REVISED EDITION. 
 
 THE CAUSE OF 
 
 HARD TIMES. 
 
 URIEL H. CROCKER. 
 
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THE CAUSE 
 
 OP 
 
 HARD TIMES 
 
 BY 
 
 URIEL H. CROCKER 
 
 There is that scattereth and yet increaseth; and there 
 is that withholdeth more than is meet, but it tendeth to 
 poverty. — Proverbs xi. 24 
 
 EeiJifieU ©Iittion 
 
 
 LITTLE, BROW:Nr, AND COMPANY 
 
 1896 
 
A.' 
 
 6«^ 
 
 Copyright, 1895, 
 By Uriel H. Crocker. 
 
 Camlinlrse, 9a. 5. a.: 
 
 PRINTED BY JOHN WILSON AND SON, 
 UNIVERSITY PRESS. 
 
PREFACE. 
 
 TO the views set forth in this little book 
 the author asks that a fair and unpreju- 
 diced consideration may be given. As those 
 views are new and have not yet penetrated 
 into the professorial mind, they must stand 
 or fall, not by the weight of authority or pre- 
 cedent, but by the strength or weakness of 
 the arguments adduced in their support. Of 
 the critics, if they shall deign to notice him, 
 the author asks that they will endeavor to 
 make sure that they understand his views 
 before they attack them, and will not set up 
 as his, and then proceed to demolish, views 
 and arguments for which he is in no w^ay 
 responsible. 
 
 URIEL H. CROCKER. 
 
 Boston, March, 1895. 
 

 TABLE OF CONTENTS. 
 
 Chapter Page 
 
 I. Principal Characteristics of Hard Times 7 
 
 u/ll. The most Prominent Characteristic an Ex- 
 cessive Capacity of Production, and a 
 resulting Amount of Products in Excess 
 of the Demand for them ..... 14 
 
 III. A General Excess of Production over De- 
 
 mand has been alleged by Economists 
 
 to be Impossible 16 
 
 IV. The Arguments by which the Economists 
 
 have supported their Position stated, 
 and their Validity doubted .... 20 
 V. The Position of the Economists shown to 
 be a False One. There may be a 
 General Excess of Production resulting 
 from an Excessive Amount of the Ma- 
 chinery of Production 25 
 
 VI. Statements by other Writers confirmatory 
 of the Views set forth in the preceding 
 Chapter 30 
 
IV TABLE OF CONTENTS. 
 
 Chapter Page 
 
 V VII. An Excessive Amount of the Machinery 
 
 of Production accounted for as a Result 
 of an Excessive Demand for Income- 
 producing Investments 37 
 
 VIII. The Excessive Demand for Income-pro- 
 ducing Investments arises from an 
 Excessive Desire to Save rather than to 
 
 Spend 42 
 
 IX. How the Lost Equality between Produc- 
 tion and Demand may best be restored 51 
 X. Why the recent Hard Times began when 
 they did, and how soon we may expect 
 
 them to end 55 
 
 XI. Historical Facts confirming the Author's 
 
 Theory 60 
 
 XII. Some Practical Conclusions 66 
 
 XIII. The Origin of " Trusts " 74 
 
 XIV. The Difference between the Author's Views 
 
 and those of the Economists a Radical 
 
 One 80 
 
 XV. The Economists' Explanation of the " Ten- 
 dency of Profits to a Minimum " shown 
 to be Antiquated and Inadequate . . 83 
 XVI. Some Prognostications as to the Future . 85 
 
TABLE OF CONTENTS. 
 
 Chapter 
 
 XVII 
 
 A Harvard Professor's Question . . . 
 XVIII. Previous Writings by the Author and by 
 Others on the Subject of this Book . 
 
 Page 
 90 
 
 97 
 
 Index 105 
 
THE 
 
 CAUSE OF HARD TIMES. 
 
 CHAPTER I. 
 
 PRINCIPAL CHARACTERISTICS OF HARD TIMES. 
 
 THE people of the United States, and to 
 a perhaps less extent those of Europe 
 also, have recently been suffering from a 
 period of extreme depression in trade, or, in 
 other words, from what are called "hard 
 times. " About twenty years ago there was 
 a similar period of depression, and during 
 the whole interval since that time there has 
 been much trouble of the same kind. The 
 evidences of the recent depression are well 
 known. Laboring men have found it im- ^ 
 possible to obtain their usual employment. 
 Manufacturing establishments have been un- ^ 
 able to find any profitable use for all their 
 
JJ 
 
 8 THE CAUSE OF HARD TIMES. 
 
 macliinery, and many of them have been 
 compelled either to continue to turn out pro- 
 ducts at a loss, to cut down wages, or to 
 close up altogether. The railroads of the 
 country have been without their usual amount 
 of passengers and of freight, and have been 
 driven to curtail their expenses by a large 
 dismissal of employees, — the weaker rail- 
 roads having been forced into the hands of 
 receivers, while the stronger, by reason of 
 the falling off of their profits, have been 
 compelled to reduce or to omit altogether 
 the dividends to their stockholders. Shop- 
 keepers have complained that their trade 
 has fallen off, and that consequently they 
 have been unable to pay to their landlords 
 the usual rents. And, finally, capitalists 
 have found so small a demand for their funds 
 that money has been a drug in the market, 
 and only loanable at rates of interest unpre- 
 cedentedly low. 
 
 Under these circumstances it would seem 
 to be a fact beyond dispute that the imme- 
 diate cause of the depression is to be found 
 in a falling off in the demand for the pro- 
 
THE CAUSE OF HARD TIMES. 9 
 
 ducts of labor, — meaning by " demand," not 
 that demand which seeks to obtain a product 
 as a gift or for an inadequate price, but the 
 demand which is ready and willing to pay to 
 the producer a remunerative price ^ for his 
 product. It is surely the falling off in this 
 demand that has deprived the shop-keeper ^ 
 of his trade, the manufacturer of a market 
 for his products, the railroad of its freight 
 and its passengers, the laborer of his employ- 
 ment, and the capitalist of the usual return 
 of interest upon his money. It is also clear 
 
 1 It may be well to remark here that the " remunerative 
 price" referred to here and elsewhere in this book is not 
 that selling price which will make good to the producer the 
 actual cost of the production of his product, but that price 
 which equals what would be the cost, at the time of sale, of 
 reproducing that product. By reason of improved mechan- 
 ical processes the producer of a commodity is often forced, 
 through the competition of the producers of a later and 
 cheaper article, to dispose of his own product at a loss 
 compared with what has been to him the actual cost of its 
 production. This loss, however, is due not to any diminu- 
 tion or failure of the demand for the product, but to other 
 causes entirely unconnected with "hard times." This de- 
 mand for products at remunerative prices is afterwards 
 referred to in this book as ^ -* remunerative demand ; " and 
 the word " dem.^^;^ sii]aplyr4s 9|so i^Sed in the same sense. 
 
10 THE CAUSE OF HARD TIMES. 
 
 that an increase in this demand would set 
 all the wheels of industry in motion, would 
 restore his trade to the shop-keeper, would 
 make busy again the machinery of the manu- 
 facturer, would load the railroads again with 
 freight and with passengers, would give em- 
 ployment once more to all the great army 
 of laboring men, and would cause capital to 
 be again in demand and the current rate of 
 interest to rise. These things are at last so 
 plain that one can hardly find even a pro- 
 fessor of political economy rash enough to 
 deny them. 
 
 This strange condition of affairs, — this 
 distress in the midst of plenty, — this super- 
 abundance of laborers and of the machinery 
 of production, ready for employment, but 
 unable to find it, — this apparently complete 
 equipment of the world with factories and 
 railroads and warehouses and willing hands, 
 all eager to join in the work of creating and 
 distributing products for the comfort and 
 pleasure of mankind, but all held in check 
 and forced to remain idle by some strange 
 power that paralyzes them, — these phenom- 
 
THE CAUSE OF HARD TIMES. 11 
 
 en a would seem to furnish a subject of pe- 
 culiar interest and of especial importance 
 for the student of political economy. But, 
 strangely, the professors of that science sel- 
 dom touch upon this subject in their books 
 or in the journals devoted to their special 
 branch of learning. Indeed, it would almost 
 seem as if it were a subject avoided by them 
 from a feeling of their .entire inability to 
 grapple with it. 
 
 At the time of the great depression in trade 
 that occurred about twenty years ago, the 
 professors did indeed have some theories to 
 air and some advice to give. Then, one of 
 the leaders among them, Professor Bonamy 
 Price, the Professor of Political Economy 
 in the University of Oxford, England, an- 
 nounced in the Contemporary Review for 
 April, 1877, (p. 787,) that the cause of the \/)/ 
 then existing trouble was " one and one 
 only, — over-spending, over- consuming, de- 
 stroying more wealth than is reproduced, and "" 
 its necessary consequence, poverty." This 
 theory was^ however, plainly -at Variance 
 with undisputed fact^. A people suffering 
 
12 THE CAUSE OF HARD TIMES. 
 
 from " over-spending, over-consuming, de- 
 stroying more wealth than is reproduced," can- 
 not possibly find itself, as we found ourselves 
 then, and have again found ourselves more re- 
 cently, possessed of multitudes of usable but 
 unused products of labor, of an excess of idle 
 machinery, and of multitudes of men and 
 women unable to find employment. Poverty, 
 which Professor Price correctly called the 
 " necessary consequence " of over-spending, 
 is always evidenced by a scarcity, ratlier than 
 an abundance, of the products of labor, and 
 by a large demand for labor to make good 
 the previous waste. Apparently, indeed, the 
 professors of political " economy " have felt 
 bound to consider " economy " to be the rem- 
 edy for all evils, and the want of " economy " 
 the cause of every kind of mischief, and in 
 their attempt to carry out these ideas they 
 have been reduced, like Professor Price, to 
 the necessity of explaining a condition of 
 abundance by making it the result of waste, 
 — of explaining a condition where men can- 
 not find any work to do in the creation of 
 products, by making that condition the result 
 
THE CAUSE OF HARD TIMES. 13 
 
 of a wasteful destruction and consequent 
 scarcity of products. 
 
 If, then, we get no light from the profes- 
 sors, let us examine the subject for our- 
 selves, and see whether we can discover the 
 true cause of the phenomena which constitute 
 the so-called ^' hard times," or " depression 
 in trade." 
 
CHAPTER 11. 
 
 v^v/the most prominent characteristic an 
 excessive capacity op production, 
 and a resulting amount of products 
 in excess op the demand for them. 
 
 AS has been already stated, the one con- 
 clusion which we may. draw, of the 
 truth of which it would seem that there can 
 be no dispute, is this, — that at the present 
 time the capacity of production of this coun- 
 try, the capacity of its machinery and of its 
 laboring classes to produce and distribute, 
 useful products, is far in excess of the remu- 
 nerative demand for those products. There 
 is surely nothing to keep idle machinery 
 and willing hands from creating and dis- 
 tributing products, if those products can be 
 disposed of at a profit to the producers. The 
 fact is that the producers are all ready and 
 waiting, but the buyers are wanting. Plainly 
 
THE CAUSE OF HAED TIMES. 15 
 
 the country's capacity of production has for^"'^ 
 the time run ahead of its demand for con- 
 sumption, and this excess of capacity of pro- 
 duction has only been made evident to the 
 producers by an actual excess of production 
 over the demand for consumption, — by their 
 discovery that they have stocks of goods on 
 hand which are in excess of the amount 
 which can be sold at remunerative prices. 
 This condition of affairs, this inequality 
 between production and consumption, be- 
 tween supply and demand, may properly be 
 called either " over-production " or " under- 
 consumption. " Each term equally well 
 describes the situation, and each has been 
 employed by different writers, but that which 
 has been most usually employed by econo- 
 mists has been "over-production." 
 
CHAPTER HI. 
 
 A GENERAL EXCESS OP PRODUCTION OVER 
 DEMAND HAS BEEN ALLEGED BY ECONO- 
 MISTS TO BE IMPOSSIBLE. 
 
