PRICE, 25 CENTS. 
 
 —•->•—{■ J_ J-J h* $>•••>••— 
 
 Political Economy 
 
 --OF- 
 
 — o o ' 
 
 JOHN LORD PECK. 
 
 WITH A STATEMENT OF THE 
 
 LAW OF JUSTICE 
 
 -L—BETWEEN—— 
 
 CAPITAL AND LABOR. 
 
 Philadelphia : 
 
 Edward Stern & Co., 125 and 127 N. Seventh Street. 
 1879. 
 
Po litical Economy 
 
 -OF- 
 
 Democracy. 
 
 -BY- 
 
 JOHN LORD PECK. 
 
 WITH A STATEMENT OF THE 
 
 LAW OF JUSTICE 
 
 -BETWEEN- 
 
 CAPITAL AND LABOR. 
 
 PHILADELPHIA: 
 
 Edward Stern & Co., 125 and 127 N. Seventh Street. 
 
COPYRIGHTED 
 
 1879. 
 
PREFACE. 
 
 I N a late magazine is a somewhat remarkable article 
 upon German Socialism,* in which, after showing the 
 position of Socialism in the history of Political Econo¬ 
 my, and the contrast of its economic doctrines with 
 those of the English school, the writer closes with this 
 statement and prediction: 
 
 “ A new problem is to be solved. How can the 
 principle of Competition be so restrained that its bene¬ 
 ficial results may be retained, and its detrimental 
 workings hindered ? There is no country in the world 
 where the political and economic conditions are so 
 favorable for the solution of this problem as in the 
 United States. America must repudiate the central¬ 
 izing tendency of German Economy/’ (represented by 
 Social Democracy which would give to the government 
 the control of all industry) “ because that tendency is 
 opposed to the ideas upon which the government is 
 founded; but, on the other hand, another century of 
 unrestrained activity of private enterprise will itself 
 contradict the theory of freedom, and destroy that 
 government. From this dilemma must arise an Amer¬ 
 ican Political Economy,—an Economy which is to be 
 legal rather than industrial in its character.” 
 
 * By H. C. Adams, Ph. D. of Johns Hopkins University. Penn 
 Monthly , April, 1879. 
 
4 
 
 PREFACE. 
 
 An American school of Economy has long existed, 
 having a purpose to “ hinder the detrimental workings 
 of free competition,” at least in its international action, 
 by legal rather than industrial means. And in the 
 following pages an attempt is made to indicate how, by 
 the coming further development of American Economy, 
 further legal means will be discovered for solving the 
 problem in such a way that the laissez faire principle will 
 be allowed its full operation to the individual in ac¬ 
 quiring wealth sufficient for a competence, while the 
 state shall interfere to prevent great corporations from 
 becoming practical monopolies, and to restrain the few 
 who possess great capitals and great advantages from 
 robbing the many of their natural opportunities by 
 continued accumulation. 
 
 The belief that class distinctions are to become 
 permanent and forever exist in this country because 
 they have always existed in other countries, even 
 though taught by genuine friends of the lower classes, 
 is not to be accepted without opposition. It is first to 
 be ascertained what can be done toward the establish¬ 
 ment of a practical as well as theoretical equality. 
 
 This essay was written some six months ago, and 
 the prediction above referred to was thus, (if the ex¬ 
 pression is allowable), beginning to be realized before 
 it had been publicly made. 
 
 August , 1879. 
 
The Political Economy 
 
 —OF— 
 
 Democracy. 
 
 T HE first school of Political Economists, and the 
 first set of doctrines relating to Economy, origi¬ 
 nated in Commerce or Foreign Trade. That school was 
 called the Mercantile, and the object of its teachings 
 was to bring as much gold and silver as possible into a 
 country, and to send out as little as possible in 
 return; not primarily for the benefit a plentiful circu¬ 
 lation of money would bring to the masses of the 
 people, but to enrich and strengthen the state treasury, 
 the king, and the government. The next school that 
 arose—the Physiocratic—came from a natural reaction 
 against the first, and represented predominantly the 
 interests of Agriculture. The third school took its 
 rise in England at a time when modern industry, hav¬ 
 ing already gained considerable development, was 
 starting into a new and more rapid growth from the 
 perfection of the steam engine, and the application of 
 important machines to the manufacture of fabrics. 
 Whatever may have been the purpose of its founder, 
 Adam Smith, the doctrines of Free Competition and 
 Non-interference by Government, which he advocated, 
 with others brought out by his disciples, came to be a 
 set of ideas representing and favoring for the most 
 part the interests of Manufacture ;—not manufacture 
 in its weak and undeveloped state, but comparatively 
 
6 
 
 THE POLITICAL ECONOMY 
 
 full-grown and with a consciousness of strength. Eng¬ 
 land at this time, after having encouraged and pro¬ 
 tected her manufacturers for a long period, was fast 
 gaining the first place as a manufacturing country. 
 Her insular position, limited territory, and maritime 
 habits, with possession of coal and iron, naturally im¬ 
 pelled and enabled her to assume this leading position. 
 
 As England grew up to industrial superiority she 
 grew into the adoption of laissez faire by the govern¬ 
 ment, and free trade or competition between nations and 
 individuals as the first great truths of Economy. As ex¬ 
 cessive trade and manufacture, by its reaction, brought 
 on periods of hard times, in which the poorest classes 
 suffered from destitution and consequent disease, the 
 Malthusian doctrines of a limited wagesfund , and of 
 the natural increase of population faster than increase 
 of food-supply to support it, came into existence, and 
 were accepted by the teachers of British public opinion. 
 As capital, work, and population became centralized in 
 manufacturing towns, and land passed into the hands 
 of the few the Ricardian theory of rent , a justification 
 for the constantly increasing rent of land, was also de¬ 
 veloped, accepted, and taught. The doctrine that 
 foreign trade would regulate itself, and that one coun¬ 
 try could not rob another through its trade, has in 
 later years become a favorite theory with the econo¬ 
 mists of a country that possessed the power, and 
 wanted the opportunity, to rob nearly every other with 
 which it might deal. It was no less natural that a 
 country possessing abundant capital, and able by its 
 superior industrial development to draw gold and silver 
 from other countries to itself, should believe with un- 
 
OF DEMOCRACY, 
 
 7 
 
 faltering faith in the necessity and virtue of a hard- 
 money currency under all circumstances, and look with 
 doubt and scorn upon one based more or less upon 
 credit. 
 
 These are the principal tenets of the orthodox 
 British Free Trade school. Superimposed upon the 
 ideas of previous schools, and modified in some degree 
 by later investigations, they have become the predomi¬ 
 nant ideas in Political Economy as it is taught in Eu¬ 
 rope and America at the present time. They are the 
 special creed of Trade, of the Wealth and Aristocracy 
 that grows out of trade, and of succesful Manufacture 
 controlled by wealth—the doctrines that in every way 
 favor the selfish interests of Wealth, Trade, and Aris¬ 
 tocracy. 
 
 Whether a principle is accepted because it is true 
 —or because it is adapted to existing conditions, men¬ 
 tal or physical, cannot here be discussed; but the stu¬ 
 dent of Economy can hardly fail to discover that, in 
 regard to these views at least, they have agreed with 
 the natural instincts and wishes of the classes by whom 
 they have been accepted as true. 
 
 Opposed to the English system of ideas, are the 
 teachings of the American School, originated and led 
 by Henry C. Carey. A denomination holding some 
 principles in common with this exists with consider¬ 
 able strength in Germany, and to some extent also in 
 Italy and France, where it has been developed and 
 influenced largely by the writings of Mr. Carey, trans¬ 
 lated in those countries. That it, like the American, 
 will continue to grow and its influence to increase, is 
 
8 
 
 THE POLITICAL ECONOMY 
 
 guaranteed by the inductive and more strictly scien¬ 
 tific character of its method, which is historical, and 
 deals with conditions as they actually exist, not theo¬ 
 retical and doctrinaire, as has been hitherto mainly 
 the character of the English methods. Without claim¬ 
 ing these branches as being one with our own school, 
 or classifying them further, I will speak of the Ameri¬ 
 can system of doctrines as it has been developed and 
 now exists in this country. 
 
 Mr. Carey is the only one of our economists who 
 has done any large amount of original work in this 
 science, though it is not, of course, claimed that he is 
 the author of all the principles taught by the school. 
 Yet by his elaboration of them—his own and others 
 —and combination of the whole into a harmonious 
 system, having one common spirit, purpose, or ten¬ 
 dency, he has gained as proper a title to them as Mr. 
 Darwin has to that of Natural Selection, or Mr. Spencer 
 to the philosophy of Evolution. His great merit con¬ 
 sists in having discerned more clearly than any other 
 one the true character and animus of Trade, of Inter¬ 
 national trade more especially, and in having faithfully 
 exhibited it as predominantly unprincipled in its nature, 
 becoming in its extreme forms of development indi¬ 
 rect robbery—a sort of national vampirism—a civil¬ 
 ized and polished manifestation of the spirit of War 
 and Rapine of former ages—a form of selfishness 
 having greater evil results than almost any other. 
 From this discovery, and from the connection between 
 Trade and Political Economy, there springs up, by 
 natural reaction, a set of views taken from an opposite 
 standpoint, governed by an opposite motive, and origi- 
 
OF DEMOCRACY. 
 
 9 
 
 nating doctrines of an entirely opposite character and 
 tendency. Mr. Carey thus appears as the founder of 
 a system which, by natural outgrowth becomes, as 
 will be seen farther on, the Political Economy of De¬ 
 mocracy. 
 
 I have no purpose of discussing the truth or scien¬ 
 tific value of either of these sets of opposing principles, 
 nor of estimating how much of truth or error may be 
 connected with any particular one. I wish simply to 
 show, by contrasting them, what is their natural ten¬ 
 dency when adopted and acted upon as truths, and 
 afterward to glance at some prospective developments. 
 
 Against the British doctrine of free trade or com¬ 
 petition between nations and individuals, giving to the 
 rich, strong, and skilled, whether individuals or nations, 
 the power to crush and rob those who are poorer and 
 weaker, Mr. Carey opposed that of Protection to 
 Home Industry—not a scheme of duties to raise rev¬ 
 enue for a government or to sustain some monopoly, 
 purposes for which duties have always been resorted 
 to—but as a means and a policy to enable countries 
 weak in capital, skill, and industrial development, to 
 combine and safely use their small capitals, to make 
 the most of what industrial talent they possess and 
 encourage the evolution of more, to produce as great a 
 variety of industries as is practicable, and thus create 
 employment for every kind of capacity, with the largest 
 opportunity and demand for labor. The argument for 
 this is, that it tends toward the distribution of wealth 
 among the laboring classes and men of small means, 
 ultimately leading to the equality of every country 
 
IO 
 
 THE POLITICAL ECONOMY. 
 
 with every other in the production of all those commo¬ 
 dities not dependent upon climate or peculiar natural 
 resources, thus abolishing a large share of that distant 
 and foreign trade which now goes toward inequality, 
 by building up big fortunes for merchant princes, ship¬ 
 owners, and railroad kings. Still further, this policy, 
 by favoring Labor, enables the poor man to get pos¬ 
 session of land, thus tending toward equality in the 
 distribution of real estate, besides giving to the small 
 farmer his best opportunities, by creating a market for 
 his products in the vicinity where they are grown. In 
 short, by restricting that power of the superior country, 
 which, if left free operates to crush out the worker 
 and small capitalist of a weaker nation, Protection 
 leaves these latter classes free to use their opportuni¬ 
 ties, and to make such approximation as they can 
 toward equality. In still fewer words, it is freedom 
 for the weak against freedom for the strong. 
 
