing extracts from free-trade criticisms. It closes with a note containing the overweening criticism, by an English manu- facturer, of great wealth, eloquence, and social power, upon the stupidity of Americans, in pursuing that policj' which, in England, renders a John Bright possible.* The silent but effective answer to Mr. Bright's urgency that Congress should be " wise and right- eous" is found in the practical illustration which British free trade affords of wisdom and righteousness, in its career at home and in India, Ireland, Turkey, China, and Japan. If Americans had 600,000,000 of barbarians where we could train our guns upon them, if they demanded the right to trade with their coun- trymen in preference to buying of ourselves, then we too might aspire to teach " wisdom and righteousness '' in the English way. In the absence of these barbarian aids, we have to be quite humble. British righteousness and British wisdom, both of which blend in British free trade, are beyond our present reach. * Mr. L. U. Reavis of St. Louis recently received from Rt. Hon. John Bright of En- gland the following letter : One Ash, Rochdale, Feb. 6, 1888. DEA.B Sib : .... As to the disputes between labor and capital, surely your mon- strous tariff provokes, if it does not justify, your strikes and labor insurrections. If your Congress insists on burdening your whole population to give profit to your manufacturers, surely the workmen may as justly insist on protection to their labor. Whilst your tariff is in force you need not expect your workmen to be wise. Pro- tection, which means robbing somebody, will not content itself with enriching manu- facturers, but will be called in to give higher wages and shorter hours of labor to your workmen. Congress should become wise and righteous, before it can expect the artisans and laboring classes to make progress in that direction. Tours very trulj', John Beight. Me. L. U. Reavis, St. Louis, Mo., U. S. America. CHAPTER XV. Economy of Protection. 213. How a Tariff May Protect Producers. DUTIES ON IMPORTS MAY PROTECT THE PRODUCERS, TRADERS, TRANSPORTERS, BANKERS, LAND-OWNERS AND LABORERS OF THE COUNTRY, IMPOSING THE DUTIES IN FIVE WAYS, WHICH ARE THE FIVE POINTS OF PROTECTION, VIZ. : FIRST, WHEN, WITHOUT RAIS- ING THE PRICE OF THE ARTICLE, THEY SHUT OUT IN WHOLE OR IN PART THE FOREIGN COMPETING ARTICLE, THEREBY SECURING TO DOMESTIC PRODUCERS THE EXCLUSIVE RIGHT TO SUPPLY THE ARTICLE TO DOMESTIC CONSUMERS. This occurs when the article is so largely produced at home that domestic producers are fully competent to supply it at as low prices as it can be imported, yet would lose a portion of their market if free competition from abroad were allowed. As the cheapness with which an article can be marketed often depends on the certainty of a market, it is obvious that this class of duties, by insuring to American producers a certain market, tends immediately and in the first instance to cheapness. The test of the cheapness of the American market relatively to the foreign is found in our ability to export, since no article will go abroad ex- cept to obtain a price higher, by cost and profits of transportation, than it can find at home. The following schedules of protected articles which we both export and import shows how large is the volume of merchandise, the duties upon which do not enchance the price in the Ameri- can market. Yet they protect that market, containing 63,000,000 customers, to American producers, absolutely as to the portion of foreign goods excluded by these dutes, and relatively as to the portion admitted. Since, by the terms of the j^roposition, the American price is the same or lower than the foreign, tlie whole duty on competing goods must be paid by the foreign competing producei's. , 610 UCONOMIO PHILOSOPHY. Protected Products Value of lir ^vhich we export. Exports. \ n Duty on Importation. Implements of iron, steel. and wood (agricultural) $2,976,371 48 45 percent. Pot and pearl ash 31,363 14 30 per cent, to 3 cents per lb. Tanning bark 97,442 12 Ra\v, free ; ext., 20 per cent. Beer, ale, and porter 384,196 41 20 to 35 cents per gal. Bells and bronze 26,377 17 3 cents per lb. Billiard-tables 43,095 23 35 per cent. Blacking 187,403 44 25 per cent. Books 831,132 47 25 per cent. Brass and manufactures.. 332,439 39 1% cents per lb. to 45 per cent. Bread and breadstuffs 182,670,528 68 20 cents per bushel to 20 per cent. Bricks 50,870 13 30 per cent. Brooms and brushes 241,403 50 35 to 30 per cent. Candles 226,687 39 20 per cent. Carriages, carts, etc 1,439,003 50 35 per cent. Cars (railroad) 1,393,059 18 35 per cent. 30 per cent. Clocks 1,403,363 53 Coffee and spices 93,390 44 Free to 20 cents per lb. Coal 3,693,785 18,623 29 14 Free to 75 cents per ton. 30 per cent. Combs Copper and manufactures 658,941 34 2K to 4 cents per lb. to 35 per cent. Cotton goods 13,332,979 56 10 cents per lb. to 40 per cent. Drugs and medicines 3.517,149 59 Free to 10 per cent, to 25 per cent. Dyestuff 8 939,929 32 10 per cent. Earthen, stone, and china ware 180,773 45 25 per cent, to 60 per cent. Average 40 per ceut. Fancy articles 852,130 49 Fruits 1,750,398 48 Average 40 per cent. Furs and fur-skins 4,747 944 9 Free to 30 per cent. Ga.s-fixtures 30,862 18 45 per cent. Ginseng 483.171 2 Free to 25 to 50 per cent. Glass and glassware. . . . 864,335 53 Average 45 per cent. Glue 46,374 25 20 per cent. Hair 307,133 275,904 24 28 25 to 35 per cent. Hats, caps, and bonnets.. 20 to 30 per cent. Hay 190,175 29 $3 per ton. Hemp and manufactures. 735,893 47 $10 per ton to 40 per cent. Hides and skins 1,499.737 30 Raw, free ; dressed, 20 per cent. Hops 1,456,786 30 8 cents per lb. India-rubher goods 510,716 47 25 to 30 per cent. Iron and steel wares 17,571,332 68 Average 40 per cent. Jewelry 303,245 35 25 per cent. Lamps 350,009 47 40 per cent. Lead wares 178,779 8,999,627 30 55 3 to 3 cents per lb. Leather and m'ufactureg 15 to 30 per cent. Lime and cement 100,169 35 10 per cent. Matches 161,466 36 .35 per cent. Mathematical ins'ments.. 599,397 37 35 per cent. Musical instruments 1.267,450 39 35 per cent. Naval stores 3,370,307 53 30 per cent. Oils of all kinds 58,279,632 68 25 per cent. Powder and ball 909,755 45 6 to 10 cents per lb. Paints and colors 424,991 49 3 cents per lb. Paintings and engravings 406,153 35 25 per cent. Paper and stationery.. . 1,618,883 55 15 to 25 per cent. Perfumery 285,000 4"; 50 per cent. Plated ware 396,595 47 35 per cent. Printing presses and type 211,292 42 45 per cent. fresh and salt beef, but- ter, cheese, milk, eggs, fish, lard, mutton, oys- ters, pickles, sauces. pork, onions, potatoes). 117,765,471 88 20 to 40 per cent. SHEARMAN ON DUTIElS. 611 Protected Products which we export. Quicksilver Kags Rice " ... Salt Scales and balances Seed, hay and cotton Sewing-machines Soap Spirits Starch Sugar and molasses, chief- ly refined Taliow Tin wares Tobacco, cigars, etc Trunks and valises Umbrellas and parasols . . Varnish Vessels and steamers V negar Watches Wax Wearing apparel Wine Wood,lumb'r, timb'r, etc. Wool and woolens Zinc Uumanufactured articles not mentioned Manufactured articles not mentioned Total ^ Value of Exports. 959.128 11,000 10,109 18,^65 304,446 4,219,600 2,647,515 667,993 1,989,038 361,471 1,873,182 4,015,798 198,608 21,430,869 192,952 2,025 187,000 90,213 9,846 121,470 32,325 695,398 67,000 24,011,228 445.431 124,648 1,013,900 5,421,529 $702,777,091 I 8 S- Duty on Importation. 10 per cent. 10 per cent. ]i^ to 2J^ cents per lb. 8 to 12 cents per cwt. 21^ cents per lb. 20 per cent. 4S per cent. 20 per cent. $2 per gal. 2 cents per lb. 1 4-10 to 2}^ cts. per lb. ; 4 to 8 cts. per gal. 1 cent per lb. 1 to 2 cents per lb. 15 cents to $1 per lb. 30 per cent. 35 Jjer cent. 40 per cent. 20 10 40 per cent. "]/^ cents per gal. 2s"percent. 20 per cent. Average 35 per cent, and 35 cents per lb. 5 cents per pint to $2.25 per gal. 20 to 40 per cent. 13 cents to 50 cents per lb. }4 cent to •2% cents per lb. Average 40 per cent. Average 40 per cent. In certain of these articles, viz., sugar and molasses, iron and steel, wearing apparel and woolens, we import the crude article in a form in which it needs further manufacture, and export the products of the same article in a more finished form. In such cases the crude article bears a higher price, and the more finished article as low (or lower) a price, as in foreign countries. This is specially true of crude iron and steel, relatively to the implements made from them. American manufacturers of wares pay the whole duty on im- ported pig, scrap, and bar iron, and yet sell the finished products made of them, both here and in all foreign countries, as low as their foreign competitors. An acute free trader, Mr. Thomas G. Shearman, issued to the American manufacturers a tract explain- ing to them that, including the manufacturers of railroads, they, as a class, pay 97 to 99 per cent, of all the duties paid on im- ported products . The manufacturers, however, passed the tract over to the farmers as a means of correcting the statement, so fre- 612 EGOmMtG PMIL080PSY. quently made by the less candid free traders, that the farmers pay the whole duty. On the whole, it was found that Mr. Shearman's address to the manufacturers was too strong meat for the free- trade propagandism. It was deemed safer to return to the ' ' sin- cere milk of the word," viz., that manufacturers are the cormo- rants, and those who buy no goods (except, at times, sugar) that are increased in price by the duty are their victims. 214. W^hen Duties on Imports Protect from Taxa- tion. DUTIES ARE PROTECTIVE WHEN, BY COLLECTING A REVENUE PROM IMPORTERS, WITHOUT INCREASE OF PRICE ON THE THING IMPORTED, THEY SAVE THE BODY OF AMERICAN TAXPAYERS FROM TAXATION. Duties on imports operate protectively, in behalf of the whole body of the taxpayers of the country imposing them, when, with- out increasing the price of the commodity on which they rest, and hence without operating'as a tax on Amei'ican consumers in any degree whatever, they collect a considerable revenue out of the foreign producers and importers of competing products, thereby shielding the body of American taxpayers from taxation to the extent of the sum so collected. Such duties may perform the double function of protecting our body of taxpayers against a given sum of taxation, and protecting certain groups of domestic producers in a portion of the domestic markets. Each mode of protection ends exactly where the other begins, i.e., on the goods admitted we get a revenue paid by foreigners, which is a form of protection to our taxpayers against taxation. To the ex- tent of the goods which would come in but for the duty, but are excluded by the duty, we get no revenue, but an exclusive mar- ket for domestic producers, instead of a market divided between them and foreign producei^s. Both these results being, in the cases supposed, without increase of cost to consumers, the duty, as to consumers, is not a tax. In short, while free trade divides our American markets between our producers and the foreign, and leaves us to pay the entire duties, protection divides the burden of paying the duties between American producers and the foreign, and leaves the former to enjoy the whole American market. SCHEDULE OP DUTIES WHICH CAN NOT BE CHARGED OVER WHOLLY ON CONSUMERS. Below is a schedule of articles which we both export and now DUTIES a:ffegt peices. 613 import, and which, thei'efore, must preserve very nearly like values at home and abroad. I do not say exactly like values, but I affirm that the values can not vary much, since the grades we export under each name must be enough higher abroad than here to pay for exportation, and the grades we im- port must be pi'oducible, enough cheaper abroad than here, so that when tlie foreign producer has added his share of the duty to tlie cost of his production, he will still usually have a margin of profit. But if one gi'ade of a given article is higher priced liere tlian abroad, while another grade of the same article is lower priced, both and all grades of that ai'ticle can not keep very far from equivalent values in the two countries. In the case of every article included in this schedule, there arises an irresistible presumption from the fact that the article is in some form and degree one of export, that prices being about at a level in the two countries, a veiy considerable portion, or the whole of the duty, is paid by the foreign producer. Tliat pre- sumption needs, however, to be tested in each case, in conform- ity with a principle which will be stated and if proved, fui^nish a substantial proximate rule, more accurate than has hitherto been in use, for calculating the portion of revenue paid by foreigners. Tlie following- is tlie schedule : Articles which we both Export and Imjmrt. Beer, ale, and porter Books, blank-books, and music. . Brass (manufactured) BreadstufEs, grain, and rice Bricks and tiles Bristles, bruslies, and brooms Candles and tapers Carriages, and parts of Cliemicals, drugs, and medicines Clocks, watches, and parts of . . . Coal .. Coke Cocoa, coffee, and substitutes for Copper, chiefly crude Cotton goods Cliina and eartlienware Fancy articles Fisli (exports $4,187,338) Fruits and nuts Furs and manufactures of Glass" " Hair " " Hats, bonnets, and hoods Hay Hemp and manufactures of Hides and skins Imports. 1882. !937,806.59 ,002.696.76 668,136,35 ,478,596.33 153,033.33 ,547,81329 6,678.00 140,422.57 ,161,115.97 ,039,647.97 ,192,689.23 53,244.03 60,615.50 317,172..34 ,985,306.49 ,873,075.95 6.54,978.88 ,332,017.37 1,047,937.22 216 333.19 7.53,537.11 831.085..32 ,026,248.77 891,.520.35 382,386.48 ,702,970.61 Bevenue. 1883. $417,202.09 745,402,30 180,315.87 4,152,827.36 34,705.99 330,976.14 1,586.93 49,174.92 4,981,453.14 804,483.89 621,099.25 13,311.01 4,026.96 109,496.50 12,227,103.04 2,965,978.84 3,913,245.05 414.915,63 4,427,135.45 1,135,129.91 3,847,28.661 228,317.91 41.3,211.41 153,196.07 2,414,080.50 4,992.00 614 ECONOMIC PH1L080PHT. Articles which we both Export and Import. Hops India-rubber goods Iron and eteel, and manufactures of Jewelry (not in ( iamonds and watches). Lead, and manufactures of Leather " " Lime Marble (exports $614,400) Matches Metals, bronze, German silver, nickel, platina, britannia, etc Musical instruments Oils, Mineral, etc Animal Vegetable, fixed " volatile Gunpowder and fulminates Paints and colors Painting and statuary ... Paper, pulp, and manufactures of Pens and pencils Perfumeries Pickles, capers, and sauces (exports $25,635) . . . Potatoes Provisions (bacon, beef, butter, cheese, eggs, lard, meats, milk, etc) Saddlery Salt Sand Seeds (flax, hemp, garden, etc) . . . . Soap Spirits and wines Starch Stone, other than marble Straw Sugar and molasses Tallow Tar and pitch Tin cans and manufactures Tobacco, cigars, etc Umbrellas, parasols, and materials. Varnish Vegetables •. Vinegar Wax "Wood, lumber, timber, etc Wool Woolen manufactures Zinc Total. Imports. 1882. 288,344.00 300,445.65 53,998,266.74 398,796.44 211,934.99 12,215,203.48 36,878.99 575,144.60 2,233.95 1,429,918.17 1,514,762.43 29,625.00 102,873.18 868,201.58 300,975.77 2^3,822.25 1,217.407.35 2,574,815.91 2,011,645.21 209,909.73 500,867.08 350,444.22 4,656,368.50 2,046,533.27 157,565.09 1,561,131 .74 23,640.00 1.455,175.18 316,061.49 9,453,593.49 82,672.68 223,397.96 41,683 37 94,523,797.29 6,469.50 27,608.75 8,216,132.12 83,354.00 112,781.29 1,182,203.60 26,030.60 6,455.95 8,967,290.69 10,333,358.54 37,284,823.88 949,041.92 $415,759,545.00 Revenues. 1882. 69,964.64 97,293 65 24,196,037.62 99,862.22 126,301.70 3,794,564.62 3,687.90 354,165.54 • 781.88 425,188.24 455,040.0s 6,001.00 21,157.23 389,800.56 98,186.60 9,542.08 411,331.52 262,270.86 689,041.32 129,685.94 302,415.57 122,673.03 1,318,246.35 434,545.34 55,147.78 715,243.13 2,364.00 281,696 24 143,495.45 6,789,023.04 73.276.28 52,192.83 13,477.57 49,216,335.56 733.05 5,521.77 67,681.34 6,047,560.09 41,628.60 52,759.24 223.006 96 11,342.39 1,421.00 1,697,431.91 3,856,678.06 25,439,102.52 377,159.01 $174,562,630.98 It appears, therefore, that out of the total of $505,491,966.66 of imported goods paying duties in 1882, four-fifths, or $415,759,- 545, are goods, some forms and grades of which we export to the amount in all of about $700,000,000, which was shown by the first schedule to be the amount of our protected ex- ports ; also, that out of a total of $215,617,669.62 of revenue collected on impoi^ts, an irresistible presumption arises that a like proportion of four-fifths, viz., $174,562,630.98, is either not chargeable over upon American consumers at all, or DISPLACma WITHOUT INCREASING. 615 is divided so that a definite and large portion of it is not so chargeable. IN CASES WHEREIN THE IMPORTATION DISPLACES A PORTION OF AN ALREADY SUPERABUNDANT SUPPLY THE FOREIGN PRODUCER PAYS THE WHOLE DUTY, Among the articles, on which the duty is not chai-geable on the American consumer in any degree whatever, are breadstuffs, coal, fish, hay, paper, potatoes, provisions, sand, starch, stone, straw, tallow, tar, and pitch, vegetables, vinegar, and wood, lumber, and timber. In breadstuffs the import for 1882 was $16,478,596.33, almost exactly one-hundredth as much as our domestic production, which for 1881 (short crop) was worth $1,570,248,541, and one-eleventh as much as our exports, viz., $182,670,528, The American pi'ice was fixed by the ratio of the whole demand upon America, foreign and domestic, to the whole available supply. If European sources of supply and demand a}"e included, the driblet from Canada which constitutes our importa- tion would be one part in 250. If American sources only are counted it would be one part in 100. But when we are sending abroad eleven times as much breadstuffs as we import from Can- ada, it is obvious that the importation from Canada simply dis- places its equivalent in American breadstuffs, increasing by so much our national surplus for export. Hence Canada, being nearer the point of demand than our far West producers, lessens by so much the quantity of American produce that can find market. The degree in which it lessens the quantity of our own far West breadstuffs, that can profitably be marketed, exactly offsets the addition it makes to our exports. It is like a pint of water, jDoured into a barrel of water that is already running over. It effects no change of level, nor increase in quantity, but only a substitution of atoms in an unchangeable quantity. Plainly the import of breadstuffs from Canada exerts no influ- ence whatever over the American price, but merely displaces part of our American product, partly by lessening the quantity marketed, and partly by increasing the quantity exported. A Canadian can not, on bringing his wheat into our market, if our wheat is selling at $1.25, say : "I want $1.45 for this wheat, because I had to pay twenty cents a bushel import duty." He must sell for the American price. He need take no less, and he can get no more. Hence, if he pays a duty, it figures merely as an additional item in his cost of production, i. e., a deduction 616 ECONOMIC PHILOSOPHY. from his profits, just as if it were a sum paid for phosphates or manure. The opposite theory would involve the absurd corollary that all the breadstuffs produced in the United States, though one hundred times as great in quantity as the trifles imported from Canada, mxist have been made twenty per cent, higher by the mere duty on this importation from Canada, or that a tax of $312,000,000 could be imposed on consumers of American bread- stuffs, and paid over to American farmers, as the consequence of collecting a twenty-five percent, duty on $16,000,000 worth of breadstuffs coming in from Canada and going out to Europe. Hence, we have to admit that the whole duty collected on breadstuffs, entering the United States from Canada, is paid by the Canadians. Here, therefore, is a saving to the whole body of American taxpayers of $4,152,827.36 per year, through the duty on imported breadstuffs. No American resident, citizen, or tax- payer pays one cent of this revenue in the form of increased price. Yet, as the Canadian is seen to pay it into the Treasury, it is necessary to prove that the American price is increased by the amount of the duty, in order to escape the conclusion that the Canadian sustains the final burden of the tax. Of coal, we import $2,192,689.23 worth, against an export twice as large, and against a production of $94,287,923. Every ton im- ported is, therefore, a displacement of a portion of domestic prod- uct, partly by diminishing the quantity of the latter which can be profitably marketed, and pai^tly by compelling a portion of the latter to be exported. Neither of the processes tends to lower or raise the price, since in both cases the importation only dis- places a portion of the domestic supply without increasing the aggregate supply. By so much as the importation from Nova Scotia is more, the domestic product will be less. All the facts, which make the duty on breadstuffs a collection of revenue ex- clusively from foreign producers, apply to coal. Hence, of the $621,099.25 annually collected on coal not one cent is collected from American consumers of coal. Lumber and manufactures of wood are exported from the Northwest, i. e. , from Michigan, Wisconsin, and Minnesota, into Western Canada and Manitoba, to the amount of $2,475,636 an- nually, thus showing that it is cheaper in the Northwest than in any part of Canada. It is imported from the Ottawa district of Canada into New York and New England to the amount of |8, 967, 290. 60, thus showing that it is dearer in New York and COMPETITION REPEALS THE " TAX." 617 New England than in most parts of Canada. Finally, we ship from our ocean points upwards of $24,000,000 worth to foreign countries. The total value of our lumber product is $233,268,- 729, or say thii-ty times as much as we import, and our importa- tion is less than one-third of our export. Here again the Canadian gets the American price ; his impor- tation is a displacement, partly felt in diminishing our domestic product, and partly in increasing our export. Hence the $1,697,- 431.91, collected from Canadian lumber producers, protects the body of our taxpayers from just so much tax which they would otherwise have to ^scy. Summing up the revenue derived from the articles on which the importation serves clearly only to displace a small portion of our domestic production, partly by lessening the portion of our domestic product that can be profitably marketed and partly by forcing another portion to be exported, we find that on these sev- eral articles, viz., breadstuffs, coal, fish, hay, paper, potatoes, pro- visions, sand, starch, stone, straw, tallow, tar and pitch, tobacco, vegetables, vinegar, wood, lumber, etc., we collect duties from foreign producers to the amount of $15,919,878.03, apparently without a possibility of any tax on the American consumer. 215. When Protection Promotes Production. — The third class of cases, in which duties on imports operate protec- tively, is when, being imposed on articles of which the American production is inadequate to supply the American demand, they enhance the price sufficiently to stimulate the production up to a condition of adequacy to supply the demand. When this point of adequacy of domestic supply is reached, domestic prices will have fallen to a dead level with foreign prices. While the domestic production is rising toward this condition of adequacy, the enhanced price, or " tax " occasioned by the duty, lessens pari passu with the approach of the domestic production toward ade- quacy to supply the domestic demand. In no case, therefore, whei'e there is a large domestic production, can the domestic price stand as high as the foreign price with the duty added. If the law, by which the duty recedes from its full effect on the price, could be reduced to mathematical certainty, an exact count of the temporary cost of protective duties, and an account current of this cost against their pi'ofit in enhanced production and increased internal ti-ade, could be arrived at. But fluctuations in markets greatly embarrass it, and down to the present time the Governnaent of the United States has neg- 618 ECONOMIC PHILOSOPHY. lected to collect such statistics as would furnish most aid in establishing the universality of such a mathematical formula. It has to be left to sound business judgment. Upon no point are the American people so ill-informed, and so subject to imposition on the part of the unscrupulous, as on that of the relative prices of consumable commodities of nearly all kinds in Europe and in America. Subject to variations, which may be separately noted, the proxi- mate J.aw of the receding effect of duties under an increasing do- mestic production is that, pari passu as the domestic production becomes adequate to supply the demand, the tariff tax declines. For instance, on crude sugar we import ten-elevenths of our supply. Presumptively, therefore, ten -elevenths of our duty, on the raw materials or forms of our sugar, falls as a taxation on our manufacturers and refiners of sugar. The existence of an export of refined sugar, though only to the extent of one-fiftieth in value of our importation of crude sugar, would suffice to prove that prices are as low in our markets as abroad, were it uot that the expoi't is aided by payment of a rebate of the duty collected on the importation of the crude sugar used in its manu- facture. In fact, however, refined sugar has at times been lower in the United States than abroad, and is usually higher by only a third or half the duty. To this exteiit the tax is continued against our consumers. The assumption that raw sugar is taxed depends also, for its truth, on the condition that the repeal of our duty would cause no change in the tariff ]3olicy of the countries which sell us the sugar. If, however, they should put on an export tax simultaneously with our taking it off, as Brazil and China did on the occasion of the repeal of our duties on tea and coffee, then we would be simply presenting to foreign nations our present sugar duties, amounting to about $50,000,000 annually. Collateral causes other than the tariff, such as patents, which limit the competition among domestic manufacturers, may con- spire to prevent prices receding, under domestic competition, in the degree our rule calls for. The history of steel rails may illus- trate. When they were altogether supplied from abroad, neither duties nor patent monopoly were much complained of. The price was so high that even the duty of $28. 50 per ton was only equiv- alent to 30 per cent, ad valorem, though the fall in price so raised its ad valorem rate that had it continued it would have become a duty of 100 per cent. In 1864 as high as $375 in currency was j)aid for steel rails. In 1883 our demand had expanded to 1,912, 93X Whole duty, ) { TariflP $28.50 J- : ] Tax, per ton. ) ( $3.16 " GEO WING RICH AS TAXES RISE." 619 tons annually, under reduced prices and expanded production, and we ourselves produced 1,688,794 tons a year, leaving only 224,057 tons to be imported. If the law of receding tax had worked unfettei'ed, it should have resulted as follows : Whole demand, ) { Deficit, ) 1,912,921 \ : ] 224,057 > ; tons. J ( tons. ; In short, in 1882, in view of the ratio of our domestic produc- tion to our importations, the price of steel I'ails should have been only $3.16 per ton higher in America than in Europe, whereas it was from $15 to $18 higher, the duty being then $28.50 per ton. This failure of the price to recede, at an equal pace with the expansion in the domestic production, was due to the patents which limited the right to manufacture here to eleven companies, all acting under one arrangement as to their patents, and whose patents continued to run after the English patents had expired. Had there been no patent monopoly, i. e. , had all Ameri- cans been free to make Bessemer rails after 1870, it is probable that forty instead of eleven makers might have competed. In that case the American price might not have been higher than the foreign price by more than the ratio assigned, $3.16 per ton, plus freight and charges. Still the fact that America is the ultimate market, for consumption, of about as many rails as all the rest of the world combined, necessarily causes iron and steel rails to tend toward higher prices in America than elsewhere. The duty recedes from its effect, as a tax, in proportion as the domestic production becomes adequate to supply the domestic demand. Hence the portion of the duty which is a tax on domestic consumers, bears always the same proportion to the share which is paid by foreign producers, as the deficit in the domestic supply bears to the whole domestic demand. If this law be applied to the foregoing schedule of duties, to the amount of $174,562,630.98, it will furnish us with the fairest standard for ascertaining the gross cost of protective duties, in the first instance, i. e. , before offsetting the profits which ensue to the country at large from enhanced production, and the increased prospei'ity of all kinds of industries. The problem which has excited the candid wonder of many ingenious persons is. Why, under protective duties, do we gi'ovv rich in just the degi'ee that taxes are high? The secret of the puzzle is that foreign producers pay so large a share of the duties that American 620 ECONOMIC PHILOSOPHY. consumers actually are presented in part with their im- ported commodities. This is, in part, why Chancellor Bis- marck attributes the unwonted prosperity of America, during the twenty-three years past, to the only operative cause peculiar to that period, as compared to other pei'iods, viz. , our protective du- ties. It will also both explain and justify the fact that the last English work on political economy, by Professor Henry Sidg- wick, of Cambridge University, says (p. 576) : '''It must he ad- mitted that the imposition of import duties is, imder certain cir- cumstances, a method at least temporarily effective of increas- ing a nation''s income at the expense of foreigners. " In stating, as a proximate rule for estimating the decline in the tariff tax, which results from the advance in the domestic pro- duction, that, pari j^assu as the domestic production becom.es ade- quate to supply the domestic demand, the tax declines, I use the word proximate in its broadest sense. For instance, while the American manufacture of silks now supplies the country with about one-fourth of the silk worn in this country, the deficit being still three-fourths, the rule above set forth would require that the current selling American price should be one-fourth of the duty below the French price with duty added, supposing the French price itself not to have been reduced by the American manufacture. In short, that the current American prices ought to be three-fourths only of the French price, plus the duty. This is not far from the fact. French manufacturers several years ago refused to fill American orders except through their New York houses. They alleged as the reason that, if they should sell to American customers at current French prices, the latter, on pay- ing the duty, would find the American price so much lower than the French price with duty added, that they could not sell at all. This is only another mode of saying that the French producers of silks are paying a portion of our revenue. The formula I have given would fix that portion proximately at about a fourth of the price ; which, if the duty be 60 pei* cent., would be two-thirds of the duty. The accidents of trade might cause this to fluctuate between a tenth and three-tenths, and differently on different kinds of silks, according to the degree in which our domestic manufacture is superseding the French, in each kind, in our mar- kets. The actual law which determines the price being the ratio of the whole supply, foreign and domestic, to the whole demand, domestic and foreign, it follows that the recession of price must bear a permanent relation to this greater equation, HIGHER DUTIES MAKE CHEAPER CROCKERY. 621 and only a subordinate relation to the less one of the ratio of the domestic to the foreign supply. Still, if a competent government investigation were made, I think it would prove that for several years past the American price for silks has been from one to three tenths below the French price and duty, thus, in effect, showing a payment by the French silk manufacturers of from two to four tenths of our revenue from silks. English nianiifacturers of cutlery and crockery also make dif- ferent price lists to American customers from those they sell at to Austi'alian and to English, putting their product enough lower here than elsewhere, to virtually pay as much of the American duty as they can afford to pay, without losing their entire profit. In crockery the proximate rule above given v is borne out with essential accuracy. The American manufacture produces about $5,000,000 woi-th a year, as against an importation of about $7,000,000 worth. Our total annual consumption being $12,000,- 000, and our domestic production having become adequate to supply five-twelfths of the demand, it ought to be found that our foreign competitors are bearing five-twelfths of the tariff tax. As the effect of a duty is partly to raise prices in the coun- try imposing it, but partly also to depress prices in the country producing the product on which it is imposed, a comparison of present relative prices in the two countries is not always more satisfactory than a comparison of present prices with past prices in the same country. Davenport & Bro., a New York import- ing house in crockery, china, and earthenware, report that in 1852 a crate of assorted crockery would sell to the American con- sumer at $95.30, under the 30 per cent, duty, and a like crate sold in 1883 under a 50 per cent, duty, at $57. 80. The goods had sold 67 per cent, higher under a duty 40 per cent, lower. The books of Oscar Cheeseman, another importer and jobber of crockery in New York, show that assortments of crockery which sold for $108.68 in 1860 under a 24 per cent, duty sold in 1883 under a 50 per cent, duty, for $63.81. Although the duty has since been raised to 60 per cent. , inquiry of these firms shows that the goods in question sell very much lower now than when these statements were made. Nine heavy firms of dealei-s in plumbing and sanitary hard- ware in New York cei'tified, in the winter of 1882, that the prices on their class of earthenware wei'e 40 per cent, lower then than in 1873, when the business of their raanuf9,cture was first undertaken 622 ECONOMIC PHILOSOPHY. in this country, though the currency in which these prices were stated was worth 33 per cent, more in coin in 1882 than in 1872. They say: "We are of the opinion that the manufacture of these goods here has been the main cause of this reduction, and also tliat the development of home manufacture has always the tendency to reduce j)rices to the consumer." In crockery, there- fore, 40 per cent, increase in the duties has caused the Ameri- can production to expand until it supplies five-twelfths of the American demand, and has reduced the net price to American consumers by a percentage greater than the whole duty. With- out this reduction in price, the annual consumption for which we now pay $12,000,000 would have cost us $19,200,000, an annual saving of $7,200,000, which is more than the invoiced value of all that we import, viz. (for 1882), $6,873,075.95. In view of such facts, and of the fierce struggle made by foreign potters to hold the American market, it is safe to say that of the revenue col- lected on pottery, viz. $2,965,978.84, one-half has been paid by the importers, and only one-half by the American consumers. Certain newspapers, in 1868-70, denounced the duty on paper as a tax on knowledge. The fear that knowledge was going to be taxed, so great was their stock on hand, naturally made them "fast and furious." The tax on "knowledge" was continued, with the gratifying result that knowledge so increased, on all hands, that most of those who had not known that the duty on paper helps to make it cheap, instead of dear, found it out. The facts are, that the United States makes 535,000,000 pounds of paper annually,* while Great Britain makes only 350,000,000 pounds, so that our supply is slightly greater per capita than the English. They could only have more for export, than we, by using less. As recently as 1873, we imported foreign paper to the value of $580,- 000. In three years the importation fell to $20,000. At the same period our export, which in 1869 was only $3,650, grew, in seven years, to $810,000, and in 1882 was $1,618,883, while our imports of materials for making paper grew to $6,024,772.63. In paper, therefore, we became importers of the raw materials and ex- porters to fifty-one countries of the finished product of all grades, England being our largest purchaser, and the British possessions in Africa one of our smallest, because little paper is used there. Since 1883 our imports of paper have gained slightly on our * Census of 1880. HOME MABKET8 FIRST . 623 exports, but the domestic pi'oduction is sixteen times greater than the importation. According to our formula, it is sixteen-fold moi'e potential in securing permanently cheap paper. Though the paper manufacture maintains a larger supj)]y, and in most grades at as low prices as the English, an assault along its lines under a system of low duties would shatter it in all its parts. The conditions relating to hosiery and dress-goods, of all except the extremely expensive kinds, resemble those above outlined as to crockery. The revenue on these, therefore, is divided. Mr. Marshall Field, the leading importer and dry -goods merchant of Chicago, stated in 1882 that in all ordinaiy woolen and cotton goods, for common wear by the business men and working classes, the American market (though surrounded by an average 45 per cent, tariff) is the cheapest market in the world. Six- sevenths of the goods of this class consumed here are now made in America. Our cotton sheetings and cotton prints are selling in Manchester and Liverpool, as well as in every port on the globe. It does not follow that they are not helped by protec- tion, for our duty secures to our cotton producers an exclusive American market, in addition to whatever foreign markets may be open to them. h. large trade makes a low price. If the principles above outlined be applied to our entire tariff list, it would show that, of the $212,000,000, or less, of duties on imports usually collected, the proportion collected from foreign producers and not chargeable over to American consumers varies with the fluctuations in the state of foreign and domestic prices, never coming below $40,000,000, and seldom, perhaps, rismg above $60,000,000. Few writers are more passionately British, or more dogmati- cally indifferent to facts, than Mr. Mill. By some fortuitous accident, however, he did make the discoveiy, which he thus candidly admits (vol. ii. p. 457): "Those are, therefore, in the right who maintain that taxes on imports are partly paid by foreigners." His application of the principle in practice shows less knowledge of the laws and conditions of trade than would be expected. 216. Protection Promotes Wages. The fourth mode in which duties on imports operate to protect the industries op the country" imposing them is when, by increasing the number of occupations and en- terprises that can be carried on within a country to 624 ECONOMIC PHILOSOPHY. THE PROFIT OF THE MAN WHO RISKS HIS CAPITAL IN THEM (THE "entrepreneur"), THEY INCREASE THE FULLNESS AND DIVERSITY WITH WHICH THE NATURAL RESOURCES OF A COUNTRY ARE DEVELOPED AND USED, THEREBY CAUSING MORE EMPLOYERS TO COMPETE FOR THE HIRE OF LABOR, AND SO RAISING THE RATE OF WAGES, OR THE NUMBER OF WORKERS THAT CAN FIND WORK AT THAT RATE, OR BOTH. I have shown that no duty can increase the price, if it rests on the importation of an article of which our domestic production is adequate to supply the demand. Such is the case of wheat. If the duty raises the pi-ice, without starting the domestic pro- duction, it is a revenue duty, since the whole duty paid goes to the treasury, and there are no domestic producers to protect. Such is the case of tea, and such, until recently, was that of silk goods. The duties which are pi'otective are limited, therefore, to those which are stimulating a domestic production not yet adequate to supply the domestic demand. If there are fifty or five thousand such that enhance prices, that means that there are fifty or five thousand new sets of employers competing with each other for the hire of labor, ivho ivould not be in this com- petition for the hire of labor, were it not for those particular duties which are thus enhancing prices. Suppose a new country like Australia has hitherto imported clothing, and had but five occupations, viz., raising sheep, shearing sheep, trans- porting wool to market, and importing and selling clothes and groceries for the wool-growers. If the protective dvities on woolen goods start the occupations of scouring, dyeing, spinning, weaving, and tailoring, the number of occupations will be in- creased from five to nine, and the number of competitors for the hire of labor in like proportion. At least, the degree of competi- tion for the hire of labor, which was caused abroad by the manu- facture of the cloth abroad, will be transferred to Australia, and added to the previous competition for the hire of labor there, together with the added competition involved in building the new factories and introducing machinery. Labor obtains employment, only on condition that the employer, or enterpriser, can sell the product of the labor at a profit, after paying wages and the interest on his capital. An enterpriser or employer is generally a man or corporation who borrows his capital. In this country it is so usually true, that the enterprisers keep the workers busy, that workingmen fall into the habit of thinking that work comes by some inevitable necessity like sun- THE MEN WHO RAISE WAGES. 625 rise or the tides. Many workingmen imagine that it is the great corporations and employing capitahsts who cause their wages to be as small as they are, rather than that it is to these that they owe the fact that they can earn any wages at all. But, in fact, it is the competition of the enterprisers with each other that advances wages. It is the extent and number of the enterprises that can be made profitable, that increases the competition of the enter- prisers, and protection determines the extent and number of the enterprises that can be made pi-ofitable, when such enterprises have to be begun against the competition of older, or stronger, foreign competitors. Without protection, therefore, American labor cannot at present, as against foreign labor, be kept fully employed. With adequate protection at all points it can. Nothing else can do it ; for where the " boss " cannot make a profit, labor must go out. India and China ai'e examples of countries where the enterprisers are far behind the labor supply, because every man who gets a petty competency suflRcient to cover his wants for the rest of his life stops work. They have not there the great corporations, large fortunes, and vast "monopolies," as we call them, which have distinguished Roman, English, and American civilization, because they have not the same ]Jower of combination. Hence their wages of labor ar-e low — two or three cents a day. For in order that there may be an exhaustless demand for the labor of wages- workers, there must be an exhaustless ambition in those who can employ. Apart from the greed of the competent, there can be no relief to the need of the incompetent. Not only does the wage- worker, who feels that he has got enough, stop working, but the capitalist who discovers that he has got enough stops investing, and to cease investing in new enterprises is to cease employing new men. Hence what the poor most need, in any country, is men able to employ, i.e., rich in jDresent means, and who never know when they have got enough, and in fact never get enough. The curse of China and India, which keeps them poor and at famine's verge, is, that so little capital satisfies their money-making men, and retires them from the field of en- tei'prise. Millions compete for employment, but no emploj^ers compete for labor. The surplus capitals of the rich, employed in reproduction, and comj)eting with each other for the labor of the unemployed, are the cause of rise in rates of wages. Wealth not needed for present consumption, and thei'efore invested in build- ing houses for I'ental, causes rents to fall. Wealth to lend lowers rates of interest. 626 ECONOMIC PHILOSOPHY. The whole cost of all commodities and enjoyments resolves itself finally into one or another of three forms of corapensation for labor, viz. : 1. Wages of labor, which covers merely the cost of employing all those workmen whose toil perfects the com- modity, and perfects each raw material that enters into the commodity, after others have supplied the capital, including the land, and undertaken the risk essential to the creation of the raw material and the employment of the labor. 2. Profits of enter- prise, which are the compensation for the risk of loss of the whole capital involved in the undertaking, and for that form of labor, care, and courage which assumes the risk of the demand for the commodity, when it shall be brought into existence, being suf- ficient to compensate for the cost of production, on sale of the commodity in open competition with all others who produce it, and to leave a margin of profit. This compensation or profit amounts to the whole excess, of the returns created by the demand, over the cost of production, including wages, rent, interest, and capital sunk. 3. Interest and capital, which, in the case of created capital, is the compensation for the use of labor previously hoarded or stored in commodities. In the case of land (rent) it is the compensation for the use of labor previously hoarded, or stoi'ed, in the form of the sum paid on the purchase of land, for the value which it has derived from the aggregate movement of society, i.e., from its nearness to centers of social and industrial movement. In some cases, in cities, this value arises from its having been withheld, at considerable cost, for interest and taxes, from the inferior uses which would have lessened its value. Thus wages, rent, profit, and interest, are all but differing forms of compensation for labor — i.e., of wages. The price of com- modities is but wages, some of which are once, some twice, and some thrice removed. So much of the price, as was paid in wages for the last process of production, is evidently wages. For in- stance, in making pig-iron the census returns but a fifth of the cost as being paid for wages, i.e., for evident wages, or wages of the last process involved. The ore, lime, and coal are raw materials, and a large element in the cost of these is labor, or wages, of production and transportation. The furnace, and fund from which wages are paid till the iron is marketable, are counted as capital, but these are only past labor stored, in plant and money. All capital, rent, interest, and profits therefore resolve themselves finally into wages. If they are not wages in the first instance, they are wages paid for the abstinence from the HO IF D UTim PROTECT WA GE8. 627 IDleasures of consuming' previous wages. Or if there has been no abstinence, but only irfv^ention and enterprise, in perceiving avenues to wealth where others failed to see them, then the px'ofits of such inventive energy or enterprise are the wages which society justly awards to the man who can teach it what is both new and valuable. There are no sources of value save in labor and the desire of that which labor obtains. If, therefore, there are 1,500 protective duties affecting prices, there must be 1,500 domestic productions inadequate to supply the domestic demand. Hence there must be 1,500 nuclei of industry at which new employers are bidding against each other for the employment of workmen ; hence 1,500 centers of increased de- mand for labor from which higher wages for labor radiate on every side ; hence 1,500 centers of enterprise where capital is at risk for new profits, labor is making new products, rents and raw materials and wages are rising, and the prices of the finished product are falling. The statistics which prove the increased employment of labor and higher rates of wages in the United States under protection than under low duties are simply endless. Free traders try to ascribe the higher wages existing in this country to land, climate, inventive sagacity. But there was more land, and it was more fertile, in our colonial period than now, and yet labor was then worth but a shilling a day ; luxuries now common to the poor were then rare among the rich. Our climate merely rivals, without excelling, that of Europe, and in- ventive sagacity stores itself into machine power, of which En- land has rather more than we, the product of three hundred years of protection. High wages are due to such an organization of iiadustries as keeps the whole people employed, and to attain the greatest possible diversity we must not only tolerate those which we cannot avoid having, but we must insist on having those which, at the outset, free foreign competition would be both in- terested and able to destroy. And we must do this honestly, in order to multiply the JBelds of employment for labor, and keep wages at the maximum, so far as human legislative effort can. 217. Protection Promotes National Unity and Peace. DUTIES ON IMPORTS PROTECT THE DOMESTIC INDUSTRIES OF THE COUNTRY IMPOSING THEBI WHEN, BY BRINGING INTO EXISTENCE AND DEVELOPING INTO A CONDITION OP SELF-SUSTAINING PROFIT INDUSTRIES ESSENTIAL TO AN ACTIVE INTERNAL COMMERCE DURING PEACE, AND TO THE NATIONAL DEFENSE DURING WAR, THEY INCREASE THE PROBABILITIES OF BOTH DOMESTIC AND 628 ECONOMIC PHILOSOPHT. INTERNATIONAL PEACE, AVERT OR GREATLY MODIFY FINANCIAL CRISES, AND RENDER WAR LESS FREQUENT AND LESS EXHAUSTING. The Cobden Club adopts as its motto, ' ' Peace, good will among the nations," * but every sunrise is announced by the reveille of English drums, awakening English soldiers to back with the bayonet some new intrusion on the rights of barbarian races, in order to secure to British factories the profits of selling breech- clouts and wooden gods to some new tribe of heathen, to the prejudice of the local manufacture. Ten thousand Englishmen were slaughtered in 1884 in the Soudan as part of this pro- gramme. England has her nose in every quarrel on the face of the earth. She is not wholly out of war one month in twenty- five. Indeed, it is doubtful if she has been at absolute peace for a day since 1846. Free-trade in men and in commodities was the war-cry of our Southern Eebellion. It cost us one million lives and ten thousand million dollars. It had its face set backwards towards feudalism, baronialism, paucity of employments, poverty of laborers, the lash as legal tender for a day's work, civil war as a substitute for economic discussion, caste instead of currency, bullets instead of banknotes, and bullying in place of statesman- ship. The whole origin of our late costly war was economic error, and every fibre of its economic errors is gathered up and woven into the detestable shibboleth of England's American implements and tools — "Free Foreign Trade." While the free trade argument in America has been identified with disentegra- tion and disunion from the first, the desire to secure a national revenue through a protective tariff was the motive which welded the feebly united States of the Confederation into the present national Union, t While the foreign trade policy is hourly breeding war among the nations, protection to home industry develops within every nation the most gratifying results of peace, and the best effects of commerce. It says to each nation, " Mind your own business." It teaches each that the best conquest it can make over its rivals is to absorb their pursuits, their arts, their populations, and their power, by active invention and peaceful immigration. We have room in the United States for 300,000,000 of people, and we must prepare for their coming. But they cannot all farm. To keep them busy every pound of our cotton must be spun and woven * " Free trade, peace, good will among nations." t See Mason's "Short TarifE Uistory of the United States," and "Twenty Years of Congress," by James G. Blaine. PROTECTION 18 PEACE. 