 AT this point, however, we encounter a 
 difficulty. It is claimed by econo- 
 mists that, while over-production of a par- 
 ticular product is possible, and in fact often 
 happens, a general over-production, or gen- 
 eral excess of production over remunerative 
 demand, is in the nature of things an utter 
 impossibility. Thus John Stuart Mill, in his 
 "Principles of Political Economy" (book 3, 
 chapter 14, sections 1 and 3), after defining 
 '« over-supply " as supply " in excess of that 
 for which a demand exists at such a value as 
 will afford the ordinary profit," proceeds to 
 assert that : " Because this phenomenon of 
 over-supply and consequent inconvenience or 
 loss to the producer or dealer may exist in 
 
THE CAUSE OF HARD TIMES. 17 
 
 the case of any one commodity whatever, 
 many persons, including some distinguished 
 political economists, have thought that it 
 may exist with regard to all commodities, — 
 that there may be a general over-production 
 of wealth, a supply of commodities in the 
 aggregate surpassing the demand, and a con- 
 sequent depressed condition of all classes of 
 producers." He states further that the sup- 
 porters of this doctrine of general over-pro- 
 duction " agree in maintaining that there may 
 be, and sometimes is, an excess of produc- 
 tions in general beyond the demand for them, 
 and that, when this happens, purchasers can- 
 not be found at prices which will repay the 
 cost of production with a profit," and he 
 proceeds to attempt the refutation of what 
 he asserts to be the most plausible form of 
 this doctrine by the following argument. . . . 
 " There may easily be a greater quantity of 
 any particular commodity than is desired by 
 those who have the ability to purchase, and 
 it is abstractly conceivable that this might 
 be the case with all commodities. The error 
 is in not perceiving that, though all who 
 
18 THE CAUSE OF HAKD TIMES. 
 
 have an equivalent to give might be fully 
 provided with every consumable article which 
 they desire, the fact that they go on adding 
 to the production proves that this is not 
 actually the case." 
 
 The great weight of the name of John 
 Stuart Mill, and his reputation as a sound 
 reasoner, have caused this conclusion of his 
 to be accepted by economists as sacred truth. 
 With the ordinary economist, to assert the 
 possibility of general over-production is to 
 commit the unpardonable sin. Thus, in an 
 article by Moreton Frewen on " Gold Scarcity 
 and the Depression in Trade," in the Nine- 
 teenth Century for October, 1885, we read: 
 "People of little education are accounting 
 for low prices on the hypothesis of general 
 over-production ; but it is hardly necessary to 
 point out that, while over-production in any 
 particular trade is frequent, and quickly 
 adjusts itself, general over-production is 
 impossible." And Mr. Edward Atkinson, 
 in an address on the " Statistics of Con- 
 sumption," printed in the Boston Sunday 
 Herald for July 5, 1885, says : " I desire to 
 
THE CAUSE OF HARD TIMES. 
 
 19 
 
 examine the outside of the head of any one 
 who pleads a general over-production, in 
 order to see how his brain is constituted, 
 and what element of common sense has been 
 omitted in his make-up." 
 
 
 i?? 
 
 
CHAPTER IV. 
 
 THE ARGUMENTS BY WHICH THE ECONOMISTS 
 HAVE SUPPORTED THEIR POSITION STATED, 
 AND THEIR VALIDITY DOUBTED. 
 
 EVEN at the risk of incurring the con- 
 tempt of Messrs. Frewen and Atkin- 
 son, and of the whole tribe of professors of 
 Political Economy, I will venture to exam- 
 ine the soundness of Mill's position. In the 
 first place, I may mention that those who 
 look only at the facts, not troubling them- 
 selves about theory, are unanimously of the 
 opinion that a state of general over-produc- 
 tion has existed during the past few years. 
 The practical man asks what class of pro- 
 ducers (not in the enjoyment of a monopoly) 
 there is, which has not felt and believed that 
 its own class of products has been over-pro- 
 duced. If such a complaint came from a 
 few only, the followers of Mill would admit 
 
THE CAUSE OF HARD TIMES. 21 
 
 that it might be well founded, as he allowed 
 over-production in special branches to be 
 possible; but general over-production he 
 claimed to be impossible. If people gener- 
 ally complain that they have been suffering 
 from that, they must, according to his doc- 
 trine, be under a delusion. As an illustra- 
 tion how closely the modern economists hold 
 to the views of Mill, the following words from 
 Macvane's "Political Economy" (published 
 in 1890) are here quoted : " Any one commod- 
 ity, or any limited number of commodities, 
 may be produced in excess of the demand at 
 any time; but it is quite impossible that all 
 products should be in excess of the demand 
 at one and the same time. If the supply 
 of some things is excessive^ the supply of other 
 thinys is deficient to the same extent.^^ (Chap. 
 27, sect. 1.) 
 
 Is it possible that Mill and the theorists 
 are right, and the practical men all deluded ? 
 Is it possible that during all these hard times 
 there have been, hidden somewhere, classes of 
 products which, as is maintained by Professor 
 Macvane, have been under-produced, — the 
 
22 THE CAUSE OF HAKD TIMES. 
 
 supply of which has not been equal to the 
 demand for them, — and the under-production 
 of which has been sufficient to offset the over- 
 production of other things, and to reduce the 
 average of production to an equality with the 
 average of demand ? If there have been any 
 such under-produced products, — products for 
 which the demand has exceeded the supply, 
 — there must certainly have been a great 
 profit derivable from the business of furnish- 
 ing those products to customers . eager and 
 able to pay for them. Can it be that in this 
 enterprising nation no one has been able to 
 discover what these under-produced products 
 were, and to employ in their production some 
 of the vast amount of idle capital which has 
 so long been seeking in vain for some prof- 
 itable employment ? It would seem to be 
 impossible for even Professor Macvane to 
 answer these questions in the affirmative. 
 
 If then observed facts appear to be so much 
 at variance with theoretical conclusions, we 
 can with more confidence examine into the 
 arguments of the theorists. Mill's state- 
 ment is that the " error " of those who have 
 
THE CAUSE OF HARD TIMES. 23 
 
 supposed general over-production to be possi- 
 ble consists " in not perceiving that, though 
 all who have an equivalent to give might be 
 fully provided with every consumable article 
 which they desire, the fact that they go on 
 adding to the production proves that this is 
 not actually the case." In other words. 
 Mill's argument is that no man creates a 
 product except for the purpose of supplying 
 himself with some other product which he 
 desires, and that his production of his own 
 product is always strictly proportioned to 
 his desire to obtain other men's products in 
 exchange for his own. Thus he limits the 
 amount of the production of each individual 
 to an amount which cannot exceed that of 
 his own demand for the products of others, 
 and consequently the production of the whole 
 community, which is the aggregate of the 
 production of all the individuals compos- 
 ing that community, must according to Mill 
 be limited to and cannot exceed the aggre- 
 gate of the demand of all those individuals, 
 and thus a general over-production, or gen- 
 eral excess of production over demand, is 
 
24 THE CAUSE OF HARD TIMES. 
 
 made impossible. But if it can be shown 
 that men sometimes cany on production, not 
 primarily and solely for the purpose of sup- 
 plying themselves with the products of others, 
 but for an entirely different and independent 
 reason. Mill's argument necessarily falls to 
 the ground. 
 
CHAPTER V. 
 
 THE POSITION OF THE ECONOMISTS SHOWN TO 
 BE A FALSE ONE. — THERE MAY BE A 
 GENERAL EXCESS OF PRODUCTION RESULT- 
 ING FROM AN EXCESSIVE AMOUNT OF THE 
 MACHINERY OF PRODUCTION. 
 
 'TPHAT a powerful incentive to production, 
 -*- other than the desire of the producer 
 to obtain the products of others, exists at the 
 present day, cannot well be denied. This 
 incentive is to be found in the willingness 
 of the owners of the present immense amount 
 of machinery of production to keep that 
 machinery busy in the work of creating pro- 
 ducts, even when they can only dispose of 
 those products for less than cost, rather than 
 to suffer the greater loss that must come to 
 them if that machinery is allowed to lie idle. 
 They often continue for long periods to carry- 
 on production, not because they hope there- 
 by to gain a supply of products exceeding 
 what they already have, but with a sure 
 
26 THE CAUSE OF HARD TIMES. 
 
 knowledge that the daily result of their pro- 
 duction is a decrease of their supply of pro- 
 ducts, a diminution of their wealth, a net 
 loss. And the way in which this is brought 
 about is as follows. 
 
 In recent years the machinery of production 
 has been created so extensively that in very 
 many branches of industry its capacity of 
 production has been largely in excess of the 
 demand for its products. And when this ex- 
 cessive machinery is, as is usually the case, 
 the property of different competing producers, 
 the now familiar result is brought about that 
 these competitors find at last that there is no 
 remunerative demand for all their products. 
 Some producer's machinery must stop its 
 work, or all the producers will find that it is 
 impossible to dispose of their products except 
 at less than the ordinary profit, or perhaps 
 not otherwise than at a loss. But stoppage 
 itself involves a loss, and ordinarily a greater 
 loss than continued production. The owner 
 of idle machinery has upon his hands a 
 costly article of property, which involves 
 him in continual expense for its care and for 
 
THE CAUSE OF HARD TIMES. 27 
 
 its protection from the weather, from fire, 
 and from thieves, and which, in spite of all 
 that he can do to preserve it, will rapidly 
 deteriorate through rust and decay. He will 
 also, by allowing his machinery to lie idle, 
 suffer a further, and in most cases a more 
 serious, loss from parting with and scatter- 
 ing beyond recall the skilled workmen who 
 have been running that machinery, and from 
 driving the customers, who have been in the 
 habit of buying his products, to seek else- 
 where for their usual supply; and it is well 
 known that a course of trade once diverted is 
 not easily restored to its old channel. Under 
 these circumstances, it is evident that a large 
 and powerful body of producers — namely, 
 the owners of the immense amount of the 
 machinery of production — may well be 
 brought, and in many recent cases have actu- 
 ally been brought, to the creation of products 
 to an amount not based upon and propor- 
 tioned to the demand for those products, but 
 based mainly on the producers' own desire 
 to save and protect their machinery and their 
 business. In order to save and protect these 
 
28 THE CAUSE OF HARD TIMES. 
 
 important elements of wealth, they have been 
 ready and willing to maintain and continue 
 a production which has not only involved no 
 profit, but which has often brought them 
 actual loss. Thus we find it to be true that 
 there may be a production which is, with the 
 knowledge of the producer and intentionally, 
 in excess of the producer's demand for the 
 products of others; or, in other words, we 
 find that the fact that men " go on adding to 
 the production " does not prove that they are 
 necessarily and solely actuated by a desire 
 to increase their store of " consumable arti- 
 cles," but that they may be actuated only 
 by a desire to lessen an unavoidable decrease 
 of their store of such articles, Mill's argu- 
 ment to prove the impossibility of general 
 over-production is thus shown to be founded 
 in error, and it is made plain that there may 
 exist, and have in fact existed, periods of 
 so-called general over-production ; — or, in 
 other words, periods when there has been a 
 general excess of products over and beyond 
 the demand for them at prices remunerative 
 to the producers. 
 
THE CAUSE OF HAED TIMES. 29 
 
 Another way of stating the argument for 
 the possibility of general over-production is 
 as follows. If men were ready to engage in 
 production, not solely in order to meet the 
 remunerative demand for products, but also 
 that they might gratify a desire for muscular 
 exercise, it surely could not be denied that 
 production in the aggregate might in such 
 case be brought to exceed the aggregate of 
 remunerative demand. And the result can- 
 not be different if that which men desire to 
 keep active in the work of production is not 
 their natural muscles, but the machinery 
 which serves as an artificial aid to those 
 muscles. 
 
CHAPTER VI. 
 
 STATEMENTS BY OTHER WRITERS CONFIRMATORY 
 OF THE VIEWS SET FORTH IN THE PRE- 
 CEDING CHAPTER. 
 