 This, be it observed, is claimed as its natural 
 ,tendency, and its actual operation as between nations. 
 But the logical outcome of it should be to make local 
 centres of industry, with a balance of agriculture and 
 manufactures, at every principal town and village, 
 instead of allowing great manufacturing centres to 
 grow up, with their immense corporations, where the 
 factory system, with the close competition of both 
 capitalists and laborers among themselves, develops 
 worse evils than those of the fishing and hunting 
 barbarian life, which has no industry at all. Why 
 does the policy fail here ? Because the smaller com¬ 
 munities within a country have no efficient means of 
 resisting the competition of these great centres. This 
 
OF DEMOCRACY. 
 
 11 
 
 is the one weak point in the plan. Why should we 
 need any more protection against the competition of 
 big corporations and capitals outside the country, than 
 against those of Lowell and Lynn within our borders ? 
 is the question of the theoretical free-trader. And, 
 aside from the consideration of certain national differ¬ 
 ences, there is no answer and can be none, except this 
 —that there should be a policy and action in the 
 smaller communities to assist the establishment of 
 their own manufactures, and that whatever power they 
 may have through the use or remission of local taxa¬ 
 tion, should be employed for this purpose, till a variety 
 of industries, with a balancing agriculture, should exist, 
 so far as natural conditions allow, all over the country. 
 This, I repeat, is, in opposition to the interests of big 
 manufacturing and trading centres, the natural result 
 of logically carrying out the theory. And that such 
 general distribution of capital and industry tends 
 towards equality in the possession of property, is suf¬ 
 ficiently evident. 
 
 As I did not propose to defend the truth of this or 
 any other theory or doctrine, neither do I need to state 
 in what ways this policy may be abused, what mis¬ 
 takes may be made in applying it, or how far it may 
 be reconciled with a certain amount of international 
 free trade, especially between differing climates. 
 
 In opposition to the English theory of a limited 
 wages-fund to be divided among the employees, giving 
 to them little or much, according as the laboring popu¬ 
 lation are many or few in number, and making natu¬ 
 ral increase of wages impossible, Mr. Carey taught 
 
12 
 
 THE POLITICAL ECONOMY 
 
 this doctrine:—that in the natural growth of society, 
 uninterfered with by the oppressions of the soldier, 
 trader, slaveholder, or politician, (for these are all 
 put in the same category), there is a constant tendency 
 to increase of wealth and to an improvement in the 
 condition of all classes; that of this constantly increas¬ 
 ing production from combination, and from use of 
 machinery, Capital receives a share that increases in 
 absolute amount, but decreases in relative proportion 
 of the whole; while the laborer receives a share not 
 only increasing in quantity, but in relative proportion 
 of the whole also—a constantly increasing wages-fund 
 both in amount and rate—thus giving him increasing 
 opportunity for improvement of his condition, the 
 whole process being in harmony with the natural pro¬ 
 gress of all things. 
 
 The theory of rent put forth by Ricardo, assumed 
 that Agriculture commenced upon the richest lands, 
 and that as these became occupied population was 
 pushed out upon the poorer ones; the necessity of 
 this movement giving to the owner of the best the 
 power and right to demand rent for them. Increase of 
 population compels the cultivation of poorer and still 
 poorer soils, enabling the landlord to increase and con¬ 
 tinue increasing the rent in proportion to natural value 
 of the land. The tendency is here towards a steadily 
 growing inequality of condition, the land holder taking 
 a larger and still larger share of the soil’s produce for 
 rent, and leaving to the laborer a share, whether as 
 wages or otherwise, that is constantly becoming smaller. 
 
 Mr. Carey, on the contrary, showed that Agricul- 
 
OF DEMOCRACY. 
 
 13 
 
 ture began, not upon the richer soils, but the more 
 easily cultivated poorer ones; that as society acquires 
 numbers, wealth, knowledge, improved means and 
 methods, cultivation advances upon the more difficult 
 but more fertile and productive low lands of the river 
 bottoms. The normal tendency is therefore in the 
 opposite direction, towards greater production, diminu¬ 
 tion of rent in proportion to produce of land, and 
 approach, however slow, toward equality of condition 
 between landlord and laborer. This again, is in har¬ 
 mony with that natural progress of things by which 
 the capitalist receives a constantly diminishing share 
 in the profits of manufacture, and by which the rate 
 of interest on money tends equally to decrease. 
 
 The Malthusian teaching concerning population — 
 that human creatures multiplied at a much more rapid 
 rate than supplies of food could be produced to subsist 
 them, and that hence in fully settled countries the 
 “ over-production ” must emigrate or be killed off by 
 starvation, war, or pestilence, in order to keep the 
 number down to the proper limit, has been modified 
 somewhat by the biological science of later years, so 
 as to show probability of a much slower rate of increase 
 for the future among the intellectual and wealthy 
 classes. But the influences operating toward this re¬ 
 sult have no effect upon the poor and ignorant; these 
 will continue to increase. John Stuart Mill, with his 
 strong sympathies for the workingman (but stronger 
 regard for the rights of capital) could see no hope of 
 permanently bettering his condition, no matter what 
 else might be done, without this “ indispensable ” re- 
 
14 THE POLITICAL ECONOMY 
 
 quirement of a restraint upon increase of population. 
 At the present time, some of the best friends of the 
 worker in England, are making active efforts, even 
 with the law and the government against them, to 
 teach the necessity and the methods of such restraint. 
 
 Now, it is not necessary to discuss what motives 
 may or may not properly be placed before those who 
 are actually in hopeless bad circumstances, or before 
 that larger class of both poor and rich who are in an 
 equally bad state of physical, mental, or moral consti¬ 
 tution and health, to restrain them from reproducing 
 misery. Presented thus, without regard to class or 
 social condition, perhaps nothing could be said against 
 restraint. But to show the spirit of the teaching, the 
 “ true inwardness ” of it when held out as a doctrine 
 to be specially urged upon the working classes, let us 
 take these few considerations: 
 
 First, that nowhere in modern Europe is there any 
 country so thickly populated but that there still remain 
 large quantities of uncultivated land, and especially is 
 this true of England, the home of the theory. 
 
 Second, that nowhere in modern Europe, not even 
 in Ireland, has there ever been any such pressure 
 of abundant population upon food-supply but that 
 money could have bought all the food that was needed. 
 Whatever starvation there has been was not because 
 there was no food obtainable anywhere, but because 
 those who starved had not the means to purchase. It 
 was inequality of wealth, not insufficiency of food. 
 
 Third, that however bright, healthy and beautiful 
 children a poor couple maybe capable of bringing into 
 the world, if fortune, whether from their own fault or 
 
OF DEMOCRACY. 
 
 15 
 
 not, is against them they are allowed no moral right 
 to propagate; while a rich couple (or the rich un¬ 
 coupled) however diseased, deformed, vicious, insane, 
 or idiotic their children may be, are allowed the moral 
 right to curse the world with any number of them, 
 simply because the parents are able to support them, 
 though education, in any sense, may be an impossibility. 
 
 To this doctrine, which insults every drop of blood 
 and every spark of manliness in the workingman’s 
 nature—insults him to the very core—Mr. Carey 
 opposed not only the biological truth that increasing 
 development of brain and nerve, and improvement in 
 the quality of the human being, would lessen his pro¬ 
 lificness in numbers; but further, that in the natural 
 progress of society, protected as far as may be from 
 the spoliations of foreign trade (and the three other 
 plagues before mentioned) man’s power over the soil 
 became increased by the application of science, like his 
 power over mechanism ; that the farmer’s land was his 
 instrument of production, to be constantly made more 
 productive by scientific agriculture, and by improving 
 the quality of the products; that this, with the in¬ 
 creasing ability to conquer and cultivate the richer 
 soils of the low lands, as well as to make the poorer 
 ones more fertile ; together with the possibility of pro¬ 
 ducing an unknown but immense amount of food by 
 fish-culture; were sufficient indications that Nature 
 had made provision for as many future inhabitants of 
 the land as were ever likely to stand upon it. Such 
 views allow the poor man of the coming generations an 
 equal right to live with the rich one ; and, in connection 
 with others here presented, tend to give him something 
 like equality in the means of making good his claim. 
 
i6 
 
 THE POLITICAL ECONOMY 
 
 To the theorizing of the Free Trade economists 
 that international trade regulated itself if let alone, and 
 that one country could not rob another, Mr. Carey re¬ 
 plied by showing from history, statistics, and present 
 facts that one nation, having industrial development, 
 could rob another, which had not, by trade as truly 
 and effectively as by war; that England got the best 
 of all those countries that traded with her on Free 
 Trade terms as really as a sharper swindles a green¬ 
 horn, or the frontier trader of the West the Indians 
 whose “ raw materials ” he buys. Only in degree is 
 there difference. It is this trade policy that has made 
 England the richest country, relatively, on the globe, 
 and her lowest classes the most degraded; for it tends 
 in every way toward inequality, both at home and in 
 the countries that submit to it, enriching the trader 
 and transporter by impoverishing the producer; 
 whereas, the opposite policy favors the increase of 
 domestic exchange, by increasing the amount of pro¬ 
 duction and distributing it more equally. 
 
 That the teachings of British Economy in regard to 
 land do not encourage the distribution of it, is made 
 sufficiently clear by the state of things in Britain it¬ 
 self, where, for the last hundred years, it has been 
 passing from the hands of the small proprietors into 
 those of the aristocracy and the retired merchants, 
 and where there is now a smaller proportion of it held 
 by mechanics and by the workers upon it than in 
 any other part of the world. Indeed, so much is this 
 in harmony with the spirit of Free Trade Economy 
 that John Stuart Mill, its most humane and liberal 
 
OF DEMOCRACY. 
 
 17 
 
 representative, could suggest no better remedy for the 
 inequality than that the unclaimed barren commons 
 still existing should be divided up into small patches, 
 and ownership secured to those who would settle upon, 
 fertilize, and cultivate them till they became of suffi¬ 
 cient value to need a sure title. 
 