629 on our soil, thus saving' wages and profits to the amount of $400,- 000,000 annually. We must produce all our sugar, whether from the beet, from sorghum, or from the cane, thus stopping an out- flow of $100,000,000 annually, virtually in coin. We must so expand our urban and agricultural industries, as to render the foreign market unimiDortant to us for any purpose. This alone is the policy which will keep us at peace witli each other and with all the world — will enable us to hold together this gigantic union of states, which, from the first, has exhibited so many of the tendencies toward forming itself into two nations instead of one. To maintain the Union by peaceful means, in preference to the bayonet, is the first problem in American statesmanship. It can not be done unless the two sections. North and South, have a commerce with each other five-fold greater than they now have, and to this end the commerce of both sections with England must be relatively less. Hence the maintenance of the Union now, as in 1832 to 1860, hingos upon the maintenance of the pro- tective policy. South Carolina virtually won disunion, when it bullied Con- gress into the Compromise Tariff of 1833. The same contest is again upon us, and involves the same consequences. As surely as the protective policy shall be abandoned, just so surely will the North be compelled to fight again, within thirty years, for political union with the South. Thus, before us, lie the two forks in our road, as in 1833. To the left lie free foreign trade, and domestic dissension and disunion ; to the right lie protection, the prosperous expansion of our industries, and foreign and domestic peace. Had the South begun the development of her manufacturing industries in 1780 to 1883, as at first urged by Jefi'erson, Washing- ton, Madison, Callioun, Clay, Benton, Jackson, and other of her most eminent statesmen, she would have fought for union, instead of for disunion, in 1861. But if a manufacturing South could be supposed capable of desiring disunion, that result could not have been defeated by arms. Free trade bred, in the South, both the errors that sought secession, and the industrial incapacity that rendered the effort a failure. Protection, if continued twenty years longer, will end the desire of the South to be either a separate nation, or a retrogressive force in the present nation, while developing in that section a power and self-sufficiency, whicli would render either desire omnipotent, if it could exist. The United States have illustrated, on a tragic scale, the disin- 630 ECONOMIC PHILOSOPHY. tegrating tendency of a policy of free trade with foreign nations, which had finally to be overcome by military force, and the national union, which was formed chiefly to enact a protective tariff on imports, was maintained successfully only through the financial and industrial solidarity imparted by the same tariff. Protection to domestic industry was the vital principle of Kos- suth's movement in 1848 for the vindication of Hungarian unity, and which afterwards, under Von Beust, in 1866, found expres- sion in the unity of the Austro-Hungarian empire. The same principle underlay the reconstruction of United Italy through the dash of Garibaldi, the radical penetration of Mazzini, and the clear statesmanship of Count Cavour. In France the national unity is never weak, because the sentiment of protection to home industry is innate. Thus everywhere the two phases, National Unity and Protection to Industry, are seen to be only different names for the same essential truth. On the other hand, the sole tendencies toward disintegration, in that Germany which Napo- leon I. found it so easy to convert into the battle-ground of Europe, were identified with a free foreign trade. The tendencies toward German unity which crowned the late William emperor of a revived German empire, in Paris, after the victories of Metz and Sedan, were the fruits of protection. The disintegration of Ireland from England, and the continually proclaimed dis- loyalty of the former, are a fruit of the "sharp bai'gain" known as British free trade. Other dependencies of England are only loyal because permitted to be protective. CHAPTER XVI. STATE ACTION IN RELATION TO SPECIAL INDUSTRIES. 218. Silk. — The efforts, by government aid, to compel the culture of silk in Mexico, the West Indies, and the United States, date from the very settlement of these several parts of the conti- nent, viz. : from 1522, under Cortez, in Mexico; from 1610, under King James, at Jamestown, in Virginia, and as early as 1604, in the West Indies. The attempted culture of silk, in these three portions of America, had a long and disappointing history in this period, when only the rudest industi'ies and those most directly connected with food, shelter, and the needed raiment of the pro- ducers, could survive. This shows that, however sound the principle of state intervention and stimulus may be, when applied to right cases, it becomes, like private enterprise and industry itself, equally fantastic and mischievous when foolishly applied. The production of silk requires the patient and skilled labor of a peaceful and contented people, not so much for the tending and feeding the worms, and the preservation and hatching of the eggs, as for the reeling of the silk from the cocoon, and the separation from it of all objectionable matter. Yet, from the first, the notion prevailed in England that not only could colonists, thrust into immediate conditions of danger, harassment, and turmoil, carry on this industry favorably, but that it could and should be made a happy means of converting Indian savages to the true faith, by exhibiting to them, in the wonderful operations of the silk- worm, proofs of the existence of a Creator. It was extolled as admirably adapted to the negro, owing to his indolence. It was even calculated, by one philanthropist, that England could save the entire cost of her pauper maintenance, by sending the paupers to Virginia, Carolina, and Georgia, to feed silk-worms. Their presumed shiftlessness was set down as the prime qualification which would assure success in the enterprise. In the 25 years from 1731 to 1755, about 251 pounds of raw silk, in all, were sent from tlie Cai'olinas to Great Britain, and about 8,829 pounds were sent from Georgia in the same period. This was under a parlia- 632 ECONOMIC PHILOSOPHY. mentary bounty of three shillings per pound. In 1766 the bounties were reduced one-half. As late as 1790 raw silk was still pro- duced, in a very small quantity, for export. In 1725 Pennsylvania had sent a small quantity of silk to England. Prior to the war for independence, Franklin and other leaders of thought were greatly interested in introducing the silk-worm and the mulberry tree. From the period of the first war with Great Britain to 1826, there was a scattered and unsuccessful attention given to the sub- ject by individuals. In 1826 Gideon B. Smith, of Baltimore, and Dr. Felix Pascalis, of New York, brought the Morns Multicalis tree to the attention of the public. Nearly all the States, from Maine to Georgia and Indiana, offered bounties, on the mulberry trees, on the cocoons, and on the reeled silk ; counties, fairs, and stock companies inter- ested in silk-growing followed with further offers. The United States granted a farm of 262 acres at Greenbush, N. Y., to one Clark, on condition that he should plant at least 100,000 mul- berry trees. National and State silk cojiventions were held. Stock silk-growing companies were formed. America was under the influence of tlie speculative fever prevailing in England and France, in connection with the general inflation from 1824 to 1839, and a portion of the financial ci'aze expended itself upon silk culture. The leaders of society, philosophy, industry, and science all wrote treatises on silk culture. The mystery and poetry of it were fascinating. Men had no railway shares to speculate in, and they speculated in multicaulis buds, silkworms, eggs, and mulberry trees. Prices rose to $1, $5 per tree, and profits, of six-fold the investment, were made in a single year, raising trees. In 1839 the bubble burst, and the trees were good only for pea brush. Only slight attempts to manufacture silk were made, though as early as 1837 Massachusetts was making sewing-silk to the value of $150,477, and employing 157 hands. Many, if not most, of the present successful silk houses trace their rise to the humble manufacture of sewing-silk then carried on. In 1840 the total production of American silk is estimated at 40,000 pounds. From this time to the present, the culture of silk in America has formed an inappreciable element in the sup- ply, and the manufacture has been dependent on the imported raw silk. As respects silk culture, therefore, experience has shown that private enterprise is as likely to be injudiciously and wastefully applied as government aid. Both must fail where a vast number of persons allow their imaginations to get the better FAILURE OF SILK CULTURE. 633 of their judgments, so as to believe that an industry must prove profitable, merely because its processes are fascinating in a scien- tific point of view, and its product is attractive in an eesthetic sense. Lately, promising efforts have been made to cultivate raw silk in Kansas. It is asserted that the worms thrive as well on the Osage orange leaves as on the mulberry. As the manufacture increases, the cultui-e of silk may, in time, become feasible. In 1850 the silk manufacture in the United States, obtaining its raw silk from Italy and China, employed 1,723 persons ; in 1860, 5,435 ; in 1870, 6,649, and in 1880, 34,521. The value of the products expanded as follows : In 1850, $1,809,476 ; in 1860, $6,607,771 ; in 1870, $12,210,662; and in 1880, $34,519,723. Inasmuch as the culture of raw silk has proved a failure, it may be conceded that whatever duties were collected on raw silk prior to 1846 (since that date it has been free of duty), as well as the bounties paid to promote its production, and the losses in- curred in its attempted culture, have netted no other return than the happiness which always attends an enthusiasm, and the wis- dom which often follows a defeat. The experimenters sowed for experience, and they gathered in the crop. The present silk manufacture had its beginnings in a manufac- ture of sewing-silk, which was not greatly assisted by the attempts at silk culture. It owes its present dimensions largely to that universal emulation after equality with the best, among American women, which causes every such woman in whatever station to desire to possess at least one silk dress. This condition of senti- ment among American women was itself produced by the higher average of material corufort accorded to American women, than to those of any other people, through our higher average returns in industry. This created the demand only. That demand would have continued, to this date, to be supplied wholly by foreign manufacturers, had the duty of 80 per cent, imposed for revenue, under the tariff of 1846 to 1861, continued to the present time. It was the raising of this duty, from 30 or 40 to 60 per cent, in 1864 which brought its revenue function into subor- dination to its protective function, and created the silk manufac- ture m the United States. The rise in the American manufacture has been attended by a general decline in the selling prices of silk goods in America, compared vv^itli the prices which prevailed under the 30 per cent, duty of 1846 to 1872, of about one-third. The value of the silk manufactures imported in 1880 is almost identical with the value imported in 1853, being slightly upwards 634 ECONOMIC PHILOSOPHY. of $33,000,000. During- the war of 1861-5, the importation fell to about $11, 000, 000 worth, but forfifteen years past it has been twice or thrice as great, and it still exceeds the domestic production. The tariif legislation concerning silk has been as follows : From 1790 to 1832, raw silk was free. In 1832 a duty of 12i per cent, was laid, which in 1841 was raised to 20 per cent., and in 1842 to 50 cents per pound. In 1846 this was reduced to 15 cents per pound, and since 1857 it has been free. Silk manufactures came under a duty of 7\ per cent, in 1790, raised to 12^ and 15 per cent, in 1804-8— doubled to 30 percent, in 1812-15. In 1842 the duty was made $2 per pound on silk twist, 25 per cent, on silk for manufacture, $1.50 per pound on pongees and plain white for printing and coloring, and from 1832 to 1836 manufactures from beyond the Cape of Good Hope were charged from 10 to 20 per cent. , while those from Europe came in free — a very extraor- dinary attempt apparently to discriminate against oriental in favor of European silks. From 1861 the duty on manufactured silks became 40 per cent., and from 1864, 60 per cent. The revenue obtained has been from $11,000,000 in 1867 to $15,615,000 in 1882. This effectually refutes the a priori dictum of Mr. Mill that no duty can, at the same time, produce protection and revenue. The heavy protective duties, on actively competing products, seem to affect the national treasury much as a tight roof affects the family cistern. While the inmates of the household are protected from the exterior damps, fogs, rains, sleets, and cbills which they would derive from too free an exchange of their vitality for nature's influences, the family cistern withal is filled with good water. For the same dampness which is fatal, when imported "free" through the roof, is a very useful adjunct to the house- keeper, when collected in the cistern. 219. Decline of Silk Manufacture in England. — Eng- land left her silk manufactures entirely unprotected in 1860, after having given them a steady, and at times a vigorous, pro- tection, since the reign of James I. The visible decline set in from 1861. Tiie number of her spindles employed in the silk industry fell from 1,338,544 in 1861 to 842,538 in 1878, and the number of persons employed declined from 117,989 in 1861 to 63, 577 in 1878.* The imports of raw silk into Gi'eat Britain, * Robert P. Porter found in Coventry in May, 1883, that the wages in the silk-weaving art had so declined that for making one class of goods known as 23-in. "mock gro-. grains " the weavers could now only earn about 6s. id. ($1.56) per week. ENGLISH SILK-MAKERS GO OUT. 635 which had averaged 6,191,691 pounds in 1867-70, fell to an annual average of 3,460,073 pounds in 1879 to 1882, including a decline of one-half in the raw material for manufacture. Deducting the amount re-exported, the quantity remaining for manufacture in Great Britain declined from 3,560,226 pounds annual average in the years 1867 to 1870 to 2,424,287 pounds in the years 1879 to 1882, while in the year 1880 the import of raw silk into the United States rose to 2,562,236 pounds, being slightly in excess of tlie British use of raw silk in manufacture. In 1829, 2,000,000 pounds of India silk came to England; in 1882 only 44,549 pouiids.* Mr. Robert P. Porter describes the decline of the silk industry in England as follows : ' ' Before the suicidal policy of free trade ruined the British silk industry it flourished in all these centers. In Congleton, twenty- five years ago, 5,186 operatives were employed, and to-day only 1, 530 ; in Coventry 40, 600 people were dependent on this industry ; to-day not more than a quarter of the number are engaged in the ribbon trade. In Derby 6,650 were engaged twenty-five years ago, to-day only 2,400. In the most prosperous time of the industry in London 60,000 were employed, to-day only 4,000. Between 1841 and 1851 over 15,000 hands were employed in this industry in Macclesfield, to-day much less than this number. * Japan in 1883 sent of raw silk To England 2,983 bales. " Europe (excluding England) 10,236 " " United States 6,154 " —Textile Record. Meanwliile, the importation of foreign silks for English consumption ({i.e., in excess of the foreign silks re-exported) is shown by the following figures to about equal the English production, as might be expected from the displacement of one-half the silk weavers of England : IMPORTATION OF SILKS. Year 1880. Year 1881. Dress and piece goods $23,738,318 $20,615,413 Hosiery 412,016 424,977 Other mannfs. of silks 11,343,883 12,413,113 Totals $35,494,217 $33,453,503 Decrease $2,040,714 EXrORTATION OF SILKS. Year 1880. Year 1881. Foreign silks re-exported $379,887 $246,671 Precisely as we have heretofore shown that the quantity of corn imported after the repeal of the corn laws was not an addition to the total supply, but only a displacement of the domestic production, leaving the supply the same; so the free importation of foreign silks is balanced by a withdrawal of domestic silk weavers from I he industry, exactly equivalent to the force required to produce the imported silks, had their impor» tation been prevented by protective duties, 636 ECONOMIC PHILOSOPHY. The 5,000 employed in Middle ton in 1850 have decreased to ahout 400 in 1884. ' ' Basle and St. Etienne send their goods, free of duty, into the English home market, and compete with Coventry. Germany and St. Chamond send in their braids and displace those of Leek. B,oubaix, Lyons, Crefeld, and Milan have exterminated the once flourishing industry of Spitalfield. Germany, Switzerland, Italy, and France are pushing the Macclesfield goods out of the home market. Germans are underselling the Middleton district in gal- loons, and Calais undersells Nottingham in lace and hosiery. The effects of the French treaty, which Mr. Cobden negotiated in 1860, were most disastrous. From that moment the industry began to decay. I ask any fair-minded free trader to reply to the facts which I give below and which can not be contradicted. " At Congleton the ribbon trade left the town. Throwing trade gradually declined, particularly in Italian silks. In Coventry it ruined the trade. In Derby it greatly reduced silk-throwing. In Leek it injured the serge trade. In London it brought ruin to many. A gradual reduction of Macclesfield production followed its enaction, while it destroyed the trade of Middleton, and in Manchester the silk trade practically died out. Nottingham was alone the exception with regard to the bad effect on the silk trade of the French treaty of 1860. It may even have derived a slight benefit from it, because the products are of such a nature as to command a demand for them abroad. Never was a more wanton and cruel blow aimed at a flourishing industry. In 1857, a few years prior to the ratification of the treaty, the import of raw silk into England aggregated 12,077,931 pounds. Since then it has dwindled year by year, as foreign manufactured goods have forced their way, free of duty, into the home market, until the last six years it has hardly averaged 3,000,000 pounds per annum, in 1883 being 3,178,593 pounds, and in 1881 sinking to 2,904,580. On the other hand, the imports of manufactured goods have gradually increased in value from about $10,000,000 in 1857 to $102,620,000 in 1888. A duty of 15 or 25 per cent, on this luxury would have held this important industry for England." * *A commission recently appointed by Parliament, to ascertain the causes of this decline, addressed a letter to the Boards of Trade of the several silk centers of the country, and received the following replies : Congleton : " Withdrawal of protection." Coventry : " Free imports of French and German goods, combined with high duties imnosed by other countries on our goods." Derby; "Withdrawal of protection." M'CTILLOGH RELUCTANT. 637 Of the silk manufactures still imported into tlie United States about $7,000,000 worth came from Germany, and nearly the entire balance from France. The free trade of England, in silks, is fast declining to " no trade." Leek : " Sewing-silk trade maintained itself." London : "Withdrawal of protection." Macclesfield : " Free importation of French and German goods, especially black silks, velvets, and mixed goods," Manchester : "The French Treaty." Middleton : " The French Treaty of 18C0, coupled with the adulterated dyes intro- duced into England." Nottingham : " No decline, owing to the large increase in the use of silk lace." The replies to the parliamentary inquiry in relation to the collapse of the British silk industry in the nine principal centers of the trade are brief, direct, and tinged with sadness. J. R. McCulloch, while prematurely boasting in 1863 (in note to Adam Smith's " Wealth of Nations," p. 201), that the sillf trade of England, two years after the repeal, was more prosperous than ever, still says that a duty of 10 or 15 per cent should have been retained. Why, if free trade were a sound basis ? and why, if the silk manufacture was more prosperous than ever after the repeal of ii s protection ? Such an admission shows, first, that McCulloch truly saw that the repeal of the duty would prove destructive to the industry, and also that he knew the industry was not then more flourishing than ever. There seems to be a potent spell in the word free trade that has the power to make an English economist say what he knows to be fnl.se, every time he alludes to it. Mr. McCulIoch's note so palpably convicts him of hiding a pro- tectionist belief, and indeed knowledge, behind afree-trade profession, that we publish it entire. It shows that McCulloch perceived that silk would be seriously affected by foreign competition ; but he justifies allowing it to be sacrificed forsooth, because it was only a sixth or a seventh of the whole of British manufactures. And after ad- mitting that free trade would seriously affect it, and that 10 or 15 per cent, duty should have been maintained, he still does his best to eke out a case for free trade. He said in 1863 : "The value of the manufactured goods annually produced in Great Britain has been estimated at about 125 millions sterling, including the raw material. But linen and silk are the only manufactures that could be at all seriously affected by the freest intercourse with other countries ; and the aggregate value of both these branches, inclu.'-ive of the raw material, docs not probably exceed 18 or 20 millions, or from a sixth to a seventh part of our whole manufactures ; and cannot, therefore, be supposed to afford employment to more than a corresponding portion of our manufac- turing population. " In point of fact, however, the free importation of foreign linens and silks would only supersede a very small part of these manufactures. There is no reason for sup- posing that any of the principal branches of the linen manufacture would be materially injured by the gradual reduction of the existing duties on the importation of linens. And although the French excel in the manufacture of lighter silk fabrics, we are superior, or at least equal, to them in the manufacture of gloves and hosiery, and in that of poplins, and all those mixed fabrics of which silk is the ba=is ; and we are also rivalling them in the brightness of our colors, and the durability of our dyes. It has been a common practice to insure the safe delivery of French silks in any part of London for from 10 to 15 per cent, premium ; so th it it was not, as commonly sup- jjosed, so much, perhaps, to prohibitory regulations as to our own ingenuity, that our silk manufactures were indebted for that monopoly of the market they so long enjoyed. But their supposed dependence on customs regulations made them indifferent to im- j)rovements ; and to iiC^O? Rolled iron, except rails, made in United States. 536,958 500,048 595,311 579,838 598,386 643,230 705,000 710,000 941,992 1,076,368 1,110,147 1,097,867 1,042,101 1,144,219 1,333.686 1,627,324 1,838,906 2,155,346 2,265,957 2,283,920 Pig iron made in Uni- ted States. Net tons. 919,770 731,544 787,662 947,604 l,lc5 996 931,582 1 ,350,343 1,461,226 1 ,603,000 1,916,641 1 ,865.000 1,911,608 3,854,558 2,868,278 3,689,413 3,266,581 a, 093,236 2,314,585 2,577,361 3,070,875 4,295,414 4,641.564 5.178,122 5,146,972 mai-TiiiocoiorrC'^co^-iTaioiG^G^c^trtt- Approximate rail con- ni-t-'-.oi<»=t;i-<=i« t-.=o,-*'o;^.=i2- Bumption. Nettons. g?So25SS?ro^?^SSfeSgSg 1 03THC0C00JO0J'-H00t~10O!>CnTH!>£- J 'rPQOCOlOOOt^T-HTtOOCOTHTl'QOC^C^t- Rails imported. Net : R.^.'-I.'-l^^'^.'--".^.,'^ 't^,'=^,r,=^_ + ^«r. .! C0OC0CSC0OQ0Q005 Tj^OCOrtOO tons. coiOi-iCicoTOiooT-i Tj>05ooeira 1 ■r-iC-iCOCOiOiOOi,-' 0?COO* . QOoooioocDc^QooO'Tj'coocoot-coff^ajc^mcot^OTii-p 1 OT^.-iC0COC^!?:Oi-ICDOe0Ot-T-HT-i0JO00t-C0OOT05 lotai rails maae in ^•o,-„^tfo'to'o'Nco-OToVooomCTOJ%*«TO_,Vooo'" United States. Net ioQor-jt-:=^"'22==^"5'vJ^-'='2?P'^teF^'"'^-5ooto " ' 1 OJ 1-1 0* Oi CO TO T)> -T m lO CO £.- O^OO L- i> 00 i.~ 00 T-<^-^0O CO CO Oinooooio^co>-co3ooT)wt-.-«-'^03rH»o -fir:coir;cot-r-i-i en CO O. « 00 ■r-(_r-. t- i> O) CO I- r-i t~ O i.~ o Year. 1860 1861 1862 1863 1864 1865 1866 1867 1868 1869 1870 1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1883 1883 steel rails, of which we made our first in 1867, have superseded iron. The rapid rate of decline in the price of steel rails from b'52 ECONOMIO PHILOSOPHY. $158. 50 per ton (gold) in 1868 to $37.75 per ton in 1883, at which date they were produced more cheaply than iron had been or could be produced, is one of the marvels of industrial development. The preceding is Mr. Kent's tabulation of statistics plotted on diagram. The chart, as appears by the figures on the left margin, is so drawn that each check space represents, as to immigrants, 50, 000 ; as to railroads, a hundred miles annually built ; as to iron and steel, 250,000 tons annually produced ; and as to prices of rails, a rise or fall of $10 per ton. 223. American Shipbuilding, Coasting and Ocean "Vessels, and Carrying Trade. — a. The Raw Materials of Ship- building. — The narrowness of the trading spirit was not sufficient in the early days, nor in the later midday of the republic, to cause it to be supposed that Henry Clay, of Kentucky, favored protec- tion to American industries becaiise the people of his State were largely engaged in growing the hemp that would be used in making canvas and cordage for shipping. The protection of our shipping, however, naturally received the first attention at the hands of the founders of our government. Owing to our great supplies of cheap lumber we had the first requisite to ship- building. The tendencies of the hardy sons of New England toward fishing and whaling supplied the second, a maritime class. Our position among commercial nations was less central than that of England, and our capital and banking facilities were less. Our manufactures also, were about thirty years behind those of England, in that quality of dimensions, or magnitude, which is the chief requisite to cheap production. With these aids and draw- backs, the adoption of the Federal or National Constitution in 1790 placed it in the power of Congress, for the first time, to legis- late in a manner to develop our shipping. b. The Navigation Laivs. — The American navigation laws, adopted when the government was founded, permit only Ameri- can-built vessels to be registered as American vessels. American vessels are of two classes, those engaged in the ocean-carrying trade, i. e., between our ports and those of other nations, and those engaged in carrying between different points on our coast, which is called the coasting trade. From our coasting trade all foreign-built and foreign-owned vessels are shut out by peremp- tory prohibition, the provision of the statute being that any vessel having a foreign registry, which carries any freight or passengers between two American ports, unless they be ports between which i£i*K, 1S60 1661 1 1 i 7 8 3 1870 i 2 3 4 5 7 3 9 ISSO I a 9 I3ftl Vmtjram shotv'tny Raiiroail Coiutrucliuit, Jiuil ami Irti/i J'rwluctlbn, Ilnnttgratiutt, tic., /rum IWJO lo ISM. PROTECTING OUR MERCHANT SHIPS. 653 there is direct overland communication through the country to which such vessel belongs, shall be forfeited. Our navigation laws, as originally enacted, also virtually ex- cluded foreign vessels from carrying a large share of our imports and exports by a system of " discriminating duties, " which means higher duties on the same goods if brought on Bi'itish or other foreign vessels than if brought in American vessels. Thus, under the act of 1789, teas, if brought in American ships from China direct, paid only from 6 to 20 cents per pound ; if brought in American ships from Europe only, then from 8 to 26 cents per pound; but if brought to this country in foreign ships they paid from 15 to 45 cents per pound, or two and a half times as much as if brought fi'om China in American vessels. This discrimina- tion continued in principle, though frequently changed in amount, until 1833, at about which time, under the cry of free trade, then beginning to be popular with the Southern wing of the Democratic party, the discrimination was given away by the Senate in treaties with one foreign power after another, until it was virtually repealed. This withdrew tariff protection from our ocean-carrying trade, and opened the privilege of carrying our exports and inaports to whomever would carry them cheapest. Our coasting trade remained, being held fast by the clause in our navigation laws which prohibited any foreign vessel from carry- ing between two American ports. For the period from 1833 to 1855, this practice of getting our carrying done where we could get it done cheapest did not develop any injurious effects, for the reason that vessels were still built of wood, of which we had the cheapest supply, and dependent on sails. c. The Tonnage Acts. — The tonnage act passed in the first ses- sion of Congress also favored American shipping as against the ships of foreign powers. The rate imposed on vessels built and owned in America was 6 cents per ton ; foreign-built and foreign owned vessels were charged with 30 cents per ton; and vessels both built and owned by foreign subjects were charged 50 cents per ton. The effect of the navigation laws and tonnage acts, on the carrying trade of England and America, is seen in the follow- ing table (from "Taxation in the United States," by H. C. Adams, p. 42) : American tonnage British tonnage Tear. employed in for- employed in eign trade. Ami-rican trade. 1789 127,329 94,110 1792 414 679 206,065 1794 525.649 37,058 1796 675,046 19,669 654 ECONOMIC PHILOSOPHY. These figures conclusively refute those who say that the best way to protect our navigation interests is to let them alone. Adams further says (p. 70) : " The growth of American ship- ping, from 1789 to 1807, is without parallel in the history of the commercial world. During the years intervening between those two dates, American tonnage engaged in the foreign trade in- creased from 127,329 tons to 848,306 tons, i.e., the capacity of ship- ping owned by American citizens devoted to the foreign trade had increased six and eight-tenths times." Between 1816 and 1846 a series of about fifty acts of Congress were passed, from time to time repealing the tonnage duties by piecemeal, and as to one country at a time. In 1818 they were abolished as to vessels be- longing to subjects of the King of the Netherlands, in 1819 as to Prussia, Hamburg, and Bremen. Among the last abolished were those on Spanish vessels, in 1846, from which were still re- served vessels coming from Cuba and Porto Pico. Mr. Wells, in his "History of American Merchant Marine, " p. 85, says: "At the commencement of the war there were no tonnage taxes." We think this is substantially but not literally true. In 1862 a tonnage tax of 10 cents per ton was laid, which was afterwards increased to 30 cents, the present rate, payable alike by foreign and domestic vessels, and only once a year on any vessel, and alike whether she enters an American port once or a hundred times. But if any person, not a citizen of the United States, be- comes part owner of a vessel of American build, then the tonnage tax is increased to 60 cents per ton, and the vessel ceases to be entitled to registry, or enrollment, as an American vessel. d. The Plea for Free Ships. — An American citizen, who pur- chases an English vessel, has not the right to have it registered as an American vessel for foreign trade, or to have it enrolled or licensed for coasting trade, so as to entitle it to protection by our government as being in theory a part of our American soil. Ex- actly what the status of such a vessel would be in an American port we do not say, as we do not know that the question has ever been put to a practical test. If such a vessel should attempt to take part in our coasting trade by carrying goods from New York to Charleston she would be forfeited, because the statute so de- clares. What the legal consequences would be of her taking part in foreign traffic, without being registered as an American vessel, or as a vessel of any other nation, we do not ssij. The reasons of this state of the law are that, to allow the free importation 3,nd registration of foreign-built ships would, in the present con- DISCRIMINATING DITTIES. 055 dition of prices for ship-buildiug here and abroad, practically put an end to the American business of building ships, for whatever portion of our carrying trade the ship so imported could be used. If she could be used only in our ocean-carrying tra^de, then the free importation of ships for ocean-carrying only would destroy American ship-building for ocean-carrying only. If ships, how- ever, could freely be imported for the coasting trade as well, ^. e., for carrying between American ports, then American ship-build- ing for coasting, lake, and river purposes would all be seriously invaded or left open to invasion and destruction at any time. In return for the national character accorded to American vessels during peace, the government has the right under- a sort of emi- nent domain to use them for naval purposes during war. Our government has always held that it must, for its naval protection and national defense during war, absolutely prohibii foreign ves- sels taking part in its coasting trade. Great Britain did the same for its coasting trade until 1849, when it threw open the right to carry between British ports to the vessels of all nations. e. Effects of withdrawing protection from ocean-going shijJS and entering on a free scramble for the ocean-carrying trade ivithout subsidies. — In our ocean-can*ying trade, however, the United States applied the protective policy in behalf of American vessels, by admitting goods brought in vessels owned by Ameri- cans, at lower rates than if brought in foreign vessels, from 1789, when the first navigation laws where passed, to 1815, w^hen by the reciprocity treaty * with England we agreed to charge no dis- criminating duties or tonnage against English vessels coming into our ports, if England would charge none against American vessels entering hers. The adoption of the policy of discrimin- ating duties, of which Madison was the strenuous advocate, had transferi'ed to American vessels the ocean-carrying which had * Et. Hon. Wm. Huskisson, president of the Board of Trade, epeaking in the House of Commons on May 12, 1826, says essentially that England adopted the so-called re- ciprocity law of 1815, giving American vessels the privilege of carrying goods and products of other countries into British ports, because it desired for English ships the privilege of carrying goods of other than English production into American ports, and because it thought the reciprocity would give American vesspls few or no addi- tional freights, while it would give English vessels sailingto America an increase of freights of great value. Until August 5, 1883, American vessels paid port and dock dues on the gross ton- nage, while English vessels paid only on the net tonnage. The National Lino steamer America, having a gross tonnage of 5,5C8 tons, and a net tonnage of only 2,829 tons, if registered as an American vessel would pay as port dues $1,658.40, but as an English vessel only $847.70. 656 ECONOMIC PHILOSOPHY. previously been done by English.. The American tonnage em- ployed in foreign trade had multiplied five times in nine years, and the English tonnage employed in the American trade had de- clined four-fifths. From 1815 to 1851 the ocean-carrying trade of both England and America continued to be carried on in wooden ships. While England gained immensely, relatively to other nations, by having induced us to adopt the free-trade policy of getting our exports and imports carried where we could get them carried cheapest, still we did not lose, so long as the carrying was done in wooden ships, except in attempting to compete witli ocean steamers. We could always build wooden ships cheaper than they could be built in England. In 1855, however, our relative deficiency in iron and steel man- ufactures began, to send us behind. The following schedule shows the degree of decline in our tonnage engaged in the ocean traffic, which was thrown open to a so-called free competition, but really to a competition with an English subsidized commer- cial marine : §> 1 •a ■S^ •S 1 1 §-S ■g § Tear. ^ !l - e e 53 S.S ss S !~ |§ Is"^ ^*5 t-l Ex U "s »H 1840 762,838 1,172,694 $231,227,465 82.9 17.1 1845 904,476 1,223,218 231,901,170 81.7 18.3 1850 1,439,694 1,797,825 330,037,038 72 5 17.5 1855 2,348,358 2,543,255 536,625,366 75.6 14.4 1860 2,378,396 2,644,867 762,288,550 66.5 33.5 1865 1,518,350 1,448,846 1,545,998 3,318,522 2,638,247 2,219,698 604,412,996 981,896,889 1,219,434,.544 27 7 35 6 25.8 62.3 1870 64.4 1875 74.2 1880 1,314,402 2,637,686 1,613,770,633 17.4 82.6 1881 1,297,035 2,646,011 1,675,024,318 16.0 84.0 1882 1 ,259.490 2.873,638 1,560,071,700 15.5 84,5 From this it appears that our tonnage employed in foreign trade is only one-half as great as it was in 1855-60, while our tonnage employed in the coastwise trade has slig'htly increased, some of it being interfered with by our rapid railway develop- ment. /. English subsidies to vessels an efficient form of protection. — When Great Britain seduced us in 1815 into applying free-trade principles to our ocean-carrying trade, she did not agree not to subsidize her own vessels. While she invited our vessels to free competition, she subsidized her own, thus playing against us witli loaded dice. WITHDRAWING SUBSIDIES. 657 About 1840 * Cunarcl secured a subsidy of £60,000 per year for a montbly line of steamers between Liverpool and Halifax and Boston, which was increased in 1849 to £90,000. Soon after the United States government granted a subsidy to the Great West- ern Steamship Company, or ' ' Collins " Line. Cunard thereupon obtained from England an annual subsidy of £145,000 for a line to New Yoi'k, and in 1849 testified before the Committee on Con- tract Packet Service : " If I had got this contract three months sooner there would have been no American line." Mr. Colburn, Chancellor of the Exchequer, admitted having sustained the Cunard coinpetition at very heavy expense, but said it was not right to place that expense to the account of the post-office. (Hansard, Ixiv. 321.) On June 14, 1858, through the influence of Robert Toombs of Georgia, and as one of the measures preliminary to an expected dissolution of the Union, an act was passed limiting the Post- master-General and forbidding him to make a contract for carry- ing ocean mails to run more than two years or to involve a higher expense than sea and inland postage. At that date the Cunard Line was working under an eleven years' contract, with an annual subsidy of £191,400. This law destroyed the Collins Line, and the Havre and Bremen (American) lines followed within a year or two after. The report of the Committee on Contract Packets, made to Par- liament in 1853, says : ' ' The objects which appear to have led to the formation of these contracts, and to the larger expenditure involved, were to afford us rapid, frequent, and punctual com- munication with distant ports which feed the main arteries of British commerce, and with the most important of our foreign possessions, to foster maritime enterprise, and to encourage the production of a superior class of vessels which would promote the convenience and wealth of the country in time of peace, and assist in defending its shores against hostile aggression." It referred to the Cunard subsidy as having grown to £173,340, or at the rate of $2.72i per mile (traveled), and £61,642 in excess of the postage received. In an examination of witnesses before the Parliamentary Com- mittee on Packet and Telegraph Contracts in 1859, the following questions were asked : By Richard Cobden — * Edward P. North in forthcoming article in North American Bevieiu. 658 ECONOMIC PHILOSOPHY. Q. 558. You are aware that it (the Collms Line) ceased because the American government withdrew tlie subsidy ? By Mr. Wilson— Q. 613. Mr. Cunard's contract is £191,000, is it not ? A. Yes, £191,400. Q. 617. £320,000 is the amount which is now paid by this country and the colony for the trans-atlantic jpostage, including the Galway Line ? Q. 618. And in the face of these increasing subsidies the American government has altogether relinquished the practice of subsidizing their vessels, and their vessels of course have been driven off the passage ? International contempt, for the folly of any class of public dotards and imbeciles, v/as never more heartily expressed than in questions 558 and 618, in which the English free traders, Cobden and Wilson, record their scorn for the stupidity and uupatriot- ism of their American dupes and allies. In a letter in the London Times of September 28, 1886, from J. Henneker Heaton, M. P. for Canterbury, to the Postmaster- General Raikes, in reply to the assertion of the Secretary of the Treasury, that " we " (Great Britain) "are losing £1,000 a day, £365,000 a year, by our ocean mail service," he says: "As a matter of fact these subsidies are not paid to make up a deficiency in the postal accounts, but in order to keep up the character of our merchant fleet." Until three years ago, England was the only European country sending regular, and fast, steamships to Australia. Since then the French government subsidized the powerful Messageries Maritimes to the amount of £160,000 a year, and now the four- weekly steamers are to be changed to fortnightly, with £250,000 a year. The Gex'nian government also established a splendid line of steamers to Australia with a subsidy of £120,000 a year. In a report issued by the British post-office in 1863 it is said : "To assume that these packets were only established for post- office purposes is to charge the government with the most absurd extravagance. The, West India jDackets, for instance, wei'e established at a cost of £240,000 per annum, though the utmost return expected from letters was £40,000, leaving the £200,000 a clear deficit." After 1858 all the " subsidy " American vessels were getting was two cents postage per letter for carrying mails which they ENGLISH SUBSIDIES WIN. 659 would freely liave paid fifteen cents to avoid carrying. The subsidies to English vessels were as follows : Bounty or subsidy VALUE OF TOTAL [MPORTS AND Years. paid British ships EXPORTS. by British Govern- ment. American Ships. Foreign Ships. 1848 $3,250,000 $238,300,163 $70,775,896 1849 3,180,000 220,915,275 72,697,984 1850 5,313,985 239,272,084 60,764.854 1851 5,330,000 316,107,239 118,505,712 1853 5,510,635 294,735,404 123,219,817 1853 5,865,400 346,717,127 152,237,677 1854 5,950,559 406,698,539 170,591,875 1855 5,741,633 405,485,462 131,139,904 1856 5,713,560 482,268,274 159,336,586 1857 5,133,485 510,331,027 213,517,796 1858 4,679,415 447,191,304 160,066,267 1859 4,740,190 465,741,381 229,816,211 1860 4,349,760 507,247,757 255,040,693 1861 4,703,285 381,516,788 203,478,278 1862 4,105,353 217,695,418 218,015,296 1863 4,188,275 241,875,472 343,056,031 1864 4,503,050 184,061,486 485,793,548 1865 3,981,995 167,402,492 437,010,124 1866 4,227,018 325,711,961 685,226,691 1867 4,079,996 296,998,387 580,022,004 1868 4,047,586 297,981,573 550,546,074 1869 5,481,690 289,956,772 586,492,012 1870 6,107,761 352,969,607 638,927,282 1871 6,070,741 353,664,172 755,822,576 1872 5,693,500 345,331,101 839,346,362 1873 5,665,296 346,306,597 966,722,651 1874 5,697,346 350,451,994 939,206,106 1875 4,860,000 314,257,792 884,788,517 1876 4,420,271 311,076,171 813,345,987 1877 3,976,580 316,660,281 859,920,536 1878 3,914,990 313,050,906 876,991,129 1879 3,768,230 272,015,692 911,269,332 1880 3,873,130 280,005,097 1,309,466,796 1881 3,601,350 238,080,603 1,378,556,017 1882 3,538,835 242,850,815 1,284,488,861 The difficulty of finding commercial vessels, carrying the American flag over ocean traffic, is not quite so great as our free- trade enemies contend, but such as it is, it is all due to free-trade principles, applied in four ways, viz. : 1. Opening our ocean- carrying trade to free competition ; by treaty of 1815, no pro- tection whatever has been given to our ocean-carrying trade for seventy years. If it has failed, it has failed on the free- trade basis, and its failure must be chai'ged up to free-trade 660 ECONOMIC PHILOSOPHY. px'inciples only, viz., getting our carrying done by the cheapest carrier. 2. Withdrawing protection from iron and steel manu- facture, by tarifPs of 1833 and 1846. 3. The war of the South for secession, professedly to establish free trade. 4. The war on American shipping by English cruisers in 1861-5 in the interest of British free trade. g. The Transition from Wood and Sails, to Steam and Steel. — Doubtless, had we, from 1816, or even from 1833, adequately protected our iron and steel manufacture, the throwing open of our ocean-carrying trade to a free scramble between us and other nations might have continued to be void of harm to us. For, in that case, we might have been pi'epared, by 1855, to pass from small wooden ships to large iron and steel, and from sails to steam, in competition with England. Necessarily England could only enter upon the iron and steel manufactui'e, to any consider- able extent, after the epoch of the locomotive, and its applica- tion to land and water locomotion, which was in 1828-30. The two free-trade policies combined, of throttling our iron and steel manufacture at home, and opening our ocean carrying trade to free competition with England, brought us to a condition in 1850-55 where England was prepared for the great transition from small clippers to great iron steamers, and we were not. So long as the transition related merely to the change from sails to steam we held our own. In 1851 Great Britain herself had only 65,921 tons of steam shipping engaged in the foreign-carrying trade, and the United States in the same year had 62,390 tons, being nearly equal. It grew until 1855, when we had 115,000 tons. Thence it stood still, and in 1862 it was less by 2,000 tons than in 1865. Our sales of vessels to foreign ship buyers began to decline in 1855, and by 1860 were insignificant. The transfer of American ships to foreign owners during the war, to prevent capture, and the destruction of our ships by the war, together with the enormous impetus given to our internal indixstries, especially railroads, at th& return of peace, and the facts that capital invested in American shijis paid a state personal property tax, while that invested in foreign ships paid no tax whatever on the principal, and other facts conspired to deter American capital from investment in ships. In 1880 the fact developed in England and on the continent that in Europe there had been an over-production of ships. They were anxious to sell off their stock to Americans before the decline of values set in. An immense free-ship lobby, consisting about equally of English- THE " FREE SHIP" ERROR. 661 men enlisted in the sliipping- interest, and of Americans who had never owned ships and never intended to, set up a cry for ' ' f I'ee ships," so that Americans coukl be induced to take the English surplus off their hands. There could be no interest whatever on the part of American capital to raise the cry. For if any American capitalist desires to become a ship-owner he can become a part owner in any English vessel, to any extent short of becoming an owner of the whole vessel. His capital will earn better dividends in an English than in an American vessel, for the three-fold reason that it will not be taxed for state and local pur- poses; that it will receive its share of about $6,000,000 a year of subsidies for cari'ying mails, and will not have to sustain the con- sular service, which in England is sustained by salaries, but among us by fees, which are a tax on the ship-owner. Now we come to the objections which exist to the free-ship fraud. h. Why Ocean-going Vessels must be Built by Ourselves. — Every registered American vessel has three aspects. If it could be built abroad it would be an imported product of foreign labor, and as such would compete in the American market with American- built vessels. Whether built abroad or here, it becomes in law part of our American soil, and entitled to be defended as such by the whole force of the republic. In return for this obligation to pro- tect it, the nation is entitled to take it for naval purposes, at an appraised value, if it wants it. By international law, however, and the laws of European states, the ship is protected from this right if it re-registers under a foi-eign flag before it is taken. Two considerations, therefore, are paramount in deciding whether we can afford to take these foreign craft and adopt or natui'alize them into our merchant marine. These are: First, will they be ours when we want them for war purposes ? For we do not want to take under our national protection a fleet of thousands of mer- chantmen which, at the first note of war with a foreign power, will slip back again out from under tjie American flag, and become British vessels. This point, in its turn, will depend on whether the capital owning and men controlling them would really be American, or whether it would continue British. Now, as American production had no motive of profits to invest in a naturalized English ship, which would not have been fully met by its existing privilege of buying shares in foreign ships, it may be assumed that the capital embarked in the Americanized vessels would continue to be in their Englisli builders and mortgagees. So long as we built our railroads of EngUsh rails, they remained 1562 ECONOMIC PHILOSOPHY. English investrrieiits to the end. Presumptively English-built shi,ps would remain the property of their English builders, and nine of the transfers out of ten would be merely colorable, or, if made in good faith, would retain the core of the watermelon in the form of bottomry liens in behalf of English mortgagees. This being so, at the first speck of war they would all return to the English flag. They would not perfoi'm the function for which alone we give them national protection. A second consideration would be, whether we would admit them to, or exclude them, from the coasting trade. The framers of the free-ship bills — Codmans, Wells, and the Free-trade League — all asserted that they did not seek admission to the coasting trade. But, obviously, it would be absurd to have a class of American vessels sailing from New York to Havana, who would be liable to forfeiture if they touched and took cargo at Savannah, in Georgia. It was obvious that the coasting trade also must be open to them, if they were to be American vessels. But to open our coasting trade, to the competition of all the world, would destroy the last vestige of our ship-building, close every ship-yard, and leave us with a fleet of foreign-built and foreign-owned vessels, who, at the first sound of war, would return to their foreign flag. i. Liberality of English Subsidies Contrasted with American Parsimony. — The British government dispenses its subsidies at the discretion of the Board of Admiralty. Though the carrying the mails is made a condition of the subsidy to each line, yet the amount of the subsidy is graduated by the judgment of the Ad- mii*alty as to the probable deficit in the earnings of the company to sustain the route, and not by the value of the mail service to be rendered. , The payments of subsidy are also annual sums in gross to the line, and not a postage per letter. From 1850 she paid $705,666 per year to the Cunard Company ; to four compa- nies she paid a total of $4,523,666 per annum, graduated accord- ing to their needs. Fix)m 1848 to 1854 she paid, to bring her steam fleet up to 304,559 tons, a total of $23,390,020— a subsidy equal to $93 per ton, which is more than such a fleet would sell for to-day. She also induced Brazil, and other countries, to join her in subsidy schemes in favor of her own vessels, to the extent of $1,500,000 per annum, making lier entire subsidy fund between 1849 and 1854 $8,023,000 per year. From 1854 to 1860 England spent $36,- 308,632 in subsidies on her steam merchant marine, and increased her tonnage from 304,559 tons in 1854 to 452,352 tons in 1860. From 1861 to 1865 England was making war on our commerce, so SA VING MONEY B T PIRA CT. 663 much more effectively through the rebel pupate ships sent out from lier dock -yards, than she had been able to do by subsidies, and American competition in tlie ocean-carrying trade was so swiftly disappearing, that she rapidly reduced her subsidies, until in 1865 she paid less than at any time since 1849. Indeed, her economy had dated from the year 1854— the very year in which, under the pressure of her competition, our merchant marine began to decline. In 1854 England began to diminish her subsidies in consequence of the refusal of the American Congress to aid Amer- ican shipping, and in 1870, in consequence of the United States having for the first time granted a subsidy to the Pacific Mail, England for the first time jumped her subsidies up to a higher figure than they had been since 1854. In the intermediate period England had saved in reduced subsidies, compared with those she was payin-g while the United States was a successful competi- tor, exactly $19,472,094, or $5,000,000 more than was necessary to pay the Alabama claims, which was the whole cost of her war on our commerce. This will appear from the following schedule of the amounts saved by Great Britain, in subsidies, in each year after the decline of our commerce began, compared with her ex- pense for subsidies in 1854 : Saved relative-' Subsidies ly lo (he year Tear. paid. 1854. 1854 $5,950,559 1855 5,741,633 $208,926 1856 5,713,560 236.999 1857 5,133,485 817,064 1858 4,679,415 1,271,144 1859 4,740,190 1,110,369 1860 4,349,760 1,600,799 1861 4,703.285 1,347,274 1862 4,10r,353 1,845,206 1863 4,188,275 1,762,274 From these figures it appears, that if England had set apart the sum she could save annually in subsidies by the effective demoli- tion of our ocean-carrying trade, as an insurance fund to indem- nify her against all cost of making war on our commerce, even to the extent of fitting out rebel privateers to destroy our vessels, she would have made a net profit, merely on her savings of $5, 000,- 000, to say nothing of the fact that while these savings were going on she was increasing her shipping to 5,150,000 tons, valued at $1,000,000,000, all of which represented wages paid for British labor, and was giving employment to 240,000 men in the con- struction and repairs of her ships, and to 220, 000 more in sailing them, the latter of whom would increase her national earnings by $350,000,000 a year. Saved relative- Subsidies ly to the year Year paid. 1854. 