 THE actual working of the process by 
 which, first, an excessive amount of 
 machinery is created, and afterwards that 
 machinery is run at a loss by its owner in 
 his desire to save himself from the greater 
 loss that would result from its stoppage, has 
 been well described by Mr. Andrew Carne- 
 gie, a practical manufacturer, widely known 
 and of recognized ability, in an article on 
 "Trusts," in the North American Review for 
 February, 1889. Mr. Carnegie there says 
 (pp. 141, 142):- 
 
 "A demand exists for a certain article, 
 beyond the capacity of existing works to 
 supply it. Prices are high, and profits 
 tempting. Every manufacturer of that arti- 
 
THE CAUSE OF HARD TIMES. 31 
 
 cle immediately proceeds to enlarge his 
 works and increase their producing power. 
 In addition to this, the unusual profits attract 
 the attention of his principal managers, or 
 of those who are interested to a greater or 
 less degree in the factory. These communi- 
 cate the knowledge of the prosperity of the 
 works to others. New partnerships are 
 formed, and new works erected, and before 
 long the demand for the article is fully satis- 
 fied, and prices do not advance. In a short 
 time the supply becomes greater than the 
 demand ; there are a few tons or yards more 
 in the market for sale than are required, and 
 the prices begin to fall. They continue fall- 
 ing until the article is sold at cost to the 
 less favorably situated or less ably managed 
 factory, and even until the best managed and 
 best equipped factory is not able to produce 
 the article at the price at which it can be 
 sold. Political economy says that here the 
 trouble will end. Goods will not be pro- 
 duced at less than cost. This was true when 
 Adam Smith wrote ; but it is not quite true 
 to-day. When an article was produced by a 
 
S2 THE CAUSE OF HARD TIMES. 
 
 small manufacturer, employing, probably at 
 his own house, two or three journeymen and 
 an apprentice or two, it was an easy matter 
 for him to limit or even to stop production. 
 As manufacturing is carried on to-day, in 
 enormous establishments, with five or ten 
 millions of capital invested, and with thou- 
 sands of workers, it costs the manufacturer 
 much less to run at a loss per ton or yard 
 than to check his production. Stoppage 
 would be serious indeed. The condition of 
 cheap manufacture is running full. Twenty 
 sources of expense are fixed charges, many 
 of which stoppage would only increase. 
 Therefore, the article is produced for months, 
 and in some cases that I have known for 
 years, not only without profit or without 
 interest upon capital, but to the impairment 
 of the capital invested. Manufacturers have 
 balanced their books year after year, only to 
 find their capital reduced at each successive 
 balance. While continuing to produce may 
 be costly, the manufacturer knows too well 
 that a stoppage would be ruin. " 
 
 Mr. David A. Wells has made a similar 
 
THE CAUSE OF HAKD TIMES. 33 
 
 statement in his " Recent Economic Changes," 
 published in 1889, (p. 73,) as follows: — 
 
 "It was formerly a general assumption 
 that, when price no longer equalled the cost 
 of production and a fair profit on capital, 
 production would be restricted or suspended; 
 that the less favored producers would be 
 crowded out, and, by the relief thus afforded 
 to the market, normal prices would be again 
 restored. But this doctrine is no longer 
 applicable to the modern methods of produc- 
 tion. Those engaged in great industrial 
 enterprises, whether they form joint-stock 
 companies, or are simply wealthy individ- 
 uals, are invested with such economic powers 
 that none of them can be easily pushed to 
 the wall, inasmuch as they can continue to 
 work under conditions that would not permit 
 a small producer to exist. Examples are 
 familiar of joint stock companies that have 
 made no profit and paid no dividends for 
 years, and yet continue active operations. 
 The stockholders are content if the plant is 
 kept up, and the working capital preserved 
 intact; and, even when this is not done, 
 
34 THE CAUSE OF HAED TIMES. 
 
 they prefer to submit to assessments, or to 
 issue preferred shares and take them up 
 themselves, rather than go into liquidation, 
 with the chance of losing their whole capital. 
 Another feature of such a condition of things 
 is that the war of competition, in which 
 such industrial enterprises are usually en- 
 gaged, is usually carried on by a greater and 
 greater extension of the market supply of 
 their products. . . . Under such circum- 
 stances, industrial over-production, mani- 
 festing itself in excessive competition to 
 effect sales and in a reduction of prices 
 below the cost of production, may become 
 chronic. " ^ 
 
 1 The following quotations from the author's pamphlet 
 entitled "Over-production and Commercial Distress" (pp. 
 16-18), published in 1887, are here given, in order to show 
 that Messrs. Carnegie and Wells had been anticipated by 
 this author in their statement of the causes of recent over- 
 production. Indeed, the similarity in the form of the three 
 statements would seem to show that this author furnished 
 to the two later writers the unacknowledged basis for their 
 above quoted statements. 
 
 ''Modern society has brought in, to complicate the pro|>- 
 lem which Mill attempted to solve, at least one new and im- 
 portant element, namely, the immense amount of machinery, 
 which now increases a hundred fold the effectiveness of human 
 
THE CAUSE OF HARD TIMES. 35 
 
 labor. And the use of machinery has had one curious effect 
 which Mill entirely overlooked ; namely, that its owner finds 
 an inducement to employ it in the production of consumable 
 articles, even when he has no hope or expectation that he 
 can by such production supply himself, directly or indirectly, 
 with any consumable article for his own use. The factory 
 owner, for instance, has upon his hands a piece of property 
 which, if idle, will involve him in continued expense for its 
 care and its protection from the weather, from fire, and from 
 thieves, and which, in spite of all that he can do to prevent 
 it, will rapidly deteriorate through rust and decay. The 
 owner of an idle factory must also suffer a further injury 
 from losing the skilled workmen who have been accustomed 
 to run his machinery, and from forcing the customers, who 
 have been in the habit of buying his products, to patronize 
 rival manufacturers ; for to fill the places of those workmen 
 and to find new customers, when his factory starts up again, 
 must certainly involve him in great trouble and expense. . . . 
 In order to avoid the loss which must necessarily come to 
 him if his machinery is allowed to remain idle, he will em- 
 ploy that machinery in production, even when he knows that 
 the articles produced must be sold for less than the cost of 
 producing them. " 
 
 "It is evident that during recent years much machinery 
 has in fact been run without profit, or at a loss, to its owners, 
 — run simply because those owners believed that they would 
 suffer a smaller loss if they should continue to run it than if 
 they should allow it to lie idle. It has in recent years been 
 a matter of common observation that most kinds of machin- 
 ery have been created of a capacity in excess of the demands 
 of the market for the products which the machinery has been 
 adapted to produce. There has hardly been a branch of man- 
 ufacture, open to free competition, in which the machinery 
 has not within the last ten years been run for long periods 
 
36 THE CAUSE OF HAED TIMES. 
 
 at a loss, simply because its owners have hoped to kill off 
 rival manufacturers, to hold tlie market in anticipation of 
 better times, or to avoid the deterioration and expense neces- 
 sarily attendant upon idleness ; and there is hardly any 
 branch of manufacture to-day — unless it is, through a patent 
 right or otherwise, in the enjoyment of a monopoly — which 
 is not endeavoring to limit production by all sorts of mutual 
 agreements, known as pools, trusts, etc., and thereby to pre- 
 vent the continuance or recurrence of the troubles which it 
 has experienced and of the losses which have resulted from 
 the excessive amount of its machinery and from its gen- 
 eral capacity of production in excess of the demands of the 
 market." 
 
CHAPTER VIL 
 
 AN EXCESSIVE AMOUNT OF THE MACHINERY OF 
 PRODUCTION ACCOUNTED FOR AS A RESULT 
 OF AN EXCESSIVE DEMAND FOR INCOME- 
 PRODUCING INVESTMENTS. 
 
 WE have seen that the chief feature of our 
 recent business depressions has been a 
 general excess of production over the demand 
 for products at remunerative prices, a condi- 
 tion which, under the name of "general over- 
 production," the professional economists have 
 mistakenly thought they had proved to be 
 impossible, and we have seen further how an 
 excessive creation of the machinery of pro- 
 duction has, through the competition of the 
 owners of that machinery, made this general 
 over-production not only a possible, but an 
 actually existing phenomenon. We have 
 next to consider how we may account for the 
 existence of this excessiva amount of ma- 
 chinery. 
 
88 THE CAUSE OF HARD TIMES. 
 
 There is at the present time a great 
 demand in the civilized world for income- 
 producing investments, meaning thereby 
 those kinds of property which secure to 
 their owners annual returns of income. The 
 wealthy classes depend for their support up- 
 on the income which they derive from such 
 investments, and the same is true in the 
 main of our charitable and educational insti- 
 tutions, and, in a less degree, of the poorer 
 classes, who often supplement the income 
 derived from their daily wages with interest 
 upon a deposit in a savings bank, or with 
 dividends upon a few shares in the stock of 
 a corporation. 
 
 We are apt to think that the field for these 
 income-producing investments is unlimited 
 in extent, but, if we consider carefully, we 
 shall see that this is by no means true. We 
 shall find that such investments are substan- 
 tially limited to two classes: first, those 
 based on real estate; and secondly, those 
 based on what may be called the world's 
 machinery of production and distribution, 
 including in this latter class factories, ware- 
 
THE CAUSE OF HARD TIMES. 39 
 
 houses, railroads, canals, steamships, sail- 
 ing vessels, and the other like aids which 
 mankind has learned to use in the great work 
 of creating and distributing the various pro- 
 ducts of labor. Most, if not all, income- 
 producing investments will be found to be 
 included directly or indirectly in one of 
 these two classes. Mortgages, bonds, and 
 promissory notes derive their value from the 
 real estate or other property owned by the 
 mortgagor or promisor, and the book of a 
 depositor in a savings bank only represents 
 a share in the investments which the bank 
 has made with the funds of its depositors. 
 
 The strict limitation of the amount of the 
 first of these two classes of income-producing 
 investments is evident. The income-pro- 
 ducing real estate of the world at any given 
 time is not only plainly limited in amount, 
 but is also substantially secured in exclusive 
 ownership. The limitation of the other 
 class, — that of the machinery of production 
 and distribution, — is not at first sight so 
 clear. If, however, it be true, as we have 
 stated above, that such machinery may be, 
 
40 THE CAUSE OF HARD TIMES. 
 
 and in fact in recent years has been, created 
 with a capacity of production in excess of 
 the remunerative demand for its products, 
 we see at once that there is a limit to this 
 kind of investment also, — that there is a limit 
 to the amount of such machinery which can 
 find any profitable employment, — the over- 
 stepping of which limit leads to a total loss 
 of income by the holders of the investments, 
 and may even cause a change in the char- 
 acter of the investments from income-pro- 
 ducing to income-destroying. It appears 
 then that the field for the investment of 
 capital, so that it shall make annual returns 
 of income to its owners, is distinctly limited 
 in every direction, and that its limits have 
 been in recent times distinctly approached, 
 and even in some cases overstepped, and 
 thus we see that the true cause of this over- 
 production of machinery and of products is 
 to be found in an excessive desire to se- 
 cure these income-producing investments,,— 
 a desire that has led to a creation of the 
 machinery of production and distribution, not 
 only up to the limit which the circumstances 
 
THE CAUSE OF HAED TIMES. 41 
 
 of the time have fixed for the amount of that 
 machinery which may at that time be income- 
 producing, but even beyond that limit into 
 the region where machinery becomes, not in- 
 come-producing, but income-destroying. 
 
CHAPTER VIII. 
 
 THE EXCESSIVE DEMAND FOR INCOME-PRODU- 
 CING INVESTMENTS ARISES FROM AN EX- 
 CESSIVE DESIRE TO SAVE RATHER THAN 
 TO SPEND. 
 
 WE have shown that there may be in the 
 world an excessive desire to secure 
 income-producing investments, — a desire 
 SO great as to defeat its own ends, and to 
 convert from increasers to destroyers of in- 
 come even the investments which have been 
 already secured. But what is this desire for 
 income-producing investments other than a 
 necessary result of the much lauded virtue 
 of saving f — not, indeed, the old-fashioned 
 miser's saving of his coins in an old stock- 
 ing, but that more intelligent saving, which 
 abstains from spending one's gains or wages 
 to secure immediate and transient comforts 
 and pleasures, and, instead, devotes those 
 
THE CAUSE OF HAED TIMES. 43 
 
 gains or wages, or at least a portion of them, 
 to what economists have called " productive 
 consmnption, " — to the creation of new 
 machines of production or distribution, in 
 order that the saver may, by the profits 
 which he hopes to derive from that machin- 
 ery, secure a provision against the needs of 
 old age or of ill health, or may guard his 
 own future or that of his children against 
 the necessity of daily labor. 
 
 Here we reach a conclusion very difficult 
 of general acceptance. Saving has been 
 quite universally accepted as a virtue to be 
 practised at all times and under all circum- 
 stances. Solomon did indeed say, " There is 
 that scattereth, and yet increaseth ; and there 
 is that withholdeth more than is meet, but it 
 tendeth to poverty " (Proverbs xi. 24) ; but 
 this has been supposed to be a matter in 
 which the wisdom of Solomon has been found 
 to be wanting. It is hard to bring people 
 to-day to believe with Solomon that the gen- 
 eral practice of saving may be carried to such 
 an extent as to be excessive, and to do injury 
 rather than good to mankind. It is hard to 
 
44 THE CAUSE OF HAKD TIMES. 
 
 overturn deep-seated prejudices; but preju- 
 dices must at last, though slowly, yield to 
 reason. We have seen that saving for the 
 purpose of securing income-producing invest- 
 ments (which the economists recognize as the 
 best object of saving) may be carried to such 
 an extent as to overfill the possible limits of 
 the field of profitable investments, and thus 
 to bring, instead of benefit to mankind, only 
 the enforced idleness, the miseries, and the 
 want of a period of business depression. 
 
 As the troubles of the recent hard times 
 have been due mainly to a want of demand 
 for products, — to a failure of demand to 
 keep pace with production, — we can see, 
 further, that if the great army of savers, 
 instead of devoting so much of their surplus 
 funds to the creation of superfluous machin- 
 ery of production, had employed more of 
 that surplus in the purchase of products to 
 be consumed for their own immediate com- 
 fort or pleasure, not only would the super- 
 fluous new machinery with its resulting 
 troubles never have been called into being, 
 but these very people would have themselves 
 
 \ 
 
THE CAUSE OF HAED TIMES. 45 
 
 created an added demand for products, — a 
 demand that would have kept in full action 
 all the old and also some new machinery, 
 would have kept demand up to an equality 
 with supply, would have prevented all the 
 disastrous results of the competition between 
 the owners of the superabundant machinery, 
 and, in a word, would have prevented en- 
 tirely the occurrence of any hard times. 
 