 On the other side, Mr. Carey, besides showing that 
 in a natural, healthy society the tendency is always 
 toward division and distribution of land, has always 
 claimed that the policy of Protection increased that 
 tendency, helping to make land easy of acquirement 
 to all who needed to work upon it or make a home. 
 That he and his disciples have favored and advocated 
 the action of our own government in making the pub¬ 
 lic lands free to settlers there can be no doubt. 
 
 Hard money , and a limited circulation of paper 
 based upon it, is the natural policy of those who deal 
 in money. Every few years the wealth of England 
 overflows in loans to other countries, because so little 
 of it is distributed (except in charity) among her own 
 poorer classes. Those who own this capital are inter¬ 
 ested in hard money, for it secures them the full value 
 of their property, and, it may be contended, more than 
 the full value, while they have no interest in a paper 
 money, containing, as paper money always does, more 
 or less of the element of credit. The large traders, who 
 get their credits by bank discounts, and whose circu¬ 
 lating medium consists of checks, drafts, and bills of ex¬ 
 change, cannot be expected to appreciate fully the value 
 of that small-money circulation which to the farmer, 
 mechanic, and small merchant is so essentially neces- 
 
i8 
 
 THE POLITICAL ECONOMY 
 
 sary for business and labor. Hence the connection be¬ 
 tween the state of affairs and the policy. It leads 
 toward inequality by preventing or limiting that 
 natural increase of the circulating medium with in¬ 
 crease of population and production which gives to 
 Labor its natural opportunity for increase of wages. 
 
 With different motives and views, Mr. Carey and 
 his school have represented in all earnestness that 
 a full, free, and rapid circulation of money was of the 
 greatest importance to the growth and prosperity of 
 society. They have advocated a policy that would 
 prevent the rich and spendthrift classes from sending 
 away our gold and silver for foreign luxuries, and in¬ 
 stead by retaining it in the country furnish a safe basis 
 for a paper currency. Mr. Carey was himself the first 
 to protest against that wholesale contraction of the 
 Greenback currency which followed the close of the 
 Rebellion, and he, if not the first, was one of the first, 
 since the recent agitation of the subject began, to pro¬ 
 pose a National credit money wholly independent of 
 gold and silver, and banks. He has also taken special 
 pains to show that the expansion and contraction of 
 a false credit by the banks—a credit resting wholly 
 upon the credit of their depositors, not their own— 
 that this, and not any normal or ordinary increase of 
 the currency, has been the principal cause or favoring 
 condition of those business revulsions which have oc¬ 
 curred periodically ever since the advent of moderm 
 methods in banking. 
 
 That easy money brings with it fuller employment 
 and better pay to the workingman, favoring the im¬ 
 provement of his condition and elevation of his char¬ 
 acter, is almost too plain to need saying. 
 
OF DEMOCRACY. 
 
 19 
 
 Looking again at the connection between social 
 conditions and ideas adapted to them, we may see that 
 England, having gained an industrial development and 
 power superior to that of other countries, naturally be¬ 
 comes the great middleman of the world, aspiring to 
 buy raw materials and supplies from other countries, 
 work them up into manufactured articles, and sell these 
 again, mainly to other countries, doing the transpor¬ 
 tation both ways, and furnishing the money to carry 
 on the business. Those who supply the raw materiais 
 pay her two profits on transportation, a third to 
 the importer, another to the manufacturer, still 
 another to the exporter of manufactured goods, and 
 one, two, or three more to the banker who furnishes 
 the funds ; while themselves losing their resources, im¬ 
 poverishing their soil, limiting their industry, and de¬ 
 grading labor, all in greater or less degree. The 
 Political Economy that has grown up along with this 
 policy and in harmony with it, representing the selfish 
 interests of the wealthiest classes, spreads into other 
 countries as they grow in wealth and trade, and manu¬ 
 facture passes into the control of capital. In this 
 country its principal centres of influence are the cities 
 of New York and Chicago—one the great centre of im¬ 
 porting trade, the other the largest grain-shipping centre 
 of the West. Here, as in Europe, the Economy goes 
 along with the material interests of the classes indi¬ 
 cated. Indeed, it is no more natural that a man brought 
 up in a distillery should believe in Free Liquor than 
 that one educated in London or New York should be¬ 
 lieve in Free Trade and Hard Money. To expect 
 otherwise would be like expecting grapes from thorns 
 or figs from thistles. 
 
20 
 
 THE POLITICAL ECONOMY 
 
 The later literature of England, even aside from 
 that pertaining to Economy, is tinctured more or less 
 with the poison of this Trade philosophy. Her best 
 men, like Mill and Spencer, are fettered in their thought 
 and hardened in their feelings by a disgusting rever¬ 
 ence for the assumed rights of Trade, Wealth, and 
 Aristocracy. Our own country absorbs so largely of 
 English literature of all kinds that our educated classes 
 imbibe the same English teaching and English spirit. 
 As the result of this education, our literary “culture” 
 sneers pretentiously at American Economy, although 
 shortsightedness and sophistry can be shown to char¬ 
 acterize all the leading Free Trade notions. New 
 York, our literary as well as trade centre, is in charac¬ 
 ter and sentiment more like an old-country town than 
 an American. Wealth is there the great god that 
 commands more homage than any other. The late 
 utterances coming from its press, about the power of 
 the banking influence, the advisability of adopting the 
 English method of capital-farming, and the necessity 
 that Labor should be contented with more humble 
 means of living, etc., are all in this view intensely sig¬ 
 nificant. The doctrine and policy that compels the 
 degradation of the mechanic, farmer, and laborer, breeds 
 the harsh and arrogant spirit which would press them 
 down to still lower grades. In short, there is no need 
 of hesitation in describing the Orthodox English Po¬ 
 litical Economy as the creed of selfishness, caste, arro¬ 
 gance, robbery, and brutality. 
 
 Can it be doubted that a system whose ideas teach 
 the opposite of all this is the doctrine that tends to¬ 
 ward the elevation of the working masses, and toward 
 greater equality in the condition of all ? 
 
OF DEMOCRACY\ 
 
 21 
 
 Let us note a few more of the contrasting charac¬ 
 teristics of the two systems. 
 
 British Economy and policy encourage foreign 
 trade, which is always accompanied by the greatest 
 amount and distance of transportation. American 
 Economy looks towards the relative decrease of foreign 
 commerce, and increase, both in amount and propor¬ 
 tion, of the domestic, in which the small merchant 
 finds most opportunity and real demand for his ser¬ 
 vices. But further, it looks towards decrease in the 
 whole number of middlemen, for it contemplates the 
 location of producer and consumer in as near prox¬ 
 imity as may be to each other, where their exchanges 
 can be made with the least necessity for merchant or 
 transporter. The middleman’s tax is large in propor¬ 
 tion as the distance of transportation is great. To re¬ 
 duce this expense is to divide the amount saved between 
 producer and consumer, adding to the pay of one and 
 diminishing cost to the other, making a more equal 
 distribution. 
 
 The Free Trade teaching entirely ignores the waste 
 of natural resources. It justifies and encourages the 
 destruction of forests, impoverishment of soils, and 
 exhaustion of mines in one country to furnish raw 
 materials at half their value to be worked up in an¬ 
 other. And the only excuse for such waste is that 
 Nature has provided these materials so generously that 
 the woodsman, farmer and miner by thus robbing the 
 earth of its timber, its fertility of soil, and its minerals 
 can buy the manufactured goods more cheaply than 
 they can make them themselves. Now, these resources 
 belong by natural right to the whole people. They 
 
22 
 
 THE POLITICAL ECONOMY 
 
 belong to the generations of the future as well as to 
 that of the present. The workers of the future will 
 need timber, they will need farms that are not barren, 
 they will need gold, silver and other minerals. To rob 
 the earth of these now to buy foreign goods with them, 
 thus giving half their value into the hands of those 
 who are already too rich, is at the same time to rob 
 the workingman’s children, and his children’s children. 
 Would it not be better to encourage a manufacture in 
 the vicinity of those resources where one-half of them 
 would buy the same quantity of goods, and the other 
 half could be saved for the future. At least that seems 
 to me to be taught by American Economy. 
 
 Every man by being born into the world has a natu¬ 
 ral right to a share in these natural resources. Some¬ 
 where and in some way, on the land or otherwise, he 
 has a right to invest his labor so that he can live by 
 it. His right to labor and his right to live are virtu¬ 
 ally one. If he is poor the opportunity to labor is to 
 him the most important thing of all. Yet this matter 
 is almost totally disregarded by the writers of the 
 British school. The only right of the laborer they 
 appear to recognize is his right to buy where he can 
 buy cheapest, and sell where he can sell dearest, 
 whether he has anything to buy with or riot—whether 
 or not he has any chance to sell his labor. 
 
 Mr. Carey and his school have always made the 
 opportunity to labor a point of the first importance. 
 They have urged their policy on the ground that it 
 created a demand for labor, and for labor of various 
 kinds, the tendency being toward constant employ¬ 
 ment, rise of wages, and improvement of condition. 
 
OF DEMOCRACY. 
 
 23 
 
 The orthodox English Free Trade system of Politi¬ 
 cal Economy has, for its one grand object, the quickest 
 production and greatest accumulation of Wealth , re¬ 
 gardless of its distribution or of the ultimate conse¬ 
 quences to those who produce it. The selfish instincts 
 only are appealed to, with such results as might be 
 expected from unrestrained selfishness—the greatest 
 extremes of riches and poverty, luxury and degrada¬ 
 tion, discord, misery, and prospective anarchy. The 
 system of Mr. Carey has, for its first and greatest 
 object, the welfare of Man, and the distribution of 
 wealth in a way to benefit and ' elevate the masses ; to 
 give comfort, self-respect, and development to those 
 who need it most. From first to last, this purpose 
 runs through everything. The unselfish motive here 
 generates ideas whose natural effect is to promote 
 justice, equality, harmony, and the permanent pros¬ 
 perity of all the various parts of society. 
 
 [It must not be supposed, from the general tenor 
 of my statement, that there is any one-sidedness in the 
 views of American Economists—that capital is under¬ 
 valued, or that the merchant, transporter, and banker 
 are not considered equally useful with any others, so 
 far as their work is necessary. It is, rather, a more 
 just and liberal all-sidedness that animates them in 
 their disposition to uphold and strengthen the weaker 
 parts of the social structure in a fairer balance against 
 those that are naturally strong and liable to overbear.] 
 