1864 $4,503,050 $1,347,509 1865 3,981, £95 1,968,564 1866 4,227,018 1,723,541 1867 4,079,996 1,870,253 1868 4.047,586 1,902,973 1869 5,481,090 468,869 1870 6,107,761 Total ... $19,472,094 664 ECONOMIC PHILOSOPHY. Between 1854 and 1882 Great Britain has paid in subsidies to her shipping $164,000,000, while the United States in 1881 actu- ally collected postage, on her mail matter going to foreign coun- tries, to the amount of $1,560,679.90, and paid for carrying all its mails to foreign countries only $239,141.21, thus taxing her mail- carrying ocean going ships, in the sum of $1,331,548.69 for bene- fit of the land mail service. 224. Evolution of Manufactures in Canada. — The Liver- pool Cotton Circular about four years ago said : " This country has suffered very severely of late years, from the increasing stringency of foreign tariffs . There has been a growing tendency evinced in most countries to protect their own industries, and in every such case we are the [chief sufferers, for we live, as already said, by exchanging our manufactures for the necessaries of life. The United States was at one time a large customer for iron-ware and textile fabrics; but the hostile tariff she has enforced, since the civil war, has nearly driven us out of her markets, and has built up a vast system of manufactures, which completely supplies her own wants, and leaves something to spare for competition with us in foreign mar- kets. The freetraders of this country console themselves by thinking that she is the chief sufferer; but whether this be so or not (which is very doubtful) the fact remains that hi. r markets are almost lost to us, and we, on the other hand, are constantly more dependent upon her for food and raw material. For this we have no means of paying except by money or bonds, or indirectly by our credits with China, Brazil and other coun tries, from which America imports tea, sugar, etc. Our colonies all follow in the wake of the United States, and do their best to stimulate their own manufactures by closing their markets against ours.''' The significent statement that the British colonies all follow in the wake of the United States, notwithstanding the fact that the United States makes no effort to induce them to do so, while the British administration, and Parliament use every blandishment to persuade them not to do so, goes far to prove, as Bonamy Price says, that protection is an ineradicable instinct, and that, as Mr, Lester F. Ward "*" holds, government by coercion (and perhaps by tradition also) is rapidly giving place, throughout the world, to "government by attraction." The American Congress may well say to Gi^eat Britain, in the matter of her colonies, both American and Australasian, "We care not who appoints their Governors- General, so long as we inspire their tariffs." In 1879, largely under the leadership of Sir John A. Macdonald, Canada determined to protect certain of her manufactures, includ- ing cottons and woolens. We have referred to Prof. Sidgwick's ingenious argument that, on purely economic grounds, the North- western States (Michigan, Indiana, Illinois, Iowa, Wisconsin, and Minnesota) would gain by the more rapid advance in manufac- •' Dynamic Sociology," by Letter F. Wurd, S vols. OAjS'ABA gains. 665 tures they would make if permitted by the Constitution to protect certain of their manufactures against the overwlielming competi- tion of the long-established manufactures in New Eiigland and Pennsylvania. Under the Constitution of the United States, this is a problem in purely speculative economics, as the "if" in the way of its practical realization is probably insurmountable, and certainly so without changes in the American Constitution which would look like disintegration and are never likely to be asked for. Inasmuch, however, as American free traders by profession ask us why, if a tariff is good to protect New England from old En- land, would not a tariff be equally good to protect the Northwest from New England, we have, therefore, placed side by side the results of the adoption of the protective policy in Canada, with the economic results of that inability to adopt a protective policy as against New England and Pennsylvania, which pertains to the Northwest as a section, by force of the inhibition contained in the Federal Constitution. We do this because we do not desire to blink or evade any issue legitimately collateral to the protection policy. There are grounds for holding with Prof. Sidgwick that the Northwest would for a period make an economic gain, through the more rapid advance in manufactures which would ensue, if the Northwest were free to protect their manufactures of cottons, woolens, paper, iron, and steel against their Eastern competition by some means more effectual than mere cost of transportation. The results of four years of the protective policy in Canada, as exhibited in a recent report of Mr. William T. Patterson, secre- tary of the Dominion Board of Trade, as well as of the Board of Trade and Corn Exchange of Montreal, are to increase nearly threefold every department of the cotton manufacture, as appears from the following summary of the progress made between 1879 and 1883 : Seven mills Twenty mills in 1879. in 1883. Total capital employed $3,100,000 $8,500,000 Aggregate raw material used per annum, lbs 13,800,000 38,470,000 Quantity of cloth produced, yards 38,000,000 115,000,000 Approximate value of annual production $3,745,000 $10,400,000 Spindles, number 134,000 472,000 Looms, number 2,940 9,950 Employees, number 2,265 10,200 Amount of wages paid per annum $556,000 $1,110,000 Value of fuel consumed $45,000 $215,000 Value of chemicals $20,000 $125,000 In the manufacture of woolens, the census makes the following Capital. Employees. Production. % 580,4ir 901 SI, 498,343 630.821 1,556 1,385,730 5,272,376 6,877 8,113,055 666 ECONOMIC PHILOSOPHY. exhibit, it being premised, however, that many of the woolen factories are of the very smallest kind, and that the number of mills will be likely to diminish, rather than increase, with the future expansion in the volume of business : Number. Carding and fulling mills 439 Hosiery manufactories 83 Woolen cloth making 1,281 The lines of production in cotton goods are, besides the 115,- 000,000 yards of cotton cloths, brown sheetings and shirtings, bleached and fancy shirtings, apron checks, nuns' stripes, denims, ticks, ducks, cottonades, crochet and knitting cottons, beam warps for woolen mills, 8-4, 9-4, and 10-4 brown sheetings, drills, bags, wadding and batting, cheviots, canton flannels, shoe ducks and drills, pocketings, wigans, etc. In woolens they are tweeds, cassimeres, etoffes, flannels, blankets, serges, beaver, presidents, diagonal and nap coatings, shoe cloth. Canada, therefore, has in four years built up a woolen manu- facturing industry about equal to that of New Hampshire or New York in the value of its products, and exceeding the com- bined woolen industries of Ohio, Illinois, Indiana, loAva, Wis- consin, and Michigan. The aggregate product of the woolen mills of the latter States is as follows : Ohio $1,084,323 Indiana 2,728,347 Illinois! 1,896,460 Iowa 435,747 Michigan 481,517 Wisconsin 1,480,069 Total $8,107,463 Yet the population of these six States aggregates 12,831,282, while the entire population of the Dominion of Canada is only 4,000,000 persons, or less than a third of these six States. More- over, every one of these six States is better fitted for both growing sheep and manufacturing woolen goods than is any part of Canada, and has a larger market of purchasers, Canada has bravely imposed upon herself the protective duties necessary to bring about this degree of industrial development. Yet the rise in Canadian prices of woolen and cotton goods is so slight that the strolling conventions of New York free traders, sent out annually to hold sessions in the Western States, continue to speak of Canada as the country of cheapness relatively to the 1878. 1884. No. of hands, 43,794 77,346 Yearly wages, $13,833,733 $24,396,165 Capital invested, . $37,819,931 $67,293,373 Yearly output, $49,966,282 $102,870,166 Industries visited, 1,501 2,135 IK SIX YEARS. 667 Uuited States. In fact, however, tlie United States have long since reached low prices in both cottons and woolens through domestic competition, and the Canadians are content to expand their prices in some degree, if they see it to be necessary, to build up a diversified system of industry. Ill 1884 the facts above stated for 1883 were extended and amplified in the report of the commissioners on the effects of the tariff for five years. The following is, in the main, their sum- mary of its effect on the development of manufactures in the provinces of Ontario, Quebec, New Brunswick, Prince Edward Island, and Nova Scotia : Increase. 34,553 $10,562,432 $29,473,443 $52,903,884 634 The increases have therefore been as follows : Per cent. Number of hands increased, 80.74 Yearly wages increased, 76.35 Capital invested increased, . 77.96 Yearly output increased, 105.90 The industries embraced are the foundry business, the furni- ture, machinery, implements, iron, tobacco and cigars, knitting, leather, brushes and brooms, woolen, wooden, confectionery, boots and shoes, metals and tinware, x^aper, musical instruments, clothing-, general industries, and cotton factories. The Canadian mode of gathering statistics shows both the increase in the capital, and the number of hands employed in the establishments existing in 1878, and the number of new factories. The increase in number of establishments and hands employed is from 50 to 100 per cent, in six years in nearly all the industries. In cotton, factories it is greater, thus : Facioi'ies. Hands. Wages. Product. Capital. Factories, 1878, ... 4 1,361 $276,000 $1,151,000 $1,800,000 Same factories, 1884, . . 4 2,126 445,000 1,872,000 3,350,000 New factories, 1884, . . 13 2.375 502,500 2.530,000 3,448,000 Increase of 1884 over 1878, . 13 3,140 671,500 3,251,000 4,998.000 The number furnishing statistics is seventeen, four of which were in existence prior to 1879, and thirteen have been estab- lished since. The increase in the number of hands in this class has reached 210 per cent. The wages averaged $203.79 in 1878, ,and $210.28 in 1884. 668 ECONOMIC PHILOSOPHY. The total increase distinguishing the old factories from the new, in all industries, sums up thus : Factories. Hands. Wages. Product. Capital. Factories, 1878, . . 467 27,869 $8,174,900 $34,131,100 $26,160,500 Same factories, 1884, . 467 42,080 12,870,900 53,554.500 36,647,400 New factories, 1884. . 258 13,453 4,040,900 23,712,000 11,777,700 Increase of 1884 over 1878, 2.8 27,664 8.737,000 43,136,000 22,261,600 The Canadians claim to manufacture saws and some edge- tools for export to tlie United States. They are doubtless not wholly insensible to the fact that the reason why they are per- mitted to enact protective tariffs against England, while Ireland and India ai'e not, is that, while theoretically they are under the paw of the British lion, potentially and influentially they are under the wing of the American eagle. Their particular freedom to enact protective tariffs, they owe much more to the potency of their geographical environment, than to the recommendations of their British cousins. 225. The Sheep and "Wool. — The sheep is pictured as a source of wealth, closely connected with man's welfare, on the monuments of Egypt, is mentioned in the Vedas of India, in the Chinese Chou-King, the Persian Zend Avesta, and appears as an article of religious sacrifice in the fourth chapter of Genesis. Everywhere, therefore, he accompanies man on his entry into the historic period, and certain writers,* attempting to probe the mists of antiquity, perhaps, by the help of imagination, discern the fii'st recorded social contest, in the preference of one class for the pas- toral life, and of another class for tilling the soil. The triumph of the farmer over the shepherd is, they think, typified in the murder of Abel by Cain. If this fancy be true, the history most familiar to the western world opens with an economic con- test between the two classes of workers. It is believed that the merino sheep of Spain is descended from the Tarentine sheep of the Romans, which were known to the Romans as "Greek sheep," being remarkable for the silky fine- ness of their fleece. The Greeks and Romans owed much of then* material wealth to their wool industry. One patrician be- queathed by will 200,000 sheep to Augustus. The farming of the Roman Empire was largely of the kind now known as " bonanza farming," or "gx-eat ranch" grazing. f Wool depends for its value much upon the progress made in the other arts, and espe- * Goldziher '-' Mythology of the Hebrews. " t " The Fleece unci the Loom," an address by John L. Hayes. WOOL AND WOOLENS. 669 cially in scouring, and dyeing, in spinning and weaving, in navigation, loom construction, and ultimately in the iron and steel manufacture. The Roman purple was a woolen cloth, worth four dollai'S per pound before dyeing, and one hundred and sixty dollars per pound when colored with the Tyrian dye.* This dye has for many centuries been numbered among the lost arts, but in 1856 a new dye of perhaps nearly equal value was made from coal tar. The woolen manufacture preceded banking, as the basis of the modern revival of industry and the consequent revival of art, in the twelfth and the thirteenth centuries, in Florence, Venice, Pisa, and Genoa. Then the woolen manufacture passed to the Nether- lands, and from thence under Charles V. to Spain, France, and England. In the time of Nero, accordmg to Pliny, Babylonian couches woven of wool rose to a value of four million sesterces, or $640,- 000. The name of Spinner on our treasury notes, and of our great orator, Webster, indicate a descent from an ancestry of spinners and weavers. The American Wool Growers' Association is pre- sided over hj a president whose name, De Lano, indicates that his French ancestors were also wool-raisers. Edward III., in the latter part of the fourteenth century, began the systematic encouragement of the wool industry by the En- glish government. Prior to that time the English produced wool chiefly to sell to the Netherlands, making up only the com- monest and coarsest of their own cloths.f One parliament was summoned expressly to encourage the wool product and manu- facture of woolens. It prohibited the importation of cloth and the export of rams, and forbade the wearing of foreign cloth. Soon the prohibitions wei-e changed to duties. So effective was the policy that, while at the beginning of his reign more than half the cloth worn in England was imported, in his twenty-eighth year the exports of cloth were three-fold the imports. During the next five centuries three hundred and eleven stat- utes were enacted for the protection of the woolen manufacture. * "The Fleece and the Loom," by John L. Hayes. t The author of the " Golden Fleece " says of Edward III. : " He saw that the sub- jects of the Duke of Burgundy, receiving the English wool at sixpence a pound, re- turned it through the manufacture of that industrious people in cloths at ten shillings, to the great enriching of that state, both in revenue to their sovereign and employment to their subjects . He at once proposed how to enrich his people, and to people his new conquered dominions ; and both these bo designed to effect by means of his English cnminnditv.. wool." 670 ECONOMIC PHILOSOPHY. The export of wool, after being several times suspended, was definitely prohibited in 1660, and so continued until 1825.* The exportation of fuller's earth, and of sheep, were forbidden under severe penalties. Sheep-shearing' within five miles of the sea was forbidden, except in presence of a revenue officer to prevent the export of the wool. To prevent a monopoly of the profits of wool production, the number of sheep to be kept by one person was limited to 2,000. All burial shrouds were I'equired to be of woolen, as well as all black cloth worn at funerals. But the ex- port of woolen clotlis was at length permitted free.f Ireland, and the English plantations in America, were forbid- den to export woolen cloths. | At first the wearing of Indian calicoes was forbidden, and when the cotton manufacture in England was getting well under way, British calicoes were still restricted to those of a blue color, lest they might interfere with the woolen manufacture. The East India Company would ex- port none but British cloth, from its foundation to 1828. Portu- gal, which, until 1703, had supplied both her own people and Brazil with woolen goods, was cunningly induced by certain favors given to Portuguese wines by England to admit English woolen goods free. This ended the Portugese wool and woolen industry, and reduced Brazil to that industrial subserviency to England which is impei-fectly offset by her affinities in race, religion, and language to Portugal. For four years only, from 1819 to 1823, were the English wool- growers able to secure a duty on foreign wool of sixpence per pound. Wool was styled "the flower and strength, the revenue and blood," of England. The lord chancellor of England presided over the House of Lords on a wool-sack, which gave its name to his office, as an emblem of the close association existing between the kingdom and its leading industry. § Lord Bacon, addressing the ministers of his sovereign, said : " Let us advance the native commodities of our own kingdom, and employ our own countrymen before strangei's. Let us turn * " The Fleece and the Loom," by John L. Hayes, p. 13. 1 1st William and Mary. % 10 and 11 William III. §Theantiquitieof wool within thiskingdom hath been, beyond thememorieof man, so highly respected, for those many benefits therein, that a customable use has always been observed to make it the seat of our wise learned judges, in the si^ht of our noble peers (in the Parliament House), to imprint the memorie of this worthy commoditie within the , jDinds of those firm supporters and chief rulers of the land."— John May, 1G13. WOOL REQUIRES TIME. 671 the wools of the land into cloths and stuffs of our own growth. It would set many thousands to work ; and thereby one of the materials would, by industry, be multiplied to five, ten, and, many times, to twenty-five times more in value, being wrought." A statute of William III. declares the woolen goods, naming their kinds, to be " the greatest and most profitable commodities of the kingdom." In short, England, in like circumstances and with a like popu- lation, was saying then exactly what Canada and Australia are saying to-day, that the ability to riiake its own woolen clothing lies at the basis of a nation's industrial independence. 226. Wool a Finished Pi'oduct. — It is the custom of manu- facturers of woolen cloths to speak of wool as a raw material, be- cause it is the raw material of their particular industry, and each industry, provided it confines the meaning of the term to its own uses, may properly speak of that which it buys for re-manufac- ture into some other product as its " raw material," and of that which it produces for sale as its " finished product. " But this iise of terms becomes delusive and misleading when it is applied to the industries of an entire nation, for therein whatever is the raw material of one industry must have been the fi.nished product of some other. In fact it is a slower and longer process, to evolve wool of a particular grade, than to convert the wool when produced into a garment. At a fair m Georgia, wool which was worn by a sheep at sunrise as his natural coat, was worn by the governor of the State at a ball on the same evening — having undei'gone in so brief a time all the intermediate processes of washing, shearing, scouring, dyeing, drying, spinning, weaving, measuring, cutting, lining, basting, sewing, fitting, and ironing. But the process of developing the sheep by climate, food, care, and breeding, into a particular variety, is one of years or even centuries. The species is more susceptible of modification than any other animal except the dog, and as wool is capable of being transported to gi'eat distances without injury to its value, all the world may be said to compete in its production. Hence, the prime requisite of developing it is steadiness of policy over long periods of time. Subject to this condition, it has been said: " the breeder may chalk out on a wall a form perfect in itself, and then give it ex- istence. "* Hence, as Dr. Hayes remarks, ' ' that distinctness and * Lord Somerville, quoted in Bischoff on " Wool, Woolens, and Sheep," London, 1843, p. 380. 6V2 ECONOMIC PHILOSOPHY. variety of fabric which characterize the wool manufacture ; and thus we have the coarse Cordova and Donskoi wools for our carpets ; the noble electoral wools of Saxony and Silesia for our broadcloths; the strong middle wools of the Southdown and our native sheep for blankets ; the soft, long, and finer merino wools of France, Vermont, and Michigan for thibets, delaines, and shawls; the longer and coai'ser combing wools of the Cots- wold and Leicester races for worsteds in their thousand applica- tions; the very long and bright-haired lustre wools of Lincoha- shire for alpaca fabrics; and, lastly, the precious silky Mauchamp wool, the recent triumph of French agronomic skill, rivalling even the cashmere for shawls and the angora for Utrecht velvets." Wool is lighter in its actual specific gravity than cotton, linen, or silk,* is the best non-conductor of heat, and is the most inde- structible and durable of all the fibres. Its value as wool outlasts every garment in which it enters, and in the form of shoddy forms a valuable ingredient in the manufacture of new and often of very fine cloth. Very much of the economy of the English wool manufacture, for 40 years past, has consisted in its more ex- tensive utilization of shoddy .f The fibre of wool is not like that of silk, hemp, flax, and cot- ton, a straight and structureless homogeneity, but is "crisped or spirally curled, and is made up of cells of difi'erent kinds, the interior forming the j)ith, and the exterior consisting of serrated rings imbricated over each other, having under the microscope the appearance of a series of thimbles with uneven edges inserted into each other, these serratures, as well as the spiral curls, being more or less distinct, according to the fineness of the fibre." | This is the reason why wool alone of all the fibres can be made into felt, as in hats and broadcloths. Wool also receives and holds dyes persistently, and hence gives rise to garments which will wash without change of color. 227. Rate of Consiimptiou of Wool. — About a pound and a quarter of wool are produced for each inhabitant of the globe ; but in the richer countries, as France, England, and the United States, the consumption of wool reaches from four to seven pounds for each person per annum. It may be said that a nation which feeds as many sheep as it contains of human beings, Avill not need ♦ Hayes' ' ' Fleece and Loom,"' p. 5. t Chambers' Encyclop. Art. " Wool." X Hayes' " Fleece and Loom,'" p. 5. WOOL C0N8TIMPTI0N. 073 to import wool for its own consumption. The United States, with 58,000,000 people and 45,000,000 sheep, imports about as much wool as from 3,000,000 to 13,000,000 more sheep would produce. Austro-Hungary, with 38,000,000 people and 14,000,000 sheep, needs more wool. France, with 23,000,000 sheep, is more depen- dent on imports for wool, and on exports for its markets of cloths. Yet the home consumers constitute, in the main, its market. Englaud in 1855, out of a total supply by production and im- portation of 250,000,000 pounds, retained for use in her manufac- tures 81^ per cent., and exported as wool 18^ percent., leav- ing her somewhat more than six pounds per capita to supply both her manufacture for home use, and her export of cloths and clothing. The subsequent ratio of supply to consumption has been as follows, in millions of pounds : * 1869. 1880. 1883. Total Supply 4661^ 7291^ 732 Exported 129 2543^ 296J^ Retained in Great Britain 33714 475 4353^ Per cent, retained 7234 65 593^ Per cent, exported 27% 35 403^ Meanwhile the growth of the export of woolen goods in quan- tity represents a considerable decline in value, and hence a cor- responding decline in the power to support labor. Between 1880 and 1885 the value of the woolen exports of Great Britain de- clined from £129,000,000 to £85,000,000, and the number of per- sons employed in the manufacture has within 20 years declined by 5,000 persons. The consumption of wool in America now in- cludes a domestic production of 370,000,000 pounds, and an im- portation of about 90,000,000 pounds, all of which is consumed in the manufacture of woolen goods for the wear of the Ameri- can people without export. It seems that the consumption of wool, in actual wear in America, rises to about 6| pounds per capita, or very exactly the same as the like consumption in the United Kingdom. 228. The Protectiou of Wool and Woolens iu Europe. — In France the evolution of the woolen industry was closely re- sultant from and dependent on the action of the government. Colbert, the minister of Louis XIV., made attractive offers to foreign artisans, distributed 50,000 livres in encouraging the wool industry, and attracted Van Robais from Holland, by a patent is- sued to him for manufacturing fine cloths, after the fashion of * J. L. Bowes & Bros.' Annual Wool Tables. 18o3. 674 ECONOMIC PIIILOSOPHT. Spain and Holland. Thiers attributes the credit of introducing the manufacture of cloths into France to Colbert. He imposed heavy duties on the importation of foreign cloths, modified the wool of the French flocks by imported breeds, and is regarded by Carey as the father and founder of the Protectionist School of Statesmen. Under Louis XYI. merino sheep were extensively introduced into France. Once, in 1786, France was weak enough to enter into a treaty with England, whereby in exchange for certain expected favors in the admission of fine and high-priced French cloths in England, English low-priced goods were ad- mitted at low duties into France. As the finer and moi'e improved branches of any industry must always be the outgrowth of the previous success of the coarser and cheaper grades, a fatal blow was struck by this treaty at the entire woolen industry of France, x from which the country had not recovered at the outbreak of the French Revolution of 1793. Napoleon was as vigorous a protectionist toward wool as to- ward beet sugar. ' ' Spain, " he said, ' ' has twenty-five millions of meinnoes. I want France to have a hundred millions ." * He established sixty additional sheep-folds for blending French with Spanish breeds. One of his chief military designs was to shut English manufactures out of Europe by a reciprocal blockade. Visiting the calico-printing works of Oberhampf , he said, ' ' We both have a war with England, but I believe the noblest is yours." Indeed, protection has been thought a chief cause of Napoleon's success and popularity in France, as well as a leading element in his usefulness. The Jacquard loom was the product of this inventive period. Dyeing was brought to high perfection. Great manufacturing towns arose out of the profits of newly born industries. By 1851 a million and a quarter persons were employed in the woolen manufacture in France, Germany, Austria, Russia, Spain, Switz- erland, and Sweden, all strenuously seeking to nurture their flocks and spindles, by protective duties, against undue foreign competition. Had the continental nations, at the close of the wars of France with the allied powers in 1815, given England free trade in woolen goods, she could have spun and woven, temporarily at a lower price than any of them, every pound of cloth needed on the continent. This temporary ability would have concentrated * Berneville, p. 133. Hayes' " Fleece and Loom," 27. MANY FORMS OF PROTECTION. 675 the woolen manufacture, for all these countries, in England and would have deprived them of their own. Ireland, Portugal, Tur- key, India, and to some extent China and Japan, were con- quered, dragooned or purchased to adopt this policy. France, Spain, Austria, Russia, Switzerland, and Sweden owe their woolen nianufactures to their adherence to the protective policy. Nor is there any doubt whatever, in the mind of any statesman, that the ultimate effects of this dispersion of industries among nations secures a more abundant supply to the people of each, at a far lower labor cost, than if the policy of immediate cheapness had been pursued. Cheapness in obtaining for a while a supply of a particular kind of goods is of very little value, when com- pared with cheapness in the processes whereby such goods ar^ produced. The former is a transient good. The latter is a per- manent good. The processes whereby products are caused to be, can only be made cheap by multiplying the cii'cumstances under which they are produced, and the variety and number of the agencies employed to produce them. This is done, by the nations generally, when each protects its own industries. Whether such protection is effected by laying out roads, so as to aid its producers in marketing their crops as cheaply as their competitors in other lands; or in educating its people so as to de- velop their caj)acity for skilled industry, in a degree equal or superior to that of other coun tries ; or in granting to inventors of new machines, authors of new books, and discoverers of new substances, processes, or compounds, the exclusive profits of their inventions for a term of years ; or whether it seeks, by im- port duties, to protect its industries, by securing to those who invest capital and labor in conducting them, at a period when the profits are rendered hazardous by foreign competition, a better hold on the home market than is given to the importer ; or whether it maintains armies and colonies in various parts of the earth, and subsidizes the lines of steamers which communicate with them, so as to secure to the coercing nation the lion's share of the trade of these colonies, or of the nations of overawed and browbeaten bar- barians among whom such armies and stations are established — all these are mere modifications of the form of protection, and all have but one end in view, viz. , to adapt the mode of protection to the interests of the people of the dominant class, occupation, or country, never to those of the subservient country, class, or occu- pation. It is in this broad sense that the policy of protection, to the 676 EGONOMIG PHIL080PHT. home industries of the class, occupation, and country which leg- islates, may be said to be the intended policy of all nations, and especially of Great Britain. The withdrawal of j)rotection from farmers, so far from being- an exception to this rule, illustrates it. The farmers had ceased to be, even proximately, the domi- nant class ; the manufacturers thought it to be for their protec- tion to take the duties off bread-stuffs, and as they outnumbered the farmers, their form of supposed and intended protection won. 229. Wool Culture in America. — The colonial period wit- nessed the colonial legislatures uniformly trying to develop wool growing and woolen manufacturing, while the British parliament was trying to repress at least the manufacture. Massachusetts bountied the killing of wolves, and Delaware and Virginia pro- hibited the exportation of sheep and of raw wool. The first gen- eral congress of deputies, meeting at Annapolis, in 1774, as well as the provincial congress of Massachusetts of the same year, the convention of Virginia, and the assembly of Pennsylvania, all adopted protective measui'es toward wool growing, and looking to its manufacture. In 1800 the first merino stock was introduced, aiid a mill was erected for manufacturing "fine wool." In the restrictions on trade incident to the Napoleonic wars, in 1809, fine merino wool rose to $3 per pound, full-blood Spanish meriuoes rose to $1,500 in special instances. Even as late as 1820, twenty- five merino sheep brought $5,900 in Philadelphia. Still, until 1824, no duty was imposed on the importation of raw wool. That act imposed a duty for the first year of 20 per cent., for the second of 25, and, after 1826, of 30 per cent, on all wool whose invoice price abroad exceeded ten cents, and on such 15 per cent. Mr. Thomas H. Benton tried to make it a progressive duty, increasing at 10 per cent, per annum until it amounted to 50 per cent. , and then at 5 per cent, until it reached 70 per cent. Though the compromise act of 1833, and the acts of 1846 and 1857, reduced the protective efficacy of the duties on wool, its importation has never been free since 1824. In 1810 the first wool had been exported from Australia, and in 1820 the export had risen to only 99,000 lbs. By 1830 it had reached 1,000,000 lbs, and the export from South America in- formed our fathers of that day that for us free wool would mean but little wool, and that of poor quality and dear. FRUITS OF PROTEGTIon TO WOOL. 6Ht A high price for wool can only be maintained in conjunction with a large woolen manufacture, and a large woolen manufacture requires both cheap power and cheap looms. As both cheap power and cheap looms depend largely on cheap iron and steel, the evolution of the woolen industrj^ in the United States fol- lowed close on tlie heels of the growth of the iron and steel in- dustry. The following (in millions) shows the increase in number of sheep and pounds of wool since 1850 : Census Years. No. of Sheep. 1850 21f 1860 22\ 1870 28i 1880. 43i Pounds of Wool. 60i 100 2351 From 1867 to 1883 the duties on wools and woolen goods were, in the main, such as had been suggested and approved by the combined associations of wool growers and woolen manufacturers of the United States, The essential principles involved in this tariff were that it is more important that, as a whole, the tariff should be effectually protective than that its schedule should be simple in its construction ; that cheap wool, as a raw material for manufacture, could most surely be had by maintaining an active home production of wool ; that America is sufficiently diversified in soil and climate to produce all varieties of wool needed by our manufacturers ; and that the interests of wool pro- ducers, woolen manufacturers, and the American consumers of woolen goods, are identical when periods of moderate duration are considered. Each of these positions has been contested by the advocates of the free-trade theory. The relative abundance of our total supply of woollen goods in 1860 and in 1880 appears as follows : Year. Population. Foreign Supply. Domestic Supply. Total Supply Sup^ply^er 1860 1880 31,44.3,790 50,500,000 S37,87fi,945 33,023,8 sr $61.80.5,217 237,587,671 $99,772,162 271,211,558 $3.17 5.37 6*78 ECONOMIC PHILOSOPBT. Mr. Bigelow states the increase more specifically as follows : Itebis. 1850. I860 1868. Pounds. Pounds. Pounds. Pounds of wool grown . . 52,516,959 60,511,343 177,000,000 Value. Value. Value. Value of wool imported $1,618,691 $4,842,152 $3,915,262 \aiue of wool manufactures imported 17,151,509 37,937,190 32,400,759 Value of domestic wool manu- factures .... 45,281,764 68,865,963* 175,000,000 Mr. John L. Hayes computes the rate of consumption per cap- ita at $4.31 in 1860, and $6.52 in 1880. What are the effects of existing duties on wool upon the Amer- ican price ? The duties, since 1866, have been from ten to twelve cents per pound on combing and clothing wools, and from two and a half to five cents per pound on coai'se carpet wools. The latter is generally regarded as a duty for revenue only, as we do not produce the article. The former would raise the price by the amount of the duty, if our country were producing very little wool relatively to the quantity required — say a fourth, half, or even two-thirds of the competing grades. But, in fact, we pro- duce nine-tenths of the competing qualities, and, if we produced the other tenth, our total production would make the price as low here as abroad, even if the duty were ten dollars a pound, or pro- hibitory. A duty on the importation of an article, which a. coun- try can have no need to import, because it produces as much as it desires to consume, can have no effect whatever on its price. The following diagram shows the ratio in weight of our home production of wool, of all kinds, to our importation. The greater part of the importation, as here indicated, is coarse carpet wools of a quality inferior to any we have yet sought to produce. Wools are of so many grades that their prices will range all the way from ten to fifty cents in the same market. Hence the com- parison of prices between different markets, or between two coun- tries, is difficult, and can be made only by experts. Mr. John L. Hayes, in a defense of a reduction of the duty, in 1883, states that the combing and clothing (fine) wools imported in 1880 were 2^,- 785,171 pounds. The customs returns show that these were in- voiced at an average price of twenty-three cents per pound. * Bulletin National Association Wool Manufacturers, vol. xvi. No. 1, p 80. FOREIGN AND DOMESTIC. 679 ^ ■* ■ '" - ~ ■jIT" IJ" ci -LJ-L >o^ 1 184(1 ^ o o ■§- -1+ - o d. d> .^-l / ^ ^r^ , ?= IHod <^ O ""^ 2 \:^ .Z^ ci '/ ^ ^ d - Ze b § •'// ,. -J. =-l -I ;«. = tl -i 1K(i(l 1 rV Si a 2" C) t 5j S o ^ ;; o o ^ r 1KG5 - -1 |-L - - t!*^ a „ n 1 ?°- rt- y - ^^1 = 1K7II ^ -1 ri , / u . i ^ - - - , 18V5 ■ ^ '!■:> 1 d 6) I 1 ^-^ J fe^'TT \m) ^ y/^^ ^4 /, > ''//,'< %;^ ^t 1881 /. "t — - - -M^'^ \ -- ^ ^r o — fe i ■^L 95? 1 .^"^ h 1884 'fc "d t t^ — t 1885 ^r? 1 ! 1 3^ 1 1886 1 '■ i 1 1 ' ' jfi^ r 1888 1 1 PBOPOETION OF WOOL PRODUCED TO THAT IMPORTED. Prices of wool were five cents lower in 1883 than in 1880. Yet the British Board of Trade returns show that the total import of wool of all grades and kinds, from Australia into England, in 1883, was valued at £17,066,476 for 326,517,520 pounds, or more than twenty -Ave cents a pound. Wool being five cents higher in 1880 than in 1883, as shown by the accompanying chart, it would fol- low that the average on all grades of Australian wool in England, in 1880, must have been thirty cents, or seven cents per pound higher than combing and clothing wools were invoiced at, to bring them to the United States. Allowing another five cents for the difference in price between the average of all grades and the fine, it would follow that the combing and clothing wools brought into New York at twenty-three cents, in 1880, should have had a foreign price of thirty-five cents, or twelve cents higher than the invoice. This would indicate that the handlers of Australian combing and clothing wools made a " dip " on them, to get them into American markets, of twelve cents, or the whole amount of the duty. While Australian wools were at this period quoted at " good to superior fleece- washed mei'inos Is. 8c?. to Is. lOd. [forty to forty-four cents], and average to good Is. 3d. to Is. 8d. [thirty- 680 ECONOMIC PHILOSOPHY. one to forty -one cents] per pound," and while Mr. Hayes, an expert, says that only the best long and fine wools (apart from carpet wools) are now imported, yet almost the entire quantity imported is invoiced at twenty-three cents per pound, a price which is three cents below the* foreign price of blanket wools. The conclusion is inevitable that the foreign price does " dip " by nearly or quite the whole duty, to accommodate itself to the American market, and, this being so, the president of the Wool Manufacturers' Association was right in testifying before the Committee of Ways and Means, of Congress, that the price of wool is not made higher by the duty. The Association was only wrong in making the duty on wool a part of the basis for esti- mating the duty on woolen goods. The duty on woolen goods should be estimated simply by inquiring the money rate at which the goods can sell in the foreign market, under the most favora- ble conditions, then the rate at which they can be manufactured here, and making the duty large enough to more than cover the difference at all times, and under all fluctuations in price. The annexed chart shows the facts above cited, as to the prices of wools. The average invoice price of twenty-three cents per pound applies to all years since 1880. The total wool product of the United States is now estimated at 330,000,000 pounds,* which, adding 95, 000, 000 pounds for importa- tion, amounts to 415,000,000 pounds for 58,000,000 of people, or 7xF pounds per capita per annum. The consumption of wool in 1860 could hardly have reached one-half as many pounds per capita. This goes far to sustain the theory tliat an abundant consumption is best attained through an abundant home pro- duction.! 230. Woolen Industry of England. — Toward the close of the eighteenth century England, owing to the persistency which she had shown in developing her iron and steel manufacture, plunged into a series of inventions in mechanics which brought her into the front rank of nations as a manufacturer of woolen goods, and, at the opening of the present century, in cottons. These were the steam-engine by Watt, which for the first time superseded human power by steam power, and converted capital * Helmuth, Schwanze & Co.'s Circular, published by George William Bond in 1887, estimates product of North America a: 460,000,000 pouiuls. t Since 1884, however, owing to the threatened sacrifice of the wool producers, im- plied in the reduction of the duties on wool in 1883, the number of sheep in the United States has declined by about 6,000,000, or by 7.37 per cent. (Report for 1887 of Pennsyl- vania Wool Growers' Association.) 7 6 5 i t I 1 == g s =5 1 s is s 3 1 S ss s S i s B 3 S 1 f= s s K i s R S ?: 1 .3 u 3 3 g s 6 s s — - 1 1 1 1 1 1 1 _ _ Mill MM 1 L M - "What piice-wouiate if made by adding duty to foreig npri '- - - - - - Chart Showing Who Pays the Duty " on Competing WOOLS ' ' . Foreign Pnco of Emoat Wool avLi=c(=o. Bosctin Price of fine Domestio Wool in Gold. IL — - — -_--_ II i „ini»ii Port rhilip Fleece Wool. _ Invoice EriccB of Wool in 1882. 7 ^ ~ ~ F r r ~" - -T\ r /■' .i rh dn. on'fcar, .na-|voi!l ■io.^M- t V »l li Iho n-ti ril^ vttn Ori.i lont / 1 al, Hi L u »h,.i.r.„j<,r] Ml. .m vn,lidel thin :JneeceWoo1 n.. «-.Y ,k 'iJ /t\ »-Ol{t-U oniKjiei >n- " ^ froi .185 to 11 61 b)( Nin mo. ( 1 n ^ ,1 ~ ~ ""' dot} eon dbe iddc "to't 10 lo oiSn pric C.U ;/ l'\ / fr ' 5 / ■^ / ', ^.. ^ /I \ 4, U "^ \l\ !s ~ /i\ L<, riy, cot Fin Oh ',.:: =lns -^\ •// n p r \ N/ \ '■ ■' 1 V. >l •1 — 1 \ r. rejg Pci col- lest p" Phil 1 iFl oeojsgi. !n^ 1 A rA / k /i-- \ \ X i /\ H/l\ - V, \ \ li »ton Pric ofF inoT Le itic Vool nG old' ^ i' V V i^ iiJij -" \ \ u — / ^ A \ \ 1 / K V 1/ \ 1 1 Cap .Fit ^ / A At /* Av •ieeofiiUA. leric ST" u H.i ite. «ve nee lim rie.n Wo il.e F^ nin 1,W, / h /^ u A »• 5^4 1 ALJ.L V ■^ 121. (25 .)av ■rag l.ric oof 11-1 ianWool in :iigii r 18* 1 ^! ■,- ' .;,f. s*. -t "'•'•» ^'_ 3< -to t ' ^ 1 Inve •J" *"- -p ■^ 1 ' 11.., Feecc ~ ~ - ,Fi,.,J„„ . 1 1 1 1 1 1 1 i . lU Woo ,i»W.i ~v lavo copricoofww Im KTtcdf ^aV •gn. Ma 832. = c. Brit it) -' ; a™ Be. njoi n ign- ■«,lsi. eav ' J — 5 ,o like «, — m" cm ) _ ,„ „- h J' ' ™oftro in „nedf om F •no In 9S. — _!_ ' Ti SJT s^ (G'j.ll. 11- '-^ "^ t. 1II.W8) _ — . — — in,. cop SU.2I9I. im ™ 1 hill .1. »!. — _ ~ — ~ ~ ~ ^ i; __ — "ilT - — oS »M .» IK - -, r - "" - - — — — — — - — — — — --Im -4:^ ^ i^'uVi*!'! 1 § B s a s S e 3 3 g 3 s 3 "s § s e 5 8 1 B s u " s K B iS S i 3 ■ i PROTECTION FORCING INVENTIONS. 681 into the clieapest of all laborers — clieai^er even than coolie labor ; the roller-spinning of Paul, adopted by Arkwright, dispensed with linger a.nd hand-work in spinning, and drew and twisted the fibre in a continuous thread by an automatic mechanism ; then came the jenny of Hargreaves, which, instead of one, drew seventy threads at once ; then the mule of Crompton, which in- creased the power of the sjiinner a hundred-fold ; and the power looms of Cart Wright, which quadrupled the power of the weaver. Then came the factory system of Arkwright, which, by gathering many looms under one control, intensified production and in many ways saved labor, while it lessened, perhaps, the individu- ality and independence of the workers. Finally came the gig- mill by Mr. Gott, raising the wool on the cloth without manual labor, and the shearing frames, woi'ked also by power. By these inventions the consumption of wool in Great Britain rose to 94,- 000,000 pounds of domestic wool, and 8,000,000 imported, by the close of the last century. By 1851, according to M. Bernoville,* the annual consumption had grown to 208,000,000 pounds, or more than double. In 1883 the total supply for the United King- dom had grown to 732,000,000 pounds, of which 296,000,000 were exported, leaving 435,000,000 poi;nds for domestic consumption. Tliough this gives the British people as large a supply of woolen goods, per capita, as is obtained by those of the United States, the source of that supply is increasingly foreign in England, and in- creasingly domestic in America. In England the wool grown in the kingdom declined from 140,000,000 in 1855 to 128,250,000 pounds in 1883, while the imports increased five times. In Amer- ica the imports both of wool and woolen goods have remained stationary, or declined, while the domestic production has in- creased tenfold and the consumption about threefold. The in- ference is that the English wool and woolen industries are gradually leaving England to take up their abode in protective countries. So far as this ti'ansfer of industry is coincident with a like migration of English population to new countries, it may be ascribed to the various causes which help to make populations migratory, the chief of which is the migratory nature of profits. But so far as the rate of transfer exceeds that of population, and especially so far as the rate of transfer of a particular industry from a country wherein it is not protected by tarifi's to one where * " Industries des Laines Peignees," par M. Bernoville, p. 11. 682 ECONOMIC PHILOSOPHY. it is so protected exceeds the rate of transfer of industries which are equallj^ protected in both countries, such increased rate may, in the absence of the clear indication of other adequate causes, be fairly ascribed to the difference in the protection extended to them. Thus a period in which the British carrying trade, or commer- cial marine, is actively protected, and the American is not, is marked by a transfer of American vessels and sailors to Great Britain ; though if in the same period British farmers, wool grow- ers, and silk weavers are inadequately protected, and Americans in the same walks of life are either naturally or artificially pro- tected in an adequate degree, a transfer takes place of British farmers, wool growers, and silk weavers to America, above the ordinary migratory tendency of industry. 231. The Cost of Protection to the Woolen Manufac- ture. — Among the familiar impositions of the free traders, is that of estimating the cost of protecting a domestic industry, by assuming that the whole domestic product is raised in price by the amount of the duty, or by some large percentage of that amount, and that it could all be obtained by importation at the price it sells for abroad when no importation occurs. Mr. Springer, of Springfield, Illinois, has worked up the cost of pro- tection to the American woolen manufacture, on this basis, as follows : Value wool im- ported 1882. Duty received. Average ad va- lorem rate. Value home products consumed 1880. Incidental taxes, being In- creased cost to consumers. $47,679,502 $29,254,234 61.36 per cent. $267,182,914 $106,873,165 As the wages paid in the manufactures of woolen goods amount to only $47,351,628, an argument is thus made out that it would be cheaper, to pay all these employees their wages, and to this might also be added the dividends paid to the mill-owners, than to pay the increased cost to consumers. Mr. Springer, however, impeaches all these figures, resolving them into solemn guess- work, by admitting that the domestic price is not increased by the amount of the duty, and that he does not know, and has no means of knowing, by what amount it is increased, or that it is increased at all. All this is admitted in the following words, which are Mr. Springer's, and Avliich ai'e uttered by him, not to give away his case, but to save it. He says: FIG URES THA T O UE8S. G 8 3 ' ' It will be seen, from an examination of the statement, that the rate of increase in the cost of the home product, by reason of the tariff, has been estimated in each case at much below the duty itself. This is due to the fact that many of the articles are in- ci'easedin price only to a limited extent by reason of the tariff.'' All these figures, hovvever, lose their value as means of estimat- ing the cost of the tariff, when the principle upon which they are marshalled is conceded to be false. This principle is that the price of the domestic product is raised by the amount of the duty. This Mr. Springer admits is false, by taking a different standard, viz. : a certain jDercentage of the duty, the rate of percentage being the result of pure guess-work on his part. Thus all this cumbrous superstructure of pretended argument from figures rests, at bot ■ torn, on a guess. The attempt to compute the exact cost of pro- tection, like the attempt to prove the net profit derivable from law, education, internal improvements, or any other function of gov- ernment, shades rapidly off into quantities that are immeasurable. It belongs to the domain of intellectual jugglery. The problem of the relation of the cost of protection to its ad- vantages is one that appeals to the sense of value, or profit- perception, or business judgment of all men. The production, per capita, of wool and woolen goods in the United States, has about doubled in the j^rotective period since 1860. The common sense of common men, and the special sense of statesmen, concur in holding that this more abundant production renders the Amei'i- can market as low-priced a market, on most kinds of woolen goods, as the world contains. Practical merchants having a close knowledge of markets concur in this opinion. Hence, the tax of pi'otection, while not actually computable, and while it is liable to undergo a theoretical variation with every change in prices, is really nominal on all varieties of goods that have had any consid- erable period for development under its infiuence. 232. Cotton — Antiquity and Modern Growth of tlio Industry. — The cotton of commerce is produced by about twenty species of the genus Gossypium, in all of which the cotton wool is attached to the seed, for the physiological purpose of promoting the distribution of the seed, as thistle-down distributes the thistle seed. Most of these are flowering herbs approximat- ing to the hollyhock more nearly than to any other northern flower. Tlie exceptions are the sacred cotton tree of the Hindoos, •which produces a fibre used only in preparing the robes of the Brahmin priests, as its tripartite thread is held to be a sacred em- 684 ECONOMIC PHILOSOPHY. blem of tlie Trinity, and the cotton tree of ancient Peru and Mexico, from whose product Cortes was presented with cotton garments, on his arrival in 1519. Cotton was largely used in the domestic manufactures of India five centuries before the Christian Era, and therefore twenty centu- tries before it was largely raised, spun, or woven in the European world. Its culture and manufacture reached China about B.C. 300. Its extension to Turkey, Egypt, and Africa has been made smce its culture in the United States made it a leading article of modern commei'ce, The Hindoo used the distaff and the fingers in spinning, and a few sticks, the limb of a tree, a hole in the ground for his treadles and feet, constituted his entire loom during twenty centuries. But so great was his industry that "in every village, every woman and child was at work, making a piece of cloth," says Orme, and the muslins of Decca were so finely woven that they were described as " webs of woven wind." It is disputed whether the manufacture of cotton in Europe was brought to Italy during the Crusades, or to Holland by the Dutch after the latter had passed to India by the Cape of Good Hope. The former is the better view, as Holland imported cottons from Italy before her ships rounded the cape. The cotton manufacture began at Manchester, England, before 1640, as an adjunct to the linen manufacture previously carried on, but had hardly any growth until 1760 and later. The inven- tion of tbe spinning jenny by Hargreaves, in 1770, was the be- ginning of the cotton industiy in England. The invention cre- ated such alarm among the spinners, whose labor it displaced, that they first broke into Hargreave's house and desti'oyed his machine, and afterwards, when the jenny had begun to come into general use, they had a great uprising of the people, and, scouring the country, broke everj^ curling and spinning machine they could find in Lancashire. In 1769 to 1772, Arkwright fol- lowed with the invention of the spinning frame, Avater frame, or " throstle," as it was variously called, which performs the whole process of spinning itself, leaving to the Avorkmen only to feed it with material and piece the thread when it breaks. In 1785 the steam-engine was first applied to drive the machines for spinning cotton. At this period the raw material, or as it was for many years called the "cotton wool," or more briefij'' the "avooI," came from * Encyclopedia Britannica, Art. " Cotton." GROWTH OF MANCHESTER. 685 the British West ludies, Brazil, Smyrna, etc. In the same year, 1785, a clergyman named Cartwright, who had never seen a per- son weave, invented the power loom, being stimulated thereto by the suggestion that the spinning machine would soon spin so much yarn that hands enough never could be hired to weave it. He had seen an automaton machine play chess, and as all the movements in weaving were reducible to three, he thought a machine could make them. When first broached, the idea was combated as visionary, by every person familiar with weaving. Until these inventions came into use cotton goods were dearer than woolen, and too dear for general use. About 1795 a canal brought cheap coal to Manchester. Her small wares were sent out on pack-horses, into the villages of England, and sold by chapmen, in the inns. The whole cotton trade was still in the germ, but from 1795 it gvew rapidly. By 1800 it consumed 100,- 000 bales and exported $27,000,000 worth of manufactured cot- tons. Now 3,000,000 bales are required, and the export of manu- factured cottons has grown to $337,500,000. The period of great- est rapidity in the growth of the cotton industry was from 1795 to 1855. In 3817 it employed 110,763 persons in Great Britain. In 1835 it employed 220,134 persons, or more than there were in 1880 employed in the same industry in the United States.