 It is perhaps well here to caution the reader 
 against the idea that the author of these 
 pages fails to recognize any virtue in saving. 
 No one can admit more readily than he does 
 that human progress has been mainly brought 
 about by the aid of this virtue. Except for 
 the saving of the past, the world would be 
 without all the immense machinery of pro- 
 duction and distribution which exists to-day, 
 and which forms perhaps the most important 
 element of our civilization. All that is here 
 claimed is that economy and saving, like 
 most other good things, can be carried too 
 far, — so far, indeed, as to cause injury rather 
 than benefit to mankind. One need not be 
 supposed to deny the benefit or the necessity 
 
46 THE CAUSE OF HAKD TIMES. 
 
 of food for the human body, because he 
 claims that the gratification of an inordinate 
 desire for food may result in injury to health, 
 or even in the destruction of life itself. It 
 is certainly evident that if all men should, 
 in their desire to save and to acquire wealth, 
 practise the strictest economy, live on the 
 simplest food and in the meanest houses, 
 wear the poorest clothes, and abstain from 
 all travelling and pleasure-seeking, they 
 would render all machinery of production 
 and distribution substantially useless and 
 unprofitable, and would find that, by their 
 extreme efforts to save and grow rich, they 
 had defeated their own purposes, and had 
 rendered valueless the hard earned and much 
 treasured investments of their past savings. 
 In a world of misers the investment of sav- 
 ings would necessarily be limited to the old- 
 fashioned hoarding of gold, for there would 
 be no profit in the ownership of idle facto- 
 ries, railroads, steamships, and warehouses, 
 and even real estate, if there were no trade 
 in the shops and no demand for desirable 
 house lots, would give little or no gain to its 
 
THE CAUSE OF HARD TIMES. 47 
 
 owners. So long, however, as mankind are 
 not all misers, there will always be an oppor- 
 tunity for_the individual togaixLJay-sa^ving, 
 altliough, if the general saving of the whole 
 community be excessive, the individual's 
 gain may be the public's loss. In advancing 
 his own interests, the individual may add to 
 the general loss arising from the excessive 
 creation of the machinery of production and 
 distribution ; as, on the other hand, in these 
 days of business depression, a man might 
 help the general situation by spending not 
 only his income but his principal in giving 
 employment to idle workmen. He would 
 ruin his own fortune and injure himself, but 
 he might be a public benefactor by setting 
 some of the wheels of business in motion. 
 
 That the practice of economy and the 
 acquisition of income-producing investments 
 has in recent days been carried too far, is 
 not to be wondered at. To save rather than 
 to spend, and thereby to grow rich, has been 
 popularly considered to be almost, if not 
 quite, the chief end of man. The pulpit and 
 the press have united in teaching the duty of 
 
48 THE CAUSE OF HARD TIMES. 
 
 economy. No man has been thoroughly re- 
 spected by his neighbors unless he has been 
 adding, according to his means, to his store 
 of income -producing investments. The me- 
 chanic and the laborer have been doing this 
 by deposits in the savings banks, the depos- 
 its in those institutions in the small State 
 of Massachusetts alone having shown an 
 increase even during the hard times of the 
 year ending Oct. 31, 1894, of over sixteen 
 millions of dollars.^ The citizen that has 
 accumulated investments to the amount of 
 ten thousand dollars has been endeavoring, 
 by a life of self-denial, to increase those 
 investments to a hundred thousand. He 
 that has had a hundred thousand has been 
 looking forward to and laboring to bring 
 about the time when he might enroll himself 
 among the millionaires. He that has had a 
 million has been hard at work to triple or 
 quadruple his million before his death. And 
 even a Yanderbilt, an Astor, a Gould, a 
 Russell Sage, or a Hetty Green, has not been 
 
 1 See Report of Massachusetts Board of Commissioners of 
 Savings Banks for 1894. 
 
THE CAUSE OF HARD TIMES. 49 
 
 content unless he or she could each year add 
 more millions to his or her already immense 
 accumulations. 
 
 In this way men have gone on increasing 
 their investments in the machinery of pro- 
 duction and distribution, unmindful of the 
 fact that such machinery is valuable only so 
 far as it creates and distributes products for 
 which the market furnishes a remunerative 
 demand, and that, if that demand fails to 
 keep pace with the amount of products, the 
 machinery of production must be, to just the 
 extent by which demand lags behind, super- 
 fluous, useless, and without profit. Men 
 have acted as if they supposed it to be pos- 
 sible to cut down to the lowest limits the 
 consumption of products, and at the same 
 time to afford the largest field for the profit- 
 able employment of machinery and of labor 
 in creating and distributing those products. 
 Under these circumstances it is not strange 
 that machinery has been created with a 
 capacity of production far in excess of the 
 demands of the market for its products, and 
 that products have actually been created in 
 
50 THE CAUSE OF HARD TIMES. 
 
 excess of those demands. The supply of 
 products has been continually and rapidly 
 increasing, but there has been no correspond- 
 ing increase in the demand for them. At 
 last the owners of the machinery have been 
 forced to close their factories and to dismiss 
 their workmen, and by that very act they 
 have made the already inadequate amount of 
 demand still more inadequate, for their own 
 ability and inclination to spend is greatly 
 lessened by the loss of the profits which 
 they had expected to derive from their ma- 
 chinery, and the demand of the dismissed 
 and unemployed workmen is necessarily re- 
 duced to a bare call for the simplest neces- 
 saries of life. 
 
CHAPTER IX. 
 
 HOW THE LOST EQUALITY BETWEEN PRODUC- 
 TION AND DEMAND MAY BEST BE RE- 
 STORED. 
 
 AS we have found it to be true that the 
 aggregate of production may be in 
 excess of the aggregate of demand at remu- 
 nerative prices, and as we have found that, by 
 reason of that excess, hard times have been 
 brought about, and the laboring classes have 
 been forced to be idle and starving in the 
 midst of plenty, it plainly becomes the duty 
 of the economist to study how this inequality 
 between production and demand may best be 
 removed, and how the lost equality between 
 these two elements may best be restored. 
 It is evident that, in order to restore this 
 lost equality, one of two things must be 
 done : a way must be found either to reduce 
 production or to increase demand. There 
 
52 THE CAUSE OF HAED TIMES. 
 
 are various means by which these two results 
 may be reached, and it is surely the duty of 
 the economist to study carefully these vari- 
 ous means, and to point out those which are 
 most likely to be on the whole beneficial in 
 their operation. 
 v/ On the one hand, production may be dimin- 
 
 ished by wars, riots, floods, and conflagra- 
 tions ; by the refusal of mankind to avail 
 itself of the assistance of labor-saving ma- 
 chinery; by the enforced idleness of large 
 classes of people, as, for example, when con- 
 victs in prisons are prevented from perform- 
 ing useful labor ; by reducing the hours of 
 labor through the adoption of eight-hour 
 laws or otherwise ; or by the closing of fac- 
 tories and the stoppage of machinery, this 
 last being a result which has frequently 
 been brought about in recent years through 
 combinations of manufacturers in so-called 
 "trusts," whereby the machinery of one or 
 more of the producers of a commodity has 
 been kept idle at the joint expense of all the 
 producers of that commodity. 
 
 On the othec hand, demand may be in- 
 
THE CAUSE OF HARD TIMES. 53 
 
 creased by the action of government in i^ 
 waging costly and destructive wars, in main- 
 taining large armies and navies in time of 
 peace, and in the erection of costly public 
 buildings and public works. It may also be 
 increased by a more liberal expenditure on 
 luxuries by the richer classes, or by a more 
 generous use of wealth in charities for the 
 poor. A larger enjoyment of the comforts of 
 life by the poorer classes would of course 
 increase demand ; but this mode of increase 
 is not dependent on the simple volition of 
 the poor themselves, for, before they can 
 increase their demand, it is necessary that 
 they should receive increased wages, or at 
 least wages which, if not larger as measured 
 in currency, are larger in purchasing power. 
 And, finally, demand may be increased \/^ 
 through the opening of new fields for the 
 investment of capital, as would happen, for 
 example, if a new mode of transportation 
 were invented which would serve as a substi- 
 tute for railroads. 
 
 Most of these methods of diminishing the 
 aggregate of production, or of increasing the 
 
54 THE CAUSE OF HARD TIMES. 
 
 aggregate of demand, are evidently remedies 
 that are worse than the disease for which a 
 cure is sought. There are, however, at least 
 two of these suggested remedies that may 
 well be worthy of our careful attention. If 
 we can relieve the troubles of the time by 
 increasing the demand of the poor for com- 
 forts and luxuries, or by reducing the hours 
 of labor of the laboring classes, or if we can 
 effect a combination of these two remedies, 
 whereby the poor shall both enjoy more and 
 labor less, shall have more to enjoy and more 
 time for enjoyment, a good result will surely 
 be accomplished. At all events, we may 
 conclude that this new conception of the true 
 province of political economy opens for us 
 new and unexplored fields of thought, worthy 
 of careful and earnest consideration. 
 
CHAPTER X. 
 
 WHY THE EECENT HARD TIMES BEGAN WHEN 
 THEY DID, AND HOW SOON WE MAY EX- 
 PECT THEM TO END. 
 
 WE have seen that the recent hard times 
 have been caused by the fact that 
 production has run ahead of demand, and we 
 have traced the causes which have tended to 
 bring about this excess of production. It 
 remains for us to discover some reason why 
 this inequality between production and de- 
 mand should have been felt in the United 
 States so suddenly and so severely in the 
 summer of 1893. There must have been at 
 that time something to cause either a great 
 and sudden increase of production or an 
 equally great and sudden decrease of demand. 
 There was evidently no reason for a sudden 
 development at that time of the desire for 
 income-producing investments, with a result- 
 
56 THE CAUSE OF HARD TIMES. 
 
 iiig sudden increase of the machinery of pro- 
 duction. There was no such cause, and no 
 such result. There was, however, a sudden 
 decrease of the general demand for products, 
 and the cause of this diminution of demand 
 is not far to seek. In the summer of 1893 
 there was in the United States, as is well 
 known, a sudden and violent panic in the 
 business community, arising out of a fear 
 that gold was going to a premium. This 
 panic caused a general locking up of funds 
 and an extreme scarcity of money, and made 
 the current rates of interest unusually high. 
 There were many failures, and all classes 
 were frightened and began to economize. 
 Shopkeepers, finding that their trade was 
 falling off, feared to lay in their usual stocks 
 of goods. Manufacturers found that the de- 
 mand for their products was disappearing, 
 and consequently began to reduce the number 
 of their employees. The idle employees 
 were no longer able to make their usual pur- 
 chases, and the stockholders in the factories, 
 who were expecting to be deprived of their 
 usual dividends, reduced largely their pur- 
 
THE CAUSE OF HAED TIMES. 57 
 
 chases also. Thus everything conspired to 
 reduce demand, thus the sudden inequality 
 between production and demand was brought 
 about, and thus the hard times were begun. 
 
 If this was the way in which the recent 
 hard times began, in what way may we hope 
 that they will be l)rought to an end ? The 
 hard times of twenty years ago were probably 
 brought to an end in the United States by a 
 great demand from Europe for our grain. 
 The sale of their grain at good prices brought 
 prosperity back to our Western farmers. 
 They began again to purchase freely ; demand 
 began to grow throughout the country; the 
 machinery of production began to be busy 
 again ; shopkeepers, finding that prices were 
 beginning to rise, thought it was time for 
 them to fill their shelves with ample stocks 
 of goods for future sales ; all men began to 
 be hopeful of the future and to spend freely 
 again; and thus the tide was turned and 
 demand increased rapidly. It would seem 
 that we have not at present much reason to 
 hope that we may feel such a stimulus to the 
 general demand for products as was furnished 
 
58 THE CAUSE OF HAKD TIMES. 
 
 twenty years ago by the European demand for 
 our grain. But there have recently been some 
 signs of improvement in business, and it may 
 well be that a sufficient stimulus to start us 
 on the road to recovery may be found in an 
 increased demand, which must necessarily 
 spring up at last after a season devoted to 
 the using up of old supplies and to the 
 emptying of shops and warehouses. If there 
 can be but the beginning of such an increase 
 of demand, we may well hope that it will 
 continue until our machinery and our labor- 
 ing men and women are all busy again, 
 until both production and demand are again 
 full and ample, and until the hard times 
 shall have fully disappeared. The one thing 
 needed is only an increase of the demand 
 for products. This may of course be most 
 naturally brought about by an increased abil- 
 ity to purchase ; but it may also be brought 
 about by an increased inclination and readi- 
 ness to purchase, arising out of a general 
 disposition to take a more hopeful view of 
 the future, out of a feeling that the time for 
 saving and scrimping has passed, and that a 
 
THE CAUSE OF HAKD TIMES. 59 
 
 more liberal scale of expenditure may finally 
 be indulged in. If only this feeling of hope- 
 fulness regarding the future can come to us, 
 it matters not on what the feeling is founded, 
 or indeed whether it is well founded at all. 
 If only it will come, it will work out the ful- 
 filment of its own prophecies, — it will start 
 the increase of demand, — it will raise de- 
 mand to an equality with supply, and thus 
 will bring us to the end of the present hard 
 times. 
 