 Gathering up now the principal aspects of the two 
 opposing systems, to take a more concentrated view 
 
24 
 
 THE POLITICAL ECONOMY 
 
 of them, let me repeat that one, the English, is rela¬ 
 tively metaphysical, narrow, theoretical, and doctrin¬ 
 aire—the other broad, historic, inductive, scientific, 
 practical. One advocates freedom for the rich and 
 powerful class—the other protection for the poorer 
 and weaker classes. One glorifies trade and favors 
 the middleman at the expense of all others—the other 
 stands by the producer and producing consumer. One 
 represents the policy of Capital, which results in dis¬ 
 cord—the other that of self-respecting Labor, which 
 makes for harmony. One is the Economy of waste¬ 
 fulness, and robbery of the soil—the other saves re¬ 
 sources, and utilizes labor. One is short-sighted, 
 looking only to present money-making—the other is 
 sagacious, contemplating the needs and welfare of both 
 Present and Future. One tends to the cheapening of 
 raw-materials, labor, and humanity—the other towards 
 raising the value of all three. One has in it the spirit 
 of selfishness—the other that of unselfishness. One 
 is Malthusian—the other human. One has for its only 
 object Wealth—the other for its first great object 
 Man. 
 
 British Economy ends in the dismal—American in 
 unlimited progress, success and hope. One holds out 
 the policy that goes with centralization of wealth and 
 power, with aristocracy, corruption, practical slavery, 
 and decay—the course and end of all the old nations 
 of the past—the other, that of democracy, of freedom, 
 of moral progress, of equality in property, education, 
 development, influence, position—universal equality 
 and national immortality. 
 
 However slight may be the effect of any one of the 
 
OF DEMOCRACY. 
 
 25 
 
 ideas here referred to, however strong or feeble the 
 influence from the whole of either system taken to¬ 
 gether, the fact remains that the resulting tendency is 
 all in one direction. Let us then reflect that central¬ 
 ization of wealth, and European inequality is actually 
 growing upon us in all the older and richer portions 
 of our country; that equality before the law is almost 
 useless without something like equality in property, 
 for the rich man can beat the poor and cheat him of 
 justice in nearly every case where they come together 
 before the courts ; that inequality in education leaves 
 the ignorant to become the dupes of the demagogue, 
 and makes equal suffrage little better than a delusion, 
 depriving the wisest men of all proper share of guiding 
 influence; that social inequality is the sole cause of 
 that universal extravagance, display, and snobbishness, 
 which, whether in themselves or the rich, is in either 
 case a curse to the poor; that inequality of moral 
 development, besides keeping our honestest men out of 
 public affairs at one extreme, at the other adds the 
 great burden of crime to all else from which we suffer. 
 And when we consider, also, that sufficient property 
 to allow of comfort and partial leisure is almost indis¬ 
 pensable to the attainment of intellectual, moral, or 
 social equality, the importance of a set of ideas that 
 can properly be called the Political Economy of Democ¬ 
 racy or Equality, can hardly be over-estimated. 
 
 I do not assume to represent these teachings pre¬ 
 cisely as Mr. Carey and others have stated them, or as 
 any one beside myself would state them. Neither, as 
 before said, do I propose to offer any of the evidence 
 
26 
 
 THE POLITICAL ECONOMY 
 
 on which they rest. That evidence is to be found in 
 the works of Mr. Carey and various writers upon 
 National Economy. My object is, instead, to induce 
 others to examine these proofs, and ascertain for them¬ 
 selves if the doctrines are true, and if they have any 
 such bearing as is here represented. A certain portion 
 of our people should be especially interested in doing 
 this. 
 
 A new political party has sprung up in this country, 
 in a considerable degree owing its birth and its inspira¬ 
 tion to men of the American school. It assumes to 
 represent Labor and to be devoted to the welfare of 
 the producing classes. If there is any such opposite¬ 
 ness of character in the two leading systems of Politi¬ 
 cal or National Economy as I have asserted, the men 
 of this party should make themselves sure of it as 
 soon as possible. Furthermore, this party is, for other 
 reasons, directly interested in Political Economy as no 
 former party has ever been. Its very life and success 
 depends upon it having this kind of knowledge. Only 
 by having it can its leaders know what are the true inter¬ 
 ests of Labor, and how the masses are cheated, in a 
 hundred ways, out of their rights, opportunities, and 
 advantages. Only by having it can the people tell 
 whether they are led by honest and capable men, or 
 swindled by politicians as heretofore. Only by the 
 help of this knowledge can the party inaugurate a new 
 monetary policy or policy of any kind, in place of that 
 to which they are opposed, that will be permanently 
 successful. Only by having it can they avoid the mis¬ 
 takes natural to a new party composed so largely of 
 men just beginning to think and to learn upon Eco¬ 
 nomic subjects. 
 
OF DEMOCRACY. 
 
 27 
 
 Besides the men of this party, all men of other par¬ 
 ties, who have not a selfish interest in the teaching and 
 policy of a selfish system, should have both a selfish 
 and unselfish interest in understanding this science 
 sufficiently to judge if there are in it any such opposite 
 drifts as have been described. 
 
 The American school, however, has not yet fur¬ 
 nished the whole of the Political Economy of Democ¬ 
 racy. Mr. Carey laid a noble foundation, and raised a 
 large part of the superstructure. The growth of his 
 influence, though slow, is none the less likely to be 
 sure and lasting; and his work will not in the present 
 age and country long wait for helpers. Some small 
 additions to it have already been made, and some 
 things of importance are likely to be developed in the 
 future. In taking a hasty glance at these last, how¬ 
 ever, it is necessary to begin with a few words upon 
 the Function of Government as viewed from the stand¬ 
 points of the opposing denominations. 
 
 [It may be well also to state that I am not now, or 
 any farther, even attempting to represent views for 
 which any one but myself can be held responsible.] 
 
 According to the general teaching of the English 
 economists, Government has no function in regard to 
 industrial and mercantile affairs except the enforcement 
 of contracts, and protection of the right of unlimited 
 free competition, however fierce and destructive. Man's 
 right to buy and sell is his most precious right, and 
 must be preserved whoever may suffer. It is assumed 
 
28 
 
 THE POLITICAL ECONOMY 
 
 that the best man will win in the struggle for exist¬ 
 ence (that is, wealth) and thus the survival of the fittest, 
 in agreement with the law of Natural Selection, 
 will be secured. The practical result of the laisser 
 faire policy is that not only the weak and inferior in 
 brains, character, and energy, but also those who are 
 weak in inherited capital, rich friends, and opportuni¬ 
 ties are crushed out and kept down, while the few 
 strongest, with the largest capitals, maintain their posi¬ 
 tion and thrive. The process may be seen going on 
 in any of our cities or large towns, and is sometimes 
 described as “ the big fish eating up the little ones.” 
 Ultimately, in a fully settled country it comes to this— 
 that only the few who have large capitals can do any 
 business of any kind, all others becoming hirelings 
 upon the employer’s terms, and practically slaves—a 
 true “ Commercial Feudalism.” 
 
 The economists of the American school assume 
 that Government has a function in providing for the 
 common welfare as well as protecting the right of the 
 individual, which extends to industrial and commercial 
 matters as well as to all others.* Any action of the 
 individual’s freedom that is injurious to the collective 
 well-being is subject to correction, even though tech- 
 
 * That class of people who believe by instinct in everything called 
 “ free,” and who are anxious for the removal of all governmental re¬ 
 straint, should particularly take notice that in commerce and industry 
 the great capitalists, the speculators, swindlers, monopolists, etc., really 
 make war upon society by abuse of free competition, robbing not only 
 its poor and simple, but its more honest, truthful, and worthy members 
 in a way that ordinary law does not reach, and which requires the in¬ 
 tervention of the central power as truly as does war from an outside 
 enemy. 
 
OF DEMOCRACY. 
 
 29 
 
 nically no right of another has been violated. The 
 right of the individual to buy and sell is subordinate 
 to the good of the community, and may be interfered 
 with and modified as far as the public good requires. 
 According to the logic of this position, there should 
 be nothing to prevent the government from building a 
 competing railroad to counteract a monopoly, from 
 taxing a business out of or into existence, from loan¬ 
 ing its money or credit in a time of depression, or from 
 engaging in any kind of industry if the public demand 
 it in order to be protected from imposition. The power, 
 influence, and credit of the people as a whole—the 
 nation—is to be used for the benefit of the people. 
 Comparing large things to small, the position of the 
 government is essentially the same as that taken by 
 the head of a numerous family, some of whose mem¬ 
 bers are not yet able to take care of themselves, and 
 others not sufficiently conscientious to regard the 
 rights and interests of the whole. 
 
 Developing this idea of governmental function to 
 its farthest extreme, it might be held that, when de¬ 
 manded by the public welfare and the popular will, the 
 government might properly take upon itself the owner¬ 
 ship and control of all property used in production 
 and distribution, and, superseding private enterprise, 
 manage all industrial affairs entirely for the common 
 benefit of the whole people—a programme similar to 
 that of the Socialistic Labor party or Social Demo¬ 
 crats. 
 
 Now, we cannot expect to escape the law of Sur¬ 
 vival of the Fittest. The superior will live and thrive 
 at the expense of the inferior, in trade and industry 
 
30 
 
 THE POLITICAL ECONOMY 
 
 as truly as in the conflicts of savages, or in the chase 
 of wild beasts for their prey. The inferior will suffer, 
 and be compelled to take the lower position. But the 
 superiority should be a superiority of intelligence and 
 character, not one of wealth and good fortune merely. 
 The masses of the people, if they are not too inferior 
 in intelligence and energy, will use the power they now 
 possess to prevent their natural opportunities from 
 being taken away by those who already have more 
 wealth than they can use, or who by inherited capital, 
 powerful friends, superior education, or good fortune 
 of any kind, have an advantage not due to their per¬ 
 sonal merits. These should not be allowed to get 
 entirely ahead of others, who, by natural character and 
 ability, are their equals, and entitled to an equal oppor¬ 
 tunity. The factitious advantages given by wealth are 
 not to defeat natural justice, which would allow to all 
 an equal start in the same race. In short, the people 
 will show that they are not inferior, by combining their 
 strength and refusing to be preyed upon like little fish 
 by big ones. 
 
 If, on the other hand, the free-competition process 
 be allowed to go on to its extreme result of dividing 
 society into two principal classes, the few rich and 
 many poor—the capitalists and proletaries—then the 
 ideas belonging to an opposite motive and tendency 
 will be carried to their extreme development, the doc¬ 
 trines of Social Democracy will spring up and grow, 
 (as they are already beginning to do, in this country 
 as well as in Europe), and the proposal to put all capital 
 and all industry into the hands of the government, 
 with a distribution of the products for the common 
 
OF DEMOCRACY. 
 
 3i 
 
 good, will be advocated and urged in an earnestness 
 proportionate to the force with which competition 
 presses the workingman down to a lower grade. In 
 the meantime, various forms of Cooperation and In¬ 
 dustrial Partnership will be resorted to as compromise 
 efforts to avoid the worst evils of competition without 
 resisting it openly. 
 
 If the American people think Social Democracy too 
 radical a remedy for the evils likely to arise in time 
 from unchecked free competition, they will, as above 
 predicted, prevent those evils by whatever means may 
 be most efficient. 
 