* The cotton-spinning kingdom had fifty years the start, as a manufac- turing power, of the cotton-growing republic, and yet this start had all been won in the preceding forty years. The rate of growth of the cotton industry in England is almost identical with that of the city of Manchester, for about eight- ninths of all the people employed in the industry in England were employed in, and formed a part of the gi'owth of, the city of Manchester, since 1800.t The cotton industry in England results in an export four times as great as the domestic consumption. In 1876 the annual value of the expoi'ts of yarn and cloth were £73,079,000, while the home consumption amounted only to £17,777,000. It is this in- dustry which more than any other, except banking or the lend- ing of money, compels England to pursue an aggressive policy in pushing her foreign markets and defending her foreign trade at every point. It is this desire to protect and defend her foreign trade, that causes the drum-beat of her morning reveille to ac- * Robert P. Porter, "Breadwinners Abroad," p. 91. t Manchester, including Salford. Porter's " Breadwinners," p. 91. 686 ECONOMIC PHILOSOPHY. company the sun, without ceasing, in his circuit around the world. For behind the British drummer everywhere is the y^ '518,000 500,000 440,000 476,000 400,000 / 400,000 300,000 238,000 300,000 200,000 y 162,000 ^^lOC ,000 GKOWTH OF THE CITY OF MANCHESTER. British trader, who employs the drummer, and pays for the beat- ing of the drum out of the profit on his exports. 233. Tlie Cotton-Growing' Industry in the United States. — To encourage the production of raw cotton, or as it was at first usually called "cotton wool " in the United States, a duty of three cents per pound was laid on its importation in 1790, and this duty, with slight variations in its amount, continued until 1846. A doubt was expressed whether such a duty could prove advantageous, as the prosj)ect that the cotton plant could succeed in thefSouth was deemed precarious. In 1792 Eli Whitney in- vented the first machine for ginning or separating the seeds from the lint or down. Whitney's " saw gin " consists of a series of saws revolving between the intei'stices of an iron bed, upon which the cotton is placed so as to be drawn through, whilst the seeds are left behind. This invention lessened greatly the cost of getting the fiber ready for shipment, and immediately caused the cultivation of cotton to become profitable. In 1799 the ex- port had risen to 9,000,000 pounds, in 1817 to 95,000,000 pounds, and in 1845 to 872,000,000 pounds. The protective duty Avas pi'obably not needed after 1798. FALL OF PROTECTED COTTOK 687 The average price of cotton per pound for the half century from 1790 to 1844 was as follows : z -4--!i^ -r-Lp— ±j- Hz z ± ~ E E ± eN|E z n -hh'-h ^^EH E'-^f^ - =-^1- rfr - — -H -1- - - - - - - - •— [- |— - - - 40- --M- rr 4+ zz_ =p t - ij:: _ -:: z :: z z ::i z = z = ~ - f \ Ti;zzfc|: --r- — ^ - '— ^ - — - -- - - - - h - - - T OP ~ —J ^- / - - 1 [ - -^ — ^ 1 — - —J — — — — — ~ — — ' — 1 — - -\ - t 7:-v. - -U/ _ __ ^ J 1 1 — - — -I — — — - — - u - 30; ' — 1 g" fe -F E = E z ^ FJ ^ it r E E = E E - z z z - tL Z z 25- /— ^1 - - -i-t-H = ^ - dz ^ — ^ ^ - = ^ ^ ^z — ^ ^ = ^ 20 f -{ -1 -| -- - - - - ^t :? Z. :^ -: / ^- T^ -1- - r 1 ■ -H- 15 E zS E = E = P = z E! L . ^ ' : U- 1 ; -h E r-Zj'z Z ± ^ Evi= Z =c 10- l~ ~ z - ~ q^ I z z; :^ z dz -A ^ z z - r: A tb ^'^ ^ 7= i^ z r "t+ ^J -^ — -^-\ \ \ - - - - -t=tc §' 1«.!S.T ins o « "* 1 wt ^ •2 !' • ff " ■tf -£ -a -0 ■o t- mc V 1 c * T s r' ■" 1"' *l PRICES OF COTTON FROM 1790 TO 1845 IN CENTS PER POUND. A general identity will be observed between the fluctuations in prices of cotton here indicated and those of breadstufPs in En- gland and America set forth inch. iii.,p. 124. The general decline in price of cotton, between 1800 and 1845, results from the increase in quantity produced ; this increase was so marked, and its effect on the price so evident, as to give rise to the saying that the more cotton the planter sent to market the less he got for it, while the smaller his crop the greater his retvirns.* The high price of cotton between the years 1815 and 1820, cofi- curring with a rajjid expansion in the production, caused an advance in the price of negro slaves in the United Slates in 1820 to 1830, so that the rearing and breeding of slaves, and the internal trade in slaves between the slave- raising and the cotton-growing States, became very profitable. This in turn gave a rapid acces- sion of political power to the slaveholding interest, which was at the same time the free-trade interest. Hence from 1820 to * Dr. H. C Carey, "Social Science," by McKean, p. 263, shows that In 1815-16 a crop of 80,000,000 lbs. brought $20,500,000. " 1821-22 " 1.34,000,000 lbs. " 21,500,000. " 1827-29 " 236,000,000 lbs. " 26,000,000. " 18.30-32 " 280,000,000 lbs. " 28,000,000. " 1840-42 " 616,000,000 lbs. " 55,000,000. " 1843-45 " 719,000,000 lbs. " 51,000,000. " 1849 " 1,026,000,000 lbs. " 66,000,000. In short, twelve and one-half times as much cotton iu 1849 as was produced in 1815 brought only three and one-third times as much money. 688 ECONOMIC PHILOSOPHY. 1860 cotton growing, slavery, and free trade became closely knit together into one principle. This it was which repealed the Missouri Compromise in 1820, battled for the equality of slavery with the wages system from 1820 to 1860, threatened secession and a dissolution of the Union in 1828 to 1830, and after thwart- ing the protective policy from 1833 to 1860, except during an interval from 1812 to 1816, finally broke out into the civil Avar of 1860 to 1865. The considerations underlying^ the entire struggle were eco- nomic. The armies that met on the Rapidan, and at Vicksburg, represented opposing economic theories. The constitution of the attempted Confederate States solemnly provided that no protec- tive tariff should ever be enacted in those States, or by that gov- ernment. The Confederacy was only to differ from the Union, in making slavery the normal condition of labor, and freedom from protective duties the natural right of commerce. It is an impressive truth that the free trade, thus contended for, destroyed the Confederacy. The lack of the gold revenue, which would have come from a protective tariff if the South had had competing manufactures, rendered the bonds and notes of the Confederate States worthless. The lack of the manufactured goods greatly impaired their .military strength. The conviction became far more general in the South after the war, that no nation can afford to depend upon the production, by another nation, of any of the forms of wealth essential to a nation's defense in war. The feeling of dependence on cotton, expressed by tlie saying '^Cotton is king," gave way to the feeling that money is king. The Northern States, by their greater diversification of industries, actually grew richer in the midst of the expenditures which so impoverished the South. Of this diversity of industries money is the symbol and agent. 234. Cottou as a Power in Politics. — The political effects of the rapid expansion of the cotton manufacture in Englaiid, from 1800 to 1855, were as important as were those of the equally rapid expansion of the cotton culture in the United States. It engendered the ambition of England to become the workshop of the world and to convert all other nations into consumers of her products and producers of her food and raw mate- rials. In pursuit of this policy she sacrificed her farmers, and yeomani'y of Ireland and Scotland, at the shrine of foreign trade. The nature of her success will be seen, by observing how much more largely her trade lies with nations which she is able to command TEE COTTON FAMINE. 689 witli her guns, and whose tariffs she regulates hy treaties obtained by aggressive war, or by more or less open purchase, than with nations whose power enables them, and whose intelligence in- spires them, to admit or exclude her goods at their own pleasure. In 1881 British cotton piece goods were shipped to countries whose trade is commanded by treaties which are the product of former wars, coercion, or purchase, as follows : To Coerced and Treaty -bound Countries. To Turkey To Egypt .... To Brazil .... To foreign West Indies . To China and Hong Kong To Java $23,468,500 7 755,935 14,501,444 6,154,888 29,105,947 5,170,369 To India, Ceylon.'and Singapore 93,571,981 $179,735,070 To Free Countries. To France To Italy . To United States . To Arnentiue Rypublic To Chili .... To British North America To Australia . To other countries $4,97),206 6,344,745 7,521,409 5,804,570 5,257,542 4,599,064 8,187,015 $41,748,211 $04,702,159 Neai'ly five times as much of the foi'eign trade of England in cotton piece goods now lies in countries whose legislation she is able to shape, and does shape, by coercion or other means, as in those which are independent of her control. No other element of the English export trade has exercised so aggressive an influence • over English j)olitics as this export of cotton goods. To it are due the establishment of an empire in India, the repeal of the corn laws in 184:6, the British naval and commercial policy, and much of British colonial finance. 235. The Cotton Famine of 1860-5.— Society by an in- voluntary economic law, acting only through the impulse of dealers towards profits, economizes in the use of any essential of life of which the supply is cut off, by means of a rising scale of prices. This was shown in the cotton famine, produced hj the civil war in the United States, in 1861 to 1865. The year 1860 had been the year of greatest production ever known in cot- ton goods. Two thousand six hundred and fifty mills, em- ploying 440,000 hands, were running 30,000,000 spindles and 350,000 power looms. Of 1,390 million pounds of cotton im- ported 1,054 million were worked up in Great Britain. Twenty- four million pounds' (sterling) worth annually of cotton goods were consumed in Great Britain, and a value twice as large was exported. In the year 1861 the price of middling Orleans rose from 7:}d. to 690 ECONOMIC PHILOSOPHY. 12d. per lb. This shut off the profits of spinning and weaving until an unusually large stoclc of goods on hand could be sold off, as the manufactured goods did not rise in price as rapidly as the raw materials. Moreovei', though the quantity of raw cotton in store was greater than ever before, the ratio of its price to that of the goods was such that it could not be made up at a profit, and hence the mills were rapidly closed or put on short time. In 1862 relief funds were subscribed, and soup kitchens were opened, furnishing soup at Id. per basin. From half to three-fourths of the employees in the different mills were out of work. About $1,000,000 was subscribed .to keep the workers from starving. In May cotton rose to 15d. , and in October to 2s. 3d. per lb., and more profit could be made by buying to hold than by manufacturing. At Christmas 352,000 persons were out of work, and £40,000 per week were distributed in relief. Not until May, 1863, did the manufactured goods on hand climb up to prices at which the raw cotton could be spun and wove at a profit, when it was wortli 2s. 5d. per lb. in the bale. Then the manufacture was gradually resumed. The following schedule, of the prices obtained for the quantity of raw cotton imported, shows that, the smaller the quantity obtainable in any except one year, the larger was the sum of money which measured its aggre- gate value : Year. Quantities (cwts ) Value. 1800 12,410,000 £35 757,000 1861 . 11,233,000 38,653,000 1862 4,678,000 31,093,000 1863 5,978,<00 !5G,278,000 1864 7,976,000 78,201,000 1865 8,732,000 66,032,000 1866 12,296,000 77,521,000 The high price of cotton was divided by being spread in part over silks, woolens, linen, hemp, and even jute, straw, paper, etc., all of which were called on, in part, as substitutes. The rise which remained was sufficient to withhold it entirely from use, until the stocks previously manufactured had been worn out, thus dividing the rise in price over the largest quantity of goods and the longest possible period of time. In this way the hard- ships of the famine, though severe, were minimized to the utmost extent possible, until the supply returned. The cold operation of speculative selfishness thus had the effect to save the cotton on hand and prevent its waste. This form of economy, was therefore, as benevolent in its effects as the feeding of the hungry with QtflNlNE-MAKINO EXPELLED. 691 cheap soup. Students of political economy, in accounting for the prices of textile fabrics in Euro^je or America from 1861 to 1870, will be careful to unite with such other causes as they may have in view, the all-controlling influence of the cotton famine, and the large issues of x^aper money in the United States, and of debt in Europe. The imports of cotton goods into the United States, in certain lines, are more than three times as great in value as the exports of cotton goods in other lines. The former are $36,000,000, and the latter $13,000,000 annually. Our imports are most largely of hosiery, and our exports most largely of sheetings and prints. The cotton manufacturers of New England were among the ag- gressive advocates of the pi'otective policy in the eai-ly days of the republic, or from 1790 to 1850. For thirty years past, how- ever, the classes of cotton manufacture which were able to live, were also able to export in free competition with English manu- facturers. While steadily urging the necessity of securing the home market to American producers, they have not sought ac- tively to supersede the importation in those lines in w^iich the former held the field. The success of foreign hosiery, and certain other forms of cotton manufacture, in keeping their hold on the American market is due to the admission of them at low and encouraging rates of duty, which have repressed the effort to substitute the American for the foreign article in those lines. 236. Destruction of Quinine Manufactui-e in the United States. — To descend from the great cotton industry to the little manufacture of quinine out of cinchona bark, is like a step from the infinitely great to the infinitely little. Quinine, however, possesses economic importance as the one and only article which, as a sop to an agitation extending over twenty-five years, in behalf of " tariff reform," was, in 1879, taken out from under a duty which had the effect to protect the manufacture in the United States, and was placed upon the free list. There were, at the time of the repeal of the duty, five American firms, and thirteen European firms, engaged in the manufacture. It had first been ]Dlaced under a duty of fifteen per cent, during the pres- idency of Jackson, in 1832, which had been raised to forty cents per ounce in 1842, restoi'ed to twenty per cent, in 1846, changed to fifteen per cent, in 1857, to twenty per cent, in 1861, to forty-five per cent, in 1862, to twenty per cent, in 1872, whei'e it continued until made free. 692 ECONOMIC PHILOSOPHY. The article is made from a bark obtained chiefly in Peru, and which European as well as American manufacturers import free. The rate of production is very variable, and hence the price of quinine varies chiefly according- to the price of the bark. Under the various duties above named, the following was the range of prices for twenty -five years : In 1857 it sold as high as $2.00 and as low as $1 .40 per oz. In 18G0 " as high as $1.80, and as low as f 1.20. In 18G3 " as high as $3.90, and as low as $2.25. In 1864 " as high as $3.75, and as low as $2.G0. In 1865 " as liigh as $3.40, and as low as $2.20. In 1877 " as high as $4.50, and as low as $2.70. lu 1881 '■ as high as $3.25, and as low as $1.90. In short, in each year it varied in price, by an amount several times greater than the duty, which variation, therefore, could not have been an effect of the duty. In 1877, when the special agitation was raised against the duty as a "tax on invalids," the quinine was selling for $4. 12i per ounce in London, which was $2.59 higher than it had sold for* in London one year previously. On this cry the duty was repealed. Four years after its repeal quinine sold as higli as $3.25 and as low as $1.90, Avhich was seventy cents higher than it had sold for when under a duty in 1860. The price on both sides of the ocean rose and fell chiefly with the price of the bark. The effect of the withdrawal of the duty was that the American manufacturers, who had imported 6,389,- 378 pounds of bark for manufacture in 1878, imported only 3,639,- 315 pounds in 1883, and afterward a continually diminishing quantity. Meanwhile our importation of the sulphate of quinine rose at the following rates, our American invalids being each year more dependent on the imported article : In 1877 we imported 75,804 ounces. In 1878 " " 17,549 In 1879 " " 228,348 In 1880 " " 416,998 In 1881 " " 408,351 In 1882 " " 794,495 In 1883 " " 1,055,764 In short the rejjeal of the duty, exactly as in the case of the repeal of the English duties on breadstufts, while it makes no permanent change in the price of the breadstuffs, operates effect- ually to transfer the seat of production from the home countiy to the foreign. AMERICAN SALT. 693 237. Tlie Salt Industry as Related to the Tariff— The manufacture of salt in the United States depends largely on pro- tective legislation by. Congress, and by the several States for its existence ; yet its history is full of proofs that thus to pi'otect the domestic manufacture cheapens the supply, and that a repeal of the duties only raises the price of salt abroad instead of reducing it at home. E\^ery State in the Union, and probably every country on the globe, contains the means of making salt. In 1880, out of a total consumption of 52^ pounds per capita for the American people, 19 pounds were foreign salt imported, Z2>\ pounds were domestic, of which 9.7 pounds were produced in New York, 3.46 pounds in Virginia, 2.95 pounds in Ohio, 13.87 pounds in Michigan, and 3.20 pounds in all other parts of the United States. The following diagrams exhibit the expansion in the production relatively to the importation in forty years. SUPPLY PER CAPITA IN 1880. SUPPLY PKR CAPITA IN 1840. In the fifty years ending in 1880, the supply of domestic salt increased by 14.1 pounds per capita, the supply of foreign salt diminished 3.8 pounds j)er capita, and the total supply of salt in- creased by 10.25 pounds per capita. The jjrice of domestic salt during this period declined in about the ratio of its increased abundance per ca^iita, viz., from 21 cents per bushel to 164 cents, while the average foreign invoice value per bushel declined only from 12| cents per bushel in 1830, to lOf cents per bushel in 1880. So much foi'eign salt can be brought in ballast, free of freight, to the United States, that ocean transportation adds little or notliing to the cost of foreigii salt. 694 ECONOMIC PHILOSOPHY. On March 3, 1807, a duty of twenty cents per bushel which had existed since 1800 was repealed. The country enjoyed the benefits of free salt, at $2 per bushel ! * In 1809, and later, after the war of 1812-15 set in, it rose to $4 i^er bushel. During neither of these periods would the cost of pi'oduction have exceeded thii*ty-five cents per bushel, if the interval of free trade in salt had not de- stroyed the domestic establishments. Tlie cost of salt, for the three years of war, was thus made equivalent to what an equal supply for thii'ty -three years would have cost, had proper estab- lishments for making- salt been maintained. t In Texas and Louisiana are some of the finest beds of mineral salt in the United States, wherein salt caii be obtained with fewer hours of labor per bushel than at any of the foreign salt produc- ing points, but not at so low a money price. The South, being always most dependent on the foreign supply for salt, expected to get cheap salt through a secession from the Union in 1860, as one of the economic advantages of that undertaking. Practically, however, the war of 1861 to 1865, and the block- ade of the Confederate ports, gave the Southern States so vigor- ous a protective policy that the salt manufactui^e at the Grand Saline in Texas alone soon employed 3,000 men. As in 1807 to 1815, so again in the Southern States in 1861-5, the cost of four years of salt certainly exceeded any sum that thirty years of salt supply could have cost, under a diversification of industries arrived at, dui'ing peace, by tariff duties. Indeed, tlie inability of the Southern States to supply themselves promptly with salt, quinine, iron and steel ware, and clothing, were among the chief material causes of their overthrow in the military struggle. Protection to the salt manufacture, by tariff duties, has been offset by State taxes on the product, in a degree that is not usually allowed for. Thus, from 1813 to 1830, though the duty was twenty cents j)er bushel, the State of New York, where alone the manufacture had got a start, levied a tax of twelve and one-half cents per bushel, thus reducing the protection to seven and one- half cents. In 1830 the duty was reduced to fifteen cents per bushel, leaving a protection of only two and one-half cents, and from 1832 to 1834 the State tax was two and one-half cents higher than the duty, thus virtually fining the domestic producers two * Bishop's " History of American Manufacturee." t Report of Committee on Salt to Niitional Convention for Protection of American Interests, held at New York, April 5, 1811. THE MICHIGAN COMPETITION. 695 and one-half cents per bushel, relatively to their foreign competi- tors, for doing- business in New York, instead of abroad. In 1834, the duty having fallen to 9.4 cents per bushel, the State tax was re- duced to six cents, and in 1841, under the further decline of the duty, the protection was only 1.6 cent per bushel. The highly protective tariff o'f 1842 laid a duty of eight cents per bushel, which in 1846 was reduced to twenty per cent., equal to 2.43 cents per bushel, and the state reduced its tax to one cent per bushel, where it still remains. Hence, for ten years ending in 1857, the protection to the New York salt-makex's was only 1.43 cents j)er bushel, and under the reduction in 1857 the protection fell to three-fifths of a cent per bushel. In 1861-2 the duties were raised to from ten to thirteen cents per bushel. In 1872 these rates were reduced to from 4^ to 6f cents per bushel. Meanwhile the legislature of Michigan, in 1859, offered a bounty of ten cents per bushel, for all salt over the first 5,000 bushels produced from water obtained by boring wells in Michigan. Though the tariff protection was then only If cent per bushel, capital rushed into the manufacture at a rate that soon compelled the State to repeal the tax. The production, beginning in 1860 with 2,360 bushels, rose in 1881 to 13,751,495 bushels, which about equalled the entire consumption of foreign salt in either 1860 or 1880. The only special advantages enjoyed by Michigan over many of the other States lay in the temporary offer of the bounty, and the cheap supply of sawdust, fuel, and lumber for barrelling, furnished by the vast lumber manu- facture in conjunction with which the salt manufacture is car- ried on. In the competition thus set on foot between the Michigan salt producers and the importers of foreign salt, the Michigan salt has steadily declined from a price equal to the invoice price of the foreign salt, jdIus the duty, down to a price actually lower in some years than the invoice (foreign) price of the imported salt free of duty. The diagram shows the prices. Here it is evident that the Michigan prices for the five years, 1877 to 1881 inclusive, ai-e on a level with the foreign invoice prices without duty from 1868 to 1872, and are from twenty to twenty-four cents per barrel lower than the foreign invoice price from 1872 to 1876 inclusive. But the striking fact shown by this diagram is that the reduction of from four to six cents per bushel (sixteen to twenty-four cents per barrel), made in our import duty in 1872, sent the foreign invoice price of salt up by from 696 ECONOMIC PHILOSOPHY. twenty to twenty-four cents per barrel, or by exactly the duty.* Average Price per Barrel in cents. If there were any class of cases in which Mr. Mill's theory would apply, that protective duties on imports would make them- selves felt in the increased prices of exports, and would there- fore, operate in part to tax foreigners on our exports, and in part to lessen our exports, such an effect might be expected in the case of the import duty on salt acting on our export of but- ter. Under the tariff of 1851, with a duty of only 1.5 cent per bushel on salt, the country exported less butter in five years, than when the duty in 1862 was made twenty-four cents per 100 pounds it exported in one year, viz., the year 1863. In fifteen years, from 1846 to 1862, of virtual free trade in salt, the * David H. Mason, of Chicago, a most accurate economic expert, says ("Report of TarifE Commission," p. 1205) : " Tlie reduced duty went into operation August 1, 1873. Let it be noticed that the foreign producers, vvlio always take whatever profit circumstances will permit them to LEATHEB AND SHOES. 697 country exported only 66,118,096 pounds of butter, while in the ten years following, under a duty of twenty-four cents per 100 pounds, the export of butter rose to 104,031,946 pounds, being more than twice as large an export of butter when the duty on salt was twelve-fold higher than under free trade. If the import duty on salt is jjowerless to prevent the doubling the export of butter from whatever cause, it may safely be affirmed that the notion that duties on imports are a check on exports is the dream of a visionary. 238. Licatlier, Boot.s, and Slices. — The United States surpasses every other country in the abundance per capita, average quality, and cheapness of its supplies of leather, boots, and shoes. Lynn began to export women's shoes in 1788. In 1795 she supplied the Southern markets, and sent some to Europe, and in 1874 the product of the Lynn factoi'ies alone was $14,000,000, and the three States of Massachusetts, Maine, and New Hampshire now make upwards of $100,000,000 worth per annum in factories, while the total factory product of the United States in 1880 was 1166,050,354. The product of the petty in- dividual shoemakers, and makers to order, admits of no accurate statement, and hence we are without any data of the aggregate quantity consumed. The United States has three aiid a half times as many cattle per capita of population as Great Britain, about as many sheep; * and imports free of duty almost exactly the same annual supply of get, /)?<< MP ^A.e«»'^;ricesim??ie(iia. consumption of values by, in United States, 70; founds all governments, 435; in- cluding that of United States. 438; an armj^ is a factory and what it makes, 439; cost of, in England, 479; in India, how paid and officered, 485, 486; of China is also the police, 537; organiza- tion and mode of drilling and fighting depend on condition of iron and steel manufacture, 646; officers of, in England, 406; Roman army furnished accord- ing to capital, 412; when army is chief power in the state the form of government indicates it, 413; army part of the executive, 416, 427; cost and ecouomjf of, 437, 440; sustained in France and United States by conscrip- tion, 437; expenditure, 438; native and English officers of, in India, 486 Art, is political economy an, 1-9; Adam Smith and Stewart so hold, 7; export of works of, 610; import and revenue from, 613; position of glass-making in use- ful arts, 638, 644 Artisans of a whole country can not learn new trades, 66, 67; wages of American higher than English, and their work better, 596; Birmingham Board of Trade and London Times on, 596; Span- ish and Dutch, how attracted to France, 673, 674 Artel, in Russia, 526-530 Ash, pot and pearl, export of, and duties on import, 610 Asia, tribute paid by, 454; brown race prehistoric, 645 Associations, wool growers and wool manufacturers, combine to form American tariff on wool and woolens, 677 Assumption, substitution of for ar- gument, 25, 26; simpler than in- vestigation, 571 Athens, its government the pro- duct of economic life, 402; aris- tocratic, 405; dependence for food, 570 Attraction in the state, 433, 664; maj' be greatest toward a coun- try of higli taxation, 473 Augers, English and American, prices, 590; qualities, 596 Australia, registration of titles in, 143; life of herdsmen and shep- 'lo GENBBAL INDEX. lierds in, 317; effect of Aus- tralian and California gold on coinage, 385, a86; governments of, 407; colonization of criminals in, 445; tariffs in, 530, 531; ex- port of wool from, since 1810, 676; crime in, 33, 442; prices of Australian wool abroad and of Ohio wool in Boston (chart), 679- 681; England's trade in cotton goods with, 689 Australia, West, lixed terms of of- fice, 407 Austria, coinage unit, 338; alleged bankruptcy of, 448; war with Germany in 1866, 516, 523 Austro-Huugary, government of, 407 ; expenditure on army in, 438 ; protection tariff essentially like those of France, Germany, etc., 530 ; product of iron, steel, and coal, 650 ; the basis of unity, 630 ; wool supply, 673 Autocracy, in form of government not inconsistent with democratic methods, 526; or socialistic, 528- 529 Avarice, its function, sphere and cost, 201-210, 433 ; relation of to wages, 625 Axes, English and American, prices, 590 ; qualities, 596 B. Babylon, wookns, 669 Bacon, revenue on paid by foreign producers, 586 ; exports and imports, 610,613 ; revenue from, 613 Baconian school, 24 ; doctrine of protection, 670, 671 Baden, 515, 523 Balance of Trade, Gregory King's essay on, 95 ; example of, 383 ; turned in favor of United States by protection in 1824-1834, 384 ; Doctrine of, stated, 393 ; Bacon on, 392-394; examples of in Uni- ted States from 1862-1883, 393- 395, 599-602; doctrine true when statistical omissions are cor- rected, 395 ; discussed by Adam Smitli, 500 ; where no imports are needed, effect of, 599 Balance of industries, A. Jackson on, 382 Bank of England, organization and practice of, 389 ; profits, 390 Bankers, protected when home trade is secured against foreign, 609 Banks, Secretary Chase and banks of New York, 221 ; distrust of, by the poor causes hoarding, 224 ; antiquity of. in China, 334 ; deposits and checks, 349 ; notes of, 350 ; national, 351 ; secured, 351 ; state and private, 352 ; part of banks in crises, 371-378; limitations on Bank of England, 374 ; stopped in 1857, 377 ; prac- tice of Bank of England in a panic, 378, 389 ; banks may be led into inflation by excess of goods, 384 ; may by discounts produce inflation, 389 ; may profit by crisis, 389 ; policy of standing by each other, 389 ; debts of, in United States, 448 ; part of banks in aiding govern- ment in Russia in its issues of paper money, 528, 529 ; relation of woolen industries to, 669 Banks for savings, dejDosits in, in United States, 190 Bankruptcy, effects of by gov- ernment, 221 ; in United States in 1854-7 produces crisis in England, 376-378; alleged, of Russia, 529 ; individual, avoided by national liquidation of debt at current values, 529 Bark, tanning, protection on and export of, 610 Barter, doctrine of, applied to domestic wages, 321-323 ; inter- national trade is not, 601 ; if it were it would be oppressive in refusing most of our products, 602 Bavaria, 515, 522, 523 Beef, duties on, 382 ; paid by foreign producers as to United States, 586, 610, 613 Beer, protection and export of, 610 Belgium, trade with Franco. 26 ; wool, 26; silks, coals, wool, hops, GENERAL INDEX. 711 glass. 2 ; travel in, 28 ; unit of coinage. 388 ; government of, 407 ; proportion of improved land and tillage, 540 ; rates of wages in, 581, 511 ; urn- balance of trade against, 509-603 ; pro- duct of iron, steel and coal in 1883, 650 Bells and bronze, duty on and ex- port of. 610 Beneficence, of the adjustment of each part of society to every other through interest, 400, 401 ; of the economic law that prices rise when production is small, 690 Bengal, petition of cotton and silk maiuifacturers of, f(ir protection against English competition, 487 Berlin, 405, 514 ; Berlin and Milan deci'ees, 640 Billiaid tables, export of, 610 Bimetallism, 361-369 Birmingham, American cheapness in iron and steel wares affects it, 596 Blacksmith's tools, 383 ; wages in various countries, 511 Blacking, export of, 610 Blankets, protected, 383 ; wool for, 672 ; consumers of, 589 ; not taxed, 590; shoddy in, 590; prices of, in England and America, 590 Bolivar, monetary unit of Vene- zuela, 338 Bolivia, monetary unit of, 333 Boliviano, 336 Boards, local diversity of in Eng- land 478 ; Boards of trade on destruction of silk industry in England, 636, 637 ; on Canadian manufactures, 665 Bonanza farming, 262-272 Bonds, national, bearing interest, relation of to notes, 392 Bonnets, protected, 383 ; exports, 610 ; imports and revenue, 613 Books, duties, 383 ; imports and exports, duties on,' revenue from, 610, 613 Boots and shoes, recent strikes in, 328 ; heavily protected from 1816-1828, 383 ; wages in Mas- sachusetts and England, 583; production and prices in Amer- ica and Great Britain, 697, 698 Borough boards and rates, 477-479 Boston, glass, 644 Bounties, in land, 144; on export of beet sugar essentially a tiction, 506 ; the substitution of bounties for duties is generally a free trade notion, 597 ; objections to, 596; on silk culture, 632; on ships by British goverinnent, 659 ; on sheep culture — killing- wolves, 676 ; on salt production in Michigan, 695 Bourgeoisie in France, 403 Brandy, English, 482; German, 520 Brass, 383; in coinage, 339; success of American, 596 ; imports of and revenue from, 613 ; exports of, and duty on imports, 610 Brazil, coinage of, 338 ; British control of trade of, 516, 670 ; tariff, 530 ; protection of metals in chart, 366 ; balance of Am- erican trade with, 600 ; benefited by removal of American duties on coffee, 600 ; England's trade with, 689 Breach of trust, as a mode of con- quest, 484 Breeding of sheep to any pattern, 671 ; in France, 674 Bread and breadstuffs, cost of, 25 ; relation of, to laboring class, 26 ; dealing in breadstirffs and pro- visions on boards of trade or produce exchanges, 105-120 ; elt'ect of rise in price during scarcity to cause economy in use of, 106-120 ; capacity of a few to produce, 220 ; black bread in India, 227 ; home market for, 382 ; export of breadstuffs from France prohibited by Colbert in inlerest of manufacturer, 60 ; German trade, in, 519 ; effect of duties on trade betwecui Canada and United States, 533 ; bread not x'educed in price by rci)eal of corn laws, 558 ; revenue on im- ports, of into United States paid by foreign producers, 586 ; ex- ports' of, 610; imports and rev- nue from, 613 ; consumer pays no revenue on, 615 Breech-loaders, American manu- facture for export, 596 712 GENERAL INDEX. Bremen, 523 ; steamer line to (American), how destroj^ed, 657 Brewers, incidental protection to, in England, 482 Bribery, agency in procuring the Act of Union, 493 Brick, strikes and losses in, 328 ; England gives Ireland free brick but protects herself against Irish brick, 493 ; revenue collected from Canadians on, 586 ; ex- ports of, 610 ; wages of making in Massachusetts and England, 582 ; imports of, and revenues from, 614 British Empire (see Great Britain) British Indies, balance of trade of, against United States, 600 British advice, through free trade leagues, 604 ; from John Bright, 608 British drumbeat, who pays the drummer, 686 ; extent of British trade in cotton goods with co- erced countries compared with her free trade, 689 Bridges, Roman, taxes on, 454 British cholera, 488 Broad, coin of Cromwell, 340 Broadcloths, wool for, 672 Bronze, 339 ; duties on, and ex- ports of, 610 ; age of, 645 Brooms, exports of, 610 ; imports of, and revenue from, 618 Buckets, export of, from United States, 596 Budget, annual, 453 ; of United States in 1888, 468 ; of 1882 and 1878 in Great Britain, 479 ; of 1878 in France, 498 Buenos Ayres tariff, 530 Building trade, wages of, in United States and Great Britain, 583 ; strikes and losses iu, 810, 338 Bulgaria, roses in, 215 Bullion, relation of, to money, 335 Bureaucracy, 406 Burlingame Mission, 535, 550 Butter, under tariff of 1816 to 1828, 383; duty on does not affect price, 586 ; amount of revenue collected by United Slates from ('auadians on, 586, 591 ; export of, 610 ; import and revenue from, 613 ; export of butter and duties on salt, 696 Buying, necessity of, in order to sell, a specious economic error, 599, 602 Cabinet, construction of, 410 Calicut, trade of, 486 Calicoes, importation into England prohibited, 489; in 1720 fined per- sons found wearing, 489, 670 ; Napoleon on, 678 California gold, 385 Cambrics, France prohibited, 500 Cambridge, Massachusetts, glass manufacture, 641 Camel, iron and steel brouaht by, from China 2000 B.C.. 645 Canada (British possessions in North America), coinage of, 386 ; national policy of internal improvements and protection in, 531-533 ; Canadian liberty largely enhanced by her juxta- position to the United States, 531 ; American duties on Cana- dian products largely paid by Canadians, 582-53^3, 591-594; relative taxes in Canada and Ver- mont, 576 ; free trade can only exist in connection with national and political unity, 574, 576 ; Canada reaps only where she has sown, 575, 576 ; Canada pays through the American tariff' for her political sovereiii:ntv, how much ? 598, 599 ; same, 615, 618 ; conditions of lumber trade be- tween Canada and the United States, 616 ; progress of manu- factures in, under, "national policy," 664-668 ; her growth in woolen and cotton manufacture compared with the northwestern States, 665 ; report of Dominion board of trade on, 665; England's trade in cotton goods with, 689 Canals, effect of, 150, 152, 154 ; Chinese living on, 545 Cast-steel, English and American prices of, 590 Canvas, 652 Candles, England gives Ireland GENERAL INDEX. 713 free candles, but sews by a pro- tected caudle, 493 ; exports of, 610 ; imports of and revenue, 613 Caps, export, 610 ; imports and revenue, 613 Carpenter's tools, 596 Carpets, protected, 383 ; when in- troduced in Fnmce, 639 ; carpet wools not produced in United States, 675 ; duty on carpet wools is therefore a revenue duty, 678 Capital, its relation to credit, 6 ; when scarcity in production is capital according to Tooke, 116; wages are capital, 134; parts with labor when, 163 ; di- vision of product between capi- tal and labor, 163-166; capital emploj'S only for profit, 169 ; sharing of returns of industry between capital and labor, 172- 181 ; in Great Britain, 176 ; capital replaces wealth con- sumed in production, 180 ; economy of, in organizing in- dustry, 188, 195 ; rates of protit depends on turning frequently, 192 ; in particular enterprises de- clines in rates of profit, but not in general industry, 195 ; de- fined, 196, 197; fixed or circu- lating, 198 ; rules labor hj dis- tribution to want, 201 ; subdi- vision of, destroys, 203 ; accumu- lation of wealth is humane, 203 ; is not the antithesis of labor, 211 ; is the opposite of a hoard, because always in social use, 211 ; effects of large capitals on indus- try', 219; liow massed to con- trol capital, 220 ; small capitals earn large rates of profit, 222 ; and vice versa, 223 ; all repro- ductive capital in constant social use, 224 ; large capitals promote wages, 237 ; basis of theory of diminishing returns, 228 ; bal- anced by theory of new fields, 229; wages are capital, 234, 285 ; capital the .guarant}^ of wages, 235; why land is deemed an investment of capital in United States and not in Eng- land, 241 ; Views of Hamilton, Bastiat, Roscher, as to capital in- vested in laud being an element in rent, 241 ; large capitals in farming, 262-267 ; economy of tenant farming, 268-272 ; econ- omy of large holdings of land, 268-273 ; capital divides as a partner with the labor it em- ploys, 309-314 ; but in a mode governed by conditions, 312 ; will the tendency of capital to share profits increase ? 314 ; ex- haustion of capital a cause of crises, 378 ; Price on crises, 379 ; capital as a power among democ- racies, 402 ; how represented in Roman elections, 412 ; Calhoun on representation of capital, 412- 415 ; not well represented in British House of Lords, 426 ; inducement to loan to govern- ment, 448 ; relative ecpiality of taxes on capital and on incomes, consumption, etc., 456 ; Ricardo on, 457 ; Mill on, 463, 464 ; plu- ral voting, 479 ; spoliation of capitalists in India leads to ces- sation of industries and great famines, 485-488, 625 ; loans of, by Germany, 520 ; gains to both profits and wages by capital in form of machinery and animals, 540-543 ; increased employment for, under protection, not met by free traders, 560 ; capital and wages may both get higher pay in one country than another, 579, 582 ;- Perry's error refuted, 579-582 ; the taxing power is it- self a form of capital and as such may like all capital promote pro- duction, 585 ; reasons requiring a 42 per cent, tariff to ensure occupations involving equal ' ' effort " with those conducted by foreign capital, 585 ; great capitals seeking profit are the best guaranty of liigh wages, 625 ; difficulty of arriving at capital accurately in census, 643 ; capital invested in imported American ships would always be foreign capital, 661, 662 ; capital invested in manufactures iu 714 GENERAL INDEX. Canada, 665, 666 ; capital con- verted by steam inventions into the clieapest of all laborers, 681 Carolina, North and South, silk raising in, 631 Carpets, wages in, in United States and England, 582 Carriage, wages in manufacture of, in Massachusetts and Great Brit- ain, 583 Carrying trade, between England and United States, brought down to fi'ee competition in 1816, cap- tured by England (656) through protection to her iron and steel manufactures, (648) subsidies (659) reciprocitjr (655), piracy (663), and other phases of ' ' right- eousness," 608 Catallactics, as a synonym for political economy, 7 Cattle used as money, 333 Caucus, for nominating candi- dates, 417 Carrying trade, decline of, 656; causes, 640-664; extent of, 659 Carriages, exports of, 610; imports of and revenue from, 613 Cars, railroad, exports of, 610 Carthage, 453; tribute of to Rome, 454 Carts, exports of, 610 Cash, when credits turn into cash, money being cheap, 221 Cashmere wool, 672 Causes of transfer of any protected industries to protective countiies, 681 ; made very plain where two competing countries having the same race and natural facilities protect opposite classes of in- dustries, 681; and these two classes migrate in opposite di- rections, but always toward pro- tection and from free trade, 682; of failure of Confederate States, 688, 694 Census, exceptions from, 25; can not take note of losses, 71; its value in economics, 38; popula- tion of United States by, 146 ; earnings of British people by, 176; failures of enumeration in, 224; Roman census a means of ponnecting wealth with voting power, 412; of 1880 in United States and 1872 in France, 486; no official census by Chinese gov- ernment, 537, 538; alleged cen- suses of China fictitious, 538; their contradictions and absur- dities analyzed, 539-543; census figures of United States are vague as to capital invested, 643 Centralization, varies in republics, 416; in France, 497; Germany, 514-525; in Canada, 531 • Ceylon pearl divers, 414; Ceylon, England's trade in cotton goods with, 689 Character, an element in economic success, 307; qualities which give political leadership deter- mined by economic conditions, 402 Charity, relation of, to industry, 199-210; is evoked by social de- mand, 204; relation of, to luxury, 213-215; to co-operative schemes, 314; to utility of social services, 325; altruistic effects obtained by egoistic means, 433; social effects of pursuing charity to the pre- judice of industry, 446 ; soup- kitchens and other relief during cotton famine in England, 690 Charts, of prices of wheat in Eng- land, United States, and France from ' 1780 to 1880, 124; of im- migration into United States, 147; of relative values of gold and silver produced in two suc- cessive periods, 365; of pro- duction of precious metals, 366; of prices from 1790 to 1875, 380-1 ; of prices and expansion in crises of 1837 and 1857, 387 of growth of debt, 447; of revenues and expenditures of United States from 1790 to date, 469; of miles of railroad built; iron and steel rails made; total rails made; rails imported; con- sumed; pig-iron made; rolled iron made; prices of pig and rolled iron and steel rails; pig- iron produced in Great Britain, and immigration for 23 years to 1883, 651 ; prices of wool in Eu- rope and United States, and GENERAL INDEX. ns " wlio pays duties on wool," 681 ; of ;iver;ii!,e price of co(U)ii ))cr pound from 1790 to 1844, 687 Clieajjuess, distinction between, in temporary supply and in pei'- manent sources of supi)ly, 117, 508; large capitals promote, 206; in railway freights, 220; of nioue}', turns credits into cash, 221; depends oh dimensions in production, 219; relative, of gold and silver, 341, 342; of a metal promotes its circulation if free coinage is given, 341, 342; causes no increase of consumption where motive is display, 475; of beet sugar, 505; opposition of English rehncrs to, 505; J. S. Mill holds that if other nations could carry for England cheaper than English vessels, this would be a deticiency needing remedy by protective laws, 557; not se- cured by repeal of corn laws, 558; cheapest to buy may be dearest in use, 567; ultimate cheapness only attainable through present clearness, 569; cheap goods and machine labor, 584; of American iron and steel wares in 1868 relatively to foreign, notwithstanding bar and pig-iron were dearer, 596; London Times on How is that? 596; where cheapness depends on having the entire home market, protection secures, 609; ell'ort of American free traders to get cheapness bj^ low duties caused the war of 1860-65 for secession, 648-650; transient compared with permanent cheapness, 675 Cheese, revenue paid by foreign Canadian producers on, 586; ex- port of, 610; import and revenue from, 613 Chisels, English and American prices of, 590 Cholera, economic causes, the origin of, 485 Chicago, Board of Trade, mode of doing business on and economy of, 102-120; anarchists of, 91; city government of, 405 Chicory, excise on, 481 Children, provision for support of, by state, 477; labor in fac- tories in Kussia, 527; relative wages of, in Massachusetts and Great Britain, 482 Chili, monetary unit of, 338; mili- tary successes against Peru, 440; tariff, 530; England's trade in cotton goods with, 689 China (ware), exports of, 610; im- ports of and revenue on, 613; prices, how affected by Am- erican tariff and manufacture, 621; introduced into France when, 639 China, area, 141, 537; immigration from, 148; disphicement of Chinese labor by* English ma- chinery, 209; Adam Smith on wealth of, 215; unlike conditions of labor in, and lower earnings, 297; economic and climatic con- ditions, effect on the form of government, 402; political parties in, 404; tax-collectors in, 453; taxes in, 455; opium war on, 534; loss of sovereignty, as to tariffs, 533; exodus of the people would follow introduction of English railroads and banks, 536; sources of misinformation con- cerning, 536; opium trade detri- mental to (Cobden), 536; size of army, 537; censuses fictitious, 538; 'analysis of their discre- pancies, 538-541; absence of beasts of burden and machinery, 540; economic bearings of this absence, 540-545; limits on i^op- ulation in, 547; breath of re- ligious toleration in, 550; internal trade of, renders external trade not essential either to supply or prices, 552; balance of trade in favor of, against the United States, 600; iron and steel first brought from by camel, 645; England's trade with, 689 Chinese empire, proportion of area and population to China proper, 541 Chinese, 148; immigration of, 321; paper money among ancient, 334; opium trade detrimental to, 536; social habits of the, 545; 16 GENERAL INDEX. must take American agricultural implements to China, 551 Chrematistics, 11 Christian world, in iron and steel, 645, 646 Church, increasing utility and dim- inishing cost (value) as society advances (Elder), 324 ; effect of union with state, 403 ; attitude of state toward, in Prance, 403 ; and land-owning gentry in Eng- land, 406 ; of Rome, 418 ; pur- suit of secular interests is health- ier economically than excessive addiction to tlie enthusiasms of the, 446 ; church-rates in Eng- land, 477 ; number of clergy in France, 496 ; large proportion of women in orders, 497 ; vital in Russia, 530 Cider, England keeps protected cider and gives Ireland free cider, 493 Cigars, protection to manufactur- ers of, in England, 481 ; revenue on, imported into United States, by whom paid, 586 ; export of, 611 ; import and revenue from, 614 Cities, feeble class in, 121 ; again, 219 ; rents in, 238-343 ; compar- ative failure of government of, in United States, 405 ; in France, 416 ; taxes in, in United States, 468 ; rates in, 477 ; in England, built on trade in India, 486 Circulating capital, investment of, in fixed capital may produce crisis, 378 Civilization, relation of ownership to, 23 Civil service, in United States, 416 ; corresponds to bureaux, 416, 437 ; in India, 485 ; contrast in salaries paid to concjuered and conquering race, 485-486 Classes, owe something to each other, 31 ; value to working, of an extra dollar, 583 ; fallacy of protected and improtected, in United States, 320 ; governing, in republic, 416 ; rich and poor, in same district, must be com- pared as to crime, 442 ; eilect of rank on crimes of men and wo- men, 442 ; enterprising class, not same as lenders to government, 449 ; government in the interest of the English manufacturing class, 437, 438 ; in France, 496 ; of population forming British empire, 516 ; taxes on, in Ger- many, 538 ; social, in Russia, 536 ; free trade in England and United States as a class interest, 605, 606 Clergyman, invented power loom, 685 Climate, effect of, on economical and political institutions, 403 Clocks, American superiority in, 596; exports of, 61 0; imports and revenues, 613 Clothes, of wool, 672 ; shoddy, 672 ; trade in French and Eng lish, 674 Clothing, 520 ; wages in manufact- ure of, in Massachusetts and Great Britain, 589 ; strikes and losses in, 338 ; revenue on im- ports of, in United States, whom paid by, 586 Clothing wools, 679-681 Coals, trade between Belgium and France, 26 ; England, 37 ; acci- dents in mines, 32 ; quantity mined in Germany, 530 ; revenue paid by foreign producers on, imported into United States, 586; exports of, 610 ; imports of and revenue from, 613 ; consumer does not pay the duty, 615 ; world's product of coal in 1883, 650 Coasting trade, defined, 653 ; ves- sels in, how protected by naviga- tion laws in United States, 652- 654 ; effect of ' ' free ships" if extended to, 654, 655 ; protected in England until 1849 ; ships built hy foreign capital could not safely take part in American coast trade, 661, 663 Coercion, in the state, 433 Coffee, free American import of, 600 ; rise of price on, in Brazil when American duty removed, 600 ; export, imports of, 610, 613 Coffee mills, prices, 590 ; qualities, 596 GENERAL INDEX. in Coin, asserted to he, ;v form of credit, 6 ; -amount of in Unit- ed States in 1861, 221 ; not the sole money in certain senses and yet the sole money in others, 330 ; standard and subsidiary or fractional, 335; notof invaria])]e value but less variable than bul- lion, 335 ; coins of United States, 337; of England, 339-342; value of the standard coins of all nations certitied by the United States mint, 338 ; prices of rare, 340 ; of England, 342 ; de- mand for, produces linancial cri- ses, 377 ; history of debasing the coinage in England, 339-342 ; over-valued metal seeks the mint, 341 ; under-valued the melting pot, 342 ; total gold coinage of France, England and the United States, 386 ; paying out coin as a means of resumption, 529 Coinage in United States, 384 ; rap- idity of, from 1851 to 1875, 366 College, electoral, in United States, how superseded, 419 Colombia, monetary unit of, 338 ; tariff, 530 Colonies, British, tariffs of, 530 ; protective, except in India, 531, 064 ; policy towards American colonies, 631, 647, 648; tariff policies of, identical with that of the United States — all protective, 664 ; British policy concerning colonies, 689 Colonization, 445 Colors, exports of, 610 ; imports and revenue, 613 Combinations of labor, 300-307 ; Jevons on, 302 Combing wools, 679, 680 Combs, export of, 610 ; imports and revenue (included in fancy articles), 613 Comitia, 412 Commerce, as related to trade, 6 ; Gossen's theory of, 94; how all commerce seeks to concentrate in markets, 100 ; regulating inter-state, in the United States, 159; if business is more commercial than manufacturing, labor's share is less, 312; crises in commerce, 371 ; subtracting coin from, 384 ; number of per- sons engaged in, in France, 496 ; should be confined (Jefferson) to importing articles we cannot pro- duce, 596 ; America's foreign commerce increases seven-fold from 1840 to 1880, while per- centage carried in American ves- sels declines six-sevenths, 656 ; British commerce, how "fed" as to its main arteries, 657 Commodity defined, 89, 197 ; de- fined by Marx, 91 ; what is a fin- ished, 671 Common sense, and national safety, 570 Commonwealth or state, 57-60 ; power over citizens, 58 Commons, House of, 37, 133, 140 ; composed of, 406 ; origin and development of, from a body of petitioning tax suggesters into the supreme power, 408-412 ; minis- ters sit in, 411 ; members Tin- paid, 424 ; of Ireland, in 1799, plead for protection, not union, 492 Commune, Communal, Commun- ism, 41-54 ; charitable and I'c- ligious, 52, 54, 131 ; use of land, 134 ; disappearance of, 139 ; spirit of communism in voting taxes where but few of the voters are taxpayers, 474 ; share of, in education in France, 497 ; in Prussia, 523 ; workings of prac- tical communism in Russia, 526 Communal taxes, 523 ; ;m econ- omy in communal system in Russia, 529 Competition, as a price-maker, 90-120 ; between railways, 160 ; again, 220 ; in rents, 237-243 ; of uses for land, 246; with old industries stifles the young, 319 ; shut off in trade enforced on con- quered countries, 463 ; protec- tion to home industry is a form of international, 568 ; competing conunerce between countries having like natural gifts and conditions, Imt unlike artificial and acquirable gifts such as di- mensions in production, anteri- 718 GENERAL INDEX. ority, etc., which time and pro- tection will supply, forms the theme of tariff contention, 568, 573 ; effect of competition be- tween producers in different countries to make protective duties a means of relief from taxation instead of a tax, 586 ; domestic competition repeals all increase of prices caused by a duty and avoids any economic occasion to repeal the duty, 596 ; lack of competition among em- l^loyers in countries reduced by spoliation of capitalists, 625 ; competition between Canadian and American producers, effects of on burden of duties and prices, 615-617 ; of Americans in silk production, 633-636 ; in glass, 644 ; in iron and steel, 646 -651 ; Americans first expel the English from carrying-trade thi'ough protection, and are fin- ally expelled by them through free trade, 652-664 Condor, 338 Confederate States, financial strug- gle with, 231, 353-355 ; declara- tion of war with, 417 ; effects of Avar on Northern prosperity, 380 ; fall in value of its notes, 353 ; represented the free trade and slave labor side of economic questions — causes of rebellion, 687, 688 ; experienced in making salt, 694 Confederation of German States, 515, 521-525 Conflict among economists, 5-9 ; as to government, 131-133 ; as to money and prices, 343 ; as to theories of equality in taxation, 456 ; as to incidence of taxes, 459, 460, 467 Congo, socialism on the, 23 ; also slavery, 23, 41-54 Congress, action of, as to railways, 145-161; as to contraction of cur- rency, 392 Connecticut, in 1790, 140, 252, 546 Conquest, of barbarians for trade purposes, profits of, 484 ; of India, how effected, 484 ; of sovereignties merged in Ger- many, 522 , of China as respects tariff", 534^536 ; of Japan as respects tariff, 553, 554 Conscription, 437 Constitution, in all countries, 404 ; in United States, 407 ; Calhoun's definition of constitutional gov- ernment, 413 ; power to declare war, 417 ; executive and judicial departments directly govern, leg- islative and constitution check or control these in governing, 416, 417 ; electoral college in United States shorn of its con- stitutional responsibility by rea- son of its meeting at different points and voting at the same time, 420 ; constitution regarded as distrusting the wisdom of the people, 420 ; its most original and admirable feature, 426 ; constitutionality is habit in Eng- land, 426 ; checks and balances of constitution in United States, 132-135, 427, 428 Constitution of United States shovild be amended (Jefferson) to allow internal improvements out of surplus revenue rather tlian reduce duty on salt, 640 ; inhibition on interstate duties may be an economic burden in part, 665, 666 ; of " Confederate States," 688 Consiuner, causes value, 86 ; his place in industry, 87, 94-100 ; how affected by grain-dealing on boards, 106-120 ; consumer's wealth, 216 ; riches can not add to capacity to consume wealth, 224 ; i-elation of consumer to cost of rent and produce, 242 ; consumers produce prices, 320 ; of British beer pay more (Shad- well) because of protection to brewers, than they would if they had free trade in beer, 482 ; Doctrine that " consumer pays the duty," forgotten in Act of Union, England taking the " taxed goods " and giving Ire- land " free goods," 493 ; increase of demand of consumer causes improved tillage in Germany, 520; consumer does not always GENERAL INDEX. 