CHAPTER XL 
 
 HISTORICAL FACTS CONFIRMING THE AUTHOR'S 
 THEORY. 
 
 THE recent history of Europe furnishes 
 one well-established fact, which is 
 wholly inexplicable except on the theory 
 advanced in this book. After the Franco- 
 German war of 1871 France was left with its 
 territory devastated by the armies which had 
 fought within its borders. Its farms, its 
 buildings public and private, its factories, 
 its highways, and its railroads had been 
 ruined and destroyed, and it had been com- 
 pelled to pay an enormous sum as an indem- 
 nity to its victor. Germany had however 
 suffered little in comparison. The battles 
 had not been fought on its soil, and its 
 expenses in the war had been in large part 
 repaid to it by the millions of indemnity 
 which it had extorted from its fallen foe. 
 
THE CAUSE OF HAKD TIMES. 61 
 
 But history shows that under these circum- 
 stances — which, according to all accepted 
 principles of political economy ought to have 
 caused prosperity in Germany and want and 
 distress in France — it was Germany that 
 suffered from hard times, the general depres- 
 sion in trade after 1873 having been felt 
 more severely in Germany than in either 
 England or America, while France was 
 entirely free from any such trouble.^ 
 
 1 Lest the reader should doubt the truth of the historical 
 statement here made, the following quotation is given 
 from the article, already referred to, by Professor Bonamy 
 Price in the Contemporary Review for April, 1877 (pp. 779- 
 783) : — 
 
 "Commercial depression is the universal cry, a commer- 
 cial depression probably unprecedented in duration in the 
 annals of trade, except under the disturbing action of pro- 
 longed war. . . , Ample evidence abounds on all sides to 
 show its extent and severity in England. . . . Have other 
 countries bowed their heads in suffering under the commer- 
 cial depression ? Let America be the first to speak. In 
 1873 she experienced a shock of the most formidable kind. 
 She has not recovered from the shock at this very hour. . . . 
 Let us visit Germany, — Germany, the conqueror in a great 
 war, and the exactor of an unheard of indemnity. What do 
 we find in that country ? Worse commercial weather at this 
 hour than in any other. Nowhere are louder complaints ut- 
 tered of the stagnation of trade. . . . And so we come round 
 
62 THE CAUSE OF HARD TIMES. 
 
 The theory here presented easily accounts 
 for these facts by showing that there could 
 have been in France no hard times, with 
 factories and laboring men in want of 
 employment, when all the machinery and 
 all the men and all the railroads of the 
 country were hard at work repairing the 
 waste of the war. In Germany, on the other 
 hand, a period of great prosperity immedi- 
 
 to France, the people whose well-being has been so visited 
 with the most violent assaults. Her losses and sufferings 
 have surpassed those endured by any other nation, yet the 
 deep, heavy pressure of the commercial paralysis has weighed 
 upon her the least oppressively of all. War has desolated 
 her broad fields and overthrown her industries over great 
 areas of her territory. Her taxation has been suddenly raised 
 by the gigantic sum of thirty millions of English pounds a 
 year. . . . Her share of the commercial trial has been the 
 severest and largest of all ; yet at this hour she exhibits, not 
 the melancholy languor of business men in other countries, 
 but the active movements of quickened recovery." 
 
 It seems almost incredible that the above should have 
 been written by the economist who traced the cause of the 
 commercial depression of which he wrote simply to "over- 
 spending, over-consuming, destroying more wealth than is re- 
 produced, and its necessary consequence, poverty." He could 
 argue that this was the cause of the trouble, and yet admit 
 that the result was the smallest where the cause was the 
 greatest, and the result the greatest where the cause was the 
 smallest. 
 
THE CAUSE OF HARD TIMES. 63 
 
 ately following the war, — a time when new 
 buildings and new factories were erected in 
 large numbers to make ready for a booming 
 future that did not materialize, — was suc- 
 ceeded by a time when it was found that the 
 nation had been going too fast, when the 
 rich found that their investments were not 
 going to be as productive of income as they 
 had hoped and expected, and that they must 
 therefore stop building and must retrench 
 their expenses. Then the laboring men 
 began to lose their daily employment and 
 daily wages, and were forced to economize 
 also, and thus hard times with their accom- 
 panying distress were brought about, and 
 Germany, the conqueror, that had come 
 lightly out of the war, was suffering from an 
 enforced idleness of its people, while the 
 people of France were enjoying the benefits 
 of an enforced activity which compelled 
 everybody to be busy. In a similar manner 
 we may account for the condition of the 
 United States after the conclusion of the 
 War of the Rebellion. During that war 
 there was nowhere complaint of enforced 
 
64 THE CAUSE OF HARD TIMES. 
 
 idleness, nor was there such complaint for 
 several years after the war was over. Dur- 
 ing those years there was much to be done 
 in the way of repairing the damage and 
 waste that the war had caused, and there 
 was also all over the country an immense 
 investment of capital in the building of new 
 shops and warehouses, new dwellings to be 
 sold or let, new railroads, and new factories. 
 At last, however, it was found that this 
 investment of capital had been overdone, 
 that there were more new shops and ware- 
 houses than there was demand for, that there 
 were more new dwelling-houses than could 
 be sold or let, and that there were more 
 railroads and factories than profitable em- 
 ployment could be found for. Then the 
 laboring classes, whose services had been in 
 great demand all through the war and through 
 the succeeding years, began to find that their 
 employers had no further need of their ser- 
 vices. Then those who had made the un- 
 profitable investments began to see that they 
 must economize and consume less of the 
 products of labor. Demand on all sides 
 
THE CAUSE OF HARD TIMES. 65 
 
 rapidly fell off. A general excess of products 
 beyond the demand which was ready to pay 
 a remunerative price for them began to be 
 evident, and the hard times of 1873-74 were 
 upon us. 
 
CHAPTER XII. 
 
 SOME PRACTICAL CONCLUSIONS. 
 
 THE fact which we have endeavored to 
 establish, of the existence of limits 
 to the field for income-producing invest- 
 ments, suggests several conclusions which 
 are important. 
 
 The first is that the immense investments 
 of people like the Vanderbilts, the Astors, 
 and the Goulds are mischievous so far as 
 they tend to monopolize the whole of the 
 world's field of investment, and to leave 
 small chance for the generality of people to 
 make, by the investment of their smaller 
 savings, the needed provision against the 
 wants of old age or of sickness. It will be 
 unfortunate if the time shall ever come when 
 a few families will have secured in their own 
 exclusive possession the ownership of all, or 
 of substantially all, the real estate and the 
 
THE CAUSE OF HAllD TIMES. 67 
 
 machinery of production and distribution, 
 and will have left, as the only possible in- 
 vestment of savings open to the multitude, 
 the hoarding of gold and silver and jewels in 
 safe-deposit vaults or in old stockings. Such 
 a result would operate to destroy in the 
 greater portion of mankind that virtue of 
 providence, of thought for the future, which 
 has done so much to advance civilization. 
 
 Secondly. The theories, of which much is 
 heard at present, which would exclude all 
 •individual ownership from real estate and 
 from railroads, telegraphs, gas-works, water- 
 works, and the like, would greatly restrict 
 the limits of the field for the profitable in- 
 vestment of capital, and would thus render 
 it much more difficult than it is to-day for 
 individuals to find income-producing invest- 
 ments for their possible savings. Men would 
 thus have small inducement to refrain from 
 living from hand to mouth and taking no 
 thought for the morrow ; and they would 
 be led to neglect that provision for the future 
 which is so important an element for human 
 welfare. 
 
68 THE CAUSE OF HARD TIMES. 
 
 Thirdly. The overcrowding of the field 
 for income-producing investments is causing 
 a reduction in the rate of income to be 
 derived from invested property, and though, 
 in the course of its development, this brings 
 us to times of general distress, the process 
 is in its final result a beneficent one, for, as 
 I have written in a previous publication, ^ 
 "A reduction in the rate of income from 
 invested property means, in the final analy- 
 sis, that the world pays less than it has 
 before been paying for the use of its machin- 
 ery; that labor is obtaining a larger, and 
 capital a smaller share of the compensation 
 paid for production; that of the price of 
 every article purchased for consumption by 
 the rich or by the poor a greater proportion 
 goes to pay for the labor, whether of hand or 
 of brain, that has been expended on its pro- 
 duction or its transportation, and less for the 
 use of the machinery which has helped to 
 produce it or to transport it to the consumer. 
 The evils, then, which result from an exces- 
 sive investment of capital in machinery, are 
 
 1 "Over-production and Commercial Distress," p. 29. 
 
THE CAUSE OF HAED TIMES. 69 
 
 only temporary. The evils of general over- 
 production, of glutted markets, and of en- 
 forced idleness and consequent want among 
 the poor, are only the results of the irregu- 
 lar flowing of a stream whose general course 
 tends surely towards the improvement of 
 mankind, and the lessening of the inequal- 
 ities between the rich and the poor. It has 
 been my purpose to show how the irregulari- 
 ties in the flow of this stream, the temporary 
 chokings of its current, have been caused, 
 and how depression in trade has resulted 
 from these irregularities in the working of a 
 process, which, if it were regular and not 
 too rapid, would operate only to the good of 
 mankind."^ 
 
 Fourthly. If, as has been argued, the clos- 
 ing of factories and the throwing of laborers 
 out of employment find their original cause 
 in an excessive desire, on the part of the 
 general public, to acquire income-producing 
 investments, and in a consequent overcrowd- 
 
 1 The first few lines of this quotation were quoted bj^ Hon. 
 David A. Wells in his "Eecent Economic Changes," p. 430, 
 but without giving any credit to their author. 
 
70 THE CAUSE OF HARD TIMES. 
 
 ing of the limited field for such investments, 
 it would seem that the sufferers from the 
 results thus brought about might fairly have 
 some claim on that public, as represented by 
 the government of the city, state, or nation, 
 for relief from the suffering thus created. 
 If the action of the community as a whole, 
 through the general excess of its desire to 
 accumulate investments, is such as to leave 
 labor unemployed and starving in the midst 
 of abundance, may not the idle and starving 
 laborers fairly claim that the government, 
 which represents the community at large, 
 shall find and supply them with that employ- 
 ment, that means of earning a livelihood, 
 which individuals have failed to furnish ? A 
 new light is thus thrown on the question of 
 the policy of establishing public workshops, 
 and of carrying on public improvements for 
 the purpose of giving employment to the 
 idle. The objections to such measures, on 
 grounds not here noticed, may be insuper- 
 able ; but the views before set forth suggest 
 strong arguments why, under certain circum- 
 stances, it may be the duty of a government 
 
THE CAUSE OF HAED TIMES. 71 
 
 to relieve public distress by employing work- 
 men on a large scale in carrying out public 
 improvements which would not otherwise be 
 undertaken. 
 
 Fifthly. An argument in favor of a pro- 
 tective tariff may be drawn from the theory 
 here presented. If a country, on account of 
 its undeveloped condition, or for any other 
 reason, affords greater opportunities and a 
 larger field than other countries for the 
 profitable investment of capital, it is pos- 
 sible that it may, by limiting, through tariffs 
 or otherwise, its communication with other 
 countries where the field of investment is 
 more crowded, postpone the time when the 
 effects of the competition between investors 
 will cause depression in trade, hard times, 
 and general distress within its own borders. 
 It is probably true, however, that, though a 
 country may by a protective tariff, which 
 shuts out foreigners from competing with 
 native production, postpone somewhat the 
 time when it is itself to. suffer from some of 
 the unpleasant, though necessary, incidents 
 of its progress towards a diminution of the 
 
72 THE CAUSE OF HARD TIMES. 
 
 profits of the rich and idle, and an increase 
 of the profits of the laboring poor, it yet 
 thereby only delays the march of its own 
 progress in civilization. America, with its 
 less crowded field for investment, may by a 
 tariff keep its own markets for its own pro- 
 ducers, and may thereby prevent the capital 
 of Europe from intruding upon and taking 
 possession of a portion of that field. It may 
 thus prevent foreign capital from competing 
 with its own capital on equal terms, and 
 may thereby keep its rate of income from 
 investments up to a higher figure than the 
 European rate. In ocean commerce English 
 and American capital have competed in 
 recent years on exactly equal terms; and the 
 former, being the cheaper capital, — that is, 
 the capital that is content with the lower 
 rate of interest, — has necessarily driven out 
 of the field the dearer capital of America. 
 Thus the destruction of the foreign com- 
 merce of the United States is seen to be no 
 result of protection . or of free trade, or of 
 any legislation or want of legislation, but to 
 be simply the necessary effect of the law 
 
THE CAUSE OF HARD TIMES. 73 
 
 which gives to the cheaper capital the entire 
 control of any field of investment to which 
 it has full and unrestricted access. And if, 
 by the removal of duties or otherwise, Eng- 
 lish capital shall be enabled to compete in 
 our markets in the production of any given 
 article of manufacture, with only the slight 
 item of the cost of transportation from Eng- 
 land to America operating against it, we 
 may expect it to be as efficient as in the case 
 of ship-owning in driving American capital 
 out of that field of investment, or at least in 
 forcing American capital to be content with 
 a lower rate of profit than it had previously 
 been accustomed to. On the other hand, if 
 we look upon the maintenance of a high rate 
 of profit for capital as simply the mainte- 
 nance of high prices for the use of the 
 machinery of production and distribution, 
 and of low prices for labor, we see that pro- 
 tective tariffs, though they may sometimes 
 postpone the coming of periods of general 
 over-production and distress, are on the whole 
 a hindrance to the onward march of civili- 
 zation and to the general unprovement of the 
 condition of rp?alSKindX-»-^C^'^ 
 
 
CHAPTER XIII. 
 