 As one step in a course of opposition to the old 
 methods of reckless free competition, it may be antici¬ 
 pated that the policy of the government in partially 
 limiting the ownership of land, by selling (or giving) 
 it in small quantities to those only who settle upon it, 
 will sometime be extended to the whole country, and 
 one man’s possessions be limited by law to an amount 
 thought suitable for farming purposes. Not, of course, 
 in the near future, but whenever a sufficiently numer¬ 
 ous population shall make it advisable.* The distribu¬ 
 tion of land is the distribution of a pretty sure means 
 of comfort and independence to the many; and they 
 will not be wise if they allow this land, which is the 
 natural heritage of all, to pass into the hands of the 
 few, or to remain there if by any means a part of it 
 should get into such possession. Not another acre 
 should ever be given to help build premature railroads, 
 
 * A plan for accomplishing this can be suggested which apparently 
 would involve but little difficulty. 
 
32 
 
 THE POLITICAL ECONOMY 
 
 and all thus offered to which a fair title has not been 
 earned by the railroads, should be immediately re¬ 
 claimed. It is even now time to consider whether the 
 present selling of government land in large quantities 
 to capitalists and speculators, and indeed whether the 
 sale of it in any way, should not be stopped at once, 
 and the acquisition of such land be made possible only 
 in small amounts, by living upon it according to the 
 terms by which it is offered free to settlers. 
 
 A second step may consist in a modification of the 
 present Protective policy. It is often sought to be 
 modified in the interest of the trader and of some 
 strong manufacture; let us consider what is possible 
 in the opposite direction. Protection pure and simple 
 —Protection for the sake of Labor and the producing 
 interests—has never yet had a fair trial. It has always 
 been mixed up by politicians and statesmen with taxa¬ 
 tion —with a tariff of duties for revenue—and Protec¬ 
 tion has always suffered from the association. The 
 only valid argument against the policy, aside from that 
 against its consistency, before adverted to, is the one 
 that it does not protect—that it defeats itself—that by 
 putting duties upon everything, everything is raised in 
 price, and the cost of raw materials, of living, and of 
 labor, is so much increased that the additional cost of 
 manufacturing an article is equal, or nearly so, to the 
 duty on the imported article; the manufacturer’s profit 
 is therefore no greater than before; it is just as diffi¬ 
 cult for him to compete with his foreign foe, and nothing 
 is gained. This is in greater or less degree true; but 
 the validity of the reasoning is not against Protection 
 
OF DEMOCRACY. 
 
 33 
 
 itself; it is against Protection and Taxation combined 
 —against tariff for protection and revenue both— 
 against duties on everything. 
 
 Now duties have no business to be upon every¬ 
 thing. Duties laid for protection of industry should be 
 laid only upon commodities that compete with our 
 own production. Everything else should be totally 
 free of duty. Every duty laid for revenue, in the usual 
 way, nullifies to some extent the effect of those laid for 
 protection. And when these revenue duties are put 
 upon everything, they may in some cases neutralize 
 the effect of the protective duties entirely. The manu¬ 
 facturer and laborer are then both cheated; they ask 
 for bread, and get a stone—with perhaps a little crust 
 on it. Duties for revenue are a double swindle upon 
 the laborer; they not only cheat him of the protection 
 he needs, but compel him to pay a larger part of the 
 tax thus raised than he does of any other. 
 
 Systematic and consistent protection must extend 
 to every kind of raw materials that can be produced 
 at home, and every manufacture likely to establish 
 itself after a fair opportunity. The object is, by a vol¬ 
 untary loss for a few years, to establish industries that 
 shall be of benefit to the nation for all time; and as 
 many such as possible. The complaint of some manu¬ 
 facture, already strong, that is able, or would be, to 
 import certain materials more cheaply, must not be 
 allowed for a moment to interfere with this policy. 
 Neither must commercial treaties or any international 
 arrangements. These things indicate that some strong 
 industry wishes to thrive at the expense of a weaker 
 one. An industry established must not prevent a new 
 
34 
 
 THE POLITICAL ECONOMY 
 
 one from growing up. The producer of raw materials 
 and the laborer who has only his labor to invest are 
 the ones least able to protect themselves, and should 
 have protection first, last, and most. This is to protect 
 industry at its very roots. 
 
 There is another kind of protection, not inconsist¬ 
 ent with the above, namely, the protection of resources. 
 Not the natural resources from which come raw mate¬ 
 rials, but the money and credit of a people, acquired 
 by industry. The spendthrift classes, rich and poor, 
 and the mercantile class assist each other to bring on 
 a period of extravagance, excessive trade, and specu¬ 
 lation, during which these resources are spent and go 
 out of the country for imported luxuries; after which 
 follows national bankruptcy, and then a period of hard 
 times while another store of resources is being accu¬ 
 mulated to be again spent in the same manner; an 
 experience of which we have already had several repe¬ 
 titions. This it is within the right, the power, and 
 the duty of the national government to prevent. As 
 the father of a family restrains the dissipated and 
 spendthrift members of it from wasting his and their 
 own property, and thus bringing ruin upon the whole, 
 so the government should restrain Shoddydom from 
 ruining the whole nation. To this end it should im¬ 
 pose duties upon foreign luxuries to any extent that 
 may be necessary to effectively prevent an unfavorable 
 balance of trade. Tariffs have sometimes been designed 
 to serve this purpose to some extent along with others, 
 but never with sufficient thoroughness, nor as an openly 
 acknowledged duty of the government. Such protec¬ 
 tion can be accomplished without increasing the cost 
 
OF DEMOCRACY. 
 
 35 
 
 of anything that ordinarily enters into the working¬ 
 man’s style of living. 
 
 When these two forms of Protection, having only 
 these two objects, fail to raise incidentally a sufficient 
 amount of revenue, the balance can be provided by a 
 graduated tax on incomes. These are the only meth¬ 
 ods yet practiced for raising a tax that do not compel 
 the poor man to pay, directly or indirectly, more than 
 his proper share. 
 
 Protection once properly applied, it should be, what 
 it has never yet been in this country, a fixed, settled, 
 and permanent arrangement for an unlimited time. 
 If the policy is a correct-one it is good for the masses 
 of other countries as well as ours; and this being so 
 when once a tariff has been adapted to meet the wants 
 of any country there is no reason why it should ever 
 be greatly changed or the policy abandoned. And 
 when we shall have become capable, as we shall be 
 soon, of producing manufactured goods equal to the 
 best, it is to be hoped our people will never be guilty 
 of urging a selfish Free Trade policy upon some other 
 country whose industrial capacity may be less devel¬ 
 oped. 
 
 The monetary policy of the nation must depend 
 upon its industrial policy. This can be easily made 
 out. 
 
 A currency of uniform and steady value is as 
 necessary to the honest merchant doing a legitimate 
 businesss, as to the mechanic or farmer who labors for 
 his dollar with* his muscles only. There is no one but 
 the speculator—the mere trader, who has only the 
 
36 
 
 THE POLITICAL ECONOMY 
 
 gambler’s justification for his business,—that can derive 
 any advantage from a varying standard of value. 
 Hard money and soft money partisans are equally 
 agreed upon the necessity of an unvarying dollar. 
 But whether it is of specie or paper makes practically 
 very little difference. If a nation is bankrupt its hard 
 money very quickly disappears. If it is earning more 
 than it spends—selling more than it buys—its paper 
 money is as good as gold, for it has or can have the 
 metal with which to redeem it if required; and a very 
 little specie will in such a case secure a large amount 
 of paper, because there can be no great demand for 
 specie. Let it be observed, too, that when specie is 
 going out of a country a gold dollar becomes, to that 
 coimtry , as varying and unsteady in its actual value, 
 that is, its purchasing power, as any discredited paper 
 dollar, this value increasing and prices decreasing as 
 more of the metal is exported. It is only the good 
 financial condition of a country—its having greater 
 resources than liabilities, and being able to have and 
 to retain either kind of money—it is only this that 
 makes any circulating medium of practical use to its 
 people. Without it the hardest money will disappear ; 
 with it the softest paper will be good, or can be made 
 good at any moment. 
 
 And this condition is to be secured by the protection 
 of our financial resources , as described above. No 
 other means will sustain business confidence, and keep 
 in circulation a currency worth having. A non-export¬ 
 able money will not save us from hard times; for, in a 
 period of business activity, when general trade is good, 
 speculation prosperous, the people extravagant, foreign 
 
OF DEMOCRACY. 
 
 37 
 
 trade active like the rest, then more imported goods 
 will be bought than home productions pay for, and 
 after the precious metals are exported, bonds or other 
 evidences of debt, which also represent credit, will be 
 sent out until credit is exhausted, after which they fall in 
 price—like a doubtful man's note sold at a discount— 
 speculators and premature enterprises fail, merchants 
 connected with them are obliged to follow, confidence 
 is destroyed, and hard times set in—the experience we 
 have been passing through since 1862. Nor will a 
 specie basis currency of any ordinary strength secure 
 us any better; we have had the like experience with 
 that several times, and the bottom flies out of every¬ 
 thing just as quickly. Neither, in ordinary times , 
 would a low rate of interest on money loaned by the 
 government, if that were to be made practicable, for it 
 would stimulate excessive trade and reckless expendi¬ 
 ture perhaps worse than anything else.* The nation 
 is subject to the same laws that control the fate of an 
 individual or a family ; when either one of them takes 
 on the habits of a spendthrift, as our own country has 
 done every time it had the means, the same experience 
 happens to it; first, its hard money and other ex- 
 
 *In a time of commercial revulsion, on the contrary, a loan of its 
 credit by the government to the people would in all probability be an 
 immense help toward moderating the reaction, mitigating or avoiding 
 its worst consequences, and enabling business sooner to revive. A 
 vast amount of good, apparently, could have been accomplished by 
 our government during the last five years if, instead of having its 
 financial policy determined in the interest of the moneyed class, its 
 credit (credit money) had been freely loaned, through its Post Office 
 agencies, to those who needed it most. Prevention, however, is far 
 more important than any partial remedy. 
 
38 
 
 THE POLITICAL ECONOMY 
 
 changeable property goes, then its credit is taken till 
 that becomes suspicious, then follows bankruptcy and 
 a return to hard work and frugality, with an accom¬ 
 paniment of vagabondage, pauperism, or starvation. 
 
 The ready objection to all this will be that we have 
 been having our resources protected during the last 
 period of business activity, and the usual result has 
 come about notwithstanding. But that protection, 
 though unusually great, was not extraordinary in any 
 such degree as to compare with the extraordinary 
 amount of paper money put in circulation, the extra¬ 
 ordinary extravagance of expenditure, and the extra¬ 
 ordinary rush of business and speculative gambling 
 which characterized that period. It could not, there¬ 
 fore, have been expected to counteract it sufficiently. 
 