719 pay the duty, 533 ; duties ■which consumer does not pay, 58(5 ; Chicago Tribune on what the consumer pays, 593 ; how duties repeal themselves so far as the}'' are protective taxes, 59G ; class of imports on which consumer can not be charged with the duties — the producer pays them, 610-617 ; consumer of French woolens, 673 ; of English, 673 ; consumers of wool (manufact- urers of woolens) combine with producers in framing American tariff, 677, 678 ; fallacious esti- mate of the increased cost of wool to consumers, 682 ; contra- dicted by the testimony of an association representing the entire force of wool consumers, 681 Consumption, of meat, bread and spirituous liquors in the United States, 25 ; is the motive to pro- duction, 88 ; of commodities dis- tinguished from consumption of wealth, 197 ; consumable wealth not the subject of avarice, 205 ; demand for, how controlled, 220 ; total consumption by people in United States, 224 ; limits on, 225 ; of rich and poor, 226 ; elfects of taxes on, 458 ; taxes on consumption of luxuries ad- vocated by Dr. Smith, 461 ; con- sumption of wool in France, England, Austro-Hungary and America, 672, 673 ; influence of, on production, 256-263 ; of a d(miestic product involves home consumption of two products, foreign of one, 560, 578, 579 Contracts, freedom and number of, grow with private titles, 23 Contraction, after inflations of cur- rency, 359-360, 391 ; efl:"ect of, on prices, 392 Convention, House of Lords once a, 408 ; system of nominating by, 422 Convicts (in United States), 440 ; Means of reforming, 445 Coopers' tools, export of, 596 Co-operation, concealed uiider the forms of feudalism, 225 ; experi- ments in, 313 ; at Guize, Minne- ajjohs, Peacedale and New York, 313 ; to succeed as a business must profit employer, 314 Copper, sole money in early Rome, 334; coinage in England, 342 ; Gernvin trade in, 519 ; revenue paid by foreign producers on copper ore, 586 ; exports of, 610 ; imports of and revenue from, 613 Copyright to authors and pub- lishers a form of protection to industry, 675 Cordage, England hangs Irishmen on free rope but Englishmen on a protected rope, 493 Cordova wools, 672 Corn, law governing price of, 96 ; how in 1795-6, 96 ; price depends on demand, 96 ; dealing in on Produce Exchange, 105-120 ; effect of short crop on price in 1881, 106. 117; prices of, from 1780 to 1880 in England, France, and America, chart 112, 115-117; Tdoke on prices of, 115, 117 ; elTect of seasons on prices, 113 ; ellcct of cost of i^roduction on prices, 114 ; prices of, in 1620 to 1812, 116-117; cornering the market, 104 ; cost of wheat pro- ducing, 219 ; rate of multi]ily- ing, and effect of thin planting, 231 ; of rents and transporta- tion, 247 ; not made cheaper by repeal of protection to, 118-121 ; biit crisis produced by change of source of supply, 376 ; Ire- laud's interest in duties on corn, 491 ; export of corn prohibited by Colbert, 501 Corn crushers, American export and cjuality of, 596 Corners, in grain, 101-111 ; in labor, 300-302 Corn laws, agitation for repeal of, aided by errors concerning prices, 1812-1817, 112, 119 ; Brodrick, Shadwell, McCulloch, Encvclopedia Britannica, and Hvndman on, 117-120, 553; effect of repeal of, 470 Corporations, ownership by a form of private wealth, 54, 57, 134, 720 GENERAL INDEX. 135, 139, 151-160, 220, 221 ; ad- vantages of corporations over individuals as producing agents, 57 ; shares of, sell at a sum on which they will pay double in- terest, 179 ; stock of, how con- trolled, 220 ; tendency is toward corporations in labor employing rather than co-operation, 314 ; power of Bank of England to avert or promote crises, 389 ; power of corporations succeeds that of eloquence and political managers, 402 ; taxed in China, 455 ; debts of, held abroad, and crises, 377 Cost, of liquors, meat and bread missions and instruction in United States, 25 ; of production as a cause of value, 11 ; not measurable, 11 ; nor computa- able, 355 ; repudiated by Tooke, 114 ; relation of, to utility and value, 81-99 ; error to suppose prices are immediately regulated by, 110 ; yet in long run how affected, 220 ; of a credit cur- rency, 356 ; a fiat money or labor money without cost impossible, 358 ; desire to display cost, 475 ; cost of collecting revenue in England, 479 ; of beet sugar in 1799, 503 ; tariff duties some- times count as part of producer's cost, 532 ; cost in effort not identical with cost in mone_y, 574 ; cost of supplying the con- ditions which render American markets the best in the world, 575 ; of machine labor is not synonymous with cost of human labor, 209, 580 ; all costs of com- modities, services, and all ex- penditure is a compensation to labor, 626 ; of beginning a new manufacture, 639 ; of British policy of subsidizing ocean-going vessels (659) compared with the profit, 663 Cotton (wool or raw material), price of, when crop is large or small, 96 ; capacity of one man to pro- duce, 220 ; growth in manufac- ture in war of 1812, 380 ; pro- tected, 383 ; relation of to slavery, 384 ; value of destroyed in India by failure of manufactures, 48S; converted into manure, 488 ; manufacture of, in Canada, 531 ; interior trade of Chinese in, 552 ; cxiltivation of, partially ex- tinguished hy importations in Japan, 554 ; wages in manufac- ture of, 5S1 ; in United States, France, and Gi'eat Britain, 581, 582 ; fibre of, compared with wool, 672 ; ph^'siology and an- tiquity of the cotton plant in India and China, 683, 684 ; modern growth of the cotton manufacture, 684 ; inventions connected with its modern evo- lution, 685 ; production of "cot- ton wool " stiniTilated by a pro- tective duty, 686 ; invention of the gin, 686 ; export of cotton, rapid growth of, 686 ; average price of (shown hy chart) from 1790 to 1844, and Carej^'s state- ment of decline in values of cot- ton, 687 ; cotton famine in Lan- cashire during American war, 689-691 Cotton gins, American export and quality of, 596 ; invention of, and effect on production of cotton, 686 Cotton goods, protected, 383 ; pro- tection of, in United States op- posed by producers of raw cot- ton, 384-385 ; manufacturers of in India petition for the same protection fiom English goods as England exacts from theirs and are denied. 487 ; former manu- factures in Turkey, 490, 513 ; trade of England with Zollve- rein German states in cotton goods, 519 ; weight of imports and exports, 519 ; acts to protect manufacture of, in England, 555; effect of import of, from Eng- land into India, 66,67 ; exports of, from United States, 610 ; imports of and revenue from, 613 ; American cottons lead in English markets in quality, 623 ; necessity of manufacturing the entire American cotton crop in America at an early date to keep GENERAL INDEX. '721 labor emploja'd, 628-629 ; manu- facture protected iu Canada, growth, mills, capital, hands, product, and prices, G64-668 ; kinds of cotton and woolen goods 13 rod need in Canada, 666 ; Cotton trade in the germ in 1795 ; rapid growth of, and of city of Manchester, 685, 686 ; extent of production of cotton goods in England in 1861, 689 ; American imports and exports of, 691 Cotswold wools, 672 County, debts of, iu United States, 448 ; rates for county uses in England 477 Coventry, decline of silk Aveaving in, 636 Credit, conflict as to its being capital, 6 ; grows with private titles, 23, 211 ; credit is wealth, 67 ; Confederate rebellion sub- dued on credit, 221 ; credit money, 335 ; relative quantity used, 344 ; exchangeable credit is qtiasi money, 346 ; credit attracts gold, 350 ; credit based usualty on securities or debts receivable, 352 ; volume of, 355 ; how inflations of credit may be caused by reduction of tariff duties, 383-385 ; and expansions in volume of notes and dis- counts, 387 Crime, in Great Britain, 32 ; in Ireland, 33 ; in Austria, 33; Iiomi- cides in Southern States, 34, 57- 60 ; crime abated by war, 221 ; right of free speech does not ex- tend to incitements to crime, 307 ; relation of crime to the state, 431 ; extent of, in United States, 440 ; crime a problem in economics, 441 ; offspring of liberty, 444 ; land not alienable for crime in Russia, 526 ; colonial manufactures and exports of machinery to American colonies made criminal, 647, 648 Crises, relation of labor to, 190 ; large capitals lessen suffering in, 222 ; crises of various kinds, 371 ; of 1857 in England, 376 ; exhaustion of capital produces, 378 ; cause of crisis of 1887 in United States, 382-385; due to delay of profits on good enter- l^rises, 391 ; crises minimize the pain of failure in industries no longer sociallj^ needed, 396 ; and steer invention and capital into needed channels, 397 ; may be the penalty of mismanage- ment or ignorance on the part of government, 397 ; of 1816-1819 in United States, 514 ; of 1833, 515 ; silk mania and crises 1828- 39, 632, 633 ; peace and free trade crisis of 1818-19, 641, 642 Crockery, decline of tariff tax, with increase in domestic pro- duction — the duty not identical with the tax, 621 Crops, how values of increase, 258 ; share of, taken for taxes, 455 ; ratio of crops to taxes in India, 486; rotuliDii of crops under proteclidii, oio, 571 Crusades, 447, 550 Cuba, monetary unit of, 338 ; trade of with United States, 600 Culprits, 440 Crown, unit of Depmark, Norway, Sweden, 338 Crown, lands, produce from, 479 Cultivation, began where, 645 ; the quality of, depends on near- ness to markets and position relative to demand, 241-253 ; extensive cultivation exhausts soils, 253-256; intensive improves soils, 256-274; of food plants, evolution, 275-280 ; decline of, in Ireland, 274 ; of laud in India, 486 ; labor turned to cultivation of land by crises, 397 ; land going out of cultivation in Tur- key, 490 ; of vine in France, 497 ; of land in Germany, 520 ; ratio of tillage to entire area in Belgium, New Jersej^ China, 540 ; England, Wales, Kiangse, France, Yunyan, Switzerland, Illinois, Foo-Keen, Connecticut, New York, Massachusetts, Rhode Island, and Kwei Choo compared, 546 ; wheat-lands of England go out of cultiva- tion after repeal of corn laws, 559 V22 GENERAL INDEX. Cultivators (machines), siiperiority of American abroad, 596 Cunard Line of steamers, by wliat means it killed the Collins line, 657, 664 Currency (see Money), national debt is international currency, its joayment contraction, 354 ; relation of, to prices, 386-389 ; of Russia, suspensions and re- sumptions on 528, 529 ; acts to protect in England, 555 Curry-combs, export of, 596 Customs, revenue from, in United States, 468 ; chart showing ratio of customs to total revenue in United States, 469 ; how the same duty can produce both revenue and protection, 469 ; revenue from, in England, 479 ; decline in, since 1858, 480 ; in- crease on tobacco, 480 ; number of customs oiflcials in Great Britain and United States, 482 ; customs of France, 498 ; cus- toms union or " Zollverein " in Germany, 514 Cutlery, Americ3,n errors taught in the colleges but corrected in the factories, 594-598 ; whatever people can make buttons with which to buy ciitlery can make cutlery with -oiiich to pay for the buttons, 596 ; if we have the bones we should make the but- tons — if we have the ores we should make the steel, 598 ; Jefferson says so, 598 ; English manufacturei's pay part of American duties on, 621 Cut nails, American report of, 596 D. Damascus, once a centre of the cotton and steel manufacture, 490 Dearness, no check on consump- tion, but a stimulus, when the motive of consumption is dis- play, 475 ; British beer made dearer according to free-trade theprists by lack of free foreign beer, 482 ; permanent dearness ensured by breaking down domestic sources of supply wherever the foreign supply is inadequate, 510 ; is in inverse ratio to weight (tine goods make small parcels), 518 ; better than cheapness as to things nationally desirable (Mill), 557 ; in imple- ments the best is cheapest what- ever it may cost {London Times), 596 ; when protection against imijortation does not involve dearness in first instance, 609 ; no protective duties occasion dearness but those that are stim- ulating a new industry, 624 ; cost of beginning new industry (glass), 639 ; dearness of the cheap goods got under low duties but paid for by war of 1861 -65 and loss of American carry- ing trade, 648-650 Debasing coinage, in England, 339-342 Debt, effects of, 211 ; on value of currency, 221 ; on credit and cash payments, 221 ; the basis of credit, 352 ; Foreign debt may produce financial crises in coun- try owing it (McCulloch), 377 ; bad economy to pay debt with tools of trade, 383 ; debt of United States extinguished, " 384 ; has certain effects of con- traction, 394 ; Fawcett on, 392 ; MacLeod on, as a means of payment, 393 ; expenses of, in Europe and America, 438 ; chart of growth of, 447 ; aggregate debts of nations, 448 ; aggregate of public and private, in United States, 448 ; Adams and Fawcett, Lord Derby, Iron Age, and Professor MacLeod on economic aspects of national debt, 447- 451 ; political aspects of national debts, 450 ; repudiation or col- lection, 450 ; European debts cannot fall due, 450 ; are sav- ings banks, 450 ; effect of pay- ing off national debt, 450 ; national borrowing tends toward socialist expenditure, 451 ; inte- rest on debt of United States in 1883, 468 ; interest on debt OPjNEEAL tndex. 723 of England, 479 ; expenditure on debt in France, 497 ; cx]X)rt of, from United States to Ger- many, niS ; alleged .scaling of debt" in Russia, 529 Declaration of Independence, the- ory of equality in, 133 Declarations of war, practically obsolete, 417 . Decline, of cultivation of wheat in England, 559 ; of silk maniifac ture in Enghmd under free trade in silks, 634 ; of importation of raw silk into England G35 ; Porter on, 635, 63(i, 687 ; of American shipping under free trade principles applied to carry- ing trade and iron and steel industries from 1816 to 1855, 640, 653-664 ; of wool produc- tion and sheep in America under tariff reduction of 1883, of wool grown in England, 681 ; decline in price of cotton caused by expansion in its production, 687 ; in price of Michigan salt, 695 Deductive method, defined ; is metapliysical and a priori ; Mill and liicardo are exponents of ; begins in assumption and ends in obscurity and error, 9-14 Defence, national, things essential to, ,556; conviction of "Con- federate States " after the war, 688 ; manufactures essential to, 688 Definitions of terms : Political economy, 1-9 ; economic philos- ophy, 1-9 ; evasiveness of econ- omic definitions, 5, 13, 211 ; metaphysical method, 9 ; his- torical method, 17 ; ethics, 33 ; of statistics, 34 ; Manchester school, 40 ; wealth, 41 ; pover- ty, 43 ; Carey's and Fawcett's definition of wealth, 43-48 ; family, 60 ; social wealth, 63 ; national, 67 ; the want pressure, 77 ; value, 79-87 ; wage fund, 87 ; demand, 87 ; commodity, 91 ; anarchism, 91 ; wealth of two kinds, 93, 316; Gossen and Jevons' theorv of value, 94-99 ; marlvets, 99-103 ; prices, 103- 124 ; title, 135-140 ; land sys- tem, 140-150 ; railway system, 150-162 ; employers and work- ers, 153-168 ; profit, 163-184 ; wages, 184-187 ; reproductive and enjoyable wealth, 216 ; of value of land, 337 ; of economic rent, 338 ; of labor, 381-293 ; by Devas, Perry, Elder, Adam Smith, Roscher, McCulloch, MacLeod, Mill, Jevons, Carey, Ricardo, Cairnes, 281-294 ; of money, 329-336 ; bills of ex- change, 346 ; of free coinage, 361 ; crises, 370 ; of despotic and free government, 404 ; of monarchy, 405; of aristocracy, 405 ; of bureaucracy, 406 ; par- liamentary government, 406 ; re- sponsible government, 406 ; of republic, 412 ; of federal repub- lic, 415 ; of the industrial state, 443 ; functions of political state, 433-485 ; crime, 441 ; farming the revenues, 477 ; poll tax, 53 ; of local taxation and national in United States, 468 ; of rates. 476 ; of ad valorem duties, 481 ; of British free trade, 491 ; of German Zollverein as designed by List, 514, 515 ; of mir and artel in Russian communism, 536-529 ; of production, 533 ; of American vessels and of ocean and coasting trade, 653-653 ; of the state as the sum of all indus- tries that are intrinsicallj^ profit- less, but socially profitable, 700, 701 ; of private and public pur- poses, 703, 703 Degrees, sale of taxed, in Cliina, 455 Delaware, colony of, protected sheep and wool manufacture, 676 Demand, cause of value, 88 ; gov- erns distribution of wealth through investments of capital, 313 ; how controlled by large capitals, 330 ; causes rents, agri- cultural and urban, 337-343 : views of economists on, 337- 343 ; of American women for silks, 633 Democracy, due to ('i|uality of economic conditions eillier 124: GENERAL INDEX. among all or among the domi- nant class, 402 ; entire absence of capital is democratic, 402 ; except as to the slaves, 402 ; largeness of the class it means to serve, 424 ; democratic party under Jefferson regard a surplus of revenue as not a good reason for withdravsring protection from salt, 640 Denmark, monetary unit of, 338 ; government of, 407 ; our bal- ance of trade with, 599-601 Deposits in bank, 349; run for, and crisis, 371-373, 377, 385-389 Destruction, of industries the only alternative to protecting them, 461-462, 561 ; Shadwell on, in Dutch Indies, 480 ; Humboldt on, in Mexico, 480; of opium in China, 534 ; of Chinese manufactures, needs only a free introduction of English means of transportation and lending money, 536 ; destruction of val- ues by strikes, 310, 328 ; of Roman farming by distribution of free corn, 317 ; requires more wisdom (to avoid doing injurj') than protection, 561 ; of Portu- guese wool and woolen industry by treaty, 669 ; of qiiinine in United States, 692 Diet, vegetable, its relation to in- dustry, 298 ; of the poor in In- dia, 486, 487 Dimensions, when cheapness in production depends on, it must begin at some relative loss, or not at all, 319 ; of iron and steel manufacture essential to cheap iron and steel, 509, 652; in cotton production, effect on price, 687 Direct taxation, in England, 476 ; difficulty of telling how much any area pays, 478 Discounts, libei-al, may produce the intiations which end in crises, 389 Discriminating duties, 652,665; dis- criminating port and dock dues against American ships, 655 Distillers, incidental protection to, 482 Distribution, of returns of industry between rent, wages, interest, and profits, 173-184 ; of commodi- ties distinguished from distribu- tion of wealth, 196 ; of wealth precedes production of com- modities, 196, 198 ; economic distribution is just, 199 ; its re- lation to philanthropy and char- ity, 200 ; Mill, Ingersoll, and Karl Marx on, 200-215 ; by in- vestment and by luxury, 213- 215 ; equality of enjoyable and consumable products compared with inequality in control of re- productive wealth, 199-212, 224 ; crime aims at a redistribution by unlawful means, 441 ; of tax- es in Great Britain, 476 ; of in- dustries in France, 496 ; of w^ealth and work under the Commune in Russia, 526 ; of pro- duct as affected by depriving working classes of free access to the land, 574 Disunion, allied to free trade in all nations, 637-630 Diversity of industries, essential to happiness as well as industrj^, 317-319 ; how to effect it, 382 ; in France leads to self-employ- ing, 496 ; is not inequality of fa- cility in producing the same thing, but equality in producing unlike and exchangeable things, 513 ; protection only increases prices when increasing the di- versity of industries, which re- duces prices, 564; northern States grew rich during war of 1861 to 1865, owing to, while southern States were wasted by lack of, 688 Diversity of natural gifts, gives rise to a commerce which pro- tectionists put on the free list, and free traders in some in- stances place high duties on, 573 ; it is only artificial gifts — capital, anteriority in jiroduc- tion, etc. , that protectionists de- sire protection against, 573 Division of labor incident to large capital, compact populations, and great diversity of pursuits, 219; effect of lack of, on mental con- dition, 317 GENERAL INDEX. 121 Dogma, STibslituted for inductive science, 571 Dollar, of United States standard, 336, 337; of Canada, Liberia, Mexico, 338; Wendell Phillips on the moral value of a dollar, 583 Dominion of Canada, report on manufactures, G64-668 Donskoi wools, 672 Door-knobs, English and Ame- rican, prices of, 590 Door-latches, American, export of, 596 Doubloon, 338 Draclima, monetary unit of Greece, 338 Drain, of rent to foreign landlords, 487; of native M'ealth to pay for forced importations (Japan), 554 Drainage, a local rate for, 477 Drink, cost- of , 24; of beer in Eng- land, 482; of wines in France, 497; effect of, on labor in Russia, 537 Drugs, protection to in 1828, 383; export of, 610 Dry goods, American market the cheapest, 623 Dutch government in East India, order destroying spice trees, 480 Duties, effect on price, 25-26; when they come in as protective, 319; in 1861 duties on imports sus- tained the credit of government, 353; protective duties may pre- vent commercial crises, 374-390; under tariff of 1824-28, 383; change from ad valorem to specific, 383; low duties produce universal disaster in 1837, 382; and 1857, 385; made protective to manufactures by Institutes of Manuin India, 453; revenue from in United States, 468; Turkey limited to 3 per cent, duties on imports from ] 675 to date, effects of, 488-492; duties high on Irish goods going into England, low on English goods going into Ireland under Act of Union, 493; Dr. Smith on protective and retaliatory duties, 556; must either cause revenue only or sup- press or protect production, 563; protective duties repeal them- selves at the proper time, 563, 564; are for revenue only, " wherever there is and can be no competing domestic product," 573; provided domestic com- petition is not jirevented by law; in which case they are for revenue plus the destruction of native industry, 481 ; paid by foreign producers, schedule of, 586; Mill's concession bungling but adequate to the point, 587; duties in other countries reduce profits of English producers, 588; working of duties relatively to bounties, 596; importing non- comijetiug (tropical) products free works no increase in our exports to countries producing them, 600,601; on agricultural implements, 610; articles on which duties chiefly paid by foreigners, 610-613; on silk in United States, 634; in En2,land, 637, 638; effect of repeal of, 635, 636; on iron and steel rest on manufacturers of iron and steel goods, 647; discriminative on iron and steel carried in British ships, 648; discriminating duties on tea brought in American ships, 653; progressive duties on wool proposed by Benton, 676; tariff' on since 1824, duty on carpet wools a revenue duty, 678; comparison of invoice prices with foreign quotations on wool show that foreign prices " dip " downward by amount of duty to get the wool into Ame- rican market, 679, 680; chart showing wlio pays duty on wools, 681; on salt in United States, 695; effect of reducing American duties to send up foreign prices, 695 Dye-stuffs, duties on and export of, 610: on wool, 672; in France, 674; Tyrian dyes, value of, in Roman purple, 669; from coal tar (aniline), 669 E. Earthenware, export of, 610; im- ^26 GENERAL INDEX. ports of and revenue from, 613; prices in New York, bow affected by duties and produc- tion, 621 East Indies, balance of trade against United States, 600 Eas^ India Company exported none but Englisli clotb, 670 Economy, in the individual con- curs with progress of society, 308; of coin and credit, 355-358; Adam Smith on, 356; in the wage contract, retailing, etc., 433; economics of the Chinese but little known to western nations, 548; Chinese economy has its credit side, 549; as well as its debit side, 543; economy of protection, 609-630; in iron and steel, 648-650; in the sub- sidy policy of England, 659-663; in privateering as compared with svibsidies, 663; false economy of United States mail service nets both loss and disgrace, 664 Ecuador, monetary unit, 338 Edge-tools, wages in American and Eiu-opean, 581; Canada exports, 668 Education, and the State, 434; and crime, 441; illiteracy in France, 497; expenditure on, in France, 497; care of, in Germany, 521, 523; in glass-making, 644; a mode of protection, 675 Effort, tariff required to protect where equivalent effort pro- duces, 585 Eggs, yolks of, duty and revenue on, 586; exports, 610; imports , and revenue, 613 Egypt, civilization attended pri- vate ownership in, 23; early use of money in, 334; present unit of coinage and its value, 338; taxes and tribute in prehistoric, 452, 453 ; tribute paid to Rome, 454; food exported during famine, 570; ancient use of glass in, 638; iron and steel in, 645, 646; England's trade in cot- ton goods with, 689 Elbe, change in commerce on the, 518 Elections, cost of, in United States, 414, 416; modes of, in use prior to American constitution, 418; where many constituencies vote separately and simultaneously, an anterior nomination results, 419; electoral commission, 421 Eloquence, its period of ascen- dency in government, 402; British and American speeches, 411 Emancipation, in Russia how effected, 526 Emigration, always at first at- tended \)j hardship, 318; a sub- ject for state aid, 417- Empire, British, maintained by military force for profits of trade, 484 Employment at wages, beginnings of, 164-170: wages system economical and equitable, 170- 181; conditions of, in compact centres of industry, 210; qualities that promote success and utility in, 307, 308; employment in in- dustry is the only actual organiza- tion of labor, 310; strikes in various employments, 328; em- ploying class larger in France than in England or United States, 496 Employers, losses to by strikes, 310, 328; in silk industry in America, 633; in silk trade in England. 739 Enforced trade, 483-491, 516 ; Ger- many has none, 516; in India, 483 ; in Turkey, 488 ; in Ireland, 491 ; in China, 536, 553 ; in Ja- pan, 553, 685, 686, 689 ; Eng- land's coerced trade five times greater than all others, 689 Engine, steam, invention and effect of, 680, 681, 684 England, trade between, and France and Belgium, 27 ; rail- way travel in, 28 ; displacement of labor in other countries by machinery in England raises wages in, 209 ; possible produc- tion of wheat in, 231 ; relative wages in, 315 ; it practices not free trade but military protec- tion, 316 ; intended free coinage of silver but failed, 362 ; Bank of OENERAL INDEX. 121 England producing panics and crises for profit, 389 ; govern- ment of England free, 404 ; par- liamentary, 406 ; responsible, 406-412 ; England practices mil- itary and subsidy protection to foreign trade, 431, 432 ; an army- made state, 439 ; monopoly of opium produQtion, 456 ; crises of 1825-6 produced by resump- tion, 371 ; crisis of 1847 by free trade, 374-376 ; crisis of 1857 produced by bankruptcy in United States caused by free trade, 376-380 ; crisis of 1866, 389 ; methylated spirits, 476 ; lo- cal taxes in England and Wales, 476 ; paupers in, 478 ; cost of paupers, 478 ; and of army, 478 ; prohibition of cultivation of to- bacco in, 480 ; highest known duties on imports laid by, 481 ; governs for profits of trade, 484 ; a career and a market, 484, 485 ; England gave Bengal a freer trade than herself, 487 ; same to Tur- key, 489 ; permitted protection in Ireland from 1783 to 1800, 492 ; Act of Union a measure of free trade to Ireland and protec- tion to England, 493 ; contended for free trade in Germanj^ 514 ; pyramid of England's industrial power, 516 ; her monopoly of barbarian markets, 521 ; .her forced seizure of Chinese mar- kets, 533-535 ; population to scjuare mile of, compared with China, 545 ; average crop of wheat per acre in any county in, 254 ; relative labor-cost of pro- ducing iron in England, Penn- sylvania, and France, 573 ; wages in England compared Mdth Mas- sachusetts, and with United States, 581, 582 ; American bal- ance of trade against England, how adjusted, and net balance tending to an increase of coin, 599-602 ; silk manufacture de- stroyed by free trade in silks, 635-637 ; total . value of manu- factures of all kinds, 637 ; sti- fling American manufactures (Brougham), 642 ; population, and iron and steel manufacture in, for a century, 646 ; product, 1883, of iron, steel, and coal, 650 ; course of, in building up her carrying trade, 640-660 ; and in inducing Americans to allow and aid in the destruction of American carrying trade, 640- 661 ; wool supply of, from 1850 to 1883, 673 ; consumption of wool compared with United States, 673 ; brief advantage over France in woolen treaty, 674 ; Napoleon's war on England in- dustrial as well as military, 674 ; triumphs in the former, 675 ; prices and incidents of cotton famine, 690 English spoliation in India more disastrous than Parsee or Mo- hammedan conquests, 487 ; in Turkey, 488-491 ; in Ireland, 491 ; early Ent;;land in wool and woolens, 668, 669 Enterprise, defined, 163 ; distin- guished from loans to govern- ment, 449*, how destroyed among the Hindoos, 485 ; pri- vate enterprise (Moffat) not called on to make the sacri- fices required in initiating a new industry against certain foreign supei-iority, 563 ; Devas on same point, 568 ; entrepreneurs, larger proportion of, in France, 496 ; small in China and India, 623- 626 ; consequences to labor, 625 ; private enterjjrise liable to be misapplied where state aid is also, 632 Equality, theories of, in taxation, 456 ; cqualitjr in industrial claims of Irish (491), Hindoo (488), with English not recognized, 488-491 ; of elTort protected by tariff, 585 Equilibrium, of industries, Jeffer- son on, 598 Escudo, coin of Chili, 338 Ethics, relation of economics to,22 ; no ethical perfection in govern- ment, 440 Europe, rates of wages in, 581 ; our balance of trade against, 600 ; how adjusted, and net balance in our favor, 601 ; first glass V28 GENERAL INDEX. manufacture in, 639 ; the primi- tive brown race in, 645 Evolution, of historical method, 16 ; scientific, 23 ; of economic progress in America, 36 ; of House of Commons, 37, 408-411: of civilization, 42 ; of society, 49 ; from communism, 51 ; to private wealth, 55 ; of the fam- ily, 60 ; of national power, 65 ; of a correct definition of value, 80-92 ; of true theory of value, 94-102 ; of markets, lOp-106 ; of a sound doctrine of prices, 107- 121 ; of titles, 127 ; of monop- oly, 130 ; of laws, 133 ; of rights, 135, 137, 139 ; of immigration, 147 ; of railways, 151-160 ; of true theory of wages, 163-183 ; and of distribution of wealth, 184-205 ; of capital as a laboring agent, 208 ; of a distorted rent theory, 239 ; of the true doc- trine, 243 ; of cultivated plants, 275 ; of a true definition of labor, 282-290 ; of mone,y, 330-336 ; of freedom, 359 ; of occupations causes forms of government, 403 ; of responsible and parlia- mentary government, 401-412 ; of beet sugar, 503-506 ; of Ger- man industries, 514-521 ; of Ger- man empire, 521-525 ; of silk manufacture, 631-637, 638-644 ; iron and steel, 644-652 ; English and American shipping, 652-664; of Canadian manufactures, 664- 668 ; of wool and woolen indus- tries in Europe, Australia and America, 668-682 ; dependent in United States on the iron and steel industry, 677 Exchange, why men exchange, 91 ; in markets how conducted, 99- 1?,0 ; theory of equivalence in exchange not an unerring one, 109; usually equitable, 110; title the source of, 137 ; equivalence between employer and employed, 171-182 ; the surplus of one in- dustry depresses its own price, but gives value and price to that surplus of another for which it exclianges, 320, 321 ; money as a medium of, begins in treasure, 329-331 ; bills of, a form of credit money at times, 335, 346 ; arises out of diversity of produc- tion, but not out of inequality in producing same things, 513 ; equivalence does not dispose of the protectionist argument of two capitals and two sets of la- borers on home product, one on imported, 560, 561 ; "exchange is exchange " — the formula that dispenses with all other knowl- edge (Perry), 571 ; of wool for cloths between England and Bur- gundy, 669 Excise, 454, 476, 479 •, excise du- ties rest on what articles in Eng- land, 481 ; none on tobacco, 481; on beet sugar in France, 505 Executive, a unit in all govern- ments, 416 ; large control over the war power, 417 ; compared to a premier, 417 ; or czar, 417 Expansion in volume of currency, 385-388 Expediency of protective tariffs, 565 Expenditure, on government, 428 ; on armies, 424 ; on education in Northern States, 434 ; in local government and cities in United States, 468 ; on war, navy, In- dians, pensions, etc., 468; local in England, 476 ; on poor, 478 ; on navy and fleet, 478 ; on post- office, 480 ; on school and educa- tion in France, 497 ; on land and sea forces in France, 497 ; on debt in France, 497 ; of Ger- many and Prussia compared, 522 ; on schools, 523 Exports and Imports, 26-28, 34; relation to prosperity, 35 ; exces- sive exports produce English cri- sis in 1857, 377 ; of gold in 1851 to I860, 386 ; duties on, in China, 455 ; of manufactured tobacco to England, small, 481 ; of leaf tobacco, 480 ; tax on in Turkey, 488 ; of machinery for working flax prohibited, 489 ; export du- ty on cloth laid by Irish parlia- ment, 492 ; of food, raw materi- als and manufactures from France, 500 ; of beet sugar to GENERAL llfDEX. 729 England, 505 ; change of exports from raw materials to finished products in Germany under pro- tection, 517 ; value of exports in inverse ratio to weight, 518 ; of bonds from United States to Ger- many, 518 ; of lumber from United Slates, 533 ; every pro- tected article,. incapable of dom- estic production at first, becomes capable of export at last, 564 ; countries which export food not therefore growing ones, 566 ; habitual export of food tends towards famines in the food pro- ducing country, 570 ; the exports and imports free traders encour- age are those in which both countries have the same natural facilities and differ only in ante- riority, 573 ; protectionists alone desire a commerce based on dif- ference in natural facilities, 573; export in large quantities of an article proves a higher or equi- valent price abroad to that pre- vailing in the country of export. 591, 592, 609 ; but is not in con- flict with a small import from pro- ducers locally favored as to near- ness, cost of production, etc., 593 ; in such case the duties col- lected on the import are a de- duction from a producer's price which is not made greater by them, 593 ; and are an interna- tional tax, 594 ; American export of iron and steel wares displac- ing those of Birmingham with le.'^s than eight years of protection, 596 ; no more exports desirable than will pay for what we lack the natural (not acquired) facili- ties to produce, 598 ; exports are not dependent on our willing- ness to import any competing product, 599-601 ; exporters have essentially nothing to do with importers, 601 ; capacity to export limited to highly trans- portable goods, 602 ; export of glass in 1818, 641 ; of machinery and artificers from England made a felony, 647, 648 ; Amer- ican exports and imports, how carried, 656 ; export of wool from England pi'ohibited for 165 years, 670; present export of wool- en goods, 673 ; large ratio of ex- ports of cotton to domestic con- sumption in Great Britain, 685 ; effect of export trade in cotton goods on Great Britain's foreign policy, 689 ; of butter, 696 F. Factory, relation of, to the farm, 320 ; to home manufactures in Russia, 527 ; increase of, in Can- ada, 667, 668 Failures, diminish as means of payment increase, 221 Fairs, precede markets and cities, 100 Fair trade, Thorold Rogers on, 557 Fallacies, in Mill, 10-15; in histories of political economy, 8; alleged in mercantile school, 18, 19 ; Cossa as to statistics, 24 ; of ef- fect of dispi'oving statistics, 24 ; of taking part for the whole as to American cost of drinks rela- tive to food, 25 ; Springer as to tariff duties, 26 ; in Fawcett as to effect of cheap bread on crime, 26 ; as to safety of railway trav- el, 29 ; prosperity of free and slave States, 33 ; homicides in South and federal intervention, national prosperity not lueasura- ble by foreign trade, 36 ; of rest- ing value on labor, 84 ; of Dr. Smith's theory of invariable val- ue of labor, 85 ; of Karl Marx's theory of value, 91 ; of theory that speculation raises prices, 100-110; of getting cheap bread- stufl's by importation, 117 ; of resting title on labor, 129 ; of ideal theories of equal taxation, 456 ; of schemes of taxation which suppress a domestic pro- duction yet profess to take no money out of the pockets of the people except what goes into the treasury, 462 ; of the incidence of taxation, 462-467 ; of trying to inflict ". suffering" or "sacri- fice" on the rich by taxes, 463, 730 GENERAL INDEX. 467; of Mr. Mill as to customs du- ties being inadequate to produce both protection and revenue, 469 ; of Adam Smith's notion that cer- tainty of taxes causes economy in voting them, 474 ; of Bastiat concerning scarcity obstacles, etc., 506-513 ; of equivalence in excliauge argument for free trade, 561 ; in George's land con- fiscation scheme, 126-129 ; in socialistic scheme of railways, 160; in Dr. Smith's theory, "labor causes all values," 167-175 ; in theory of declining profits, 191- 195, 228-230; in theory that wealth must be distributed equally or injustice is done, 201- 228 ; in Malthus's theory of pop- ulation, 231-235 ; in Ricardo's theory of rent, 238-243 ; dear labor underworking cheap labor, 267 ; in Malthus's theory of pop- ulation tending to outrun means of subsistence, 295-297 ; in the distinction between raw mater- ials and finished products except as to a single industry, 311 ; of increasing wages by diminishing workers and consumers, 320 ; of protected and unprotected "classes, 320 ; concerning Gresh- am's law, 368, 373 ; of objections to balance of trade doctrine founded on statistical omissions. 395 ; of M. Quetelet's ground of assuming that crime is not pro- portionate to poverty, 442 ; of Dr. Smith's giving his own opin- ion concerning Colbert and Tur- got as that of " the most intelli- gent meuin France," 501 ; of com- puting the saving on the non-pro- duction of a commodity which a country lias all the natural fac- ilities to produce which are pos- sessed by any other, 504 ; of sup- posing cheapness controls the trade of countries whose trade conditions grow out of past wars, treaties.and other historic sequen- ces, 517; of Chinese census, 538- 550; of tariff for revenue only, i.e., without either protection or sup- pression, 564 ; of Perry's argu- ment that importing foreign goods is not employing foreign labor, 572 ; of the "profit argu- ment " for free trade, 576, 577 ; of Perry's api^licatiou of Ricar- do's theory, that dear human labor can underwork cheap human labor, 267 ; of the error that the import and payment of duty on a small part of a coun- try's supply raises the price of the whole domestic supply, 591; reductio ad ahsurdum, that it con- verts the whole income of Ameri- can producers of every kind into a collection of protective taxes from each other, 592 ; of pi'edic- tions by McCulloch that free im- portation of foreign silks would not destroy English manufact- ure, 637; of domestic price of every imported or imjjortable article being the foreign price l^lus the duty, 682 Family, relation of, in various per- iods, 60-65 ; unequal wealth of, in England, 273 ; regulation of, by government, 431 ; harmony of, in China, 552 ; resemblance of family unity to national unity, 575 Famine, in India, 331 ; causes, ex- tent, and number of, in India, 485 ; in Ireland, 491 ; would re- sult in China if opened to rail- roads, 536, 547 ; export of food continues during famines, 570 ; cotton famine in England, 690 Fanaticism as a social waste, 446, 447 Fancy articles, export of, 610 ; im- ports of and revenue from, 613 Farmers, cost of meat among, 25 ; ejectment of tenant farmers in Ireland on repeal of protection to corn, 26 ; in Persia, 51 ; ryots of India affected by loss of man- ufactures, 67 ; small and large farms, 73 ; prices of crops af- fected by scarcity, 96 ; relative power of consumption and pro- duction, 97 ; how affected by trade in grain in great boards and produce exchanges, 103, 112; profit made by them on short GENERAL INDEX, 731 crop of 1881, pea.s and oats, 107 ; production of fanners deter- mined by market prices, 108 ; prices not determined by labor or cost of production, 108 ; products of as alTected by sea- sons, wars, currency, protection, etc., 110-120 ; decline of acreage planted by farmers in Great Britain under free trade in corn, 118-120 ; protits of farmers in England, 178 ; inequalitj^ of conditions among, equalized by migration, 214 ; farming less favorable to the poor than city life, 219 ; economy of Dakota and bonanza farms, 219 ; Dr. Smith on farm rents, 288 ; true cause of rent, 238, 242, 243; how rent and transportation balance each other as taxes on farmers, 247-253 ; how many are tenant farmers in United States, 267 ; capitals in farms, 267 ; farmers being elim- inated in Ireland, 274 ; decline of crops and animals after pro- tection withdrawn, 275 ; sim- plest organization of farm labor is working on shares, 311 ; num- ber engaged in, in United States, 320 ; farmers of the revenue in Asia and Africa, 453 ; farmers of India, how destroyed, 485 ; of Turkey, how taxed, 488 ; com- petition between farmers and its effects, 513 ; can have no trade with competing farmers, 513 ; in Prussia advance in tillage, 520 ; employed by the commune (mir) in Russia 526 ; farmers' prices and import duties, 591 ; butter, potatoes, grain, and flour not raised in price in United States by duties, 501 ; nor wool, salt, coal, and lumber, 591, 592 ; farmers of America are not the promoters of any free trade agi- tation whatever — importers not authorized to speak in their name, 604, 605 ; share of duties paid by farmers, according to Thos. G. Shearman, less than from 1 to 3 per cent, of the total, 612 ; farmers of Great Britain sacrificed to the manufacturers, 676 ; products of, exported, 610 ; yet a revenue derived from their importation, 613 ; rates of duty on farmers products, 610 Farming the revenues, in China, 453 ; Asia and Africa, 453 ; in Rome, 454 Federal union in United States and Germany, how formed, 514 Fertility of man relatively to ani- mals and plants, 231-235 ; as an element in rent, 238-242; de- cline of, in certain countries and advance in others, 254-262 ; fertility changing to desert in Turkey through free trade and bad government, 490 ; how in- duced in Prussia, 520 " Fiat " (see Money) Fig tree, taxed, but imports free in Turkey, 489 Finance of United States, in 1861 to 1875, 352-355, 386 Finished products, value of ex- porting, rather than raw mate- rials, 322 Fire-arms, wages in manufacture of, 581 ; superiority of Ameri- cans in, 596 Fire-wood, revenue from, 586 Fisheries, taxes on, 454 ; English statutes to protect, 555 Fish, exports and imports of and revenue from, 610, 613 ; con- sumer does not pay the duty on, 615 Flannels, protection to, 383 Flax, duties on, 383 ; in Russia, 527 ; wages in flax manufac- ture in Massacliusetts and Great Britain, 582 ; fiber compared with M'ool, 672 Florence, woolen manufacture, 669 Florin, 338 ; in England, 339 Food, rate of production of, 232 ; evolution of sources of food, 275-280 ; no food fund in nature, 295 ; fallacies of the fear of man outrunning means of subsis- tence, 296; effect of free coi-n on farmers of Italy, 317 ; con- sumer makes price, 320 ; of Hin- doos, 486 ; imports and export!? Y32 GENERAL INDEX. of, in France, 500 ; from Ger- many, 515, 520 ; in cotton goods, 520 ; export of, in raw, ceases when embodied in linislied prod- ucts, 520 ; countries exporting food are not necessarily growing countries, 566 ; dependence of a country on foreign countries for food, 570 ; excess of food in a food-exporting country no guar- anty tliat its people will not starve, 570 ; wages in food prep- aration in Massachusetts and Great Britain, 582 ; strikes and losses in, from 1881 to 1887, 328 ; butter in United States, effect of duty on price, 586 Foreigner, how made to contrib- ute revenue under protective duties (Sidgwick), 565 ; depen- dence on, discussed by McCul- locli and Devas, 570 ; on what articles foreigner pays the duty, 586 Foreign salt, lessened consump- tion of, in United States, 693 ; price, 697 Foreign ships, carry our imports and exports (659), because of the total withdrawal of protec- tion from American carriers, 642, 653 ; causes, 659, 660 Foreign trade, protected by Great Britain effectively, 316 ; effects of in United States, 381-385 ; how classified in France, 500 ; limitations and restrictions hav- ing other than a protective de- sign not to be charged to the protectionist principle, 500, 501 ; limited relatively to home trade by cost of transportation to arti- cles combining small bulk and easy portability with large value, 600 ; restricted by the small number of products it can take, 602 ; involves military aggression and a universal and incessant drumbeat, 685, 686 Forests, waste of and extent of in United States, 148 ; taxes oii in Roman empire, 454 ; wo- men working in, in Germany, 525 Forfeiture of foreign vessels tak- ing part in coasting trade, 652 Franc, unit of France, Belgium, and Switzerland, 338 France, silk trade of, 26 ; travel in, 28 ; military statistics under Napoleon III. , 30 ; marriage in, 30 , cost of wars in, 70 ; value of agricultural products of, 230 ; relative wages, 315 ; coinage of, from 1851 to 1856, 380, 386; monetary unit of, 338 ; change in social forces, 403 ; French government responsible, 407 ; as a republic, 416, mayors and police prefects appointed, 416 ; expenditure on army in, 438 ; M. Quetelet on crime in, 442 ; ' comparative loss of life by indi- vidual crime and social strug- gles, 446 ; credit, how main- tained, 448 ; payment of German indemnity by, 450 ; producing tobacco, 456 ; but permitting subjects also to produce, 481 ; employers numerous in, 496 ; relative to Great Britain, 497 ; land-owners numerous, 497 ; value of wine manufacture, 497; of all manufactures, 497 ; of foreign trade, 497 ; government centralized, 497 ; protective duties in, 498 ; free and dutiable articles, 499 ; France and protec- tion discussed by Adam Smith, 500-503; beet sugar, 503-506; her military relations to Ger- many, 515 ; proportion of land cultivated to population, 546 ; labor cost of making iron com- pared with that in England and Pennsylvania, 573 ; unity of, 630 ; under Colbert introduces manufacture of china, glass, carpets, and tapestry, 639 ; pro- duction of iron, steel, and coal in, 650; lines of steamers sus- tained by, 658 ; merino wools of, 672, Mauschump, wool of, 673;- Avool supply of, 673 ; beginning of the wool industry under Col- bert, 673 ; brief mistake of French statesmen in 1786 con- cerning woolens, 674 : triumph of Napoleon's protective policy GENERAL INDEX. '733 in Europe generally since 1816, 675 ; England's trade in cotton goods with, 089 Frankfort, ol4, 515 Free coinage, 341, 3-42, 358-369; defined, 361 Freedom, relation of prices to, 121 ; diminislies in compact centres, M'itb increase in power, but can still be had on the out- skirts, with relaxing power, 210; capital emancipates labor, 212 ; how, 213 ; freedom of speech, when the intent of speech is to promote crime, 307 ; relation of money to, 329 ; created by the extra dollar (Phillips) after satis- fying wants, 583 Free list, of England, 482 ; of India, 487 ; of Turkey, 488 ; of Ireland, 493 ; of France,498,499; coffee on, in United States, not in England, 600 ; American free list covers six-sevenths of all articles not producible in America, 601 ; but importing them free has no ten- dency to increase our exports to the countries which produce them, 601 ; we sell them only a fifth as much as we buy from them, 601 " Free ships," as a pretended American policy, a fraud, 661, 662 ; the counterpart of the Tro- jan Horse, 662 Free trade, associated with the Laissez faire doctrine, 15 ; mak- ing one world's market would impair wages in high standard countries, 315 ; how under the name free trade protection may be practiced, 316 ; the argument that " all trade is barter" vindi- dates protection, 322 ; (rue free trade measured hy freedom in paying for what we buy with wliat we have to buy with, 322 ; crises produced by free trade policy in England in 1847-8, and United States in 1854-7, in 1819-1837, 374-381; tends to over-tradina:, 377 ; produces crisis of 1837, 382 ; and of 1857, 385 ; imports increase and revenue relatively to imports fall under free trade, 469-472 ; how far British tariff" is a free trade scheme, 482 ; internal trade of England less free than in United States, 482, 483 ; effects of forcing English trade on India, 483-488 ; free list in France, 499 ; free trade puts high duties on imports not ]M'o- ducible in the country laving the duty, 480, 508 ; free trade soon brings dearness and scarcity, 509 ; wdierever the domestic sup- ply is the only one adequate to the demand, 510; list of Ger- many, at first an advocate of free iTade, 514 ; how changed, 514 ; free trade theory covers coerced trade in practice, 553 ; exempli- fied in China, 534 ; and Japan, 553, 554 ; lowest duties known save in Turkey, 533 ; exceptions to free trade (Mill), 557 ; an argu- ment of protectionists that no free trader can refute except by reftising to state it, 560 ; free trade in fact only a criticism, not a policy, 602 ; while it professes to let industries alone in the country adopting it, it really cloaks war on all nations, 6, '8 ; its tendencies disintegrating, 629, 630 ; displacement of labor by, in silk manufacture in Eng- land, 635 ; American ocean ves- sels left to free competition with foreign since 1816, 642, 653; does not kill until foreign ship- builders can build a cheaper ship, 656 ; then it proves fatal, 656 ; free trade pressed but de- clined in all British colonies, 664, 668 ; absolute