 THE ORIGIN OP "TRUSTS." 
 
 ONE of the results plainly traceable to 
 the overcrowding of the field of invest- 
 ment has been the formation of the numerous 
 so-called "trusts," which have of late played 
 an important part in the manufacturing 
 interests of the country. Whenever it has 
 been found that the machinery of production 
 in any branch of manufacture has been 
 created with a capacity of production in 
 excess of the demands of the market, the 
 different manufacturers, in their endeavors 
 to avoid being left with unsold balances of 
 products on their hands, have, as has been 
 before stated, been forced to dispose of those 
 products for less than it had cost to produce 
 them. Production having grown largely in 
 excess of demand, it has been necessary that 
 it should in some way be reduced, and, as no 
 
THE CAUSE OF HAKD TIMES. 75 
 
 single manufacturer has been willing to 
 allow his machinery to lie idle for the bene- 
 fit of his competitors, there has been no way 
 left except for all those engaged in the busi- 
 ness to band themselves together in a so- 
 called "trust," and to place the management 
 of the business of all in the hands of one 
 man or of a few men, who are given full 
 power to determine the amount of production 
 that can profitably be carried on, and who 
 can order the stoppage of any machinery that 
 they may deem to be for the time superflu- 
 ous, — the owner of the idle machinery re- 
 ceiving, however, his full proportion of the 
 profits of the whole business. Thus in vari- 
 ous special branches of manufacture over-pro- 
 duction has been prevented, and the amount 
 of production has been limited to that which 
 can be disposed of at a price remunerative 
 to the producer. This '' trust " scheme 
 has proved in practice to be very efficient, 
 and it has been successful in securing to 
 those who have joined in forming these 
 combinations, whether their machinery has 
 been busy or idle, a handsome income on 
 
76 THE CAUSE OF HARD TIMES. 
 
 their investments. Where, however, pro- 
 ducers have been unable or unwilling to 
 unite in this way, and have endeavored to 
 escape from the loss which they would 
 suffer from disposing of their products at 
 less than cost by reducing that cost through 
 a cutting down of the wages of their em- 
 ployees, they have found that they have not 
 thereby helped the situation, inasmuch as, 
 the whole cause of the trouble being an 
 amount of products in excess of the demand 
 for them, a mere reduction of cost without 
 any reduction of the amount produced has 
 had but little effect towards equalizing pro- 
 duction and demand. Thus those producers 
 who have tried to remedy the evil by a 
 simple reduction of wages have found sub- 
 stantially the same difficulty in disposing of 
 their superfluous products, after they have 
 thus reduced the cost thereof, that they 
 had found before that reduction had taken 
 place. 
 
 One principal reason for the success of 
 these " trusts " is to be found- in the fact 
 that they make it possible for the manufac- 
 
THE CAUSE OF HAKD TIMES. 77 
 
 turers, who unite in forming them, not only 
 to avoid the reduction, caused by competition, 
 in the selling prices of their products, but 
 also to cut off the heavy expenses that had 
 been previously incurred in carrying on their 
 competition with each other. Before their 
 combination in a " trust " each manufacturer, 
 in order to effect a sale of his own products 
 rather than those of his rivals, had incurred 
 heavy expenses in advertising, in employing 
 drummers and agents, and in opening shops 
 in expensive locations for the sale of his pro- 
 ducts. As, after the formation of the " trust," 
 no one can gain anything by the sale of his 
 product rather than that of another manufac- 
 turer, there is small occasion for advertising, 
 for special shops, or for drummers and agents. 
 To effect the sale of a product, one agency in 
 a city, instead of a dozen, becomes all-suffi- 
 cient. There is no longer any need to cover 
 the country with an army of drummers, whose 
 main duty had been, not to increase the num- 
 ber of products sold, but only to secure sales 
 for their respective employers and to keep 
 sales away from the rivals of those employers. 
 
78 THE CAUSE OF HARD TIMES. 
 
 If the manufacturers of pianos could to-day 
 combine in a " trust," what a tremendous 
 outgo of expenses would be stopped. Instead 
 of rows of high-priced shops on the principal 
 thoroughfares of all our chief cities, one well- 
 placed shop in each city would suffice. There 
 would no longer be occasion for elaborate 
 and costly advertisements in all the papers, 
 setting forth the rival claims of the instru- 
 ments of the different makers. There would 
 no longer be occasion to pay to professional 
 musicians, as is continually done to-day, a 
 commission of a hundred dollars for his or 
 her services in advising the purchaser of a 
 piano to select one of a particular make. Or, 
 to go into another field than that of manu- 
 facture, if our fire insurance companies could 
 be united in some sort of a trust, there would 
 no longer be occasion for the employment 
 and maintenance of the present immense 
 army of insurance brokers, whose labors do 
 not serve in any material degree to increase 
 the total amount of insurance, but who are 
 paid by the companies some fifteen per cent 
 
THE CAUSE OF HARD TIMES. 79 
 
 out of the total amount of premiums received, 
 — a payment which is made by all the com- 
 panies, simply because, if any one company 
 stopped making it, the brokers would divert 
 all business from it to its rivals. 
 
CHAPTER XIV. 
 
 THE DIFFERENCE BETWEEN THE AUTHOR'S 
 VIEWS AND THOSE OF THE ECONOMISTS 
 A RADICAL ONE. 
 
 THE views set forth in this book are, as 
 has been before stated, in direct con- 
 flict with the doctrine of the impossibility 
 of general over-production. That doctrine, 
 however, lies, according to John Stuart Mill, 
 at the basis of the whole of the accepted 
 system of political economy, of which he 
 may be considered to have been the founder. 
 Mill says of it: "The point is fundamental. 
 Any difference of opinion on it involves 
 radically different conceptions of political 
 economy, especially in its practical aspect. 
 On the one view, we have only to consider 
 how a sufficient production may be combined 
 with the best possible distribution; but, on 
 the other, there is a third thing to be con- 
 
THE CAUSE OF HARD TIMES. 81 
 
 sidered, — how a market can be created for 
 produce, or how production can be limited 
 to the capabilities of the market. "^ Mill's 
 idea seems to have been, that, as it was 
 impossible that there should be a general 
 excess of production over demand, it was 
 only necessary for the economist to consider 
 how to promote the production and distribu- 
 tion of products ; but he seems strangely to 
 have overlooked the consideration that, even 
 if it was impossible that production should 
 run ahead of demand, it was still possible 
 that, the, two being as it were tied together, 
 production might be limited and held back 
 by a lagging demand, and that therefore cir- 
 cumstances might still exist under which 
 the only way to promote production, and 
 thus to secure the full employment of labor, 
 would be by finding a means of increasing 
 demand. We see, however, that, in addition 
 to production and distribution, there is really 
 a third thing for economists to consider, 
 namely, "how a market can be created for 
 
 1 Principles of Political Economy, Book III. Chap. XIV. 
 sect. 4. 
 
82 THE CAUSE OF HARD TIMES. 
 
 produce," and that Mill's conception of politi- 
 cal economy, — namely, that its only province 
 is "to consider how a sufficient production 
 may be combined with the best possible dis- 
 tribution," — is, to use his own expression, 
 " radically different " from the true concep- 
 tion. Mill's system of political economy, 
 built upon the consideration of production 
 and distribution alone, is therefore a false 
 system, even if, as Mill claimed, general over- 
 production is impossible ; but if, as has been 
 shown, general over-production is not only 
 possible, but a matter of actual and present 
 experience, his whole conception of political 
 economy is doubly proved to be false, and 
 we find double reasons for adopting what he 
 calls a " radically different conception " of 
 that science. 
 
CHAPTER XY. 
 
 THE economists' EXPLANATION OF THE TEN- 
 DENCY OF PROFITS TO A MINIMUM SHOWN 
 TO BE ANTIQUATED AND INADEQUATE. 
 
 MILL had much to say of the " tendency 
 of profits to a minimum." He recog- 
 nized the existence of this tendency, and 
 explained it as follows: "On a limited ex- 
 tent of land only a limited quantity of capi- 
 tal can find employment at a profit. As the 
 quantity of capital approaches this limit, 
 profit falls. When the limit is attained, 
 profit is annihilated, and can only be re- 
 stored through an extension of the field of 
 employment, either by the acquisition of 
 fertile land, or by opening new markets in 
 foreign countries from which food and mate- 
 rials can be purchased with the products of 
 domestic capital. " ^ 
 
 1 Principles of Political Economy, Book lY. Chap. IV. 
 sect. 1. 
 
84 THE CAUSE OF HARD TIMES. 
 
 This theory, which makes the rate of the 
 profit derivable from capital to depend upon 
 the area of fertile land, might have some 
 plausibility if income-producing investments 
 were limited to agricultural lands; but in 
 these modern days, when by far the greater 
 part of the income which capital receives is 
 derived from the ownership of lands which 
 produce no crops, and from the ownership of 
 the machinery of production and distribution, 
 Mill's theory is seen to be utterly inadequate 
 and antiquated. The theory advanced in 
 these pages, however, fully explains the ad- 
 mitted tendency of profits to a minimum, by 
 referring it to the tendency of mankind to 
 accumulate income-producing investments of 
 all kinds at a rate faster than the rate of 
 growth of the possible field for such invest- 
 ments, thereby gradually crowding that field, 
 so that the competition of the investors gradu- 
 ally forces down the rate of profit which can 
 be obtained from their investments. 
 
CHAPTER XVI. 
 
 SOME PROGNOSTICATIONS AS TO THE FUTURE. 
 
 A LTHOUGH in the future a general in- 
 l\ crease in the wages of labor, or other 
 causes, may bring about an increased con- 
 sumption of and demand for products, and 
 consequently an increased use for the ma- 
 chinery of production and distribution, yet 
 it seems probable that the desire to obtain 
 income-producing investments will be so 
 general and so powerful that the field for 
 such investments will hereafter remain per- 
 manently crowded, except when it may be 
 cleared for a time by the destruction due to 
 a great war, or by an invention which shall 
 call for a large investment in a new kind of 
 machinery. A crowding of the field for 
 investment must lead to severe competition 
 among investors, and to a lessening of their 
 profits. Manufacturing business, therefore, 
 
86 THE CAUSE OF HARD TIMES. 
 
 when it has no monopoly, but is open to the 
 competition of all comers, may be expected 
 to return in the future only small profits. 
 Railroads, if free from competing lines, may 
 however expect their business to increase in 
 volume, and, if free from too much legislative 
 interference, which seems now to be their 
 chief danger, may be expected to pay hand- 
 some dividends. For real estate, advanta- 
 geously situated, a large increase in rental 
 value may be anticipated, which will make 
 real estate a desirable form of investment, 
 unless too great a portion of the rents deriv- 
 able from it is taken by taxation to be wasted 
 or squandered by incompetent or corrupt 
 governments. Money in the future cannot 
 be expected to command more than low rates 
 of interest; indeed, it is probable that there 
 will be a general and continued decline in 
 the current rate. We may anticipate, how- 
 ever, that the development of the results 
 which we have foreshadowed will not be 
 regular and uniform. There will continue 
 to be in the future, as there have been in the 
 past, periods when demand will be abnor- 
 
THE CAUSE OF HAKD TIMES. 87 
 
 mally increased by a general movement to 
 accmnulate stocks of goods in anticipation of 
 an expected rise in their price, and periods 
 also when demand will be abnormally dimin- 
 ished by the causes which have been shown 
 to have brought about hard times; but it 
 would seem that the general tendency must 
 be such as has been indicated. 
 