 If these views are correct, the policy to be antici¬ 
 pated for the future is that the National Government 
 shall furnish the circulating medium, assuming that 
 which is now issued by the banks, when advisable, 
 putting it out for its current expenses, or in any legiti¬ 
 mate undertaking, being responsible for it and taking 
 care to make it as good as any other money, by 
 making it exchangeable for any other, which it can do 
 by fully protecting its monetary resources in the way 
 indicated. As the amount of this currency will in¬ 
 crease in proportion to the country’s increase in 
 population and w r ealth, while the use of gold and 
 silver money becomes less and less with the advance of 
 civilisation, the paper circulation will in time come to 
 be very large, and will perhaps have but a small pro¬ 
 portional amount of specie basis. Still, as there will 
 be but small demands for what is called “ the world’s 
 
OF DEMOCRACY. 
 
 39 
 
 money,’’ and these only for use in the world outside 
 the country, while the use of precious metals in the 
 arts will be more than supplied by the current pro¬ 
 duction, the small amount of basis, will be practically 
 sufficient, and the result comes to be a practical super- 
 sedure of coin by paper money. 
 
 To go along with such a currency, or indeed with 
 any other, there should be a policy that looks to the 
 discouragement and check of the trading propensity, 
 by the abolition of all laws for the collection of mer¬ 
 cantile debts, by the limitation of bank loans, by 
 making illegal all doubtful speculative transactions* 
 and in every way preventing, as far as possible, that 
 easy and illegitimate credit , which in easy times is 
 obtained by men whose character and habits are un¬ 
 worthy of it, which is the great means of inducing or 
 facilitating excessive trade, and which, in its final 
 expansion by everybody to the bursting point, is the 
 cause of crises, revulsions and hard times. 
 
 The rise of wages that should accompany prosper¬ 
 ous business and increase of wealth is to be expected, 
 not from any cause that produces a general rise in 
 prices, but from improvement in the condition of the 
 producing classes. The less speculation or excitement 
 in trade, the less inflation of credit by the banks- and 
 consequent less variation in general prices—the steadier 
 the business movement—the firmer will be the confi¬ 
 dence of business men, the more constant will be the 
 employment of labor, the more general the distribu¬ 
 tion of wealth, the greater and more certain the 
 improvement of the worker’s condition, the more 
 independent he becomes, and the better able to demand 
 and obtain a higher rate of pay for his services. 
 
40 
 
 THE POLITICAL ECONOMY 
 
 One other business besides the control of the cur¬ 
 rency may be safely put into the hands of the National 
 Government as soon as possible; that is, the manage¬ 
 ment of Savings. Not by any such half-way method 
 as proposed by politicians, but by a system so thorough 
 and complete that every poor man or woman shall 
 have the freest opportunity to deposit any amount, 
 from one dollar upward, in the Post Office of any little 
 village, where it shall be absolutely secured by the 
 government, and draw such interest as its lowest bonds; 
 while proper regulations shall limit the benefits of the 
 system to those for whom it is designed. As trading 
 will always be overdone because less disagreeable than 
 some other occupations, and needs to be discouraged, 
 so saving should receive the fullest ^^couragement be¬ 
 cause it involves thoughtfulness, prudence, and self- 
 denial, virtues which to some of the poor are very dif¬ 
 ficult to practice. If the government has no present 
 need of the money thus collected, it can at least use it 
 to buy its own bonds in open market, or loan it to 
 parties who do need it, in such a way as to secure itself 
 against loss. And as long as it can do this it should 
 be considered under moral obligation to do it for the 
 sake of those who would be benefited by the general 
 facilities for saving. 
 
 A change in method of Taxation is possible in the 
 future as still another step toward elevation of the 
 working classes, and approach toward equality. The 
 germ of Graduated Taxation, thus far exhibited only 
 in a graduated tax on incomes, may develop into a 
 graduated tax upon all property, and perhaps be used 
 
OF DEMOCRACY. 
 
 4i 
 
 to prevent the accumulation of immense fortunes in 
 single hands. The poorer members of society will 
 eventually discover that the vast property of the mil¬ 
 lionaire, held by one person whose wants are all sup¬ 
 plied, would if held by a hnndred men, full of yet un¬ 
 supplied wants, give rise to a demand for labor and its 
 products, and their distribution, a hundred times as 
 great as it does in the hands of the single owner. To 
 offset against this, however, there is that part of the 
 millionaire’s property which is invested or loaned for 
 purposes of production and employment of labor. If 
 this part were the whole of it except that which sup¬ 
 plied his ordinary wants—wants similar to those of 
 the man owning ten thousand—then the effect would 
 be equal; in other words, if he lived like the man of 
 ten thousand, and invested all his unconsumed capital 
 and income in useful production, it would make no 
 difference to the working man who might be the tech¬ 
 nical owner; for in either case the same demand for 
 productive labor would exist, assuming that the man of 
 ten thousand consumes no luxuries and makes no use¬ 
 less expenditure. But all the capital sunk in unpro¬ 
 ductive expenditure, for purposes of ostentation and 
 luxury, such as palatial residences and grounds, fast 
 horses, yachts, etc., (except in times of distress, when 
 expenditure for any purpose may be better than none) 
 is a waste of resources, which might otherwise be 
 turned into the channels of useful production, and be a 
 means of increasing the property and the comfort of 
 the poorer classes, aiding their moral, social, and intel¬ 
 lectual elevation, and contributing towards a greater 
 equality, morality, and wisdom in all. For indeed the 
 
42 
 
 THE POLITICAL ECONOMY 
 
 millionaire is, with some exceptions, morally as low 
 and selfish as he is high socially; and for the purpose 
 of securing his own best happiness is really no wiser 
 than the poor ignoramus who serves him in carrying 
 out his “high-toned” selfish wishes. 
 
 All the old talk about the expenditure of the rich 
 for luxuries being a benefit to the poor is, in ordinary 
 times, a pure swindle, which only the popular ignorance 
 upon economic subjects prevents from being seen as it 
 is. This they will come to see, and also the fact that 
 all those who serve and aid the rich in their waste of 
 money for luxury and show are but so many parasites 
 supported upon what has been indirectly taken from 
 productive labor by a higher cost than necessary for 
 everything the poor man consumes. Eventually it is 
 to be expected the men of labor will discover that para¬ 
 sitism of every kind in state, church, or society is a tax 
 upon what they produce, an abridgment of their means 
 and comfort, a hindrance to their improvement and hap¬ 
 piness. When they shall have learned this they will 
 probably take measures to limit the accumulation of 
 wealth in one person’s hands to a reasonable amount, 
 thus limiting their own poverty, and limiting the ex¬ 
 tent of general servility and corruption. One of the 
 most effective of such measures would seem to be 
 Graduated Taxation. 
 
 A tax of this kind is, moreover, the only means of 
 compelling the rich to pay in proportion to their ability, 
 and of securing real justice. The man who owns one 
 thousand dollars is not as well able to pay a certain 
 percentage as is one owning fifty or a hundred thou¬ 
 sand. The first might be inconvenienced or deprived 
 
OF DEMOCRACY. 
 
 43 
 
 of his wishes to a considerable extent, the latter not at 
 all. After a certain amount has been acquired, suffi¬ 
 cient for all the owner’s reasonable wants, his further 
 acquisitions may be taxed enormously and still he will 
 suffer no loss of anything really necessary to his hap¬ 
 piness. Therefore a man’s ability to pay taxes is not 
 in proportion to the total amount of his property, but 
 in proportion to what remains after exempting a cer¬ 
 tain amount required for the satisfaction of his natural 
 and proper human wants. 
 
 Still further, such a method of taxation would be 
 advisable as favoring industry and frugality in the 
 poor; for with less monopoly of openings and oppor¬ 
 tunities by the rich, and with the burden of tax lifted 
 till the time they became able to bear it, they would 
 have more encouragement to labor and save. 
 
 In Education the popular masses will find their ad¬ 
 vantage in obtaining less of that instruction classed as 
 learning, or that which is considered as accomplishment 
 merely, and more of that which is scientific, technical, 
 and useful, which will prepare them to fight success¬ 
 fully the battle of life, and including the industrial Art 
 that will teach them to make common things beautiful. 
 There is something to be said in favor of requiring 
 every child to begin its education upon an equal footing 
 in the common schools, and much more for the com¬ 
 pulsory attendance at school of all under fifteen years 
 of age. But compulsory education, to be effective, 
 must be enforced by officials of the state, for apparently 
 it will never be carried out by local ones. It is doubt¬ 
 ful if any child, however rich or poor, should be al- 
 
44 
 
 the political economy 
 
 lowed to grow up without having learned the rudi- ■ 
 ments of some useful productive occupation. Lack of 
 ability to get a living in honest ways is the most com¬ 
 mon predisposing condition of knavery. In Europe 
 the School Garden has become an established institu¬ 
 tion ; the School Garden and School Workshop both 
 will not be too much for America. 
 
 The criminal, too, must be educated, and the pauper 
 and vagrant. Sometime it may dawn upon people 
 who are not lawyers or officials that the only rational 
 purpose of penal laws and prisons is to reform a crimi¬ 
 nal, or failing in that to put him where he cannot prey 
 upon society. It is admitted that he needs educating 
 morally and intellectually; and, without bringing his 
 labor into competition with that of honest men, he 
 should be taught some useful trade, or more than one, 
 adapted to his capacities and tastes, and be drilled into 
 permanent habits of industry. Whatever his crime or 
 the now usual punishment of it, a second offence, and 
 even the first if atrocious, should subject him to this edu¬ 
 cational prison discipline, without hope of pardon or es¬ 
 cape, till he either becomes a safe and useful member 
 of society or dies. There is no way to exterminate the 
 criminal and pauper classes but by preventing their 
 propagation, and giving an industrial as well as mental 
 education to every child without exception. While, 
 behind all this educational preparation there must be a 
 settled public conviction of the low-lived and selfish 
 character of the aristocratic feeling, of the inherent 
 disgracefulness of idleness and luxury, of the necessity 
 of gaining distinction in some way that shall be useful 
 to mankind ; these convictions being re-enforced byj 
 
OF DEMOCRACY. 
 
 45 
 
 the impossibility of acquiring great riches for selfish 
 indulgence. There is superfluous wealth enough in 
 the hands of the extremely rich to give ten years of 
 schooling to every child, and to make scientific knowl¬ 
 edge so common among all classes that disease, poverty, 
 and crime shall be substantially abolished. The means 
 for effecting this change has been already suggested in 
 Graduated Taxation. 
 