free trade in wool and woolens kills the wool and woolen industries of Poi'tu- gal and Brazil, 670 ; short career of mischief in France in 1780-93, 674 ; free trade in United States transfers American ships to Eng- land, and free trade in England transfers millions of farmers, wool-growers, and silk-makers to United States, 682 ; free trade the corner-stone of the Con- federate rebellion, 687, 698 ; in 734 GENERAL INDEX. quinine, 693 ; free trade is the creed of untlirift in the United States, and derives its cliief sup- port from the thriftless classes, 099 ; the uniform sequence of prosperity after protection caus- es denials that sequence implies causation, post hoc, etc., 703-707 Free traders, irritable and super- cilious tone of,' 555-558 : their error of style arising from bumptious intolerance combined with limited research, 558 ; Jevons and Perry do not meet the "one and two capitals" point, 560, 572 ; when free traders are not unpatriotic (Devas), 570; can not claim the "diversity of natural gifts" argument, as it belongs wholly to the protectionists, 572-573 ; the free trade contention is for free admission of competing products, and high duties on products dependent on unlike natural conditions, 573 ; Mr. Shearman contends that manu- facturers in United States pay from 97 to 99 per cent of tariff duties, 611-612 ; downfall of American ocean carrying trade due to free traders' efforts to get cheap iron and steel by importa- tion while England was getting it by protection, 648-650 Freight earnings must be added to exports of carrying nations to state balance of trade correctly, 395 ; of English ships, 663 ; how obtained, 659, 663 French school of economists, Bastiat, 8, 42, 234 ; Say, 9 ; Lh- Vasseur, 80 ; demand the cause of labor, Boisguillebert, 82 ; Condillac, 82 ; Cournot on mar- kets, 100; Dupin, 70; Cordier, 70 ; Wolowski, 78 ; Godard, 189; Fontenay, 242; DeCandolle, 275-280; Editor of Le Devoir, 313 ; M. Godin, 313 ; Le Play, 331; Baron de Rothschild, 364; Cernuschi, 373 ; Quetelet, 441- 445; Bastiat, 506, 514; Colbert and Turgot, 500, 503, 639, 650, 673; Napoleon, 673, 675 Fruits, exports of, 610 ; imports of and revenue from, 613 Fuel, in making iron, 645 Furniture, wages in manufacture of in Massachusetts and Great Britain, 582 ; strikes in, 328 ; revenue from in United States paid by foreign producers, 586 Furs, exports of. 610 ; imports of and revenue from, 613 Futures, dealing in on boards of trade; economic aspects of, 104 G. Gas-fittings, export of, 596, 610 Gaul, taxes in, 454 Genoa, woolen industry, 669 Georgia, silk raising in, 631, 632 ; present production of iron, 646 ; Robert Toombs of Georgia helps effectively to destroy American merchant marine, 657, 658 ; and earns contempt of British free traders by his subserviency, 658 ; woolen coat made in one day in, 671 German economists, Roscher, 24, 43, 50, 64, 122, 178, 240, 380 ; Karl Marx, on value, 88-94, 184, 189, 240 ; Soetbeer, 868, 366; H. H. Gossen, 94; Heine, Heeren, Hegewisch, Niebuhr, 139; Griln- lund, 212, 176, 179, 306; List, 514-530 Germans, subscribed to French indemnity, 450 ; indemnify the empire for its absolutism, 524 Germany, accidents in mines, 82 ; fairs in, 102 ; value of agricultural product, 230 ; relative wages in, 315 ; experi- ence in changing from silver to gold, 362-363 ; monetary unit, 338 ; emperor's power, 406 parliament advisory, 40 > expenditure on army in, 438 empire founded by its army, 439 ; production and export of beet sugar in, 503-506 ; national unity and German empire pro- moted by protection to German industries, 514-520: trade of with England prior to 1827, 515 ; in raw materials kept Germany aENEHAL INDEX. iSD poor, ,'515 ; its war "wilh Austria in 1866-7 caused no debt, 516 ; war of 1870 with France, 516 ; industrial conditions of, 516 ; no enforced trade, 516 : Germany leads in specified particulars, 521 ; causes of, 521 ; history of evolution of German Empire industrially, 514^521; politically, 521-525 ; heterogeneity and dis- union of, under free foreign trade, 521, 522 ; revenues of, 522 ; rates of wages in, 581 ; American balance of trade against, 600 ; unity of Germany a result of protection, 630 ; superseding English in silk manufacture, 636 ; product of iron, steel, and coal in 1883, 650 German Empire, monetary unit of, 338 ; political evolution of, 521- 525 ; industrial growth of, 514- 521 ; vindicated in parliament, 524 Gia'-mill, invention of, and effect, 681 Gimlets, export of, 596 Gin, Whitney's cotton, effect of invention, and nature of, 686 Ginseng, export of, 610 Glass, trade in between England and Belgium, 27 ; duties on, 383 ; in France, 498, 502, 503 ; German, 519 ; Victoria protects, 530 ; beginning manufacture of in Pittsburg, 578 ; rates of wages in glass manufacture in America and Europe, 581 ; England pro- tects her own glass, but with- draws protection from Irish glass, 493 ; exports of, 610 ; im- ports of and revenue from, 613 ; history of manufacture of, in Egypt, Europe, and United States, 638-644 ; begun under Colbert's auspices in France, 639; in Scotland, England- and American colonies, 639 ; Alexan- ander Hamilton's report on , 639 ; white green. Hint, German, crown, and cut glass, 640,641; total product of, from 1824 to date, 643, 644 Glue, revenue paid by foreign producers on, 586; export of, 610 Gold, tie between government credit and gold in 1861-5, 221 ; as an ornament, 331 ; followed silver in England, 334 ; the cur- rency of capital and large invest- ments in reproductive wealth, 339 ; quantity in use as money, 344 ; Adam Smith on relati\'e values of gold and silver, 345 ; rate of production of, relatively to silver, 366, 367 ; how affected by drain to India, 373; can not afford to pay debts in gold when it removes an implement of business, 383; in arts, 383; gold penny, 339 Gourde, monetarj^ unit of Hayti, value, 338 Government, on what qualities in, growth of wealth depends, 68; origin of, 131-135; changes in, 133 ; debts of, 352 ; is involuntary, instinctive, and beyond the collective power of society to dispense with, 398- 399 ; among savages is tribal, 402 ; gi'ows out of their economic condition, as being without capi- tal, 402 ; if economic conditions are unequal becomes aristocratic, 402 ; climate, 402 ; occupations mould the form of, 403 ; remains an affair of party, 404 ; despotic when, 404 ; free, 404 ; judicial department most coercive, 416 ; the official class slightly larger in republics than in monarchies, 423 ; temporal and spiritual and secular, 428 ; general and local, 429 ; functions of local are largely economic, 429, 430 ; in all employment, 432 ; right to govern, 440 ; functions of ex- pand, 455 ; its share of produc- tion, 454-455 ; practice of, some- times better than theories, 457- 460; local, in England, 477; British Empire governed for j^ro- fits and not for revenue, 484 ; little local government in France, 497 ; of William and Bismarck approved, 514-525 ; taxes on liquors identify government with traffic in certain ways, 527 ; workings of Ilussian govern- ^36 (GENERAL INDEX. mentasto emancipation, resump- tion, and paupers, 520, 521 ; of China riglit in excluding forces tending to disruption of Chinese internal trade, 547; is the sum of all intrinsically profitless and socially necessary industries, 700, 701 Grains, duties on imports of, from Canada, 591 Graziers, taxed in Turkey, 488 Great Britain, crime in, 33 ; origin of its House of Commons, 37 ; commons and private lands, 139; earnings of entire people, 176 ; value of agricultural products, 230 ; total gold coinage of, in 1851 to 1856, 386; monetary unit, pound sterling, value of, 338 ; extent of deposits in private banks, of, 389; total bank depos- its of, 389; culture of the nobility and land-owning gentry in, 406 ; history of government in, 408- 412 ; credit, how maintained, 448 ; local taxation in, 476-479 ; general taxation in, 479-483 ; tyranny in prohibiting cultiva- tion of tobacco, 480 ; derives no revenue from outside dominions except profits of trade, 484 ; rates of wages, blacksmith and iron- puddlers, in 1867, 511; change in trade of, with Germany, pro- duced by protection in Germany, 515 ; relation of, to her colonies, 530-533 ; unable to prevent their adoption of protective policies, 530-533; course of, toward China and Japan, 533-554 ; British protective laws, 555; and what occupations they protected, 555 ; rates of wages in, compared with United States and Mas- sachusetts, 581-582 ; total value of British manufactures, 637 ; small product of iron and steel a century ago, 646 ; and imports, 646; population of in 1788, 646 ; Great Britain indebted to her protection to iron and steel and ship-building for lier carrying trade, 648, 649 ; product (1883) of iron, steel, and coal, 650 ; pro- duct of pig iron from 1860 to 1883, 651; how Great Britain " fesds the main arteries'of British com- merce," 657 ; but can not influ- ence the tariff policies of her colonies, 664 ; British legislation always animated by a protective motive, 675, 676 ; but it was a protection to the stronger, at the cost of the weaker class, 670 Greeks, ignorant of use of sugar, beer, cultivated strawberry, buckwheat, maize, 275-279 ; allotments of land by Lycurgus, 138; economic conditions of, gave form to governments, 402 Greece, ownership of land in, 23 ; family relation in, 61 ; monetary unit of, 339 ; earliest money of, 331, 333 ; government of, 407; al- leged bankruptcy of modern,448; early iron and steel in Homer, Schliemann, Gladstone, and Gold- ziher, 645 ; wool culture and sheep in, 668 Gresham's law, 368 Groat, 339 Guesswork, as a basis of i^roof, 683 Gunpowder, export of, 610 ; im- port and revenue, 613 Gypsum, revenue paid by im- porters, 586 Hair, export, of, 610 ; import and revenue, 613 Hamburg, 523 Hammered coins, 340 Hand-made goods in India super- seded by English machine-made, effects of, 66 Hanover, for free trade in 1818, 514, 515, 522 Hard times, 372, 374-376, 381 ; in- crease of imports leading to, 384, 385 ; of 1854-7, 385 Hardware, wages in, inUnitedStates and Europe, 581 ; effect of im- ports of hardware from England into India, 66, 67 ; prices of san- itary hardware in New York, how reduced by American com- petition under protection, 621, 623 GENERAL INDEX. 137 Hatchets, English aud American, prices of, 590 Hats, wages in United States and Great Britain, 582 ; export, 610 ; imports and revenue, 613 Havre (American) steamer line de- stroyed, 657 Hay, rakes, export of, 596; export of hay, 610 ; import and reve- nue, 613 ; importer pays duty, 615 Hayti, monetary unit of, 338 Hebrews, taxes among, 453 ; di- vision and allotment of land, 138 ; year of jubilee not an ex- ample of communism or state ownership, 138 Hemp, under tariff of 1816-1834r- 1828 in Russia, 527 ; exports from United States, 610 ; im- ports and revenue, 613 ; com- pared with wool, 672 Hesse, 515 Hides and skins, export of, 610 ; import of and revenue from, 613 High duties, England on tobacco, 480 ; free trade policy lays on tropical and non-competing products, 573 Highways, 430, 432 Hindoos, 486, 516 (see India) Hinges, English and American prici'S of, 590 Historical school, 13; notconfined to opinion, 17 ; limitations on, 20 ; importance of historical method on questions of revenue and protection, 469 Hoard, can not be affirmed of en- joyable wealth, 205 ; onljr of re- productive or social, 207 ; oppo- site of capital, 211 ; in stockings, 224 ; rich have no hoard, 224, 304-307 ; silver ornamenlsin In- dia as refuge against famine, 331 Hoes, export of, 596 Holland, government of, 407 ; credit, 448 ; American balance of trade against, 599 Home, markets, 381-382 ; home better secured in Russia than Ireland, 430 Jlome trade, 512, 560, 567 ; takes more products than foreign, 602; and is freer as to means of pay- ments, 604 Home production, employs tAvo capitals and two sets of laborers where imported employs one, 572 Hops, revenue paid by foreign producers, 586 ; export of, 610 ; imports of and revenue from, 613 Horses, excise duties on, 481 Horse-nails, export of, 596 Hosiery, duties on, in 1828, 383 ; success of foreign, 691 House tax in England, 482 Hundred rates, 477 Hungarj'-, food exported during famine, 570 I. Idleness, when compulsory, 511, 513, 569 Identity, not diversity of natural gifts between United States, England, France, Germany, etc., 573 Illinois, land system in, 142; Railroads, aid to, 155; railway earnings and division of, be- tween capital and labor, 173, 311; transportation from, 221; corn, production in, 252; farm products in, 261; tenant farms in, 269; taxes in, 468; manu- factures of, 664, 666 Inunigratiou, 145 ; past and future, 145-146 ; chart of, 147 ; money brought by, 148 ; assorted and exclusion of, 148 ; exclusion of, as a measure to promote wages, 320, 321 ; change in consump- tion by, 321 ; protection to Amer- ican industries favorable to, 473; from Switzerland into Ireland during protection, 492 ; of Chi- nese into other countries coex- tensive with destruction of au- tonomy and industries in their own, 536 ; figures of Chinese, 548; compared with European, 548 ; total immigration from 1860 to 1883 shown'"by tables and chart, 651 738 QSNiSRAL mBlit. Impeacliment, 409 Implements, agricultural, in Unit- ed States, 263-267 ; Germany, 525 ; China, 547 ; wages in man- ufacture of, in United States and Europe, 581 ; American articles supplanting those of Birming- ham in foreign markets, 596 ; protected but exported, 610 ; prehistoric, for defense, 644 Imports, duties on Roman, 454; in United States from 1821 to 1881, average amount of, and revenue produced, 469-472; gold dis- coveries increase, 470; quantity of imports reouired under low duties to produce as much re- venue as high, 471 ; chart of im- ports and revenue from 1820 to 1860, 471; of food, raw materials and manufactures in France, 500; change in Germany from finished products to raw materials, 517; of lumber into United States, 532; increase ten- fold of imports of silk into Eng- land under free trade in silks, 636; of wool and woolens com- pared with domestic product, 677-678 Importations, excessive produce commercial crises, 374, 376, 382, 385, 388; importing English iron, is importing English crops con- densed into iron, 579; it dis- places American crops to the value of the iron imported, 579; importation, where domestic production is adequate, dis- places it, but does not increase supply nor lower prices (silks), 635, 636 Importers and foreign manufac- turers inspire the free trade criticism, 604, 605; in Jefferson's period wanted duty taken off salt, 640; importers of competing goods, interests not identical with those of American labor, 642 Improvements, 455 Incidence of taxes, 459; a final subtlety of slight practical value, 460; can not be known if " con- venience" is consulted, 461-407; of import duties on products amply supplied at home, 609- 623; incidence of tariff' duties on iron and steel, 647; on wool and woolens, 678-680 India, former wealth of, and present poverty, 66; relative wages in, 315; influence of drain of silver to, over its ratio of value to gold, 346; silver standard, monetary unit of, 338; value in annas, 338; ancient taxes in, 453; land tax or rent, 455; tax on salt, 455; economic effects of British as- cendency in, 483-488; revenue paid by, 485; salaries of English and native ofticers, 485; India was compelled to take free trade in silks and cottons while Eng- land kept protection, 487; Eng- land vetoes iDrotective legislation in, 533; food exported during famine, 570; England's trade in cotton goods with, 689 India-rubber goods, exjDorts, 610; imports and revenue, 613 Indiana, land system in, 142; fertility in, 242; corn produc- tion in, 252; farm products in, 261; tenant farmers in, 269; in silk raising mania of 1826 to 1839, 632; in plate glass, 644; economy of protection to its manufactures against Eastern (Sidgwick), 562, 665, 666 Indians, 23, 49-54, 645 Indirect taxes on luxuries com- mended by Smith, 461 Individual debts in United States, 448 Industry, incentives to, 62; begins how, 162-166; distinction be- tween it and labor, 163; how stimulated by abundant means of payment, 221; annual pro- duct of, in United States, 224; comprehends all economic effort, 290; all new industries unprofit- able at first, 318; women in, 325, 328, 382; crises in United States, 382; industries more affected usually by local than general government, 430; failure in, the chief cause of crime, 441; in- dustry a surer source of well- being than charity, 446; effect of (GENERAL INDEX. 739 public debt, 448; prohiltitioii of an industry as a nu'aus to pi-e- vent a tax from protecting it, 461; subversion of industries in India, 485; transfer of industries from Turkc}' to England, 490; relation of legislation to industry in France, 487-513; in Germany, 514-525; home industry in hemp, flax, linen, and woolen in Eus- sia, 527; relation of government to, 455; Adam Smith on pro- tection to, 555; Mill on pro- tection as a means to naturalize a foreign industry, 556; not an advantage to a country to turn all its energj^ into one channel, 567; inducements to organize a varied home industry (Moflat), 567; new industries require shelter, Devas on, 568, 577, 578; how protection aids, 609-629; silk industry in England and United States, 631-637; glass industry in United States, 638-644; iron and steel, 644-652; ships and ship building, 652-663 ; carrying trade, 663; wools and woolens, 664-670 ; cotton and cotton goods, 670-680 Industrial independence, 671 Industrial war, between England and India, 66-67; between Ger- many, France, United States, and England in silk manufac- ture, 631-638; between England and United States in silks, 635- 637; in manufactures. 642; Brougham on, 642; in iron and steel, 646-647; England's industrial war against American commercial marine succeeds, 640-666; through "free trade" reciprocity, 655; subsidies, 659; piracy, 663; England scores a short free-trade blow at France, 674; France triumphs under Napoleon, 674; whose views rule Europe, 675 Incomes of people of all nations (]\Iulhall), 36; in England, 176; growtli of, 273; incomes as a basis of taxation, 450; income; ta.c, 479-482; total income of railways reporting in Illinois, 173-311; of English railways, 174; of manufactures in United States, 176-312; of English people compared with Hindoos, 66; in salt manufacture, 312; textile fabrics, 312; iron and steel, 312; meat packing, 312; woolen goods, 312; lumber, leather, 312 ; ship-building, 313; silk manufacture, 313; tax on incomes called class tax in part in Germany, 522; average in- come of Hindoos, 486 Inequalities, and crime, 442 ; in taxation, 463 Inflation, as a cause of crises, 385 ; produced hy war debts, 392, 394 ; loans to government are inflation, 450 Inquisition in France, 502, 550 Insolvencj', of individuals abated by issues of government money, 221 ; of nations may follow from owing abroad, 377 ; ma}' be pro- duced by excess of imports, 382 ; and even of gold, 385 ; du ring- free trade periods, 377, 385 ; but not in protective, 389 ; of nations, 448 Instruments, musical, 519 ; pro- tected in Victoria, 530 ; mathe- matical and musical in United States export of, 610 ; import of, and revenue from, 613 Interest, pecuniary, the aggregate of all private interests is the public, 36-40 ; per cent of, less- ens as fund increases, 178 ; ratio of to returns of industry, 178 ; equal to one half of average rate of profit, 193 ; ratio of interest to rent, 194 ; rate of, is in inverse ratio to amount of capital of lender, 222 ; interest defined, 238 ; may be high where pro- duction is slow, 261 ; on loans must be added to exports in stat- ing balance of trade of monej'- leudiug nations, 395 ; on United State debt in 1883, 468 ; interest and wages may both be high if product of industry is great, 579-581 Internal improvements in United States, 150-158, 220 ; in Canada, HO GENERAL INDEX. 531 ; in United States Jefferson thought federal government should be empowered to make rather than disturb the tariff on account of a surplus, 640 Internal revenue, or taxes, in Rome and Gaul, 454 ; in United States, amount of, 468, 475 ; taxes on "whiskey and tobacco popular in United States 475 ; difficulty of repealing in United States, 475 ; extent of taxes on internal commerce in Eng- land, 482, 483 ; internal taxes heavy in Turkey, 488 ; inter- nal trade freer in England than in France prior to 1793, 501 ; but not between England and Ireland, 501 ; internal trade most free where protection from foreign trade is best assured, 514 ; on liquors in United States and in Russia make the manu- facturers of liquors collectors of revenue in effect, 527 International competition, 319 ; payments made by export of debt, 353-359 ; crisis in one country spreads to others, 377 ; can be taxed 457, 607, 630 ; in silks, 633-637 ; in glass, 644 ; in iron and steel, 646 ; in prices of iron and steel, 647 ; in shipping and ocean carrying trade, 652- 664 ; dispersion of industries among nations better than con- centrating them into one, 674, 675 International contempt, shown by eminent English free traders toward their American dupes, 657,658 International iniquity, 446, 483- 487, 488-490, 491-495, 533-548 International taxation, 457 ; through profits of a conquered and enforced trade in India, Turkey, and Ireland, 483-491 ; China's struggle to avoid, 540- 548 ; how much Canada pays in, 593, 594, 615-617 International values,450; and trade, Mill's theory of, 10-14 ; opposed by Carey, 16 Invasion, to compel " free trade," China, 534 ; Japan, 553 ; of silk industry of England and des- truction by free trade in silks, 635-637 Inventions, state sphere concern- ing, 431 ; inventive spirit crushed by irremovable poverty, 597 ; most of the great inventions of England made in strongly pro- tected industries and periods, 654, 648, 649, 680, 681, 684, 685 ; few of moment since 1846, 596, 597 ; London Times on, 596 ; American invention of pressed glass, 643 ; in France during protective periods, 674, 675 ; rapidity of in England in pro- tective periods, 680, 681 Iowa, land sj'-stem in, 142; cost of transportation from, compared with English farm rents as a tax on farmers, 250, 251; corn pro- duction in, 252; value of lands, 257; farm products in, 261; tenant farms, 269; banking in, 352; woolen manufactures in, 666 Ireland, relation of crime to pov- erty in, 33 : population being eliminated, 274-275 ; home not secured by its local system. 430; effect of prohibition of tobacco raising in, 461, 462; famine of 1846-1849 in, and effect on American exports, 470; taxes in, 476; prohibition of culture of tobacco in, 481; never has had protection to industry from a British parliament, 491; English efforts to suppress manufactures in, 492-495; how it throve under home-rule protective policy from 1783 to 1800, 492; subversion of her industries under Act of Union, 494; free corn in 1846 reduces her acreage to corn one-half, 559; prohibitfHl from producing tobacco in order that duty on may not protect, 562; food ex- ported in famine, 570 ; ovir bal- ance of trade with, 599-601 Iron, capacity of one man to pro- duce, 220; division of product in iron and steel manufacture in United States, 312; iron used as GE^EUAL INDEX. 741 money, 834; rate of excliange of iron for wheat during war, 380; tariff of 1824-28 as to iron and steel, 382, 383; Euglisli pro- tection of her iron and steel, 489; in France, 498-503 ; slow growth of American iron and steel and final high prices under low duties, rapid growth and final low prices under high du ties, 500; iron and steel made with less labor cost, though at higher money cost, in Pennsyl- vania than in England, 511; Hewitt's facts refute Bastiat's sophisms, 511; wages of black- smiths and iron jniddlers in Am- erica and Europe in 1867, rates of, 511 ; quantities of pig and bar made in Germany, 520; iron and steel wages in Germany, 523; galvanized, protected in New South Wales, 530; grates, stoves, etc., protected in Victoria, 530; statutes maintained in England, to protect iron and steel manu- facture, 555; Michigan M'ould profit (Sidgwicli) in producing iron, by protection from Pennsyl- vania, 505; relative labor cost of producing iron in Pennsylvania, England and France, 573; im- porting English iron is an im- portation of the crops, etc. , con- densed into the iron, and dis- places American crops to that amoimt, 579; wages in rolling mills in United States and Europe, 586; revenue on im- portation of pig iron, whom paid by, 586; bar iron in part, 587; Mill on division of import du- ties, 587; wrought iron, English and American prices of, 590; American iron and steel wares pronounced superior bj" Birming- ham board of trade in 1868, Tjfmdon T'imes tells why, 590 ; export of agricultural imple- ments, values of, 610; exports of iron and steel wares from Ignited States, 610; American iron and steel mauufactnre and foreign pay duties on, fill, 612, 617; imports of and revenue from. 613; iron and steel manufacture older than agriculture, 644; mythological antiquity of, 645; i^chliemann. Homer, Gladstone, and Goldziher on, 645; relation of Vulcan to, 645; small use of iron and steel in Great Britain in 1788, 646; growth of since 1796 in England, 646; better protected in England than in United States from 1790 to 1845, 648; disastrous effects of this fact on American shipping after 1855, 648; world's product of iron, steel, and coal in 1883, 650; total production of iron and steel rails, pig, rolled, prices of steel and iron rails in United States, miles of railroad built, produc- tion of pig iron in Great Britain, and immigration from 1860 to 1883, 651 ; Liverpool Cotton Cir- cular on effects of American tariff, 664 Italian economists, Cossa, 24; Genovesi, 82; Beccaria, 82; Count Rosconi, 336 Ital}^ monetary unit of, 338 ; parties in, 404 ; government, 406, 407; in College of Cardinals, 418 ; cost of army in, 438 ; low credit of, 448 ; tariff of, 530 ; its balance of trade against the United States, 6C0 ; product of iron, steel, and coal, 650 ; Eng- land's trade in cotton goods with, 689 Jamaica, cane-sugar growers seek union with United Slates or Canada, 505 Japan, imit of, 338 ; loss of sover- eignty as to tariff, 533, 553, 554; averts an armed invasion in 1864 bj' conforming her tariff to for- eign demands, 553 ; balance of trade against United States, 600 Java, England's trade with, 689 Jeffci-sonian protectionism, 640 Jennv, spinning, invention and effect of, 681-684 Jewelry, exports of, 610 ; inijtorts and revenue, 613 142 GENERAL INUEX. Judicial department most coercive on the citizen, 416 Justice, administration of made subordinate to revenue in India, 486 K. Kansas, silk culture in, 632 Kentucky, glass, 644 ; hemp, 652 Knights of Labor, relation to the organization of labor, 310 ; strikes ordered by, 328 Kopeck, 338 Labor, conflicts in defining, 4, 12, 14; bureaus of statistics of, in- creasing, 22 ; relation of labor class to price of bread, 26 ; rela- tive inducements to, in commun- al and private ownership, 41-54 ; how supply of affects price, 98 ; how affected by machine power, 122 ; in Asiatic countries, 123 ; relation of to title, 125-130 ; can not give rise to titles, 129 ; divi- sion of, due to private title, 135- 136 ; modes of division of i^roduct with capital, 163 ; when labor time became a commodity, 166 ; not the sole producer, 167 ; dividing product in railways and manufacturing, 172-181 ; capi- talizing the productive value of labor, 181 ; is not muscular effort, but organized obedience, 182 ; produces only its own wages, and no surplus, 188 ; capital the chief laborer in civi- lized industry, 208 ; displace- ment of labor in one country by machinery in another, 209 ; helpless laborers find work most easily in cities, 219 ; how affected by large capitals, 219 ; capacity to produce food, 219 ; in iron, woolen, and other industries when aided by capital, 220 ; is freer where capitals are large 227 ; first organizations despotic, 233; labor on farms, 253-261 ; value declines directly as dis- tance from consumer of product increases, 259-262 ; distinction of labor from sport, from services sold to an employer, from crime, from effort put forth to produce, from capital, from im- plements ; is servile effort, 281- 284 ; also distinguished from work, 284 ; from pleasure, 285 ; must be irksome and painful, 286 ; aversion to, 286 ; necessary con- trast between labor and pleasure, 287 ; less broad than production, 290 ; is obedience, 290 ; is only a part of industry, 290 ; combina- tions of laborers, 300-303 ; explo- sion of wage fund doctrine, 290 ; profits the true source of wages, 293 ; population not a check, 295 ; countries of clear and cheap labor, 297-300 ; is tlie ultimate receiver of all wealth, 305 ; works as even partner with capi- tal on farms, railways, and manufacturing, 309-315 ; is compensation of, increased by profit-sharing ? 314 ; labor not protected by excluding or les- sening population, 321 ; do wages of social labor increase with their social utility? (Elder) 323 ; strikes and theii- cost, 328 ; woman's labor and wages, 325- 328 ; affected by war and prices, 380 ; slave labor rises with profits, 384 ; the wage con- tract economical to the worker, 433 ; how effected by spoliation of the capitalist class in India, 485 ; labor cost, not the same as money cost, 511 ; of children in Russia, 527 ; value of, made eight time greater in United States than in China, by adding animal and machine power in production to human, 540-543 ; quality of Chinese labor, 547 ; labor troubles which would ensue from the premature introduction of foreign machinery and pro- cesses in China, 548 ; double employment of labor on home products than on imiDorted, 560 ; laborers protected by tariff duties, 609 ; no other ultimate destination exists for wealth of GENERAL INDEX. f43 any kind or iu any hauds except to compensate labor and relieve want, 626 ; loss of employment in silk manvifacture in Eng'land under free trade in silks, 635-637; loss of employment in Unitc(l States in 1816 to 1819 by glut of English goods, 642 Laborers, protected by tariH' duties, when, (i09 Laces, 383 Laissez faire, the doctrine defined and its decline referred to, 15 ; Carey assailed, 16 ; England dropped in jDractice, 17 ; its ex- tension to social classes hy Prof. Sumner, 21 ; losses by, 149 ; how the school of was founded, 199 ; contrast between the actual English policy and Laissez Faire, 66, 67, 316, 317-431, 432- 435 ; extent of English interfer- ence shown by local rates, 477 ; and by prohibiting tobacco rais- ing, 480-481 ; interference in foreign countries, 484-488, 489- 491; in Ireland, 491-495; doctrine of Laissez Faire ig- nored and violated in China and Japan, 533-555 ; even to keep the peace discriminates against those whose occupation would be to break the peace, 578 Lamps, exports of, 610 Land, relation of title to, to tillage of, 125-130 ; distribution in United States, 139 ; division and allotment of, in Canaan, 138 ; Sparta, 138 ; Rome, 138 ; mode of surveying, 142 ; records of, 143 ; rent and its relation to in- terest on capital, profits of en- terprise, and wages of labor, 171-194 ; when capital, 210 ; in cities where land is dearest the poor have the best chance to live, 219 ; wheat on Dakota land, 219 ; land of less value than wages to one without capital, 235 ; title to, begins in possession, 237 ; always held by highest bidder, 237 ; how rent arises, ac- cording to Mill, Hamilton, Mac- leod, Fontenay, Jevons, Fawcctt, Sidgwick and Price, monopoly theory leads to the confiscation conclusion, 243 ; large holdings and bonanza farming, 265-274; Large holdings in the United States and England, 270-272; permanent land-holdings pro- mote nobilities, 402 ; lands and local government, 430; taxes on in China, 455 ; India, 455 ; Mill's desire to tax the unearned in- crement of value, 463 ; taxes on land-owners, 465-473 ; reve- nue from sales of, in United States, 468-474 ; effect of taxing occupant or owner on rents, 474 ; when owner pays the land tax, 476 ; plans for transferring title from owner to tenant, 477 ; crown lands, 479 ; land tax in England, 479-482 ; small value of land where national- ized, 488 ; land breaking uj) into small holdings in Germany, 520 ; land communism in Rus- sia, 526 Land-owners, protected by tariff duties, when, 609 Lard, export, import, and reve- nue, 610-613 Laurel, 340 Laws, of economics, are natural laws, 2, 3, 4; unity of with physi- cal laws, 4; Mr. Mill's alleged law of equation of international de- mand is a verbal circle and not an economic law, 13 ; Laissez faire, an obsolete "law," 15; wage fund theory a verbal cir- cle and not a relation of cause and effect, 16; " profits the leav- ings of wages " also true only in the physical sense, 17 ; law of the value of economic facts is identical with the law of weight of physical substances (gravity), 20; moral obligations contract as personal freedom increases, 20, 21; superiority of law over em- piricism, 22 ; how arrived at, 23; relation of hypothesis and ex- periment to study of economic law, 24; Fawcett's alleged "law" of coincidence of prosperity of laborers and cheapness of bread, 26; law of the bias of statistics 744 GENERAL INDEX. through widely extended in- terests, 30; of acclimating consti- tutions to unhealthy influences exploded, 32 ; of the constancy in ratio of crime to poverty, 32, 33; and to inharmony of races, 34; supposed ratio of prosperity to imports and exports exploded, 35; morals grow with the means to be moral, 48; intellectual rise from barbarism to civilization is identical with an economic transition from ownership in common to private ownership, 53 ; production springs from ex- change, 54 ; growth in wealth and individual freedom causes gTowth in corporations and vice versa, 57 ; within certain limits morality grows with liberty, crime increases with restraint, 59 ; endurance in the state is proportionate to integrity in the family, 62 ; family influence as permanent as heredity is natural, 63 ; with growth in wealth second- ary motives (moral qualities) grow, 63 ; as occupations multi- ply more, men work at work they love, 64 ; fighting force of nations is proportionate to their productive power, 65 ; an im- portant part of a nation's wealth, though not of relative wealth among the citizens, 68 ; law of equivalence in exchange expresses only a probability, 69, 109; of evanescence of all wealth, 70 ; of extinction as enjoyable wealth of all that is converted into and remains reproductive wealth, 71; the more social the use the less the perishability of , wealth, 72; evanescent in the de- gi'ee that it is vital, 73; wealth the fruit of abstinence, but great fortunes imply also that it has been reproductively used, 74; the pressure of want a perpetual spur, since the more we get the more we want. 77 ; Carej^'s law, that as society advances values decline and utilities increase, dis- cussed, 84 ; producers create commodities, consumers confer values, 86 ; demand causes pro- duction, 88; economic error pro- duces social insanity. 91; it may ensue from the error that labor causes value, 91 ; law of declining utility of enjoyable commodities causes exchange, 92, 95; aided by the law of unlimited capacity to feel secondary wants, 93 ; Gos- en's law of pleasure and satiety, 94; law of rise of price in dispro- portion to scarcity, 95, 96, 97, 115; law of rise of utility as com- modity approaches consumer, 98, 99; labor only determines value in the degree that by producing a glut it impairs value, 99; buy- ing futures in grain equalizes prices, 104; price is governed by the proflt of future uses, not by cost of past exertion, 110 ; war only raises prices when it changes the volume of money (Tooke), 113; increase in rapidity of cir- culation affects prices like in- crease in volume of money, 114; cost of production is no regu- lator of price, 114; cheapness in sources of supply will maintain a lower average price than the mere cheapness in the supply itself, 117; the latter may be tem- porary, former is permanent, 118-120 ; freedom depends on profits rather than on relative prices of raw materials and finished products, 121 ; law of survival of poor in cities, 122; of declining values and wages as we go eastward, 122; causes, 123; of destruction of industries by competition, 124 ; that promises decline in value in proportion to their magnitude and lack of assets for their redemption, 127 ; individual liberty grows with private titles, 128, 139; and with the number and extent of private monopolies or personal titles as distinguished from communal ownership, 130, 131 ; and with the evolution of law and the state, 132; laws grow and rights arise as a compromise between usui'pation and resistance, 133- GEJSmUL INDEX. 745 135; private title causes exchange, 137, 138 ; tlie state will aid every industry which the majority of the people desire, but in which they can not prolitably invest, 151-155 : profit the economic cause of wages, 168 ; as much equivalence in exchange applies to the wage contract as to any sale of commodities, 173; emploj'- mcnt at wages tends toward equality of division or working on shares between the aggregate capital and aggregate labor, i76- 178 ; rent tends to take a fourth of the produce of land, interest a fourth, and wages half, 177- 180 ; profits tend constantly to fall to level of rent and interest or to be eliminated, 179-182; rate of profit is directly as the excess and inversely as the time in which it is made, 191; profits average twice the rate of interest, 193; distribution of wealth causes production, 198 ; wealth means not commodities, but inequality among men in the possession of commodities, 202 ; the greater the accumxilations the greater the diffusion, 204 ; laboi-ing power is proportionate to and measured by capital, 208 ; as capital (machinery) grows, labor changes from toiling to knowing, 208, 209, 299, 300 ; and combines command of implements with obedience to orders, 209; luxury relieves the distant, economj^ the near, 214 ; rates of interest de- cline as accumulations increase, 220-224 ; money stays longest with those who make it most productive, 217 ; capital earns a declining rate in any one occupa- tion, but returns to its high rate in some others, 230; man's food increases faster than man, 231; Malthus' alleged law an error, 231, 292, 296;' the more the mer- rier is economic law, 234; what- ever impairs the value of capital impairs rates of wages, 235; land is always held by highest bidder, 238-240 ; rent is the sharing the produce earned with the capital that expels less productive oc- cupations, 242, 249 ; rent bal- ances transportation, 249-253 ; and disperses the less competent so that the more competent may have the space, 252 ; values of land per acre values of land pro- ducts per capita and values of labor on land all grow as farmers are few, and decline as they are many, relatively to those who do not farm, 256, 265 ; release of labor by machinery multiplies occupations while lessening toil, 264, 265 ; with machinery, the less men work the more they get, 266 ; the bigger the farms the cheaper the wheat, 267-272; large estates make low rents, 272 -275 ; the irksomeness of labor economizes huinan elfort, limit- ing it to the line in which it satis- fies social demand, 286 ; in the economic sense commodities are produced by entrepreneurs and the wage-worker produces only a diversion of the wages to himself, 290; the alleged wage fund law a circuit of words, and not a true law of cause and effect, 291 ; the wage fund can not cause the wages, since it is the wages in total, 294; profits are the cause and measure of rent, interest, and wages, 294; tendency toward a minimum in old channels offset by a tendency toward the max- imum in new channels, 228, 294 ; difi'erence of average comfort among men much less than dif- ference of wages or income, 298 ; there is an economy in being slow as well as in being fast, 298 ; but the fast economy is in the lead, 543, 545 ; regulating rates of wages implies state emploj'ment, 301 ; trade unions " corner" the labor market on the same plan as brokers corner grain, 301 ; a com- bination among many may be destructive of industry, though its aim be one which, if pursued by each one singly, would be pro- motive of industry, 302 ; arbitra- '46 GENERAL INDEX. tion cannot determine future rates of wages or prices of commodi- ties, 303, 304 ; agitations for social revolution exist wherever there is economic incapacity and miscon- ception, 305 ; money-making is a free art, as to it anarchy in the main already rules, 307, 309 ; society puts each man in his most useful place, 308, 309 ; capital and enter- prise only can organize destitute laborers, 310 ; destitute laborers can organize strikes, 310 ; but they can not organize labor, 310, 328 ; all wages work is product sharing, at the halves or nearly so, 313, 313 ; labor markets can not become one market, 315 ; mil- itaiy protection to foreign trade may protect home wages in an exporting country, 316, 431, 483- 495 ; increasing the diversity of industries in an importing country by protective tariffs also protects wages, 318 ; there can be no un- protected classes in a protective country, 320 ; excluding immigra- tion, unless of particular occupa- tions, would not protect wages, 321 ; trade can only be made free as we are furnished with the means to trade with, 323 ; wo- man as a worker tends toward the family order and from the competitive sphere, 327 ; the sources of the low wages of em- ployed women is the reserve of unemployed, 327 ; money is the mainspring of industry, 332 ; coined money of depreciated met- al will remain at par partly on the credit which stamps it, 336 ; a cur- rency chiefly of coin tends to- ward adulteration, 339-342 ; rela- tive value of silver to gold seems to depend on relative quantities by weight in which they are pro- duced, the total values of both metals in use being the same, 345- 366, 373 (see charts, p. 367) ; ex- changeable credit affects prices as paper or coin, 346, 391, 392 ; money tends constantly toward idealization, the substitution of faith for value, 349, 355 ; well sustained national debt will act as money in international trade between the borrowing and cred- itor countries, 354 ; cost of credit money is the cost of maintaining the credit, not of engraving the note, 356 ; fiat money overlooks the true sources of credit, 350, 350 ; contraction in volume of money enslaves, expansion in good money frees men, 359 ; an economic illusion may produce substantial effects, 360; good times may attend bad money, 361 ; gold standard can not be violently established, 362 ; the world tends toward an equipoise of the two standards as between different countries, if it cannot have the double standard in all, 363 ; line of fluctuation of prices is made more uniform by the equilibrium of the two money metals, 364, 368; a country gains in both trades by successfully maintaining the double standard, making a profit on the sale of the dearer coin and the purchase of the cheap, always if the parity of the two is restored, 364-365 ; Gresham's law, that adulterated money causes an ex- port of pure coin, or bad money drives out good, has no applica- cation to the case of a fall in the value of the bullion of which one kind of money is made, 368 ; a run for deposits, being the taking out of one to put into the other, becomes futile if all banks stand together, 370, 371; a resumption of specie payments after a long suspension is an inflation, and tends to a speculative crisis, 371 ; the maxim, a crisis due in En- gland every ten years, in America every twenty, fails in 1887, 374 ; freer importation tends to produce a crisis within three years, whe- ther in England, 375-376, 377, 378, 389, 390 ; or in the United States, 381, 382-385, 386-388; the law, that a country is drained when the balance of trade is against it, admits of no real ex- ceptions, the alleged exceptions GENERAL INDEX. V47 being only failures to get at the true balance sheet, 393-395 ; mon- etary and commercial crises are largely due to misgovernmeut, and the advantages they confer are the adaptation of business to misrule, 397 ; governments are natural and inevitable, 399-406 ; the political state takes its form from the occupations of the peo- ple, and is military, hereditary, or elective, as occupations are war- like, agricultural, or diversified, 401-42~9, 432-435 ; political gov- ernment by males is co-extensive with the extent to which govern- ment is coercive, 435, 436 ; attrac- tive functions, such as reigning, where a premier governs educa- tion and all forms of culture by government superintendence, are non-sexual, 434 ; do not enforce themselves, 436 ; difference in the feasibility and economy of laws generally assented to and those enacted by narrow majorities, 436 ; division of function between the sexes is economic of the welfare of both, 436 ; saving money by dispensing with armies is a doubtful experiment in the economic aspect, 437-439 ; all States are army-made, 439 ; crime an economic problem, 441 ; over long periods human utilities and mischiefs are more nearly equal- ized than over short, 445-448 ; facility in negotiating state loans tends toward socializing state functions, 449-451; a theory of taxation ideally equal in the view of all minds is a chimera, 456, 457 ; none can follow the final incidence or burden of taxes, 463- 465 ; the i^roductiveness or bene- fits of tazation is traceable, 465- 468 ; protective tariff's always produce the largest ratio of rev- enue to importations, 469-472 ; and stimulate immigration by raising wages, 473 ; universal suffrage taxes capital, 474; limited suffrage and aristocratic govern- ment tax vulgar consumption, 480 ; facility in raising local loans and laying local taxes favors so- cialistic expenditure, in England, 478 ; in United States, 150-155, 474 ; import duties can only be limited to a revenue function purely by proliibiting the dom- estic productioTi, 480 ; hence a country which could produce everything could not lay a pure- ly revenue duty, 562 (pre- face) ; a human-labor country can not give free-trade to a machine-labor country without being ruined, 484-496 ; it must at all cost import the machin- ery or process instead of the product, 484-496 ; foreign con- quest makes great landlords, 270, 484-486, 520, 521 ; persistent pro- tection to many industries mul- tiplies land-owners and self -em- ploying small proprietors,496,497, 520, 521; true protection begins by protecting raw materials, France, 498 ; protection a short road to cheapness and abun- dant supply, 505 ; France in beet sugar, 20 years, 515-521; United States in cutlery (8 years), 596; if scarcity or dearness is like that produced in spring by sowing seed instead of consum- ing, it is better in the long run than the transient plenty pro- duced by consuming seed that needs to be sown ; Bastiat's scarcity and abundance argu- ment therefore is too simple and single to meet the protectionist argument, 508-510 ; law of migration of labor and capital, 146, 229, 274, 492-511; protec- tion in proper cases maximizes the return and minimizes the effort to the world at large, 511; production of unlike products not of unlike values creates com- merce, 513; hence commerce between countries having equal facilities for producing differ- ent products is profitable to both, but that between countries hav- ing different facilities for pro- ducing the same products is ruinous to one, 513; a country 748 GENERAL INDEX. which exports its raw materials remains poor ; it grows rich as it advances to tlie export of its finished products, 515-521; mili- tary energy is proportionate to economic wisdom, 516; national power and unity proportionate to its fidelity to the protection of its own industries and popula- tions, 515-521; The policy of making one country the work- shop of the world requires con- stant aggressions on the rights of barbarian and hand-labor nations, 533-554 ; free trade in competing products may change the place of production, but has no permanently cheapening effect on prices, 559-560; pro- tection can only raise prices while it is increasing domestic competition which will reduce prices, 563 ; free trade (the sub- stitution of importation for pro- duction) employs one domestic capital where protection employs two, and results in one domestic supply for consumption where protection results in two, 571- 574; law, that as Avages rise pro- fits fall, is disproved in theory and fact, 579-584; protective duties collect revenue from for- eign producers in part, 584; wherever foreign producers can not add duty to their price, but can deduct it from their profits and still leave a profit, they con- tinue to import notwithstanding they pay the duty, 585-594; a wisely laid protective duty never can need repeal, as it repeals it- self as fast as it produces cheap- ness, 596 ; exports depend on cheapness in their productions, not on willingness to buy of their foreign purchasers, 599, 600; home trade is freer than foreign because it takes pay in more products, 602; matters of public interest are always mat- ters of private interests publicly considered, 603; law of effect of import duty on the price of domestic article, 610-617; can only raise the price where it is forcing a new industry, 617; the law of decline of the tariff tax stated, 618; it bears a like propor- tion to the portion of the duty paid by foreign producers as the deficit in domestic supply bears to the whole domestic demand, 619-622; the greater the national surplus relatively to a uniform demand the less the value of the aggregate product (cotton), 687; economy of a rise in prices due to a lessened supply, 689; the smaller the quantity obtainable the greater its aggregate value, 690 Lead, German imports and ex- ports of, 519; revenue paid by foreign producers of lead im- ported into United States, 586; white lead, revenue on, paid by foreign producers, 586; exports of, 610; imports and revenues, 613 Leather, manufacture in United States, division of product in, 312 ; in France, 498, 499, 503 ; Germany, 520; Ireland given freer leather than England, 490; revenue on imports into United States, whom paid by ? 584 ; exports of, 610 ; imports and revenue from, 613; American leather trade, 697, 698 Legislation, influence of private interests upon, 36-38; functions of state in, 136 ; absence of, against waste of lands, forests, 148; concerning rivers, 149; ef- fects of neglect as to highways, 149-150; by states and Congress as to railways, 150-161; as to rates of Avages, 166 ; restricting banks from issuing notes, 349; act of 1844 concerning issues of notes, 377; suspension of, 377; tariff of 1816-1824-1828, _ 382, 383 ; proposal to emancipate, 384; tariff of 1846 and effects, 385-388 ; in England, how con- ducted, 411 ; a check on the executive power, 416; affects the citizen at what points, 417 ; English habit of legislation by GENERAL INDEX. 749 piecemeal, 478 ; protective, denied to Indian, 487; act of of union a scheme to destroy Irish manufactures, 493-494 ; summary of protective laws maintained by Great Britain for 440 years, 555 ; concerning wool, 669-671 Leicester wools, 672 Liberia, dollar, 338 Lime, export of, 610 ; import and revenue from, 613 ; in iron man- ufacture, 645 Lincolnshire wools, 673 Linseed oil, revenue on, paid by foreign producers, 5b6 Liquors, taxes on, 475 : effect of, on labor in Russia, 337; taxes on, in Russia, 537 Lira and Lire, monetary unit of Italy, 338 Liverpool, customs officials in, 483 : growth of, 490 Loans, to the state, inducement to (Adams), 448 ; a form of in- flation, 449 ; local loans in Eng- land, 476 ; in India, 486 ; by Germany, 518-530 Local, taxation, 459 ; government, 439 ; in United States, 468 ; in Great Britain, 476 ; in France, ■ 497 ; but little craved in Russia except in the commune, 530 ; effect of local taxation to reduce protection, 694 Locks, door, chest, cupboard and drawer, export of, 596 Locomotives, 519 London, city government of, 405- 483 ; made great by three- cornered trade, 601; decline of 'silk industry in, 636 Loom, invention of, 484 ; power loom, 681-685 Lords, Ho\ise of, 426; how con- trolled by Commons, 427 Loss, as an economic force, 188-191 ; proportion of losers to winners, 89; losses to wage-workers and employees by strikes, 310, 338 ; indirect profits involved in loss, 211 ; taxes on, 456 Lumber, manufacture of in United States, returns to labor and cap- ital and division of product in, 313; strikes in, 310-338; reve- nue on imports of , paid by foreign producers, 586 ; exports of, 611 ; imports and revenue from, 614- 653 ; Canadian producers bear the tax, 610-618 Lunacy, individual and social, 445- 447; may consist in economic error, 91 Luxemburg, 514-531, 650 Luxury, relieves a more distant and precarious laborer than in- vestment, 814 ; its relation to happiness, 315 ; taxes on, 456, 461; fallacy of basing taxation on distinction between luxuries and necessaries, 461, 517 . Lynn, shoe and boot production in, '697, 698 M. Macedon, 359, 417 Machinery, displacement of labor in one country by machinery in another, 209; makes capital the laborer and labor only the kiioiver in civilized countries, 208; on farms, 219; in iron, woolen, wheat, bread, printing, building, boots and shoes, etc., 330; growth of, in extensive farming, 368-367; aids large hold- ings and cheap production, 363- 375; cast-iron plows, 264; gang plows, 364; harvesters, 865; eff'ects of on labor, 267; does it lessen demand for labor, 897- 399; effects in determining- wages, 318; absence of machine power in China and economic effects of, 540-553 ; do machines and animals by exempting man from toil increase his thinking powers in like degree, 548, 543; economic power of United States measured against that of China, 543; effect of premature introduction of machinery by foreigners on native industries of China, 547; wages in manufac- ture of machinery in United States and Europe, 581, 583; ex- port of sewing, sausage, weigh- ing, washing, mowing and kib- 150 GENERAL INDEX. bliug machinery from United States, 596; weighing machinery, exports of, 611 Mail steamers, of America, how lost, 657; of England, France and Germany, how subsidized and sustained, 657--664 Majority, modes of determining, 403; may be of military force, of capital, or of both, 412; close approach of the two, 66; wlieu numbers only count, 414; Cal- houn's plan of government by concurring majorities, 414; all majorities reduce to one efficient vote, 421 ; the rest are inefficient or surplus, 421 Malt, excise duty on, 481 Mai thus' law, of population, 230; rate of increase in man and his food, 231 Mahbub, monetary unit of Tripoli, 338 Man, rate of increase of, and his food, 231; his weakness as a savage, 232 ; requires diversified industries for his culture and happiness, 317,318: Elder on rise in rank of labor according as it fixes Itself in things, institutions, or man, 323; growth of value of human life, 445; his secular in- terests rescue him from suffering brought on by fanaticisms, 446- 447 ; * 'man is man, ' ' — this (Perry) dispenses with economic facts, 571 Manchester, school of political eco- nomists, 15 ; who oppose its the- ories, 16 ; its chief function, 40 ; trade built up by subversion of Hindoo industry, 486 ; growth of, simultaneous with that of power spinning, 685, 686 Mauufactui-ers, foreign inspire the free trade criticism, 604, 605 ; of sugar pay the duties on crude sugar, 618 Manufactures, in United States, 147; profits of English, 178; how aided by division of labor, 219 ; how manufactures affect values of farm lands, wages of farm labor, and prices of farm products, 256-262 ; profit shar- ing in, 311, 312 ; beginnings of, 319 ; number engaged in, in United States, 320 ; strikes in, 328 ; growth of cotton manu- facture during war, 380 ; make a home market for breadstulls, 382; wreck of, under tariff of 1833, 382 ; same under that of 1846, 382-386 ; tobacco manufacture heavily protected in England, 481 ; also rum, slightly, 482 ; brandy and patent medicines, 482 ; Hindoo manufactures sub- verted, 484 ; by forcing free trade in English goods on India, while England retained protec- tion against Indian goods, 487 ; same policy pursued by England with Turkey, 488-491 ; excel- lence of Turkish manufactures until undermined, 489 ; decline of since 1812, 490 ; decline of in Ireland since Act of Union, 491- 495 ; number engaged in, in France, 496 ; of beet sugar in France and Germany, 503-506 ; manufactures as a force in eman- cipating serfs in Russia, 527 ; effects of premature introduction of steam manufactures by for- eign owners in China, 547 ; skill of Chinese as manufacturers, 552 ; statutes enacted in aid of manufactures in England for 440 years, 555 ; manufactures made for all the world not of good quality, 567 ; foreign manufact- ures, hoAv driven out of the field at their own cost, 588 ; foreign manufacturers and producers the exclusive promoters of free trade in United States, 604, 605 ; of copper, brass, etc., imports, exports, and revenues, 610, 613 ; list of protected products which are both imported and exported from United States, 610, 613 ; their relation to the tariff and farmers as stated by Shearman, 611 ; value of British manufact- ures, 637 ; Hamilton's report on glass manufacture. 