 We may also expect that in the future, 
 whenever a new field for investment is 
 opened, which seems to promise large returns, 
 capital will rush into it in large and exces- 
 sive amounts. If, for instance, the owners 
 of capital at any time discover that some 
 one is deriving a large profit from the manu- 
 facture of a new product, as recently from 
 the manufacture of bicycles, the rush of 
 those wishing to gain a share of those profits, 
 will be so great that it will shortly be evident 
 that the number of bicycles, or whatever the 
 new product may be, produced and offered 
 for sale, is largely in excess of the number 
 called for at remunerative prices by the 
 public. The selling price of the product will 
 then be largely reduced, while at the same 
 
88 THE CAUSE OF HARD TIMES. 
 
 time the expenses of competition in agents, 
 advertising, &c., will have largely increased. 
 Then those engaged in the business will find 
 that they are glad to sell their products at 
 almost any price, even for less than the cost 
 of production, and this field for investment, 
 which but a little while before had been so 
 profitable, will be found to have been con- 
 verted into a producer of losses rather than 
 of profits, and those engaged in working it 
 will be busy endeavoring to discover some 
 means, by a " trust " or otherwise, to limit 
 and lessen the production of the very article 
 from the increased production of which they 
 had but a short time before expected to gain 
 the largest profits. 
 
 A more serious question arises as to the 
 probable behavior of the laboring classes in 
 the hard times which are sure to come at 
 intervals in the future, and when they find 
 themselves again and again unemployed and 
 starving in the midst of plenty. The labor- 
 ing classes are every year showing them- 
 selves to be more and more ready to resort to 
 violence in attempts to right their supposed 
 
THE CAUSE OF HAED TIMES. 89 
 
 wrongs, and it is but natural to expect that 
 the J will grow more and more impatient at 
 each repetition of the experience of suffer- 
 ing mysteriously from want in the midst of 
 plenty, and that they may at any time strike 
 blindly and with violence at anything that 
 demagogues lead them to suppose to be the 
 cause of their troubles. Socialism, with its 
 promises of relief from such troubles, may 
 well gain much support in the future, and 
 may even succeed in putting its theories into 
 practice. At any rate, the possible results 
 that may arise from the influence of future 
 hard times upon the general advance of 
 civilization are so important, that a careful 
 study of the causes of these periods of* busi- 
 ness depression is well worthy of the con- 
 sideration of all thoughtful men. 
 
CHAPTER XVII. 
 
 A HARVARD PROFESSOR'S QUESTION. 
 
 AT the midwinter examinations at Har- 
 vard College in 1895, the following 
 question was put to the students in " Econo- 
 mics I." ''Suppose everybody resolved to 
 consume productively only^ what would he the 
 result f " As I felt very curious to know 
 what the Harvard economists would consider 
 to be the true answer to this question, I 
 wrote to Prof. W. J. Ashley, who according 
 to the Harvard Catalogue stood at the head 
 of "Economics L," that I should feel greatly 
 obliged to him if he would inform me what 
 he considered to be the true answer to this 
 question. Prof. Ashley wrote me in reply 
 that he did not himself set the question, 
 but that he imagined the examination paper 
 which contained it was prepared by his asso- 
 ciate, Prof. Cummings. Prof. Ashley added. 
 
THE CAUSE OF HARD TIMES. 91 
 
 that he supposed " that the question was set 
 to ascertain whether the student had really 
 read his Mill carefully, especially the last 
 paragraph of Book I. Chap. III.," and that 
 he imagined that his '^colleagues would hold 
 that the answer might properly depend on 
 conditions of time and place. " As the only 
 " conditions of time and place " that could 
 be involved in the question appeared to me 
 to be simply those of the present time, and of 
 our planet, the earth, and as upon referring 
 to my Mill I could get no light from the 
 paragraph to which Prof. Ashley referred 
 me, I wrote to Prof. Edward Cummings ask- 
 ing him what he considered to be the true 
 answer to the question which he had pro- 
 posed. As I received no reply to my note, 
 I wrote Prof. Cummings a second time, sug- 
 gesting that my first note might have called 
 for so elaborate an answer that he had felt 
 disinclined to answer it, and that therefore I 
 would modify my question and ask simply 
 "Would the result be an increase of the 
 wealth of the world ? " a question that would 
 require for answer only a simple " Yes " or 
 
92 THE CAUSE OF HARD TIMES. 
 
 "No." As Prof. Cummings has not vouch- 
 safed to me the ordinary courtesy due from 
 one gentleman to another who has asked him 
 a civil question, — if he was afraid to commit 
 himself by an answer, he might at least have 
 replied that his business was to put, not to 
 answer, questions in political economy, — I 
 have been forced to abandon all attempts to 
 learn how a Harvard Professor answers one 
 of his own questions. 
 
 As, however, the Professor's question 
 seems to be one which deserves a careful 
 answer, I will myself give it some considera- 
 tion. "Suppose everybody resolved to con- 
 sume productively only, what would be the 
 result ? " ^ The first result would evidently 
 
 1 It may be well to give in this place Mill's definition of 
 " productive consumption." It is as follows : — 
 
 " Whoever contributes nothing directly or indirectly to 
 production, is an unproductive consumer. The only pro- 
 ductive consumers are productive laborers ; the labor of di- 
 rection beini? of course included, as well as that of execution. 
 But the consumption even of productive laborers is not all 
 of it productive consumption. There is unproductive con- 
 sumption by productive consumers. What they consume in 
 keeping up or improving their health, strength, or capacities 
 of work, or in rearing other productive laborers to succeed 
 
THE CAUSE OF HAED TIMES. 93 
 
 be an immediate and total stoppage of the 
 consumption of and demand for all sorts of 
 luxuries, and for all those comforts of liv- 
 ing which do not contribute to mankind's 
 efficiency in production. Men would eat 
 simple but nutritious food, would wear cheap 
 and common clothing, would live in plain 
 and simply furnished houses, would travel 
 but little, would have but tlie smallest use 
 for theatres or hotels, and would seldom 
 employ any domestic servants, male or 
 female. The hundreds of thousands who 
 are now employed in supplying all the un- 
 productive consumption of the world would 
 lose their employment, and be forced to look 
 about to see how they could find occupation 
 in supplying that demand for productive 
 
 them, is productive consumption. But consumption on 
 pleasures or luxuries, whether by the idle or by the indus- 
 trious, since production is neither its object nor is in any 
 way advanced by it, must be reckoned unproductive: with a 
 reservation perhaps of a certain quantum of enjoyment which 
 may be classed among necessaries, since anything short of it 
 would not be consistent with the greatest efficiency of labor. 
 That alone is productive consumption which goes to maintain 
 and increase the productive powers of the community." — 
 Principles of Political Economy, Book I. Chap. III. § 5. 
 
94 THE CAUSE OF HARD TIMES. 
 
 consumption which, by the conditions of the 
 question, would be all the demand that would 
 be left in existence. Now to what would the 
 Professors have these people turn their atten- 
 tion ? To what products would they have 
 them devote their labors ? Should they all 
 become cheap tailors and hat-makers and 
 boot-makers, and manufacture millions of 
 coats, hats, and boots to be piled up in ware- 
 houses waiting for a demand that could never 
 catch up with the supply? Or should they 
 build factories and railroads and steamships, 
 for which, in the diminished demand for 
 those things in a world which abstained en- 
 tirely from unproductive consumption, there 
 would be no use, and which w^ould be built 
 only to rot and rust and decay, unused 
 and unusable ? Surely no one would claim 
 that men should employ their time in the 
 production of any superfluous products such 
 as we have mentioned. It follows, then, 
 that if " everybody resolved to consume pro- 
 ductively only," one result would be that it 
 would not be possible to find full employ- 
 ment for everybody, and that every one 
 
THE CAUSE OF HARD TIMES. 95 
 
 would be idle a good part of the time, or 
 that many would be idle all the time. Or, 
 to put it more simply, if " everybody re- 
 solved to consume productively only," not 
 half the productive capacity of mankind 
 would be called into action. 
 
 And what would be the result as regards 
 the wealth of the world ? Would tliat wealth 
 be increased or diminished ? An immediate 
 result would certainly be that all the wealth 
 that was invested in articles of unproductive 
 consumption or in machinery for the produc- 
 tion or distribution of such articles would 
 become useless, and consequently valueless. 
 In this way the wealth of the world would 
 certainly be diminished. Is there any way 
 in which there could be an increase of wealth 
 to compensate for this certain decrease ? 
 There could be no wealth in the owner- 
 ship of things that nobody wanted. In a 
 world where every one's wants were the sim- 
 plest, there would be but the smallest profit 
 in the ownership of the warehouses, shops, 
 factories, railroads, and ships that would be 
 needed to keep those wants supplied. Wealth 
 
 :2'Q% 
 
96 THE CAUSE OF HARD TIMES. 
 
 could not increase, men could not grow rich, 
 for it would be impossible for men to find 
 new income-producing investments, and the 
 income to be derived from old investments 
 would be reduced to the lowest limits. We 
 arrive, tlien, at the conclusion that the result 
 of mankind's resolve to consume productively 
 only must be general idleness and a large 
 decrease of the world's wealth. I have not 
 been able to find in Mill or in the writings of 
 the professors of political economy any sug- 
 gestion of any of these results, and when I ask 
 the professors what opinions they hold on these 
 subjects, they either fail to take any notice of 
 my questions, or, like Jack Bunsby, — who, 
 when delivering his opinions, was wont to 
 add, " The bearings of this observation lays 
 in the application on it," — they reply that 
 the answer to the question " might properly 
 depend on conditions of time and place." 
 It may amuse one to speculate how high a 
 mark the student would have received who 
 should have been brilliant enough to write 
 down this answer to the question in his 
 examination paper. 
 
CHAPTER XVIII. 
 
 PREVIOUS WRITINGS BY THE AUTHOR AND BY 
 OTHERS ON THE SUBJECT OF THIS BOOK. 
 
 THE views presented in this book were 
 first suggested by this author in a 
 communication printed in the Boston Daily 
 Advertiser in its issue for August 8, 1877. 
 That communication was followed at inter- 
 vals by numerous others in the Boston Ad- 
 vertiser, the Boston Transcript, the New 
 York Nation, and in other papers. The 
 author also set forth his views somewhat 
 at length in an article entitled "Saving 
 versus Spending," which appeared in the 
 Atlantic Monthly for December, 1878. All 
 his earlier writings on this subject were 
 collected by him in 1884 in a pamphlet 
 entitled " Excessive Saving a Cause of Com- 
 mercial Distress. " That pamphlet was fol- 
 lowed in 1886 by another, entitled "The 
 
98 THE CAUSE OF HARD TIMES. 
 
 Depression in Trade and the Wages of 
 Labor," and in 1887 by still another, entitled 
 "Over-production and Commercial Distress." 
 The author has also contributed two articles 
 to the Quarterly Journal of Economics, the 
 first entitled "General Over-production," 
 which appeared in the number for April, 
 1887, and the other entitled " The Over-pro- 
 duction Fallacy," which appeared in the 
 number for April, 1892, and an article by 
 him, entitled "Diminishing Returns from 
 Investment," appeared in the Social Econo- 
 mist for April, 1893. 
 
 For the views of other writers on the sub- 
 jects discussed in this book the following 
 references are here given: — 
 
 Wealth of Nations, by Adam Smith, Book 
 
 I. Chap. IX., Of the Profits of Stock; Book 
 
 II. Chap. III., Of the Accumulation of Cap- 
 ital, or of Productive and Unproductive 
 Labor. — Principles of Political Economy, by- 
 Rev. T. R. Malthus, Chap. VIL, sect. 3, Of 
 Accumulation, or the Saving from Revenue 
 to add to Capital, considered as a Stimulus 
 to the Increase of Wealth ; sect. 10, Applica- 
 
THE CAUSE OF HARD TIMES. 99 
 
 tion of some of the Preceding Principles tc 
 the Distress of the Laboring Classes since 
 ISIS, with General Observations. — Political 
 Economy, by Dr. Thomas Chalmers, Chap. 
 III., On the Increase and Limit of Capital; 
 Chap, v.. On the Possibility of a General 
 Glut. — Treatise on Political Economy, by 
 Jean-Baptiste Say, Book I. Chap. XL, 
 Of the Formation and Multiplication of 
 Capital; Chap. XY., Of the Demand or 
 Market for Products. — Letters to Mr. 
 Malthus on various Subjects of Political 
 Economy, particularly on the Causes of 
 the General Stagnation of Commerce, by 
 Jean-Baptiste Say. — Principles of Political 
 Economy and Taxation, by David Ricardo, 
 Chap. XXL, Effect of Accumulation on 
 Profits and Interest; Chap. YL, On Profits. 
 