 Of interference by the government with railway 
 and other corporations , it is safe to predict that no 
 more of it will be done than is positively necessary. 
 The American people will not infringe upon any one’s 
 freedom without cause. But the power to do so ex¬ 
 ists and is likely to be used when protection of the 
 people’s interest cannot be otherwise secured. There 
 are many ways in which the power of a great corpora¬ 
 tion can be and is abused, and as human nature is in¬ 
 herently disposed to take advantage of the weak and 
 ignorant, it is only by perpetual vigilance that abuses 
 can be prevented or corrected. To remedy those now 
 existing, and the evils of legislation that discriminates 
 in favor of the rich and powerful in various ways, will 
 be a work of no little magnitude and difficulty. Ulti¬ 
 mately, there is reason to hope, the selfish and un¬ 
 principled rich who prey upon society at one extreme 
 will become extinct, as will also those at the other who 
 are incapable of improvement—methods will be de¬ 
 vised to prevent the piling up of big fortunes, and to 
 prevent the children of crime, if not crime itself, from 
 coming into existence. 
 
46 
 
 THE POLITICAL ECONOMY 
 
 That the new party now arising, or some other soon 
 to arise, will pay attention to the opposite tendencies in 
 Political Economy, and that it will adopt some of the 
 most important practical ideas favoring equality, with 
 a platform ever varying as the abuses imposed upon the 
 masses are discovered and new reforms instituted in 
 their interest, appears decidedly probable. The in¬ 
 creasing intelligence of the laboring classes, the grow¬ 
 ing interest in Socialism, the awakened thought of all 
 persons upon our late dangerous social condition, to¬ 
 gether with the absence of moral motive in the pro¬ 
 grammes of both the old parties, make this indeed 
 almost certain. The Greenback issue, as the main one, 
 even if it were sound in the way presented, is tar too 
 little to sustain such a party ; but as a true working¬ 
 man’s party, devoted to simple justice for the masses 
 and the advancement of equality, it will possess moral 
 motive, and have sufficient work upon its hands for 
 many years. It may accomplish a political revolution 
 equal in importance to that against Slavery. It can 
 extinguish the great army of tramps, that fearful 
 anomaly in our social life, and bring about a moral 
 renovation equal to the political. It may do as much 
 for practical human freedom as any party or movement 
 that has ever existed. 
 
 The idea has been advanced that every great nation 
 has a vocation properly belonging to it—a purpose in 
 the grand scheme of human destiny, that lies behind 
 it and constitutes its reason for being—a peculiar 
 
OF DEMOCRACY . 
 
 47 
 
 part to play in the progress of the race.* If I might 
 be allowed to formulate the expression of this destiny 
 in regard to ourselves, I would say that the American 
 
 Vocation is to be the Realization of Equality -not an 
 
 impossible absolute equality, not a mere dead-levelism ; 
 but a comparative equality of high grade, such as the 
 world has never yet seen, that shall insure to every 
 one the means of practical freedom and control of his 
 own career, with a capacity to appreciate goodness, 
 truth, and beauty in all the achievements and posses¬ 
 sions of Humanity, and an ability to make the best use 
 of his faculties and secure his greatest happiness. 
 
 In a natural forest a grove of trees grow up to¬ 
 gether, few of them being much larger than the rest, 
 and none of them small. The underbrush dies out, 
 and the common soil supports as many of them as can 
 find room to grow. It may be that they furnish a not 
 unfair symbol of human society in its approach to the 
 perfect state. 
 
 * 
 
 * This conception, with its illustration in America and other na¬ 
 tions, is taken from an article by John Dyer, in the Penn Monthly for 
 July, 1875. 
 

 Law of Justice 
 
 -BETWEEN- 
 
 Capital and Labor. 
 
PREFACE. 
 
 The little essay following states and illustrates a 
 rule that is applicable in every kind of business enter¬ 
 prise or combination of capital and labor. The ar¬ 
 rangement contemplated by it is not Cooperation, of 
 the ordinary type, in which the laborer is his own 
 Capitalist; nor is it an Industrial Partnership, in which 
 the capitalist and manager offers such a share of the 
 profits as he may choose to the laborer, more as a 
 reward to faithfulness than as a matter of justice; 
 though it approaches more nearly to the latter in not 
 requiring the laborer to possess capital. It proposes 
 the terms that Labor may offer to Capital, or Capital 
 to Labor, as the dictate of strict justice between them 
 —something which either can offer or accept with 
 manly dignity, conscience, and good feeling. This 
 claim appears like one to be scouted as soon as made, 
 but a careful reading of the essay will show it to be 
 less preposterous than it seems. 
 
 There is no need to speak of the importance of the 
 idea advanced if true, nor to apologize for the direct 
 and hasty manner in which it is presented, at a time 
 when, in regard to this subject, every one is ready to 
 receive an'idea that can be of service, in as few words 
 as possible. 
 
The Law of Justice 
 
 —BETWEEN— 
 
 Capital and Labor. 
 
 P OLITICAL Economy appears not to recognize that 
 there is any question of justice between Capital 
 and Labor, other than that of the just fulfilment of 
 contracts between the capitalist and laborer, the same 
 as in any other kind of bargain or trade. In the 
 common view the purchase or sale of labor, or the 
 mutual exchange of service, is all there is in the rela¬ 
 tion, and therefore it ought to be governed by the 
 ordinary laws of trade. 
 
 Yet it is possible to take a different view of the 
 connection between these parties; to look upon it as a 
 kind of natural partnership, in which justice, in the 
 proper sense of the word, appears to have an applica¬ 
 tion according to an easily understood principle or 
 rule. I shall endeavor to state in a concise and plain 
 manner what I conceive this to be, and hint at some 
 of the advantages to be anticipated from carrying it 
 into practice. 
 
 The principle itself is so simple that where there 
 has existed a sufficient motive for doing justice the 
 method has been at least partially discovered. In the 
 Cooperative Stores of England and Germany, a rule 
 
52 
 
 THE LAW OF JUSTICE 
 
 has always been acted upon which, so far as applied, 
 is essentially the same thing ; that is, dividends to each 
 member in proportion to amount of purchases made by 
 him —in other words, in proportion to the amount of 
 profits produced by each one through Jus purchases. 
 The assistance given by capital toward the common 
 result, if taken into account at all, is considered to be 
 sufficiently rewarded by the interest allowed to it; and 
 in many instances the small amount of capital required 
 from each member being the same—a single share 
 Avorth five or ten dollars—there w^as really no need 
 of considering Capital in distributing the profits. It 
 was then a natural and easy inference that profits 
 should justly be shared in proportion to amount of pur¬ 
 chases. 
 
 Carrying the same principle into ordinary Produc¬ 
 tion, in which profits are made by manufacturing 
 goods as well as by selling them—by labor as well as 
 by trade , it would give to Capital and to the Laborer 
 shares in proportion to the value of zvhat each had fur¬ 
 nished toward the production of the profits . Now, the 
 Laborer furnishes, not himself, but the use of himself, 
 his labor or services for a given time, the value of 
 which is measured by his wages or salary—what he 
 earns. Capital furnishes, not itself, for it is supposed 
 to remain unhurt and to be returned without loss, but 
 it furnishes its purchasing power, its convenience, its 
 use or service, or the use of machinery or other pro¬ 
 perty in which it is invested, such service being valued 
 by what it could earn , that is, an interest of six, eight, 
 or ten per cent, of itself, during the same time. The 
 earnings of the laborer is one factor, the earnings of 
 
BETWEEN CAPITAL AND LABOR. 53 
 
 capital—not of the capitalist himself—is the other. 
 Or, to look at it in another way,, the laborer may be 
 considered a machine , the use of whose muscular or 
 thinking apparatus, or both, is worth a certain amount 
 a year—his wages or salary. The use of capital is 
 worth what it could earn if the use of it were given 
 for hire in any other business—that is, its interest. 
 The laboring machine and the capital are both sup¬ 
 posed to be returned good at the end of the year. 
 The interest of the capital for its use or service, and 
 the zvages of the laborer for his use or service in the 
 joint production, should then divide the profits; the 
 total wages and the total interest should share in direct 
 proportion to the amount of each. This is so plain 
 and self-evident, it is hardly possible to doubt its jus¬ 
 tice. It is precisely the same as though the division 
 were between the interest on money for its use on one 
 side, and the interest on the value of a machine for its 
 use on the other. The value of the laborer, when 
 capitalized like a machine is assumed to be a sum 
 whose yearly interest would be equal to the yearly 
 earnings of the man. 
 
 I have been speaking as if only one laborer were 
 concerned, but with any number of laborers the divi¬ 
 sion is equally simple. Each one takes a share of the 
 total amount assigned to Wages in direct proportion 
 to the total amount of his individual wages, or salary, 
 for the given time; the individual salaries, or wages, 
 being considered, as is commonly the case, to repre¬ 
 sent the comparative value or amount of each one’s 
 contribution to the general production. The rates of 
 wages and of interest are taken to be just what they 
 
54 
 
 THE LAW OF JUSTICE 
 
 are made by the ordinary action of Supply and 
 Demand. 
 
 Machinery (of wood and metal) and buildings are a 
 part of the capital, and need not be considered separ¬ 
 ately. An appropriation for the wear and tear of 
 them is of course to be taken out from the total 
 earnings before distribution, that being a loss to be 
 repaired before the net amount of profits can be 
 known. 
 
 To illustrate the working of this law, let us imagine 
 a small factory with a capital of $100,000, and an opera¬ 
 ting force of fifty hands. It does a good year’s busi¬ 
 ness, and makes a net profit of $10,000, after paying 
 wages to the amount of $40,000, and interest to the 
 amount of $10,000. Interest, being one-fifth of the 
 whole sum paid for services ($50,000), takes one-fifth 
 of the profit, or $2,000. Wages, being four-fifths, will 
 take $8,000, to be redivided among the fifty operatives 
 in the ratio of each one’s yearly wages. Then, if we 
 allow the superintendent to have a salary of $1,500, 
 his share of the $8,000 will be $300. If four others have 
 salaries of $1,000 each, their shares will be each $200 ; 
 if five more receive $900 each, they each take $180; 
 and the remaining forty, whom we suppose to have 
 earned $750 each, will each have $150. 
 
 In the supposed instance the amount of capital 
 invested, compared to labor, is large, and the rate of 
 wages and interest high ; but these are of no conse¬ 
 quence to the application of the principle. The greater 
 the relative amount of capital or interest involved, the 
 smaller will be the share of profit coming to Labor or 
 Wages; the smaller the relative amount of capital, the 
 
BETWEEN CAPITAL AND LABOR. 55 
 
 greater the gain of Labor. But whether it gives to 
 the workman or to the capitalist much or little, the 
 rule is strictly just so long as we allow the justice of 
 interest to capital, and the right of men to buy and 
 sell labor according to Supply and Demand. 
 
 To see its justice still more plainly, if possible, let 
 us consider everything concerned in the production as 
 capitalized —the money, the land or buildings, the 
 machinery, and the operatives. The laborer, whatever 
 he may be in any other capacity, is for industrial pur¬ 
 poses only a more intelligent machine ; and it is the 
 use of his muscular machinery for which he is paid 
 wages. Then, if mo?iey capital is worth ten per cent, 
 or one-tenth of itself per year, a man who earns $1,000 
 a year wages should be capitalized at $10,000, or con¬ 
 sidered as equivalent to that amount of stock. His 
 earnings are then like those of money capital, one- 
 tenth of his value; and he shares, or should share, the 
 profits in the same proportion as if he had furnished 
 $10,000 money capital to the establishment instead of 
 his own labor. The interest of that sum would just 
 pay the wages of some other equally good man. That, 
 then, is his exact value as human capital, or as a 
 human machine. 
 