639 ; growth of in 1806-15 during non-inter- course, 641 ; views of Hamilton, Madison, and Jefferson on, 640. GENERAL INDEX. 751 642 ; quantities and values of glass manufactures in United States, 644 ; manufacture begins in iron and steel, 644, 645 ; rela- tive position of, in England and United States in 1740, 653 Marble, exports, imports and reve- nues from, 613 Mark, 338 Markets, the index of values, 99 ; defined b_y Jevons, Cournot, and others, 99-l(i2 ; leading, of the world, 99-101 ; grain markets and their effects on prices and production beneticial, 107-120 ; effect of market prices on pro- duction, 114 ; effect of distance from, on modes of production, 247-262 ; obstructions between independent labor markets essen- tial to preserve higher prices in one than the other, 315 ; Andrew Jackson on American markets, 882 ; taxes on, 455 ; for English goods, the object of colonization and conquest, 484 ; in Prussia, 520 ; distance of markets lowers the quality of manufactvires, 567 ; value of markets depends on past political and collective action of the nation in which they are, 574, 575 ; hence for- eigners have rights in them sub- ject to the national will, 576 ; Birmingham supplanted in its old markets in iron and steel wares by American, 596 ; free trade, dividing the home mar- ket, causes dearness where the home market must be the chief source of supply, 609 ; protection secures the whole market and divides payment of the revenue, free trade divides the market and obliges American consumers to pay all the revenue, 612-615 Marriage, statistics of, 30 ; effect of on woman's work, 326; mono- gamy, relation to race, food, and economic conditions, 402 Massachusetts, population in 1790, 140 ; aid to railways, 153 ; ad- vance in fertility of soil, 252, 254, 328 ; cidtivated land. 546 ; rates of wages in, and in Gre;it Britain, 582 ; beginning of silk manufacture in, 632 ; as a colo- ny protected sheep, wool and wool manufacture, 676 Matches, export of, 610 ; import and revenue from, 613 Mathematical instruments, export of, 610 ; import of and revenue, 613 Maximilian, and foreign bondhold- ers in Mexico, 450 Meat, cost of, 25 ; consumption of in United States, 224 ; relative shares of capital and labor in first division of product, 312, 520 Mecklenburg, 515 Medicines, patent, British duties on, 482; American export of, 610 Men, in war, 437 Mercantile debt in United States, 448 Merchandise, glut of, may produce inflation, 384 Merchants, qualities essential to success, 400 ; debts of, in United States, 448 ; liable to mistake a tax collector for a thief, 453 ; English merchants in Cldua al- ways backed by English troops, 536 Merino, wools, 672 ; Napoleon on, 674 ; in America, high prices on merino sheep, 676 Metals, division of wages in 312 ; English and American wages in, 582 ; strikes in, 328 ; imports of and revenues from, 613 Methods in political economy, 9-36 ; the metaphysical, 12 ; the scientific, 23 ; metaphysical scliool of, 13, 9-36; bias re- flected in economic discus- sion, 330 ; on final incidence of taxes, 460 ; futility of meta- physical aphorisms in the case of a protective tariff producing revenue, 469-472 ; Perry's dog- ma "the facts are too many — it's simpler without," 571 ; how big an inverted pyramid can topple on an "if" in Perry's treatment of the tariff, 589 ; " reasonable suppositions " substituted for science, 589 753 GENERAL INDEX. Mexico and Mexicans, tribal own- ership in ancient, 23 ; production of pr'ecious metals in, 366 ; Uni- ted States dependent on for coin from 1790 to 1852, 384 ; moneta- ry unit of, 338 ; centralization in, 416 ; import and exjaort duties, 416 ; effort of bondholders to seat Maximilian, 450 ; tarifl:,530; cultivation of silk in, 631 Michigan, economic gain, (Sidg- wick), by protection against Pennsylvania, 562, 665, 666; vrools of, 672; salt production in, and state aid of, 693-697; ef- fect of competition to compel importers to pay duties on im- ported salt (diagram), 696 Migration of labor owing to lack of employment, 146-148, 274, 275, 492, 494, 511; of profits, 229 Military, strength of protective policy, 515 ; in Germany and France, 515 ; military coercion in enacting tariffs of China and Japan, 533; military protection to export trade, 608, 628 (see India, Ireland, Turkey, China, Japan), 675 Milk, export of, 610; import and revenue, 613 Mills, coffee, English and Ameri- can prices of, 590; number of mills in Canada, 665, 666-668 ; in cotton, in England, 689 Milled coins, 340 Milreis, 338 Mineral, door-knobs, English and American prices of, 590 Mines, mortality in, in Germany, 32; production of gold and silver in mines of all countries, 366; quantity of coal mined in Germany, 520 ; taxes on, 454; number employed in, in France, 496; women work in mines in Germany, 525; in United States, 327; natural conditions alone do not insure success in mining, 573; mines probably first paid rent, 645 Ministry, government by responsi- ble, 410 Minority, rights of, 441 Mint of Bombay, ornaments brought to, 331; of United States on coins, 338; of London, 342; rate of coinage in United States, 384 Mir, of Russia, 526-530 Missouri, glass, 644 ; compromise on slaver}^ 688 Mohammedanism, opposed to tax- ing foreigners, 488; large ele- ment in British Emijire, 516; ascendancy of Mohammedan races in iron and steel manufac- ture in middle ages, 646 Molasses, 520; export of, from United States, 611; import and revenue, 614 Monarchy, relation of to liberty, 404-405; when absolute, not- withstanding a parliament exists, 406; when advisory and parlia- ment absolute, 406; how the one vote determines majorities, 422 Money, conflict in defining, 6; Lord Liverpool on, opposed by Carey, 16; views of mercantile school on, 18; social uses of, 75; how circulation of, influences prices, 122; brought by immi- grants, 148; as a force in abol- ishing slavery, 164; in prosecut- ing war, 221; organization of society by money wages super- sedes that by rank, 225; money defined, 329-333; by Jevons, Sidgwick, Walker, Hume, Ca- rey, Roscher, Devas, White, 329, 330; meaning varies in dif- ferent uses, 330; begins as hoarded treasure uncoined, 331; its potency, 333; supersedes not peaceful barter but forcible seiz- ure, 333 ; oxen used as, 333 ; its three forms, 335; value of coin not wholly dependent on value of bullion, 336; Count Rosconi on, 336; evolution of British coinage, 339-341; relation of money to prices, 343; proportion of coined to credit money in use, 344; what constitutes the vol- ume of money, 344 ; ratio of value of silver to gold and how affected, 345; bills and notes, 346-349; deposits and checks. GENERAL INDEX. 753 351; bank-notes, 350-352; na- tional debt as international cur- rency and affecting prices, 353- 355; cost of credit money, 355- 357 ; volume of, 358; influence of expanding volume of, 359- 361; Hume, Alison, and Walker on, 358-361; how affected in dearnessby scarcity, 372; money manufactured rapidly during war, 380; inflation in 1833-37 in United States, causes of, 382- 385; sudden dearth of money in 1837, money an implement and not safely exportable from a coun- try except within stringent limits, 383-385 ; paper money in United States, 384 ; too many goods in market may cause inflation of paper money and discounts, 334; rapid production of gold, inflat- ing credits and importations may produce crisis, 384; expan- sion in, 387; relation of govern- ment bonds to, 449; cost in money not the same as cost in effort, 511 ; experience of Russia in suspend- ing and resuming on paper money, 528, 529; money cost and not relative cost in labor or effort may determine a new coun- try's ability to compete with an old in a new industry, 573; Hewett on labor cost of Ameri- can, English, and French iron, 573 ; money a greater king than cotton, 688 Mongolia, tribal ownership in, 23 Monometalism, 361-369 Monopoly, and title, 130; and the state, 131; not feared in sparse settlements, 145 ; Mill holds rent to result from, 242; of opium production by England, tobacco by France, etc., 456; of barbarian trade by military force, 521; effect of, on wages, 623- 626; early English laws to pre- vent monopoly of profits of wool raising, 669 Montreal, Board of Trade and Corn Exchange, secretary's report on Canadian manufactures, 665 Morals, state regulation of, 431 ; the more exacting the law the more lax its enforcement, 435 ; no ethical perfection in govern- ment, 440 ; morals and crime, 441 ; in France, 442 ; in China, 545, 552 ; moral value of an ex- tra dollar to the workman on Saturday night, 583 Morrill Tariff, effects of, 469-472 Moslemism, can accept no revenue from foreigners and therefore practices free trade, 488 "Motive" is motive (Perrj^), 571 Mulberry speculation, 632 Municipal debts in United States, 448 Murders, constancy of, 32, 443 Musical instruments, export of, 610 ; imports and revenue from, 613 Mutton, exports, imports, and reve- nue, 610, 613 N. Nails, export of, 596 Nassau, 513 Nation, profit to, not identical with profits to individuals, 67 ; national wealth, what is, 68 ; re- lative profits of national indus- tries, 36 ; nationality of immi- grants, 148; crisis in one nation af- fecting another, 377, 385, 389,391; debts of, 448; of United States, 448 ; state corporate and private, 448 ; national unity in Germany a result of protection, 514-525 ; national policy inCanada allied to l^rotection, 531 ; national unity in France, Germany, United States, etc., promoted by protection, 628-630 ; national quality of sliips, 654 ; national apprentice- ship in new industries, 569 Nationalization of laud, advocated by George, 125-129 ; in India, 486 ; destroys values of land and wages of labor, relativelj" to pri- vate ownership, 481-488 Naval stores, export of, 610 Navigation laws, of England, ap- proved by J. S. Mill, 557 ; Jeff- erson thought navigation a "pro- tuberant " interest, 598 ; laws to encourage, in United States, 652 V54 GENERAL INDEX. Navy, expense of navy department in United States, 468 ; of navy in England, 478 ; compared with the paupers of England, 478, 479 ; expenditure on, in France, 497 Necessaries, 461 Netherlands, monetary unit of, 338 ; woolen manufacture in, 669 ; trade of, for English wool, 669 New England, as affected by free trade with Canada, 574-576 New Jersey, 140, 261 ; railways in, 154, 264 ; value of land in, com- pared with India, 488 ; propor- tion of land and tillage to popu- lation, 540 ; glass manufacture in, 639 New South Wales, 530 ; tariff of, compared with Victoria, 530 New York, railway transportation in, 220 ; railway consolidation in, 220; infant railways in, 151, 153, 155, 217; freights to, 221; size in 1790, 141 ; in 1781, 150 ; effect of canal policy, 150; its statehood, municipal only, in in- ternational affairs, 415 ; cultiva- tion in, 232, 546; land values, 246 : fertility, 252, 254 ; land cultivated in, 546 ; glass manu- facture in, 639 ; salt production and state tax on, 693-697 New York City, change of rents in, by removal of dry goods trade, 70 ; markets in, 100 ; railway fi'eights from Chicago to, 221 ; Chase and its bankers in 1861, 221; its city government, 405; taxes in,468 ; glass. 639, 643 ; prices of wool in, 679-681 New Zealand, 445 Nihilists, of Russia, not an econo- mic party, and do not represent poverty, 530 "North" the, in the war about slavery, 415, 687, 688 Nobles (half, qr.), 340 Nobility, and land, 402 ; in Eng- land, their part in government, 406 Norway, monetary unit of, 338 ; American balance of trade against, 600 Notes (see Bills) ; relation of bank notes to crises, 371-385 Nova Scotia, 667 Nuts and bolts, American super- seding foreign in 1868, 596 O. Obedience, or subordination, is the essence of the wage contract, 184 ; amount of, required in- creases as centers of industry be- come compact, 210 ; habits of discipline fit one to command, 307 ; obstructions to equaliza- tion of labor, 315, 316 ; essential in business, 400 ; disobedience in its relation to crime, 444 Obstacles to production, do not cause pi'oduction directly, 511 Occupant, relation of occupancy to title, 51-52; to labor, 125- 130 ; to conversion of public land to private, 141 ; to rent, 243 ; taxes on occupant of land in England, 459 ; as to United States, 473 ; rates paid by, in England, 476 ; land tax and house duty, 479 Occupations, only a master of an art can teach its theorj^, 8 ; not all interested in low prices of food, 26 ; as society advances occupations become more con- genial, 64 ; tendency of, to col- lect in one center and make mar- kets, 100 ; rate of returns in, 100; necessity of capitalists, 227 ; princif)les governing the re- wards of various, 243, 244 ; agri- cultural and manufacturing oc- cupations are the natural mar- kets each for the other, 256-266; new occupations multiply with machinery and capital, 265-266 ; division of returns in, 312-316 ; protected, 320 ; women's, 326- 329 ; strikes in, 328 ; effect of taxes on, to create a monopoly, 464 ; forms of government, moulded by, 403 ; house duty, income from, in England, 479 ; occvipation changing to desola- tion and desert under free for- eign trade and internal taxes in GENERAL INDEX. Ibi Turkey, 490 ; number iu all oc- cupations in France, 496 ; occu- pations of German women, 524, 525 ; wages in various occupa- tions in United States, Great Britain, France, Russia, and Prussia, etc., 581, 582'; relative wages of women and children in Massachusetts and England, 583 Ocean-sailing craft, growth of, in United States under protection in 1789 to 1816, 652-656; final down- fall of, under free competition in carrying, due to vigorous protec- tion to English iron and steel industrj^ and no protection to American, 640, 656 ; subsidies to English ocean-going vessels, 659, 662, 663 ; denial of subsidies to American ocean-going vessels, 657-658 Officers, 423, 424 ; of customs iu England and America, 482 ; native and English officers of army in India, 486 Offices, sale of, taxed in China, 455 Ohio, land system in, 142; railroad aid in, 254; corn production in, 252; farm products in, 261; ten- ant farms in, 269; manufactures, 664, 666; agricultural report on wheat, 25-4 ; woolen manufac- turers of, 666; salt production in, 693 Oils, exports of, 610 ; imports of and revenue from, 613 Olive trees taxed, but imports free, in Turkey, 489 Ontario, manufactures, 667 Opium, forced on China by war, 534 Organizations, of working-men to resist employers, 309-311 ; co- operation, 311-314 ; of industry, 432, 433 ; of home industry, 567 ; of all opposition to established industries uses same means as protection, 569 Organization, labor, their motive in America since 1873, 597 ; of societv depends on iron and steel, 645, 646 Ornaments, of gold and silver, 33 Ottoman Empii'e,revenue policy in, 320 ; monetary unit, 338 ; econ- omic condition and free trade career of, 488, 491 Over-trading and crises, 377 Oriental and Levant Trading Co., 490 Owner and occupier, which pays taxes, 467, 476 Oysters, exports, imports, and revenue, 610, 613 Paintings and engravings, exports, 610 ; imports and revenue, 613 Paints, exports of, 610 ; imports and revenue, 613 Paper, 393 ; English duties on Irish fourteen times higher than Irish duties on English, 493, 515, 519 ; protected in New South Wales, 530 ; wages in paper manufacture in America and Europe, 581 ; United States revenue on paid by foreign pro- ducers, 586; exports of, 610; imports and revenue, 613 ; American duties on, sustained, 622 ; who pays, 610-613 Parasols, export of, 611 ; imports and revenue, 614 Paris, lacemakers of, 214 ; rents in, 242 ; city government of, 4(15 ; fertility of its pavements, 122 Parish, rates and their iise, 476 Parliament, acts of, as to wages, 166; as to bank notes, 349; government by, 406-412; election of members, 418 ; relations to the miuistrj^ 410 ; absolute, 426; practical assertions of, 426; mode iu whichCommons control, 427 ; protective laws passed by, 555 ; its inquiries concerning decline of silk industry-, how an- swered, 636-637; early protective measures towards wool and woolens, 669, 670 Partnership, between capital and labor, 163-215 ; between govern- ment and those who as manu- facturers of liquors collect the taxe thereon, 528 Parsimony, 218 ; not always econ- omical, 226 ; of American gov- ernment squanders its maritime wealth, 652-664 ^56 GENERAL INDEX. Party, all governrflent carried on by, 403 ; majority, how deter- mined, 403 ; in France, 403 Passenger receipts, excise on, 481 Passion, its spliere in government, 398-399 ; its relation to crime, 443 Patents to inventors, a form of protection to industry, 675 Paterson, city of, 640 " Pauper labor of Europe," phrase originated with A. Jackson, 643 Paupers, 382 ; in England, 475 ; avoided in Russia, 526 ; schemes of raising silk-worms by labor of, 631, 632 Payment, demand multiplies means of, 221 ; social workers of higher class can not be paid in a part of the product, 323 ; money as means of, 329-339 ; by bills and notes, 345-348 ; money of ac- count, 348 ; debt as means of, 393 ; for public service, 424 ; national debts as means of, 447- 451 Peace, effect of, on industry, 380 ; in Turkey, 490 ; effects of peace of 1816 on American manu- factures, 641, 642 •, motto of Cob- den Club not sustained by the aggressive tendencies of free trade, 534-555, 630 Penitentiary system, 440-445 Penknives, American superiority in, 596 Pennsylvania, influence of, on Ger- man political economy, 514 ; manufacture of glass, 638, 641 ; as a colony protected sheep, wool, and woolen manufacture, 676 Penny and Pence, 339, 340 Pens and pencils, imports of and revenue from, 613 People, sense in which they rule, 417 Perfumery, exports of, 610 ; im- ports of and revenue, 613 Peru, ancient mode of ownership, 23 ; diamond hunters of, 214 ; monetary unit of, 338 ; recent reverses of, 440; subservience to bondholders, 450 Peseta, 338 Peso, dollar of South America, 338 Petroleum lamps, Americans su- perior in, 596 Philadelphia, city government, 405 Phoenicia, 453, 455 Piaster, monetary unit of Egypt and Turkey, 338; standard coin of Tripoli, 338 Pickaxes, English and American prices of, 590 Pickles, etc., imports, exports, and revenue from, 613 Pig iron, duties on, paid by manu- facturers, 611 ; in England, 646 ; in United States, 647 ; relative prices in both countries, 647 ; who pays duties on, 647; colonial export of, encouraged by Eng- land, 647 ; protective policy of Great Britain contrasted with low duties in America from 1800 to 1846, 648 ; effects of, 649 ; world's production in 1883, 650 ; production of in United States from 1860 to 1883, 651 Piracy, directed by statesmanship and aided by American sub- serviency, scores a net gain by the destruction of American carrying trade, 663 Pitch, 520 Pittsburg, glass manufacture in, 639, 640, 643 Planes, English and American prices of, 590 Plated ware, export, import, and revenue, 610, 613 Pleasure and Pain, economics treated as a theory of, 94 Plows, American inventions in, 264 ; labor saving, 264 ; superi- ority of American in foreign markets, 596 Plumbers' brass ware, American export of, 596 ; prices reduced by tariff, 621, 622 Plural voting, on local taxes, 478- " 479 Plutology, 7 Poland, partition of, less injurious than free foreign trade in Tur- key, 490 Police, of China, 537 Political economy, defined, 1-9 ; causes of its declining influence, 9 ; conflicts in, 1-9 ; influence of GENERAL INDEX. 151 Carey and American school on, 16 ; relation of to ethics and jurisprudence, 18 ; mercantile school, 18 ; relation of, to ethics, 22 ; practical, where studied, 36-40 ; of the wages question, 287-303 Politics, of India. 66 ; of United States, 66 ; of German social- ism, 91, 301 ; of internal im- provement as advocated by American statesmen, 150 ; of American railways, 150-160 ; in France, 403 ; Russia and China, 404 ; England, 411 ; in United States, 418^29 ; of Indian em- pire, 483-488 ; of the Irish ques- tion, 494-499 ; of Germany, 524; of Russia, 526 ; of British colonies, 530-533 ; ignorance of western nations concerning poli- tics and economics of China, 548 ; of Democratic party in United States in 1854 to 1858 concerning free foreign trade and slave home labor, 553 ; pro- tectionist claim that the domestic production of an article employs more domestic labor than its im- portation, not fairly met by Jevons, 560 Poll tax, 453, 463 ; of China, 545 Poor, state care of, 431 ; cost of in England, 478 ; what the poor most need to sustain wages, 625 Population, Malthus on, 16 ; feebler and more perishable class may endure in cities, 121 ; increase of, in colonies, 140 ; predictions of, in United States, 145 ; future, 145 ; chart of, 146 ; increase of. with wages, 169 ; inefficient, delinquent, and incompetent survive most easily in cities, 219 ; earth's capacity for, 229; Malthus' law, 230; means of subsistence increase faster than, 234 ; relation of, to rent, 237-241 ; view^s of Smith, Ricardo, Carey, Bastiat, Mill, Roscher, Locke, and Fontenay on rent and population, 238- 242; ratio of capital to, lixes the wages fund, according to Cairnes, 290 ; alleged tendency of, to increase with rise of rewards of labor, 292 ; is popu- lation a check on wages? 295 ; diminishing population has no economic tendency to increase wages, 320, 321 ; fluctuating population increases crime, 442 ; moves toward protective tax- ation, 473 ; of England in 1882, 479 ; under the sway of Great Britain, 483; increase of, in Ire- land under protection, 492; pro- portion in towns in France, 497; under the ZoUverein and in modern Germany, 515; of Brit- ish Empire, how distributed, 516; of China would be reduced and scattered by a disruption of Chinese industries by substitu- tion of English, 536; of China as indicated by size of army, 537; exaggerations concerning popu- lations easily exposed, 538-541; opinions of Malte Brun, Sir G. Staunton, R. M. Martin, J. R. McCulloch, De Guignes, John Francis Davis, Dr. Medhurst, Dr. Morrison, S.Wells Williams, Marco Polo, Adam Smith, Behm and Wagner, Minister Seward, and S. Aug. Mitchell, concern- ing Chinese i^opulation, 538-550; probable actual population of China, 547; ignorance of western nations concerning population of China, 548; population, may be attracted by protection, 566 ; of Great Britain and Ainerica in 1788, 646 ; moves from free trade to protection, witness American sliips and English farmers, silk weavers and wool growers, 682 Porcelain, tax on manufacture of, 455 ; in France, 502, 503 Pork, revenue on, paid by im- porters, 586 ; exports, imports, and revenue, 610, 613 Porter, duty on and export of, 610; import of and revenue from, 613 Porto Rico, trade with, 600 Portugal, ornaments of the people, 331 ; monetary unit, 338 ; al- leged bankruptcy of, 448, 516 ; ^58 GENERAL INDEX. English treaties with, 500 ; bal- ance of trade with, 600 ; woolen industry ruined by taiiff treaty, 670 Post office, revenue from, 480 ; British post office on the cost of sending ocean mails, 657, 658 ; American post office, 664 " Post hoc ergo propter hoc," 703- 706 Postage, subordinate to subsidies in English, French and German ocean mail service, 657-664 ; supreme in American non-ser- vice and dis-service, 658 Potato, revenue on imports of, into United States paid by importers, 585, 586, 591; imports and ex- ports of, and revenue from, 610, 613 Potato rot, in Ireland, causes of, 491 Potash, protected in United States, but exported, 610 Pottery, effect of import of from England into India, 66, 67 Pound sterling, 338; varioush^called sovereign, double angel, unite, broad, and guinea, 340-341 Poverty, relation of to crime, 33, 42; abolition of .would be wealth, 75; caused by war in France, 70; function of, as spur to service, 77, 78, 89; how affected by mon- opoly, 130; essential to existence of wealth, 201 ; is the true oppo- site of capital, 211; rarity of ex- treme, 216; consistent with hap- piness, 216; the poor survive best in compact populations, 219; is greatest in countries of least cap- ital and fewest monopolies, 227; poorer countries use a currency of silver, 339 ; periods of poverty and distress,and causes, 382-386; throughout United States in a free-trade period relieved by soup-houses, 386; poverty not a feature of the depression of 1873 to 1879; influence of poverty of the whole or a class in shaping government, 402; what the poor pick up in streets of Paris, 122; poverty and crime, 441; salt, tax on in India, 455; cost of poor in England, 478; poverty of Hindoo people, 486; of Germany under free trade prior to 1827, 515; suffering poverty prevented in Russia largely, 526 ; relieved within the family in China, 552; the extra dollar removes, 583 ; unfavorable to invention, if excessive, 597 ; during cotton famine in England, 690 Powder, gun, exports, 610 ; im- ports and revenue, 613 Power, love of, as a motive in gov- ernment, 455 ; cotton as a power in politics, 688 Power loom, invention and effect, 681, 685 Predictions, fallacious and sound, 373, 374 Premier, 453 Pi-esident, of United States, pow- ers of, 417; mode of election de- signed by the Constitution, 418; how it was ignored and disused, 419; effect of such departure the convention system and direct vote, 420, 421; evils and anoma- lies incident to it, 421, 422; the few who select are not the con- stitutional few who were intend- ed to select, 423 Prices, law of rise in, by diminished production, 95; Jevons, Thorn- ton, Tooke, Chalmers, Carey, and agricultural reports on, 96 ; relation of, to value and utility, 94-100 ; markets deter- mine, 94-114; freedom necessary to fair, 102; as made in grain and stock markets more econom- ical than privately made, 108, 109; not regulated by cost of pro- duction, 110; but by dividing ad- vantage, 111; exaggerated state- ments attributing high prices to protection which were due to wars and affected all prices and all countries, l:f2; chart of prices of grain and flour in England, France, and America, 112, 124; Tooke on effect of scarcity on prices, 113-117; effect of war on, 113; seasons, 113; rapidity of cir- culation, 114; Carey on prices and freedom, 121; countries of high and low prices, 122; of land GENERAL INDEX. 759 in United States, 145; arc condi- tions of ijroduction, 167-181; af- fected ultimately by cost, 220; by war, 221; by nearness of con- sumers, especially of bulky pro- ducts, 252-263; prices for labor must be higher where greater freedom is to be maintained, 315; of coins, 340; affected by volume of money, 343; relation of to cri- ses, 371-375; of provisions, 372; effects of war on, 380; and of prices on prosperity, 380; chart of prices from 1790'to 1880, 380- 381 ; prices follow volume of cur- rency,387 ; chart of prices and cir- culation from 1834 to 1864, 387; falling prices cause cessation of production and hard times, 390- 393; stimulated by government loans, 449; of sugar in Paris un- der Napoleon, 503; low prices of beet sugar in 1884, 506; prices of Canadian exports to United States, how affected by tariff, 532; breadstuffs not reduced in price by repeal of corn duties in England, 558; protective duties, if wisely laid, never need repeal in interest of prices, 563; their effect on price repeals itself through home competition, 563, 564 ; made more even under protection, 570 ; cheap goods mean cheap human labor, unless they are the product of macliin- ery, 583, 584; jn-ice not affected by the duty where the domestic production is adequate to supply the domestic demand, 585, 586, 615; duty cannot in many cases be added to the price, and in all such cases it comes out of the profits of producer, 587, 588; ex- ample in cutlery, 587; of Eng- lish and American iron and steel war(!S in 1882, of steel rails, fall in, 590; laAv of the ratio of whole supply to the whole demand ap- plied to the effect of tariff on prices, 591, 592, 593; repeal of revenue duties on coffee in United States did not produce equivalent fall in, 600; on breadstuffs in United States not affected by duty; prices during silk and moris multicaulis mania in United States, 632; of pig, and iron and steel rails in United States from 1860 to 1883, 651; extraordinary price of fine wool- ens in ancient Rome, 669; high ]n'ice on merino wools and sheep in United States, 676; why the duty on wool does not raise its price by amount of duty, and under a sufficiently ample pro- duction not at all, 678-680; of foreign and domestic wools com- pared, to show that duty is not added to American price (see chart of prices), 679, 680, 681; effect of abundant production on (cotton), 687; economy of a rise in prices due to a lessened sup- ply, 689; in cotton famine of 1861-5, 689-691; of quinine be- fore and since the supersedure of American by foreign manufac- ture, 692 Priesthood, power of socially, re- flected in state, 413 Primogeniture, 144 Printing, wages in England and America, 582 Printing presses, export of, 610 Private purposes, defined, 702, 703 Problems, can abundance promote ultimate poverty, and scarcity ultimate gain ? see Tooke on, 116; of national debts, 447-451 Producers, when protected without rise in prices, 609 Production, as related to trade, 6; cost of production as a cause of value, 11; social and moral ef- fect of, 41-54; decreased affects prices by what law, 95; cost of does not regulate price (Tooke), 114; but past and present price determines how much cost can be expended in future, 115 ; scarcity sometimes has effects like those of, 116; domestic pro- duction and money cost, 124; and monopoly, 130; how affect- ed by distribiition of land, 140; no production of forests, 148; begins with appropriation, 162- 166; depends on capital, 167; 760 GENERAL INDEX. and on prices, 169; and on sub- ordination of wills and obedi- ence, 182-188; which, and not muscular effort, is the essence of labor, 183-188; laborer 'produces only his wages, 187; involves opposing distributions of wealth and of products, 196; reproduc- tive wealth only the subject of avarice, 206; humanity of large accumulations of means of, 205- 210; on bonanza farms, 219; cost of wheat production, 219; of bread, 220; of iron, 220; by small copital, 222; annual, in United States, 224, 229; capacity of the earth for, 230; rate of pro- duction of man and his food, 231 ; productivity of capitals ap- plied iy wholly distinct fact from fertili'jy of soils, 238; production implies subordination, and is a government of interest, 307-309 ; but is a partnership affair in the division of the product, 309-815; on a small scale can seldom be- gin in free competition with pro- duction on a large scale, 319; by women, 325-328; rate of produc- tion may increase during war, 380 ; but diminishes with falling prices, 390-393; steered into new channels by crises, 395; which minimize the pain of failure by making it general, 396; mental qualities which promote success in, 400; are war and army ex- penditure productive? 438-440 ; share of product taken by taxes in ancient Rome, Gaul, China, 454, 455 ; production of commod- ities and values are inverse, 465; of beet sugar in France in 1875, 505; large production of iron and steel in America the shortest road to low prices, 509; cost of production includes import du- ties, if no other than the dutied market exists, 532; production doubled by protection as com- pared with importation, 560 ; production should not be sacri- ficed to revenue, 563; produc- tiveness of protective tariffs as re- spects revenue, 469-472; produc- tion at lower labor cost may be at higher money cost, 574; of glass in United States from 1790 to date, 642-644; per capita of woolen goods in United States, 683; of iron, steel, railways, etc., in United States, 651; of pig iron, steel, and coal in world, 650; of ships and steamers as affected by subsidies, and by protection to iron and steel, 651- 664; of cotton and woolen goods in Canada, 668; of sheep, wool, and woolens in all countries, 668- 683; tariffs do but little to regu- late the quantity produced, but much to determine the place of production (quinine), 692; pro- duction of shoes in facto- ries in United States, 697 ; do- mestic production, how aided by tariff, 609-629; of silk and silk goods, history of, 631-637; of glass, 636-644; of iron and steel, 644-652; tables and chart of iron and steel production in United States and Great Britain from 1860 to 1883, 652-653; protection the prevailing policy of Europe since Napoleon and Frederick, 675 Profit, sometimes greatest on small crop, 116-119; in railways, 155; the inducement to employ labor is, 168-194; risk earns it, 186; rate depends on time as well as price, 191-194; charity is a subtle form of, 204; of peace, 211; small capitals earn large rates of, 222; causes of high, 229; do not decline in the new fields, 229-230; defined, 238; is there an ordinary rate of, 238; profit-sharing in farming, 268- 272; profits the mother of wages, 293-316; rate of, the measure of success of industry, 293; the source of wages, rent and interest, 294; steer industry and energize labor, 294; views of Smith, Walker, Cairnes, Atkinson; what qualities favor profit-making and aid the work- er to become an employer, 307; how all industry is profit-shar- GENERAL INDEX. rei ing, 311-315; is intended profit- sharing better than the involun- tary '? "314; profit of sustaining bi-metallism, 365; if successful, 365; great public improvements that yield no profit may produce financial crises, 379; declining profits stagnate labor and pro- duce suffering, 390; rate of profit measures' the social neces- sity of industries, 397; in the economic sense, 397; desire of profit controls all social organ- ization and rt^ciprocal useful- ness among men, 400; relative prospect of, in loans to govern- ment and investments in pro- duction, 449; making a profit out of being taxed, 463; profits of trade maj^ be a form of taxa- tion, 483-491; salaries and bribes as profits of conquest, 480; mer- cantile profits of Indian trade, 486; Englishmen's profits the basis of the act of union, 493; profits small in Germany, 516; sometimes lessened by necessity of paying duties on the product, 532; profit of working under protection is offset by losses of initiating a new industry, so as to equalize the chance of profit in protected industry with that in business of other kinds, 565; Sidgwick on, 565; the profit argument for free trade applied to protection, 576; American in- dustry ahvays less profitable than it might be, so long as it ex- ports raw cotton, breadstuffs and provisions, instead of first working them up into finished cotton goods (Jefferson), 598; profits during moris multicaulis mania in United States, 632; profit of growing cotton dates from cotton gin, 686; affects the profit of growing slaves, 687; profits of cotton manufacture, rule English politics, profits of growing cotton did for 40 years rule American, 688; w^ages arc paid no longer than profits exist, 690 Prohibition, of imports of calicoes. chintzes and muslins by England in 1700, 489; between Holland and France in 1671, 501; of new vineyards in France, 502; of im- ports of iron and steel wares into United States from 1790 would have brought cheap- ness and abundance, 650; great political and social econo- my of, 650; applied to for- eign vessels from taking part in coasting trade, 652 Proletariat, small in France rela- tive to employers, 496 Property, effect of land becoming, 138; according to Adam Smith, 288; social uses of private, 304; as a qualification for voting and holding ofiice in England, 479; and income tax, amountjof in England, 479; in land in India, 488^ in New Jersey and New Yprk, 488 Protection to industry, 17, 121-124; distinction between importing competing products and com- peting producers, 314; the former displace labor without increasing demand, 314; the latter adds to the demand as fast as to the supply,315; protection to indiistry in United States in- volves an obstruction to equal- izing American labor market with foreign, 315; military protection to foi'eign trade, 316; natural protection, 319; exists as to all non-importable products and services, 319 ; protected classes, 320; it protects prices of raw materials to export only finished products, 322; tariff of 1824-8, 382; natural and artificial facilities, 382; rat« of duties under, 383; overwhelmed by ex- cessive imijortations, 384; failure of a government to be loyal to its own people in industrial matters may cause crises, 307; power to levy tariffs essential to national unity, 416; protective- ness of a nation's policy involves stud}^ of local as well as general, and army and colonial as well 762 GENERAL INDEX. as tariff action, 431; may be military, 431; early traces of it among Hindoos, 453; protection or the prohibition of an indus- try the only alternatives if the country can produce the article, 461,462; those who do not live by industry are not so directly interested in, 463; protective tariffs excel free trade tariffs in producing revenue, 469--472; and also prosperity, 473; protection to tobacco manufacturers in Great Britain, 480-481 ; to extent of prohibiting imports into Eng- land of calicoes, chintzes, and muslins, 489 ; advance of Ireland under, from 1783 to 1800,_ 493; not responsible for retaliatory tariffs, 500; aims to produce in harmony with natural facilities and at less labor cost, 511; List's, labors in behalf of, in Germany, 514; division between German states in 1818, 514; effect of, on relative militaiy strength of France and Germany, 515; limit and extent of German oppor- tunity in Zollverein, 517; applies to raw materials as much as to finished products, 517 ; in Russia, 525-530; in Australia, Austro-Hungary, Italy, Servia, Houmania, Spain, Mexico, and South American States, 530; Canada, 531-533; protection in India vetoed, 533; absolutely crushed out in Chinese tariffs, 538; and Japanese, 553; vast number, variety, and vigor of protective statutes in England, 555; principle of protection in- dorsed in part by Smith, Mill, Sidgwick, Devas, etc., 555-558; doctrine on policy of, ascribed by Rogers to Tories, 557; by Price to practical men in Ger- many, France, United States, and Canada, 557, 664; Perry regards profanity as essential to a scientific elucidation of pro- tection, 550; Jevons does not meet the protectionist argument that domestic production em- ploys two home capitals, im- portation one, 560; protection cannot require more wisdom than destruction, 561 ; duty can only be protective while it is adding another industry, 563; same duty may give revenue on part and protect against part, 565; attracts population and in- creases national strength (Sidg- wick), 566; is natural, 567; Mof- fat on, 566-568; Devas's argu- ments for, 569-571; justified by Roscher, 569; tends to avert famines, 570 ; protection doc- trine requires low or no duties on all products which we lack natural facilities to produce, 573; it puts all duties on prod- ucts that compete with what we produce, 573 ; Hewitt on our natural facilities for making iron, 573; free trade not desir- able between Canada and Ver- mont, 572-575 ; Perry's point, "trade profits, or men would not trade," 576; trade in the long run and the short run, 578; rates of wages in America and Europe, 579-582 ; Wendell Phillips on the dollar, 583 ; taxes that enrich the consumer because paid by the producer, 585-589; Perry's vast superstructure of tax wab- bles on an "if," and falls, 589, 590; steel rails not "taxed" by the tariff, but reduced in price four-fifths, 589, 651; woolen blankets not "taxed," 590-079 (chart of wool prices); iron and steel wares not "taxed," 590, 647, 650; protection to the profits of its own producers is that which each nation means even when it, by sacrificing its farm- ers to its manufacturers, calls it free trade, 606-608; the five points of protection, 609; protec- tion promotes unity and peace, 628-630; relation of, to silk man- ufacture in United States, 631- 634; decline of silk manufac- tui'e in England since protection was withdrawn, 634-638; intro- duction of glass, china, carpets and tapestry manufacture into GEJSERAL INDEX. 763 France by Colbert, 639 ; early protection to glass manufacture in the United States, 640 ; in- duced by Hamilton's report on, 639; partly protected by friabil- ity, 643; greater tariif protection to British than to American iron and steel manufacture from 1790 to 1845, 648; disastrous eifect of failure to protect iron and steel manufacture felt for ensuing fifty years on American ship- building, 649; American naviga- tion laws exclude foreign ves,sels from coasting trade, but after 1816 fail to protect American ocean-going vessels in any way; 653 ; protection by discriminating duties and tonnage acts from 1789 to 1816, 653; growth of American shipping under, 653- 654 -. repealed by treaty, 654; and acts of Congress, 654; since 1862,654; positive effects of pro- tective policy on growth of American merchant marine, 656; results of, in Canada, 664-668; history of protective legislation in England as to wool, 669-671 ; Lord Bacon a prophet of protec- tion, 670,671; multiplicity of the modes of protection to industry, 675; Thos. H. Benton favored a progressive duty on wool, 676 Protected classes, 320, 328 Protected industries,strikes among, 328 Provisions, export of, and rate of duty on import, 610 ; revenue, 614 Prussia, rates of wages in 1867, 511, 581; proposer of protection in Germany, 514, 515, 517 ; miles of railway in, 520; advance of wages in under protection since 1879, 523; rates of wages in 1869, 581 Public purposes, defined, 702, 703 Publishing, wages, England and America, 582 Puddlers, iron, wages in United States, Great Britain, Prussia, etc., 511 Pumps, export of American, 596 Pupjshment, involves economic loss, 441; modes of, 444; severity lessened, 444; colonization, 445 Pyramids, and iron, 645 Q. Qualities, in implements the best is cheapest whatever it may cost, 596; of wool, 672 Quantity, as quantity of certain ex- ports increases value declines, 673 Quebec, manufactures, 667 Quicksilver, exports of and duty on imports, 611 Quinine, destruction of manufac- ture in United States, by free trade, 690-695 R. Race, of immigrants to United States, 145; first to use iron, 645 Rails, iron and steel, production and fall of prices, 651 Railway, travel, safety of, in United States, France, etc., 29; railways and monopoly, 135 ; American, growth of, 150-161; Harlem, 151; in England, 151; Baltimore and Ohio, 151; Mo- hawk & Hudson River, 153; Boston & Albany, etc., 153; era of consolidation, 155; land grants to, 157; areas of, 158; distribu- sion of earnings between capital and labor, 172-174; shrinkage of values, in 1883-5, 190 ; cost of moving grain and flour in Amer- ica, 220; how controlled by Van- derbilt, 220; reducing freights, 220; rates of in United States, from 1868 to 1884, 221; shrink- age in values borne entirely by capital, 222; profit-sharing in railways, 311; strikes on, 328; insolvency of American railways in 1857 produces crisis in Eng- land, 377; excessive building of railways, 379; expectations of, in 1837, 385; relations of to iron and steel industry, 391 ; debts of, in United States, 448; effect of on imports, 470; loans in India, 486; mileage of, in Prussia, 520; VG4 GENERAL INDEX. aid to railways in Canada, 531; effect of premature introduction of railways by foreigners in China, 547, 551; freights on American railways, 584; miles of railroad built, tons of iron and steel rails made in United States, and prices of rails from 1860 to 1883, 653, 653 Rank, organization of labor by rank, 325; effect of rank and grade of life on crime in men and women, 443 ; taxed in China, 455; depends indirectly on iron and steel manufacture, 646 Rates, incidence of, 459, 467; kinds of, 477 Raw materials, prices of, 121; in estimating wages, 172-176 ; values given to, by diversifying industries, 333; distinction be- tween raw materials and finished product, applies to each product singly, but disappears in national aggregates,' 671; France protects, 498; valueless in India where manufactures were destroyed, 488; Germany remained poor and weak, while the ' ' granary of Europe," 515; production of, first protected under ZoUverein, 517; raw materials may be dearer and yet the finished product cheaper, 596; so of American iron and steel wares, 596; demand for raw silk in England falls by tliree-fourths under free trade in silks, 636; small raw materials required for iron and steel manu- facture in England in 1790, 646; wool a finished product, 671 Reciprocity, treaty of United States with England in 1816 described by Mr. Huskisson as a dexter- ous swap for England, 655 Record, debts of, in the United States, 448 Refiners of sugar, ,duties, 618 Rent, Ricardo's theory opposed by Carey, 16 ; causes of, 135-150 ; share of produce of land that goes to rent, 177; according to Smith, Young, rates of on pro- ductive real estate, 179 ; how compares with profit on capital, 193; relation of rent to value of land, 287, 238 ; Smith's and Ri- cardo's views criticised, 239 ; depends wholly on location, 239, 240 ; views of Carey, Roscher, Bastiat, Locke, Mill, Fontenay, and MacLeod on, 343; defined as cost of occupying working space, 338 ; depends on what facts ? 338 ; rent balances transporta- tion, 847-351 ; economizes pro- ductive space to the advantage of society, 348-353 ; revenues rented in Asia and Africa, 453 ; taxes are rent where government is socialistic, 453 ; or simple bondage, 453 ; the first rent would be of mines (iron) for manufacture of weapons, 645 Repeal, of a protective duty can never be needed, 564, 596 ; of duties on coffee in United States raised prices in Brazil, 600 Reproductive, capital distinguished from enjoyable, 163, 305,. 307 ; reproductive wealth defined, 316; rate of reproduction in man and his food, 331 ; investments in re- productive wealth, if premature, produce crises, 378 Repu.blic, 131 ; diversity of form in, 415 ; departments of in United States, 437 ; freedom to vote for its officers does not lessen their absolute powers, 416 Residences, regulation of by gov- ernment, 435 Responsible government, defined, 406; history of, 406-413; dates in England from failure of George III. to subdue America, 409 ; developed largely in Vic- toria's reign, 410 ; crown repre- sents the dignity, cabinet the policy, 454 Resumption, in England in 1820, effects of, 370, 871 ; in Russia, 528; and Uiuted States, 390, 392, 528 Revenue, farming the, 453 ; as an exclusive object in laying taxes belongs to the military period, 456 ; sources of, in the United States, 468 ; most revenue al- ways produced by protective GENERAL INDEX. 765 tariffs, 469-473; from public lands, internal revenue, and cus- toms in the United States, 475 ; in England, from all sources, 479, 476 ; cost of coUcctinc; in England and United States, 482 ; drawn in salaries in India, 485 ; from land in India, 488 ; of Turkey mortgaged, 490 ; of France, 495-498 ; of Germany and Prussia, 522 ; of Russia, 527 ; collected in the United States on Canadian products nut a tax on consumers, 533 ; of China, 537 ; tariff for revenue only is an impossible chimera, 561-563 ; duties on imports will protect unless domestic produc- ductionis forbidden, 562; Amer- can government having no power to prohibit domestic production, 562 ; can not levy a duty for revenue only, 562, 563 ; a tariff for revenue only calls for high duties on products we have no natural facilities to produce, 573; revenue derived from importa- tion of articles of which we pro- duce our whole supply, 586 ; duties so far as they produce revenue are revenue duties (Mill) 587 ; even repeal of revenue duties may not always cause re- duction in prices by amount of dutj-- (coffee), 600 ; portion of revenue collected from foreign- ers, 623; revenue from silks, 634 Revolution, agitation for a social, 304-307 ; tendencies to paternal despotism where spirit of revo- lution is deficient, 402 ; effected ii/English government by Amer- ican independence, 409 ; what is deemed revolutionary in Eng- land, 426 ; loss of life in French revolution compared, 447 ; kind of industrial revolution needed in (Uiina, 551-554 Revolvers, American superiority in foreign trade, 596 Rhode Island, 141, 252; popula- tion of, to cultivated land, 546 Rial, 340 Ribbons, England protects her own against Irish, 493; decline of, when protection against French and German gone, 634-637 Rice, excise on, 481 ; revenue on, in United States, paid by foreign- ers, 586 ; exports of, 611 Rice-hullers, American export of, 596 Roads, taxed, 454 Romans, economic conditions of, determined their political iustilu- ti(jns, 402 ; power first in sold- iers and priesthood, then in sold- iers and lawyers, then in political manipulators of elections, etc., 402 ; register of revenues and expenses, 454 ; tribute derived by, 454 ; wool culture and sheep among ancient, 608 Rome, pope of, 404 ; elective, 405; mode of choosing, 418 Rome, ownership in, 23; family relation imder Roman law, 60; classes which ruled in, 402, 405; extraordinary prices of fine woolens, 669 Rose noble, 340 Rotation of crops, 255, 520; and of manures, 520 Rouble, 338 Roumania, tariff, 530 Rubber (see India rubber) Rupee, 338 Ryots, 485, 486 Russia, markets of, 100; bureau- cratic government, 406; value of agricultural products of, 230; relative wages in, 315; orna- ments worn in, 331; monetary unit of, 338; political parties in, 404; local government, 430; the mir, 430; expenditure on army in, 438; alleged low credit of, 448; area of, 526; communal and land system of, 525-527; emancipation, 526, 527 ; home industry in, 527; child labor and total number of hands employed in factories of, 527; Russians escape three important forms of western taxation, through their more practical socialism as an aspect of their intenser despot- ism, 529; the taxes of emancipa- tion (including rebellion), re- sumption, and pauperage, 529; 766 GENERAL INDEX. American balance of trade against, 599-601 ; product of iron, steel, and coal in, 650 S. Salaries, as a mode of taxation, 485 Salt, earnings of salt manufacture in United States and division between capital and wages, 312; value given by meat packing, 322 ; tax on, converts the Hin- doos into earthworms, 487 ; Ro- man taxes on, 454; Chinese, 455 ; heaviest known tax laid on in India, 455, 486 ; United States revenue from, not paid by con- sumer, 586 ; fuller demonstra- tion of this point, 693-697 ; ex- ports of, 611 ; imports and rev- enue from, 614 ; a surplus of revenue not a good reason for withdrawing protection from, 640 ; salt production in United States as related to tariff, 693- 697; foreign production as com- pared with domestic in use, 693; 693 ; prices, duties, and manu- facture South and North, 694, 695; from 1868 to 1872 duty was added to price, from 1872 to 1876 it was divided, since 1876 it has been paid entirely by importers (diagram), 696. Sausage machines, American ex- port of, 596 Savages, absence of money among, 331; schemes of converting by raising silkworms, 631 Savings banks in United States, 190 Savings, taxes on, 464 " Saw gin," Whitney's, 686 Saws, wages in manufactui-e of, 581; English and American prices of, 590 Saxe- Weimar, 515 Saxony, wages in 1867, 511, 515; wools of, 672 Scales and balances, exports, 611 Scarcity, effect of on prices, 115- 119; of savage life, 162-166; of crime during great wars, 443; the scarcity and abundance so- phism of Bastiat, 508 Schools of political economy, 9-36; of Carey, 16; schools sustained by taxes under universal suf- frage, 474; in Prussia, 523 Science, is political economy a, 1-9; classification of, by A. Comte, 6; the scientific method in polit- ical economy, 23; how economy made exact (Jevons), 34; Perry says the facts are too numerous, whirling and entangled, 571 Scissors, American export of su- perior, 596 Scotland, union of with England, 340, 461; taxes in, 476; prohi- bition of culture of tobacco in, 480; lessened product of bread- stuffs under free trade in corn, 559; production of tobacco pro- hibited in order that import duty may not protect, 562; oiu- bal- ance of trade with, 599-601; ear- ly protection to glass, 639 Seasons, effect of bad seasons to destroy agriculture counteracted by protection to corn in Eng- land, 113-118 Secession, war for in United States, could it have been averted? 