 — Elements of Political Economy, by James 
 Mill, Chap. lY., sect. 1, Of Productive and 
 Unproductive Consumption; sect. 3, That 
 Consumption is co-extensive with Production. 
 
 — Principles of Political Economy, by John 
 Stuart Mill, Yol. L Book I. Chap. Y., Fun- 
 damental Propositions on Capital, sect. 3; 
 
100 THE CAUSE OF HARD TIMES. 
 
 Chap. XL, Law of Increase of Capital, sect. 
 4; YoL IL Book IIL Chap. XIV., Excess of 
 Supply; Book lY. Chap. lY., Of the Ten- 
 dency of Profits to a Minimum; Chap. Y., 
 Consequences of the Tendency of Profits to a 
 Minimum. — Chapters on Political Economy, 
 by Prof. Bonamy Price, Chap. lY., Capital. 
 — Article entitled "One Per Cent," by Prof. 
 Bonamy Price, in the Contemporary Review 
 for April, 1877. — The Economy of Consump- 
 tion, by Robert Scott Moffat. — Principles 
 of Political Economy, by J. R. MacCulloch, 
 Parti. Chap. IL, sect. 3, Accumulation and 
 Employment of Capital ; Chap. YIL, Causes 
 of Gluts; Part III. Chap. YIL, Circumstances 
 which determine the Average Rate of Profits ; 
 Part lY., Consumption of Wealth. — American 
 Political Economy, by Prof. Francis Bowen, 
 Chap. XYIL, The Rate of Profit as affected 
 by the Limited Extent of the Field for the 
 Employment of Capital : The Theory of 
 Gluts. — Principles of Political Economy, by 
 Prof. William Roscher, Am. Ed., translated 
 by John J. Lalor (1882), sect. 23, Equilib- 
 rium between Production and Consumption; 
 
THE CAUSE OF HARD TIMES. 101 
 
 sect. 215, Necessity of the Proper Simultane- 
 ous Development of Production and Consump- 
 tion; sects. 216, 217, Commercial Crises in 
 General; sect. 220, When Saving is Injuri- 
 ous; sect. 221, Limits to the Saving of Capi- 
 tal. — Final Report of the Royal Commission 
 appointed to inquire into the Depression of 
 Trade and Industry (printed in 188G). — ^First 
 Annual Report of the U. S. National Bureau 
 of Labor, by Hon. Carroll D. Wright. — Two 
 articles by Mr. F. B. Hawley, the first in 
 the National Quarterly Review for July, 
 1879, entitled "The Ratio of Capital to Con- 
 sumption," and the second in that Review 
 for October, 1879, entitled "The Rationale of 
 Panics " ; also a book published by the same 
 gentleman in 1882, entitled "Capital and 
 Population." — An article by Mr. Edward 
 F. Sweet, in the Chicago Times for April 
 26, 1880. — Recent Economic Changes, by 
 Mr. David A. Wells. — Article on "Trusts," 
 by Mr. Andrew Carnegie, in the North 
 American Review for February, 1889. — 
 An article on " Industrial Depressions, their 
 Cause and Cure," by Mr. Frederick H. 
 
102 THE CAUSE OF HAKD TIMES. 
 
 Cooke, in the American Journal of Politics 
 for December, 1893. — Involuntary Idleness, 
 by Hugo Bilgram. — The Fallacy of Saving, 
 by John M. Robertson. — A Fundamental 
 Principle of Political Economy, a pam- 
 phlet by Edgar J. Rich. — The Physiology of 
 Industry, by A. F. Mummery and J. A. Hob- 
 son. — The Evolution of Modern Capital- 
 ism, by John A. Hobson. — These last two 
 books, published in England in 1889 and 
 1894, present views and arguments substan- 
 tially the same as those presented in the 
 preceding pages. There was also published 
 at Stuttgart, Germany, in 1895, a general 
 history of the different theories that have 
 been advanced in explanation of the causes 
 of business crises. This book of 438 pages 
 is entitled "• Geschichte der National-okono- 
 mischen Krisentheorieen," and its author is 
 Eugen von Bergmann, of the University of 
 Tiibingen, who finds in it room to mention, 
 in a foot-note at page 60, " der Americaner, 
 Uriel H. Crocker," " ein ahnlicher Verfechter 
 der rohesten tjberproduktionstheorie." 
 
THE CAUSE OF HAKD TIMES. 103 
 
 In closing, it may be well to say tliat 
 no professional economist has ever publicly 
 recognized the validity of the theories and 
 arguments set forth in this book. On the 
 other hand. Prof. J. Laurence Laughlin, 
 Prof. Silas Mac vane, and Mr. T. B. Yeblen 
 have published attempted refutations of those 
 theories and arguments, and Prof. Arthur 
 L. Perry, Prof. W. G. Sumner, Prof. F. W. 
 Taussig, and Prof. Charles F. Dunbar have 
 privately expressed to this author their entire 
 dissent from his views, the last-named gen- 
 tleman having confined himself to a simple 
 expression of such dissent, and having re- 
 fused to enter in the slightest degree into a 
 discussion of the grounds of such dissent, ap- 
 parently deeming this author's views to be 
 entirely unworthy of his consideration. It 
 may be added that Mr. John A. Hobson, 
 whose two works are mentioned above, has 
 written this author that he has had a similar 
 experience with the English economists, no 
 one of whom, he says, " shows the least incli- 
 nation to give any consideration" to his 
 theory. 
 
104 THE CAUSE OF HARD TIMES. 
 
 Lest the reader should be surprised at 
 the Miiess of the foregoing statement of 
 the general repudiation of the author's views 
 by the professional economists, the author 
 desires to say that he does this only in order 
 to prevent these economists from protesting, 
 when the truth of the views here presented 
 finally becomes apparent to them, that they 
 were never foolish enough to deny such self- 
 evident propositions, but that they had always 
 maintained and asserted them. 
 

 INDEX. 
 
 Page 
 Ashley, PRof. W. J. His answer to a question 90 
 Atkinson, Edward. His view of general over- 
 production IS 
 
 Bergmann, Eugen von. His history of crisis 
 
 theories 102 
 
 BiLGRAM, Hugo. Eeference to book by . . . 102 
 Bowen, Prof. Francis. Reference to his 
 
 *' American Political Economy '' .... 100 
 
 Carnegie, Andrew. On over-production caused 
 
 by excessive machinery 30 
 
 His statement based on that of this author . 34 
 Reference to article by him 101 
 
 Chalmers, Dr. Thomas. Reference to his 
 
 works 99 
 
 Commerce. Competition of English and Ameri- 
 can capital in 73 
 
 Consumption. Productive and unproductive . 92 
 
 Cooke, Frederick H. Reference to article by 
 
 him . 101 
 
 CuMMiNGS, Prof. Edward. His question, and 
 
 his failure to answer it 90, 92 
 
106 INDEX. 
 
 Page 
 
 Demand. What economists mean by ... . 9 
 
 Remunerative demand 9 
 
 Falling off of, the immediate cause of hard 
 
 times 8 
 
 What may be done to increase demand . . 52 
 Depression in trade. Principal characteristics 
 
 of 7 
 
 Dunbar, Prof. Charles F. Has expressed 
 
 dissent from this author's views .... 103 
 
 Economy. Considered by political economists 
 
 to be the remedy for all evils 12 
 
 France. Not troubled by hard times after 
 
 Franco-German war of 1871 61 
 
 Frewen, Moreton. His view of general over- 
 production 18 
 
 Future. Prognostications as to the .... 85 
 
 General Over-Production. What is meant 
 
 by 15 
 
 Economists claim that it is impossible . . 16 
 
 John Stuart Mill on 16, 23 
 
 Prof. Silas Macvane on 21 
 
 Practical men believe that it has actually 
 
 existed 20 
 
 Shown to be possible 25, 28 
 
 A result of an excessive amount of ma- 
 chinery 25,28 
 
 Germany. Hard times in^ after the Franco- 
 German war of 1871 61 
 
INDEX. 107 
 
 Page 
 
 Hard Times. Principal characteristics of . . 7 
 How relief from may be obtained . . . 51, 58 
 Immediate cause of the recent hard times 51, 55 
 
 How those of 1873 arose 65 
 
 Hakvard Professor. Question propounded by 90 
 
 Hawley, F. B. Reference to articles by . . . 101 
 
 Hobson, John A. Reference to books by . . 102 
 
 His experience with English economists . . 103 
 
 Income-producing Investments. The vari- 
 ous kinds of 38 
 
 Desire for, the cause of excessive amount of 
 
 machinery 37 
 
 The field for, a limited one ... . . 38 
 
 Will remain crowded in the future ... 85 
 
 Monopolizing of 66 
 
 Effect of a reduction of the rate of income 
 
 from 68 
 
 Interest. Rate of, falls in hard times ... 8 
 Lower rates may be expected in the future . 86 
 
 Labor. Effect of shortening the hours of . 51, 54 
 Duty of government to find employment for 70 
 Probable behavior of, in the future ... 87 
 
 Laughlin, Prof. J. Laurence. Has published 
 
 attempted refutation of this author's views 103 
 
 MacCulloch, J. R. Reference to his works . 100 
 
 Machinery. Excess of 14, 25 
 
 When excessive in amount, causes over-pro- 
 duction 25 
 
108 INDEX. 
 
 Machinery — continued. Page 
 Run at a loss to save greater loss from stop- 
 page 25 
 
 Excess of, a result of excessive demand for 
 
 income-producing investments .... 37 
 Limit to the amount of, that can find profit- 
 able employment 39 
 
 Macvane, Prof. Silas. On general over-pro- 
 duction 21 
 
 Has published attempted refutation of this 
 
 author's views 103 
 
 Malthus, Kev. T. R. Reference to his works 98 
 Manufacturing Stocks. As an investment in 
 
 the future 86 
 
 Mill, James. Reference to his works ... 99 
 Mill, John Stuart. Held general over-pro- 
 duction to be impossible 16, 23 
 
 Deemed the point to be fundamental ... 80 
 His explanation of the *^ tendency of profits 
 
 to a minimum " 83 
 
 What he meant by general over-production 16 
 
 Reference to his works 99 
 
 Moffat, Robert Scott. Reference to book by 100 
 
 Mummery, A. W. Reference to book by . . 102 
 
 Over-Production. What is meant by . . . 16 
 
 Caused by excessive amount of machinery 25 
 
 Andrew Carnegie on this point ..... 30 
 
 David A. Wells on this point 32 
 
 Perry, Prof. Arthur L. Has expressed dis- 
 sent from this author's views .... 103 
 
INDEX. 109 
 
 Page 
 Price, Prof. Bonamy. His explanation of hard 
 
 times 11 
 
 His statement of comparative condition of 
 France and Germany after Franco-Ger- 
 man war 61 
 
 Reference to his works 100 
 
 Production. Excessive capacity of ... . 14 
 
 How it may be diminished 52 
 
 Productive Consumption. Defined ... 92 
 
 Railroads. Effect of hard times on ... . 8 
 
 Futm^e prospects of 86 
 
 Real Estate. As an investment in the future 86 
 
 RiCARDO, David. Reference to his works . . 99 
 
 Rich, Edgar J. Reference to pamphlet by . . 102 
 
 Robertson, John M. Reference to book by . 102 
 RoscHER, Prof. William. Reference to his 
 
 Political Economy 100 
 
 Royal Commission on Depression of Trade, 
 
 Report of 101 
 
 Saving. Desire for, may be excessive .... 42 
 
 Solomon on excessive 43 
 
 Effect of excessive ' . 44, 90 
 
 Extent to which saving is carried .... 47 
 
 Say, Jean-Baptiste. Reference to his works . 99 
 
 Smith, Adam. Reference to his works ... 98 
 Sumner, Prof. W. G. Has expressed dissent 
 
 from this author's views 103 
 
 Sweet, Edward F. Reference to article by . . 101 
 
110 INDEX. 
 
 Page 
 Tariff. Reasons for and against a protective . 71 
 
 Taussig, Prof. F. W. Has expressed dissent 
 
 from this author's views 103 
 
 Tendency of Profits to a Minimum ... 83 
 
 Trusts, Origin of 74 
 
 Effect of 52, 75 
 
 Under-consumption. What is meant by . . 16 
 
 Veblen, Mr. T. B. Has published an attempted 
 
 refutation of this author's views .... 103 
 
 War. As a means of relief from hard times 52, 53 
 
 Effect of Franco-German 60 
 
 Effect of our War of the Rebellion ... 63 
 
 Wealth. Effect upon, of excessive saving . 44, 95 
 
 Wells, David A. On over-production caused 
 
 by excessive machinery 32 
 
 His statement based on that of this author . 34 
 Unacknowledged quotation from this author 
 
 by him 69 
 
 Reference to his " Recent Economic Changes" 101 
 
 Wright, Carroll D. Reference to report of . 101 
 
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