 Thus closely inspecting the nature of the contribu¬ 
 tion made by the laborer, it is seen to be, in a strict and 
 rigid sense, capital (human capital), and our rule of 
 justice thus requires a division of profits in proportion 
 to amount of capital furnished by each party. 
 
 On the other hand, considering capital to be, as it 
 really is, the conserved and accumulated force result¬ 
 ing from previous labor, performed by somebody, then 
 
56 
 
 THE LAW OF JUSTICE 
 
 the same law gives the profits to each party in pro¬ 
 portion to the amount of labor invested by each. For 
 the capitalist who invests $50,000 (rate of interest 
 being as above supposed) contributes what is equal to 
 five men or five machines, whose annual service or 
 labor is each worth a rent or a salary of $1,000. 
 
 In either view a dividend is in proportion to the 
 amount of service rendered by each party toward the 
 common product of their operations. 
 
 [Some of the terms here used will not sound pleas¬ 
 ant, they may suggest reminisences of slavery; but, if 
 they express the actual truth, we may as well get used 
 to them. The hired laborer is to some extent a slave 
 in his present condition; if, by understanding his real 
 nature and position as a laborer, we can help to make 
 him more free, it is not best to quarrel with the terms 
 that give us a true conception.] 
 
 A loss is to be shared in the same manner as a 
 profit. A loss only great enough to prevent the pay¬ 
 ment of part of the interest can be equalized by 
 witholding part of the wages till the end of the year, 
 or time of settlement, and then making such a dis¬ 
 tribution that Wages shall lose the same percentage as 
 Interest. 
 
 An impairment of the money capital is to that pre¬ 
 cisely what damage is to a machine, or what accidental 
 injury is to an operative. Whatever method is advis¬ 
 able to secure against one, is equally proper to secure 
 against the other. If the worker is to risk the loss of 
 his limbs or his life, the capitalist can afford to risk the 
 loss of his money. If the latter is to be insured 
 against loss, the former should be insured against un- 
 
BETWEEN CAPITAL AND LABOR. 57 
 
 avoidable accident. But as it is impracticable in pay¬ 
 ing wages to obtain a return of any part of it to 
 meet losses, and even difficult to withhold a part of 
 it very long, it seems decidedly the most simple 
 and efficient method to provide a contingent fund from 
 the receipts of prosperous years, to insure against 
 losses of all kinds, including accidents to operatives 
 and wear and tear of machinery or plant. This is the 
 method actually adopted by some of the industrial 
 partnership establishments to provide against some if 
 not all of these losses. In this manner Interest and 
 Wages bear each its just proportion of the loss; and, 
 taking a series of years together, that loss falls equit¬ 
 ably or in proper ratio upon all the individuals con¬ 
 cerned. 
 
 A reduction or rise in wages justly implies a cor¬ 
 responding reduction or rise in the rate of interest, 
 and vice versa , with, perhaps, slight modifications 
 caused by natural variations in prices. 
 
 Justice would also give to a workman, whose labor 
 is unhealthful, dangerous, or very severe, a rightful 
 claim to an allowance for wear and tear, unless the 
 compensation be made by a higher than ordinary rate 
 of wages. 
 
 That the workingman who is unwilling to take any 
 risk or share in any possible loss, has no right to claim 
 a share in profits will be at once admitted. 
 
 As to the results to be anticipated from the adop¬ 
 tion of this standard of justice in practice, I cannot 
 but believe it would give to the workingman some¬ 
 what more than the industrial partnerships have 
 
58 
 
 THE LAW OF JUSTICE 
 
 usually done, but not as much, of course, as true co¬ 
 operative production, in which he furnishes his own 
 money capital and receives all the profits. If justice 
 and good feeling can do anything toward success in 
 business, as already they appear to do in certain cases 
 where partially brought out, then this ought to pro¬ 
 duce good results to both Labor and Capital. The 
 laborer has under it every inducement to do his best 
 for the prosperity of his. employer. The employer, 
 with improved prospects of success from the hearty 
 co-operation of the workman, has a reasonable assu¬ 
 rance of a good interest on his capital, and a share in 
 the gains on account of that interest. If he is also the 
 superintendent of his business, he has an additional 
 share of profit on acconnt of his salary as his own 
 employe. 
 
 The history of modern efforts at Co-operation or 
 Association in industry, in various ways, seems to me 
 to show that those arrangements called industrial part¬ 
 nerships, in which the proprietor or capitalist controls 
 and manages, while allowing to his employes a small 
 share in the profits, are the most natural, because most 
 successful, first steps toward harmonious co-operative 
 production. The law here explained also seems to me 
 to furnish the true guide for conducting such arrange¬ 
 ments. 
 
 The only real and valid objection I am at present 
 able to see to this standard of justice is that might 
 makes right—that Nature and Society give to the 
 capitalist a right and power to take advantage of the 
 necessities of a man so poor that he is obliged to sell his 
 
BETWEEN CAPITAL AND LABOR. 59 
 
 labor on any terms he can get, and to withhold from 
 such a one that which neither Nature, Society nor 
 Justice allows him to withhold from one who is able 
 to sell his labor or refrain from selling it, as he chooses. 
 
 An objection will arise, however, to the effect 
 that the manufacturer who acted upon it would be 
 unable to compete with one who did not. This, I 
 believe, is apparent only, not real. In this case, let it 
 be observed, it is not the employer alone who is to 
 make the struggle against competition. His men are 
 as much interested in meeting it as himself. The 
 esprit du corps , and the common interest and sympathy 
 of all engaged are brought to bear in a united effort 
 to overcome opposition. Such being the state of feel¬ 
 ing, the whole amount of profits, or what would other¬ 
 wise be profits, is allowed to go for this purpose, and 
 interest and wages also, as far as the parties think it 
 advisable to sacrifice them. And if we suppose an 
 establishment having, by successful business for a few 
 years, acquired a considerable reserve fund for con¬ 
 tingencies and extraordinary expenses of any kind, 
 necessary or advisable, then here is another means, 
 greater or less, for meeting a sharp competition. 
 
 But assuming the more helpless situation, in which 
 there is no such fund, we may also assume that the 
 workmen are to be employed permanently, one year 
 after another, and that the capital likewise is perma¬ 
 nently invested, or at least that this is the intention in 
 regard to both. Then a reduction of wages and in¬ 
 terest to guard against anticipated difficulty from com¬ 
 petition ought to be practicable and easy. Each party, 
 capitalist and laborer, acknowledges the justice of re- 
 
6o 
 
 THE LAW OF JUSTICE 
 
 ducing interest and wages in equal ratio—one-tenth, 
 one-fifth, or more, of each as the case may demand. 
 The laborer knows that no advantage is to be taken of 
 him ; that if a profit is thus allowed to be made which 
 would not be possible with the payment of high wages, 
 he will share in it equitably whatever the amount ; 
 that he really gets from profit and wages together the 
 same sum he would otherwise receive with a higher 
 rate of wages and interest but no profit, and gets it 
 without causing danger or embarrassment to the busi¬ 
 ness. He further knows that the next year or series 
 of years will make up to him what he loses in this; 
 that as a permanent arrangement it is the best he can 
 make. Knowing all this he cannot oppose reduction 
 to any extent necessary, provided it leaves him suffi¬ 
 cient to live upon as he goes along. The capitalist, 
 knowing the reduction of interest to be equally just, 
 and that what it falls below the average in one year is 
 made up in another, will be no less ready to give it his 
 consent. 
 
 Furthermore, the manufacturer operating on this 
 principle has a great strength from the complete and 
 thorough satisfaction, sympathy and good will of his 
 men. His competitor acting on the common plan, 
 though he may sometimes secure a temporary advan¬ 
 tage by having all the profits he can make, yet finds 
 his gains materially lessened by the unfaithfulness of 
 his workmen—h>y inferior and damaged goods, by 
 breakage and waste from carelessness, by killing of 
 time and stealage—by all kinds of dishonest}'. On the 
 other hand, the acknowledgment and acceptance of a 
 just principle by the employer develops honesty, care, 
 
BETWEEN CAPITAL AND LABOR. 6 t 
 
 faithfulness on the part of the employe, and an in¬ 
 terest in the common success, which not only prevent 
 these losses, but increase his actual skill and power, 
 and the amount and quality of his product. This good 
 feeling and unity of interest is already acknowledged 
 to be an important element in the production of profits 
 by the existing industrial partnerships. Yet those ar¬ 
 rangements concede only partial justice to the laborer, 
 and an institution governed and guided by a rule that 
 does complete justice to all would derive a still greater 
 advantage from the more perfect harmony, unity of 
 effort, and faithfulness of all concerned. 
 
 It may also be said against this, as against any 
 proposal of a similar nature, there is danger that those 
 holding the power given by capital may break up the 
 arrangement when it may suit their temporary interests 
 to do so, and that the laborer, having reaped the 
 benefit of good times, may desert at the coming on of 
 bad ones; though such conduct in either would be 
 short-sighted and foolish as well as base. This danger 
 creates the necessity for some prudent investigation of 
 the characters of parties before entering into an agree¬ 
 ment. And after all it must be remembered that just 
 principles can be carried out only by people who have 
 some sense of justice, and a permanently wise ar¬ 
 rangement only by those who have some degree of 
 sagacity. The unprincipled and foolish, among both 
 employers and workmen, will go on in the old discor¬ 
 dant and selfish way, each taking advantage of the 
 other at every opportunity. The capitalists who really 
 desire a better understanding with workingmen and a 
 better plan for conducting operations, manufacturers 
 
62 
 
 THE LAW OF JUSTICE 
 
 whose sympathies impel them to continue work at a 
 loss rather than throw their help out of employment, 
 mechanics who with a little capital have the intelli¬ 
 gence and honesty to combine their means and be just 
 to each other—men who value peace, harmony, safety, 
 and general happiness as well as money—these are the 
 ones to initiate the method of doing business accord¬ 
 ing to a just principle, and by its success demonstrate 
 the right way to avoid the existing discord between 
 Capital and Labor. 
 
 I have called this rule of distribution, justice ; but I 
 do not mean that absolute justice which was taught by 
 Josiah Warren, and embodied by him in the doctrine 
 of “ Cost the Limit of Price ”—a doctrine that is yet 
 to make his name immortal. Sometime in the future, 
 when capital and talent shall both have become moral¬ 
 ized and devoted to the service of Humanity rather 
 than Self, we shall be able to buy and sell at cost, 
 giving equal labor for equal labor in every transaction.