438 Seed, tax, 466; export of (liay and cotton) seeds, 611; import of flax, hemp, etc., 614 Senate of United States, 414, 426 Servia, government parliamentary and responsible, 407 Sewing machines, American ex- port of, 596, 611 Sex, in crime in Gi'eat Britain, 33; imposes no material obstacle to directon of industry if the value sense exists, 307-308; women as wages- workers, 325-328; does their best welfare lie in giving them a broader claim to support at the hands of male relatives, or a freer admission to compete for wages? 325; limitations on wo- man as a worker, 326; degree in which they are self-supporting in United States, adherence to the family order, 327; the work- ers find their real underbidders in the " ladies," who work or not as they choose, and GENERAL INDEX. ^6^ hence help to fix woman's work nearer the gratuitous standard, 328; sex and crime, 441, 442; in worli in France, 497; in Ger- many, 524; in strilies, 328 Shearing frames, 681, 685 Shears, cast steel, English and American prices of, 590 Sheei?, taxed in Turkey, but im- ports and aliens free, 488; in France, 498; antiquity of sheep culture and history of, 668-683; development of, 671; may be bred to any pattern, 671; high prices on merinos in America, 676; growth of sheep and yield of wool in United States, 677 Sheetings, 383, 666 Shillings, 339, 341 Ships, building and repairing of in United States, low returns to capital and large to labor in, 313; English ships needed protection until they could carry cheaper than all others (Mill), 557; wages in, in America and Europe, 581 ; American ships came under free competition in 1816, 642; ship- building dependent on iron and steel manufacture since 1845, 648; British ships protected by discriminating duties on iron carried in them, 648; canvas and cordage for, 652; rapid growth of shipping while under protection in United States, 653, 654, 656; national quality of ships and right to protection, 654; free ships would put an end to ship-building, 655; decline of American ocean-going marine because unprotected itself and dependent on iron and steel manufactures, also unprotected, 656; while English iron and steel industries were got ready for ship-building by persistent pro- tection, 640; subsidies to English ocean-going vessels, 659, 662, 663; denial of subsidies to Amer- ican ocean-going' vessels, 657, 658; American penny-wise mean- ness t(jward ships enables Eng- land to score a handsome net profit on her piracy over all costs of indemnity, 663 Shoddy and rags, in Yorkshire, 122; in English blankets, 590, 672 Shoemakers' tools, American ex- port of, 596 ; productions of in United States, 697 Shoes, export of from New Eng- land, 35 ; law governing price of in exchange with corn, 97; strikes in, 328; protected in 1824, 383; women's shoes exported from United States, for one hundred years past ; magnitude, value, and cheapness of New England shoe trade, 697, 698 Shovels, English and American prices of, 590 Siberia, tribal ownership in, 23 Sidon, 453 Silesia, wools of, 672 Silk, early culture of, in America, 631 ; visionary economic views concerning, 631 ; colonial export of raw, 631 ; revival of in 1826, and silkworm mania, 632, 633; manufacture of, in United States, sharing of product in, 313; Eng- lish silks protected against Irish by Act of Union, 493; taxes on manufacture of, in China, 455; decline of silk manufacture in Turkey, 491 Silks, French imports and exports of, 26 ; Belgium, 26 ; manufac- turers of Bengal petition for same protection against English silks as England exacts against theirs, 487 ; former repute of Turkish silks and velvets, 490; in France, 500-503 ; statutes in aid of silk manufacture in Eng- land, 555 ; wages in silk hats in America and Europe, 581 ; Eng- lish silks protected against Irish by Act of Union, 493; decline of the tariff tax on silk though the duty remains the same, 620, 621 ; manufacture of in America, growth of value of product, 633; a consequence of protective duties, 633 ; decline of manufac- ture in Eugland under free tniilc, 632; proportion of silk mauufac- iGS GENERAL INDEX. ture to Great Britain's entire manufacture (McCulloch), 637 ; McCulloch's attempt to ' ' explain away" the destruction of the English silk manufacture by free trade, 637, 638 ; imports of into United States from France and Germany, 637; former rivalry between England and France in, 637 ; scarf of silk in Coeur de Leon's contest with Saladin, 646 ; fibi'e of compared with wool, 673 Silver, in India, 331 ; the money of the poor, the retailer, the laborer, and of vital consumption, 339 ; in England, 399; relative quantity used, 344 ; has free coinage, and is standard in India, 362; in Ger- many, 363; elfect of cessation of drain to India accurately foretold by Meggins prior to 1770, and verified in 1873, 373 ; export of, where it subtracts from circula- ting medium, 383, 384 ; Ameri- can interest in Chinese trade, 536 Simplicity, as a cover for indolence, 571 Skill, influence of on wages, 313 Slaughtering and meat packing in United States, relative wages and profits, 313 Slavery, associated with tribal ownership, 23 ; and pauperism, 30 ; relative prosperity of free and slave states partly due to race capacity, 33 ; in United States by census, 146 ; slavery abolished by substitution of wages for force, 164 ; servants, provision for, 166 ; change of opinion concerning slavery with growth of freedom, 333; relation of to free trade and the secession movement of 1833-33,678-679; rise in price of slaves due to success of cotton, 384; in civilization is suc- ceeded by penitentiaries, 444; slave labor and free trade parts of the same scheme of propagand- ism in United States, 553, 687 ; profits of cotton-growing and slave-growing combine to make slavery a power, 687; the slavery struggle in America an economic war, 688 Smiths, 383, 511, 646 Smuggling, between England and France exceeded legitimate trade in 1774, 500; right to smuggle in China and Japan backed by British forces, 554; in New York it is effected by agents of foreign houses (Wells and committee of Congress), 605 Soap, England protected her soap- makers, but gave the Irish free soap by Act of Union, 493 ; ex- port of, 611 ; import of and reve- nue from, 614 Socialism, theory of tribal or com- munal ownership should be studied, liow, 83 ; state socialism and wherein all state life is social, 57, 60; what is social wealth, 63- 65 ; social view of title, 135-150; Henry George's scheme of land, 135, 130 ; disappears as to title with advances of society, but in- creases as to use, 130-151; culmi- nates in slavery, 138 ; socialistic tendencies of taxation, 145 ; aid to railwa.ys and reaction against, 145-161 ; railway theoi'ies of socialism, 160; argument of, as to capita], labor, and wages, ex- ploitation and robbery, stated and answered, 167-185; Mill's quasi- socialism, 185 ; the socialist ob- jection to accumulation ans- wered, 198-310; Karl Marx, 309; social saving by private enter- prise, 318 ; poor survive best in cities, 219 ; social gain by large capitals, 330 ; social use of re- productive wealth, 234 ; Bastiat on socialism, 334 ; objections of socialists to large landholding, 373 ; socialist views of labor dis- cussed, 304-330 ; destruction of values by strikes, 310, 338 ; doc- trine that returns to capital are a robbery of labor is subversive of all social order, and tends only to destroy industry, 307 ; wages of social' labor, 333; tendencies of local government to socialist undertakings, 477-479; socialism of the Russian mir and artel. GENERAL INDEX. 769 526 ; in Russian finance, 528; Russian socialism in two aspects exceeds that of western nations, 529 Sociology, relation of to political economy, 7 Soil, exhaustion of, 253-256 ; re- lation of protective policy to, 570, 571 ; would first be used for making iron, 645 Sol, monetary unit of Peru, 338 Soldiers, erroneous statistics of in France under Napoleon III. , 30 ; health of British soldiers serving abroad, 31; of recruits in France, 32; bounty laws in America, 145; wages of, 290; hold the power at first, 402 ; cost and functions of, 437-440; relation of to industry, 440; soldiers for sale in Germany while export raw materials, 515; expenditure on soldiers inFrance, 497 Sophisms, of Mill as to protective duties producing no revenue, 469-472 ; may apply to a theory, but not to a practice, hence to free trade but not to protection, 507 ; of Bastiat criticised, 506- 513 ; of Perry as to paying for foreign products with domestic and trading for profit, 571-577, 578 Southern States, effect of war of 1861-5, 415, 687, 688 ; in salt making, 694 South Carolina, in 1828 to 1837, 384,629, 630; silk raising, 631 Southdown wools, 672 Sovereigns, 340-342; pound ster- ling, 340 Sovereignty of United States with- in its powers, 415 ; sovereignties merged in Germany, 522 ; of China and Japan undermined as to tariff, 533, 534 Spain, 214 ; monetary unit of, 338 ; government responsible, 407 ; debt of, 448; order des- trojang vines and olive trees iu Mexico, 480 ; taria' of, 530; Am- erican balance of trade against, 600 ; product of iron, steel, and coal, 650; wool and woolens, 008, 669; wools of, 672 Spai'ta, causes of its peculiar state life were economic, 402; iu'islo- cralic, 405 Specie, import and export of, 383; turned, 384, 386; resump- tion of, 529 Specific duty on tobacco, con- verted into ad valorem, 481 ; nearly all duties specific under Zollverein, 517 ; on glass in United States, 644 Spinning jenny, 681, 684 ; spin- ning frame or throstle, 684 Spirits, 480, 481, 482 ; export of, 611; import and revenue, 614 Spirituous liquors, annual value of, consumed in United States, 25; taxeson, 463, 464; effects of , 475 ; how methylated for use iu arts, 476 ; English revenue from, 480, 481, 482 Spiritual government, 428 St. Petersburg, 351, 405 Stamps, revenue from, 479, 482; in India, 486 Standard, silver, and later gold in England, 334; coin, 335, 336; in United States, 336 ; nine meanings, 342 ; single and double, on, 361; Beaconsfield on, 362 Starch, Act of Union gave Ireland fi^e starch, England protected starch, 493 ; export of from United States, 611 ; import and revenue, 614 State, control of railways by, 29; origin and functions, 131-151 ; aid to railways iu United States, 150-161 ; decline of cost (value) and increase of utility of the state as society advances (Elder), 324; state, like the family or the basic qualities of human nature, is a necessity, and natural, 392, 393; the government of interest known as industry or business is more searching, minute, and controlling than the political state, 399; it is an unconscious government, 400; form of the state determined by the material conditions of the people, 402- 404 ; state as a mechanism much alike in its essence and 110 GENERAL INDEX. form, whatever its mode of selec- tion, 404-415 ; parliamentary and representative states, 406; responsible ministry and dis- soluble legislature, 407-412 ; Roman state, 413 ; what forces state must represent, 413; " con- curring majorities " according to Calhoun, 414; relation of in- dustrial to political, 431 ; the state as wise as its average con- stituency only, 441; objects in punishment, 440; state debts in United States, 448 ; loans to, 448; effect on tax policies of state becoming a producer, 456 ; subjects of a state do not pay all its taxes, 457 ; state taxation in United States, 468; functions of in England shown by diversity of local rates, 477-479; state aid to railways in Canada, 531 ; state aid to silk culture in United States, 631-633 ; state aid to glass-making in Massachusetts, 639; state is the sum of all in- trinsically profitless but socially necessaiy industries, 700, 701 ; and hence merges into identity with protection, 700, 701 Statesmanship, its relation to polit- ical economy, 8, 17; American examples of, 38; state dt^flned, 131; statesmen assume the basic qualities of human nature as constant factors, 398 ; forms through which it works in Eng- land, America, France, etc., 406-429 ; class who supply work for statesmen, 447 ; statesmen should know whether a tax pro- duces revenue and prosperity, 465-469, 469-473 ; as this is a practical matter, but need not know its final incidence, which is a metaphysical subtlety, 459- 460 ; statesmanship of Russia in emancipation, 527; of Germany, 514-523; of colonial and Cana- dian independence, 531; Chinese statesmanship as to subversion of native industry by foreign pro- cesses prematurely introduced, 548; American statesmen over- I'eached and out maneuvered by English from 1815 to 1860inmat- ters relating to carrying trade and ocean ships, 640-664; de- struction of American merchant marine an intended stepping- stone to disunion, 657, 658; of Sir John A. Macdonald, 664; of Colbert in France, 673, 674; artisans, how attracted, 674; blunder of French statesman- ship in 1786, 674; triumph of Napoleon's protective policy in Europe, 674,675; statesmanship of America holds protection to be the surest road to cheapness, 683; of Great Britain sacrifices domestic production to foreign trade, 689 Statistics, definition of, 24; phil- osophy of, 24-40 ; Cossa's fal- lacy as to, 24; what they show, 24; fallacious handling of, 24- 26; conflicts of, as between dif- ferent nations, 26-28: may be due not to error but to different classification, 27 ; as to silks, coal, wool, hops, glass, 28; of china discredited, 29 ; military under Napoleon III., 30 ; of the poor prove relief onljr and not poverty, 30 ; of eccentric marriage, 30; of health and cli- mate, 31 ; crime, 32, 443, 444; taken with a bias, 33; accurate predictions of population, 145 ; of grain production, shortage and effect of in United States, 1879- 1883,106,117;Mongredien's errors concerning causes of dear bread- stuffs in England, 112; during Napoleon wars, 112-113 ; chart showing that fluctuations in America and France were iden- tical with those in England, 124; of repeal of corn laws, 119; of immigration into America, 141- 150; chart of, 147; of forests in United States, 148; of beginning of railways, 152-157; land grants, 157, 158; of division of product between capital and labor, and of division of capital fund be- tween rent, interest, profits, 173- 182; of economy of large capitals, 219-230 ; of relative capacity (GENERAL iNDEX. 7V1 of reproduction as between man and his food, 230-234; of ratio of rent to value, 244 ; of rent and transportation as balancing, 250-252 ; of diminution in value of products by distance from markets, tax of transportation, 252 ; exhaustion of soils and contra, 254; of ratio of farm in- comes, farm values, and farm wages to nearness of consumers (Dodge), 256-262; of agriculture by machiner}'-, 263-267; of large landholders in America and England, 268-374; of depopula- tion and waste of Ireland, 274- 275; of emergence of food plants into general use, 275-280 ; of cost and economy of strikes and lockouts, 310, 328; of division between capital fund and wage fund in America, 311-314; of women who labor, 325-328; of value of standard coins, 338; of fineness of British coins, 340- 342; of all coins and paper in use, 344; of export of bonds, 340; of turning from silver to gold in Germany, 362; of rate of production of gold and silver, 363-367 ; causes of disparity between silver and gold, 368; of crises, 1825-6 in England, 371; 1847 in England, 374; 1857 in England, 377; of 1816-19 in United States, 381; of 1837 in United States, 382-385; of 1857 in United States. 385-388; of 1866 in England, 389; of 1873 in United States, 390-392 ; of balance of trade doctrine, 393, 394; of bal- ance of trade, how marred, 395; of cost of armies, 437 ; of crime, 440 ; of income and expendi- ture of United States in 1883, 45; of average imports and ratio of revenue to imports under pro- tection and low duties from 1821 to 1861, 469-i70 ; of taxation in Great Britain, 476, 479 ; of pau- pers in England, 478 ; of cost of collecting revenue, 482 ; of spo- liation of India, 484-488 ; of Turkey, 488-491 ; spoliation and decline of Ireland, 491-495 ; of occupations of French, 496 ; of women in France, 497 ; of reve- nues, 498 ; of French taxes, 499 ; of population of the Zoll- verein, 516 ; of German reve- nues and prosperity, 492-524 ; of sources of revenue, 523 ; of iron and steel production, 522 ; of emancipation in Russia, 527 ; of resumption of specie pay- ments in Russia, 528 ; concern- ing China always begin in a guess, 537 ; of Chinese popula- tion as estimated by most com- petent geographers, 538-550 ; of Chinese immigration to America, 548 ; of rates of duty and of duties paid by foreign producers under American tariff, 607-620 ; of steel rails, cutlery, plumbing ware, paper,and crockery trades, 620-626 ; of experiments in silk culture in America, 631 ; Ameri- can manufacture of silk, 633 ; of silk manufacture in England, 634-637 ; of progress of iron in- dustry in Great Britain, 646 ; of the world's iron, steel, and coal production in 1881-1883, 650 ; of American iron and steel pro- ducts, steel rails, railroad build- ing, and immigration fi-om 1860 to 1883, 651 ; of English and American shipping and their rivalry in ocean carrying trade, 652-664 ; of manufactures in Canada, 664, 668 ; of sheep and wool and prices, 666-684 ; of cotton and cotton goods manufac- ture in United States and Eng- land, 684-691 ; of quinine, 692 ; of American and foreign salt, 693-697 Statutes, of England protective and prohibitory, 555 ; protective of iron, steel, and shipping, 648 ; American less so, 648 ; English protection of wool, 669 Steel (see Iron), acts to protect manufacture of , in England, 555; wages earned in iron and steel in United States, 312; German, 523; wages in steel woi'ks Uniteil Slates and Europe, 581 ; were fbe duties on steel rails a tax on con- V72 GENERAL INDEX. sumers or a relief to railways? 589, 651 ; English and American prices of iron and steel wares in 1882, 590; antiquity of, 645; world's product of steel in 1883, 650 Steel i-ails, effect of American pro- duction on prices, 590 ; other causes than tariff operated to delay fall in prices, 618, 619; production and prices in United States from 1860 to 1883, 651 Stock, exchanges, a more perfect form of market, 101 ; shrinkage of railway stocks, 332; live stock, absence of in Chinese empire and its economic effects, 540-547 Stone, wages of working in, in Eng- land and Massachusetts, 583 ; age of stone, 645 Stoneware, exports of, 610 ; im- ports of and revenue from, 613 Strikes, relation of to commercial crises, 190 ; waste of, 310, 338 ; not wholly cured by profit shar- ing, 314 ; number of, from 1881 to 1886, men and establishments engaged, and gain and loss by, 338 ; English strikes and riots of the machine breakers, 684 Subsidy, protection by, efficiently applied to English vessels, 656- 660 ; while denied to American, 656-659 ; liberality of British government, 663 ; mode of pay- ing, 663 ; economy of subsidies, 663, 675 Suez canal, favors absenteeism in India, 487 Suffrage, influence of extended, 403 ; expanding the right of, 418; effect of extension of, on the spirit and intent of legislation, 434 ; why only males vote, 435 ; effect of universal, on modes of taxation, 474 Sugar, revenue from (1861) in Eng- land, 480 ; repeal of import duty, 480 ; excise, 481 ; revenue from, in Erance, 498, 503 ; History of development of beet sugar in Europe, 503-506; efforts to prove a country richer for not producing it, though it can pro- duce it cheaper than any others but not at first, 504 ; France ob- tained abundant and cheap beet sugar in 1840, 505 ; German ex- port of, 530 ; cultivation of, partly extinguished hj forced importations in Japan, 554 ; wages in refineries in United States and Europe, 581 ; cane growers in Jamaica seek to get into a protected market, 505 ; since 1860 France taxes beet sugar heavier than colonial, 505; export of, 611 ; import and reve- nue, 614 ; state of American market and prices relatively to European, 618 ; necessity of making all the sugar a nation consumes, 639 Supply and demand, economics a study of, 4 ; law of applied to prices as affected by duty, 591- 594 ; law of ratio of whole sup- ply to whole demand applied to determine effect of import duties on prices where there . is a com- peting domestic production, 618; when supply is short prices rise in disproportion to scarcity, 690 ; of cotton in cotton famine, 690 ; prices diminish chiefly with the magnitude of supply (shoes), 697, 698 Surplus, of revenue in United States under protection, 384 ; division of, among the States, 384 ; how it arises (1883), 468 ; existence of, not a good reason for withdrawing protection from salt (Jefferson), 640 ; the greater the national surpli;s relatively to a uniform demand the less its aggregate value (woolens), 673 ; compare Tooke, Carey and Baird, 113, 117 ; (illustrated in case of raw cotton), 687 Sweden, monetary unit of, 338 ; wages of blacksmiths and iron pucldlers in, 511 ; American bal- ance of trade against, 600 ; pro^ duct of iron, steel, and coal in, 650 Switzerland, monetary unit, of, 338 ; economic conditions favor democracy, 403 ; wages in, in 1867, 511 GENERAL INDEX. V73 T. Table-ware, American export of, 596 Tallow, United States revenue on, not paid by consumer, 586 ; ex- port of, 611 ; import and reve- nue, 614 Tanning bark, protection on, and export of, 610 Tapestry, introduced in France, 639 Tar, 520 Tariff, when it becomes necessary as a protective agent, 319 ; of 1824-28 in United States, 383 ; compromise tariff of 1833, 384 ; how it brought on the inflation of 1834-36 and crisis of 1837, 385 ; tariffs in United States from 1820 to 1881 compared as to productiveness of revenue, imports, and immigration, 468- 472 ; importance of making, 488 ; Turkish tariff on English steel 3 per cent., English tariff on Turkish steel $150 per ton ; how English and Irish tariffs contrast under Act of Union, 493; England takes protection and dear goods and gives Ireland free trade and cheap goods, 493 ; sample of specific duties in Zoll- verein, 517 ; tariff of Russia de- signed for protection chiefly, 527 ; essential uniformity in all tariffs, 530 ; except where sovereignties are coerced, 533, 534 ; Chinese and Japanese tariffs, obtained by American and English coercion, 534, 553 ; tariff of France, pro- tective duties in, 498 ; discussed by Smith, 500; retaliatory tariffs, 500 ; tariff for revenue onlj^ an impossible thing in the United States, 561-563; Sidgwick on, 561-566 ; need of protection in- creases with means of transpor- tation, 569 ; rate of tariff" re- quired to sustain production in lines where equivalent effort pro- duces, 585 ; tariff' not a tax when the production it causes lowers prices more than the duty raised them (steel rails), 589, 651 ; tariff' not a tax on consumers when paid by importing produ- cers, 612-615 ; when price is raised but there is a competing domestic production, 618-620 ; change of revenue tariff on silks to protective, 633 ; effects of, 633 ; tariff as to silk from 1790 to date, 634 ; Jefferson regarded tariff and patriotism as identical even where the revenue was in ex- cess of needs, 640 ; of 1824 on glass, and eft'ect of, 643 ; British tariff on iron and steel from 1790 to 1849 created the British mer- cantile marine of 1850 tol888, 648 -650 ; American free trade tariffs on iron and steel for same period destroyed our ocean carrying trade, 648-650 ; discriminating daties according to bottoms in aid of ships, 653 ; effect of pro- tective tariff in other countries on England, 664 ; principles on which wool and woolen duties were based in United States, 677 ; caused a great increase in production of woolens and wools and a gradual lowering in price through abundant supply, 674, 678; Bigelow and Hayes on, 678; on quinine, 691, 692 Tartary, economic conditions fa- vor nomadic life, 403 Tasmania, 445 Tax-payers, relieved to the extent of revenue collected from for- eigners, 585 ; amount of relief, 586, 613, 616, 617 Taxation, the state the proper judge of the purposes to which it is adequate, 431 ; earliest tax- ation was tribute, 453 ; rapine by, 453 ; is rent where govern- ment runs industry, 453 ; taxes in services, 453 ; and representa- tion, 453 ; objects of, 455 ; theo- ries of equalitj" in, 456 ; on pro- perty, 456 ; on expenditure, 456; on superfliiilios, 456 ; despotism of single-taxism, 457 ; vagueness and self-contradiclion in Dr. Smith's theories of, 457-460 ; elusiveness of taxes and dif- ^74 OENERAL INDSX. fusion of their effects, 462-468 ; self-imposed taxation, 466 ; tax- ation by profits of trade with conquered barbarians, 483, 490 ; in France, 496-504 ; in Germany and Prussia, 522 ; tax on human energy in creating tlie means of reproducing wealth in western nations, 549 ; degree in which burden of domestic taxation is borne by domestic producers, 556 ; taxation for revenue (with- out either protecting or destroy- ing industiy) an impossible chi- mera, 561, 562, 563 ; all produc- tion caused by some form of tax- ation, 584 ; Ferry's error, 584 ; tariff duties in part relieve dom- estic tax-payers wholly from taxation, 585 ; by collecting rev- enues from foreign producers, 586 ; duty on import does not ef- fect a tax on consumer unless it raises price, 589, 612-614 ; nor if deductions in price exceed rise, 590 ; the " tax " of protection an exploded myth, 683 Taxes, effect of, on statistics, 29 ; as a means of confiscating land by numbers, 125-130; none on land in Great Britain, 144 ; in America, 144 ; socialistic, 145 ; transportation as a tax on pro- duction, 250-253 ; the chief tax on producers of farm products, 320; Elder on greater freedom in taxation as society advances, 324; of United States in 1861-5, 353; paid freely where money is made plenty, 353; modes of vot- ing in early England, 408, 409; tribute the earliest form of, 452; mention of, on Egyptian monu- ments, 453 ; in Roman Empire, Asia, Carthage, Gaul, 454; mode of distributing under Constan- tine, 455 ; in Eastern Empire and China, 455 ; enormous rate of, on salt in India, 455 ; the seed tax is the source of all pro- duction, 466 ; what taxes are most lightly felt, 467, 468 ; state and local taxes in, 468; on liquors and tobacco an imperceptible check on consumption, 475 ; amount of local and national taxes in Great Britain, 476 ; taxes in profits of foreign trade, 484; ratio of taxes to income in India, 486 ; taxes become a ground rent, 486; foreigners and resident aliens exempt from in Turkey, 488; on beet sugar in France, 505 ; in Germany, 522, 523 ; on liquors brings govern- ment into partnership with the traffic in Russia, 527 ; distribu- tion of, in Russia, 529 ; exemp- tion of Russia from certain heavy forms of taxation, 529 ; effect of proposal tax according to population, or to give alms, on census, 539 ; taxes in Japan, 554; the tax effected by a pro- tective duty (if it effects one) repeals itself, 564 ; taxes may be thrown on foreign producers, (Sidgwick), 566; tai'iff not a tax when the production it causes reduces prices by five times the entire duty (steel rails), 589 ; all internal taxes reduce the protec- tive effect of tariff, 694 Tea, on free list in United States, 573, 600 ; early discriminating duties on, to favor American ships, 653 Terms, elusiveness of economic terms, 14 Texas, area compared with Ger- many, 315; salt beds and tem- porary protection under a free trade confederacy in salt mak- ing, 694 Textile fabrics, aggregate returns to labor and capital in, 312 ; are refused protection in India while protected in England, 487 ; Liverpool Cotton Circular on American tariff, 664 ; causes of prices, 691 Thistle crowns, 340 " Throstle," invention of. 681-685 Tillage, perfection of in Germanj", 520 ; more women than men employed in, in Wurtemburg, 525 Timber, exports of, 611 ; imports and revenue, 614 Time required by free trade to pro- GENEUAL INDEX. duce tiuancial crises — four j^ears in United Stales, 383 ; one your in England, 374, 376 ; seven yeai's in United States when de- layed by unprecedented intlux of gold, 385 ; four to eight years in 1816 to 1824 to extend to all branches, 643 ; thirty-six years of free carrying trade sustained by United States before the free trade j^rinciple proved fatal, 656 Time required by protection to produce cheapness — beet sugar in France, twenty years, 515-521; cutlery in United Stales, eight years, 596 ; general manufac- tures in Germany, twenty -five years,514-517;to build up Amer- ican manufactures to prosper- ity, fifteen years, 641 ; British woolens, twenty-five years, 669 ; export of wool prohibited 165 years, 670; to convert wool into a coat, one day, 671 ; under reduc- tion of duty (3 cents per pound of wool) to reduce whole num- ber of American sheep one- seventh, two years, 679 ; to re- duce American quinine manu- facture one-half, five years, 672 Tin wares, export of, 611 ; import and revenue from, 614 Tithes, Hebrew, 453 ; India, 453 ; paid by natives in Turkey, aliens pay nothing, 488 Title, private, as related to labor and production, 125, 130, 134; regulation of, by government, 430 Tobacco, duty on, in England, liow prevented from protecting the cuUivation of, 461, 462; Shadwell and McCulloch on, 480-481 ; revenue from, 480 ; comes from United States, 480 ; invoice price in United States of tol)acco shipped to England, 481 ; revenue from monopoly of, in France, 498 ; statutes to protect manufacture of, in England, 555 ; English duty on American tobacco according to Adam Smith justifies American duty on any English product, 556 ; export of, 611 ; imports and revenue from, 614 Tolls, 454, 476 Tonnage acts, for American ves- sels, 653 ; repealed by treaties, 654 ; dues, different on English and American vessels in Ameri- can ports, 655 ; tonnage in for- eign and American vessels, 656 Tons, gross and net, 650 Tooke, on prices, 113-117 Trade, its relation to commerce, 6; essay on balance of, by G. King, 95 ; boards of, for grain and provisions, economy of, 102-120; engagc'il in, in United States, 320; Great Britain derives no revenue but profits of trade from out- lying dominions, 484 ; domestic trade increased lay protection in a degree greater than foreign trade is checked, 512; trade arises not from production of unequal values of the same product, but of like values of unlike products, 513 , hence England's superi- ority in the same line paralyzes, 513 ; freedom of internal trade as essential as protection from exterior competition, to the American policy, 514 ; a large trade makes a low price, 623 ; internal trade between North and South the most permanent and cordial basis of political imion, 649, 650 ; three-cornered commerce, 664; in slaves between the slave-growing and cotton- growing States in 1815-1830, 677-679 Traders, home traders protected when, without raising prices, foreign competing article is ex- cluded, 609 Trades unions, 166, 309-315 ; pro- portion of strikes ordered by, 328 Transit duties, 455 Transporters, protected when, 609 Transportation, and rent, 249 ; Mill's theory of annihilation of rent by perfect transportation, 247-253 ; as a tax on farmers, 820 ; strikes in, 328 ; relation of State to, 455; taxes on, in China, 455 ; number of persons in, in 776 GENERAL INDEX. France, 496; greater the develop- ment of transportation the greater the need of protective tariffs, 569; reduction in cost of, a mode of protection, 675 Traps, American export of rat, beaver, and fox, 596 Travel, 520 Treason, industrial, a general strike would be (Jevons), 303 Treaty, tariffs by, of England with Turkey, 488 ; Portugal, 500, 670; Ireland, 494 ; of 1816 between Great Britain and United States, 514 ; of England with Japan, China, etc., 516, 533; held irre- vocable by England, 554 ; with United States, "643 ; concerning shipping, 642 ; extended to other countries, 653 ; of 1815, 655 ; Huskisson on the profits of the reciprocity swap, 655 ; of Eng- land with France in 1786 in woolens, 674 Tribe, and tribal ownership by, effects of, 23, 49-54, 130 Tribute, of India, 486 Tnpoli, 338 Troy, ancient, Schliemann on iron in, 645 Trunks, export of, 611 Tunis, French bondholders in, 450 Turkey (Ottoman Empire), reve- nue policy of, 320 ; ornaments worn in, 331 ; monetary unit of, 338 ; gave England free trade, 170 years in advance of Eng- land's repeal of the corn laws, 488 ; protective England sapping the wealth of free-trade Turkey, from 1675 to 1842, 488-491 ; for- mer wealth of, in manufactures, 489 ; present desolation, 490, 516; the only thoroughly free trade country in Europe, 490 ; Eng- land's trade in cotton goods with Turkey, 689 Tyre, 450; Tyrian dyes, 669 U. Umbrellas, exports of, 611 Union, economic effects of Act of Union in Ireland, 492, 493 ; how it was bought and paid for, 493; free trade to Ireland and pro- tection to England were the basis of the Act of Union, 493, 493, 494; union of the states hinges upon maintaining pro- tective pohcy, 638-630; the pro- slavery struggle, of 1830 to 1865, 687, 688 Unite, coin of James I. 340 United States of America, drink bill of, 25 ; travel in, 28 ; free and slave States in, 33 ; homi- cides in; 34 ; secondary impor- tance of foreign trade in continen tal as compared with insular states, 35 ; [field for study of economics the best, 36 ; income of, 36 ; export of shoes from New England, 35 ; the best economic teacher, 38 ; value of its census, 39; growth of pop- ulation, 140 ; area of, 141 ; sys- tem of land registration, 143 ; population, 145, 146 ; future population, 145 ; displacement of labor in by machinery, 209 ; annual product of industry in, 224 ; wages in colonial period low, 237 ; value of agricultural product, 334 ; its standard of wages, 315 ; its debt-paying poli- cy ,353-355 ; crises in, 381-385 ; coinage in from 1851 to 1856, 386 ; responsible government not developed as a system for discussion or adoption when constitution of United States was modeled, 407, 409 ; government of United States defined, 415 ; as respects foreign nations each State forms a municipal subdivi- sion of one nationality, 415 ; cost of maintaining its govern- ment in 1861-1865, 437-439; various forms of debt in United States and amount, 448 ; state systems of taxation in, 456- 468 ; national, 468 ; relative rev- enues in protective and free-, trade periods, 469-471 ; how af- fected by English duty on tobac- co,480; number of custom officials and cost of collecting duties, 483 ; wages of iron puddlers and blacksmiths in, and in Europe, GENERAL INDEX. ■11 511 ; origin of federal union in United Sttites and Germanj^ 514 ; effects of wars of IHOG to 1815 and peace of 1816, 514 ; United States leads in certain ways, 521 ; resumption of specie payments in United States com- pared to that in Russia, 529 ; subordinate position of United States in trade with China, 586 ; silver interesls of, 586 ; has no constitutional power to pass a tariff for revenue only, 562 ; unity of the country involves loyalty by the government to those who have paid the cost of maintaining it, 575 ; relative w^ages in United States and Eu- rope, 581 ; railway freight, 584 ; no longer supplied by Birming- ham, 596 ; motive in establishing American 'Union was chiefly protection, 628-630 ; first cul- ture of silk in, 631 ; Jefferson believed protection should be continued, nothW'ithstauding it made a surplus, 640 ; C[uantities and values of glass manufacture, 643, 644 ; population compared with Great Britain, 646 ; less vigorous than England in pro- tecting iron and steel manufact- ure from 1790 to 1845, 647, 648; disastrous effects of American free-trade negligence on ship building, 648-650 ; product (1883) of iron, steel, and coal, 650; percentage of world's production, 650 ; United States built up a carrying trade and merchant ma- rine by protection, 652-656 ; and lost it bj^ bowing the knee to the free-trade Baal under name of " reciprocity," 655 ; in- fluence tariffs of British com- merce from identity of interests merely, 664 ; production and im- portation of wool, 672, 674 ; diagram of, 679 ; the struggle over slavery, 687, 688; Eng- land's trade in cotton good, with, 689 ; imports and exports of cot- ton goods by, 696 United States of Colombia (see Colombia) Unity of law, between econo- onncs and physics, 4 ; of states, 416 ; and of essential form and operation underlying the state mechanism, however differently selected, 416 ; of Germany, 514- 524 ; in a nation resembles that iji a family, 575 Universities, 480 Uruguay, America buys from, England sells to, 600 Utilit}^ relation of to value, 6, 96- 100 ; Jevons on fluctuations in, according to change in wants, 95 ; how affected by supply, 99; of ac- cumulations, 220; increase of util- ities with progress of man, 232 ; utility of private ownership as against state ownership, 304 ; of the c|ualities which promote suc- cess and profit in employing la- bor, 308; is labor paid for in proj^ortion to the degree in which its utility is social? 323; increas- ing utility of the state as society advances, 324 ; of ornaments among barbarians, 331 ; of mon- ey, 344 V. Valises, exports, 611 Values, Mill's theory of interna- tional values, 10-14; relation of to utility, 6; when depend on cost of production according to Mill, 10; vanishing values, 69- 71; definition of, 79; by Adam Smith, Carey, 79; by Roscher, Marx, Bastiat, Cairnes, F. A. Walker, Cherbuliez, Jevons, Perry, La Vasseur, Locke, Mc- Culloch, Ricardo, Carey, Mac- Leod, Aristotle, Condillac, Whately, Say, Beccaria, 79-84; fallacy of resting value on labor, 84; how all labor passes into commodities, 85 ; comes from the consumer, 86; Karl JMarx's theory of, 88-91; begins with Smith and Ricardo's error, and carries it out logically to thug- gism, 91; Jevons's theorj' of. 94; based on Gossen's theory of pleas- ure and pain. 94; values are de- termined in markets, 99; causes 778 GENERAL INDEX. of values of land, 125, 130, 145; distribution of values is the counter to distribution of com- modities, 196; law of declining and advancing values, 204 ; shrinking of, 212; elusiveness of the supposed " hard pan " to be reached by shrinkage of, 212; sense of, determines success in business, 218; values which de- cline as society grows, 221; little waste in higher values, 224-226; of laud is the capitalization of economic rent, 237; as affected by transportation, 241-253; of farm lands, products, and labor, 253-261 (Dodge); sense of value must be keen in the successful director of labor, 307; the sui'- plus in one industry constitutes by exchange the values in an- other, 320; values given to raw materials by exporting only fin- ished products, 322; relation of to money, 335; of commodities more variable usually than that of money, 336; of the standard monetary unit of most countries in United States currency, 338; overvalued metals seek coinage, 341; undervalued metals cannot circulate, but are melted, 342; fall in producing panic, 389; of criminal, 444 ; his capacity to produce has the same economic value to society, 440; aggregate value of land in India hardly greater than in New Jersey, 488; of wines in France, 497; of aver- age imports and exports increase as their weight lessens, 518-521 ; of an extra dollar on Saturday night to the workman, 584; of British manufactures, 637; as quantities of woolens exported increase value declines, 673 (com- pare Tooke, Carey and Baird, 113 to 117); of English cotton goods exported and consumed, 685 Varnish, manufacture of taxed in China, 455; exjwrt of 611; import and revenue, 614 Vegetarian diet, relation to eco- nomic condition and political in- stitutions, 402 Velvets, 672 Venezuela, monetary unit of, 338; balance of American trade with, 600 Venice, in glass making, 639; in woolens, 669 Vermont, why may not import free from Canada, 574-576; peo- ple whose products are the same can not trade, 574; Canada can not reap our prices because she did not help to sow their cost, 579; wools of, 672 Versatility of aims, when an obsta- cle to economy, 303 Vessels and steamers, export of, 611; American vessels reduced to a free competition with for- eign "in carrying ocean freights to and from American ports in 1816, 642; effect of laggard pro- tection to iron and steel manu- facture from 1790 to 1845 com- pared with English protection, to cripple American shipbuilding from 1855 to date, 648-649; ocean carrying trade of England built up, 656; by subsidies, 659, 662; treaties,- 642, 655 ; piracy, 663 ; and righteousness, 608 Veto, its disuse in England, 408- 410; power of in United States, 417; in India, 533 Vice, taxes on, to promote utilities, 463 Victoria, tariff of, 530; compared with New South Wales, 530 ; protects glass, upholstery, furni- ture, etc., 530 Vienna, 405 Vinegar, revenue on in United States paid by foreign producer, 586; exports, imports, and rev- enue, 611, 614 Virginia, early precedence, 149 ; slavery in, 384; culture of silk in, 631; glassmaking in colonial, 639; colony of, protected sheep, wool and wool manufacture, 676; salt product of, 693 Visionary, invention of power loom, 685 Voting, modes of in Roman Re- GENERAL INDEX. 779 public, 4l2; in United States, 417-429; plural voting on taxes in England, 479; property qual- ifications, 479 Vulcan and iron and steel, 645 W. Wages, rate af, Carey on, 16 ; Brassey on, 35 ; not propor- tionate to ratio of capital to population (McCullocli), 168 ; wages a payment for service, 85; how emploj'ment for arises, 164; the first are presents, 165; may be high where capital is scarce, 170 ; are the effect of profits, 170 ; though appearing to he the leavings, 170; based on eciuivalence of exchange between employer and employed, 171- 172 ; equality of division, 172- 182; received by wages class in Great Britain, 176 ; in manu- factures fixed in part by those in agriculture, 181 ; are paid for obedience only and not for mus- cular force or creative power, 183-184; Karl Marx's theory of, rests on a false basis, 184; losses of wages workers in strikes, 190; how wage workers may obtain the "profits" also, 213; when capital is risked workers earn profits, 222 ; promoted by large capitals, 227 ; low rate of in India, 227 ; law of increasing share of product to wages, how offset in new industries, 234 ; Bastiat on the preference of wages to profits or title by work- ing men, 234; wages are capital in smaller cjuantity, 235; are cost of labor expended in production, 238; rates of on farms, 253- 261; a payment for labor time, 288; differs from fee, 289; com- mission, 290 ; royalty or share, 290 ; cause of and of rate, is in profits, 293-316 ; population not a check on wages, 295 ; wages lower in countries of slow pro- duction, 297-298 ; and without machinery, 298; lower in country than city, 298 ; rates of, fixed by labor-saving machines, 299 ; causes which compel men to work for wages, 807 ; wages class excel in fervor and gener- osity, but fail in calculation and prudence, 309 ; trades unions, 310 ; in what industries wage- workers get the highest ratio of product, 313 ; effect of higher wages than the competitive rate to check extensions of works, 313, 314 ; are wages increased by profit-sharing ? 314 ; relative in different countries, 315; why higher in Great Britain than in Germany, France, and Russia, 317 ; not increased by lessening population, 320, 321; of labor in proportion to its social use, 323; of women, 325-328; economj^ of working for, 433; small number of wage workers in France and large number of small em- ployers, 496; rates of wages for blacksmiths and iron-puddlers in 1867 in United States, Great Britain, Prussia, Saxony, and Switzerland, 511; lower in Ger- many than Great Britain, causes of, 516; increase of in Germany with increase of protection, 523- 524 ; English acts to regulate wages, 555; higher wages (Sidg- wick) by protection, 566; wages affected by excessive supply of workmen, 574 ; Perry's error (with Ricardo) in supposing wages must be lower because capital is higher in America than in Great Britain, 579-582 ; com- parison of rates of in Massachu- setts and England, 580-582; Wen dell Phillips on the moral advan- tages of good wages, 583; why rates of, needed tariff' protection where equivalent efforts here and abroad would produce same commodities, 585; wages pi'o- moted by protection, 623-627 ; wages paid in Canadian manu- factures, 667-668; wages depend on the value of commodities and not on their quantity, 673 Wages fund tlieorv, Sidgwick, Mill, and Thornton on, 15; Carej 780 GENERAL INDEX. on rate of wages, 16 ; wages, rent, and interest as shares de- pend on who distributes, 163 ; defined by Cairnes, Mill, Bras- sey, Thornton, 290-292; the aggregate wage fund tends toward equal sharing with ag- gregate returns of capital, 311- 314 ; reason why wages are eight times greater in United States than in China lies in animal and machine power, 542; why wages are low in China and India, 625 "Want and wealth, the complaints of each other, 401 ; object of American labor organizations is not to prevent want, but to con- trol industry, 310, 328, 390, 597; man's first want, 645 War, effect of on prices, 113 ; of allied powers with Napoleon, 112; effect of on means of pay- ment, 114, 221; on industry, 211; on prices, 221 ; war debts, 353 ; paying expenses of as incurred, 353 ; Adams and Laughlin on, 353 ; exhaustion of war post- poned, 354; effect of as to crises, 380; absence of gold at outbreak of war of 1861, 221; close of war in United States produces mone- tary crises in England, 389 ; business revived by, 385 ; as a productive agency, 439 ; crime in social war, 440 ; expense of war debt in United States, 468 ; rise of revenue during war with " Confederacy," 470 ; effects of war tariff, 469-472 ; Russia's escape from in part, 529 ; to force opium on China, 534 ; liabilities to war increased by importing what we can produce (Jefferson), 598; growth of manu- factures in United States during war of 1806-1815, 641 ; making implements of war the first manufacture, 644 ; how the United States would have avoided the war for secession, 650 ; economic effects of war on northern and southern states, 688 "Washington, capture of, 437 Washing machines, American ex- port of, 596 Waste of forests, 148; of animals, 149; by misdirection of industry, mainly incurred by the enter- prisers, 191 ; small, of society, 224 ; servants, 226 ; small in the higher values, great in the lower, 226 ; waste involved in strikes, 310, 314, 328 ; of being without an army in United States, 437 ; of life in social struggles and fanaticism, 446, 447 ; relative waste of labor in China and in western nations as each is seen by the other, 545, 550 ; in tillage in China, 551 Watches, American machine-made, superiority of abroad, 596 ; ex- ports, duties, 611; imports, revenue, 614 Ways, 480, 432 Wax, export of and duties on, 611; imports and revenue, 614 Wealth, conflicts of definition, 5 is money wealth in the sense held by mercantile school, 18 defined, 41 ; its economic mean ing distinguished from its social 41 ; relation of, to civilization 42 ; as defined by Smith, Carey Bastiat, Roscher, Fawcett, Mill Jevons, Sidgwick, Smith again Roscher, and " Wealth," 41-43 Carey's definition reviewed, 43- 47 ; relation of, to want, 45 need not have exchange value, 46 ; relation to subordination and coercion, 47 ; savage life is absence of, 47 ; Fawcett, Smith and Carey agree on this, 48 ; ownership of property in com- mon retards growth of, 49-54 ; • social, 60-65 ; of nations, 65-69 ; of India, 66 ; Evanescence of, 69 ; destruction of, in maintain- ing government, 70 ; disap- pearance of values of land, 71 ; reproductive and enjoyable, 72 ; social endures longest, 72 ; vital most essential, 72 ; relation of owner to social wealth is custody only, 93 ; consumers' and pro- ducers', 94 ; Jevons, Gossen and Sidgwick on forms of, 94 ; also Senior and Banfield, 94 ; distri- bution of, and of products, 196 ; OENEllAL INDEX. 781 consists in inequality of means, 201 ; it paralyzes its own power when equalized, 201 ; equal dif- fusion of enjoyable, depends on unequal accumulation of repro- ductive, 204 ; redistribution of, by investment, ostentation, lux- ury and waste, 212-214 ; shrink- age in value of reproductive, pro- duces less suffering if held by large owners, 222 ; consumption of, by rich and poor, 225-226 ; loss of, may produce crisis, 378 ; and want are the steam and vacuum in the social engine, 401 ; makes a people aesthetic, poverty, quarrelsome, 402 ; gov- ernment by the rich, 405 ; vot- ing according to, in Rome, 412 ; increasing power of, in America, 414 ; the chief foe to crime, 442 ; but inequalities of fortune (Quetelet) tend to crime, 442 Weapons, early manufacture of, 645 "Wearing apparel, export of , 611 Weaving, inventions in, 681, 684- 685 Weighing machines, superiority of American abroad, 596, 611, 614 Weight of products lessens as their values increase, 518-521 West Indies, culture of silk in, 631 ; England's trade with, 6S9 ; pur- chases from, bear no proportion to sales to, 600 Wheat, prices and scarcity in En- gland, 116 ; effect of free trade in, 118-119 ; rate of growth of, under seed selection and Ihin planting, 231 ; cost of produc- tion in Iowa and England as af- fected by rent and trans] )orta- tion, 243-257 ; average cro[) per acre in England, 254 ; prices in war of 1812-15, 380 ; German imports and exports of, 519 ; protective duties on in Victoria, 530 ; prices not reduced in En- gland b_y repeal of protective duties, 558 ; quantity of wheat crop, 559 ; decline of CTiltivation in England, 559 ; in Scotland and Ireland one half, 559 Wheeling, Va., glass, 643 Window glass, when and where tirst made, 639 Wines, taxes on, 475 ; English revenue from, 480 ; manufac- ture of, in France, 497 ; duties on in England, 500 ; in France, 503 ; Germany, 520 ; export of American, 611 ; import and rev- enue, 614 Wisconsin, woolen manufacture in, 666 Women, wages of, 325-328; voting, 435-437 ; crime, 442 ; of seden- tery, 443 ; large number of work in France, 497 ; in Ger- many, 524, 525 ; large proportion withdrawn from labor in United States, 525 ; relative wages of, to men in Massachusetts and En- gland, 582 ;. in strikes, 328 ; causes of large American de- mand for silks, 633 ; shoes of women exported, 697-698 Wood, 519 ; wages of work in in Great Britain and Massachusetts, 580 ; wood, lumber and timber, export of and duties on import, 611 ; import and revenue from, 614 Wool, trade between Belgium and France, 27 ; Great Britain and France, 27 ; conditions of weav- ing at a profit, 319 ; tariff of 1824-28 as to, 383 ; change in German wool and woolen trade under protection, 515 ; trade of wool for cloth between Germany and England, 518-520 ; revenue on imports of, into United States, not paid by consumers, 586 ; this point more fully shown, 679-682 ; see also chart of prices, ih. ; antiquity of wool- growing, 668 ; a finished pro- duct in wiiat sense, 671 ; quali- ties of wool, 672 ; and wool- ens, 672 ; quantities required for consumption relatively to population, 672-673; protec- tive duties on, since 1824, 676; "free wool" would mean great cry and little wool, 676 ; export of, from A\istralia, 676 ; increased yield of, in United States, since 1850, 677 ; duties 782 GENERAL INDEX. on, were based on sound princi- ples, 677 ; approved by all pro- ducers, 677 ; over periods of moderate length, interests of producers and consumers the same, 677 ; "cotton vrool," 684 Woolens, manufacture of, returns to labor and capital in, 312; wool- en manufacturers of England seeking the suppression of those of Ireland, 491 ; in France, 503 ; trade in, between Germany and . England, 518-520 ; manufacture in Canada, 531 ; statutes to pro- tect in England 555 ; wages in, in England, and Massachu- setts, 580, 582 ; woolen blankets. Perry's error as to duties being a tax on consumer stated, 589 ; refuted, 590, 679; identity of prices in England and America, 590 ; export of, 611 ; imports and revenue, 61 4 ; protection to woolen manufacture in Canada and effects of , 665,666; extraordi- nary prices of ancient woolens, 669 ; manufacture of closely de- pendent on iron and steel, 677 Wool-sack, why so called, 670 Work, difficulties of beginning, 238 ; at first despised, 234 ; at first an adjunct to hunting or war, 234 ; cost in work not identical with cost in money, 573,574 ; work only exists where employers make profits, 625 Workmen (see Labor, Wages, Strikes); number of employed, a reason (Smith) for protection, 556 ; wages reduced by cut- ting them off from the land, 574; should be attracted to where their effort will win largest returns, 574 ; moral value of an extra dollar to, 583 ; re- duced by free trade, 635, 637 ; number of discharged and suf- fering, in 1816-19, in United States, 642 ; employed in Cana- dian • manufactures, 667, 668 ; decline of, in English silk manu- facture, 635, 637 ; decline of numbers in woolen, 673 ; in- crease of number in Europe, 674 ; large proportion of work- ers in cotton in Manchester, 685;, in cotton manufacture, 689 World, relative incomes of nations, 36 ; products of iron, steel, and coal, 650 Worsted, wages of work in Massa- chusetts and England, 582 ; wools for, 672 Wrought iron, English and Ameri- can prices of, 590 Wurtemburg, 515, 523, 524 Y. Yarn, import and export of Qer- manv, 519,520 Yen, 338 Z. Zemstvo, 530 Zinc, exports and imports of and revenue, 611, 614 Zollverein,^inception and work of, 514^521 ;' population of and movement of German states in- to, 515 ; what it could do for profits and wages, 517 ■^. .^ ^. '■s- .<< %= :%. <^^ t- .-^ ^A v^ ^. < ^^^ .^^ .-■ts' 'V ^ .s'-